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3 2021 UST Golden Notes Civil Law
3 2021 UST Golden Notes Civil Law
Academics Committee
Faculty of Civil Law
University of Santo Tomas
España, Manila 1008
All rights reserved by the Academics Committee of the Faculty of Civil Law of the
Pontifical and Royal University of Santo Tomas, the Catholic University of the
Philippines.
2021 Edition.
A copy of this material without the corresponding code either proceeds from an illegal
source or is in possession of one who has no authority to dispose the same.
UST BAR-OPS
KRIZA NIÑA B. MALALUAN CHAIRPERSON
ELISHA ELAINE D. BAYOT VICE-CHAIRPERSON INTERNAL
JOSEPHINE GRACE W. ANG VICE CHAIRPERSON EXTERNAL
MARINETTE M. SOBREVILLA SECRETARY
SARAH ANGELA D. EVA HEAD, PUBLIC RELATIONS OFFICER
REBECCA JOY M. MALITAO HEAD, FINANCE COMMITTEE
JEDIDIAH R. PADUA HEAD, HOTEL ACCOMMODATIONS COMMITTEE
SABINA MARIA H. MABUTAS ASST. HEAD, HOTEL ACCOMMODATIONS COMMITTEE
JOEMARI MATHEW R. AGARIN HEAD, LOGISTICS COMMITTEE
JOHN FREDERICK A. NOJARA LOGISTICS COMMITTEE
KIER JOHN V. UY LOGISTICS COMMITTEE
CHRISTINE JOYCE P. ANDRES SENIOR MEMBER
ELOUISA ANN D.C. CARREON SENIOR MEMBER
NICOLE MARIE A. CORTES SENIOR MEMBER
PATRICIA MAE D. GUILLERMO SENIOR MEMBER
GLENN MATTHEW C. MANLAPID SENIOR MEMBER
CIARI T. MENDOZA SENIOR MEMBER
MARYLOU RENZI M. OLOTEO SENIOR MEMBER
LOUELLE JUDE B. QUE SENIOR MEMBER
JAMES ROSS L. TAN SENIOR MEMBER
MEMBERS
PIO VINCENT R. BUENCAMINO CHRISTIAN JADE R. RABINO
LAWRENCE JERICHO B. ORTIZ JESSAMINE DENISE W. VALDES
KRISTINE H. SERRANO CHANELLE MIKAELLA T. ISIDRO
KARA C. RAMOS JOANNA A. PAZ
ANGELA MAY S. ALFONSO LARRY MARK S. MORALES
ABIGAIL P. MANALOTO HEATHER MARIAN M. AMOROSO
CLARISSE M. LIBAN LANDREL M. MATAGA
MEMBERS
JOSE CHRISTIAN ANTHONY I. PINZON MARIE ANGELICA A. CORDOBA
LAWRENCE MENDOZA AIREI KIM P. GUANGA
HAIDEE AMABEL T. UY ARLEIGH SHAYNE A. CASTILLO
DANICE GO GAN JOANNAH KIMBERLY R. GAMBOA
JHEA VERONICA V. MENDOZA FRANZ G. PAROHINOG
ANDREA D.G. GONZAGA PATRICK PAREDES
ANGELICA RUIZ
ACADEMIC OFFICIALS
For being our guideposts in understanding the intricate sphere of Civil Law.
– Academics Committee 2021
DISCLAIMER
PART II - PROPERTY
PART IV - SUCCESSION
PART VI - CONTRACTS
PART IX - TRUST
PART XI - AGENCY
Book II - Damages
Publication requirement
Law
Publication is indispensable in every case, but
Aquinas defined law as “an ordinance of reason
the legislature may in its discretion provide that
for the common good, made by him who has care
the usual fifteen-day (15) period shall be
of the community, and promulgated.” (Republic
shortened or extended. (Umali v. Estanislao, G.R.
v. Sandiganbayan, G.R. No. 104768, July 21, 2003)
No. 104037, May 29, 1992; Tañada v. Tuvera, G.R.
No. L-63915, December 29, 1986)
Effectivity of laws
Publication must be in full or it is no publication
Laws shall take effect after fifteen days following
at all since its purpose is to inform the public of
the completion of their publication either in the
the contents of the law. The mere mention of the
Official Gazette, or in a newspaper of general
number of the presidential decree, the title of
circulation in the Philippines, unless it is such decree, its whereabouts, the supposed date
otherwise provided. [(New Civil Code (NCC), Art.
of effectivity, and in a mere supplement of the
2, as amended by EO 200)]
Official Gazette cannot satisfy the publication
requirement. This is not even substantial
Effectivity: It depends on whether or not it has
compliance. (Tañada v. Tuvera, G.R. No. L-63915,
provided a specific date for its effectivity: December 29, 1986)
1. If date is specified – Upon the lapse of the
Indispensability of publication
said period following its complete
publication and not before.
GR: All laws are required to be published in full.
2. If no date is specified – 15-day period,
which may either be on the 15th or on the
NOTE: The reason for this rule is that the basic
16th day depending on the language used by
constitutional requirement of due process must
the Congress in fixing the effectivity date of
be satisfied. (Rabuya, 2009) Without such notice
the statute. (Rabuya, 2009)
and publication, there would be no basis for the
application of the maxim ignoratia legis non
a. 15th day - If the law declares that it
excusat. (Rabuya, 2009)
shall become effective “15 days
after its publication.”
XPNs to the Publication Requirement: (ORLI)
b. 16th day - If the law declares that it
shall be effective “after 15 days
1. Municipal Ordinances (governed by the
following its publication.”
Local Government Code);
2. Rules and regulations which are internal in
3. If the law provides for immediate
nature;
effectivity or upon approval – It is
3. Letters of Instruction issued by
effective immediately after its complete
administrative supervisors on internal rules
publication and not after signing by the
and guidelines;
President.
4. Interpretative regulations regulating only
4. If the law is voluminous– Reckoning shall
the personnel of administrative agency.
begin from the release of the last of the
series.
XPNs to the XPNs: (DEP)
“Unless it is otherwise provided” provision
on effectivity of law Administrative rules and regulations that
require publication:
This clause refers to the date of effectivity and
1. The purpose of which is to implement or
not to the requirement of publication itself. The
requirement of publication may not be omitted enforce existing laws pursuant to a valid
Delegation;
in any event. This clause does not mean that the
2. Penal in nature; and
1
Civil Law
3. If it diminishes Existing rights of certain DOJ Circular No. 95-001 ineffective because it
individuals. was not published?
NOTE: Circulars issued by the monetary board A: NO. OMB-DOJ Circular No. 95-001 is merely
are required to be published if they are meant an internal circular between the two offices
not merely to interpret but to “fill in details” of which outlines the authority and responsibilities
the Central Bank Act. As a rule, circulars which among prosecutors of the DOJ and of the Office
prescribe a penalty for violations should be of the Ombudsman in the conduct of preliminary
published before becoming effective. However, investigations. It does not contain any penal
circulars which are mere statements of general provision nor prescribe a mandatory act or
policies as to how the law should be construed prohibit any under pain of penalty. It does not
do not need publication in the Official Gazette regulate the conduct of persons or the public, in
for their publication. general. It need not be published. (Honasan, II v.
The Panel of Investigating Prosecutors of the DOJ,
Where to publish G.R. No. 159747, June 15, 2004)
3
Civil Law
In international law, the party who wants to A: YES. Eduardo is presumed to have acted with
have a foreign law applied to a dispute or case malice or evil intent when he married
has the burden of proving the foreign law. The Tina. Mistake of fact or good faith of the accused
foreign law is treated as a question of fact to be is a valid defense in a prosecution for a felony by
properly pleaded and proved as the judge or dolo; such defense negates malice or criminal
labor arbiter cannot take judicial notice of a intent. However, ignorance of the law is not an
foreign law. He is presumed to know only excuse because everyone is presumed to know
domestic or forum law. (ATCI Overseas the law. Eduardo has the burden to prove that
Corporation, et al. v. Echin, G.R. No. 178551,
when he married Tina, he has a well-grounded A: NO. The Supreme Court held that the
belief that his first wife was already dead. He document is not sufficient to prove the Chinese
should have adduced in evidence a decision of a marriage between Cheong Boo and Tan Dit. Gee
competent court declaring the presumptive only presented a document in Chinese stating
death of his first wife as required by Art. 349 of the alleged marriage ceremony but there is no
the RPC, in relation to Art. 41 of the FC. Such competent testimony as to what the laws of
judicial declaration constitutes proof China in the Province of Amoy concerning
that Eduardo acted in good faith, and would marriage were in 1895. Therefore, there is
negate criminal intent on his part when he lacking proof so clear, strong and unequivocal as
married the private complainant. (Manuel v. to produce a moral conviction of the existence of
People, G.R. No. 165842, November 29, 2005) the alleged prior Chinese marriage.
Q: Complainants who were connected with Ignorance of a foreign law is not ignorance of the
the Daily Informer (a widely circulated law but of fact because such foreign law must be
newspaper in Western Visayas) were first alleged and proved as a matter of fact, there
charged before the MTC by Judge Pamonag of being no judicial notice of said foreign law. Thus,
the crime of libel. Respondent judge the Chinese marriage was not adequately
conducted a preliminary investigation and proved. (Estate of Boo v. Gee, G.R. No. 18081,
thereafter issued warrants for the arrest of March 3, 1922)
the complainants. Complainants filed an
administrative case against the judge for RETROACTIVITY OF LAWS
gross ignorance of the law. They contended
that the judge neither has authority to Laws shall have no retroactive effect, unless the
conduct a preliminary investigation nor to contrary is provided. (NCC, Art. 4)
issue warrants for their arrest. The judge
said that it was his first libel case and that he Retroactive law
issued the warrants in good faith. Is the
respondent guilty of gross ignorance of the A legislative act that looks backward or
law? contemplates the past, affecting acts or facts that
existed before the act come into effect. (Black’s
A: YES. Judges are expected more than just Law Dictionary, 2009)
cursory acquaintance with statutes and
procedural rules. They must know the law and Retroactive effect of laws
apply them properly in good faith. The
provisions of Art. 360 of the RPC on the persons GR: Laws shall have no retroactive effect (lex
authorized to conduct preliminary investigation prospicit, non respicit).
in libel cases is elementary. Not to know it
constitutes gross ignorance of the law. (Miaque XPNs: (TINCREEP)
v. Judge Pamonag, A.M. No. MTJ-02-1412, March
28, 2003) 1. Tax laws;
2. Interpretative statutes;
Q: Cheong Boo, a native of China died 3. Laws creating New substantive rights;
intestate in Zamboanga. He left a property 4. Curative statutes;
worth P100,000. The estate of the deceased 5. Remedial/procedural;
was claimed on one hand by Gee, who alleged
that he was a legitimate child by a marriage NOTE: Statutes regulating the procedure of
contracted by Boo with Tan Dit in China in the courts will be construed as applicable to
1895. The estate was claimed, on the other actions pending and undetermined at the
hand, by Mora Adong who alleged that she time of their passage. Procedural laws are
had been lawfully married to Boo in 1896. retrospective in that sense and to that
Gee introduced in evidence a document in extent. (Mun. Gov’t of Coron v. Carino, G.R.
Chinese stating the marriage ceremony that No. 65894, September 24, 1987)
took place in Amoy, China. Is the document
presented by Gee sufficient enough to prove 6. Emergency laws;
the Chinese marriage of Cheong Boo and Tan 7. When Expressly provided;
Dit?
5
Civil Law
8. Penal laws favorable to the accused new doctrine should be applied prospectively
provided, the accused is not a habitual and should not apply to parties who had relied
delinquent. on the old doctrine and acted on the faith
thereon. (Rabuya, 2009)
XPNs to the XPNs:
Lex prospicit, non respicit
If the application of the retroactive law:
1. Impairs obligation of contracts; The maxim means, “the law looks forward not
2. Is in the nature of ex post facto law or a backward”. The retroactive application of a law
bill of attainder, usually divests rights that have already become
3. Divests vested rights; or vested or impairs the obligations of contract and
4. Is constitutionally forbidden. (Black’s hence, is unconstitutional. (Chavez v. PEA, G.R.
Law Dictionary, 2009) No. 133250, May 6, 2003)
NOTE: In case of doubt, laws apply Retroactivity clause of the Family Code
prospectively. (2005, 2010 BAR)
Q: Accused-appellant Belen Mejares was The Family Code shall have retroactive effect
adjudged guilty of the crime of qualified theft insofar as it does not prejudice or impair vested
of cash and jewelry amounting to or acquired rights in accordance with the Civil
P1,056,308.00. Meanwhile, on August 29, Code or other laws. (FC, Art. 256)
2017, the President signed into law R.A. No.
10951 that sought to help indigent prisoners MANDATORY AND PROHIBITORY LAWS
and individuals accused of committing petty
crimes. It also increased the baseline Mandatory law
amounts and values of property and damage
to make them commensurate to the penalties A law or a provision in a statute is said to be
meted on the offenses committed in relation mandatory when disobedience to it, or want of
to them. Should the penalties under the new exact compliance with it, will make the act done
law benefit Mejares? under the statute absolutely void. (Black’s Law
A: YES. R.A. No. 10951 has since come into effect Dictionary, 2009)
during the pendency of this case. It likewise
specifically stipulates that its provisions shall Prohibitory law
have retroactive effect. Section 100 adds that
this retroactivity applies not only to persons A law or a provision in a statute is said to be
accused of crimes but have yet to be meted their prohibitory when it forbids a certain action.
final sentence, but also to those already "serving (Black’s Law Dictionary, 2009)
sentence by final judgment." This retroactivity is
in keeping with the principle already contained Permissive law
in Article 22 of the RPC that “penal laws shall
have a retroactive effect in so far as they favor A law or a provision in a statute is said to be
the person guilty of a felony.” permissive or directory when it allows certain
acts but does not command them. (Black’s Law
Given these circumstances, it is proper for this Dictionary, 2009)
Court to adjust the penalty to be imposed on
accused-appellant. (People v. Mejares, G.R. No. Violation of Mandatory or Prohibitory Laws
225735, January 10, 2018, as penned By J.
Leonen) GR: Acts executed against the provisions of
mandatory or prohibitory laws shall be void.
Non-retroactivity of laws vis-à-vis judicial (NCC, Art. 5)
decisions
XPNs: When the law:
Judicial decisions have no retroactive effect.
When a doctrine of the Supreme Court is 1. Itself authorizes its validity (e.g. lotto,
overruled and a different view is adopted, the sweepstakes);
2. Makes the act valid but punishes the violator equal protection of laws, freedom of
(e.g. Marriage solemnized by a person not contract, trial by jury). (Pineda, 2009)
authorized to do so);
3. Makes the act merely voidable; a. Rights of personality or human rights;
4. Declares the nullity of an act but recognizes b. Family rights; and
its effects as legally existing (e.g. Child born c. Patrimonial rights:
after the annulment of marriage is
considered legitimate). i. Real rights;
ii. Personal rights. (Rabuya, 2009)
WAIVER OF RIGHTS
Rights which cannot be waived
Waiver
1. Right to live and right to future support.
It is a voluntary and intentional relinquishment 2. Right to personality and family rights.
or abandonment of a known existing legal right, 3. Right to future inheritance.
advantage, benefit, claim or privilege, which
except for such waiver the party would have NOTE: This is especially so if the waiver is
enjoyed. intended to prejudice creditors. Hence, if an heir
repudiates the inheritance to the prejudice of his
The voluntary abandonment or surrender, by a own creditors, the latter may petition the court
capable person, of a right known by him to exist, to authorize them to accept it in the name of the
with the intent that such right shall be heir. (NCC, Art. 1052; Albano, 2013)
surrendered and such person forever deprived
of its benefit; or such conduct as warrants an NOTE: If a candidate for mayor agrees to split
inference of the relinquishment of such right; or his term of office with the vice-mayor to prevent
the intentional doing of an act inconsistent with the latter from running against him, the contract
claiming it. (Cruz & Co., Inc. v. HR Construction is void by reason of public policy. (Albano, 2013)
Corp., G.R. No. 187521, March 14, 2012)
Waiver of rights
NOTE: Waivers can be express or implied,
however, it cannot be presumed. It must be GR: Rights may be waived.
clearly and convincingly shown, either by
express stipulation or acts admitting no other XPNs:
reasonable explanation. 1. If waiver is:
a. Contrary to law, public order, public
Right policy, morals or good customs;
b. Prejudicial to a third person with a
It is a legally enforceable claim of one person right recognized by law. (e.g. If A
against another, that the other shall do a given owes B P10M, B cannot waive the
act, or shall not do a given act. (Pineda, 2009) loan if B owes C and B has no other
assets).
Kinds of rights
2. If the right is:
1. Natural Rights – Those which grow out of a. A natural right, such as right to life;
the nature of man and depend upon b. Inchoate, such as future inheritance.
personality (e.g. right to life, liberty, privacy,
and good reputation); A person may waive any matter which affects his
2. Political Rights – Consist in the power to property, and any alienable right or privilege of
participate, directly or indirectly, in the which he is the owner or which belongs to him
establishment or administration of or to which he is legally entitled, whether
government (e.g. right of suffrage, right to secured by contract, conferred with statute, or
hold public office, right of petition); and guaranteed by constitution, provided such rights
3. Civil Rights – Those that pertain to a person and privileges rest in the individual, are
by virtue of his citizenship in a state or intended for his sole benefit, do not infringe on
community (e.g. property rights, marriage, the rights of others, and further provided the
waiver of the right or privilege is not forbidden
7
Civil Law
by law, and does not contravene public policy. Pension and Gratuity Management Center (PGMC)
(Cruz & Co., Inc. v. HR Construction Corp., G.R. No. of the Armed Forces of the Philippines, G.R. No.
187521, March 14, 2012) 189516, June 08, 2016, as penned by J. Leonen)
1. Waiving party must actually have the right It is the abrogation of an existing law by a
he is renouncing; legislative act. (Black’s Law Dictionary, 2009)
2. He must have full capacity to make the
waiver; Laws are repealed only by subsequent ones, and
3. Waiver must be clear and unequivocal; their violation or non-observance shall not be
4. Waiver must not be contrary to law, public excused by disuse, or custom or practice to the
order, public morals, etc.; and contrary. (Art. 7, 1st par.)
5. When formalities are required, they must be
complied with. Ways of repealing laws
Q: Edna filed an action for support against 1. Express - If the law expressly provides for
Colonel Otamias. A deed of assignment was such;
executed by Otamias where he waived 50% 2. Implied - If the provisions of the subsequent
of his pension benefits in favor of Edna and law are incompatible or inconsistent with
his children. The RTC issued a notice of those of the previous law, provided, it is
garnishment to AFP Pension and Gratuity impossible to reconcile the two laws.
Management Center and ordered the
automatic deduction of support from the Requisites of an implied repeal
pension benefits of Colonel Otamias. The CA
annulled the order of the RTC and cited PD 1. The laws cover the same subject matter; and
No. 1638 which provides for the exemption 2. The latter is repugnant to the earlier.
of the monthly pension of retired military (Rabuya, 2009)
personnel from execution and attachment.
Did Colonel Otamias validly waive the NOTE: Implied repeals are NOT to be favored
exemption granted by PD no. 1638 upon the because they rest only on the presumption that
execution of the deed of assignment? because the old and the new laws are
incompatible with each other, there is an
A: YES. Under Article 6 of the Civil Code, rights intention to repeal the old. (Rabuya, 2009)
may be waived, unless the waiver is contrary to
law, public order, public policy, morals or good Q: Sunrise executed an undertaking to
customs, or prejudicial to a third person with a construct a city road at its own expense,
right recognized by law. When Colonel Otamias subject to reimbursement through tax
executed the Deed of Assignment, he effectively credits. The trial court issued a writ of
waived his right to claim that his retirement preliminary injunction to enjoin persons
benefits are exempt from execution. The right to from obstructing Sunrise Garden in
receive retirement benefits belongs to Colonel proceeding with the construction of the city
Otamias. His decision to waive a portion of his road. The Court of Appeals directed the
retirement benefits does not infringe on the Division Clerk of Court to issue the writ of
right of third persons, but even protects the preliminary injunction enjoining
right of his family to receive support. The Deed respondents, its agents or representatives
of Assignment executed by Colonel Otamias was from implementing the trial court’s amended
not contrary to law; it was in accordance with writ of injunction. Sunrise Garden cited PD
the provisions on support in the Family Code. No. 1818 which prohibits a court from
Hence, there was no reason for the AFP PGMC issuing preliminary injunction in any case
not to recognize its validity. (Edna Mabugay- involving an infrastructure project. When
Otamias, Jeffren M. Otamias and Minor Jemwel M. this case was filed, RA No. 8975 was already
Otamias, represented by their Mother Edna effective which provides for an express
Mabugay Otamias v. Republic of the Philippines, repeal of PD No. 1818. RA No. 8975 prohibits
represented by Col. Virgilio O. Domingo, in his the issuance of preliminary injunction
capacity as the Commanding Officer of the
against the government or any person to Conflict between general and special laws
restrain the development of any national
government project. Is the allegation of If the general law was enacted prior to the
Sunrise acceptable? special law, the latter is considered the
exception to the general law. If the general law
A: NO. PD No. 1818 has been repealed by RA No. was enacted after the special law, the special law
8975. The repealing clause of RA No. 8975 remains.
provides for an express repeal. The Supreme
Court has held that implied repeals are not XPNs:
favored, and "the failure to add a specific 1. There is an express declaration;
repealing clause indicates that the intent was not 2. There is a clear, necessary and irreconcilable
to repeal any existing law." The express repeal of conflict; or
Presidential Decree No. 1818 clearly indicates 3. The subsequent general law covers the whole
Congress' intent to replace Presidential Decree subject and is clearly intended to replace the
No. 1818 with Republic Act No. 8975. The new special law on the matter. (Rabuya, 2009)
law covers only national government
infrastructure projects. This case involves a local Self-lapsing laws
government infrastructure project. Hence,
Sunrise’s contention is untenable. (Sunrise Laws that provide for their limited application
Garden Corporation v. Court of Appeals And First (e.g. House Rental Law, Annual Appropriations
Alliance Real Estate Development, Inc., G.R. No. Act, Import Control Law).
158836, September 30, 2015, as penned by J.
Leonen) JUDICIAL DECISIONS
The 1st law is The 1st law is It is adherence to judicial precedents. Once a
NOT revived revived unless question of law has been examined and decided,
Effect of unless otherwise it should be deemed settled and closed to
Repeal expressly provided. further argument. However, when in the light of
provided so. changing conditions, a rule has ceased to be
9
Civil Law
However, in criminal prosecutions, the judge GR: A custom must be proved as a fact,
must dismiss the case if a person is accused of a according to the rules of evidence. (NCC, Art. 12)
non-existent crime following the maxim “nullum
crimen, nulla poena sine lege. (Rabuya, 2009) XPN: Courts may take judicial notice of a custom
if there is already a decision rendered by the
NOTE: This duty, however, is not a license for same court recognizing the custom.
courts to engage in judicial legislation. The duty
of the courts is to apply or interpret the law, not Requisites before such custom could be
to make or amend it. considered a source of right
In case of doubt in the interpretation or NOTE: Provided said customs are not contrary
application of laws, it is presumed that the to law, public morals, etc.
lawmaking body intended right and justice to
prevail. (NCC, Art. 10) (2003 BAR) Non-applicability of customs in criminal
cases
In case of silence, obscurity or insufficiency
of the law with respect to a particular
In criminal cases, customs cannot be applied January 31, 2008 to January 31, 2009. (Rabuya,
because of the maxim nullum crimen nulla 2009)
poena sine lege (There is neither crime nor
punishment, without a law). 2. Month – 30 days, unless designated by their
name, in which case, they shall be computed
LEGAL PERIODS according to the number of days which they
respectively have;
Computation of period 3. Day – 24 hours;
4. Nighttime – from sunset to sunrise;
1. Year – 12 calendar months. (CIR v. 5. Week – 7 successive days regardless of
Primetown Property Group, Inc., G.R. No. which day it would start;
162155, August 28, 2007) 6. Calendar week – Sunday to Saturday.
NOTE: In the said case, the Supreme Court NOTE: In the computation of period, the first
declared that the provision of Section 31, day shall be excluded, and the last day included.
Chapter VII, Book I of the Administrative Code of
1987, being a more recent law, governs the If the last day falls on a Sunday or a legal
computation of legal periods with respect to holiday
counting “a year.”
If the act to be performed within the period is:
A Calendar Month is “a month designated in the
calendar without regard to the number of days it 1. Prescribed or allowed by:
may contain.” It is the “period of time running a. The Rules of Court;
from the beginning of a certain numbered day of b. An order of the court; or
the next month, and if there is not sufficient c. Any other applicable statute.
number of days in the next month, then up to
and including the last day of that month.” The last day will automatically be the next
working day.
Illustration: One calendar month from
December 31, 2007 will be from January 1, 2008 2. From a contractual relationship – The act
to January 31, 2008; one calendar month from will still become due despite the fact that the
January 31, 2008 will be from February 1, 2008 last day falls on a Sunday or a legal holiday.
until February 29, 2008. Hence, twelve calendar This is because obligations arising from
months from December 31, 2007 is December contracts have the force of the law between
31, 2008; while twelve calendar months from the contracting parties.
11
Civil Law
Private International Law vs. Penal laws and those of public security and
Public International Law safety shall be obligatory upon all who live or
sojourn in Philippine territory, subject to the
Two views principles of international law and to treaty
stipulations. (NCC, Article 14)
1. Monist school - Both subjects are essentially
13
Civil Law
3. Case involves any of the exceptions to the Q: Thousands of banana plantation workers
application of the foreign law. filed a complaint against 11 corporations
including Chiquita Brands. They claimed that
Instances: they have been exposed to a certain pesticide
which caused serious and permanent
1. When the foreign law, judgment or contract damage to their reproductive system. Before
is: pre-trial, the parties entered into a
compromise agreement which explicitly
a. Contrary to sound and established stated that the law which shall govern its
policy of the forum interpretation is the laws of Texas, United
b. Contrary to almost universally States . On July 10, 2009, the RTC issued an
conceded principles of morality (contra Order directing the implementation of the
bonus mores) Writ of Execution against Chiquita Brands
c. Involves procedural matters and its subsidiaries and affiliates who are
d. Purely fiscal or administrative matters allegedly subsidiarily liable under the laws of
e. Involves real or personal property Texas. Is the RTC correct in applying the laws
situated in the forum of Texas?
2. When the application of the foreign law, A: NO. Under the Compromise Agreement, the
judgment or contract: law that shall govern its interpretation is the law
of Texas, United States. In this jurisdiction,
however, courts are not authorized to take
a. May work undeniable justice to the
judicial notice of foreign laws. The laws of a
citizens/residents of the forum
foreign country must be properly pleaded and
b. May work against vital interests &
proved as facts. Otherwise, under the doctrine of
national security of the state of the
processual presumption, foreign law shall be
forum
presumed to be the same as domestic law.
Unfortunately, there is no evidence that Texan
Doctrine of Processual Presumption of law
las had been proven as a fact. Hence, the RTC
should have applied the Philippine law. (Chiquita
When the proper foreign law has not been
Brands, et al. v. RTC of Davao City, G.R. No.
properly proved, the court of the forum may
189102, June 7, 2017, as penned by J. Leonen)
presume that said foreign law is the same as the
law of the forum that said court can now apply.
Q: PNCC and Asiavest Holdings (M) Sdn. Bhd.
It applies when the foreign law is not alleged or
(Asiavest Holdings) caused the incorporation
if alleged, it is not proved.
of an associate company known as Asiavest-
CDCP Sdn. Bhd. (Asiavest CDCP), through
Where a foreign law is not pleaded or, even if
which they entered into contracts to
pleaded, is not proved, the court of the forum
construct rural roads and bridges for the
may presume that the foreign law applicable to
State of Pahang, Malaysia. In connection with
the case is the same as the local or domestic law.
this construction contract, PNCC obtained
various guarantees and bonds from Asiavest
Foreign laws do not prove themselves in our
Merchant Bankers (M) Berhad to guarantee
jurisdiction and our courts are not authorized to
the due performance of its obligations. The
take judicial notice of them. Like any other fact,
four contracts of guaranty stipulate that
they must be alleged and proved.
Asiavest Merchant Bankers (M) Berhad shall
guarantee to the State of Pahang "the due
A Philippine court may take judicial notice of a
performance by PNCC of its construction
foreign law, as when the laws are already within
contracts . . . and the repayment of the
its actual knowledge, such as when they are well
temporary advances given to PNCC." These
and generally known or they have been actually
contracts were understood to be governed by
ruled upon in other cases before it and none of
the laws of Malaysia. There was failure to
the parties concerned claim otherwise. (PCIB v.
perform the obligations under the
Escolin, G.R Nos. L-27860 & 27896, September 30,
construction contract, prompting the State of
1975)
Pahang to demand payment against Asiavest
Merchant Bankers (M) Berhad's performance
15
Civil Law
within its territory to the legislative, executive, manner indicated in the provision. (Sempio-diy,
or judicial acts of another state, having due 2004)
regard both to international duty and
convenience and to the rights of its own citizens Kinds of conflict rules
or of other persons who are under the
protection of its laws. (Agpalo. 2004) 1. One-sided rule – indicates when the
Philippine law will apply,
Kinds:
e.g., Article 15 and Art. 818 of the Civil Code
a. Comity based on reciprocity only apply to Filipinos
b. Comity based on the persuasiveness of the
foreign judgment. 2. All-sided rule – indicates whether to apply
the local law or the proper foreign law.
2. Theory of Vested Rights - Courts enforce
not the foreign law or foreign judgment but Characterization (Doctrine of Qualification
the rights vested under such law or or Classification)
judgment. Thus, rights acquired in one
country must be recognized and legally It is the process of deciding whether or not the
protected in other countries. The forum will facts relate to the kind of question specified in a
not apply the foreign law but will simply conflicts rule. (Saudi Arabian Airlines v. CA, G.R.
recognize the right vested by said law. No. 122191, October 8, 1998)
17
Civil Law
which one is habitually and principally a position under Sec.40 of the LGC. But,
resident, or the nationality of the country with COMELEC en banc reversed the said decision.
which in the circumstances one appears to be in It found that Manzano acquired US
act most closely connected. (Hague Convention citizenship by operation of the US
on Conflict Nationality Lawes, Art. 5) Constitution. He was also a natural born
Filipino Citizen by operation of 1935
Q: On February 8, 1961, Lau Yuen Yeung Constitution, as his father and mother were
applied for a passport visa to enter the Filipinos at the time of his birth. At the age of
Philippines as a non-immigrant. She stated 6 his parents brought him in the country and
that she desired to take a pleasure trip to registered him as an alien, but this however
visit her great grand uncle. On the date of her did not result in the loss of his Phil.
arrival, Asher Cheng filed a bond of P1,000 to Citizenship, as he did not renounce his Phil.
undertake that Lau would depart the Citizenship and did not take an oath of
Philippines on or before the expiration of her allegiance to the US. At the age of Majority,
authorized period of stay or within the Manzano registered himself as a voter and
period as in the discretion of the Commission voted in the elections of 1992, 1995 and
of Immigration might properly allow. After 1998, which effectively renounced his US
repeated extensions, Lau was allowed to stay Citizenship under American Law. Is Dual
in the country until February 13, 1962. On citizenship a ground for disqualification?
January 25, 1962, she contracted a marriage
with Moy Ya Lim Yao, a Filipino citizen. As an A: NO. Dual citizenship is different from dual
alien woman, may Lau be considered as a allegiance. The phrase “dual citizenship” in RA
citizen of the Philippines by virtue of her 7160 must be understood as referring to “dual
marriage to a Filipino? allegiance”, and persons with dual citizenship do
not fall under this disqualification. Dual
A: YES. An alien woman may be deemed a Citizenship is involuntary, it arises out of
citizen of the Philippines by virtue of her circumstances like birth or marriage, while dual
marriage to a Filipino citizen only if she allegiance is a result of a person’s volition. It is a
possesses all the qualifications and none of the situation wherein a person simultaneously owes,
disqualifications specified in the law, because by some positive act, loyalty to 2 or more states.
these are the explicit requisites provided by law
for an alien to be naturalized. Section 15 of the Also, Manzano upon filing his certificate for
Revised Naturalization Law (Commonwealth Act candidacy has elected Phil, Citizenship thus
No. 473) provides that “Any woman who is now terminating his dual citizenship. Particularly, he
or may hereafter be married to a citizen of the made these statements: “I am a Filipino citizen….
Philippines, and who might herself be lawfully Natural born. I am not a permanent resident of,
naturalized shall be deemed a citizen of the or immigrant to, a foreign country. I am eligible
Philippines.” Section 15 was obviously to accord for the office I seek to be elected…I will support
to an alien woman, by reason of her marriage to the Constitution of the Philippines and will
a Filipino, a privilege not similarly granted to maintain true faith and allegiance thereto…”.
other aliens. (Moy Ya Lim Yao “Alias” Edilberto Such statement was sufficient to revoke his
Aguinaldo Lim And Lau Yuen Yeung v. American citizenship. (Mercado v. Manzano &
Commissioner of Immigration, G.R. No. L-21289 COMELEC, G.R. No. 135083 May 26, 1999)
October 4, 1971)
Q: Teodoro Cruz was born in San Clemente,
Q: Ernesto S. Mercado and Eduardo Manzano Tarlac, to Filipino parents making him a
were candidates for vice mayor of the City of natural-born citizen of the Philippines.
Makati. Manzano won the elections, however However, respondent Cruz was enlisted in
his proclamation was suspended because a the United States Marine Corps and, without
certain Ernesto Mamaril filed a petition for the consent of the Republic of the
his disqualification and alleged that Manzano Philippines, took an oath of allegiance to the
was not a citizen of the Philippines but of the United States. As a consequence, he lost his
US. COMELEC 2nd Division granted the Filipino Citizenship by his naturalization as a
petition and cancelled the certificate of U.S. citizen in connection with his service in
candidacy on the grounds that dual citizens the U.S. Marine Corps. Thereafter,
are disqualified from running any elective respondent Cruz reacquired his Philippine
19
Civil Law
21
Civil Law
Asistio alleged that he is a resident of No. 1. Laws relating to family rights and duties, or
116, P. Zamaro St., Caloocan City, and a to the status, condition, and legal capacity of
registered voter of Precinct No. 1811A persons are binding upon citizens of the
because he mistakenly relied on the address Philippines, even though living abroad.
stated in the contract of lease with Angelina (NCC, Art. 15)
dela Torre Tengco. Should Asistio be 2. All marriages solemnized outside the
excluded from the permanent list of voters of Philippines in accordance with the laws in
Caloocan city for failure to comply with the force in the country where they were
residency required by law? solemnized, and valid there as such, shall
also be valid in this country, except those
A: NO. Residency requirements for a voter are: prohibited under Articles 35(1), (4), (5) and
one, a least one-year residence in the (6), 36, 37, and 38. (FC, Art. 26)
Philippines; and two, at least, six months in the
place where the person intends to two. GR: Under Article 26 of the Family Code, all
Residence, as used in the law pre-scribing the marriages solemnized outside the Philippines, in
qualifications for suffrage and for elective office, accordance with the laws in force in the country
is doctrinally settled to mean domicile, where they were solemnized, and valid there as
importing not only an intention to reside in a such, is also valid in the Philippines.
fixed place but also personal presence in that
place, coupled with conduct indicative of such XPN: If the marriage is void under Philippine
intention inferable from a person’s acts, law, the marriage is void even if it is valid in the
activities, and utterances. country where the marriage was solemnized,
viz:
Domicile denotes a fixed permanent residence
where, when absent for business or pleasure, or 1. Those contracted by any party below 18
for like reasons, one intends to return. In the years of age even with the consent of parents
consideration of circumstances obtaining in each or guardians; [FC, Art. 35 (1)]
particular case, three rules must be borne in 2. Those bigamous or polygamous marriages
mind, namely: (1) that a person must have a not falling under Art. 41, FC; [FC, Art. 35 (4)]
residence or domicile somewhere; (2) once 3. Those contracted through mistake of one
established, it remains until a new one is contracting party as to the identity of the
acquired; and (3) that a person can have but one other; [FC, Art. 35 (5)]
residence or domicile at a time. 4. Those subsequent marriages that are void
under Art. 53, FC; [FC, Art. 35 (6)]
Asistio has always been a resident of Caloocan 5. Marriage contracted by any party who, at the
city for more than 72 years. Asistio served in time of the celebration, was psychologically
public office of Caloocan City in 1992, 1995, incapacitated to comply with the essential
1998, 2004 and 2007. In all of these occasions, marital obligations of marriage; (FC, Art. 36)
Asistio cast his vote in the same city. 6. Incestuous marriage; (FC, Art. 37) and
7. Void ab initio marriages or reasons of public
Taking these circumstances, it cannot be denied policy. (FC, Art. 38)
that Asistio has qualified, and continues to
qualify, as a voter of Caloocan city. There is no Effect of laws, judgments promulgated or
showing that he has established, or that he had conventions agreed upon in a foreign country
consciously and voluntarily abandoned his on Philippine prohibitive laws
residence in Caloocan City. Thus, he should
remain in the list of permanent voters of GR: Prohibitive laws concerning persons, their
Caloocan city. (Luis Asistio v. Hon. Thelma Canlas acts, or property and laws which have for their
Trinidad-Pe Aguirre, G.R. No. 191124, April 27, object public order, public policy or good
2010) customs are not rendered ineffective by laws,
judgments promulgated or conventions agreed
FAMILY LAW AND PERSONAL CAPACITY upon in a foreign country.
Applicable Civil Code Provisions XPN: Art. 26 par. 2 of the Family Code (FC), on
mixed marriages where the foreigner obtained a
divorce decree abroad and was thereby
23
Civil Law
Law that governs the validity of marriage in 2. If the husband alone changes his
case of mixed marriages nationality after the marriage – The law of
the last common nationality of the spouses
If the marriage is valid would govern.
under the law of one of
the spouses while void 3. If the spouses retain their different
under the law of the nationalities after the marriage – National
Marriage other, the validity of the law of both spouses should govern.
between a marriage should be
Filipino and upheld, unless the CONTRACTS
foreigner marriage is universally
ABROAD incestuous or highly The extrinsic or formal validity – is governed
immoral (the same rule by lex loci celebrationis or lex loci contractus.
as to foreigners who get (NCC, Art. 17)
married abroad).
Lex loci contractus
The national law of the
Filipino – Philippine It means “the law of the contract;” the law that
Marriage
law should be governs the intrinsic validity of a contract.
between a
followed – otherwise
Filipino and a
the country’s public It may be determined either through;
foreigner in the
policy would be
PHILIPPINES
violated. 1. Lex voluntatis or the law specifically
stipulated by the parties in their contract; or
Ipso facto becomes a 2. Lex intentionis or the law intended by the
Filipino citizen if she parties in the absence of an express
does not suffer under stipulation.
any disqualification for
naturalization as a Law that governs the validity of contracts
Alien woman who
marries a Filipino citizen.
Filipino husband
Personal relations:
Contract Capacity Intrin
National law of the Extrinsic
of sic
husband shall govern validity
parties validit
(GR).
y
Law that governs the personal relations of Barter, Lex situs Lex situs Lex
25
Civil Law
2. The will of an alien who is abroad produces 2. The testator has his domicile in the foreign
effect in the Philippines if made with the country and not in the Philippines;
formalities prescribed by the law of the 3. The will has been admitted to probate in
place in which he resides, or according to such country;
the formalities observed in his country, or in 4. The fact that the foreign tribunal is a probate
conformity with those which this Code court; and
prescribes. (NCC, Art. 816) 5. The laws of a foreign country on procedure
and allowance of wills. (Suntay v. Suntay, G.R.
NOTE: Proof that the will conforms to the laws No. 132524, December 29, 1998)
mentioned is imperative. (Salud Teodoro Vda. De
Perez v. Hon. Tolete, G.R. No. 76714, June 2, 1994) RENVOI
3. A will made in the Philippines by a citizen or A procedure whereby a jural matter presented is
subject of another country, which is referred by the conflict of laws rules of the
executed in accordance with the law of the forum to a foreign state, the conflict of laws rules
country of which he is a citizen or subject, of which in turn refers the matter back to the
and which might be proved and allowed by law of the forum (remission) or a third state
the law of his own country, shall have the (transmission). (Coquia, 2000) Thus, it is clear
same effect as if executed according to the that renvoi can arise only from conflict of rules
laws of the Philippines. (NCC, Art. 817) and not from internal rules.
NOTE: Probate is an adjudication that the last Q: What will the Court do, if it is confronted
will and testament of a person was executed with a case with a “Renvoi” Problem?
with all the formalities required by law. It does
not pass upon the validity of the provisions of A:
the will. The disallowance of a will being 1. Reject the renvoi – If the conflict rules of the
essentially procedural in character, the law of forum refer later the case to the law of
the forum will govern the procedural matters. another state, it is deemed to mean only the
However, the court will look into the law of the internal law of that state. Thus, the court
foreign state where the suit was made as to will apply the foreign law. (Paras, 1990)
whether the extrinsic requirements in the 2. Accept the renvoi – If the conflict rules of the
execution of the will have been complied with. forum refer the case to the law of another
state, it is deemed to include the totality of
4. Joint wills executed by Filipinos in a foreign the foreign law (internal law and conflict of
country shall not be valid in the Philippines, law rules). Thus, the court will recognize the
even though authorized by the laws of the referral back and apply the local law. (Ibid.)
country where they may have been 3. Follow the Theory of Desistance – also
executed. (NCC, Art. 819) referred to as “Mutual Disclaimer of
Jurisdiction Theory.” The forum court upon
Q: How can a will executed abroad be made reference to another state’s law sees that
effective in the Philippines? such law is limited in application to its own
nationals domiciled in its territory and has
A: A will made in a foreign country may be no provision for application to nationals
probated in the Philippines after sufficient proof domiciled outside of the territory. Hence the
is presented showing that the will was duly local court will apply the local law.
executed in the manner required by law and that
the testator had capacity at the same time he NOTE: This has the same result as the
executed the will. acceptance of the Renvoi Doctrine but the
process used by the forum court is to desist
Evidence necessary for the allowance of wills applying the foreign law. (Ibid.)
which have been probated outside the
Philippines 4. Make use of the Foreign Court Theory –
Forum a court assumes the same position
1. Due execution of the will in accordance with that the foreign court would take if the case
the foreign laws; is litigated in the foreign state.
27
Civil Law
Civil Code states that the will of an alien who is extra-territoriality is Art. 2 of the RPC.
abroad produces effect in the Philippines if
made in accordance with the formalities Q: May a Filipino convicted of a crime abroad
prescribed by the law of the place where he serve his sentence in the Philippines?
resides, or according to the formalities observed
in his country. (Palaganas v. Palaganas, G.R. No. A: NO. Under the territoriality principle, a crime
169144, January 26, 2011) is punishable only in the territorial jurisdiction
where it was committed. Allowing a Filipino
REVOCATION OF WILLS convicted abroad to serve sentence in the
Philippines will be tantamount to recognizing
Rules if a person dies testate and enforcing a foreign judgment which is penal
in nature.
1. If revocation takes place in the
Philippines, whether the testator is Protective Theory
domiciled in the Philippines or in some
other country, it is valid if in accordance Any state whose national interests are adversely
with Philippine laws. affected by the crime may protect itself by
prosecuting and punishing the offender. The
2. If revocation takes place outside the Philippines adheres to this theory to a limited
Philippines by a testator domiciled in the extent. States claim extraterritorial criminal
Philippines, it is valid when it is in jurisdiction to punish crimes committed abroad
accordance with the laws of the which are prejudicial to their national security
Philippines. or vital interests, even where the offenses are
perpetrated by non-nationals. Jurisdiction is
3. Revocation done outside the Philippines, vested in the state whose national interests are
by a testator who does not have his injured or national security compromised.
domicile in this country, is valid when it is
done according to the: Universality Principle
a. Law of the place where the will was A state has extraterritorial jurisdiction over all
made; or crimes regardless of where they are committed
b. Law of the place where the testator had or who committed them, whether nationals or
his domicile at the time of revocation. non-nationals. This is, however, generally
forbidden under international law. Jurisdiction
Rule if a person dies intestate is vested with the state which has custody of
offender who committed universal crimes such
Follow lex nationali or the law of the nationality as piracy, genocide, etc.
of the decedent.
Bigamy is punishable only when committed
CRIMES in the Philippines
29
Civil Law
foreign tribunal or court in case the appointed liquidators, which was an internal
judgment is being sought in Philippine affair that required no prior recognition in a
Courts separate action. There was no enforcement of a
foreign judgment when one of the appointed
1. In a judgment or final order upon a specific liquidators terminated the legal services of
thing, the judgment or final order is private respondent Picazo Law Office and
conclusive upon the title to the thing; and engaged in its stead petitioner Quasha Law
2. In a judgment or final order against a person, Office to be the duly authorized counsel of
the judgment or final order is presumptive petitioner LIRL.
evidence of a right as between the parties
and their successors in interest by a What is involved is the prerogative of petitioner
subsequent title. LIRL, through its duly authorized representative
-- which, in this case, is its appointed liquidators
NOTE: In either case, the judgment or final order -- to terminate and engage the services of a
may be repelled by evidence of want of counsel, which is an internal affair that requires
jurisdiction, want of notice to a party, collusion, no prior recognition in a separate action.
raud or clear mistake of law or fact. (ROC, Rule (Quasha Ancheta Pea et al v. the Special Sixth
39, Sec. 48) Division of the Court of Appeals, GR No. 182013,
December 4, 2009)
Q: The Special Sixth Division of the Court of
Appeals refused to recognize the Entry of Q: Gerbert, a naturalized Canadian citizen,
Appearance of Quasha Law Office as the new married Daisylyn, a Filipino, but
counsel of Legend International Resorts, subsequently left for Canada due to work and
Limited (LIRL). It said that the appointment other professional commitments. When he
of LIRL’s joint and several liquidators were returned to the Philippines, he discovered
made pursuant to an Order of the Hong Kong that Daisylyn was already romantically
Court. Since it was a foreign judgment, involved with another man. Hurt and
Philippine Courts could not take judicial disappointed, Gerbert returned to Canada
notice thereof as the final orders of foreign and filed a petition for divorce which was
tribunals could only be enforced in the eventually granted. Two years later, he had
Philippines after appropriate proceedings. fallen in love with another Filipina and
wished to marry her. He then went to the
The CA concluded that Picazo Law Office was civil registry to register the divorce decree of
the only counsel entitled to represent and his marriage certificate with Daisylyn.
file pleadings for and on behalf of petitioner
LIRL. Quasha Law Office and LIRL then filed a However, despite the registration, an official
special civil action for Certiorari under Rule of NSO informed Gerbert that the former
65 seeking to reverse and set aside on the marriage still subsists under the Philippine
ground of grave abuse of discretion law until there has been a judicial
amounting to lack or excess of jurisdiction of recognition of the Canadian divorce by a
the Special Sixth Division of the CA. Did the competent judicial court in view of NSO
special CA Division gravely abuse its Circular No. 4, series of 1982. Consequently,
discretion in considering the Orders of the he filed a petition for judicial recognition of
Hong Kong Court appointing liquidators for foreign divorce and/or declaration of
LIRL involved enforcement and recognition dissolution of marriage with the RTC. RTC
of a foreign judgment? denied the same and concluded that Gerbert
was not the proper party to institute the
A. NO. It has already been settled in the action for judicial recognition of the foreign
aforesaid two Decisions that the Orders of the divorce decree as he is a naturalized
Hong Kong Court appointing liquidators for Canadian citizen. It ruled that only the
petitioner LIRL did not involve the enforcement Filipino spouse can avail of the remedy,
of a foreign judgment. The act of terminating the under the second paragraph of Article 26 of
legal services of private respondent Picazo Law the Family Code.
Office and engaging in its place petitioner
Quasha Law Office was a mere exercise of Does the second paragraph of Article 26 of
petitioner LIRLs prerogative, through its the Family Code extend to aliens the right to
31
Civil Law
Elements of abuse of right: (L-B-P-A) Generally, laws provide for their own sanctions
and methods of enforcement thereof. Article 20
1. There is a Legal right or duty; applies only in cases where the law does not
2. Such duty is exercised in Bad faith; provide for its own sanctions.
3. It is for the sole intent of Prejudicing or
injuring another; In view of the general sanction provided for
4. The Absence of good faith is essential to under Art. 20, a person however does not have
abuse of right. (Rabuya, 2009) an absolute right to be indemnified, it is
essential that some right of his be impaired.
Principle of Damnum Absque Injuria Without such, he is not entitled to
indemnification. (Pineda, 2009)
It means damage without injury. One who
merely exercises one’s rights does no actionable Contra Bonus Mores (1996, 1998, 2006, 2009
injury and cannot be held liable for damages. Bar)
(Amonoy v. Gutierrez), G.R. No. 140420, February
15, 2001) Any person who willfully causes loss or injury to
another in a manner that is contrary to morals,
Injury is the illegal invasion of a legal right; good customs or public policy shall compensate
damage is the loss, hurt, or harm which results the latter for the damage. (NCC, Art. 21) It fills
from the injury; and damages are the countless gaps in the statutes, which leave so
recompense or compensation awarded for the many victims of moral wrongs helpless, even
damage suffered. (Panteleon v. American Express, though they suffered material and moral
G.R. No. 174269, August 25, 2010) damages. (Tolentino, 1987)
There can be damage without injury in instances Elements of an action under Art. 21:
which the loss or harm was not the result of a
violation of a legal duty. In such cases, the 1. There is an act which is legal;
consequences must be borne by the injured 2. Such act is contrary to morals, good customs,
person alone (Ibid.) public order or policy; and
There is no civil liability for moral negligence. A A breach of promise to marry per se is not an
person is required to act with prudence towards actionable wrong. But where a man's promise to
others, but not with charity; the law imposes marry is the proximate cause of the acceptance
diligence and not altruism. Hence, the failure to of his love by a woman and his representation to
make sacrifices or egoism does not constitute a fulfill that promise thereafter becomes the
source of liability. (Tolentino, 1987) proximate cause of the giving of herself unto him
in a sexual congress, proof that the promise was
Illustration: A person who fails to render only a deceptive device to inveigle her to obtain
assistance to a drowning person or to the victim her consent to the sexual act, could justify the
of an accident, cannot be held liable for damages. award of damages pursuant to Art. 21 not
(3 Colin & Capitant 826) because of such promise to marry but because of
the fraud and deceit behind it and the willful
While a person can be absolved from criminal injury to her honor and reputation which
liability because his negligence was not proven followed thereafter. It is essential, however, that
beyond reasonable doubt, he can still be held such injury should have been committed in a
civilly liable if his negligence was established by manner contrary to morals, good customs or
preponderance of evidence. The failure of the public policy. (Gashem Shookat Baksh v. CA, G.R.
evidence to prove negligence with moral No. 97336, February 19, 1993)
certainty does not negate (and is in fact
compatible with) a ruling that there was Q: Soledad a high school teacher used to go
preponderant evidence of such negligence. And around together with Francisco who was
that is sufficient to hold him civilly liable. almost ten (10) years younger than her.
(Dominguez v. People, G.R. No. 167546, July 17, Eventually, intimacy developed between
2009) them after Soledad became an underwriter
in Cebu. One evening, they had sexual
Breach of promise to marry intercourse in Francisco’s cabin on board
M/V Escaño, to which he was then attached
GR: A breach of promise to marry per se is not an as apprentice pilot. After a few months,
actionable wrong. Soledad advised Francisco that she was
pregnant, whereupon he promised to marry
There is no provision in the NCC authorizing an her. Later their child was born. However,
action for breach of promise to marry. subsequently, Francisco married another
woman. Soledad filed a complaint for moral
XPN: When the act constitutes one where damages for alleged breach of promise to
damages pursuant to Art. 21 of the NCC may be marry. May moral damages be recovered for
recovered and is not a mere breach of promise breach of promise to marry.
to marry, such as:
A: NO. It is the clear and manifest intent of our
1. Where the woman is a victim of moral law-making body not to sanction actions for
seduction. (Gashem Shookat Baksh v. CA, G.R. breach of promise to marry. Francisco is not
No. 97336, February 19, 1993) morally guilty of seduction, not only because he
was approximately 10 years younger, and a
2. Where one formally sets a wedding and go mere apprentice pilot when he became intimate
through and spend for all the preparations with the 36-year old complainant, who is a
and publicity, only to walk out of it when the highly enlightened former high school teacher
matrimony was about to be solemnized. and a life insurance agent but, also, because, the
(Wassmer v. Velez, G.R. No. L-20089, December Court of First Instance found that, complainant
26, 1964) “surrendered herself” to Francisco because,
“overwhelmed by her love” for him, she “wanted
3. Where the woman is a victim of abduction to bind” “by having a fruit of their engagement
and rape, and thereafter the accused even before they had the benefit of clergy.
promised to marry her to avoid criminal (Hermosisima v. CA, G.R. No. L-14628, September
33
Civil Law
NOTE: To constitute seduction there must be The underlying reason is that the service vehicle
some sufficient promise or inducement and the was precisely used in the employer's business;
woman must yield because of the promise or any personal benefit obtained by the employee
other inducement. If she consents merely from from its use is merely incidental. Mekeni may
carnal lust and the intercourse is from mutual not enrich itself by charging Locsin for the use of
desire, there is no seduction. its vehicle which is otherwise absolutely
necessary to the full and effective promotion of
Prohibition against Unjust Enrichment its business. (Locsin v. Mekeni Food Corporation,
G.R. No. 192105, 09 December 2001)
No one shall unjustly enrich himself at the
expense of another. (Pacific Merchandising Corp. Q: Ludolfo owns a construction company.
v. Consolacion Insurance and Surety Co., Inc., G.R. One day, Carlos visited Ludolfo in his office
No. L-30204, October 29, 1976) wherein, he invited Ludolfo to advance
₱2,000,000.00 for a subcontract of a
NOTE: The article applies only if: ₱50,000,000.00 river-dredging project in
Guinobatan. He guaranteed Ludolfo that
1. Someone acquires or comes into possession Ludolfo’s construction company will be
of “something” which means delivery or subcontracted by the lowest bidder of the
acquisition of things”; and project. Ludolfo accepted the proposal.
2. Acquisition is undue and at the expense of Ludolfo requested his bank to release
another, which means without any just or ₱3,000,000.00 to a certain Grace delos
legal ground. Santos. Carlos then obtained the money from
Grace. After four days, ₱1,800,000.00 was
Q: Mekeni Food Corp. offered its employee returned to Ludolfo. Carlos then collected ₱
Locsin a car plan. One-half of the cost of the 800,000.00 balance. However, after
vehicle is to be paid by Mekeni and the other deducting Carlos’ personal loans Ludolfo
half is to be deducted from Locsin’s salary. issued a check worth ₱ 481,800.00 which was
The car was an absolute necessity in accepted by Carlos.
Mekeni’s business operations. Locsin paid for
his 50% share through monthly salary The project to dredge the Masarawag and
deductions. Subsequently, Locsin resigned. San Francisco Rivers in Guinobatan was
By then, a total of ₱112,500 had been subjected to public bidding. The project was
deducted from his monthly salary and awarded to the lowest bidder, Sunwest
applied as part of his share in the car plan. Construction and Development Corporation.
The vehicle remained in the ownership and However, the project was completed without
possession of Mekeni, and so Locsin sought Ludolfo’s construction company being
reimbursement of his amortization subcontracted. Thus, Ludolfo demanded
payments on the vehicle and posits that if the Carlos to return his ₱2,000,000.00 which
amount is not reimbursed, unjust Carlos did not do so.
enrichment would result, as the vehicle
remained in the possession and ownership of Carlos claimed that the principle of unjust
Mekeni. Should the amortization payments enrichment does not apply in this situation.
be refunded in favor of Locsin? He further argued that Ludolfo paid him for a
subcontract of a government project and as
A: YES. The amortization payments must be such the subcontract is void for being
refunded in favor of Locsin. In the absence of contrary to law, specifically, the Anti-Graft
specific terms and conditions governing a car and Corrupt Practices Act, the Revised Penal
plan agreement between the employer and Code, and Section 6 of Presidential Decree
employee, the employer may not retain the No. 1594. Also, according to Carlos, he
installment payments made by the employee on followed up the project’s approval with the
the car plan and treat them as rents for the use Central Office of the Department of Public
of the service vehicle, in the event that the Works and Highways as the parties agreed
employee ceases his employment and is unable upon. He was, therefore, entitled to his
to complete the installment payments on the representation expenses. Is Carlos liable to
Thus, Carlos was unjustly enriched. He retained A: NO. Unjust enrichment has two (2) elements:
Ludolfo’s money without valid basis or a person benefited without a real or valid basis
justification. Under Article 22 of the Civil Code of or justification, and the benefit was at another
the Philippines, Carlos must return the person's expense or damage. Here, Metrobank
₱2,000,000.00 to Ludolfo. Contrary to Carlos’ rightfully returned to YOHDC the amounts of the
claim, Section 6 of the Presidential Decree No. checks considering that Metrobank, as the
1594 does not prevent Ludolfo from recovering drawee bank, is obligated to return the full
his money because it is premature to rule on the amounts of the checks upon discovering that
legality of the parties’ agreement since the they were not paid to the correct payees. The
subcontract did not push through. At any rate, amounts returned were not at the expense of
even assuming that there was a subcontracting Tarcisius and his wife considering that the
arrangement between Sunwest Construction amounts were not meant for them but for
and Development Corporation and Ludolfo, the Rosillas and Delos Reyes. (Iris Rodriguez vs Your
Supreme Court has allowed recovery under a Own Home Development Corporation, G.R. No.
void subcontract as an exception to the in pari 199451, August 15, 2018, as penned by J.
delicto doctrine. Leonen)
The Supreme Court discussed that in Gonzalo vs. Accion In Rem Verso
Tarnate Jr., Tarnate, Jr. performed his
obligations under the subcontract and the deed It is an action for recovery of what has been paid
of assignment, this court ruled that he was or delivered without just cause or legal ground.
entitled to the agreed fee. According to this If a person acquires or comes into possession of
court, Gonzalo "would be unjustly enriched at something at the expense of another without
the expense of Tarnate if the latter was to be just or legal ground through an act or of
barred from recovering because of the rigid performance by another or any other means has
application of the doctrine of in pari delicto. the obligation to return the same. (NCC, Art. 22)
35
Civil Law
Accion in rem verso is considered merely an shall promulgate, and which shall not be in
auxiliary action, available only when there is no conflict with the provisions of this Code. (Article
other remedy on contract, quasi-contract, crime, 36, NCC)
and quasi-delict. Hence, if there is an obtainable
action under any other institution of positive Concept of a prejudicial question
law, that action must be resorted to, and the
principle of accion in rem verso will not lie. It is a question of a purely civil character but
(Shinryo Philippines Company v. RRN Incorp. G.R. connected in such a manner to the crime on
No. 172525, October 20, 2010) which the criminal case is based that it is
determinative of the guilt or innocence of the
Requisites (E-L-W-A) accused. (De Leon vs. Mabanag, 70 Phil. 202)
1. The defendant has been Enriched; It is one based on a fact distinct and separate
2. The plaintiff has suffered a Loss; from the crime but so intimately connected with
3. The enrichment of the defendant is Without it that it determines the guilt or innocence of the
just or legal ground; and accused, and for it to suspend the criminal
4. The plaintiff has no other Action based on action, it must appear not only that said case
contract, quasi-contract, crime or quasi- involves facts intimately related to those upon
delict. which the criminal prosecution would be based
but also that in the resolution of the issue or
Accion in rem verso vs. Solutio Indebiti issues raised in the civil case, the guilt or
innocence of the accused would necessary be
In accion in rem verso, it is not necessary that determined. (Rabuya, 2006)
there should have been mistake in the payment
unlike in solutio indebiti where mistake is an NOTE: It is the issue in the civil action that is
essential element. (Rabuya, 2006) prejudicial to the continuation of the criminal
action, and not vice-versa. (Rabuya, 2006)
Accion in rem verso vs. Unjust Enrichment
Elements
An accion in rem verso is merely an auxiliary
action available only when there is no other 1. The previously instituted civil action
remedy on contract, quasi-contract, crime and involves an issue similarly or intimately
quasi-delict, while unjust enrichment, wherein related to the issue raised in the subsequent
one is unjustly enriched at the expense of or criminal action; and
from the efforts or obligations of others, may be 2. The resolution of such issue determines
availed of as a prerequisite for the enforcement whether or not the criminal action may
of the doctrine of restitution. (Shinryo proceed.
Philippines Company v. RRN Incorp. G.R. No.
172525, October 20, 2010) Suspension of Proceedings
Liability without fault or negligence A petition for suspension of the criminal action
based upon the pendency of a prejudicial
Even when an act or event causing damage to question in a civil action may be filed in the
another’s property was not due to the fault or office of the prosecutor or the court conducting
negligence of the defendant, the latter shall be the preliminary investigation. When the criminal
liable for indemnity if through the act or event action has been filed in court for trial, the
he was benefited. (NCC, Art. 23) petition to suspend shall be filed in the same
criminal action at any time before the
PREJUDICIAL QUESTION UNDER prosecution rests. The rule authorizes only the
ART. 36 OF THE NEW CIVIL CODE suspension of the criminal action and not its
dismissal by reason of a prejudicial question.
Prejudicial questions, which must be decided (Rabuya, 2006)
before any criminal prosecution may be
instituted or may proceed, shall be governed by
the Rules of Court which the Supreme Court
A person is the subject of legal relations, while a Also, in accordance with Article 46 of the Civil
thing is the object of legal relations. Code, Capitol is capacitated to incur obligations.
This includes obligations voluntarily incurred
Personality is the aptitude to be the subject, through contracts, as well as encumbrances
active or passive of juridical relations. One is a assumed or imposed as easements. It is in
person, while one has personality. (Rabuya, keeping with a contract entered into by Capitol
2006) and with easements in which Capitol was the
subservient estate that respondents Ayala Land,
KINDS OF PERSONS Inc. and Ayala Hillside initiated the Complaint
assailing the tax sale. With respect to Ayala Land,
1. Natural – Human beings and have physical Inc., the allegations were not limited to its being
existence. a dominant estate to an easement of right of way
but even included a claim of ownership to a
2. Juridical – Artificial persons and product of smaller parcel. (Alvarado vs. Ayala Land Inc. et.
al., G.R. 208426, September 20, 2017, as penned
legal fiction.
by J. Leonen)
Q: A parcel of land owned by Capitol Hills
Juridical capacity v. Capacity to act
Golf and Country Club, Inc. was levied by the
Quezon City Treasurer on account of unpaid
real estate taxes. Alvarado was noted the BASIS JURIDICAL CAPACITY
highest bidder and was issued the Certificate CAPACITY TO ACT
of Sale of Delinquent property. A complaint Fitness to be Power to do
against Alvarado et al. was filed before the Definition the subject of acts with legal
QC RTC to question the validity of the tax legal effect. (Art. 37)
sale. Plaintiffs are some members of the golf relations.
club, Ayala Hillside “association of lot owners (Art. 37)
residing in Ayala Hillside Estate, and Ayala Inherent (co- Through the
Land Inc who has an agreement with Capitol Acquisition exists with fulfillment of
Hills. Alvarado in his answer contends, the specific legal
among others, that plaintiffs failed to state a natural activities.
cause of action because they are not the person).
registered owners of the auctioned property Only Through death
of Capitol Hills. Does the members of Capitol Loss through and other causes.
hills and Ayala Land, Inc. have a valid cause death.
of action? Can exist Cannot exist w/o
In relation without juridical capacity.
A: YES. Members of the Capitol Hills club and to the other capacity to
Ayala Land Inc. have valid cause of action. act.
Capitol is a juridical entity with its own, distinct None. Art. 38
personality. Consistent with Article 46 of the Limitation (restriction)
Civil Code, it may "acquire and possess Art. 39
property'' such as the lot put up for a tax (modification/
delinquency sale. As owner, it exclusively limitation), among
enjoyed the entire bundle of rights associated others.
with dominion over this parcel. Though having
37
Civil Law
NOTE: A person is presumed to have capacity NOTE: The following are the effects of civil
to act. (Standard Oil Co. v. Arenas, et al., G.R. No. interdiction:
L-5921, December 15, 1908)
1. Deprivation of parental or marital authority;
Status 2. Deprivation of the right to be the guardian
of the person and property of a ward;
The status of a person is the legal condition or 3. Deprivation of his property by act inter
class to which one belongs in a society. (1 Viso vivos; and
32, 2 Sanchez Roman 110) 4. Deprivation of the right to manage one's
properties. (Revised Penal Code, Art. 34)
Civil Personality
They do not exempt the incapacitated person
It is merely the external manifestation of either from certain obligations.
juridical capacity or capacity to act.
Consequently, it may be defined as the aptitude Circumstances that modify or limit capacity
of being the subject of rights and obligations. to act (FC, Art. 39)
(2 Sanchez Roman 114-147)
1. Insanity;
RESTRICTIONS ON CAPACITY TO ACT 2. Prodigality;
3. Age;
Restrictions on capacity to act: (M-I-D-I-P-C) 4. Imbecility;
(NCC, Art. 38) 5. Deaf-Mute;
6. Family Relations;
1. Minority - State of a person who is under 7. Alienage;
the age of legal majority which is eighteen 8. Trusteeship;
years of age; 9. Penalty;
10. Insolvency; and
2. Insanity – State of a person whose mental 11. Absence.
faculties are diseased;
The enumeration in Articles 38 and 39 is not
3. Deaf-mute – Lacking sense of hearing and exclusive. There are others spread throughout
the inability to speak; the code (e.g., a lawyer cannot buy property in
litigation). [NCC, Art. 1491 (5)]
NOTE: Only deaf-mutes who do not
know how to write are declared by law BIRTH
incapable of giving consent.
Determination of personality
4. Imbecility – State of a person who while
advanced in age has the mental capacity The Civil Code provides that birth determines
comparable to that of a child between two personality, but the conceived child shall be
and seven years of age; considered born for all purposes that are
favorable to it, provided it is born later with the
5. Prodigality – A spendthrift or squanderer; conditions specified in Art. 41. (NCC, Art. 40)
NOTE: Prodigality per se does not This provision has been superseded by Art. 5 of
automatically modify or restrict a person’s P.D. No. 603 (The Child and Youth Welfare
capacity to act. There must be a Code), which declares that the civil personality
declaration thereof and be placed under of the child shall commence from the time of his
guardianship under the Rules on Special conception, for all purposes favorable to him,
Proceeding. subject to the requirements of Art. 41.
“Born later in accordance with law” (1995, It depends on whether the parties are called to
1999, 2008 BAR) succeed each other.
A fetus with an intra-uterine life of: 1. If successional rights are involved – Art. 43
of the NCC: Survivorship Rule, and Rule 131,
1. Less than 7 months – Must survive for at Sec. 3(kk): Presumption of simultaneous
least 24 hours after its complete delivery deaths between persons called to succeed
from the maternal womb. each other, applies.
Since a conceived child has a provisional A: NO. Wilma cannot successfully claim that
personality even while inside the mother’s Willy had a hereditary share in his father’s
womb, it is entitled to the following rights: estate.
(SAD)
The presumption of simultaneous death applies
1. Right to Support in cases involving the question of succession as
2. To be Acknowledged between the two who died, who in this case, are
3. To receive Donations. (Rabuya, 2009) mutual heirs, being father and son.
39
Civil Law
A: YES. Wilma can invoke the presumption of mother. An unborn child shall be considered
survivorship and claim that one-half of the a person for purposes favorable to it
proceeds should belong to Willy’s estate, under provided it is born later in accordance with
Rule 131, Sec.3 (jj), par. 5, Rules of Court, as the the NCC. There is no doubt that the
dispute does not involve succession. designation of the unborn child as a
beneficiary is favorable to the child.
Under this presumption, the person between
the ages of 15 and 60 is deemed to have survived 2. If the baby was not alive when completely
one whose age was over 60 at the time of their delivered from the mother’s womb, it was
deaths. The estate of Willy endowed with not born as a person, then the question of
juridical personality stands in place and stead of whom between two persons survived will
Willy, as beneficiary. not be an issue. The baby had an intra-
uterine life of more than 7 months; thus, it
NOTE: The statutory rules in the determination would be considered born if it was alive at
of sequence of death do not absolutely apply in a the time of its complete delivery from the
case where indirect and/or inferential evidence mother’s womb. We can gather from the
surrounding the circumstances of the deaths facts that the baby was completely
exists. delivered. But whether or not it was alive
has to be proven by evidence.
Where there are facts, known or knowable, from
which a rational conclusion can be made, the 3. Since the baby did not acquire any right
presumption does not step in, and the rule of under the insurance contract, there is
preponderance of evidence controls. It is the nothing for Prieto to inherit. Prieto is not
"particular circumstances from which married to Marian neither was he named as
survivorship can be inferred" that are required the beneficiary of the insurance.
to be certain as tested by the rules of evidence.
(Joaquin v. Navarro, G.R. No. L-5426, May 29, Domicile of juridical persons
1953)
1. The place fixed by the law creating or
Q: At the age of 18, Marian found out that she recognizing the juridical person;
was pregnant. She insured her own life and 2. In the absence thereof, the place where their
named her unborn child as her sole legal representation is established or where
beneficiary. When she was already due to they exercise their principal functions.
give birth, she and her boyfriend Pietro, the
father of her unborn child, were kidnapped REPUBLIC ACT NO. 9262 (VAWC)
in a resort in Bataan. The military gave chase
and after one week, they were found in In case a protection order is issued under
abandoned hut in Cavite. Marian and Pietro R.A. 9262, Section 8, the respondent spouse
were hacked with bolos. Marian and the baby has the obligation to do the following acts:
she delivered were both found dead, with the
baby’s umbilical cord already cut. Pietro SECTION 8. Protection Orders.- A protection
survived. order is an order issued under this act for the
purpose of preventing further acts of violence
a. Can Marian’s baby be the beneficiary of against a woman or her child specified in Section
the insurance taken on the life of the 5 of this Act and granting other necessary relief.
mother? The relief granted under a protection order
b. Between Marian and the baby, who is serve the purpose of safeguarding the victim
presumed to have died ahead? from further harm, minimizing any disruption in
c. Will Prieto, as the surviving biological the victim's daily life, and facilitating the
father of the baby, be entitled to claim opportunity and ability of the victim to
the proceeds of the life insurance on the independently regain control over her life. The
life of Marian? (2008 BAR) provisions of the protection order shall be
enforced by law enforcement agencies. The
A: protection orders that may be issued under this
1. YES. An unborn child may be designated as Act are the barangay protection order (BPO),
the beneficiary in the insurance policy of the temporary protection order (TPO) and
(e) Directing lawful possession and use by Any of the reliefs provided under this section
petitioner of an automobile and other essential shall be granted even in the absence of a decree
personal effects, regardless of ownership, and of legal separation or annulment or declaration
directing the appropriate law enforcement of absolute nullity of marriage.
officer to accompany the petitioner to the
residence of the parties to ensure that the NOTE: Under Section 19, in cases of Legal
petitioner is safely restored to the possession of Separation, it states that:
the automobile and other essential personal
effects, or to supervise the petitioner's or In cases of legal separation, where violence as
respondent's removal of personal belongings; specified in this Act is alleged, Article 58 of the
Family Code shall not apply. The court shall
(f) Granting a temporary or permanent custody proceed on the main case and other incidents of
of a child/children to the petitioner; the case as soon as possible. The hearing on any
application for a protection order filed by the
(g) Directing the respondent to provide support petitioner must be conducted within the
to the woman and/or her child if entitled to legal mandatory period specified in this Act.
support. Notwithstanding other laws to the
contrary, the court shall order an appropriate
percentage of the income or salary of the
respondent to be withheld regularly by the
respondent's employer for the same to be
41
Civil Law
contract
THE FAMILY CODE
c. Social
MARRIAGE UNDER FAMILY CODE institution
Governin
Law on Law on
A special contract of permanent union between a g Law
marriage contracts
man and a woman entered into in accordance
with law for the establishment of conjugal and GR: Not subject The parties
family life. It is the foundation of the family and Right of to stipulation are free to
an inviolable social institution whose nature, the XPN: Property stipulate
consequences, and incidents are governed by parties to relations in subject to
law and not subject to stipulation, except that stipulate marriage certain
marriage settlements may fix the property settlements. limitation.
relations during the marriage within the limits Minors may
provided by the Family Code. (Family Code, Art. contract
1) through
Capacity
Legal capacity their parents
to
NATURE OF MARRIAGE is required. or guardians
contract
or in some
Under the Constitution, “marriage, as an instances, by
inviolable social institution, is the foundation of themselves.
the family and shall be protected by the State.” Contracting
(1987 Constitution, Art. XV, Sec. 2) Contracting parties may
Gender parties must be two or
Marriage is an institution in which the requirem only be two more
community is deeply interested. The State has ent persons of the persons
surrounded it with safeguards to maintain its opposite sexes. regardless of
purity, continuity and permanence. The security sex.
and stability of the State are largely dependent Can be
on it. It is in the interest and duty of each dissolved
member of the community to prevent the through
bringing about of a condition that would shake express
its foundation and lead to its destruction. The provision of
incidents of the status are governed by law, not the law,
Dissolved only
by will of the parties. (Beso v. Daguman, A.M. No. through
Dissolutio by death or
MTJ-99-1211, January 28, 2000) expiration of
n by annulment,
the term for
agreemen never by
Marriage as a status which the
t mutual
contract was
agreement.
As a status, the principle in contracts that the entered into,
parties may, by mutual agreement, put an end to or by mutual
it, cannot certainly apply, for the consequences agreement
of the marriage as a rule are fixed by law. (Paras, by the
2016) parties
concerned.
Marriage v. Ordinary contract
Evidence of Marriage
ADDITIONAL
The requisites for a valid marriage are AGE
REQUIREMENTS
provided by law.
Parental consent and
18 to 21 years old
The principle that the validity of a marriage is Marriage counseling
determined by the law effective at the time of
the celebration of the marriage is further Parental advice and
22 to 25 years old
highlighted by the fact that, as a general rule, the Marriage counseling
nature of the marriage already celebrated
cannot be changed by a subsequent amendment
Absence of the additional requirement of
to the law. (Sta. Maria, 2010)
parental advice
ESSENTIAL REQUISITES OF A VALID
It does not make the marriage void or voidable,
MARRIAGE (1996, 2009, BAR)
it only affects the release of the marriage license
to be postponed until (3) three months from the
1. Legal capacity of the contracting parties
complete publication of the application. (FC, Art.
who must be a male and a female; and
15)
2. Consent freely given in the presence of the
solemnizing officer. (FC, Art. 2)
Q: A complaint was filed against Judge Rojo
for allegedly violating the Code of Judicial
Legal capacity of the parties to marry
Conduct and for gross ignorance of the law.
Rojo solemnized marriages without the
1. Age – at least 18 years of age
required marriage license. He instead
notarized affidavits of cohabitation and
The attainment of the required minimum
issued them to the contracting parties. He
age for marriage should be reckoned, not on
notarized these affidavits on the day of the
the date of filing of the application for
parties’ marriage.
issuance of a marriage license, but on the
date of the marriage. Pursuant to Article 6 of
Was Judge Rojo’s notarization of affidavits of
the Family Code, parties may contract
cohabitations proper?
marriage on the date of the solemnization of
the marriage, i.e., when they appear
A: NO. Judge Rojo is guilty for violating the Code
personally before the solemnizing officer
of Judicial Conduct and for gross ignorance of
and declare in the presence of not less than
the law. As a solemnizing officer, the judge’s only
two witnesses of legal age that they take
duty involving the affidavit of cohabitation is to
each other as husband and wife. (Rabuya,
examine whether the parties have indeed lived
2009)
43
Civil Law
FORMAL REQUISITES OF A VALID MARRIAGE 3. In the presence of not less than 2 witnesses
(C-A-L) (1996, 2009 BAR) of legal age.
As to marriages between Filipinos - all marriages NOTE: From the time of the effectivity of the
solemnized outside the Philippines, in Family Code (August 3, 1988) up to the time of
accordance with the laws enforced in said the effectivity of the Local Government Code
country where they are solemnized, and valid (January 1, 1992), mayors do not have the
there as such, shall also be valid here in the authority to solemnize marriage.
country, except those prohibited under Art. 35
(1), (2), (4), (5), (6), 36, 37 and 38 (FC, Art. 26). 2. Marriages in articulo mortis:
1. Under ordinary circumstances (FC, Art. Such authority may be exercised not only while
7): the ship is at sea or the plane is in flight but also
during stopovers at ports of call. (Rabuya, 2018)
a. Incumbent judiciary member –
b. Military commander of a unit who is a
Provided, it is within the court’s jurisdiction commissioned officer – provided the
marriage is performed (FC, Art. 32):
NOTE: Where a judge solemnized a marriage
outside his court’s jurisdiction, this is a mere i. In absence of chaplain;
irregularity in the formal requisite, which while ii. Within zone of military operation;
it may not affect the validity of the marriage, iii. Between members of the armed
may subject the officiating official to forces or civilians.
administrative liability. (Rabuya, 2009)
Duty of the solemnizing officer in a marriage
b. Priest, rabbi, imam or minister of any in articulo mortis
church/religious sector
The solemnizing officer in a marriage in articulo
i. duly authorized by his church mortis after solemnizing such marriage shall
or religious sect and registered state in an affidavit executed before the local
with the civil registrar general, civil registrar or any other person legally
acting within the limits of the authorized to administer oaths, that the
written authority granted him marriage was performed in articulo mortis and
by his church or religious sect that he took the necessary steps to ascertain the
ages and relationship of the contracting parties
ii. Provided at least one of the and the absence of a legal impediment to the
parties belongs to such church marriage. (FC, Art. 29)
or religious sect.
NOTE: If any of the listed solemnizing officers
c. Consul general, consul or vice-consul fails to comply with any of the requisites
mandated by law for them to validly solemnize a
i. Provided both parties are marriage, the marriage is generally void, based
Filipinos and marriage takes on the ground of an absence of a formal requisite
place abroad in the country (authority of solemnizing officer)
where the consul holds office.
45
Civil Law
XPN: Unless such marriage was contracted with be solemnized by, among others, "any
either or both parties believing in good faith that incumbent member of the judiciary within the
the solemnizing officer had the legal authority to court's jurisdiction." Art. 8, which is a directory
do so. (FC, Art. 35(a)) provision, refers only to the venue of the
marriage ceremony and does not alter or qualify
Effect of solemnizing officer’s failure to the authority of the solemnizing officer as
execute an affidavit provided in the preceding provision. If there is
defect in such requirement, the same would not
It will have no effect as to the validity of the make the marriage void, but it merely subjects
marriage. The marriage will still be valid. the officer to criminal, civil, or administrative
responsibility. (Navarro v. Domagtoy, A.M. No.
The local civil registrar is given the original of MTJ-96- 1088, July 19, 1996)
the affidavit which takes the place of a marriage
license. (Paras, 2016) NOTE: In case of a marriage solemnized by a
mayor outside of his territorial jurisdiction, LGC
Such affidavit is not an essential or formal is silent on the matter, hence the
requisite of marriage, the same with a Marriage abovementioned case may be applied by
Contract. The signing of the marriage contract analogy.
and the affidavit is only required for the purpose
of evidencing the act, not a requisite of marriage. Exception to the rule requiring authority of
It is the obligation of the solemnizing officer. It the solemnizing officer
does not affect the validity of marriage. (De Loria
v. Felix, G.R. No. L-9005, June 20, 1958) The exception to the rule requiring authority of
the solemnizing officer is when a marriage is
Authorized venues of marriage contracted with either or both parties believing
in good faith that the solemnizing officer had the
GR: Must be solemnized publicly within the authority to do so. [FC, Art. 35 (2)]
jurisdiction of the authority of the solemnizing
officer: 3. MARRIAGE LICENSE
1. Chambers of the judge or in open court; A marriage license is required in order to notify
2. Church, chapel or temple; or, the public that two persons are about to be
3. Office of the consul-general, consul or vice- united in matrimony and that anyone who is
consul. (FC, Art. 8) aware or has knowledge of any impediment to
the union of the two shall make it known to the
XPNs: local civil registrar.
1. Marriage at the point of death;
2. Marriage in remote places; The requirement and issuance of marriage
3. Marriage at a house or place designated by license is the State’s demonstration of its
both of the parties with the written request involvement and participation in every
to the solemnizing officer to that effect. (FC, marriage. (Rabuya, 2018)
Art. 8)
What is required is the marriage license, not the
NOTE: This provision is only directory, not marriage certificate. The latter is not an essential
mandatory. The requirement that the marriage or formal requisite; thus, an oral solemnization
be solemnized in a particular venue or a public is valid. In fact, a marriage may be proved by
place is not an essential requisite for the validity oral evidence. (Paras, 2016)
of the marriage.
Validity of marriage license
A marriage solemnized by a judge outside of
his jurisdiction is valid The license shall be valid in any part of the
Philippines for a period of 120 days from the
Under Art. 3 of the FC, one of the formal date of issue, and shall be deemed
requisites of marriage is the "authority of the automatically cancelled at the expiration of
solemnizing officer." Under Art. 7, marriage may said period if the contracting parties have not
made use of it. (FC, Art. 20)
The status of the marriage if the parties get When either or both of the contracting parties
married within the said 3-month period are citizens of a foreign country, it shall be
depends: necessary for them to submit a certificate of
legal capacity to contract marriage, issued by
1. If the parties did not obtain a marriage their respective diplomatic or consular officials.
license – the marriage shall be void for lack
of marriage license. Stateless persons or refugees from other country
shall, in lieu of the certificate of legal capacity
2. If the parties were able to obtain a herein required, submit an affidavit stating the
marriage license – the marriage shall be circumstances showing such capacity to contract
valid without prejudice to the actions that marriage. (FC, Art. 21)
may be taken against the guilty party.
Marriage without the required certificate of
Persons authorized to issue the marriage legal capacity to marry is valid
license
The status of the marriage celebrated on the
The marriage license is issued by the local civil basis of a license issued without the required
registrar of the city or municipality where either Certificate of Legal Capacity is valid as this is
contracting party habitually resides. (FC, Art. 9) merely an irregularity in complying with a
formal requirement of the law in procuring a
Obtaining a marriage license in a place other marriage license, which will not affect the
than where either party habitually resides is a validity of the marriage. (Garcia v. Recio, G.R. No.
mere irregularity. 138322, October 2, 2001)
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49
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51
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before the RTC so that she could cancel the II. VOID MARRIAGES
surname of her husband and be able to
marry again. Marriages that are void ab initio (1993, 2004,
2005, 2006 BAR)
The RTC denied Luzviminda’s petition,
holding that while a divorce decree held that 1. Solemnized without License, except those
while a divorce obtained abroad by an alien marriages that are exempt from the license
spouse may be recognized in the Philippines requirement;
– provided that such decree is valid 2. Absence of any of the essential or formal
according to the national law of the alien – requisites of marriage;
the same does not find application when it 3. Solemnized by any person not legally
was the Filipino spouse, i.e., petitioner, who Authorized to perform marriages unless
procured the same. Invoking the nationality such marriages were contracted with either
principle provided under Article 15 of the or both parties believing in good faith that
Civil Code, in relation to Article 26 (2) of the the solemnizing officer had the legal
Family Code, the RTC opined that since authority to do so;
petitioner is a Filipino citizen whose national 4. Contracted through Mistake of one of the
laws do not allow divorce, the foreign divorce contracting parties as to the identity of the
decree she herself obtained in Japan is not other;
binding in the Philippines. Did the RTC 5. Bigamous or polygamous marriages not
correctly deny Luzviminda’s petition for falling under Article 41 of the Family Code
recognition of divorce decree she procured? or those allowed under special laws such as
the Muslim Code;
A: NO. It had been ruled in Republic vs. Manalo 6. Marriages contracted by any party below 18
that foreign divorce decrees obtained to nullify years of age even with the consent of
marriages between a Filipino and an alien parents or guardians;
citizen may already be recognized in this 7. Marriages contracted by any party, who at
jurisdiction, regardless of who between the the time of the celebration of the marriage,
spouses initiated the divorce; provided, of was Psychologically incapacitated, even if
course, that the party petitioning for the such incapacity becomes manifest only after
recognition of such foreign divorce decree – its solemnization (FC, Art. 36);
presumably the Filipino citizen – must prove the 8. Incestuous Marriages (FC, Art. 37);
divorce as a fact and demonstrate its conformity 9. Marriages declared void because they are
to the foreign law allowing it. A plain reading of contrary to Public policy (FC, Art. 38);
the RTC ruling shows that the denial of 10. Subsequent marriages which are void under
Luzviminda's petition to have her foreign Art. 53;
divorce decree recognized in this jurisdiction 11. Marriages in jest; and
was anchored on the sole ground that she
admittedly initiated the divorce proceedings “Marriages in jest is a pretended one, legal in
which she, as a Filipino citizen, was not allowed form but entered as a joke, with no real
to do. intentions of entering into the actual
marriage status, and with a clear
In light of the doctrine laid down in Manalo, such understanding that the parties would not be
ground relied upon by the RTC had been bound (Republic of the Philippines v. Albios,
rendered nugatory. However, the Court cannot G.R. No. 198780, October 16, 2013); and
just order the grant of Luzviminda's petition for
recognition of the foreign divorce decree, as 12. Common-law marriages.
Luzviminda has yet to prove the fact of her.
"Divorce by Agreement" obtained in Nagoya 1. ABSENCE OF ANY ESSENTIAL OR FORMAL
City, Japan and its conformity with prevailing REQUISITES OF MARRIAGE
Japanese laws on divorce. Notably, the RTC did
not rule on such issues. Since these are Marriage between Filipinos who are of the
questions which require an examination of same sex is VOID
various factual matters, a remand to the court a
quo is warranted. (Morisono v. Morisono, G.R. No. For a marriage to be valid, it must be between
226013, July 2, 2018)
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makes the gender classification at birth are below 18 years of age is VOID
inconclusive. It is at maturity that the gender of
such persons is fixed. (Republic v. Jennifer Such marriage is void for lack of legal capacity
Cagandahan, G.R. No. 166676, September 12, even if the parents consented to such marriage.
2008) (Sempio-Dy, 1995)
Q: Gallo has never been known as “Michael Validity of the marriage if it is a mixed
Soriano Gallo.” She has always been female. It marriage where the Filipino is 18 years old
was stated in her petition before the but the foreigner is below 17 years of age
Regional Trial Court that her Certificate of
Live Birth contained errors which should be If the national law of the foreigner recognizes
corrected. For her, she was not changing the 17-year-old person to be capacitated to marry,
name that was given to her; she was merely then their marriage is valid, otherwise it is void.
correcting its entry. To accurately reflect
these facts in her documents, Gallo prayed Effect of lack of authority of solemnizing
before the Regional Trial Court of Ilagan City, officer
Isabela in for the correction of her name
from "Michael" to "Michelle" and of GR: The marriage is void ab initio.
her biological sex from "Male" to "Female"
under Rule 108 of the Rules of Court. In XPNs:
addition, Gallo asked for the inclusion of her 1. Express- If either or both parties believed in
middle name, "Soriano;" her mother's middle good faith that the solemnizing officer had
name, "Angangan;" her father's middle name, the legal authority to do so. (FC, Art. 35)
"Balingao;" and her parent's marriage date, 2. Implied - Article 10 in relation to Article 26
May 23, 1981, in her Certificate of Live Birth, of the Family Code. If the marriage between
as these were not recorded. Does Gallo’s a foreigner and a Filipino citizen abroad
petition involve substantive changes? solemnized by a Philippine consul assigned
in that country is recognized as valid in the
A: NO. Gallo is not filing the petition to change host country, such marriage shall be
her current appellation. She is merely correcting considered as valid in the Philippines. (Sta.
the misspelling of her name. To correct simply Maria, 2010)
means "to make or set aright; to remove the
faults or error from." To change means "to Q: Judge Palaypayon solemnized marriages
replace something with something else of the even without the requisite of marriage
same kind or with something that serves as a license. Thus, some couples were able to get
substitute. Gallo is not attempting to replace her married by the simple expedient of paying
current appellation. She is merely correcting the the marriage fees. As a consequence, their
misspelling of her given name. "Michelle" could marriage contracts did not reflect any
easily be misspelled as "Michael," especially marriage license number. In addition, the
since the first four (4) letters of these two (2) judge did not sign their marriage contracts
names are exactly the same. The differences only and did not indicate the date of the
pertain to an additional letter "a" in "Michael," solemnization, the reason being that he
and "le" at the end of "Michelle." "Michelle" and allegedly had to wait for the marriage license
"Michael" may also be vocalized similarly, to be submitted by the parties. Such marriage
considering the possibility of different accents or contracts were not filed with the Local Civil
intonations of different people. In any case, Gallo Registry. Are such marriages valid?
does not seek to be known by a different
appellation. The lower courts have determined A: NO. A valid marriage license is necessary for
that she has been known as "Michelle" all the validity of marriage, except in the cases
throughout her life. She is merely seeking to provided for therein. The absence of any of the
correct her records to conform to her true given essential or formal requisites shall generally
name. (Republic of the Philippines vs. Michelle render the marriage void ab initio. (Cosca v.
Soriano Gallo, G.R. No. 207074, January 17, 2018, Palaypayon, A.M. No. MTJ-92-721, September 30,
as penned by J. Leonen) 1994)
Marriage where one or both of the parties Mistake to render the marriage void
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be: decision;
7. Interpretations given by the National
1. Medically or clinically identified; Appellate Matrimonial Tribunal of the
2. Alleged in the complaint; Catholic Church in the Philippines, while not
3. Sufficiently proven by experts; and controlling or decisive, should be given
4. Clearly explained in the decision. great respect by our courts;
8. The trial court must order the prosecuting
NOTE: Expert evidence may be given by attorney or fiscal and the Solicitor General
qualified psychiatrists and clinical psychologists. to appear as counsel for the state.
The physician’s examination is not required No decision shall be handed down unless the
in establishing psychological incapacity as Solicitor General issues a certification, which
ground for declaration of nullity will be quoted in the decision, briefly stating
therein his reasons for his agreement or
If the totality of evidence presented is enough to opposition, as the case may be, to the petition.
sustain a finding of psychological incapacity, (Republic of the Philippines v. Court of Appeals
physician’s examination of the person concerned and Molina, G.R. No. 108763, February 13, 1997;
need not be resorted to. (Marcos v. Marcos, G.R. Danilo A. Aurelio v. Vide Ma. Corazon P. Aurelio,
No. 136490, October 19, 2000; Glenn Viñas v. G.R. No. 175367, June 6, 2011)
Mary Grace Parel-Viñas, G.R. No. 208790, January
21, 2015) NOTE: In Republic v. Quintero-Hamano, the SC
held that these guidelines may not be relaxed
Guidelines set by the Court to aid it in its just because the spouse alleged to be
disposition of cases involving psychological psychologically incapacitated happens to be a
incapacity foreign national. The norms used for
determining psychological incapacity should
In the landmark case of Republic of the apply to any person regardless of nationality
Philippines v. Court of Appeals and Molina, the because the rules were formulated on the basis
Supreme Court enumerated the following of studies of human behavior in general.
guidelines in invoking and proving psychological (Rabuya, 2018)
incapacity under Article 36 of the Family Code:
In Marcos v. Marcos, the Supreme Court held
1. Burden of proof to show the nullity of the categorically that psychological incapacity “may
marriage belongs to the plaintiff; be established by the totality of evidence
2. The root cause of the psychological presented” and that “there is no requirement
incapacity must be: (a) medically or that the respondent should be examined by a
clinically identified, (b) alleged in the physician or a psychologist as a condition sine
complaint, (c) sufficiently proven by experts qua non for such declaration.” (Marcos v. Marcos,
and (d) clearly explained in the decision; G.R. No. 136490, October 19, 2000)
3. The incapacity must be proven to be existing
at “the time of the celebration” of the Instances where allegations of psychological
marriage; incapacity were not sustained
4. Such incapacity must also be shown to be
medically or clinically permanent or 1. Mere showing of irreconcilable differences
incurable; and conflicting personalities. (Carating-
5. Such illness must be grave enough to bring Siayngco v. Siayngco, G.R. No. 158896,
about the disability of the party to assume October 27, 2004)
the essential obligations of marriage;
6. The essential marital obligations must be NOTE: Mere sexual infidelity or perversion,
those embraced by Arts. 68 up to 71 of the emotional immaturity and irresponsibility
FC as regards the husband and wife, as well and the like, do not by themselves warrant a
as Arts. 220, 221 and 225 of the same Code finding of psychological incapacity as the
in regard to parents and their children. Such same may only be due to a person's refusal
non-complied marital obligation(s) must or unwillingness to assume the essential
also be stated in the petition, proven by obligations of marriage. (Castillo v. Republic
evidence and included in the text of the of the Philippines, G.R. No. 214064, February
A: YES. The Court held that B was indeed In the abovementioned case, the Supreme Court
psychologically incapacitated as they relaxed the is not suggesting the abandonment of Molina. It
previously set forth guidelines with regard to simply declares that there is a need to
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Civil Law
emphasize other perspectives as well which behavior considered [as] deviant from
should govern the disposition of petitions for persons who abide by established norms of
declaration of nullity under Article 36. conduct." As for Natividad, Dr. Zalsos also
observed that she lacked the willful
Q: Rodolfo and Natividad were married. On cooperation of being a wife and a mother to
December 28, 1998, Rodolfo filed a verified her two daughters. On February 10, 1999, the
complaint for declaration of nullity of Office of the Solicitor General (OSG),
marriage before the RTC alleging that representing petitioner Republic of the
Natividad was psychologically incapacitated Philippines (Republic), filed an opposition to
to comply with her essential marital the complaint, contending that the acts
obligations. In support of his complaint, committed by Natividad did not demonstrate
Rodolfo testified, among others, that he first psychological incapacity as contemplated by
met Natividad when they were students at law, but are mere grounds for legal
the Barangay High School of Sindangan, and separation under the Family Code. Should
he was forced to marry her barely three (3) the marriage be dissolved?
months into their courtship in light of her
accidental pregnancy. At the time of their A: NO. "Psychological incapacity," as a ground to
marriage, he was 21 years old, while nullify a marriage under Article 36 of the Family
Natividad was 18 years of age. He had no Code, should refer to no less than a mental – not
stable job and merely worked in the merely physical – incapacity that causes a party
gambling cockpits as "kristo" and "bangkero to be truly incognitive of the basic marital
sa hantak." When he decided to join and train covenants that concomitantly must be assumed
with the army, Natividad left their conjugal and discharged by the parties to the marriage
home and sold their house without his which, as so expressed in Article 68of the Family
consent. Thereafter, Natividad moved to Code, among others, include their mutual
Dipolog City where she lived with a certain obligations to live together, observe love, respect
Engineer Terez (Terez), and bore him a child and fidelity and render help and support. The
named Julie Ann Terez. RTC, as affirmed by the CA, heavily relied on the
psychiatric evaluation report of Dr. Zalsos which
After cohabiting with Terez, Natividad does not, however, explain in reasonable detail
contracted a second marriage on January 11, how Natividad’s condition could be
1991 with another man named Antonio characterized as grave, deeply-rooted, and
Mondarez and has lived since then with the incurable within the parameters of psychological
latter in Cagayan de Oro City. From the time incapacity jurisprudence. Aside from failing to
Natividad abandoned them in 1972, Rodolfo disclose the types of psychological tests which
was left to take care of Ma. Reynilda and Ma. she administered on Natividad, Dr. Zalsos failed
Rizza and he exerted earnest efforts to save to identify in her report the root cause of
their marriage which, however, proved futile Natividad's condition and to show that it existed
because of Natividad’s psychological at the time of the parties' marriage. Neither was
incapacity that appeared to be incurable. For the gravity or seriousness of Natividad's
her part, Natividad failed to file her answer, behavior in relation to her failure to perform the
as well as appear during trial, despite service essential marital obligations sufficiently
of summons. Nonetheless, she informed the described in Dr. Zalsos's report.
court that she submitted herself for
psychiatric examination to Dr. Cheryl T. To hark back to what has been earlier discussed,
Zalsos (Dr. Zalsos) in response to Rodolfo’s psychological incapacity refers only to the most
claims. Rodolfo also underwent the same serious cases of personality disorders clearly
examination. demonstrative of an utter insensitivity or
inability to give meaning and significance to the
In her two-page psychiatric evaluation marriage. In the final analysis, the Court does not
report, Dr. Zalsos stated that both Rodolfo perceive a disorder of this nature to exist in the
and Natividad were psychologically present case. Thus, for these reasons, coupled
incapacitated to comply with the essential too with the recognition that marriage is an
marital obligations, finding that both parties inviolable social institution and the foundation
suffered from "utter emotional immaturity of the family, the instant petition is hereby
[which] is unusual and unacceptable granted. (Republic v. Gracia, G.R. No. 171557,
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Q: Would the state of being of unsound mind formalized their marital union through civil
or the concealment of drug addiction, rites. As months passed, the communication
habitual alcoholism, homosexuality or between Gina and Marjune became less
lesbianism be considered indicia of frequent until it ceased altogether. Thus,
psychological incapacity, if existing at the Gina filed a petition to declare her marriage
inception of marriage? (2002 BAR) with Marjune null and void on the basis of
the latter's psychological incapacity.
A: The state of being of unsound mind, the
concealment of drug addiction, habitual During trial, Gina presented the findings of
alcoholism, lesbianism or homosexuality may be Professor Emma Astudillo-Sanchez (Prof.
indicia of psychological incapacity, depending on Sanchez), the psychologist who conducted a
the degree of severity of the disorder. However, psychological examination of the parties. She
the concealment of drug addiction, habitual concluded that Gina and Marjune's
alcoholism, lesbianism or homosexuality is a personality disorders "affected their
ground of annulment of marriage. (Santos v. CA, behaviors even before they contracted
G.R. No. 112019, January 4, 1995) marriage and, in the presence of situational
factors, became more evident during the
Q: Art. 36 of the FC provides that a marriage time they were together during the marriage.
contracted by any party who, at the time of Is upholding the annulment based on the
the celebration, was psychologically expert opinion of the psychologist sufficient
incapacitated to comply with the essential proof of the presence of psychological
marital obligations of marriage, shall be void. incapacity?
Choose the spouse listed below who is
psychologically incapacitated. A: NO. The said report failed to show that these
traits existed prior to Gina's marriage and that
a. Nagger her alleged personality disorder is incurable or
b. Gay or Lesbian that the cure is beyond her means. There was
c. Congenital sexual pervert simply no discernible explanation on the
d. Gambler juridical antecedence or incurability of Gina's
e. Alcoholic (2006 BAR) supposed condition. More significantly, the
relation of such condition to Gina's inability to
A: B and C. They may serve as indicia of perform her essential marital obligations was
psychological incapacity, depending on the not sufficiently shown. To reiterate, the
degree and severity of the disorder. (Santos v. psychological condition ought to pertain to
CA, G.R. No. 112019, January 4, 1995) If the personality disorders that are grave and serious
condition of homosexuality, lesbianism or sexual such that the party would be incapable of
perversion, existing at the inception of the carrying out the ordinary duties required in a
marriage, is of such a degree as to prevent any marriage. Unfortunately, the Case Analysis
form of sexual intimacy, any of them may qualify Report fails to demonstrate this crucial point. In
as a ground for psychological incapacity. The law determining the existence of psychological
provides that the husband and wife are obliged incapacity, a clear and understandable causation
to live together, observe mutual love, respect between the party's condition and the party's
and fidelity. (FC, Art. 68) inability to perform the essential marital
covenants must be shown A psychological report
More than just showing the manifestations of that is essentially comprised of mere platitudes,
incapacity, the petitioner must show that the however speckled with technical jargon, would
respondent is incapacitated to comply with the not cut the marriage tie. (Republic v. Tecag, G.R.
essential marital obligations of marriage and No. 229272, November 19, 2018)
that it is also essential that he must be shown to
be incapable of doing so due to some Q: Petitioner Maria Teresa and respondent
psychological, not physical illness. (Republic v. Rodolfo De La Fuente, Jr. first met when they
Quintero- Hamano, G.R. No. 149498, May 20, were students at UST before they became
2004) sweethearts. While they were still
sweethearts, petitioner already noticed that
Q: After living together as husband and wife respondent was an introvert and was prone
for two (2) years, Gina and Marjune to jealousy. She also observed that
1. Between ascendants and descendants of any Q: Amor gave birth to Thelma when she was
degree; 15 years old. Thereafter, Amor met David,
2. Between brothers and sisters, whether of and they got married when she was 20 years
the full or half-blood. (FC, Art. 37) old. David has a son, Julian, with his ex-
girlfriend Sandra. Can Julian and Thelma get
NOTE: Regardless of whether the relationship married? (2007 BAR)
between the parties is legitimate or illegitimate.
A: YES. Marriage between stepbrothers and
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stepsisters are not among the marriages Boracay, Arnold met Jenny, a Filipina, who
prohibited under the Family Code. was vacationing there. Arnold fell in love
with her. After a brief courtship and
4. SUBSEQUENT MARRIAGE complying with all the requirements, they
got married in Hong Kong to avoid publicity,
Q: If a person contracts a subsequent it being Arnold’s second marriage. Is his
marriage during the subsistence of a prior marriage with Jenny valid? (2006 BAR)
marriage, what is the status of the
subsequent marriage? (1992, 2005, 2008 A: YES. The marriage will not fall under Art.
BAR) 35(4) of the Family Code on bigamous marriages
provided that Britney obtained an absolute
A: divorce, capacitating her to remarry under her
GR: Void for being bigamous or polygamous, national law. Consequently, the marriage
even if celebrated abroad and valid there as between Arnold and Jenny may be valid as long
such. as it was solemnized and valid in accordance
with the laws of Hong Kong.
XPN: Valid if it is a terminable bigamous
marriage. Q: May a person contract a valid subsequent
marriage before a first marriage is declared
Bigamous Marriage void ab initio by a competent court?
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Civil Law
about her from other relatives and friends, still subsist despite the absent or presumptively
but no one gave him any information. dead spouse's reappearance.
Ricardo claimed that it was almost 12 years A subsequent marriage contracted in bad faith,
from the date of his RTC petition since even if it was contracted after a court
Celerina left. He believed that she had passed declaration of presumptive death, lacks the
away. According to Celerina, her true requirement of a well-founded belief that the
residence was in Neptune Extension, spouse is already dead. The first marriage will
Congressional Avenue, Quezon City. This not be considered as validly terminated.
residence had been her and Ricardo's Marriages contracted prior to the valid
conjugal dwelling until Ricardo left. As a termination of a subsisting marriage are
result of Ricardo's misrepresentation, she generally considered bigamous and void. Only a
was deprived of any notice of and subsequent marriage contracted in good faith is
opportunity to oppose the petition declaring protected by law. Therefore, the party who
her presumptively dead. Celerina claimed contracted the subsequent marriage in bad faith
that she never resided in Tarlac. She also is also not immune from an action to declare his
never left and worked as a domestic helper subsequent marriage void for being bigamous.
abroad. Neither did she go to an employment
agency. She also claimed that it was not true The prohibition against marriage during the
that she had been absent for 12 years. subsistence of another marriage still applies.
Ricardo was aware that she never left their Since an undisturbed subsequent marriage
conjugal dwelling in Quezon City. It was he under Article 42 of the Family Code is valid until
who left the conjugal dwelling to cohabit with terminated, the "children of such marriage shall
another woman. Celerina referred to a joint be considered legitimate, and the property
affidavit executed by their children to relations of the spouses in such marriage will be
support her contention that Ricardo made the same as in valid marriages." If it is
false allegations in his petition. Is the terminated by mere reappearance, the children
reappearance not a sufficient remedy since it of the subsequent marriage conceived before the
will only terminate the subsequent marriage termination shall still be considered legitimate.
but not nullify the effects of the declaration Moreover, a judgment declaring presumptive
of her presumptive death and the subsequent death is a defense against prosecution for
marriage? bigamy.
It is true that in most cases, an action to declare
A: YES. The proper remedy for a judicial the nullity of the subsequent marriage may
declaration of presumptive death obtained by nullify the effects of the subsequent marriage,
extrinsic fraud is an action to annul the specifically, in relation to the status of children
judgment. An affidavit of reappearance is not the and the prospect of prosecuting a respondent for
proper remedy when the person declared bigamy. However, "a Petition for Declaration of
presumptively dead has never been absent. Absolute Nullity of Void Marriages may be filed
solely by the husband or wife." This means that
The filing of an affidavit of reappearance is an even if Celerina is a real party in interest who
admission on the part of the first spouse that his stands to be benefited or injured by the outcome
or her marriage to the present spouse was of an action to nullify the second marriage, this
terminated when he or she was declared absent remedy is not available to her. Therefore, for the
or presumptively dead. Moreover, a close purpose of not only terminating the subsequent
reading of the entire Article 42 reveals that the marriage but also of nullifying the effects of the
termination of the subsequent marriage by declaration of presumptive death and the
reappearance is subject to several conditions. subsequent marriage, mere filing of an affidavit
The existence of these conditions means that of reappearance would not suffice. Celerina's
reappearance does not always immediately choice to file an action for annulment of
cause the subsequent marriage's termination. judgment will, therefore, lie. (Celerina J. Santos v.
Reappearance of the absent or presumptively Ricardo T. Santos, G.R. 187061, October 8, 2014,
dead spouse will cause the termination of the as penned by J. Leonen)
subsequent marriage only when all the
conditions enumerated in the Family Code are NOTE: A mere filing of an affidavit of
present. Hence, the subsequent marriage may
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Civil Law
presumptive death can be obtained, it must be citizen like her, who was among the
shown that the prior spouse had been absent for passengers onboard a commercial jet plane
four consecutive years and the present spouse which crashed in the Atlantic Ocean ten (10)
had a well-founded belief that the prior spouse years earlier, and has never been heard of
was already dead. ever since. Believing that her husband had
died, Ana married Adolf Cruz Staedler, a
The "well-founded belief in the absentee's death divorced German national born of a German
requires the present spouse to prove that father and a Filipino mother residing in
his/her belief was the result of diligent and Stuttgart. To avoid being required to submit
reasonable efforts to locate the absent spouse the required certificate of capacity to marry
and that based on these efforts and inquiries, from the German Embassy in Manila, Adolf
he/she believes that under the circumstances, stated in the application for marriage license
the absent spouse is already dead. It necessitates stating that Adolf was a Filipino, the couple
exertion of active effort, not a passive one. As got married in a ceremony officiated by the
such, the mere absence of the spouse for such Parish Priest of Calamba, Laguna in a beach
periods prescribed under the law, lack of any in Nasugbu, Batangas, as the local parish
news that such absentee spouse is still alive, priest refused to solemnize marriage except
failure to communicate, or general presumption in his church. Is the marriage valid? (2008
of absence under the Civil Code would not BAR)
suffice.
A: If the missing husband was in fact dead at the
In this case, Nilda testified that after Dante's time the second marriage was celebrated, the
disappearance, she tried to locate him by making second marriage was valid. Actual death of a
inquiries with his parents, relatives, and spouse dissolves the marriage ipso facto
neighbors as to his whereabouts, but whether or not the surviving spouse had
unfortunately, they also did not know where to knowledge of such fact. A declaration of
find him. Other than making said inquiries, presumptive death even if obtained will not
however, Nilda made no further efforts to find make the marriage voidable because
her husband. She could have called or proceeded presumptive death will not prevail over the fact
to the AFP headquarters to request information of death.
about her husband but failed to do so. She did
not even seek the help of the authorities or the If the missing husband was in fact alive when the
AFP itself in finding him. (Republic v. Tampus, second marriage was celebrated, the second
G.R. No. 214243, March 16, 2016) marriage was void ab initio because of a prior
subsisting marriage. Had Ana obtained a
Q: When are non-bigamous subsequent declaration of presumptive death, the second
marriages void? marriage would have been voidable. In both
cases, the fact that the German misrepresented
A: The subsequent marriage of a person whose his citizenship to avoid having to present his
prior marriage has been annulled but contracted Certificate of Legal Capacity, or the holding of
said subsequent marriage without compliance the ceremony outside the church or beyond the
with Art. 52 of the FC, shall be VOID. territorial jurisdiction of the solemnizing officer,
are all irregularities which do not affect the
Before he contracts a subsequent marriage, he validity of the marriage.
must first comply with the requirement
provided for in Art. 52, viz: JUDICIAL DECLARATION
OF NULLITY OF MARRIAGE
The recording in the civil registries and
registries of properties of the following: Necessity of Judicial Declaration of Nullity of
Marriage
1. Judgment of annulment;
2. Partition; The absolute nullity of a previous marriage may
3. Distribution of properties; and, be invoked for purposes of remarriage on the
4. Delivery of presumptive legitimes. basis solely of a final judgment declaring such
previous marriage void. (FC, Art. 40)
Q: Ana Rivera had a husband, a Filipino
1. Before the entry of judgment – The court Q: Is the declaration of nullity of marriage
shall order the case closed and terminated applied prospectively?
without prejudice to the settlement of estate
in proper proceedings. A: NO, it retroacts to the date of the celebration
2. After the entry of judgment – The decision of the marriage. Although the judicial
shall be binding upon the parties and their declaration of nullity of a marriage on the
successors-in-interest in the settlement of ground of psychological incapacity retroacts to
the estate. the date of the celebration of the marriage
insofar as the vinculum between the parties is
Petition for the declaration of nullity of concerned, it must be noted that the marriage is
marriage by the heirs of a deceased person not without legal consequences or effects. One
after his death such consequence or effect is the incurring of
criminal liability for bigamy. To hold otherwise
The heirs cannot file for declaration of nullity of would be to render nugatory the State’s penal
marriage. The advent of the Rule on Declaration laws on bigamy as it would allow individuals to
of Absolute Nullity of Void Marriages marks the deliberately ensure that each marital contract be
beginning of the end of the right of the heirs of flawed in some manner, and to thus escape the
the deceased spouse to bring a nullity of consequences of contracting multiple marriages.
marriage case against the surviving spouse. The (Tenebro v. CA, G.R. No. 150758, February 18,
heirs can still protect their successional right, for 2004)
compulsory or intestate heirs can still question
the validity of the marriage of the spouses, not in Q: Is a decree of nullity of the first marriage
a proceeding for declaration of nullity but upon required before a subsequent marriage can
the death of a spouse in a proceeding for the be entered into validly?
settlement of the estate of the deceased spouse
filed in the regular courts. A:
GR: Under Art. 40 of the FC, the absolute nullity
However, with respect to nullity of marriage of a previous marriage may be invoked for
cases commenced before the effectivity of A.M. purposes of remarriage on the basis solely of a
No. 02-11-10 and marriages celebrated during final judgment declaring such previous marriage
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1. Legitimate if the marriage is void: Q: When a marriage was declared null and
Q: Is a decree of nullity of the first marriage XPN to XPN: In ruling Jarillo and Montañez,
required before a subsequent marriage can Supreme Court applied Art. 40 retroactively,
be entered into validly? though the second marriage took place after the
effectivity of the FC, holding that said provision
A: is a rule of procedure. The retroactive
GR: Under the Art. 40 of the FC, the absolute application of procedural laws is not violative of
nullity of a previous marriage may be invoked any right of a person who may feel that he is
for purposes of remarriage on the basis solely of adversely affected. The reason is that as a
a final judgment declaring such previous general rule, no vested right may attach to, nor
marriage void. arise from, procedural laws. (Jarillo v. People,
G.R. No. 164435, September 29, 2009) (Montañez
XPNs: v. Cipriano, G.R. No. 181089, October 22, 2012)
1. If parties merely signed the marriage Q: Will the nullity of the subsequent
contract, i.e. without the presence of the marriage constitute a prejudicial question in
solemnizing officer. the crime of bigamy?
NOTE: The mere private act of signing a A: NO. The Supreme Court held that the
marriage contract bears no semblance to a subsequent declaration of the second marriage
valid marriage and, thus, needs no judicial could not be a ground for the dismissal of the
declaration of nullity of marriage. (Morigo criminal case for bigamy. Accordingly, the
vs. People, G.R. 145226, February 06, 2004) outcome of the civil case for annulment of
petitioner's marriage to [private complainant]
2. If one of the parties was a victim of identity had no bearing upon the determination of
theft. Here, the victim discovered that she petitioner's innocence or guilt in the criminal
was already married to a Korean national case for bigamy because all that is required for
upon receipt of her NSO’s CENOMAR. The the charge of bigamy to prosper is that the first
SC affirmed the trial court’s order for marriage be subsisting at the time the second
correction of entry under Rule 108 of ROC marriage is contracted.
without need of declaration of nullity of the
marriage since there is no marriage to be What makes a person criminally liable
for bigamy is when he contracts a second or
declared void in the first place. (Republic vs
Olaybar, G.R. 189538, February 10, 2014) subsequent marriage during the subsistence of a
valid first marriage. The parties to the marriage
should not be permitted to judge for themselves
3. Proxy marriages conducted in the
its nullity, for the same must be submitted to the
Philippines.
judgment of competent courts and only when
the nullity of the marriage is so declared can it
4. Same sex marriage celebrated abroad
be held as void, and so long as there is no such
involving Filipino citizens by reason of
declaration the presumption is that the marriage
public policy. Same sex marriage contracted
exists. Therefore, he who contracts a second
by a Filipino citizen is not recognized as a
marriage before the judicial declaration of the
valid marriage in the Philippines pursuant
first marriage assumes the risk of being
Article 1 of FC and Article 15 of the NCC.
prosecuted for bigamy.
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Finally, it is a settled rule that the criminal celebrated, the crime of bigamy had already
culpability attaches to the offender upon the been consummated as the second marriage was
commission of the offense, and from that instant, contracted during the subsistence of the valid
liability appends to him until extinguished as first marriage. (Tenebro v. CA, G.R. No. 150758,
provided by law. It is clear then that the crime February 18, 2004)
of bigamy was committed by petitioner from the
time he contracted the second marriage with 3. Donations Propter Nuptias
private respondent. Thus, the finality of the
judicial declaration of nullity of petitioner's GR: Donations propter nuptias are revocable at
second marriage does not impede the filing the instance of the donor.
of a criminal charge for bigamy against him.
(Capili v. People, G.R. No. 183805, July 3, 2013) XPNs:
NOTE: If the ground in nullifying the subsequent 1. If the donation propter nuptias is embodied
marriage is due to psychological incapacity, in in a marriage settlement, the donation is
such ground, it cannot be a prejudicial question void under Article 86 par. 1 of the Family
in the criminal case of bigamy because as held in Code;
Tenebro v. CA, the nullification still carries the 2. If the subsequent marriage is judicially
legal effect in incurring criminal liability for declared void by reason of Article 40 of the
bigamy. Family Code, the donation remains valid;
Although the judicial declaration of nullity of a XPN to the XPN: If the donee spouse contracted
marriage on the ground of psychological the marriage in bad faith, all donations are
incapacity retroacts to the date of the revoked by operation by law.
celebration of the marriage insofar as the
vinculum between the parties is concerned, it When both parties to a subsequent marriage
must be noted that the marriage is not without contracted in bad faith under Article 44 of the
legal consequences or effects. One such Family Code, all donations propter nuptias are
consequence or effect is the incurring of criminal revoked by operation by law.
liability for bigamy. To hold otherwise would be
to render nugatory the State’s penal laws on
4. Designation as Beneficiary in
bigamy as it would allow individuals to
Insurance Policy
deliberately ensure that each marital contract be
flawed in some manner, and to thus escape the
consequences of contracting multiple marriages. If the subsequent marriage is judicially declared
(Tenebro v. CA, G.R. No. 150758, February 18, void by reason of Article 40 of the Family Code,
2004) the innocent spouse may revoke such
designation if the beneficiary spouse acted in
Q: While his first marriage is subsisting, bad faith, even if such designation be stipulated
Veronico married Leticia, which marriage as irrevocable. However, if the marriage was not
was later declared void on the ground of judicially declared void and the designation in
psychological incapacity. When Veronico got the insurance policy is irrevocable, the insured
married for the third time, Leticia filed a case cannot change such designation.
for bigamy against him. For his defense,
Veronico claims that effects of the nullity of 5. Right to inherit
his marriage with Leticia retroacts to the
date when it was contracted, hence, he is not 1. Intestate Succession: The parties cannot
guilty of bigamy for want of an essential inherit from each other by way of intestate
element – the existence of a valid previous succession since they are no longer
marriage. Rule on Veronico’s argument. considered as spouses;
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2. Partition
3. Distribution of properties; and
4. Delivery of presumptive legitime.
Legitimate
GR: Illegitimate;
Children
XPNs: Those conceived or born of marriages
declared void under:
1. Art. 36 (Psychological incapacity) of
the Family Code, or
2. Art. 52 in relation to Art. 53 of the
Family Code
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Necessary
GR: There is no necessity to obtain a judicial
Judicial declaration
Declaration
XPN: For purposes of remarriage, Judicial
declaration of nullity is required.
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1. That the confidential medical record, after The prosecutor or Solicitor General shall take
having been verified for accuracy shall steps to prevent collusion between the parties
remain anonymous and unlinked; and to take care that evidence is not fabricated
2. Shall be properly sealed by its lawful or suppressed. Even if there is no suppression of
custodian, hand-delivered to the court, and evidence, the public prosecutor has to make sure
personally opened by the judge; and that the evidence to be presented or laid down
3. That the judicial or administrative before the court is no fabricated. Only the active
proceedings shall be held in executive participation of the public prosecutor or the
session. (R.A. No. 11166, Sec. 45 (c)) Solicitor General will ensure that the interest of
the State is represented and protected in
Q: Yvette was found to be positive for HIV proceedings for declaration of nullity of
virus, considered sexually transmissible, marriages by preventing the fabrication or
serious and incurable. Her boyfriend Joseph suppression of evidence. (FC, Art. 48)
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1. Compromise;
2. Confession of judgment;
3. Stipulation of facts;
4. Summary judgment; and
5. Judgment on the pleadings.
PENDENCY OF ACTION
Marriage of a Contracting party who By the contracting party Within 5 years after
party 18 years of failed to obtain whose parent did not attaining the age of 21.
age or over but parental consent: give consent.
below 21 Through free
solemnized cohabitation after
without the attaining the age of 21. Parent, guardian, or At any time before such
consent of the person having legal party has reached the
parents, guardian NOTE: The parents charge of the contracting age of 21.
or person having cannot ratify the party.
substitute marriage. The effect of
parental authority prescription on their
over the party, in part is that they are
that order barred from contesting
it but the marriage is
not yet cleansed of its
defect.
Insane spouse: GR: Sane spouse who At any time before the
Through free had no knowledge of the death of either party.
Either party was of cohabitation after other’s insanity
unsound mind coming to reason. During a lucid interval
XPN: Any relative, or after regaining sanity.
guardian or person
having legal charge of the
insane; or
Insane spouse during a
lucid interval or after
regaining sanity.
Consent of either Injured party: Through Injured party Within 5 years after the
party was free cohabitation with discovery of fraud.
obtained by fraud full knowledge of the
facts constituting the
fraud.
Vices of consent Injured party: Through Injured party Within 5 years from the
such as force, free cohabitation after time the force,
intimidation or the vices have ceased intimidation or undue
undue influence or disappeared. influence disappeared or
ceased.
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An action for legal separation which involves NOTE: It must exist after celebration of
nothing more than bed-and-board separation of marriage
the spouses is purely personal. The Civil Code
recognizes this: 10. Abandonment of petitioner by respondent
without justifiable cause for more than 1
1. By allowing only the innocent spouse and no year.
one else to claim legal separation;
2. By providing that the spouses can, by their Q: If a man commits several acts of sexual
reconciliation, stop or abate the proceedings infidelity, particularly in 2002, 2003, 2004,
and even rescind a decree of legal 2005, does the prescriptive period to file for
separation already granted. (Lapuz v. legal separation run from 2002? (2007 BAR)
Eufemio, G.R. No. L-31429, January 31, 1972)
A: The prescriptive period begins to run upon
GROUNDS FOR LEGAL SEPARATION (FC, ART. the commission of each act of infidelity. Every
55) (1997, 2002, 2003, 2006, 2007 BAR) act of sexual infidelity committed by the man is a
ground for legal separation.
1. Repeated physical violence or grossly
abusive conduct against petitioner, common Q: Lucita left the conjugal dwelling and filed a
child, child of petitioner; petition for legal separation due to the
physical violence, threats, intimidation, and
NOTE: Respondent’s child is not included grossly abusive conduct she had suffered at
the hands of Ron, her husband. Ron denied
2. Attempt to corrupt or induce petitioner, such and claimed that since it was Lucita who
common child, child of petitioner to engage had left the conjugal abode, then the decree
in prostitution, or connivance in such of legal separation should not be granted,
corruption or inducement; following Art. 56 par. 4 of the FC which
3. Attempt by respondent against the life of provides that legal separation shall be
petitioner; denied when both parties have given ground
4. Final judgment sentencing respondent to for legal separation. Should legal separation
imprisonment of more than 6 years, even if be denied on the basis of Ron’s claim of
pardoned; mutual guilt?
NOTE: The final judgment must be A: NO. Art. 56 par. 4 of the FC does not apply
promulgated during the marriage. since the abandonment that is a ground for legal
separation is abandonment without justifiable
5. Drug addiction or habitual alcoholism of cause for more than one year. In this case, Lucita
respondent; left Ron due to his abusive conduct. Such act
does not constitute the abandonment
NOTE: It must exist after celebration of contemplated in the said provision. Therefore,
marriage there is no mutual guilt between them as there is
only one erring spouse. (Ong Eng Kiam v. CA, G.R
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10. Causing mental or emotional anguish, public 1. Condonation of the act complained of;
ridicule or humiliation to the woman or her 2. Consent to the commission of the
child, including, but not limited to, repeated offense/act;
verbal and emotional abuse, and denial of 3. Connivance in the commission of the act;
financial support or custody of minor 4. Collusion in the procurement of decree of
children of access to the woman’s LS;
child/children. 5. Mutual Guilt;
6. Prescription: 5 yrs from occurrence of
Protection Order cause;
7. Death of either party during the pendency of
A protection order under R.A. 9262 is an order the case (Lapuz-Sy v. Eufemio, G.R. No. L-
issued under this act for the purpose of 31429, January 31, 1972);
preventing further acts of violence against a 8. Reconciliation of the spouses during the
woman or her child and granting other pendency of the case. (FC, Art. 56)
necessary relief.
Prescriptive period for filing a petition for
The relief granted under a protection order legal separation
serves the purpose of safeguarding the victim
from further harm, minimizing any disruption in An action for legal separation shall be filed
the victim’s daily life, and facilitating the within five years from the time of the occurrence
opportunity and ability of the victim to of the cause. (FC, Art. 57)
independently regain control over her life. The
provisions of the protection order shall be Failure to interpose prescription as a defense
enforced by law enforcement agencies. The
protection orders that may be issued under this When prescription was not interposed as a
Act are the Barangay Protection Order (BPO), defense, the courts can take cognizance thereof,
Temporary Protection Order (TPO) and because actions seeking a decree of legal
Permanent Protection Order (PPO). separation, or annulment of marriage, involve
public interest and it is the policy of our law that
Who may file Petition for Protection order no such decree be issued if any legal obstacles
thereto appear upon the record.
1. The offended party;
2. Parents or guardians of the offended party; This is an exception to the Rules of Court
3. Ascendants, descendants or collateral provision that defenses not raised in the
relatives within the fourth civil degree of pleadings will not be considered since
consanguinity or affinity; provisions on marriage are substantive in
4. Officers or social workers of the DSWD or nature. (Brown v. Yambao, G.R. No. L- 10699,
social workers of local government units October 18, 1957)
(LGUs);
5. Police officers, preferably those in charge of Q: Rosa and Ariel were married in the
women and children’s desks; Catholic Church of Tarlac, Tarlac on January
6. Punong barangay or Barangay Kagawad; 5, 1988. In 1990, Ariel went to Saudi Arabia
7. Lawyer, counselor, therapist or healthcare to work. There, after being converted into
provider of the petitioner; or Islam, Ariel married Mystica. Rosa learned of
8. At least 2 concerned responsible citizens of the second marriage of Ariel on January 1,
the city or municipality where the violence 1992 when Ariel returned to the Philippines
against women and their children occurred with Mystica. Rosa filed an action for legal
and who has personal knowledge of the separation on February 5, 1994.
offense committed. (Sec. 9. R.A. 9262)
a. Does Rosa have legal grounds to ask for
DEFENSES legal separation?
Grounds for denial of petition for legal b. Has the action prescribed? (1994 BAR)
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Civil Law
Effect of death of a party before entry of which favors offending spouse shall be
judgment revoked by operation of law;
6. Innocent spouse may revoke donations
The court shall order the case closed and he/she made in favor of offending spouse;
terminated without prejudice to the settlement and
of estate proper proceedings in the regular
courts. (Sec. 21, A.M. 02-11-11- SC) NOTE: Prescriptive period: 5 years from
finality of decree of legal separation
Effect of death of a party after entry of
judgment 7. Innocent spouse may revoke designation of
offending spouse as beneficiary in any
If the party dies after the entry of judgment, the insurance policy, even when stipulated as
same shall be binding upon the parties and their irrevocable.
successors in interest in the settlement of the
estate in the regular courts. (Sec. 21, A.M. 02-11- Q: In case an action for legal separation is
11-SC) granted, what will happen to a child below
the age of seven? Is the rule absolute?
Q: May the heirs of the deceased spouse
continue the suit (petition for decree of legal A: As a rule, the custody of the child shall be
separation) if the death of the spouse takes awarded to the innocent spouse, except if the
place during the pendency of the suit? child is below the age of seven where the law
says that the child cannot be separated from the
A: NO. An action for legal separation is purely mother, except if there is a compelling reason to
personal, therefore, the death of one party to the do so. The common-law relationship of a child's
action causes the death of the action itself – mother with a married man is a ground to
action personalis moritur cum persona. separate the child from the mother, because
such a situation will not afford the child a
NOTE: In cases where one of the spouses is desirable atmosphere where he can grow and
dead, or where the deceased’s heirs continue the develop into an upright and moral-minded
suit, separation of property and any forfeiture of person. (Cervantes v. Fajardo, G.R. No. 79955,
share already effected subsists, unless spouses January 27, 1989)
agree to revive former property regime.
Q: Which of the following remedies:
EFFECTS OF LEGAL SEPARATION
a. Declaration of nullity of marriage;
1. Spouses entitled to live separately but the b. Annulment of marriage;
marriage bond is not severed; c. Legal separation; and/or
2. ACP/CPG shall be dissolved and liquidated. d. Separation of property.
The share of the offending spouse in the net
profits shall be forfeited in favor of: can an aggrieved spouse avail
himself/herself of:
a. Common children,
b. In default of the common children, 1. If the wife discovers after the
children of the guilty spouse by a marriage that her husband has
previous marriage, “AIDS”?
c. In default of common children and the 2. If the wife goes abroad to work as a
children of the guilty spouse, innocent nurse and refuses to come home after
spouse; the expiration of her three-year
contract there?
3. Custody of minor children is awarded to the 3. If the husband discovers after the
innocent spouse (subject to FC, Art. 213); marriage that his wife has been a
4. Offending spouse is disqualified to inherit prostitute before they got married?
from innocent spouse by intestate 4. If the husband has a serious affair
succession; with his secretary and refuses to stop
5. Provisions in the will of innocent spouse notwithstanding advice from
relatives and friends?
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Civil Law
XPN: The parties, however, can come into an thereby be terminated at whatever stage.
agreement to revive their previous regime. Their
agreement must be under oath and must contain
a list of the properties desired to be returned to
the community or conjugal property and those
which will remain separate, a list of creditors
and their addresses.
4. As to Capacity to Succeed
DECLARATION OF NULLITY OF
BASIS ANNULMENT LEGAL SEPARATION
MARRIAGE
GR: Illegitimate
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Civil Law
Intestate Succession:
The parties cannot inherit from
each other by way of intestate
succession since they are no longer
considered as spouses.
Testate Succession:
GR: Any testamentary provision by
one in favor of the other shall
remain valid.
XPN:
1. If the subsequent marriage
is rendered void by non-
compliance with Article 40 of the
Family Code FC, the spouse who If one spouse contracted the marriage in
contracted the subsequent bad faith, he shall be disqualified to
Succession marriage in bad faith is inherit from innocent spouse by testate
disqualified to inherit from the and intestate succession. [FC, Art. 43(5)]
innocent spouse.
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Civil Law
1. Giving mutual help and support. 1. Where both spouses are aliens;
2. With respect to the extrinsic validity of
NOTE: A husband is liable to pay the contracts affecting property not situated in
expenses arising from the medical the Philippines, and executed in the country
assistance rendered to his wife even though where the property is located; or
he is not the one who actually called the 3. With respect to extrinsic validity of
attending physician on the ground that he contracts entered into in the Philippines but
has the obligation to provide support to his affecting property situated in a foreign
wife. (Pelayo v. Lauron, 12 Phil. 453) country whose laws require different
formalities for its extrinsic validity. (FC, Art.
2. Wife left the conjugal home for justifiable 80)
reasons, is entitled to separate maintenance.
(Goitia v. Campos Rueda, 35 Phil. 252) Rule on waiver of rights over the share in the
community or conjugal property
Reasons when the Court may exempt one
spouse from living with the other GR: Cannot be waived during the marriage.
1. If one spouse should live abroad. XPN: In case of judicial separation of property.
2. Other valid and compelling reasons.
NOTE: The waiver must be in a public
NOTE: The Court shall not grant the exemption instrument and recorded in the office of the local
if it is not compatible with the solidarity of the civil registrar where the marriage contract was
family recorded as well as in the proper registry of
property.
PROPERTY RELATIONS OF THE SPOUSES
Property regime governing the property
The property relations shall be governed by the relations of spouses in the absence of
91
Civil Law
93
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95
Civil Law
97
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99
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101
Civil Law
Either spouse may mortgage, encumber, alienate Q: A, prior to his death, sold his lot. There
or otherwise dispose of his or her exclusive were improvements made on the said lot
property. (FC, Art. 111 as amended by R.A. 10572) which was paid out of the conjugal funds of A
and B. When A died, using Art. 120 of the FC
Rules in cases of improvement of exclusive to support her claim, B sought
property (FC, Art. 120) reimbursement of her half of the sale from C,
the buyer of the property. Will the petition of
1. Reverse accession – If the cost of the B prosper?
improvement and the value of the
improvement is more than the value of the A: NO. The SC ruled that Art. 120 does not give
principal property at the time of the any cause of action on the part of B to claim from
improvement, the entire property becomes C, the subsequent buyer of the property of A, the
conjugal. deceased husband. Art. 120 of the FC only allows
claims from the husband if the latter is still the
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Civil Law
owner of the lot upon liquidation. (Ferrer vs during the marriage and net fruits of
Ferrer, G.R. No. 166496, November 9, 2006) separate property;
Presumption of inclusion of property in the NOTE: Net fruits refer to the remainder of
Conjugal Partnership of Gains the fruits after deducting the amount
necessary to cover the expenses of
GR: All property acquired during the marriage, administration of said exclusive property.
whether the acquisition appears to have been
made, contracted or registered in the name of 6. Share of either spouse in hidden treasure;
one or both spouses, is presumed to be conjugal. and
7. Those acquired through occupation such as
XPN: Unless the contrary is proved. hunting or fishing. (FC, Art. 117)
2. Livestock in excess of what was brought to A: CONJUGAL. In this case, the provisions of
the marriage; the NCC would apply since the property was
3. Those acquired by chance such as winnings purchased before the FC took effect. Under
from gambling or betting; Art. 160 of the NCC, all properties of the
4. Those obtained from labor, industry, work marriage are presumed to belong to the
or profession of either or both spouses; conjugal partnership, unless it be proved
5. Fruits of conjugal property due or received that it pertains exclusively to the husband or
the wife. In this case, there was no proof that
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Civil Law
A. CHARGE UPON AND OBLIGATIONS OF THE If levy was made on the conjugal property by
CONJUGAL PARTNERSHIP OF GAINS (CPG) reason of the husband being a guarantor, the
levy is improper. The payment of personal debts
1. Support of the spouses, their common contracted by the husband or the wife before or
children and the legitimate children of during the marriage shall not be charged to the
either spouse; conjugal partnership except as they redounded
2. Debts and obligation by one without the to the benefit of the family. (FC, Art. 122) (2000,
consent of the other to the extent of the 2005 BAR)
family benefited;
3. Debts and obligations contracted during the Q: If one of the spouses committed the crime
marriage by an administrator-spouse, both of slander and was held liable for damages in
spouses or one with the consent of the a damage suit, is it chargeable against the
other; conjugal partnership?
4. Taxes, liens, charges, expenses, including
major or minor repairs upon conjugal A: NO. Unlike in the system of absolute
property; community where liabilities incurred by either
5. Taxes and expenses for mere preservation spouse by reason of a crime or quasi-delict is
made during the marriage of separate chargeable to the absolute community of
property; property, in the absence or insufficiency of the
6. Expenses for professional, vocational or exclusive property of the debtor-spouse, the
self- improvement courses of either spouse; same advantage is not accorded in the system of
7. Ante-nuptial debts to the extent the family conjugal partnership of gains. To reiterate,
has been benefited; conjugal property cannot be held liable for the
8. Value of what is donated or promised to personal obligation contracted by one spouse,
common legitimate children for unless some advantage or benefit is shown to
professional, vocation or self- improvement have accrued to the conjugal partnership. (Go v.
courses; and Yamane, G.R. No. 160762, May 3, 2006)
9. Expenses of litigation between the spouses
unless the suit is found to be groundless. Q. Venancio is married to Lilia since 1973.
(FC, Art. 121) During their union, they acquired three (3)
parcels of land in Malolos, Bulacan. The
NOTE: If the conjugal partnership is insufficient properties were mortgaged to Philippine
to cover the foregoing liabilities, spouses shall be National Bank on August 25, 1994 to secure a
solidarily liable for the unpaid balance with their loan worth P1,100,000.00, and was increased
separate properties. to P3,000,000.00. According to PNB, the
spouses duly consented with the loan. When
Charges against the Separate Property that the Reyes Spouses failed to pay the loan
may be charged upon the CPG obligations, Philippine National Bank
foreclosed the mortgaged real properties.
Requisites: The auction sale happened and PNB emerged
1. All the responsibilities of the partnership as the highest bidder and a certificate of sale
have already been covered; and was issued in its favor. Venancio claimed
2. The spouse who is bound has no exclusive that his wife undertook the loan and the
properties or the same are insufficient. mortgage without his consent and his
signature was falsified on the promissory
Charges: notes and the mortgage.
1. Personal debts of either spouse contracted 1. What is the status of the real estate
before the marriage which did not redound mortgage?
to the benefit of the family;
2. Support of the illegitimate children of either 2. Can the conjugal partnership be held
spouse; liable for the loan contracted unilaterally
3. Fines and indemnities arising from delicts by Lilia?
and quasi- delicts.
A.
NOTE: The sale of conjugal property without the Upon termination of marriage by death, the
consent of the husband is void. If one spouse is community property shall be liquidated in the
incapacitated or otherwise unable to assume same proceeding for the settlement of the estate
of the deceased spouse. (FC, Art. 130)
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Support to the surviving spouse and to the 1. Any disposition or encumbrance made by
children during liquidation the surviving spouse involving community
property of the terminated marriage shall be
The support to be given to the surviving spouse void.
and to the children during liquidation shall come 2. Should the surviving spouse contract a
from the common mass of property and shall be subsequent marriage a mandatory regime of
particularly charged against the fruits, rents or complete separation of property shall
income pertaining to their shares to the govern the property relations of the
inventoried property. But where the support subsequent marriage.
given exceeds the fruits, rents or income
pertaining to their shares, the excess shall be Rules governing the regime of separation of
deducted from their respective shares as these property
are deemed advances from the inventoried
property. (FC, Art. 133) 1. Marriage settlement
2. Family Code in supplemental character (FC,
Liquidation of community property in the Art. 149)
absence of a judicial settlement proceeding
(FC, Art. 130) Kinds of separation of property
Effects if the community property is not NOTE: In cases provided in 1, 2 and 3, the
liquidated (FC, Art. 130) presentation of the final judgment against the
guilty or absent spouse shall be enough bases for
GR: Both spouses shall bear the family expenses NOTE: For as long as it is proven that s property
in proportion to their income. was acquired during marriage, the presumption
of conjugality will attach regardless in whose
XPN: In case of insufficiency or default thereof, name the property is registered.
to the current market value of their separate
properties. The presumption is not rebutted by the mere
fact that the certificate of title of the property or
Revival of previous property regime the tax declaration is in the name of one of the
spouses. (Villanueva v. CA, G.R. No. 143286, April
If the spouses opted for voluntary separation of 14, 2004)
property, the parties may agree to the revival
even in the absence of a reason/ground. Property regime in case the marriage is
However, a subsequent voluntary separation of declared null and void on the ground of
property is no longer allowed. psychological incapacity
If the separation of property is for a sufficient The property relation between the parties is
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Civil Law
governed by Art. 147 of the Family Code. Art. 50 of the Family Code, and Sec. 19 of the
Property acquired by both spouses through their Rules on Declaration of Nullity applies only to
work and industry shall be governed by the marriages which are declared void ab initio or
rules on equal co-ownership. Any property annulled by final judgment under Art. 40 and 45
acquired during the union is prima facie of the Family Code. Art. 50 does not apply to
presumed to have been obtained through their marriages which are declared void ab initio
joint efforts. under Art. 36 which should be declared void
without waiting for the liquidation of the
A party who did not participate in the properties of the parties.
acquisition of the property shall still be
considered as having contributed thereto jointly In this case, petitioner’s marriage to respondent
if said party's "efforts consisted in the care and was declared void under Art. 36 of the FC and
maintenance of the family household." Unlike not under Art.40. Thus, what governs the
the conjugal partnership of gains, the fruits of liquidation of property owned in common by
the couple's separate property are not included petitioner and respondent are the rules on co-
in the co-ownership. ownership under Art. 496 of the NCC. Partition
may be made by agreement between the parties
Q: Miko and Dinah started to live together as or by judicial proceedings. It is not necessary to
husband and wife without the benefit of liquidate the property of the spouses in the same
marriage in 1984. 10 years after, they proceeding for declaration of nullity of marriage.
separated. In 1996, they decided to live (Dino v. Dino, G.R. No. 178044, January 19, 2011)
together again, and in 1998 they got married.
On February 17, 2001, Dinah filed a Co-ownership under Art. 147
complaint for declaration of nullity of her
marriage with Miko on the ground of When a man and a woman who are capacitated
psychological incapacity. The Court rendered to marry each other, live exclusively with each
the following decision: other as husband and wife without the benefit of
marriage or under a void marriage, their wages
1. Declaring the marriage null and void; and salaries shall be owned by them in equal
shares and the property acquired by both of
2. Dissolving the regime of Absolute them through their work or industry shall be
Community of Property; and governed by the rules of co-ownership.
Q: Bert and Joe, both male and single, lived A: YES. The property relations of Benjamin and
together as common law spouses and agreed Sally is governed by Article 148 of the Family
to raise a son of Bert’s living brother as their Code. They cohabitated without the benefit of
child without legally adopting him. Bert marriage. Thus, only the properties acquired by
worked while Joe took care of they were able them through their actual joint contribution of
to acquire real estate assets registered in money, property, or industry shall be owned by
their names as co-owners. Unfortunately, them in common in proportion to their
Bert died of cardiac arrest, leaving no will. respective contributions. Thus, the 37 properties
Bert was survived by his biological siblings, being claimed by Sally is excluded as part of her
Joe and the boy. conjugal properties with Benjamin because Sally
was not legally married to Benjamin. As regards
Can Article 147 on co-ownership apply to the seven remaining properties, only one of
Bert and Joe, whereby all properties they them is registered in the names of the parties as
acquired will be presumed to have been spouses. The other four were registered in the
acquired by their joint industry and shall be name of either one of them with the description
owned by them in equal shares? “married to” and the last two were named to
Sally as an individual. The words “married to”
If Bert and Joe had decided in the early years preceding the name of a spouse are merely
of their cohabitation to jointly adopt the boy, descriptive of the civil status of the registered
would they have been legally allowed to do owner, which do not prove co-ownership.
so? Explain with legal basis. Without proof of actual contribution from either
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Civil Law
1. The man and the woman must 1. The man and the woman
As to requisites be capacitated to marry each must be incapacitated to
other; marry each other, or they do
2. live exclusively with each other not live exclusively with each
as husband and wife; and other as husband and wife;
3. their union is without the and
benefit of marriage or their 2. Their union is without the
marriage is void. (Mercado Fehr benefit of marriage or their
v. Fehr, G.R. No. 152716, October marriage is void. (FC, Art.
23, 2003 Salas, Jr. v. Aguila, G.R. 148)
No. 202370, September 23, 2013)
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Civil Law
When only one of the parties to a void If one of the parties is validly married
marriage is in good faith, the share of the to another, his/her share in the co-
Forfeiture party in bad faith in the co-ownership ownership shall accrue to the ACP or
shall be forfeited in favor of: CPG existing in the marriage.
115
Civil Law
unquestionably did not have any authority or The FH must be part of the properties of the
basis to motu propio order the dismissal of absolute community or the conjugal partnership
petitioner’s complaint. (Moreno vs. Kahn, G.R. No. or the exclusive properties of either spouse, with
217744, July 30, 2018) the latter’s consent. It may also be constituted by
an unmarried head of a family on his or her own
The following cannot be compromised: property. (FC, Art 156)
However, the rule is not absolute. Art. 155 of the 3. And in both cases, whether under the Civil
Family Code provides the circumstances Code or the Family Code, it is not sufficient
wherein the FH will not be exempt from that the person claiming exemption merely
execution, forced sale of attachment, to wit: alleges that such property is a FH. This claim
for exemption must be set up and proved.
XPN: Under Art. 155 of the Family Code: (Juanita Trinidad Ramos, et al. v. Danilo
Pangilinan et al. G.R. No. 185920, July 20,
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Civil Law
Exemption of Family Home must first be set b. The judgment in favor of the creditor
up and proved will be paid, plus all the costs of
execution
The FH’s exemption from execution must be set
up and proved to the Sheriff before the sale of The excess, if any, shall be delivered to the
the property at public auction. It should be judgment debtor. (FC, Art. 160)
asserted that the property is a FH and that it is
exempted from execution at the time it was NOTE: The actual value of the FH shall not
levied or within a reasonable time thereafter. It exceed, at the time of its constitution, the
is not sufficient that the person claiming amount of P300,000 in urban areas, and
exemption merely alleges that such property is a P200,000 in rural areas, or such amounts as may
FH. Failure to do so will estop one from later hereafter be fixed by law. (FC, Art. 157)
claiming the said exemption. (Spouses Araceli
Oliva-De Mesa and Ernesto de Mesa v. Spouses Q: A complaint for damages was filed against
Claudio D. Acero Jr. and Ma.Rufina D. Acero, Hinahon in 1986 when she incurred
Sheriff Felixberto L. Samonte and Registrar liabilities as early as 1977, which action
Alfredo Santos, G.R. No. 185064, January 16, prospered in 1989. The house and lot that
2012) she owned was levied upon and sold at
auction. She assails the levy and sale on the
Requisites for the creditor to avail of the ground that it was her family home and
right to execute (FC, Art 160) therefore exempt from execution. Decide.
a. The obligations enumerated in Art. Q: Has the residential house and lot of
Cesario Montana which he and his family
119
Civil Law
a. Legitimate – conceived OR born 1. To bear the surname of the father and the
within a valid marriage. mother;
b. Illegitimate – conceived AND born 2. To receive support from their parents, their
outside a valid marriage. ascendants, and in proper cases, their
brothers and sisters; and
II. Judicial Act 3. To be entitled to the legitimate and other
a. Legitimated – conceived and born successional rights granted to them by the
outside of wedlock of parents Civil Code.
without impediment to marry at the
time of conception or were so Presumption of legitimacy (2006, 2008, 2010
disqualified only because either or BAR)
both of them were below eighteen
(18) years of age. (FC, Art. 177) Article 164 of the Family Code provides that the
b. Adopted – a filiation created by law children conceived or born during the marriage
which vests between two persons a of the parents are legitimate.
relationship similar to that which
results from legitimate paternity and The presumption of legitimacy of children does
filiation. not only flow out from a declaration contained in
the statute but is based on the broad principles
I. NATURAL of natural justice and the supposed virtue of the
mother. The presumption is grounded in a policy
A. LEGITIMATE CHILDREN to protect innocent offspring from the odium of
illegitimacy. (Liyao, Jr. v. Tanhoti-Liyao, G.R.
138961, March 7, 2002)
Legitimate child
The presumption of legitimacy under Article 164
GR: One who is conceived OR born during the
of the Family Code may be availed only upon
marriage of the parents. (FC, Art. 164)
convincing proof of the factual basis therefor,
i.e., that the child’s parents were legally married
XPN: Born outside of a valid marriage (void
and that his/her conception or birth occurred
marriages) but considered as legitimate child:
during the subsistence of that marriage. Else, the
presumption of law that a child is legitimate
1. Children of marriages which are declared
does not arise. (Angeles Maglaya, G.R. No.
void under Art. 36; and
153798, September 2, 2005)
2. Children of marriages which are declared
void under Art. 53. (Rabuya, 2009)
NOTE: The child by himself cannot choose his
own filiation. Neither can he elect the paternity
Requisites for a child conceived by artificial
of the husband of his mother when the
insemination to be considered legitimate (FC,
presumption of his legitimacy has been
Art. 164, par. 2)
successfully overthrown.
1. The artificial insemination is made on the Q: What is the effect of the declaration of a
wife, not on another woman;
wife against the legitimacy of the child where
2. The artificial insemination on the wife is
the child is conclusive presumed to be the
done with the sperm of the husband or of a
legitimate child of H and W?
donor, or both the husband and a donor;
3. The artificial insemination has been
A: The child shall still be legitimate, although the
authorized or ratified by the spouse on a
mother may have declared against his
written instrument executed and signed by
legitimacy. This law likewise applies to such
them before the birth of the child; and
instances where the mother may have been
4. The written instrument is recorded in the
sentenced as an adulteress. (FC, Art. 167)
civil registry together with the birth
certificate of the child. (FC, Art. 164)
NOTE: Art. 167 of the Family Code applies only
to a situation where the wife denies the
Rights of legitimate children (FC, Art. 174)
paternity of the husband. Art. 167 does not apply
to a situation where a child is alleged not to be
121
Civil Law
123
Civil Law
Illustrations:
Marriage
Marriage
125
Civil Law
civil register in a public document or in a private
handwritten instrument signed by
2. Admission in public document OR private the parent concerned; AND IN THE
handwritten instrument is made by the ABSENCE THEREOF; and Filiation
father may be proved by:
c. The open and continuous
NOTE: Provided that the father has the right possession of the status of a
to institute an action before the regular legitimate child;
courts to prove non-filiation during his
lifetime. An illegitimate child who has not been
recognized by options (1) or (2) of the
Establishing Illegitimate Filiation (1995, abovementioned enumeration MAY PROVE
1999, 2005, 2010 BAR) his filiation under number (3) based on
open and continuous possession of the
Q: Julie had a relationship with a married status of an illegitimate child but pursuant
man who had legitimate children. A son was to Article 175 of the NCC, he or she must file
born out of the illicit relationship in 1981. the action for recognition during the lifetime
Although the putative father did not of the putative father. The provision of
recognize the child in his birth certificate, he Article 285 of the Civil Code allowing the
nevertheless provided the child with all the child to file the action for recognition even
support he needed and spent time regularly after the death of the father will not apply
with the child and his mother. When the man because in the case presented, the child was
died in 2000, the child was already 18 years no longer a minor at the time of death of the
old so he filed a petition to be recognized as putative father.
an illegitimate child of the putative father
and sought to be given a share in his putative 2. NO. I will not approve the compromise
father’s estate. The legitimate family agreement because filiation is a matter to be
opposed, saying that under the FC his action decided by law. It is not for the parties to
cannot prosper because he did not bring the stipulate whether a person is a legitimate or
action for recognition during the lifetime of illegitimate child of another. (De Jesus v.
his putative father. Estate of Dizon, G.R. No. 142877, October 2,
2001) In all cases of illegitimate children,
1. If you were the judge, how would you their filiation must be duly proved. (NCC,
rule? Art. 887)
2. Wishing to keep the peace, the child Public instrument subscribed and made
during the pendency of the case decides under oath by the putative father indicating
to compromise with his putative father’s the illegitimate child as his is sufficient to
family by abandoning his petition in establish illegitimate filiation
exchange for what he would have
received as inheritance if he were Q: Why is an illegitimate child of a woman,
recognized as an illegitimate child. As the who gets married, allowed to bear the
judge, would you approve such surname of her subsequent spouse, while a
compromise? (2015 BAR) legitimate child may not?
Only children conceived and born outside of A: NO, she cannot be legitimated by the
wedlock of parents who, at the time of marriage of her biological parents. In the first
conception of the former, were not disqualified place she is not, under the law, the child of
by any impediment to marry each other, or were Roderick. In the second place, her biological
so disqualified only because either or both of parents could not have validly married each
them were below eighteen (18) years of age. other at the time she was conceived and born
(Art. 177, FC as amended by R.A. 9858) (1990, simply because Faye was still married to
2004, 2008, 2009 BAR) Roderick Brad at that time. Only children
conceived or born outside of wedlock of parents
who, at the time of the conception of the child
Requisites of legitimation
were not disqualified by any impediment to
marry each other, may be legitimated. (FC, Art.
1. Child must have been conceived and born
177)
outside of wedlock;
2. Child’s parents, at the time of former’s
conception, were not disqualified by any RIGHTS OF LEGITIMATE AND ILLEGITIMATE
impediment to marry each other or were so CHILDREN
disqualified only because either or both of
them were below eighteen (18) years of age; NOTE: Legitimated children shall enjoy the same
and rights as legitimate children. (FC, Art. 179)
3. The subsequent valid marriage of the
parents. BASIS LEGITIMATE ILLEGITIMA
CHILDREN TE
Q: Who may impugn the legitimation? (FC, CHILDREN
Art. 182)
Surname Bear the Bear the
A: Legitimation may be impugned only by those surnames of surname of
who are prejudiced in their rights, within 5 years both parents either the
from the time their cause of action accrues, that (mother and mother or the
is, from the death of the putative parent. father) father under
R.A. 9255
NOTE: The right referred to are successional
rights. Hence, only those whose successional NOTE: Under
rights are directly affected may impugn the the
legitimation that took place. amendatory
127
Civil Law
provisions of ty of right to
RA 9255, the file an action
use of to claim
illegitimate legitimacy
father's
surname is
permissive Right to Yes No right to
and not inherit ab inherit ab
obligatory. intestato intestate
(Rabuya, from
2008) legitimate
children and
relatives of
Support Receive Receive father and
support from: support mother under
according to Art. 992, New
1. Parents; provision of Civil Code.
2. Ascendan Family Code (Iron Curtain
ts; and Rule)
3. In proper
cases,
brothers ACTION TO CLAIM FILIATION
and
sisters Paternity and filiation or the lack of the same is a
under Art. relationship that must be judicially established,
174 of the and it is for the court to declare its existence or
Family absence. It cannot be left to the will or
Code. agreement of the parties. (De Asis v. CA, G.R.
127578, February 15, 1999)
Legitime Full Legitimes Share is The manner of claiming filiation is the same for
and other equivalent to both legitimate and illegitimate children
successional ½ of the
rights under share of a Person/s who may file for claim legitimate
the New Civil legitimate filiation (FC, Art. 173)
Code child
GR: The right of claiming legitimacy belongs to
the child
Period for His/her For primary
filing action whole proof: XPN: The right is transferred to his heirs when
for claim of lifetime his/her whole the child dies:
legitimacy or regardless of lifetime.
illegitimacy type of proof 1. During minority or
provided For 2. In a state of insanity.
under Art. secondary 3. After commencing the action for legitimacy
172 of the proof:
Family Code only during NOTE: Questioning legitimacy may not be
the lifetime of collaterally attacked. It can be impugned only in
the alleged a direct action
parent.
Person/s who may file for claim illegitimate
filiation
NOTE: Provided that the action for illegitimacy 1. By the child – during his lifetime
is based on admission of paternity or filiation in 2. By his heirs – within 5 years should the
a birth certificate or written instrument. child dies during minority, in a state of
insanity or after commencing the action for
However, if the action for illegitimacy is based legitimacy
on an open and continuous possession of status
of illegitimate filiation or any other means NOTE: Provided that the action for illegitimacy
allowed by the Rules of Court and special laws, is based on admission of paternity or filiation in
the action must be brought during the lifetime of a birth certificate or written instrument.
the alleged parent.
However, if the action for illegitimacy is based
Paternity and filiation or the lack of the same is a on open and continuous possession of status of
relationship that must be judicially established, illegitimate filiation or any other means allowed
and it is for the court to declare its existence or by the Rules of Court and special laws, the action
absence. It cannot be left to the will or must be brought during the lifetime of the
agreement of the parties. (De Asis v. CA, G.R. alleged parent.
127578, February 15, 1999)
Kinds of proof of filiation (1995, 1999, 2010
The manner of claiming filiation is the same for BAR)
both legitimate and illegitimate children
Proof of filiation has two kinds (FC, Art 172, 1st
Person/s who may file for claim legitimate par):
filiation (FC, Art. 173)
1. Primary proof consists of the ff.:
GR: The right of claiming legitimacy belongs to a. Record of birth appearing in civil
the child registrar or final judgment;
b. Admission of legitimate filiation in
XPN: The right is transferred to his heirs when public document or private
the child dies: handwritten instrument signed by
parent concerned.
1. During minority or
2. In a state of insanity. 2. Secondary consists of the ff. (FC, Art 172,
3. After commencing the action for legitimacy 2nd par):
a. Open and continuous possession of
NOTE: Questioning legitimacy may not be legitimacy;
collaterally attacked. It can be impugned only in b. Any means allowed by the Rules of
a direct action Court and special laws.
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Civil Law
NOTE: To prove open and continuous constitutes a public document or private
possession of the status of an illegitimate child, handwritten instrument signed by the parent
there must be evidence of manifestation of the concerned.
permanent intention of the supposed father to
consider the child as his, by continuous and clear Prima facie case of sexual relations with the
manifestations of parental affection and care, putative father
which cannot be attributed to pure charity.
A prima facie case exists if a woman declares —
Such acts must be of such a nature that they supported by corroborative proof — that she
reveal not only the conviction of paternity, but had sexual relations with the putative father; at
also the apparent desire to have and treat the this point, the burden of evidence shifts to the
child as such in all relations in society and in life, putative father. Further, the two affirmative
not accidentally, but continuously. (Jison v. CA, defenses available to the putative father are:
G.R. No. 124853, February 24, 1998)
1. Incapability of sexual relations with the
Rules in proving filiation mother due to either physical absence or
impotency; or
GR: Primary proof shall be used to prove 2. That the mother had sexual relations with
filiation. other men at the time of conception.
(Charles Gotardo v. Divina Buling, G.R. No.
XPN: In absence of primary proof, secondary 165166, August 15, 2012).
proof may be resorted to.
Q: Rosanna, as surviving spouse, filed a claim
Pictures or certificate of baptism do not for death benefits with the SSS upon the
constitute authentic documents to prove the death of her husband, Pablo. She indicated in
legitimate filiation of a child her claim that the decedent is also survived
by their minor child, Lyn, who was born in
Pictures or canonical baptismal certificate do not 1991. The SSS granted her claim but this was
constitute the authentic documents to prove the withdrawn after investigation, when a sister
legitimate filiation of a child. The baptismal of the decedent informed the system that
certificate of the child, standing alone, is not Pablo could not have sired a child during his
sufficient. It is not a record of birth. Neither is it lifetime because he was infertile. However, in
a public instrument nor a private handwritten Lyn’s birth certificate, Pablo affixed his
instrument. (Abelle v. Santiago, G.R. No. L- 16307, signature and he did not impugn Lyn’s
April 30, 1963) legitimacy during his lifetime. Was the SSS
correct in withdrawing the death benefits?
Baptismal certificate does not prove filiation
A: NO. Children conceived or born during the
Just like in a birth certificate, the lack of marriage of the parents are legitimate. (FC, Art.
participation of the supposed father in the 164) This presumption becomes conclusive in
preparation of a baptismal certificate renders the absence of proof that there is physical
this document incompetent to prove paternity. impossibility of access under Art. 166 of the
And “while a baptismal certificate may be Family Code. Upon the expiration of the periods
considered a public document, it can only serve for impugning legitimacy under Art. 170, and in
as evidence of the administration of the the proper cases under Art. 171, of the Family
sacrament on the date specified but not the Code, the action to impugn would no longer be
veracity of the entries with respect to the child’s legally feasible and the status conferred by the
paternity. Thus, baptismal certificates are per se presumption becomes fixed and unassailable. In
inadmissible in evidence as proof of filiation and this case, there is no showing that Pablo, who
they cannot be admitted indirectly as has the right to impugn the legitimacy of Lyn,
circumstantial evidence to prove the same”. challenged her status during his lifetime. There
(Antonio Perla v. Mirasol Baring and Randy B. is adequate evidence to show that the child was
Perla, G.R. No. 172471, November 12, 2012) in fact his child, and this is the birth certificate
where he affixed his signature. (SSS v. Aguas, et
NOTE: A will which was not presented for al., G.R. No. 165546, February 27, 2006)
probate sufficiently establish filiation because it
Q: Gerardo filed a complaint for bigamy In said birth certificate, it was indicated that
against Ma. Theresa, alleging that she had a her birth was recorded as the legitimate
previous subsisting marriage when she child of Ramon and Van Bolatis, and it also
married him. The trial court nullified their contains the word “married” to reflect the
131
Civil Law
union between the two. However, it was not Cabatania v. CA, G.R. No. 124814, October 21,
signed by Ramon and Vanemon Bolatis. It 2004)
was merely signed by the attending
physician, who certified to having attended NOTE: In this age of genetic profiling and DNA
to the birth of a child. Does the presumption analysis, the extremely subjective test of
of legitimacy apply to Cherimon? physical resemblance or similarity of features
will not suffice as evidence to prove paternity
A: NO. Since the birth certificate was not signed and filiation before courts of law. This only
by Cher’s alleged parents but was merely signed shows the very high standard of proof that a
by the attending physician, such a certificate, child must present in order to establish filiation.
although a public record of a private document
is, under Sec. 23, Rule 132 of the Rules of Court, Q: Ann Lopez, represented by her mother
evidence only of the fact which gave rise to its Araceli Lopez, filed a complaint for
execution, which is, the fact of birth of a child. A recognition and support of filiation against
birth certificate, in order to be considered as Ben-Hur Nepomuceno. She assailed that she
validating proof of paternity and as an is the illegitimate daughter of Nepomuceno
instrument of recognition, must be signed by submitting as evidence the handwritten note
the father and mother jointly, or by the allegedly written and signed by Nepomuceno.
mother alone if the father refuses. There She also demanded for financial support
having been no convincing proof of respondent’s along with filial recognition. Nepomuceno
supposed legitimate relations with respect to the denied the assertions reasoning out that he
decedent, the presumption of legitimacy under was compelled to execute the handwritten
the law did not therefore arise in her favour. note due to the threats of the National
(Angeles v. Angeles- Maglaya, G.R. No. 153798, People’s Army. RTC ruled in favor of Ann.
September 2, 2005) Later, the RTC dismissed Araceli’s complaint
for insufficiency of evidence. Is the dismissal
Q: On the basis of the physical presentation of the complaint proper?
of the plaintiff-minor before it and the fact
that the alleged father had admitted having A: YES. Ann’s demand for support is dependent
sexual intercourse with the child's mother, on the determination of her filiation. However,
the trial court, in an action to prove filiation she relies only on the handwritten note executed
with support, held that the plaintiff- minor is by petitioner. The note does not contain any
the child of the defendant with the plaintiff- statement whatsoever about her filiation to
minor's mother. Was the trial court correct in petitioner. It is, therefore, not within the ambit
holding such? of Article 172(2) vis-à-vis Art. 175 of the Family
Code which admits as competent evidence of
A: NO. The birth certificate that was presented illegitimate filiation an admission of filiation in a
by the plaintiff-minor appears to have been private handwritten instrument signed by the
prepared without the knowledge or consent of parent concerned.
the putative father. It is therefore not a
competent piece of evidence on paternity. The The Court is mindful that the best interests of
local civil registrar in this case has no the child in cases involving paternity and
authority to record the paternity of an filiation should be advanced. It is, however, just
illegitimate child on the information of a third as mindful of the disturbance that unfounded
person. A baptismal certificate, while considered paternity suits cause to the privacy and peace of
a public document, can only serve as evidence of the putative father’s legitimate family. (Ben-Hur
the administration of the sacrament on the date Nepomuceno v. Archbencel Ann Lopez,
specified therein but not the veracity of the represented by her mother Araceli Lopez G.R. No.
entries with respect to the child's paternity. 181258, March 18, 2010)
(Macadangdang v. CA, G.R. No. L- 49542,
September 12, 1980) Thus, certificates issued by ADOPTION
the local civil registrar and baptismal certificates
are per se inadmissible in evidence as proof of Adoption is the process of making a child,
filiation and they cannot be admitted indirectly whether related or not to the adopter, possess in
as circumstantial evidence to prove the same. general, the rights accorded to a legitimate child.
(Jison v. CA, G.R. No. 124853, February 24, 1998; It is a juridical act, a proceeding in rem which
The relationship established by the adoption is a. that his/her country has diplomatic
limited to the adopting parents and does not relations with the Republic of the
extend to their other relatives, except as Philippines;
expressly provided by law. Thus, the adopted b. has been living in the Philippines
child cannot be considered as a relative of the for at least three (3) continuous
ascendants and collaterals of the adopting years prior to the filing of the
parents, nor of the legitimate children which application for adoption and
they may have after the adoption, except that the maintains such residence until the
law imposes certain impediments to marriage by adoption decree is entered;
reason of adoption. Neither are the children of c. has been certified by his/her
the adopted considered descendants of the diplomatic or consular office or any
adopter. appropriate government agency
that he/she has the legal capacity to
Preference in adoption (AID) adopt in his/her country;
d. that his/her government allows the
1. Adoption by the extended family; adoptee to enter his/her country as
his/her adopted son/daughter.
2. Domestic Adoption;
3. Inter-Country Adoption. NOTE: The requirements on residency and
certification of the alien's qualification to
I. DOMESTIC ADOPTION (R.A. 8552) adopt in his/her country may be waived for
the following:
Applies to adoption of Filipino children, where
the entire adoption process beginning from the a. a former Filipino citizen who seeks to
filing of the petition up to the issuance of the adopt a relative within the fourth (4th)
adoption decree takes place in the Philippines. degree of consanguinity or affinity; or
(Rabuya, 2009)
b. one who seeks to adopt the legitimate
A. WHEN ALLOWED son/daughter of his/her Filipino
spouse; or
Adoption need NOT be a last resort.
c. one who is married to a Filipino citizen
B. WHO CAN ADOPT and seeks to adopt jointly with his/her
spouse a relative within the fourth (4th)
1. Filipino citizens who are: degree of consanguinity or affinity of
the Filipino spouse.
a. of legal age, in possession of full
civil capacity and legal rights; 3. Guardians with respect to their ward.
b. of good moral character;
c. not been convicted of any crime NOTE: A guardian may only adopt his ward
involving moral turpitude; after termination of guardianship and
d. emotionally and psychologically clearance of his financial accountabilities.
capable of caring for children;
e. at least sixteen (16) years older 4. Husband and wife
than the adoptee (may be waived
when the adopter is the biological NOTE: Spouses shall jointly adopt except in
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Civil Law
the following cases: Monina, having remarried at the time the
petitions for adoption were filed, must jointly
a. If one spouse seeks to adopt the adopt. Since the petitions for adoption were filed
legitimate child of the other; only by Monina herself, without joining her
b. If one spouse seeks to adopt his or her husband, Olario, the trial court was correct in
own illegitimate child, provided that the denying the petitions for adoption on this
other spouse as given his or her ground. (In Re: Petition for Adoption of Michelle
consent; and P. Lim, In Re: Petition for Adoption of Michael Jude
c. If the spouses are legally separated from P. Lim, Monina P. Lim, G.R. Nos. 168992-93, May
each other. (Domestic Adoption Act of 21, 2009)
1998 (RA 8552))
Joint adoption when the adoptees are
Q: Petitioner Monina P. Lim is an optometrist already emancipated
by profession and was married to Primo Lim.
They were childless. Soon after, they Even if emancipation terminates parental
registered two minor children to make it authority, the adoptee is still considered a
appear that they were the children’s parents. legitimate child of the adopter with all the rights
The children were named Michelle and of a legitimate child such as:
Michael. They reared and cared for the
children as if they were their own and sent 1. To bear the surname of the father and the
the children to exclusive schools. They used mother;
the surname “Lim” in all their school records 2. To receive support from their parents; and
and documents. In 2000, Monina married 3. To be entitled to the legitime and other
Angel Olario, an American citizen. She then successional rights. Conversely, the adoptive
decided to adopt the children by availing of parents shall, with respect to the adopted
the amnesty given RA 8552 to those child, enjoy all the benefits to which
individuals who simulated the birth of a biological parents are entitled such as
child. At the time of the filing of the petitions support and successional rights.
for adoption, Michelle was 25 years old and
already married, while Michael was 18 years C. ADOPTEE
old. Both Michelle and Michael gave consent
to the adoption. The trial court dismissed the 1. Any person BELOW eighteen (18) years of
petition and ruled that Monina should have age who has been administratively or
filed the petition jointly with her new judicially declared available for adoption;
husband. Monina, in a Motion for 2. The legitimate son/daughter of one spouse
Reconsideration argues that mere consent of by the other spouse;
her husband would suffice and that joint 3. An illegitimate son/daughter by a qualified
adoption is not needed, for the adoptees are adopter to improve his/her status to that of
already emancipated. Is the trial court legitimacy;
correct in dismissing the petition for 4. A person of legal age if, prior to the
adoption? adoption, said person has been consistently
considered and treated by the adopter(s) as
A: YES. Section 7, Art. 3 of R.A. 8552 reads: Sec. 7 his/her own child since minority;
– Husband and wife shall jointly adopt x x x. 5. A child whose adoption has been previously
rescinded; or
The use of the word “shall” in the above-quoted 6. A child whose biological or adoptive
provision means that joint adoption by the parent(s) has died: Provided, that no
husband and the wife is mandatory. This is in proceedings shall be initiated within six (6)
consonance with the concept of joint parental months from the time of death of said
authority over the child which is the ideal parent(s). (Sec. 8, Art. 3, RA 8552)
situation. As the child to be adopted is elevated
to the level of a legitimate child, it is but natural Child
to require the spouses to adopt jointly. The rule
also ensures harmony between the spouses. A child is any person below 18 years old. (Sec. 3,
Art. 1, RA 8552)
The law is clear. There is no room for ambiguity.
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Civil Law
1. Sexual assault or violence committed 5. Vested rights acquired prior to judicial
against the adoptee; rescission shall be respected. (Sec. 20, Art. 6,
2. Attempt on the life of the adoptee; RA 8552)
3. Repeated physical and verbal maltreatment
by the adopter despite having undergone Q: Despite several relationships with
counseling; or different women, Andrew remained
4. Abandonment and failure to comply with unmarried. His first relationship with Brenda
parental obligations. produced a daughter, Amy, now 30 years old.
His second, with Carla, produced two sons:
Grounds by which an adopter may disinherit Jon and Ryan. His third, with Donna, bore
the adoptee him two daughters: Vina and Wilma. His
fourth, while Elena, bore him no children
1. Groundless accusation against the testator although Elena has a daughter, Jane, from a
of a crime punishable by 6 years or more previous relationship. His last, with Fe,
imprisonment; produced no biological children but they
2. Found guilty of attempt against the life of informally adopted without court
the testator, his/her spouse, descendant or proceedings, Sandy, now 13 years old, whom
ascendant; they consider as their own. Sandy was
3. Causes the testator to make changes or orphaned as a baby and was entrusted to
changes a testator’s will through violence, them by the midwife who attended to Sandy’s
intimidation, fraud or undue influence; birth. All the children, including Amy, now
4. Maltreatment of the testator by word or live with Andrew in his house.
deed; a. Is there any legal obstacle to the legal
5. Conviction of a crime which carries a adoption of Amy by Andrew?
penalty of civil interdiction; b. To the legal adoption of Sandy by Andrew
6. Adultery or concubinage with the testator’s and Elena?
wife; c. In his old age, can Andrew be legally
7. Refusal without justifiable cause to support entitled to claim support from Amy, Jon,
the parent or ascendant; or Ryan, Vina, Wilma and Sandy assuming
8. Leads a dishonorable or disgraceful life. that all of them have the means to
(NCC, Art.919) support him?
d. Can Amy, Jon, Ryan, Vina, Wilma and
Effects of rescission of the adoption under Sandy legally claim support from each
the Domestic Adoption Act of 1998 (R.A. other?
8552) e. Can Jon and Jane legally marry? (2008
BAR)
1. If adoptee is still a minor or is incapacitated
– Restoration of: A:
a. NO, there is no legal obstacle to the legal
a. Parental authority of the adoptee’s adoption of Amy by Andrew. While a person
biological parents, if known; or of age may not be adopted, Amy falls within
b. Custody of the DSWD; two exceptions: (1) she is an illegitimate
child and she is being adopted by her
2. Reciprocal rights and obligations of the illegitimate father to improve her status;
adopters and adoptee to each other shall be and (2) even on the assumption that she is
extinguished; not an illegitimate child of Andrew, she may
still be adopted, although of legal age,
3. Court shall order the civil registrar to cancel because she has been consistently
the amended certificate of birth of the considered and treated by the adopter as his
adoptee and restore his/her original birth own child since minority. In fact, she has
certificate; been living with him until now.
4. Succession rights shall revert to its status b. YES. There is a legal obstacle to the adoption
prior to adoption, but only as of the date of of Sandy by Andrew and Elena. Andrew and
judgment of judicial rescission; Elena cannot adopt jointly because they are
not married.
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Civil Law
A: IT DEPENDS. If Sonny and Sarah have been months from the date the Deed of Voluntary
residing in the Philippines for at least three (3) Commitment was executed by the child’s
years prior to the effectivity of R.A. 8552, the biological parent/s. A legally-free child is freed
petition may be granted. Otherwise, the petition of his biological parents, guardians, or adopters
cannot be granted because the American in case of rescission.
husband is not qualified to adopt.
NOTE: No child shall be matched to a foreign
While the petition for adoption was filed in adoptive family unless it is satisfactorily shown
1990, it was considered refiled upon the that the child cannot be adopted in the
effectivity of R.A. 8552. This is the applicable law Philippines.
since the petition is still pending with the lower
court. Under the Act, Sarah and Sonny must GR: There shall be no physical transfer of a
adopt jointly because they do not fall in any of voluntarily committed child earlier than 6
the exceptions where one of them may adopt months from the date of execution of Deed of
alone. When husband and wife must adopt Voluntary Commitment.
jointly, the Supreme Court has held in a line of
cases that both of them must be qualified to XPN:
adopt. While Sarah, an alien, is qualified to
adopt, for being a former Filipino citizen who 1. Adoption by relative;
seeks to adopt a relative within the 4th degree of 2. Child with special medical condition.
consanguinity or neither a former Filipino
citizen nor married to a Filipino. One of them not INTER – COUNTRY ADOPTION BOARD
being qualified to adopt, their petition has to be
denied. However, if they have been residents of Function of Inter-Country Adoption Board
the Philippines 3 years prior to the effectivity of
the Act and continues to reside here until the The Inter-Country Adoption Board (ICAB) acts
decree of adoption is entered, they are qualified as the central authority in matters relating to
to adopt the nephew of Sarah under Sec. 7(b) inter-country adoption. The Board shall ensure
thereof, and the petition may be granted. that all the possibilities for adoption of the child
under the Family Code have been exhausted and
C. ADOPTEE that the inter-country adoption is in the best
interest of the child.
Only a legally freed child may be adopted
provided the following are submitted: Trial custody
1. Child study; It is the pre-adoptive relationship which ranges
2. Birth certificate/ foundling certificate; six (6) months from the time of the placement. It
3. Deed of Voluntary Commitment/Decree of starts from the actual transfer of the child to the
Abandonment/Death Certificate of parents; applicant who, as actual custodian, shall exercise
4. Medical evaluation or history; substitute parental authority over the person of
5. Psychological evaluation; and the child.
6. Recent photo.
Results of Trial Custody
Child
1. If unsatisfactory – the relationship shall be
A child is any person below 15 years old. (Sec. 3, suspended by the board and the foreign
RA 8043) adoption agency shall arrange for the child’s
voluntary care.
Child legally free for adoption
2. If satisfactory – the Board shall submit the
A child voluntarily or involuntarily committed to written consent of the adoption to the
the DSWD as a dependent, abandoned or foreign adoption agency within 30 days
neglected pursuant to the provisions of the Child after the request of the latter’s request.
and Youth Welfare Code maybe subject of Inter-
Country Adoption; provided that in case of a NOTE: The child shall be repatriated as a last
child shall be made not earlier that six (6) resort if found by the ICAB to be in his/her
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Civil Law
Distinction between Domestic Adoption Act and Inter-country Adoption Act
When may Adoption need not be the last resort Adoption only as last resort: No child
adoption be shall be matched to a foreign adoptive
resorted to family unless it is satisfactorily shown that
the child cannot be adopted locally. (Sec.
11)
141
Civil Law
death of said parent(s). (Sec. 8)
Petition for adoption shall be filed with Either with the Philippine RTC having
Family Court of the province or city jurisdiction over the child, or with the
where the prospective adoptive parents Inter-country Board through an
reside. (Rule on Adoption, Sec. 6) intermediate agency, in the country of the
Venue adoptive parents. (Sec. 10)
Trial Custody Takes place in the Philippines Where adoptive parents reside
SUPPORT
3. Conventional – by agreement.
It comprises everything indispensable for
sustenance, dwelling, clothing, medical Rules on support of illegitimate children of
attendance and transportation, in keeping with either spouse
the financial capacity of the family, including the
education of the person entitled to be supported 1. It depends upon the property regime of the
until he completes his education or training for spouses.
some profession, trade or vocation, even beyond
the age of majority. (FC, Art. 194) (2010 BAR) ACP or CPG for the support of the following:
143
Civil Law
children liable separate property of the legitimate and illegitimate children of
of both or both spouses are the latter;
either solidarily liable
spouse 4. Parents and their illegitimate children, and
and the legitimate and illegitimate children of
common the latter;
children.
NOTE: The alleged father of a child must
first recognize the latter before he or she
Illegitima Separate If Separate property may be entitled to support.
te property is of the spouse is
children principally insufficient, the 5. Legitimate brothers and sisters whether full
of either liable; spouses can use or half- blood. (FC, Art. 195)
spouse ACP can ACP or CPG
advance the NOTE: Brothers and sisters not legitimately
support; related, whether full or half-blood, are
CPG can be likewise bound to support each other.
liable if the However, when the need for support of the
responsibiliti brother or sister, being of age, is due to a
es in Art. 121 cause imputable to the claimant’s fault or
are covered negligence, the illegitimate brother or sister
has no right to be supported. (FC, Art. 196;
Rabuya, 2009)
Parents Separate There must be a
and property is complete absence of Q: Rule when:
siblings principally separate property a. Two or more persons are obliged to give
liable; on the part of the support;
ACP or CPG obligor-spouse. b. Two or more recipients at the same time
can advance claim support from the same persons
support, but who does not have sufficient means to
only if there satisfy all claims
is complete A:
absence of a. The payment of the same shall be divided
separate between them in proportion to the
property resources of each. However, in case of
urgent need and by special circumstances,
the judge may order only one of them to
PERSONS OBLIGED TO SUPPORT furnish support provisionally, without
prejudice to his right to claim
reimbursement from the other obligors of
Persons obliged to support each other (2008
their corresponding shares. (FC, Art. 200)
BAR)
b. The order established under Art. 199 of the
1. Spouses;
Family Code shall be followed, unless the
NOTE:
concurrent obliges should be the spouse and
a. The spouse must be the legitimate
a child, in which case, the child shall be
spouse in order to be entitled to
preferred. (FC, Art. 200)
support
b. The spouse who leaves the conjugal
Sources of Support
home or refuses to live therein,
without just cause, shall not have
the right to be supported. (FC, 100 DURING PENDING AFTER
and 127) MARRIAGE LITIGATION LITIGATION
Spouses
2. Legitimate ascendants & descendants;
From the ACP GR: No
3. Parents and their legitimate children, and community GR: From the obligation to
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Civil Law
health may be restored, and he or she may be Lim v. Cheryl Lim, G.R. No. 163209, October 30,
freed from the sickness by which life is 2009)
jeopardized. (Pelayo v. Lauron, G.R. No. L-4089,
January 12, 1909) SUPPORT DURING MARRIAGE LITIGATION
Q: Cheryl married Edward Lim and they During the pendency of the action for annulment
begot three children. Cheryl, Edward and or declaration of absolute nullity of marriage
their children lived at the house of Edward’s and action for legal separation, the court shall
parents, Prudencio and Filomena, together provide for the support of the spouses and their
with Edward’s ailing grandmother and her common children in the absence of a written
husband. Edward was employed with the agreement between the spouses. (FC, Art. 49)
family business, which provided him with a
monthly salary of P6,000 and shouldered the Sources of support shall be the properties of the
family expenses. Cheryl had no steady source absolute community or conjugal partnership.
of income. Cheryl caught Edward in “a very
compromising situation” with the midwife of Mutual support of the spouses after the final
Edward’s grandmother. After a violent judgment granting the petition for legal
confrontation with Edward, Cheryl left the separation, annulment and declaration of
Forbes Park residence. She subsequently nullity of marriage
sued, for herself and her children, Edward,
Edward’s parents and grandparents for GR: Spouses are no longer obliged to render
support. Edward and his parents were mutual support after final judgment. The
ordered by the RTC to “jointly” provide, obligation of mutual support ceases after final
monthly support to Cheryl and her children. judgment.
Is the court’s judgment in making Edward’s
parents concurrently liable with Edward to XPN: In case of legal separation the Court may
provide support to Cheryl and her children order that the guilty spouse shall give support to
correct? the innocent one. (FC, Art. 198)
A: YES. However, the Supreme Court modified Effect of adultery of the wife
the appealed judgment by limiting liability of
Edward’s parents to the amount of monthly Adultery of the wife is a valid defense in an
support needed by Cheryl’s children. Edward’s action for personal support (i.e. support
parents are liable to provide support but only to coming from the spouse’s own funds). If adultery
their grandchildren. By statutory and is proved and sustained, it will defeat the action
jurisprudential mandate, the liability of for support. But if both are equally at fault, the
ascendants to provide legal support to their principle of in pari delicto applies in which the
descendants is beyond cavil. Petitioners husband cannot avail of the defense of adultery.
themselves admit as much — they limit their
petition to the narrow question of when their NOTE: Adultery is not a defense when it is to be
liability is triggered, not if they are liable.
taken from the conjugal properties or the
absolute community of properties of the
There is no showing that private respondent is spouses.
without means to support his son; neither is
there any evidence to prove that petitioner, as Q: H and W are living separately. Both had
the paternal grandmother, was willing to been unfaithful to each other. After their
voluntarily provide for her grandson's legal separation, H had been giving money to W for
support. Cheryl is unable to discharge her her support. Subsequently, W brought an
obligation to provide sufficient legal support to action against H for separate maintenance.
her children. It also shows that Edward is unable Will the action prosper?
to support his children. This inability of Edward
and Cheryl to sufficiently provide for their
A: YES. The principle of in pari delicto is
children shifts a portion of their obligation to the
applicable. Both are at fault. Consequently, H
ascendants in the nearest degree, both in the
cannot avail of himself of the defense of adultery
paternal (petitioners) and maternal lines,
of W. Besides, the act of H in giving money to W
following the ordering in Article 199. (Spouses
is implied condonation of the adultery of W.
The obligation to give support is demandable NOTE: In cases when there is a moral or legal
from the time the person who has a right to obstacle, the latter alternative in giving support
receive support needs it for maintenance. cannot be availed of.
The support shall be paid only from the date of If support is given by a stranger without the
judicial or extrajudicial demand. knowledge of the person obliged to give
support;
The right to support does not arise from mere
fact of relationship but from imperative GR: The stranger shall have the right of
necessity without which it cannot be demanded. reimbursement
The law presumes that such necessity does not
exist unless support is demanded. XPN: Unless it appears that he gave it without
any intention of being reimbursed. (FC, Art. 206)
Effect of Reaching Age of Majority
NOTE: If the person obliged to give support
If a person is of age and no longer studies, he still unjustly refuses or fails to give it when urgently
entitled to support unless there are just reasons needed, any third person may furnish support to
for the extinguishment of the right. (Javier v. the needy individual, with a right of
Lucero, 94 Phil. 634) If, upon the other hand, he reimbursement. (FC, Art. 207)
has not yet finished his studies even if already of
age, he still entitled generally to be supported. Of ATTACHMENT
course, if the person supporting dies, the
obligation ceases. (Falcon v. Arca, L-18135, July Attachment or execution of the right to
31, 1963) receive support (FC, Art. 208)
MANNER OF PAYMENT GR: The right to receive support and any money
or property obtained as support cannot be
Payment shall be made within first five days of attached nor be subject to execution to satisfy
each corresponding month. In case of death of any judgment against the recipient.
the person entitled to receive support, his heirs
shall not be obliged to return what he has XPN: In case of contractual support or support
received in advance for such support. (FC, Art. given by will, the excess in amount beyond that
203) required for legal support shall be subject to levy
on attachment or execution.
Payment by Third Person under Article 208
NOTE: Contractual support shall be subject to
The obligation to reimburse under this article is adjustment whenever modification is necessary
one that likewise arises from quasi-contract. As due to changes in circumstances beyond the
contemplation of the parties.
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Civil Law
Q: Jurisdictional questions may be raised at so?
any time. What is the exception with respect
to the provisional character of judgment for A: YES. Pursuant to Art. 207 of the Family Code,
support and the application of estoppel? Noel can rightfully exact reimbursement from
Edward. This provision reads that “[W]hen the
A: Judgment for support is always provisional in person obliged to support another unjustly refuses
character. Res Judicata does not apply. The or fails to give support when urgently needed by
lower court cannot grant a petition based on the latter, any third person may furnish support to
grounds, such as bigamy, not alleged in the the needy individual, with right of reimbursement
petition. Such decision based on grounds not from the person obliged to give support.” The
alleged in the petition is void on the ground of resulting juridical relationship between the
no jurisdiction. Edward and Noel is a quasi-contract, an
equitable principle enjoining one from unjustly
However, if the lower court’s void decision is not enriching himself at the expense of another.
assailed on appeal which dealt only with the (Lacson v. Lacson, et al., G.R. No. 150644, August
matter of support, the losing party is now 28, 2006)
estopped from questioning the declaration of
nullity and the SC will not undo the judgment of Q: Fe and her son Martin sued Martin’s
the RTC declaring the marriage null and void for alleged biological father Arnel for support.
being bigamous. Arnel denied having sired Martin, arguing
that his affair and intimacy with Fe had
It is axiomatic that while a jurisdictional allegedly ended in long before Martin’s
question may be raised at any time, this however conception. As a result, Fe and Martin moved
admits of an exception where estoppel has for the issuance of an order directing all the
supervened. (Lam v. Chua, G.R. No. 131286, parties to submit themselves to DNA
March 18, 2004) paternity testing. The said motion was
granted by the court. Did the order of the
Q: Edward abandoned his legitimate children court convert the complaint for support to a
when they were minors. After 19 years from petition for recognition?
the time Edward left them, they, through
their mother, finally sued him for support, A: The assailed order did not convert the action
which the court granted. The court ordered for support into one for recognition but merely
him to pay 2M pesos as support in arrears. allowed Fe to prove their cause of action. But
even if the order effectively integrated an action
Edward assails the grant of the support in to compel recognition with an action for
arrears as erroneous since under Art. 203 of support, such was valid and in accordance with
the FC, there was never any demand for jurisprudence. The integration of an action to
support, judicial or extra- judicial, from compel recognition with an action to claim one’s
them. Is his contention correect? inheritance is allowed. (Tayag v. CA, G.R. No.
95229, June 9, 1992) A separate action will only
A: NO. Edward could not possibly expect his result in a multiplicity of suits. Furthermore, the
daughters to demand support from him declaration of filiation is entirely appropriate to
considering their tender years at the time that the action for support. (Agustin v. CA, G.R. No.
he abandoned them. In any event, the mother of 162571, June 15, 2005)
the girls had made the requisite demand for
material support although this was not in the Q: Can DNA testing be ordered in a
standard form of a formal written demand. proceeding for support without violating the
Asking one to give support owing to the urgency constitutional right against self-
of the situation is no less a demand just because incrimination?
it came by way of a request or a ppeal. (Lacson v.
Lacson, et al., G.R. No. 150644, August 28, 2006) A: YES. Compulsory DNA testing and the
admissibility of the results thereof as evidence
Q: Noel helped Lea by extending financial are constitutional. (People v. Yatar, G.R. No.
help to support Lea’s children with Edward. 150224, May 19, 2004)
May Noel seek reimbursement of his
contributions? If yes, from whom may he do Moreover, it has mostly been in the areas of
1. Caring for and rearing of such children for It is the right of access of a noncustodial parent
civic consciousness and efficiency; to his or her child or children.
2. Development of their moral, mental and Who are entitled of visitation rights
physical character and well-being. (FC, Art.
209) 1. The non-custodial parent in cases of:
XPN: In cases authorized by law such as in 2. Illegitimate father over his illegitimate child.
cases of adoption, guardianship and
surrender to a children's home or an orphan NOTE: In case of annulment or declaration of
institution. (Santos v. CA, G.R. No. 113054, absolute nullity of marriage, Article 49 of the
March 16, 1995). Family Code grants visitation rights to a parent
who is deprived of custody of his children. Such
3. Purely personal; visitation rights flow from the natural right of
4. Temporary. both parent and child to each other’s company.
There being no such parent-child relationship
Exercise of parental authority between them, a person has no legally
demandable right of visitation. (Concepcion v. CA,
The father and the mother shall jointly exercise G.R. No. 123450, August 31, 2005)
parental authority over the persons of their
common children. In case of disagreement, the Q: Carlitos Silva and Suzanne Gonzales had a
father’s decision shall prevail unless there is a live-in relationship. They had two children,
judicial order to the contrary. (FC, Art. 211) namely, Ramon Carlos and Rica Natalia. Silva
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Civil Law
and Gonzales eventually separated. They had “Compelling Reasons”
an understanding that Silva would have the
children in his company on weekends. Silva The so-called “tender-age presumption” under
claimed that Gonzales broke that Article 213 of the Family Code may be overcome
understanding on visitation rights. Hence, only by compelling evidence of the mother’s
Silva filed a petition for custodial rights over unfitness. The mother has been declared
the children before the RTC. The petition was unsuitable to have custody of her children in one
opposed by Gonzales who claimed that Silva or more of the following instances:
often engaged in gambling and womanizing
which she feared could affect the moral and 1. Insanity
social values of the children. In the 2. Abandonment
meantime, Suzanne had gotten married to a 3. Neglect
Dutch national. She eventually immigrated to 4. Drug addiction
Holland with her children Ramon Carlos and 5. Affliction with a communicable disease
Rica Natalia. Can Silva be denied visitation 6. Maltreatment of the child Immorality
rights? 7. Unemployment
8. Habitual drunkenness
A: GR: NO.
NOTE: In one case, the SC ruled that sexual
XPN: If the fears and apprehensions were preference or moral laxity alone does not prove
founded as to the father’s corrupting influence parental neglect or incompetence; to deprive the
over the children and if it is proven therefore wife of custody of her minor child, her moral
that indeed the father is a negative influence lapses must have an adverse effect on the
because of reasons like immorality, welfare of the child or it must have distracted
drunkenness, etc. on the children, the court, the offending spouse from exercising proper
taking into consideration the best interest of the parental care. (Pablo-Gualberto v. Gualberto, G.R.
children, can deny his petition for the exercise of No. 154994 & 156254, June 28, 2005.
his visitation rights. (Silva v. CA, G.R. No. 114742,
July 17, 1997) Exercise of parental authority in case of
absence, death, remarriage of either parent,
Parental Preference Rule or legal or de facto separation of parents
The natural parents, who are of good character 1. Absence or death of either parent – parent
and who can reasonably provide for the child, present shall continue exercising parental
are ordinarily entitled to custody as against all authority.
persons.
2. Remarriage of either parent – it shall not
NOTE: Tender-Age Presumption: affect the parental authority over the
children, unless the court appoints another
No child under seven years of age shall be person to be the guardian of the person or
separated from the mother, unless the court property of the children. (FC, Art. 213)
finds compelling reasons to order otherwise [FC,
Art 213(2)]. (2006 BAR) NOTE: Parental authority is not
automatically given to the new spouse over
The paramount consideration in matters of the child of the surviving parent, unless such
custody of a child is the welfare and well-being of new spouse legally adopts the children.
the child.
3. Legal or de facto separation of parents – the
The use of the word “shall” in Art. 213 of the FC parent designated by the court.
is mandatory in character. It prohibits in no
uncertain terms the separation of a mother and Considerations in the designation of child
her child below 7 years, unless such separation custody
is grounded upon compelling reasons as
determined by a court. (Lacson v. San Jose- The Court shall take into account all relevant
Lacson, G.R. No. L-23482, August 30, 1968) considerations in the designation of the parent,
especially the choice of the child over seven
151
Civil Law
persons of their common children. However, Foundlings – newborn child abandoned by its
insofar as illegitimate children are concerned, parents who are unknown
Article 176 of the Family Code states that
illegitimate children shall be under the parental Abandoned – a child who has no proper parental
authority of their mother. Accordingly, mothers care or guardianship
(such as Renalyn) are entitled to the sole
parental authority of their illegitimate children Neglected – a child whose basic needs have been
(such as Queenie), notwithstanding the father's deliberately or inadequately unattended
recognition of the child. In the exercise of that
authority, mothers are consequently entitled to Q: Bonifacia Vancil, a US citizen, is the mother
keep their illegitimate children in their company, of Reeder C. Vancil, a US Navy serviceman
and the Court will not deprive them of custody, who died in the USA on December 22, 1986.
absent any imperative cause showing the
mother's unfitness to exercise such authority During his lifetime, Reeder had two children
and care. (Masbate vs. Relucio, G.R. No. 235498, named Valerie and Vincent by his common-
July 30, 2018) law wife, Helen G. Belmes. Bonifacia obtained
a favorable court decision appointing her as
SUBSTITUTE PARENTAL AUTHORITY legal and judicial guardian over the persons
and estate of Valerie Vancil and Vincent
Substitute Parental Authority (2004 BAR) Vancil, Jr. She alleged that Helen was morally
unfit as guardian of Valerie considering that
It is the parental authority which the persons Helen’s live-in partner raped Valerie several
designated by law may exercise over the persons times.
and property of unemancipated children in case
of death, absence or unsuitability of both Can Bonifacia exercise substitute parental
parents, or in default of a judicially appointed authority over Valerie and Vincent?
guardian.
A: NO. Bonifacia, as the surviving grandparent,
Order of substitute parental authority can exercise substitute parental authority only
in case of death, absence or unsuitability of
1. Surviving Grandparent; Helen. Considering that Helen is very much alive
and has exercised continuously parental
NOTE: The law considers the natural love of authority over Vincent, Bonifacia has to prove, in
a parent to outweigh that of the asserting her right to be the minor’s guardian,
grandparents, such that only when the Helen’s unsuitability.
parent present is shown to be unfit or
unsuitable may the grandparents exercise Bonifacia, however, has not proffered convincing
substitute parental authority. (Santos v. CA, evidence showing that Helen is not suited to be
G.R. No. 113054, March 16, 1995) the guardian of Vincent. Bonifacia merely insists
that Helen is morally unfit as guardian of Valerie
2. Oldest brother or sister, over 21 years considering that her live- in partner raped
unless unfit or disqualified; Valerie several times. (But Valerie, being now of
major age, is no longer a subject of this
3. Actual Custodian over 21 years unless unfit guardianship proceeding).
or disqualified (FC, Art. 216);
Even assuming that Helen is unfit as guardian of
4. In case of foundlings, abandoned, neglected minor Vincent, still Bonifacia cannot qualify as a
or abused children similarly situated, substitute guardian. She is an American citizen
parental authority shall be entrusted in and a resident of Colorado. Obviously, she will
summary judicial proceedings to heads of not be able to perform the responsibilities and
children’s homes, orphanages and similar obligations required of a guardian. In fact, in her
institutions duly accredited by the proper petition, Bonifacia admitted the difficulty of
government agency. (FC, Art. 217) discharging the duties of a guardian by an
expatriate, like her. To be sure, she will merely
NOTE: delegate those duties to someone else who may
not also qualify as a guardian. (Vancil v. Belmes,
NOTE: The nature of the liability of persons The scope of special parental authority and
having special parental authority over said responsibility applies to all authorized activities,
minors for their acts or omissions causing whether inside or outside the premises of the
damage to another is principal and solidary. The school, entity or institution.
parents, judicial guardians or the persons
exercising substitute parental authority over NOTE: The nature of the liability of persons
said minor shall be subsidiarily liable. (FC, Art. having special parental authority over said
219) (2003, 2010 BAR) minors for their acts or omissions causing
damage to another is principal and solidary. The
Substitute parental authority vis-à-vis parents, judicial guardians or the persons
Special parental authority exercising substitute parental authority over
said minor shall be subsidiarily liable. (FC, Art.
SUBSTITUTE SPECIAL 219) (2003, 2010 BAR)
PARENTAL PARENTAL
AUTHORITY AUTHORITY Right to Child’s Custody
153
Civil Law
Parents’ right to custody of the child days.
GR: Parents are never deprived of the custody Limitations on the exercise of the right to
and care of their children. discipline the child and its consequences
Family ties or relationship, not parental CHILD ABUSE (R.A. 7610) SEC. 10
authority.
Section 10. Other Acts of Neglect, Abuse,
NOTE: The obligation of the parents to provide Cruelty or Exploitation and Other Conditions
support is not coterminous with the exercise of Prejudicial to the Child's Development. –
parental authority.
1. Any person who shall commit any other acts
Rule on the parent’s duty of representation of child abuse, cruelty or exploitation or to
be responsible for other conditions
GR: Parents are duty-bound to represent their prejudicial to the child's development
minor children in all matters affecting their including those covered by Article 59 of
interests; Presidential Decree No. 603, as amended,
but not covered by the Revised Penal Code,
NOTE: This duty extends to representation in as amended, shall suffer the penalty of
court litigations. prision mayor in its minimum period.
XPN: A guardian ad litem may be appointed by 2. Any person who shall keep or have in his
the court to represent the child when the best company a minor, twelve (12) years or
interest of the child so requires. under or who in ten (10) years or more his
junior in any public or private place,
Scope of the parent’s right to discipline the hotel, motel, beer joint, discotheque,
child (FC, Art. 223) cabaret, pension house, sauna or
massage parlor, beach and/or other
Persons exercising parental authority may: tourist resort or similar places shall suffer
the penalty of prision mayor in its maximum
1. Impose discipline on minor children as may period and a fine of not less than Fifty
be required under the circumstances; thousand pesos (P50,000): Provided, That
the provision shall not apply to any person
2. Petition the court for the imposition of who is related within the fourth degree of
appropriate disciplinary measures upon the consanguinity or affinity or any bond
child, which include the commitment of the recognized by law, local custom and
child in entities or institutions engaged in tradition or acts in the performance of a
childcare or in children’s homes duly social, moral or legal duty.
accredited by the proper government
agency. 3. Any person who shall induce, deliver or
offer a minor to any one prohibited by
NOTE: Such commitment must not exceed 30 the Act to keep or have in his company a
155
Civil Law
Liability of persons exercising special responsibility shall apply to all authorized
parental authority over the child (FC, Art. activities whether inside or outside the premises
219) of the school, entity or institution.
GR: They are principally and solidarily liable for In this case, the petitioners’ negligence and
damages caused by the acts or omissions of the failure to exercise the requisite degree of care
child while under their supervision, instruction and caution was demonstrated by the following:
or custody. (i) petitioner school did not take affirmative
steps to avert damage and injury to its students
XPN: Unless they exercised the proper diligence although it had full information on the nature of
required under the particular circumstance. This dangerous science experiments conducted by
may extinguish the liability with the minor. (FC, the students during class; (ii) petitioner school
Art. 219) did not install safety measures to protect the
students who conduct experiments in class; (iii)
NOTE: Parents, judicial guardians or those petitioner school did not provide protective
exercising substitute parental authority over the gears and devices, specifically goggles, to shield
minor are subsidiarily liable for said acts and students from expected risks and dangers; and
omissions of the minor (iv) petitioner Tabugo (the teacher) was not
inside the classroom the whole time her class
Q: Jayson and his classmates were conducted the experiment, specifically, when the
conducting a science experiment about accident involving the student occurred. (St.
fusion of sulphur powder and iron fillings Joseph’s College v. Miranda, G.R. No. 182353, June
under the tutelage of Tabugo, the subject 29, 2010)
teacher and employee of St. Joseph College.
Tabugo left her class while the experiment EFFECTS OF PARENTAL AUTHORITY UPON
was ongoing without having adequately THE PROPERTY OF THE CHILDREN
secured the students from any untoward
incident or occurrence. In the middle of the Legal guardianship can be exercised by the
experiment, Jayson checked the result of the father or mother, jointly, without need of court
experiment by looking into the test tube with appointment over the property of an
magnifying glass and it was moved towards emancipated child.
his eyes. At that instance, the compound
spurted from the test tube and several NOTE: In case of disagreement, the father’s
particles hit Jayson’s eyes. His left eye was decision shall prevail unless there is a judicial
chemically burned, for which he had to order to the contrary. (FC, Art. 229)
undergo surgery and spend for medication.
Jayson filed a complaint for damages against Kinds of properties of a minor
the school and Tabugo. Can the said school
and its teacher, Tabugo, be held liable for the ADVENTITIOUS PROSFECTITIOUS
unfortunate incident of Jayson? 1. Earned or 1. Property given
acquired by the by the parents to
A: YES. The proximate cause of the student’s child through his the child for the
injury was the concurrent failure of petitioners work or industry latter to
to prevent the foreseeable mishap that occurred by onerous or administer;
during the conduct of the science experiment. gratuitous title; 2. Owned by the
Petitioners were negligent by failing to exercise 2. Owned by the parents;
the higher degree of care, caution and foresight child; 3. Parents are
incumbent upon the school, its administrators 3. Child is also the usufructuary;
and teachers. Art. 218 of the Family Code, in usufructuary, but 4. Property
relation to Art. 2180 of the New Civil Code, the child’s use of administered by
bestows special parental authority on a school, the property shall the child.
its administrators and teachers, or the be secondary to all
individual, entity or institution engaged in child collective daily
care, and these persons have responsibility over needs of the family;
the minor child while under their supervision, 4. Administered by
instruction or custody. Authority and the parents.
A parent is required to post a bond if the market NOTE: Child is emancipated upon
value of the property or the annual income of the reaching the age of majority.
child exceeds P50,000.
c. Death of child. (FC, Art. 228)
NOTE: The bond shall not be less than 10% of
the value of the property or annual income. (FC, 2. Temporarily: – it may be revived
Art. 225)
a. Adoption of the child;
Rules regarding the use of the child’s b. Appointment of general guardian;
property (Art. 226, FC) c. Judicial declaration of abandonment of
the child in a case filed for the purpose;
1. The property of minor children shall be d. Final judgment divesting parents of
devoted to their support and education parental authority;
unless the title or transfer provides e. Incapacity of parent exercising parental
otherwise. authority;
f. Judicial declaration of absence or
2. The parents have the right to use only the incapacity of person exercising parental
fruits and income of said property for the authority. (FC, Art. 229)
following purposes:
NOTE: In case of temporary termination of
a. Primarily, to the child’s support; parental authority, parental authority may be
b. Secondarily, to the collective daily revived thru a court judgment. (Rabuya, 2009)
needs of the family.
Grounds for suspension of Parental
NOTE: Income of the child may be used to help Authority
pay the daily collective needs of the family when
the former’s property or income is more than 1. Gives corrupting orders, counsel or
sufficient to maintain his or her needs. example;
2. Treats child with excessive harshness and
Rule on lease of property belonging to minor cruelty;
children 3. Subjects the child or allows him to be
subjected to acts of lasciviousness; (FC, Art.
GR: The parents, as legal guardians of the 231)
minor’s property, may validly lease the same, 4. Conviction of crime with penalty of civil
even without court authorization, because lease interdiction; (FC, Art. 230)
has been considered as an act of administration. 5. Culpable negligence of parent or person
exercising parental authority;
XPNs: Court authorization is required if: 6. Compels the child to beg.
1. If the lease will be recorded in the Registry NOTE: If the person exercising Parental
of Property; Authority has subjected the child or allowed him
2. If the lease is for a period of more than one to be subjected to sexual abuse, he/she shall be
year, because this is already deemed an act permanently deprived of PA.
of dominion.
If the ground for suspension of parental
SUSPENSION OR TERMINATION OF authority is civil interdiction, the suspension is
PARENTAL AUTHORITY automatic so as its reinstatement.
157
Civil Law
finds that the cause therefore had ceased and 1. Parental authority over the person and
will not be repeated. property of the child is terminated.
2. Child shall be qualified and responsible for
Transfer or renunciation of Parental all acts of civil life, save exceptions
Authority established by existing
3. Contracting marriage shall require parental
GR: Parental authority and responsibility are consent until the age of 21.
Inalienable and may not be transferred and 4. The responsibility of parents or guardians
renounced. for children and wards below 21 under the
second and third paragraphs of Art. 2180 of
XPN: In cases authorized by law. the New Civil Code shall not be derogated.
159
Civil Law
Fe is entitled to the remains of Adriano?
Natural child Father’s
A: The law gives the right and duty to make acknowledged
funeral wife of Atty. Adriano. The fact that she both parents.
was living separately from her husband and was
in the United States when he died has no Natural child by
controlling significance. To say that Rosario had, legal fiction.
in effect, waived or renounced, expressly or
impliedly, her right and duty to make Natural child Recognizing parent
arrangements for the funeral of her deceased acknowledged
husband is baseless. The right and duty to make only one parent.
funeral arrangements, like any other right, will
not be considered as having been waived or Adopted Adopter’s
renounced, except upon clear and satisfactory
proof of conduct indicative of a free and Illegitimate Mother’s or father’s if
voluntary intent to that end. requisites of R.A. 9255
are complied with.
Even assuming, ex gratia argumenti, that Atty.
Adriano truly wished to be buried in the Fe’s NOTE: An illegitimate
family plot at the Manila Memorial Park, the child shall have the
result remains the same. Art. 307 simply seeks "option" to use the
to prescribe the “form of the funeral rites: that surname of the father in
should govern in the burial of the deceased. The the following instances:
right and duty to make funeral arrangements 1.
reside in the persons specified in Article 305 in 1. If his/her filiation has
relation to Article 199 of the Family Code. Even been expressly
if Article 307 were to be interpreted to include recognized by the
the place of burial among those on which the father through the
wishes of the deceased shall be followed, Dr. record of birth
Arturo M. Tolentino (Dr. Tolentino), an eminent appearing in the civil
authority on civil law, commented that it is registry; or
generally recognized that any inferences as to
the wishes of the deceased should be established 2. When an admission of
by some form of testamentary disposition. paternity is made by
(Valino v. Adriano, G.R. No. 182894, April 22, the father in a public
2014) document or private
handwritten
USE OF SURNAMES instrument
PROVIDED, the father
Rule with regard to the use of surname by a has the right to
child who is: institute an action
before the regular
(1) legitimate; (2) legitimated; (3) adopted; courts to prove non-
and (4) illegitimate filiation during his
lifetime. (Art. 176, FC,
CHILD SURNAME TO BE USED as amended by R.A.
CONCERNED 9255)
FACTUAL
SURNAME
CIRCUMSTANCE Valid grounds for a change of name
TO BE USED
OF THE WIFE
1. One has continuously used and been known
Valid marriage (before1. First name and since childhood by a Filipino name and was
husband dies) (NCC, maiden name (Her unaware of alien parentage;
Art. 370) maiden first name 2. The change results as a legal consequence,
and surname) (FC, as in legitimation;
Art. 370) + 3. There is a sincere desire to adopt a Filipino
husband’s name to erase signs of former alienage, all in
surname. good faith and without prejudicing anyone;
2. 4. The change will avoid confusion;
3. First name + 5. The new first name or surname has been
husband’s surname habitually and continuously used by the
4. petitioner and is publicly known by that first
5. Husband’s full name or nickname. (Pineda, 2010)
name + prefix 6. The name is:
indicating that she
is his wife (e.g., a. Ridiculous,
Mrs.) b. Extremely difficult to write or
6. pronounce; and
7. Retain the use of c. Dishonorable.
her maiden name
8. Q: Can a person change his registered first
*Use of husband’s name and sex on the basis of a sex
surname is not a reassignment?
duty but merely an
option for the wife. A: NO. Before a person can legally change his
Marriage Wife is Shall resume using given name, he must present proper or
is the guilty her maiden name reasonable cause or any compelling reason
annulled party justifying such change. In addition, he must
(NCC, Art. show that he will be prejudiced by the use of his
371) Wife is Choices:
true and official name. Under the Civil Register
the 1. Resume using her
Law, a birth certificate is a historical record of
innocent maiden name
the facts as they existed at the time of birth.
party 2. Continue using
Thus, the sex of a person is determined at
husband’s surname
birth, visually done by the birth attendant (the
3.
physician or midwife) by examining the genitals
Unless:
of the infant. Considering that there is no law
a. Court decrees
legally recognizing sex reassignment, the
otherwise;
determination of a person’s sex made at the time
b. She or the former
of his or her birth, if not attended by error, is
husband is married
immutable. (Silverio v. Republic, G.R. No. 174689,
again to another
October 22, 2007)
person
161
Civil Law
Procedural requirements for a petition for In case of identity of names and surnames, the
change of name younger person shall be obliged to use such
additional name or surname as will avoid
1. 3 -year residency in the province where the confusion. (NCC, Art. 374)
change is sought prior to the filing; (Sec. 2,
Rule 103, Rules of Court) In case of identity of names and surnames
2. Must not be filed within 30 days prior to an between ascendants and descendants, the word
election; (Sec. 3, Rule 103, Rules of Court) "Junior" can be used only by a son. Grandsons
3. Petition must be verified. (Sec. 2, Rule 103, and other direct male descendants shall either:
Rules of Court)
1. Add a middle name or the mother’s
Q: Virginia Remo, a Filipino citizen, is surname, or
married to Francisco Rallonza. In her 2. Add the Roman Numerals II, III, and so on.
passport, the following entries appear: (NCC, Art. 375)
"Rallonza" as her surname, "Maria Virginia"
as her given name, and "Remo" as her middle NOTE: No person can change his name or
name. Prior to the expiration of her passport, surname without judicial authority. (NCC, Art.
Virginia applied for the renewal of her 376)
passport with the DFA, with a request to
revert to her maiden name and surname in Elements of usurpation of name
the replacement passport. Virginia, relying
on Article 370 of the Civil Code, contends that 1. Actual use of another’s name by the
the use of the husband’s surname by the wife defendant;
is permissive rather than obligatory. Is 2. Use is unauthorized;
Virginia correct? 3. Use of another’s name is to designate
personality or identify a person.
A: NO. A married woman has an option, but not
a duty, to use the surname of the husband in any Remedies available to the person whose
of the ways provided by Art. 370 of the New Civil name has been usurped
Code. However, R.A. 8239 or the Philippine
Passport Act of 1996 limits the instances when a 1. Civil – insofar as private persons are
married woman applicant may exercise the concerned:
option to revert to the use of her maiden name. a. Injunction
These are death of husband, divorce, annulment, b. Damages
and declaration of nullity of marriage.
2. Criminal – when public affairs are
In case of renewal of passport, a married woman prejudiced.
may either adopt her husband’s surname or
continuously use her maiden name. However, NOTE: If the purpose of the usurpation is to
once she opted to use her husband’s surname in conceal one’s true identity then, he is guilty of
her original passport, she may not revert to the concealing true name under Art.178 of the RPC.
use of her maiden name, except if any of the four (Pineda, 2010)
grounds provided under R.A. 8239 is present.
It can also be a violation of CA 142 or the Anti-
Further, even assuming R.A. 8239 conflicts with Alias Law.
the Civil Code, the provisions of R.A. 8239 which
is a special law specifically dealing with passport Use of another’s name is not always
issuance must prevail over the provisions of the actionable
Civil Code which is the general law on the use of
surnames. A basic tenet in statutory GR: The unauthorized or unlawful use of
construction is that a special law prevails over a another person’s surname gives a right of action
general law. (Remo v. Sec. of Foreign Affairs, G.R. to the latter. (NCC, Art. 378)
No. 169202, March 5, 2010)
XPN: It is not actionable when it is used as
Identity of names and surnames stage, screen or pen name.
163
Civil Law
Astorga Garcia, G.R. No. 148311, March 31, 2005) Gianna as “legitimate”, her surname carrying
that of Andy’s, and that her parents were
Q: The petition filed by the parents in behalf married to each other.
of their minor son Julian Lin Carulasan Wang
sought the dropping of the latter's middle Can a judicial action for correction of entries
name, "Carulasan." The parents averred that in Gianna’s birth certificate be successfully
their plan for Julian to study in Singapore maintained to:
and adjust to its culture necessitates the drop a. Change her status from “legitimate” to
since in that country, middle names or the “illegitimate”;
mother's surname are not carried in a b. Change her surname from that of Andy’s
person's name. They therefore anticipate to Aimee’s maiden surname?
that Julian may be subjected to c. Instead of a judicial action, can
discrimination on account of his middle administrative proceedings be brought
name, which is difficult to pronounce in light for the purpose of making the above
of Singapore's Mandarin language which corrections?
does not have the letter "R" but if there is, d. Assuming that Aimee is successful in
Singaporeans pronounce it as "L." Should the declaring her former marriage void, and
petition for the dropping of his middle name Andy and Aimee subsequently married
be granted? each other, would Gianna be legitimated?
(2008 BAR)
A: NO. Petitioners’ justification for seeking the
change in the name of their child, that of A:
convenience, was characterized by the Supreme a. A judicial action cannot be maintained to
Court as amorphous, to say the least, and would change the status of Gianna from
not warrant a favorable ruling. As Julian is only a “legitimate” to “illegitimate” child of Andy
minor and has yet to understand and appreciate and Aimee. While it is true that Gianna is the
the value of any change in his name, it is best biological daughter of Andy and Aimee
that the matter be left to his judgment and conceived and born without marriage
discretion when he reaches legal age. between them, Gianna is presumed, under
the law as the legitimate child of Aimee and
The State has an interest in the names borne by her husband. This filiation may be impugned
individuals and entities for purposes of only by the husband. To correct the status of
identification, and that a change of name is a Gianna in her birth certificate from
privilege and not a right, such that before a “legitimate child of Andy and Aimee” to
person can be allowed to change the name given “illegitimate child of Andy and Aimee” will
him either in his birth certificate or civil registry, amount to indirectly impugning her filiation
he must show proper or reasonable cause, or as the child of Aimee’s husband in a proper
any compelling reason which may justify such action. What cannot be done directly cannot
change. Otherwise, the request would be denied. be done indirectly.
(In Re: Petition for change of name and/or
correction/cancellation of entry in civil registry of b. A judicial action to change the surname of
Julian Lin Carulasan Wang, G.R. No. 159966, Gianna from the surname of Andy to the
March 30, 2005) maiden surname of Aimee is also not
allowed. Gianna, being presumed to be the
NOTE: The touchstone for the grant of a change legitimate child of Aimee’s husband is
of name is that there be proper and reasonable required by law to be registered under the
cause for which the change is sought. surname of Aimee’s husband. While it is true
that Gianna’s registered surname is
Q: Giana was born to Andy and Aimee, who at erroneous, a judicial action for correction of
the time of Giana’s birth were not married to entry to change the surname of Gianna to
each other. While Andy was single at that that of Aimee’s maiden surname will also be
time, Aimee was still in the process of erroneous. A judicial action to correct an
securing a judicial declaration of nullity on entry in the birth certificate is allowed to
her marriage to her ex-husband. Gianna’s correct an error and not to commit another
birth certificate, which was signed by both error.
Andy and Aimee, registered the status of
165
Civil Law
Duty of the Court after appointing the condition of his death.
representative
Effectivity of judicial declaration of absence
The Court shall: (NCC, Art. 386)
1. Take the necessary measures to safeguard
the rights and interests of the absentee; Judicial declaration of absence takes effect six
2. Specify the powers, obligations, and (6) months after its publication in a newspaper
remuneration of the representative; of general circulation.
3. Regulate the powers, obligations and
remuneration according to the NOTE: A judicial declaration of absence is
circumstances by the rules concerning necessary for interested persons to be able to
guardians. (NCC, Art. 382) protect their rights, interests and benefits in
connection with the person who has
Order of preference in the appointment of a disappeared. It is also necessary to protect the
representative interest of the absentee. (Sta. Maria, Jr., 2010)
167
Civil Law
conclusion. The FC shall have no retroactive
effect if it impairs vested rights. To
retroactively apply the provisions of the FC
requiring Juana to exhibit "well- founded
belief" will, ultimately, result in the
invalidation of her second marriage, which
was valid at the time it was celebrated.
CONTRACTING
OPENING OF SUCCESSION DECLARATION OF ABSENCE
SUBSEQUENT MARRIAGE
Applicable laws
NCC, Arts. 390-396 Arts. 41-44, Family Code Rule 107, Rules of Court
Who may file petition
1. Spouse present;
2. Heirs instituted in the will;
3. Relatives who will succeed by
intestacy; or
Absentee’s co-heirs, heirs,
4. Those who have over the
assigns, representative or Spouse present
property of the absentee some
successors-in-interest
right subordinated to the
condition of his death. (Sec. 2,
Rule 107)
Purpose of petition
To appoint an administrator over
For the purpose of contracting
the properties of the absentee. This
subsequent marriage by
To open succession is proper only where the absentee
spouse present
has properties to be administered
When to file petition
GR: 4 consecutive years
absence of spouse – and the
spouse present has a well-
After 2 years:
GR: Absence of ten years. founded belief that the absent
1. From his disappearance and without
spouse was already dead.
any news about the absentee; or
XPN: If he disappeared
2. From the last news about the
after the age of seventy-five XPN: 2 consecutive years
absentee.
years, an absence of five absence of spouse – In case of
3.
years shall be sufficient in disappearance where there is
After 5 years: If he left an
order that his succession danger of death under the
administrator of his property. (Sec.
may be opened circumstances set forth in the
2)
provisions of Article 391 of the
Civil Code. (Art. 41, FC)
Effect of reappearance
It does not automatically
terminate the subsequent
marriage. To cause the
If the absentee appears, or
termination of the subsequent
without appearing his
marriage, the reappearance
existence is proved, he shall
must be made in an affidavit of
recover his property in the
reappearance and the The trustee or administrator shall
condition in which it may
recording of a sworn cease in the performance of his
be found, and the price of
statement of the fact and office, and the property shall be
any property that may have
circumstances of such placed at the disposal of those who
been alienated or the
reappearance in the civil may have a right thereto.
property acquired
registry.
therewith; but he cannot
claim either fruits or rents.
If, however, there was
(Art. 392, Civil Code)
previous judgment annulling
or declaring the prior
marriage void, then the
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Civil Law
reappearance of the absent
spouse, the execution of the
affidavit, and the recording of
the sworn statement shall not
result to the termination of the
subsequent marriage.
Distinction between things and property Under the R.A. 7170 or the Organ Donation Act
of 1991, donation of all or a part of a human body
1. The term thing is broader in scope than may only occur after a person’s “death” (i.e., the
property. All kinds of property are things irreversible cessation of circulatory and
but not all things are property; respiratory functions or the irreversible
2. Things refer to all objects that exist cessation of all functions of the entire brain,
including those which could not be including the brain system) [Sec. 2(j), RA 7170, as
appropriated by man. Property refers to amended]
objects already possessed by man or are in
their possession; CLASSIFICATIONS OF PROPERTY
3. Things involve only corporeal objects.
Property may refer to intangible matters. 1. As to nature/mobility
(Pineda, 2009) a. Immovable or real property; and
b. Movable or personal property.
Q: Are the rights under the Bill of Rights
considered as property? 2. As to ownership
a. Public dominion; and
A: NO. They are not susceptible of b. Private ownership.
appropriation.
3. As to alienability
Requisites for a thing to be considered as a. Alienable or within the commerce of
property (USA) men; and
b. Inalienable or outside the commerce
1. Utility –It can serve as a means to satisfy of men.
human needs;
2. Substantivity/Individuality – It has a 4. As to individuality
separate and autonomous existence and not a. Specific property; and
simply a part of a whole. b. Generic property.
3. Appropriability - Susceptibility to
ownership/possession, even if not yet 5. As to susceptibility to touch
actually appropriated. a. Tangible; and
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Civil Law
b. Intangible. irrespective of its ownership;
6. As to susceptibility to substitution 3. Destination – Things placed in buildings or
a. Fungible; and on lands by the owner of the immovable or
b. Non-fungible. his agent in such a manner that it reveals the
intention to attach them permanently
7. As to accession dependence or importance thereto; and
a. Principal; and
b. Accessory 4. Analogy – Classified by express provision of
law or those which are not actually tangible
8. As to existence properties but are rights and interests over
a. Existing or present property (res existing immovable properties.
existentes); and
b. Future property (res futurae) IMMOVABLE BY NATURE AND
INCORPORATION
9. As to consumability Par. 1, Art. 415. Land, buildings, roads and
a. Consumable; and constructions of all kinds adhered to the soil.
b. Non-consumable
Land
10. As to divisibility
a. Divisible; and
By its very nature is immovable property. In
b. Indivisible
whatever transaction land is involved, it is
always immovable.
CLASSIFICATIONS OF THINGS
A truck full of soil taken from the land (like
1. Res nullius – belonging to no one garden soil) becomes a personal property
Those objects which have not yet been because it is no longer adhered to the land.
appropriated, or have been abandoned by However, the moment it is used to cover a land
the owner with the intention of no longer for ornamentation or gardening, it becomes
owning them. immovable again. (Pineda, 2009)
173
Civil Law
Assessment Appeals v. Meralco, G.R. No. L- 15334,
January 31, 1964) 1. The industry or work must be Carried on in
a building or on a piece of land;
IMMOVABLE BY INCORPORATION & BY
DESTINATION 2. The machinery must:
Par. 4, Art. 415. Statues, reliefs, paintings a. Be placed by the Owner of the
or other objects for use or ornamentation, tenement or his agent;
placed in buildings or on lands by the b. Tend directly to meet the needs of
owner of the immovable in such a manner the said industry or work; and
that it reveals the intention to attach them
permanently to the tenements. 3. Be Essential and principal to the industry or
work, and not merely incidental thereto.
“Placed by the owner”
Machinery placed by a tenant or by a
usufructuary is NOT real property.
This means that the objects must be placed by
the owner of the immovable and not necessarily
Since it is placed by a person having only a
the owner of the object.
temporary right, it does not become
immobilized. (Valdez v. Central Altagracia, 225
Requisites
U.S. 58, 1912)
1. Placed in buildings or on lands by the owner
Where a tenant places the machinery under the
of the immovable or by his agent; and
express provision of lease that it shall become a
2. Placed there in a manner that it reveals the
part of the land belonging to the owner upon the
intention to attach them permanently to the
termination of the lease without compensation
tenements.
to the lessee, the tenant acts as an agent of the
owner and the immobilization of the
Par. 3 distinguished from Par. 4
machineries arises from the act of the owner in
PAR. 3 PAR. 4
giving by contract a permanent destination to
Cannot be Can be separated
the machinery. (Ibid.)
separated from the from the
immovable immovable without
Equipment and living quarters of the crew
without breaking breaking or
permanently attached are immovable
or deterioration. deterioration.
properties
Need not be placed Must be placed by It is intended to meet the needs of the industry
by the owner. the owner of the being undertaken by MPC. The equipment
immovable, or by partakes of the nature of the immovable upon
his agent whether which it has been placed.
express or implied. The living quarters, if attached to the immovable
platform with permanence, becomes an
Real property by Real property by immovable as well. Permanence means they
incorporation. incorporation and cannot be separated without destroying the
destination. platform or the quarters. If the attachment is not
permanent, or not merely superimposed on the
platform, then the living quarters are movable
Par. 5, Art. 415. Machinery, receptacles, properties. (2007 BAR)
instruments or implements intended by the
owner of the tenement for an industry or Equipment of a transportation business
works which may be carried on in a classified as personal property
building or on a piece of land & which tend
directly to meet the needs of the said A transportation business is not carried on in a
industry or works. building or on a specified land. Hence,
equipment destined only to repair or service a
Requisites for machinery to be considered transportation business may not be deemed real
real property (COTE) property, but personal property.
Even if the properties appear to be immovable When purposely constructed or attached to the
by nature, nothing detracts the parties from ground or on another immovable (like a tree-
treating them as chattels to secure an obligation wall), fishponds and other similar breeding
under the principle of estoppel. (Tsai v. CA, G.R. places, like cemented container where breeding
No. 120098, October 2, 2001) of fishes or crustaceans is done, are considered
immovable property if the owner of the land or
Effect of temporary separation of movables tenement intended them to be permanent
from the immovables to which they are
attached The animals in the animal houses, the pigeons in
the pigeon houses, the bees in the beehives, the
There are two views: fish in the fishponds are included and
1. They continue to be regarded as considered part of the immovable property.
immovables; and (Pineda, 2009)
2. Fact of separation determines the condition
of the objects thus recovering their Cages are not included
condition as movables. It will be considered as personal property since
they can be moved from one place to another.
Machines though essential and principal
elements of the industry are personal Par. 7, Art. 415. Fertilizer actually used on a
properties when provided in the lease piece of land.
agreement
Fertilizers in sacks are not included
The Court’s holding that the machines should be
deemed personal property pursuant to the Lease
Fertilizers which are still in the sacks, although
Agreement is good only insofar as the
there is intention to place them or use them on
contracting parties are concerned. Hence, while
land, are movable. Only fertilizers actually used
the parties are bound by the Lease Agreement,
on a piece of land are deemed immovable since
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Civil Law
it is already placed in the land and can never be the civil law and common law and occasionally
separated from it. referred to as peculiar kind of personal property.
It is essential that a record of documents affecting
Par. 8, Art. 415. Mines, quarries and slag the title to a vessel be entered in the record of
dumps, while the matter thereof forms part the Collector of Customs at the port of entry.
of the bed, and waters either running or (Code of Commerce, Art.585)
stagnant.
Par. 10, Art. 415. Contracts for public works
By their nature, mines quarries and slag dumps and servitudes and other real rights over
are immovable property. immovable property.
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Civil Law
the parties and not on the consumability of the character;
thing. (2) Those which belong to the State,
without being for public use, and are
Art. 419. Property is either of public intended for some public service or for the
dominion or of private ownership development of the national wealth.
1. Public service – It depends on who pays for It is the property intended for the attainment of
the service. If paid for by the political the economic ends of the State, that is, for
subdivision, public; if for profit, patrimonial; subsistence. It is owned by the State in its private
and or proprietary capacity. It is the property not
2. National wealth – It is still property for devoted to public use, public service, or the
public use under the regalian doctrine. development of the national wealth.
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Civil Law
to make it patrimonial property must be definite. been in open, continuous, exclusive, and
Abandonment cannot be inferred from the non- notorious possession and, occupation of
use alone. (Laurel vs Garcia, G.R. No. 92013, July agricultural lands of the public domain, under a
25, 1990) bona fide claim of acquisition or ownership,
since June 12, 1945”.
Any such conversion happens only if the
property is withdrawn from public use. Section 48(b) of the Public Land Act therefore
Accordingly, the withdrawal of the property in requires that two (2) requisites be satisfied
question from public use by the City of Cebu and before claims of title to public domain lands may
its subsequent sale to the petitioner is valid. be confirmed: first, that the land subject of the
(Cebu Oxygen and Acetylene Co. v. Bercilles, 66 claim is agricultural land; and second, open,
SCRA 481, August 29, 1975) continuous, notorious, and exclusive possession
of the land since June 12, 1945. That the Iligan
Sewage system of a city is a patrimonial property was alienable and disposable,
property agricultural land, has been admitted. What is
claimed instead is that petitioners' possession is
It is property of the city, purchased with private debunked by how the Iligan Property was
funds and not devoted to public use (it is for supposedly part of a military reservation area57
profit). It is therefore patrimonial under the Civil which was subsequently reserved for Iligan
Code. Nor can the system be considered “public City's slum improvement and resettlement
works for public service” under Art. 424 because program, and the relocation of families who
such classification is qualified by ejusdem were dislocated by the National Steel
generis; it must be of the same character as the Corporation's five-year expansion program.
preceding items. (City of Cebu v. NAWASA, G.R. (Heirs Of Leopoldo Delfin And Soledad Delfin,
No. 12892, April 20, 1960) Namely Emelita D. Fabrigar And Leonilo C. Delfin
v. National Housing Authority, G.R. No. 193618,
Q: The Delfin Spouses claimed that they were November 28, 2016, as penned by J. Leonen)
the owners of a 28,800 square meter parcel
of land in Iligan City. They had been Private ownership of land prohibited to
declaring the Iligan Property in their names Aliens (KRIVENKO DOCTRINE)
for tax purposes since 1952, and had been
planting it with mangoes, coconuts, corn, GR: Aliens have no right to acquire any public or
seasonal crops, and vegetables. They alleged private agricultural, commercial or residential
that NHA took possession of a 10,798 square lands in the Philippines.
meter portion of the property. Despite their
repeated demands for compensation, the The same rule is applicable to a foreign
National Housing Authority failed to pay the corporation even if it is a religious and non-stock
value of the property. corporation. A foreign-owned corporation
cannot be the transferee of a land in the
The NHA alleged that the Delfin Spouses' Philippines even temporarily. (Pineda, 2009)
property was part of a military reservation
area. It reserved the area in which property XPN: Aliens may only acquire such lands by
is situated for Iligan City's slum improvement hereditary succession. (Krivenko v. Registry of
and resettlement program as cited in deeds, G.R. No. L-630, November 15, 1947)
Proclamation No. 2143, and the relocation of
families who were dislocated by the National Effect of a subsequent sale by the disqualified
Steel Corporation's five-year expansion alien vendee to a qualified Filipino citizen
program. Does the Spouses have the right to
claim the just compensation? If land is invalidly transferred to an alien who
subsequently becomes a citizen or transfers it to
A: YES. Section 48 of Commonwealth Act a citizen, the flaw in the original transaction is
141(Public Land Act) enabled the confirmation considered cured and the title of the transferee
of claims and issuance of titles in favor of is rendered valid.
citizens occupying or claiming to own lands of
the public domain or an interest therein. Section Thus, the subsequent transfer of the property to
48 (b) specifically pertained to those who "have qualified Filipinos may no longer be impugned
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Civil Law
existed prior to the decree of registration. (Heirs Jose emerged as the highest bidder. A
of Delfin v. Rabadon, G.R. No. 165014, July 31, Certificate of Sale was thus issued in his
2013) favor. The period of redemption expired
without the subject property being
Art. 428. The owner has the right to enjoy redeemed; hence, a Final Bill of Sale was
and dispose of a thing, without other issued and registered in Jose's name.
limitations than those established by law. Thereafter, the latter executed an Affidavit of
The owner has also a right of action against Consolidation of Ownership. This
the holder and possessor of the thing in notwithstanding, Nicolasa persisted in her
order to recover it. occupancy of the subject property and
refused to deliver possession to Jose. Is the
Writ of Possession and Notice to Vacate
Art. 429. The owner or lawful possessor of a issued by the RTC is valid?
thing has the right to exclude any person
from the enjoyment and disposal thereof. A: YES. "It is well-settled that the purchaser in
For this purpose, he may use such force as an extrajudicial foreclosure of real property
may be reasonably necessary to repel or becomes the absolute owner of the property if
prevent an actual or threatened unlawful no redemption is made within one 1 year from
physical invasion or usurpation of his the registration of the certificate of sale by those
property entitled to redeem. As absolute owner, he is
entitled to all the rights of ownership over a
property recognized in Article 428 of the New
JUS UTENDI, FRUENDI, ABUTENDI,
Civil Code, not least of which is possession, or jus
VINDICANDI, DISPODENDI, POSSIDENDI,
possidendi."
ACCESIONES
It should be clarified that the purpose of a
Attributes of ownership petition for the issuance of a writ of possession
under Act No. 3135, as amended by Act No.
1. Right to enjoy (jus utendi) (NCC, Art. 428);
4118, is to expeditiously accord the mortgagee
2. Right to the fruits (jus fruendi);
who has already shown a prima facie right of
3. Right to abuse (jus abutendi);
ownership over the subject property (based on
4. Right to dispose (jus dispodendi) (NCC Art.
his consolidated title over the same) his
428);
incidental right to possess the foreclosed
5. Right to recover (jus vindicandi) (NCC. Art.
property. To reiterate, "possession being an
428); essential right of the owner with which he is able
6. Right to accessories (jus accessiones);
to exercise the other attendant rights of
7. Right to possess (jus possidendi).;
ownership, after consolidation of title, the
8. Right to exclude (NCC, Art. 429); and
purchaser in a foreclosure sale may demand
9. Right to enclose (NCC, Art. 430).
possession as a matter of right."
Lease merely follows the property as a lien
Thus, it is only upon a credible showing by a
or encumbrance
third- party claimant of his independent right
over the foreclosed property that the law's
Q: On April 15, 1991, Nicolasa authorized her
prima facie deference to the mortgagee's
daughter, Carmelita, Artemio's sister, to
consolidated title should not prevail. Verily, a
mortgage the subject property to Jose, the
mere claim of ownership would not suffice.
predecessor-in-interest of Jose, Jose Jr. and
Virginia in order to secure a loan in the As jurisprudence prescribes, the demonstration
amount of P112,000.00. As Nicolasa failed to
by the third party- claimant should be made
settle her loan obligation when it fell due,
within the context of an adversarial hearing,
Jose, led an application for extra-judicial
where the basic principles of Evidence and Civil
foreclosure of mortgage before the Regional
Procedure ought to be followed, such as: (1) it is
Trial Court of Olongapo City, Branch 72
the claimant who has the burden of proving his
(RTC), docketed as Case No. 07-0-91. After
claim; (2) the claim must be established through
the requirements of posting, notices, and
a preponderance of evidence; and (3) evidence
publication were complied with, the subject not presented or formally offered cannot be
property was sold at a public auction, where
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Civil Law
March 2011. NOTE: A property validly deposited in custodia
Petitioner averred that the amount was legis cannot be subject of a replevin suit. (Calub
insufficient to cover the unpaid rentals plus v. CA, G.R. No. 115634, April 27, 2000)
interests from February 2007 to May 2011.
Petitioner clarified that his earlier demand to RECOVERY OF POSSESSION
pay was for the period of February 2007 to OF IMMOVABLE PROPERTY
May 2011. Thus, petitioner posited that
respondent had continuously failed and Accion interdictal
refused to comply with the terms and
conditions of the lease contract concerning It is a summary action to recover physical or
the payment of monthly rental. May material possession only and it must be brought
petitioner eject respondent from the subject within one year from the time the cause of
land? action arises. It may be:
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Civil Law
around it. No previous demand Demand is
Was the act of Francisco and his men lawful? for the defendant to jurisdictional if the
Why? (2014 BAR) vacate is necessary. ground is non-
payment of rentals
A: NO, the act was not lawful. Even if the lessee’s or failure to comply
right to occupy the premises has expired, the with the lease
lessor cannot physically oust the lessee from the contract.
leased premises if the latter refuses to vacate. As to necessity of proof of prior physical
The lessor must go through the proper channels possession
by filing an appropriate case for unlawful Plaintiff must prove Plaintiff need not
detainer or recovery of possession. Every that he was in prior have been in prior
possessor has a right to be respected in his physical possession physical possession.
possession (NCC, Art. 539) and in no case can of the premises until NOTE: The fact that
possession be acquired through force or he was deprived petitioners are in
intimidation as long as there is a possessor who thereof by the possession of the lot
objects thereto (NCC, Art. 536). The act of defendant. does not
Francisco is an abuse of rights because even if he automatically
has the right to recover possession of his entitle them to
property, he must act with justice and give the remain in
lessees their day in court and observe honesty possession. (Ganilla
and good faith. v. CA, G.R. No.
150755, June 28,
DISTINCTION BETWEEN FORCIBLE ENTRY 2005)
AND UNLAWFUL DETAINER As to when one-year period is counted from
One-year period is One-year period is
Forcible Entry Unlawful Detainer generally counted counted from the
from the date of date of last demand
As to when possession became unlawful actual entry of the or last letter of
Possession of the Possession is land. demand.
defendant is unlawful inceptively lawful
from the beginning as but becomes illegal REQUISITES FOR RECOVERY OF PROPERTY
he acquired from the time
possession by defendant 1. Clearly identify the land he is claiming in
(FISTS) unlawfully accordance with the title/s on which he
1. Force; withholds bases his right of ownership; and
2. Intimidation; possessions after
3. Strategy; the expiration or NOTE: Burden of proof lies on the party
4. Threat; or termination of his who asserts the affirmative of an issue. The
5. Stealth. right thereto. description should be so definite that an
officer of the court might go to the locality
NOTE: The question where the land is situated and definitely
of possession is locate it.
primordial, while
the issue of 2. Prove that he has a better title than the
ownership is defendant.
generally a. Best proof is a Torrens certificate; and
unessential in b. Tax receipts, tax declarations are only
unlawful detainer. prima facie evidence of ownership; it is
(Rosa Rica Sales rebuttable.
Center v. Sps. Ong,
G.R. 132197, August NOTE: Plaintiff’s title must be founded on
16, 2005) positive right or title and not merely on the lack
As to necessity of demand or inefficiency of the defendant’s title. In other
words, he shall not be permitted to rely upon the
defects of the defendant’s title. (NCC, Art. 434)
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Civil Law
Subjects d. Lease;
a. One definite a. An active 4. Grantor of the property on the grantee, either
active subject subject (creditor); by:
(e.g. owner) and a. Contract
b. One indefinite b. A definite b. Donation or
passive subject passive subject c. Will;
which is the (debtor).
whole world 5. Those arising from Conflicts of private rights -
Right of pursuit is Those which take place in accession
therefore available. continua;
Real right follows
its object in the 6. Constitution - On the prohibition against the
hands of any acquisition of private lands by aliens;
possessor.
Enforceability 7. Acts in state of necessity – The law permits
Enforceable against Enforceable only injury or destruction of things owned by
the whole world. against the original another provided this is necessary to avert a
debtor or his greater danger (with right to indemnity v.
transferee charged principle of unjust enrichment); and
with notice of the
personal rights 8. True owner must resort to judicial process –
Limit When thing is in possession of another; law
Limited by No such limitation. creates a disputable presumption of
usefulness, value or ownership to those in actual possession.
productivity of the (2008 BAR)
thing.
Extinguishment Art. 429. The owner of lawful possessor of a
thing has the right to exclude any person
Extinguished by Not so
from the enjoyment and disposal thereof.
loss or destruction extinguished.
For this purpose, he may use such force as
of the thing Claim for damages
may be reasonably necessary to repel or
may still be
prevent an actual or threatened unlawful
pursued-in case of
physical invasion of usurpation of his
loss or destruction
property
of the thing.
Justifying circumstances. — The following do not Art. 430. Every owner may enclose or fence
incur any criminal liability: his land or tenements by means of walls,
ditches, live or dead hedges, or by any other
1. Anyone who acts in defense of his person or means without detriment to servitudes
rights, provided that the following constituted thereon.
circumstances concur:
Limitation on the right of the owner to
First. Unlawful aggression. enclose or fence one’s land or tenement
Second. Reasonable necessity of the
means employed to prevent or repel it. Every owner may enclose or fence his land or
Third. Lack of sufficient provocation on tenement by means of walls, ditches, live or dead
the part of the person defending hedges or by any other means provided that in
himself. so fencing the property, no servitude or
easement constituted thereon should be
Right of self-help exercised by third person impaired. (Pineda, 2009)
A third person who is not a possessor may repel DOCTRINE OF STATE OF NECESSITY
unlawful possession on the property owned by
another. In such an event, he is acting as a
The owner of a thing has no right to prohibit the
negotorium gestor. The owner must indemnify
interference of another with the same, if the
him for injuries sustained. (Pineda, 2009)
interference is necessary to avert an imminent
danger and the threatened damage, compared to
Test of reasonableness
the damage arising to the owner from the
interference, is much greater. The owner may
The reasonableness of the defensive acts
demand from the person benefited indemnity
resorted to by a possessor is determined not by
for the damage to him. (NCC, Art. 432)
what he imagined to exist but by the objective
situation. (Pineda, 2009) He will be liable for
This principle authorized the destruction of
damages, if he uses force more than what is
property which is lesser in value to avert the
necessary in repelling the aggression.
danger poised to another property of greater
value.
German Management's drastic action of
bulldozing and destroying the crops of private
Requisites of Doctrine of State of Necessity
respondents on the basis of the doctrine of self-
help was unavailing because the doctrine of self-
1. Interference necessary to avert an imminent
help can only be exercised at the time of actual
danger and the threatened damage to the
or threatened dispossession which is absent in
actor or a third person;
the case at bar. (German Mgmt. Services Inc. v. CA,
2. Damage to another is much greater than the
G.R. No. 76216, September 14, 1989)
damage to the property.
NOTE: The intruder must not have succeeded in
its entry, for otherwise, he must resort to court Art. 433. Actual possession under claim of
action; self-help cannot apply. One cannot put ownership raises a disputable presumption
the law into his own hands. Art. 429 must be of ownership. The true owner must resort to
read in relation to Art. 536. judicial process for the recovery of the
property.
“Sic utere tuo ut alienum non laedas”
Disputable presumption of ownership
The owner of a thing cannot make use thereof in
such manner as to injure the rights of a third There is disputable presumption of ownership
person. (NCC, Art. 431) when a person is in actual possession of the
property under the claim of ownership. (Pineda,
189
Civil Law
2009) or otherwise informally appropriated or
injuriously affected; and
Resort of the owner rebutting the 5. The utilization of the property for public use
presumption must be in such a way as to oust the owner
and deprive him of all beneficial enjoyment
Under Art. 433 the remedy is judicial process to of the property. (National Power Corporation
recover the property of the person. vs. Court of Appeals, 254 SCRA 577)
Requisites to prove claim of ownership Q: Alfredo Hababag, Sr. (Alfredo) was the
owner of several parcels of agricultural land
1. Proper identification of the property; and situated in the Municipality of Gubat,
2. Title must be clear, strong and credible. Sorsogon. The aforesaid landholdings were
(Pineda, 2009) voluntarily offered for sale (VOS) to the
government under Republic Act No. (RA)
Art. 434. In an action to recover, the 6657, otherwise known as the
property must be identified, and the "Comprehensive Agrarian Reform Law of
plaintiff must rely on the strength of his title 1988,". The Land Bank of the Philippines
and not on the weakness of the defendant’s (LBP) initially valued the subject lands at
claim. P1,237,850.00, but Alfredo rejected the
valuation. After summary administrative
Requisites For Action To Recover Property proceedings for the determination of the
amount of just compensation, the Office of
1. To clearly identify the land he is claiming in the Provincial Agrarian Reform Adjudicator
accordance with the title or titles on which (PARAD) of the Department of Agrarian
he bases his right of ownership; and, Reform (DAR) Adjudication Board (DARAB)
2. To prove that he has a better title than the fixed the value of the subject lands at
defendant. (Pineda, 2009) P1,292,553.20.
Art. 435. No person shall be deprived of his Dissatisfied, Alfredo filed a Complaint for the
property except by competent authority determination of the amount of just
and for public use and always upon payment compensation before the RTC. RTC rendered
of just compensation a Decision fixing the amount of just
Should this requirement be not first compensation of the subject lands at
complied with, the courts shall protect and, P5,653,940.00. The RTC applied the Income
in a proper case, restore the owner in his Productivity Approach. CA set aside the RTC's
possession. valuation for failure to give due
consideration to the factors enumerated in
Section 17 of RA 6657 and the formula under
Eminent Domain
DAR AO 6-92, as amended by DAR AO 11-94.
Moreover, contrary to the limitation imposed
This is the superior right of the State to acquire
by DAR AO 6-92 - i.e., that the computed
private property whether registered or not for
value using the applicable formula shall not
public use upon payment of just compensation.
exceed the landowner's offer to sell - the CA
It is one of the limitations on the right of
found that the amount as recomputed by the
ownership in the pursuit of public interest.
RTC was way beyond the landowner's offer of
(Pineda, 2009)
P1,750,000.00 as stated in the Claims
Valuation and Processing Form. Is the CA
Elements of “Taking” of Property For
correct in setting aside the computation of
Purposes of Eminent Domain
RTC?
1. The expropriator must enter a private
A: YES. Just compensation is defined as the full
property;
and fair equivalent of the property taken from
2. The entrance into private property must be
its owner by the expropriator. It has been
for more than a momentary period;
repeatedly-stressed by this Court that the
3. The entry into the property should be under
measure is not the taker's gain but the owner's
warrant or color of legal authority
loss. The word "just" is used to intensify the
4. The property must be devoted to a public use
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Civil Law
same barangay. The Court of Appeals A: YES. No expropriation proceeding can
affirmed this decision and imposed interest continue if the property to be expropriated will
the rate of 12% per annum from the time of not be for public use. In Metropolitan Water
the filing of the complaint until June 30, District v. De Los Angeles, the Court held that the
2013, and thereafter, at 6% per annum until fundamental basis then of all actions brought for
full payment. Is the 12% per annum interest the expropriation of lands, under the power of
on the unpaid balance be computed from the eminent domain, is public use. That being true,
time of the taking of the subject until full the very moment that it appears at any stage of
payment valid? the proceedings that the expropriation is not for
a public use, the action must necessarily fail and
A: NO. The value of the landholdings should be should be dismissed, for the reason that the
equivalent to the principal sum of the just action cannot be maintained at all except when
compensation due, and interest is due and the expropriation is for some public use.
should be paid to compensate for the unpaid Considering that the National Power
balance of this principal sum after taking has Corporation is no longer using respondents'
been completed. From the date of the taking of properties for the purpose of building the
the subject lot on May 5, 2008 when the RTC Substation Project, it may be allowed to
issued a writ of possession in favor of petitioner, discontinue with the expropriation proceedings,
until the just compensation therefor was finally subject to the approval of the court. (National
fixed at P9,000.00/sq. m., petitioner had only Power Corporation v. Socorro T. Posada, Renato
paid a provisional deposit in the amount of Bueno, Alice Balin, Adrian Tablizo, Teofilo
P550,000.00 (i.e., at P2,750.00/sq. m.). Thus, this Tablizo, and Lydia T. Olivo, Substituted By Her
left an unpaid balance of the "principal sum of Heirs, Alfredo M. Olivo, Alicia O. Salazar, Anita O.
the just compensation," warranting the Ordono, Angelita O. Lim, And Adelfa O. Espinas,
imposition of interest. It is settled that the delay G.R. No. 191945, March 11, 2015, as penned by J.
in the payment of just compensation amounts to Leonen)
an effective forbearance of money, entitling the
landowner to interest on the difference in the Art. 436. When any property is condemned
amount between the final amount as adjudged or seized by competent authority in the
by the court and the initial payment made by the interest of health, safety or security, the
government. It bears to clarify that legal interest owner thereof shall not be entitled to
shall run not from the date of the filing of the compensation, unless he can show that such
complaint but from the date of the issuance of condemnation or seizure is unjustified.
the Writ of Possession on May 5, 2008, since it is
from this date that the fact of the deprivation of Extent of ownership of parcel of land
property can be established. As such, it is only
proper that accrual of legal interest should begin The owner of a parcel of land is the owner of its
from this date. (Republic v. Leonor Macabagdal, surface and of everything under it, and he can
G.R. No. 227215, January 10, 2018) construct thereon any works or make any
plantations and excavations which he may deem
Q: National Power Corporation instituted proper, without detriment to servitudes and
expropriation proceedings for the subject to special laws and ordinances. He
acquisition of a right-of-way easement and cannot complain of the reasonable requirements
for the construction of the Substation Island of aerial navigation. (NCC, Art. 437)
Grid Project over the parcels of land owned
by respondents. During the pendency of the AD COLEUM
proceedings, NPC filed a motion to
discontinue the proceedings since the delay The owner of a land has rights not only to its
in the possession of the properties would surface but also to everything underneath and
adversely affect the project. NPC also claims the airspace above it up to a reasonable height.
that the properties were no longer needed as Presumably, the landowner’s right extends to
it was set to acquire an alternative site. such height or depth where it is possible for
them to obtain some benefit or enjoyment, and it
May NPC be allowed to discontinue the is extinguished beyond such limit as there would
expropriation proceedings? be no more interest protected by law. (Napocor
v. Ibrahim, G.R. No. 168732, June 29, 2007)
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Civil Law
between them. (NCC, Art. 438, par. 3) The vault implicitly included in ownership, without which
has been buried for about a century and the it will have no basis or existence. (Paras, 2008)
successor of the bank which previously owned it
cannot succeed by inheritance to the property. NOTE: In general, the right to accession is
(2008 BAR) automatic (ipso jure), requiring no prior act on
the part of the owner or principal.
NOTE: Bills and notes found are not hidden
treasures. The owner can be traced through the Q: Filipinas Palm Oil Plantation Inc. is a
serial numbers. private organization engaged in palm oil
plantation with a total land area of more than
Q: O, owner of Lot A, learning that Japanese 7,000 hectares of National Development
soldiers may have buried gold and other Company (NDC) lands in Agusan del Sur.
treasures at the adjoining vacant Lot B, Harvested fruits from oil palm trees are
belonging to Spouses X and Y, excavated in converted into oil through Filipinas' milling
Lot B where she succeeded in unearthing plant in the middle of the plantation area.
gold and precious stones. How will the Within the plantation, there are also three
treasures found by O to be divided – (1) (3) plantation roads and a number of
100% to O as finder, (2) 50% to O and 50% residential homes constructed by Filipinas
to X and Y, (3) 50% to O and 50% to the State for its employees.
(4) none of the above? (2010 BAR)
The LBAA found that the P207.00 market
A: NONE OF THE ABOVE. The finding of the value declared in the assessment by the
treasure was not by chance because O knew that Provincial Assessor was unreasonable. It
the treasure was in Lot B. While a trespasser is found that the market value should not have
also not entitled to any share and there is no been more than P85.00 per oil palm tree. The
indication in the problem whether or not O was sudden increase of realty tax assessment
a trespasser, O is not entitled to share because level from P42.00 for each oil palm tree in
the finding was not by chance. 1993 to P207.00 was confiscatory. The LBAA
adopted Filipinas' claim that the basis for
ACCESSION assessment should only be 98 trees. Although
one (1) hectare of land can accommodate
The right pertaining to the owner of a thing over 124 oil palm trees, the mountainous terrain
everything which is produced thereby, or which of the plantation should be considered.
is incorporated or attached thereto, either Because of the terrain, not every meter of
naturally or artificially. (NCC, Art. 440) land can be fully planted with trees. The
LBAA found that roads of any kind, as well as
Right of accession all their improvements, should not be taxed
since these roads were intermittently used
It is that right of ownership of which an owner of by the public.
a thing has over the products of said thing
(accession discreta), as well as to all things Should the roads the respondent constructed
inseparably attached or incorporated thereto within the leased area be assessed with real
whether naturally or artificially (accession property taxes?
continua). (Pineda, 2009)
A: NO, the roads that respondent constructed
Accession is NOT a mode of acquiring within the leased area should not be assessed
ownership with real property taxes.
It is not one of the modes enumerated under Art. The roads that respondent constructed became
712 (different modes of acquiring ownership). It permanent improvements on the land owned by
is, therefore, safe to conclude that accession is the NGPI-NGEI by right of accession under the
not a mode of acquiring ownership. Civil Code, thus:
Reason: Accession presupposes a previously Article 440. The ownership of property gives the
existing ownership by the owner over the right by accession to everything which is
principal. Fundamentally, accession is a right produced thereby, or which is incorporated or
The right of accession with respect to what is Pratus sequitor ventrem – offspring follows
produced by the property. the mother
To the owner belongs the: This legal maxim means that the offspring
follows the dam (mother). The legal
1. Natural fruits - The spontaneous products of presumption, in the absence of proof to the
the soil, and the young and other products of contrary, is that the calf, as well as its mother
animals; belongs to the owner of the latter, by the right of
2. Industrial fruits - Are those produced by accretion. (US v. Caballero, G.R. No. 8608,
lands of any kind through cultivation or September 26, 1913) Thus, when the ownership
labor; over the offspring of the animal when the male
3. Civil fruits - The rents of buildings, the price and female belongs to different owners, the
of leases of lands and other property and the owner of the female was considered also the
amount of perpetual or life annuities or owner of the young, unless there is a contrary
other similar income. (NCC, Art. 441-442) custom or speculation.
Obligation of the owner who receives the Art. 445. Whatever is built, planted or sown
fruit from a third person on the land of another and the
improvements or repairs made thereon,
He who receives the fruits has the obligation to belong to the owner of the land, subject to
pay the expenses made by a third person in their the provisions of the following articles.
production, gathering and preservation. (NCC,
Art. 443) (2009 BAR) When fruits are deemed to exist
Meaning of third person 1. Civil fruits accrue daily and are considered
personal property and may be pro-rated;
One who is NOT the owner, builder, planter or and
sower. 2. Natural and industrial fruits, while still
growing, are considered as real property;
Art. 444. Only such as are manifest or born ordinarily, they cannot be pro-rated.
195
Civil Law
Art. 446. All works, sowing, and planting are 1. He who is in Bad faith is liable for damages.
presumed made by the owner and at his 2. Accessory follows the principal;
expense, unless the contrary is proved. 3. Union or incorporation must generally be
effected in such a manner that to separate
Ownership of fruits the principal from the accessory would
result in substantial Damage to either or
GR: Fruits belong to the owner. (NCC, Art. 441) diminish its value;
4. To the Owner of the thing belongs the
XPNS: If the thing is: (PULPA) extension or increases to such thing;
1. In possession of a Possessor in good faith 5. Bad faith of one party Neutralizes the bad
(NCC, Art 546) (1992, 1996, 2000 BAR); faith of the other so that they shall be
before the possession is legally interrupted; considered in good faith;
2. Subject to a Usufruct (NCC, Art. 566); 6. He who is in Good faith may be held
3. Lease of rural land; responsible but not penalized; and
4. Pledged [NCC, Art. 1680 and Art. 2102(7)]; 7. No one shall unjustly Enrich himself at the
pledge is entitled to the fruits but has the expense of another.
obligation to compensate or set-off what he
receives with those which are owing to him; FOR IMMOVABLES
or
5. In possession of an Antichretic creditor. ACCESSION INDUSTRIAL
(NCC, Art. 2132)
Three kinds of industrial endeavors (BPS)
GENERAL RULLES OF ACCESSION
1. Building – Erecting a structure or
Accession exists only if separation is not feasible. construction of any kind, with roof for
Otherwise, separation may be demanded. residential, office, social, commercial or
other purposes;
ACCESSION CONTINUA 2. Planting – Setting into the soil or land seeds
or seedlings of trees such as mangoes,
It is the right pertaining to the owner of a thing coconuts, etc;
over everything incorporated or attached 3. Sowing – The act of scattering or spreading of
thereto either naturally or artificially; by germinated seeds indiscriminately or evenly
external forces. through hand or mechanical device.
197
Property
Gathered Fruits
Planter in GF Planter in BF
Keeps fruits before possession is Reimbursed for expenses for
Planter legally interrupted. (NCC, Art. 544, production, gathering and
par. 1) (2008 Bar) preservation. (NCC, Art. 443)
No necessity to reimburse the Owns fruits provided he pays
planter of expenses since the planter expenses for production,
Landowner
planter retains the fruits. (NCC, gathering and preservation.
Art. 544, par. 1) (NCC, Art. 443)
Standing Crops
Planter in GF Planter in BF
RULE WHEN THE LAND OWNER IS THE BUILDER, PLANTER OR SOWER (1999 BAR)
RULE WHEN THE LAND OWNER IS NOT THE BUILDER, PLANTER OR SOWER
199
Property
may be explained as follows:
1. Acquire improvements
without paying indemnity
and collect damages (NCC,
Art. 445 & 449); 1. Lose improvements without
right to be indemnified
2. Order the demolition of unless the landowner sells
work or restoration to the land (NCC, Art. 449);
former condition and
1. Collect value of materials
collect damages in both 2. Recover necessary expenses
primarily from builder, planter,
cases (NCC, Art. 450); or for preservation of land
sower, subsidiarily from land
without the right to retain
owner (NCC, Art. 455); or
3. Sell the land to builder the thing until the indemnity
and planter or rent it to is paid (NCC, Art. 452 & 546);
2. Remove materials in any event
the sower and collect
if builder, planter, sower
damages in both cases. 3. Pay value of materials to its
acquired materials.
(NCC, Art. 450) (2008 owner plus damages (NCC,
BAR) Art. 455); and
5. Subsidiarily liable to
owner of materials.
201
Property
4. Sell the land to builder and 2. Sells or rents it, Builder or
planter or collect rent from Planter cannot be obliged
sower unless the value of to buy the land if its value
the land is considerably is considerably more than
greater than the building that of the building or
etc., in which case, the trees.
builder and planter shall In such case, he shall pay
pay rent. reasonable rent.
1. Acquire improvements
1. Lose improvements
without paying indemnity
without right to be
and collect damages (NCC,
indemnified unless the
Articles 445 and 449);
landowner sells the land
(NCC, Art. 449);
2. Order the demolition of
1. Recover value from Builder,
work or restoration to
2. Recover necessary Planter, Sower (in pari delicto);
former condition and
expenses for preservation
collect damages in both
of land without the right to 2. If Builder, Planter, Sower
cases (NCC, Art. 450); or
retain the thing until the acquired improvements,
indemnity is paid (NCC, remove the materials only if
3. Sell the land to builder
Articles 452 and 546); without injury to the work
and planter or rent it to
constructed, or without the
the sower, and collect
3. Pay the value of the plantings, constructions or
damages in both cases
materials to the owner of works being destroyed (NCC,
(NCC, Art. 450);
the materials.; and Art. 447);
4. Has right to demand
Since both the owner of the 3. No action against land owner;
damages from both (NCC,
materials and the builder, and
Art. 451);
etc. acted in bad faith, as
between them, they are 4. May be liable to the land owner
5. Pay necessary expenses
treated as having both for damages. (NCC, Art. 451)
for preservation (NCC, Art.
acted in good faith. (De
452 & 546); and
Leon, 2006)
6. Not subsidiarily liable to
4. Pay damages to land
the owner of the materials
owner. (NCC, Art. 451)
because as to him, the two
acted in bad faith. (De
Leon, 2006)
Land-Owner Builder, Planter, Sower Owner of Materials
1. Acquires improvements If he pays the owner of the 1. Loses materials without right
after paying indemnity materials, plants or seeds: to indemnity (NCC, Art. 449);
and damages, unless the and
builder, planter or sower 1. He may demand from the
decides to remove (NCC, landowner the value of the 2. Pays damages. (NCC, Art. 451)
Art. 454, 447 & 443); and materials and labor (NCC,
Art. 455) and shall also be The builder, planter or sower
2. Cannot compel builder, obliged to the reparation of would be considered merely an
planter and sower to buy damages (NCC, Art. 447); or agent of the owner of materials.
land.
2. Remove the materials in Therefore, the provisions of Article
any event, with a right to 449 of the Civil Code will apply by
be indemnified for analogy. He is even liable for
damages. (NCC, Articles 454 damages. (Rabuya, 2008)
and 447)
Land-Owner Builder, Planter, Sower Owner of Materials
Bad faith Bad faith Good faith
The owner of the land shall Pay value of materials to its 1. Collect value of materials
answer subsidiarily for their owner (NCC, Art. 455) and primarily from builder,
value and only in the event that planter, sower, subsidiarily
the one who made use of them If the Land Owner: from land owner (NCC, Art.
has no property with which to 455); or
pay (NCC, Art. 455); and 1. Acquires the improvement,
Builder, Planter, or Sower 2. Remove the materials in any
Land Owner can either: (NCC, may demand from the event, with a right to be
Art. 448) landowner the value of the indemnified for damages.
materials and labor. (NCC, (NCC, Art. 447)
1. Acquire improvements Art 455)
after paying indemnity
for: And he has the right to
1. Necessary expenses, retain the thing (and cannot
and be required to pay rent)
2. Useful expenses until indemnity is paid (Art.
which could either 546).
be:
203
Property
If the useful improvements
i. Original costs of can be removed without
improvements damage to the principal
ii. Increase in the thing, the possessor in good
value of the faith may remove them,
whole. (NCC, unless the person who
Articles 546 and recovers the possession
443) exercises option 2 (NCC,
Articles 547 and 447);
1. In Miranda v. Fadullon, G.R. No. L-8220, A: Since the lot owner Y is deemed to be in bad
October 29, 1955, the builder might be made faith (Art. 453), X as the party in good faith may
to pay rental only, leave things as they are, (a) remove the house and demand
205
Property
indemnification for damages suffered by him, or the spouses Nuguid benefit from the
(b) demand payment of the value of the house improvement?
plus reparation for damages (Art. 447, in relation
to Art. 454). Y continues as owner of the lot and A: NO. Since spouses Nuguid opted to
becomes, under the second option, owner of the appropriate the improvement for themselves
house as well, after he pays the sums demanded. when they applied for a writ of execution
despite knowledge that the auction sale did not
Q: Bartolome constructed a chapel on the include the apartment building, they could not
land of Eric. What are Bartolome’s rights if he benefit from the lot’s improvement until they
were: (1) possessor of the land in good faith, reimbursed the improver in full, based on the
or (2) in bad faith? (1996 BAR) current market value of the property. (Pecson v.
CA, G.R. No. 115814, May 26, 1995)
A:
(1) A chapel is a useful improvement, Bartolome The builder is entitled to a refund of the
may remove the chapel if it can be removed expenses he incurred and not on the market
without damage to the land, unless Eric chooses value of the improvement (2000 BAR)
to acquire the chapel. In the latter case,
Bartolome has the right of reimbursement of the Under Art. 448 in relation to Art. 546, the
value of the chapel with right of retention until builder in good faith is entitled to a refund of the
he is reimbursed. (NCC, Arts. 448, 546 & 547) necessary and useful expenses incurred by him,
or the increase in value which the land may have
(2) Bartolome loses whatever he built, without acquired by reason of the improvement, at the
any right to indemnify. (NCC, Art. 449) option of the landowner. The builder is entitled
to a refund of the expenses he incurred, and not
Q: Pecson owned a commercial lot on which to the market value of the improvement.
he built a building. For failure to pay realty
taxes, the lot was sold at public auction to NOTE: The case of Pecson v. CA, G.R. No. 115814,
Nepomuceno, who in turn sold it to the May 26, 1995 is not applicable.
spouses Nuguid. The sale, however, does not
include the building. The spouses The landowner is entitled to the rentals of
subsequently moved for the delivery of the building if he opted to appropriate it,
possession of the said lot and apartment. subject to the right of retention of the builder
Pecson filed a motion to restore possession in good faith (2000 BAR)
pending determination of the value of the
apartment. The landowner is entitled to the rentals of the
building. As the owner of the land, he is also the
May Pecson claim payment of rentals? owner of the building being an accession
thereto. However, the builder in good faith is
A: YES, Pecson is entitled to rentals by virtue of entitled to retain the building until indemnity is
his right of retention over the apartment. The paid. Consequently, he is also entitled to retain
construction of the apartment was undertaken the rentals. He, however, shall apply the rentals
at the time when Pecson was still the owner of to the indemnity payable to him after deducting
the lot. When the Nuguids became the reasonable cost of repair and maintenance.
uncontested owner of the lot, the apartment was
already in existence and occupied by tenants. Q: The Church, despite knowledge that its
intended contract of sale with the National
NOTE: Art. 448 does not apply to cases where Housing Authority (NHA) had not been
the owner of the land is the builder but who perfected, proceeded to introduce
later lost the land; not being applicable, the improvements on the disputed land. On the
indemnity that should be paid to the buyer must other hand, NHA knowingly granted the
be the fair market value of the building and not Church temporary use of the subject
just the cost of construction thereof. To do properties and did not prevent the Church
otherwise would unjustly enrich the new owner from making improvements thereon. Did the
of the land. Church and NHA act in bad faith?
Q: Pending complete reimbursement, may A: YES. The Church and the NHA, both acted in
207
Property
made or artificial accretions to lands that adjoin
Thus, person who is in good faith may be guilty canals or esteros or artificial drainage system.
of negligence for which he may be made liable (Ronquillo v. CA, G.R. No 43346, March 20, 1991)
under Art. 2176 involving quasi-delicts. (Pineda,
2009) NOTE: If the deposits accumulate, not through
the effects of the current of the water, but
ACCESSION NATURAL because of the constructions made by the owner
purely for defensive purposes against the
damaging action of the water, the deposits are
ALLUVION
still deemed to be alluvion and will belong to the
riparian owner.
Alluvium or alluvion (2001, 2003, 2008,
2009 BAR)
If the deposit is brought about by sea water
It is the gradual deposit of sediment by natural
When the sea moves towards the estate and the
action of a current of fresh water (not sea water),
tide invades it, the same becomes a foreshore
the original identity of the deposit being lost.
land which consequently becomes part of the
Where it is by sea water, it belongs to the State.
public domain. Thus, it belongs to the state.
(Government of Philippine Islands v. Cabangis,
G.R. No. L-28379, March 27, 1929)
Registration
NOTE: Art. 457 of NCC states “To the owners of Alluvial deposits must be registered. Though,
the lands adjoining the banks of the rivers
automatically it is owned by the riparian owner
belongs the accretion which they gradually
(Heirs of Navarro v. IAC, G.R. No. 68166, February
receive from the effects of the current of the
12, 1997), it is still subject to acquisitive
waters.
prescription which may divest the riparian
owner the ownership over the accretion.
Riparian owner
Failure to register
He is the owner of the land adjoining rivers.
If the riparian owner fails to register the
Accretion v. Alluvium
deposits within the prescriptive period of
acquiring real property (10 years if ordinary
Accretion is the process whereby the soil is
prescription or 30 years if extraordinary
deposited while alluvium is the soil deposited. prescription), it subjects said accretion to
acquisition thru prescription by third persons.
Requisites of accretion
(Reynante v. CA, G.R. No. 95907, April 8, 1992)
1. Deposit be gradual and imperceptible;
However, registration under the Torrens System
2. Resulted from the effects of the current of does not protect the riparian owner against the
the water; and
diminution of the area of his registered land
3. The land where the accretion takes place is
through gradual changes in the course of an
adjacent to the banks of a river.
adjoining stream.
If all the requisites are present, the riparian
Q: Benjamin is the owner of a titled lot which
owner is automatically entitled to the accretion.
is bounded on the north by the Maragondon
River. An alluvial deposit of two (2) hectares
NOTE: The alluvion starts to become the was added to the registered area. Daniel took
property of the riparian owner from the time
possession of the portion formed by
that the deposit created by the current of water
accretion and claims that he has been in
becomes manifest. (Heirs of Navarro v. IAC, G.R.
open, continuous and undisturbed
No. 68166, February 12, 1997)
possession of said portion since 1923 as
shown by a tax declaration. In 1958,
Man-made or artificial accretions to lands
Benjamin filed a Complaint for Quieting of
NOT included
Title and contends that the alluvium belongs
to him as the riparian owner and that since
The rule on alluvion does not apply to man-
2. To promote the interests of agriculture as he Art. 459. Whenever the current of a river,
is in the best position to utilize the accretion. creek or torrent segregates from an estate
on its bank a known portion of land and
The owners of estates adjoining ponds or transfers it to another estate, the owner of
lagoons do not acquire the land left dry by the the land to which the segregated portion
natural decrease of the waters, or lose that belonged retains the ownership of it,
inundated by them in extraordinary floods. provided that he removes the same within
(NCC, Art. 458) two years.
NOTE: This rule does not apply to lakes. CHANGE IN THE COURSE OF THE RIVER
Q: The First Accretion adjoined the southern
Whenever a river, changing its course by natural
portion of the Motherland. Decades later, the
Second Accretion abutted the First Accretion causes, opens a new bed through a private
estate, this bed shall become of public dominion.
on its southern portion. OCT was issued in
the names of all the respondents covering (NCC, Art. 462)
the Second Accretion. Petitioners alleged
that through deceit, fraud, falsehood, and Requisites (NAPA)
misrepresentation, respondent Victoriano,
with respect to the First Accretion, and the 1. There must be a Natural change in the
respondents collectively, with regard to the course of the waters of the river; otherwise,
Second Accretion, had illegally registered the the bed may be the subject of a State grant;
said accretions in their names, 2. The change must be Abrupt or sudden;
notwithstanding the fact that they were not 3. The change must be Permanent; and
209
Property
NOTE: The rule does not apply to temporary ALLUVIUM AVULSION
overflowing of the river. Gradual and Sudden or abrupt
imperceptible. process.
4. There must be Abandonment by the owner Soil cannot be Identifiable and
of the bed. identified. verifiable.
Belongs to the Belongs to the
NOTE: Abandonment pertains to the decision owner of the owner from whose
not to bring back the river to the old bed. property to property
which it is attached. it was detached.
Effect when the river bed is abandoned Merely an Detachment
attachment. followed by
River beds which are abandoned through the attachment.
natural change in the course of the waters ipso
facto belong to the owners whose lands are Requisites of avulsion (CAI)
occupied by the new course in proportion to the
area lost. However, the owners of the lands 1. Transfer is caused by the Current of a river,
adjoining the old bed shall have the right to creek, or torrent;
acquire the same by paying the value thereof, 2. Transfer is sudden or Abrupt; and
which value shall not exceed the value of the 3. The portion of the land transported is known
area occupied by the new bed. (NCC, Art. 461) or Identifiable.
NOTE: The rule on abandoned river bed does NOTE: By analogy, land transferred from one
not apply to cases where the river simply dries tenement to another by forces of nature other
up because there are no persons whose lands than the river current can still be considered as
are occupied by the waters of the river. an avulsion.
Under the Water Code, the government or the Rule on acquisition of titles over an avulsion
riparian owner may return the river back to the
original bed. (P.D. 1067, Art. 58) GR: Original owner retains title.
Art. 460. Trees uprooted and carried away XPNs: The owner must remove (not merely
by the current of the waters belong to the claim) the transported portion within two years
owner of the land upon which they may be to retain ownership, otherwise, the land not
cast, if the owners do not claim them within removed shall belong to the owner of the land to
six months. If such owners claim them, they which it has been adjudicated in case of:
shall pay the expenses incurred in gathering
them or putting them in a safe place. 1. Abandonment; or
2. Expiration of two years, whether the failure
AVULSION to remove be voluntary or involuntary, and
irrespective of the area of the portion known
It is the deposit of known (identifiable) portion to have been transferred.
of land detached from the property of another
which is attached to the property of another as a Rule on avulsion of uprooted trees
result of the effect of the current of a river, creek
or torrent. (2001 BAR) GR: The owner of the tree retains ownership.
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Property
Adjunction the two things incorporated is the principal
one, the thing of the greater value shall be
It is the process by virtue of which two movable so considered, and as between two things of
things belonging to different owners are united equal value, that of the greater volume.
in such a way that they form a single object and
each of the things united preserves its own Tests to determine the principal
nature. (NCC, Art. 466)
1. That of greater value;
Requisites of adjunction (2BUS) 2. If two things are of equal value – That of
greater volume;
There is adjunction when there are: 3. If two things are of equal volume – That to
which the other has been united as an
1. Two (2) movables; ornament, or for its use or perfection; and
2. Belonging to different owners; 4. That which has greater merits, utility and
3. United forming a single object; and volume if things. (NCC, Art. 468)
4. Separation would impair their nature or
result in substantial injury to either thing. NOTE: In painting and sculpture, writings,
printed matter, engraving and lithographs, the
Classes of adjunction or conjunction board, metal, stone, canvas, paper or parchment
shall be deemed the accessory thing. (NCC, Art.
1. Painting (pintura); 468)
2. Engraftment or Inclusion - Like setting a
precious stone on a golden ring; Ownership when the adjunction involves
3. Writing (escritura); three or more things
4. Weaving; and
5. Soldering- Joining a piece of metal to another If the adjunction involves three or more things,
metal the court should first distinguish the principal
and apply Art. 466 in an equitable manner such
a. Ferruminacion -Principal and accessory that the principal acquires the accessory,
are of the same metal; or indemnifying the former owner thereof for its
b. Plumbatura – Different metals (NCC, Art. value.
468)
Art. 469. Whenever the things united can be
Ownership of the resulting object separated without injury, their respective
owners may demand their separation.
The owner of the principal by law becomes
owner of the resulting object and should Nevertheless, in case the thing united for
indemnify the owner of the accessories for the the use, embellishment or perfection of the
values thereof. other, is much more precious than the
principal thing, the owner of the former
Good faith is necessary in Adjunction may demand its separation, even though the
thing to which it has been incorporated may
Art. 526 explains that good faith is that condition suffer some injury.
of the mind where the person concerned is not
aware that there exists in his title or mode of Separation of things is allowed in the
acquisition any flaw which invalidates it. following cases:
If the owner of the principal thing acted in bad
faith, Art. 470 (par. 2) will apply NOT Art. 466. 1. Separation without injury;
(Pineda, 2009) 2. Separation with injury – Accessory is much
more precious than the principal, the owner
Art. 467. The principal thing, as between of the former may demand its separation
two things incorporated, is deemed to be even though the principal may suffer injury;
that to which the other has been united as 3. Owner of the principal acted in Bad faith.
an ornament, or for its use or perfection. (NCC, Art. 469)
Art. 468. If it cannot be determined by the
rule given in the preceding article which of Art. 470. Whenever the owner of the
213
Property
new thing to himself, after first paying
Kinds of mixtures (COM-CON) indemnity for the value of the work, or
1. Commixtion – mixture of solids; and demand indemnity for the material.
2. Confusion – mixture of liquids
If in the making of the thing bad faith
Proportionate Ownership In Commixtion Or intervened, the owner of the material shall
Confusion have the right to appropriate the work to
himself without paying anything to the
If the things mixed or confused are not separable maker, or to demand of the latter that he
without injury, each owner shall have a right to indemnify him for the value of the material
the resulting thing proportionate to the value of and the damages he may have suffered.
the thing he owns. (Pineda, 2009) However, the owner of the material cannot
appropriate the work in case the value of
Rules regarding mixtures the latter, for artistic or scientific reasons, is
considerably more than that of the material.
By Will of Both Owners or by Accident
Good faith Specification (NCC, Art. 474)
1. Right is subject to stipulations; or
2. Right is in proportion to the part belonging It is the giving of new form to another’s material
to. him (Co-ownership arises) (NCC, through application of labor. The material
Art.422) undergoes a transformation or change of
By will of only one owner/ by chance identity. The labor is the principal and the
Good faith material used is the accessory.
1. Have the things separated provided the
thing suffers no injury; or Respective rights of the maker and the owner
2. If cannot be separated without injury, of the materials in specification
acquire interest on mixture in proportion
to his part (co-ownership). OWNER OF
MAKER
Bad faith (caused Good faith MATERIALS (OM)
the mixture) Good faith
First owner will lose Second owner will GR: Appropriate the Receive payment for
his part on the acquire entire mixture thing transformed and value of materials.
mixture and pay and entitled to pay the owner of the
damages to the damages. materials for its value.
second owner.
Bad faith Good faith (caused XPN: If the material is
the mixture) more precious than the
As if both acted in GF, As if both acted in GF, thing transformed, the
because the 2nd since the first owner owner of the materials
owner in GF was the is in BF and the has the option to:
one who caused the second owner who 1. Acquire the work
ratification, because caused the mixture in and indemnify the
the first owner. GF in a way ratifies maker for his
the BF of first owner. labor; or
2. Demand indemnity
Art. 474. One who in good faith employs the for the material.
material of another in whole or in part in Good faith
order to make a thing of a different kind, 1. Receive payment 1. Appropriate new
shall appropriate the thing thus for value of his thing and pay the
transformed as his own, indemnifying the work; or maker for the
owner of the material for its value. 2. Appropriate the work; or
new thing and 2. Receive payment
pay the owner of for value of
If the material is more precious than the materials for its materials.
transformed thing or is of more value, its value.
owner may, at his option, appropriate the Bad faith Good faith
215
Property
Scope of the action to quiet title Oños' opposition, and upon order of the RTC,
Lim converted the petition for reconstitution
Only real properties can be subject of an action into a complaint for quieting of title. The
for quieting of title. (Pineda, 2009) Oños now contend that this action for
quieting of title should be disallowed
Requisites for an action to quiet title (LCDR) because it constituted a collateral attack on
OCT No. RO-9969-(O-20449). Is their
1. Plaintiff must have a Legal or equitable title contention correct?
to, or interest in the real property which is
the subject matter of the action; A: NO. The attack is direct when the objective is
to annul or set aside such judgment, or enjoin its
NOTE: He need not be in possession of said enforcement. On the other hand, the attack is
property. (NCC, Art.477) indirect or collateral when, in an action to obtain
a different relief, an attack on the judgment is
2. There must be Cloud in such title; nevertheless made as an incident thereof. The
averments readily show that the action was
3. Such cloud must be Due to some (IRCEP) neither a direct nor a collateral attack for Lim
a. Instrument; was asserting only that the existing title
b. Record; registered in the name of the petitioners'
c. Claim; predecessors had become inoperative due to the
d. Encumbrance; or conveyance in favor of Lim's mother, and
e. Proceeding which is apparently valid resultantly should be cancelled. (Oño vs Lim, G.R.
but is in truth invalid, ineffective, No. 154270, March 09, 2010)
voidable or unenforceable, and is
prejudicial to the plaintiff’s title; and Art. 476. Whenever there is a cloud on title
to real property or any interest therein, by
4. Plaintiff must reason of any instrument, record, claim,
a. Return to the defendant all benefits he encumbrance or proceeding which is
may have received from the latter; or apparently valid or effective but is in truth
b. Reimburse him for expenses that may and in fact invalid, ineffective, voidable, or
have redounded to his benefit. unenforceable, and may be prejudicial to
said title, an action may be brought to
Reasons for quieting of title remove such cloud or to quiet the title.
An action may also be brought to prevent a
1. Prevent future litigation on the ownership of cloud from being cast upon title to real
the property; property or any interest therein.
2. Protect true title & possession;
3. To protect the real interest of both parties; Rules in actions for quieting of title
and
4. To determine and make known the precise 1. These put an end to vexatious litigation in
state of title for the guidance of all. respect to property involved; plaintiff
asserts his own estate & generally declares
Persons who may file an action to quiet title that defendant’s claim is without foundation;
2. Remedial in nature;
1. Registered owner; 3. Not suits in rem nor personam but suits
2. A person who has an equitable right or against a particular person or persons in
interest in the property; or respect to the res (quasi in rem);
3. The State. 4. May not be brought for the purpose of
settling a boundary disputes;
Q: Lim filed in the RTC in Cebu City a petition 5. Applicable to real property or any interest
for the reconstitution of the owner's therein;
duplicate copy of OCT No. RO-9969-(O- 6. An action to quiet title brought by the
20449), alleging that said OCT had been lost person in possession of the property is
during World War II by his mother, Luisa, IMPRESCRIPTIBLE; and
who acquired title to it by virtue of a deed of 7. If he is not in possession, he must invoke his
sale, albeit unregistered. On account of the remedy within the prescriptive period as
217
Property
prescription. must demolish the same to forestall the
possibility of causing death or harm to anyone,
PRESCRIPTION OR or injury to property. (Pineda, 2009)
NON-PRESCRIPTION OF ACTION
Art. 483. Whenever a large tree threatens to
Prescriptive periods for bringing an action to fall in such a way as to cause damage to the
quiet title land or tenement of another or to travelers
over a public or private road, the owner of
1. Plaintiff in possession – Imprescriptible; or the tree shall be obliged to fell and remove
2. Plaintiff not in possession – it; and should he not do so, it shall be done
a. 10 years (ordinary) or at his expense by order of the
b. 30 years (extra-ordinary). administrative authorities.
219
Property
without the consent of the other co-owners is be void. (NCC, Art. 485, par. 1) Consequently, in
not null and void but affects only his undivided order to determine the share of the co-owners in
share and the transferee gets only what would the benefits and charges, we must first
correspond to his grantor in the partition of the determine their respective interests in the co-
thing owned in common. (Paulmitan v. CA, G.R. ownership.
No. 51584, November 25, 1992)
Interests are presumed equal, unless the
Q: Is there such a thing as perpetual co- contrary is proved. (NCC, Art. 485, par. 2)
ownership?
221
Property
Requisites for acquisition through
prescription: A suit for ejectment CANNOT be brought by one
a. He has repudiated through co-owner against another co-owner, since the
unequivocal acts; latter also has a right of possession; the only
b. Such act of repudiation is made effect of the action will be to obtain recognition
known to other co-owners; of the co-ownership.
c. Evidence must be clear and
convincing RIGHT TO PROPERTY OWNED IN COMMON
vs. FULL OWNERSHIP OVER
7. Co-owners cannot ask for physical division if HIS/HER IDEAL SHARE
it would render thing unserviceable; but can
terminate co-ownership;
1. Right to property owned in common
8. After partition, duty to render mutual
accounting of benefits and reimbursements
NOTE: Each co-owner is granted the right to
for expenses.
use the property owned in common for the
purpose for which it is intended.
Rights of a co-owner to third parties
Two restrictions in the enjoyment of this
1. Assignees or creditors of the co-owners may
right:
take part in the division of the thing owned
a. The co- ownership shall not be
in common and object to it being effected
injured; and
without their concurrence, but they cannot
b. The exercise of such right shall not
impugn any partition already executed; and
prevent the other co- owners from
using the property according to their
XPN: If there has been fraud or it was made
own rights.
notwithstanding their formal opposition
presented to prevent it, without prejudice
2. Full ownership over his/her ideal share
to the right of the debtor or assignor to
maintain its validity. (NCC, Art. 497)
NOTE: A co-owner has full ownership of his
share (undivided interest) and the fruits and
2. Non-intervenors – Retain rights of mortgage
benefits arising therefrom. Being the full owner
and servitude and other real rights and
thereof, he may alienate, assign or mortgage it.
personal rights belonging to them before
He can also substitute another person in the
partition was made.
enjoyment of his share, except only when
personal rights are involved.
Any of the co-owners may bring an action in
ejectment
Q: Melecio Heirs inherited a residential lot,
ancestral house and two other structures
One of the co-owner’s action for ejectment
erected thereon, the administration and
against a defendant is deemed to be instituted
management of which were left to the care of
for the benefit of all co-owners of the property.
Erna who was then residing in their ancestral
(Resuena v. CA, G.R. No. 128338, March 28, 2005)
home. The Melecio Heirs purportedly
executed a notarized Special Power of
Consent of the co-owners is not required to
Attorney (SPA) authorizing Erna to apply for
bring an action for ejectment
a loan with RBCI and mortgage the subject
properties. Erna defaulted in the loan
The law does not require that consent of all the
payment causing RBCI to extrajudicially
co- owners must be first secured before one of
foreclose the mortgaged properties.
them can bring an action for ejectment. If the
demanded RBCI to release the subject
case does not prosper:
properties from the coverage of Erna's loan
obligation to the extent of their shares and
GR: The other co-owners are NOT bound by the
refused to vacate the premises. RBCI applied
judgment.
for and was issued a writ of possession. The
Melecio Heirs filed a complaint in court
XPN: If they were also served with summons,
alleging that the SPA submitted by Erna was
even as unwilling plaintiffs.
spurious and their signatures appearing
223
Property
such a way as not to injure the interest of the co- Transitory in Permanent
ownership or prevent the other co-owners from character.
using it according to their rights. Does not affect the Affects or relates to
substance or form. the substance or
NOTE: If one co-owner alone occupies the entire essence of the
house without opposition from the other co- thing.
owners, and there is no lease agreement, the
In relation to the Require the
other co-owners cannot demand the payment of right of a co-owner, consent of all co-
rent.
they require the owners.
consent of the
Rules on determination of the purpose of the majority who
property
represents the
controlling interest.
1. Purpose stipulated in the agreement, express
Can be exercised by Must be exercised
or implied;
the co- by the co-owners
2. In default thereof, its purpose ordinarily
owners through themselves.
adapted based on its nature; or
other persons.
3. In default thereof, the use for which it was
formerly intended.
Effect of alteration without the express or
implied consent of co-owners
ACTS OF ALTERATION
The co-owner who makes the alteration shall:
Alteration (2008 BAR)
1. Lose what he has spent;
It is a change which is more or less permanent, 2. Be obliged to demolish the improvements
which changes the use of the thing and which done; and
prejudices the condition of the thing or its 3. Pay for the loss and damages the
enjoyment by the others. (Paras, 2008) community property or other co-owners
may have suffered.
Alteration includes the act by virtue of which a
co- owner changes the thing from the state in NOTE: Estoppel will operate against the co-
which the others believe it should remain. It is owners who were aware of the execution of the
not limited to material charges. acts of alteration, but did not object thereto.
They are deemed to have given their implied
Acts of administration v. Acts of alteration consent.
225
Property
adverse to the cestui que trust or the other co- acquisitive prescription of ownership, laches
owners provided the following elements must and prescription of the action for partition will
concur: not lie in favor of Pastor. (Salvador v. CA, G.R.
No. 109910, April 5, 1995)
1. That he has performed unequivocal acts of
repudiation amounting to an ouster of the Notice of the proposed partition to creditors
cestui que trust or the other co- owners; and/or assignees
2. That such positive acts of repudiation have
been made known to the cestui que trust or The law does not require that a notification be
the other co-owners; and given but:
3. That the evidence thereon must be clear 1. If notice is given – it is their duty to appear
and convincing. (Salvador v. CA, G.R. No. to concur /oppose, otherwise creditor’s
109910, April 5, 1995) claims are deemed waived; and
2. If no notice is given – creditors and/or
NOTE: Prescription begins to run from the time assignees may still question the partition
of repudiation. made on ground of fraud or for being
prejudicial to existing rights.
Example of acts of repudiation: filing of an
action to: NOTE: Third persons who have rights attached
to the community property before its partition,
1. Quiet title; or shall retain such rights even after the partition
2. Recovery of ownership. of the property. The protection granted by law
applies to both real and personal rights.
XPN to XPN: Constructive trusts can prescribe. (Pineda, 2009)
Express trust cannot prescribe as long as the
relationship between trustor and trustee is Impugning partition already implemented
recognized. (Paras, 2008)
GR: A partition already executed or
Q: The two lots owned by Alipio were implemented CANNOT be impugned.
inherited by his nine children, including
Maria, upon his death. Pastor, Maria’s XPNs:
husband, filed a complaint for quieting of 1. In case of fraud, regardless of notification
title and annulment of documents against and opposition; or
the spouses Yabo, alleging that he owned a 2. In case partition was made over their
total of 8 shares of the subject lots, having objection even in absence of fraud. (NCC,
purchased the shares of seven of Alipio's Article 497)
children and inherited the share of his wife,
Maria, and that he occupied, cultivated, and Remedies available to co-owners where the
possessed continuously, openly, peacefully, co- owned property cannot be physically
and exclusively the parcels of land. He divided without rendering it useless or
prayed that he be declared the absolute unserviceable (NCC, Art. 498)
owner of 8/9 of the lots. His co-heirs then
instituted an action to partition the lots. Did 1. Agree on the allotment of the entire
Pastor acquire by prescription the shares of property to one of them who in turn will
his other co-heirs or co-owners? indemnify the others for their respective
interests; or
A: NO. The only act which may be deemed as 2. Sell the property and distribute the
repudiation by Pastor of the co-ownership over proceeds to the co-owners. (Pineda, 2009)
the lots is his filing of an action to quiet title.
The period of prescription started to run only Rights of third persons that are not affected
from this repudiation. However, this was tolled by partition (MRS-P)
when his co-heirs, instituted an action for
partition of the lots. Hence, the adverse 1. Rights of
possession by Pastor being for only about six a. Mortgage;
months would not vest in him exclusive b. Servitude; and
ownership of his wife's estate, and absent c. Any other Real rights existing before
Expenses which the co-owners can be A co-owner may opt not to contribute to the
compelled to contribute expenses for the preservation of the
property
Only necessary expenses. Useful expenses and
those for pure luxury are not included. GR: YES, by renouncing his undivided interest
equal to the amount of contribution.
Necessary expenses, useful expenses, and
expenses of pure luxury defined XPN: If the waiver or renunciation is prejudicial
to the co-ownership, otherwise he cannot
Are those made for the exempt himself from the contribution. (NCC,
preservation of the thing, or Art. 488)
those without which the thing
would deteriorate or be lost, or NOTE: The value of the property at the time of
Necessary those that augment the income the renunciation will be the basis of the portion
Expenses of the things upon which are to be renounced.
expended, or those incurred for
cultivation, production, upkeep, Failure or refusal of a co-owner to
etc. (Mendoza v. De Guzman, G.R. contribute pro rata to his share in expenses
No. L-28721 October 5, 1928) NOT tantamount to renunciation
Incurred for the preservation of
the realty in order that it may There must be an express renunciation,
Useful otherwise he is required to reimburse the
produce the natural, industrial,
Expenses
and civil fruits it ordinarily others for the expenses they incurred.
produces.
Adds value to the thing only for Effect of renunciation
certain persons in view of their
Ornamental Since renunciation is intended as payment for
particular whims, neither
Expenses expenses already made, it is in nature of dacion
essential for preservation nor
useful to everybody in general. en pago - there is a change in the object of the
227
Property
obligation (i.e. from sum of money to interest in her rights to the other half was vested to her
the co-ownership). Consequently, the consent heirs including Villaner and their 8 legitimate
of the other co-owner who made the advances children. (Acabal v. Acabal, G.R. No. 148376,
is necessary. (Tolentino, 2013) March 31, 2005)
Once the property is subdivided and distributed 1. It confers upon the co-owner exclusive title
among the co-owners, the community ceases to over the property adjudicated to him (NCC,
exist and there is no more reason to sustain any Art. 1091); and
right of legal redemption. The exercise of this 2. Possession of the co-owner over the
right presupposes the existence of a co- property adjudicated to him shall be
ownership at the time the conveyance is made deemed exclusive for the period during
by a co-owner and when it is demanded by the which the co-possession lasted. (NCC, Art.
other co-owners. (Vda. de Ape v. CA, G.R. No. 543) In other words, it is deemed
133638, April 15, 2005) continuous.
3. By judicial proceedings. (NCC, Art. 496)
A co-owner cannot alienate the shares of his
other co-owners Rule in case the co-owners cannot agree in
the partition
While a co-owner has the right to freely sell and
dispose of his undivided interest, nevertheless, 1. If realty is involved, an action for partition
as a co-owner, he cannot alienate the shares of (Rule 69, Rules of Court) against the co-
his other co-owners. The disposition made by owners may be filed; and
Villaner affects only his share pro indiviso, and 2. In case of personality and actual partition
the transferee gets only what corresponds to could not be made, it may be sold under the
his grantor's share in the partition of the discretion of the court and the proceeds be
property owned in common. The property divided among the owners after deducting
being conjugal, Villaner's interest in it is the the necessary expenses.
undivided one-half portion. When his wife died,
229
Property
GR: All things and rights susceptible of being 2. According to the concept of possession
appropriated. (NCC, Art. 530) a. In the concept of an owner (en concepto
de dueno) – possessor, by his actions, is
XPNs: believed by others as the owner,
1. Res communes; whether he is in good or bad faith. (NCC,
2. Property of public dominion; Art. 525) Such possessor is presumed to
3. Easement; and possess just title (NCC, Art. 540);
4. Prohibited by law. b. In the concept of a holder – possessor
holds it merely to keep or enjoy it, the
Degrees of possession ownership pertaining to another; e.g.
usufructuary with respect to the thing
1. Possession with no right or title itself. (NCC, Art. 525)
(Grammatical Degree) – Possessor knows
that his possession is wrongful. NOTE: None of these holders may assert a
claim of ownership for himself over the
e.g. possession by a thief. thing but they may be considered as
2. With Juridical title (Juridicial Possession) – possessors in the concept of an owner, or
Title is not one of ownership. Possession under a claim of ownership, with respect to
peaceably acquired and will not ripen into the right they respectively exercise over the
full ownership as long as there is no thing.
repudiation of the concept under which There can be possession in concept of both
property is held. owner and holder or in either.
231
Property
possession of the subject property? foreclosure sale becomes merely a ministerial
function, unless it appears that the property is
A: YES, respondents have the better right to the in possession of a third party claiming a right
ownership and possession of the subject adverse to that of the mortgagor.
property. The basis is the LRA certification,
daybook entry, and Decree No. 98992 that was Gerry Centeno acquired the subject lots from
issued to Emiliana Bacalso. The Decree bars all his parents, Sps. Centeno, on March 14, 1988
claims and rights which arose as may have after they were purchased by Rural Bank of Sta.
existed prior to the decree of registration. Barbara, Inc. and its Certificate of Sale at Public
(Heirs of Alejandra Delfin v. Alevina Rabadon, Auction was registered with the Register of
G.R. No. 165014, July 31, 2013) Deeds of Iloilo City in 1971. It cannot therefore
be disputed that Gerry is a mere successor-in-
Q: Spouses Gregorio and Rosario Centeno interest of Sps. Centeno. Consequently, he
previously owned the subject lots, which cannot be deemed as a third party who is
they mortgaged in favor of Rural Bank of Sta. holding the property adversely to the judgment
Barbara, Inc. as security for a P1,753.65 obligor under legal contemplation. (Rural Bank
loan. Sps. Centeno, however, defaulted on of Sta. Barbara, Inc. v. Gerry Centeno, G.R. No.
the loan, prompting the bank to cause the 200667, March 11, 2013)
extrajudicial foreclosure of the mortgage.
Consequently, the subject lots were sold to Essential elements of acquiring possession
the bank, being the highest bidder at the
auction sale. Sps. Centeno failed to redeem 1. Corpus – Refers to the existence of the thing
the subject lots within the one-year and its holding; and
redemption period pursuant to Section 6 of 2. Animus – Refers to the intent to possess the
Act No. 3135. Yet, they still continued with thing.
the possession and cultivation of the
aforesaid properties. Actual possession distinguished from
constructive possession
Gerry Centeno, son of Sps. Centeno, later on
purchased the said lots from his parents. Actual possession consists in the manifestation
Accordingly, Rosario paid the capital gains of acts of dominion over property of such a
taxes on the sale transaction and tax nature as a party would naturally exercise over
declarations were eventually issued in the his own; Constructive possession may be had
name of Gerry. through succession, donation, execution of
public instruments, or the possession by a
On March 19, 1998, Rural Bank of Sta. sheriff by virtue of a court order. (Remington
Barbara, Inc. filed a petition for the issuance Industrial Sales Corp v. CYMCAPI, G.R. No.
of a writ of possession before the trial court, 171858, January 22, 2007)
claiming entitlement to the said writ by
virtue of the Final Deed of Sale covering the Acquisition of possession according to
subject lots. Gerry opposed the petition, person of possessor (NCC, Art. 532)
arguing that he purchased and has, in fact,
been in actual, open and exclusive 1. Personal – The possession acquired by the
possession of the same properties for at same person who is to enjoy it, either the
least 15 years. Is the Rural Bank of Sta. owner or a mere holder.
Barbara, Inc. is entitled to a writ of
possession over the subject lots? Requisites:
a. Capacity to possess;
A: YES. It is well-established that after b. Intent to possess; and
consolidation of title in the purchasers’ name c. Object must be capable of being
for failure of the mortgagor to redeem the possessed.
property, the purchasers right to possession
ripens into the absolute right of a confirmed 2. Through an authorized person – Acquisition
owner. At that point, the issuance of a writ of of possession through a legal
possession, upon proper application and proof representative as provided by law or by
of title, to a purchaser in an extrajudicial appointing an agent.
3. Through a person without authority (but Minors or incapacitated persons may acquire
only if subsequently ratified) – acquisition of the possession of things; but they need the
possession through a person who is not assistance of their legal representatives for
clothed with authority by the supposed them to be able to exercise the rights arising
“principal.” from the possession. (NCC, Art. 535)
233
Property
but later on such objection ceases, the Rule when two or more persons claim
possession begun by force or intimidation may possession over the same property
be acquired. (Paras, 2008)
GR: Possession as a fact cannot be recognized at
Through acts executed clandestinely and the same time in two different personalities.
without the knowledge of the possessor
XPN:
NOTE: Clandestine possession by itself is hidden 1. Co-possessors (since here, there is no
or disguised possession conflict of interest, both of them acting as
co-owners, as in the case of property owned
Acts merely tolerated by the owner or the or possessed in common).
lawful possessor. 2. Possession in different concepts or
different degrees (e.g. both owner and
“Tolerance” is permission, as distinguished tenant are possessors as a fact at the same
from abandonment. If an owner abandons, as time; the first, in the concept of owner; the
when within the proper period for prescription, second, in the concept of holder; other
he brings no action, the possession of another examples: principal and agent; depositor
will ripen into ownership. As a matter of fact, and depositary; owner and administrator).
silence or inaction is NEGLIGENCE, not (Paras, 2008)
tolerance. But where a person occupies
another’s land with the latter’s permission (or Rules to follow in case there is a dispute of
tolerance), the occupier, no matter how long he possession of two or more persons
may remain, can never acquire ownership,
because he never had possession. Whether 1. Present/actual possessor shall be
there was permission, or there has been an preferred;
abandonment, is a question of fact. Of course, it 2. If there are two possessors, the one longer
is possible that although there was permission in possession; or
at first, the permission was subsequently 3. If the dates of possession are the same, the
withdrawn, and abandonment has resulted. But one with a title.
this must be proved by clear and convincing 4. If both claimants have titles, the competent
evidence. (Paras, 2008) court will determine the rightful possessor,
and in the meantime, the thing shall be
How to recover possession placed in judicial deposit. (NCC, Art. 538)
First, he should request the usurper to give up Only the possession acquired and enjoyed in the
the thing and if the latter refuses, the former concept of owner can serve as a title for
should invoke the aid of the proper and acquiring dominion. (NCC, Art. 540)
competent court (that which has jurisdiction
over the subject matter and the parties). NOTE: Art. 538 applies to preference of
(Repide v. Astuar, G.R. No. 505, April 8, 1902) POSSESSION (whether real or personal
Otherwise, the owner can be made the property is involved). It also applies whether
defendant in a forcible entry case with all its the possession was longer or shorter than one
repercussions. (Santiago v. Cruz, G.R. No. 6276. year. Art. 1544 applies to preference of
March 21, 1911) (Paras, 2008) OWNERSHIP in case of DOUBLE SALE (Art.
1544) or a DOUBLE DONATION. (NCC, Art. 744)
Possession by Force or Violence (Paras, 2008)
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Property
NOTE: An adverse possession of property by litigation of such possession. (Paras, 2008)
another is not an encumbrance in law and does
not contradict the condition that the property Requisites for the issuance of the writ of
be free from encumbrance. Likewise, the preliminary injunction:
adverse possession is not a lien for a lien
signifies a security for a claim. (Ozaeta v. 1. In forcible entry cases (in the original
Palanca, L-17455, August. 31, 1964) court) — file within 10 days from the time
the complaint for forcible entry is filed (not
Legal Means for Restoration of Possession from the time the dispossession took place)
(NCC. Art. 538);
A. Reasons for requiring legal means: 2. In ejectment (unlawful detainer cases) in
1. To prevent spoliation or a disregard of the CFI (RTC) or appellate court (Court of
public order; Appeals) — file within 10 days from the
2. To prevent deprivation of property time the appeal is perfected (that is, from
without due process of law; and the time the attorneys are notified by the
3. To prevent a person from taking the Court of the perfection of the appeal), only
law into his own hand. if:
a. The lessee’s appeal is frivolous or
B. Thus: dilatory; or
1. The owner should go to court, and not b. The lessor’s appeal is prima facie
eject the unlawful possessor by force. meritorious. (NCC, Art. 1674)
2. A tenant illegally forced out by the
owner- landlord may institute an action Q: During his lifetime, Velasco acquired Lot
for forcible entry even if he had not A from spouses Sacluti and Obial evidenced
been paying rent regularly. by a deed of sale. In 1987, spouses Padilla
3. The proper actions are forcible entry or entered the said property as trustees by
unlawful detainer (summary action or virtue of a deed of sale executed by the
accion interdictal), accion publiciana, Rural Bank. The Padillas averred that the
accion reivindicatoria; replevin; Solomon spouses owned the property which
injunction (to prevent further acts of was identified as Lot B. However, it was
dispossession). However, injunction is proved during trial that the land occupied
GENERALLY not the proper remedy to by spouses Padilla was Lot A in the name of
recover possession, particularly when Velasco, whereas the land sold by the bank
there are conflicting claims of to the spouses Padilla was Lot B. The heirs of
ownership. An accion reivin-dicatoria Velasco demanded that spouses Padilla
would be better. A final judgment in an vacate the property, but they refused. Thus,
unlawful detainer case may be executed the heirs filed a complaint for accion
even if there is still pending an accion publiciana.
reivindicatoria, for the two actions can a. Who has the better right of possession?
co- exist. A mere trespasser, even if b. Has the action already prescribed?
ejected, has no right to institute an
action of forcible entry. (Paras, 2008) A:
4. Writ of preliminary mandatory a. The HEIRS OF VELASCO have the better
injunction. right. Accion publiciana, recovery of the
right to possess, is an action filed in the RTC
Writ of preliminary mandatory injunction to determine the better right to possession
of realty independently of the title. The
As a rule, injunction cannot substitute for the objective of the plaintiffs in accion
other actions to recover possession. This is publiciana is to recover possession only, not
because in the meantime, the possessor has in ownership. Lot A was the subject of a
his favor, the presumption of rightful cadastral case. The OCT was issued to
possession, at least, until the case is finally Sacluti and Obial who sold the same to
decided. The exception, of course, is a very clear Artemio. From the date of sale, until
case of usurpation. Similarly, a receiver should Artemio’s death, he was in continuous
not ordinarily be appointed to deprive a party possession of the land.
who is in possession of the property in
Possession in the concept of an owner NOTE: A tenant cannot avail himself of the
presumption of just title because he is not a
1. If a person possesses en concepto de dueño possessor in the concept of owner). (Paras,
— he may eventually become the owner by 2008)
prescription; and
2. Thus, a possessor merely in the concept of The Article can apply to both real and personal
holder cannot acquire property by property. Thus, if a person possesses the key to
acquisitive prescription. (This is because a car over which he claims ownership, he can be
here the possession, far from being adverse, presumed to be the owner. But such
recognizes right of ownership in others. presumption may be overcome by documentary
One cannot recognize the right of another evidence concerning the car’s ownership.
and at the same time claim adverse (Paras, 2008)
possession which can ripen to ownership
through acquisitive prescription. For Presumptions in favor of a possessor
prescription to set in, the possession must (GCENCE)
be adverse, public and to the exclusion of
all. (Paras, 2008) 1. Good faith;
2. Continuity of initial good faith;
Possession in the concept of a holder 3. Enjoyment in the same character in which
possession was acquired until the contrary
1. Lessees or those merely permitted to is proved;
occupy; 4. Non-interruption in favor of the present
2. Trustees (including parents over the possessor;
properties of their unemancipated minor 5. Continuous possession by the one who
children or insane children (NCC, Art. recovers possession of which he was
1109); and husband and wife over each wrongfully deprived; and
other’s properties, as long as the marriage 6. Extension of possession of real property to
lasts, and even if there be a separation of all movables contained therein.
property which had been agreed upon in a
marriage settlement or by judicial decree KINDS OF TITLE
(NCC, Art. 1109);
3. Antichretic creditors; 1. True and Valid Title
4. Agents;
5. Attorneys (regarding their client’s Here, there was a mode of transferring
properties) ownership and the grantor was the
6. Depositaries; and owner. It is defined as a title which by
7. Co-owners (unless the co-ownership is itself is sufficient to transfer ownership
clearly repudiated by unequivocal acts without the necessity of letting the
communicated to the other co-owners). prescriptive period elapse.
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Property
e.g. B bought a Ford Expedition Limited shown or proved that they should be excluded.
from S, the owner thereof. Then S (NCC, Art. 542) (2008 BAR)
delivered the car to B. B now has a true
and valid title. Applicability of the Article:
1. Whether the possessor be in good faith or
2. Colorable Title bad faith;
2. Whether the possession be in one’s own
That title where, although there was a name or in another’s; and
mode of transferring ownership, still 3. Whether the possession be in concepto de
something is wrong, because the grantor dueno or in the concept of holder. Thus, the
is NOT the owner. lessee of a building is presumed to be the
possessor of the movables found therein,
e.g. B bought a BMW car from S. S then for he who needs them is supposed to have
delivered the car to B. But it turns out that been the one who introduced the movables
S never owned the car, and that into the building.
somebody else was its owner. Whether B
was in good faith or in bad faith is NOTE: By “real property’’ and “movables’’, the
immaterial in deciding if he (B) is the law means only real or personal THINGS, not
owner; what is important is that he is not rights. (Paras, 2008)
the owner because he did not acquire or
purchase the property from the owner, Exclusive possession by a previous co-owner
his title being merely “colorado’’ or
colorable. Each one of the participants of a thing
possessed in common shall be deemed to have
NOTE: It must be remembered that: exclusively possessed the part which may be
allotted to him upon the division thereof, for the
a. Ordinary prescription needs good faith entire period during which the co-possession
and just title, hence in the example lasted. Interruption in the possession of the
given, if B is in good faith, he may whole or a part of a thing possessed in common
become owner of the car by shall be to the prejudice of all the possessors.
prescription after four years (the car However, in case of civil interruption, the Rules
being personal property) of Court shall apply. (NCC, Art. 543)
b. Extraordinary prescription does not
need either good faith or just title, Example of interruption in possession of the
hence in the example given, if B is in WHOLE thing (NCC, Art. 543)
bad faith, although there may be just
title (titulo colorado), B may get A, B, and C have been co-possessors of a piece of
ownership by prescription only after land since 2002. If in 2006, A, B, and C lose
eight years. possession over the whole land, it can be said
In case of real properties, the that the three of them were in possession for
prescriptive periods are 10 years and only four years.
30 years respectively for ordinary and
extraordinary prescription. (Paras, Example of Interruption in possession of
2008) PART of the thing (NCC, Art. 543)
Right of a possessor in good faith to fruits When natural and industrial fruits are
already received considered received
First Paragraph: “A possessor in good faith is Second Paragraph: “Natural and industrial
entitled to the fruits received before the fruits are considered received from the time
possession is legally interrupted.’’ they are gathered or severed.”
a. Reason for the law: Justice demands that the a. If at the time of legal interruption, the crops
fruits be retained by the possessor who are still growing, the rule on pending crops,
thought that he was really the owner of the not that on gathered crops, should apply.
property, and who, because of such thought (NCC, Art. 545)
had regulated his daily life, income, and b. If at the time of legal interruption, the crops
expenses by virtue of such fruits. Moreover, have already been gathered, but are sold
the possessor should be rewarded for only after such interruption, the sale is
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Property
immaterial, for the law requires only a (For his crop needed a total of 6 months
gathering or severance, so Art. 544 applies. from planting to harvesting). How should
said crops be divided between A and B?
When civil fruits are deemed to accrue
A: In the proportion of 2 to 4 (or 1 to 2), 2 for A
Third Paragraph: “Civil fruits are deemed to and 4 for B. This is what the law means when it
accrue daily and belong to the possessor in good says that the net harvest shall be divided in
faith in that proportion.’’ proportion to the time of possession. (Paras,
2008)
a. If civil fruits (like rents) are accrued daily,
Art. 545 does not apply; and Sharing of expenses and charges
b. Actual receipt of the rents is immaterial;
hence, even if received only, for example, 1. The expenses for cultivation shall also be
on the 30th of a month, all rents accrued divided pro rata (2 to 4) The law says “the
before the 21st of the month (date for possessor shall have a RIGHT to a part of
example of legal interruption) should the expenses for cultivation in proportion to
belong to the possessor in good faith. the time of possession (This may in certain
cases be UNFAIR because although he may
RIGHT TO PENDING FRUITS have spent MORE than the owner, still he
will be entitled to a reimbursement of LESS
If at the time the good faith ceases, there should since his possession is shorter. The better
be any natural or industrial fruits, the possessor rule would be for the expenses to be borne
shall have a right to a part of the expenses of in proportion to what each receives from
cultivation, and to a part of the net harvest, both the harvest) (NCC, Art. 443) Otherwise,
in proportion to the time of the possession. unjust enrichment would result.
2. The charges (those incurred because of the
The charges shall be divided on the same basis land and the fruits, like TAXES, or
by the two possessors. INTEREST on MORTGAGES are what are
referred to as CHARGES, and not those
The owner of the thing may, should he so incurred on or in them, such as
desires, give the possessor in good faith the improvements) are also to be divided in
right to finish the cultivation and gathering of proportion to the time of possession. (NCC,
the growing fruits, as an indemnity for his part Art. 545, 2nd par.) (Paras, 2008)
of the expenses of cultivation and the net
proceeds; the possessor in good faith who for Options of the owner in case there are
any reason whatever should refuse to accept pending fruits at the time good faith ceases
this concession, shall lose the right to be
indemnified in any other manner. (NCC, Art. 1. To pay the possessor in good faith
545) indemnity for his cultivation expenses and
charges and his share in the net harvest; or
NOTE: This article applies to PENDING fruits, 2. To allow the possessor in good faith to
natural or industrial. FINISH the cultivation and gathering of the
growing crops, as an INDEMNITY for his
Q: What if there are natural or industrial part of the expenses of cultivation and the
fruits at the time good faith ceases? net proceeds. (Paras, 2008)
A: The possessor shall have the right to a part of NOTE: If the possessor refuses, for any reason,
the expenses of cultivation, and to a part in the to finish the cultivation and gathering, he
net harvest both in proportion to the time of forfeits the right to be indemnified in any other
possession. (NCC, Art 545) (2000, 2008 Bar) manner. [NCC, Art. 545(3)]
Q: A possessed in good faith a parcel of land. Art. 545 applies only to a possessor in GOOD
At the time he received judicial summons to faith for a possessor in bad faith has no right
answer a complaint filed by B, the crops still whatsoever to fruits already gathered nor to
growing had been there for two months. fruits still pending, except that in the former
Harvest was made only after 4 more months case (gathered fruits), he gets back the
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Property
There is NO right of removal of necessary NOTE: The possessor in good faith is
expenses whether in good faith or bad faith. entitled to both the fruits and expenses
Necessary expenses affect the existence or (necessary or useful), hence they do not
substance of the property itself. compensate each other.
Luxurious expenses or expenses for pure luxury A: A possessor in bad faith is one who is aware
or mere pleasure (ornamental expenses) are that there exists in his title or mode of
expenses incurred for improvements acquisition any flaw which invalidates it. Only
introduced for pure luxury or mere pleasure. personal knowledge of the flaw in one’s title or
mode of acquisition can make him a possessor
Examples of ornamental expenses in bad faith.
a. Hand paintings on the wall of a house;
b. A garage made of platinum; and NOTE: No tacking of bad faith, unless the
c. Water fountains in gardens. successors in interest had learned of the defect
in the title and still purchased it.
Rights of a Possessor (in the Concept of
Owner) as to Luxurious or Ornamental Bad faith is not transmissible from a person to
Expenses another, even an heir is not affected by bad faith
of the deceased predecessor.
1. If in GOOD faith:
Right of the Possessor (in the Concept of
In general, no right of refund or retention Owner) as to FRUITS
but can remove if no substantial injury is
caused. However, owner has OPTION to 1. If in GOOD faith:
allow:
a. Possessor to remove; or a. Gathered or severed or harvested fruits
b. Retain for himself (the owner) the are his own (NCC, Art. 544);
ornament by REFUNDING the AMOUNT b. Pending or ungathered fruits — (pro-
SPENT. (NCC, Art. 548) rating between possessor and owner of
expenses, net harvest, and charges) (NCC,
2. In BAD faith: Art. 545)
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Property
shall be borne by every possessor. (NCC, Art. GOOD FAITH BAD FAITH
550) “Every possessor’’ refers to one in good As to fruits received
faith or bad faith, in the concept of owner or in Entitled to the fruits Shall reimburse the
the concept of holder, in one’s own name or in received before the fruits received and
that of another, and not to the owner or the possession is legally those which the
person adjudged by the court to be lawfully interrupted. (NCC, Art. legitimate possessor
entitled to possess. (Paras, 2008) 544) could have received
and shall have the a
Improvements caused by nature or time right only to necessary
expenses (Art. 546,
Neither the possessor in good faith nor in bad par. 1) and expenses in
faith is entitled to: the production,
gathering and
1. Improvements caused by NATURE (like preservation of such
alluvium, etc.) Fruits. (NCC, Art. 443)
2. Improvements caused by TIME (like the As to pending fruits
improved flavor of wine) Liable with legitimate None
possessor for expenses
Liability for loss or deterioration of cultivation and shall
share in the net
A possessor in good faith shall not be liable for harvest in proportion
the deterioration or loss of the thing possessed, to the time of their
except in cases in which it is proved that he has Possession. (NCC, Art.
acted with fraudulent intent or negligence, after 545)
the judicial summons. As to expenses
A possessor in bad faith shall be liable for (Necessary expenses)
deterioration or loss in every case, even if Right of Right of
caused by a fortuitous event. (NCC, Art. 552) reimbursement and reimbursement only.
retention.
Rules applicable: (Useful expenses)
Right of None
A. Possessor in GOOD FAITH — reimbursement,
retention and limited
1. BEFORE receipt of judicial summons — right of removal.
NOT LIABLE.
(Ornamental Expenses)
2. AFTER judicial summons
Shall not be refunded Shall not be refunded
i. Loss or deterioration thru
but he has a limited but he has a limited
fortuitous event — not liable.
right of removal, i.e. he right of removal, i.e. he
ii. Thru fraudulent intent
may remove if the may remove if the
or negligence — liable
principal thing suffers principal thing suffers
no injury thereby, and no injury thereby, and
B. Possessor in BAD FAITH —
if the lawful possessor if the lawful possessor
Whether before or after judicial summons,
does not prefer to does not prefer to
and whether due to fortuitous event or not,
refund the amount retain them by paying
such possessor is LIABLE.
expended. its value at the time he
enters into possession.
Requisites to constitute possession whether
As to liability in case of deterioration or loss
in good faith or bad faith
No liability Always liable.
1. Possessor has a title/mode of acquisition; XPN: If due to his
2. There is a flaw or defect in said title/mode; fraudulent act or
and negligence, or after
3. The possessor is aware or unaware of the service of summons.
flaw or defect.
Possessor in good faith has the right of
Summary of rights of a possessor retention until he has been fully reimbursed
245
Property
dominion. Moreover, abandonment can without any possessor.
hardly refer to land much less to registered
land. When possession of movables is lost or not
5. There is no abandonment if an owner lost
merely tolerated (permitted) another’s
possession, nor if the latter was done by If the possessor has no idea at all about the
stealth or effected thru force and whereabouts of the movable, possession is lost,
intimidation. (NCC, Articles 537 and 558) but not when he more or less knows its general
6. There is no abandonment of movables location, though he may not know its precise or
even if there is temporary ignorance of definite location. In the former, he has lost
their whereabouts, so long as they remain juridical control; in the latter, the object
under the control of the possessor (that is, remains within his patrimony (not in the
so long as another has not obtained control patrimony of another). (Paras, 2008)
of them). (NCC, Art. 556)
7. In true abandonment, both possession de NOTE: An abandoned property is not
facto and de jure are lost. considered as a lost thing. (Pineda, 1999)
8. Abandonment which converts the thing
into res nullius (ownership of which may Loss of immovables with respect to third
ordinarily be obtained by occupation), does person
not apply to land (NCC, Art. 714, Civil Code)
much less does abandonment apply to The possession of immovables and of real rights
registered land. (Act, 496, Sec. 46) (Paras, is not deemed lost, or transferred for purposes
2008) of prescription to the prejudice of third
persons, except in accordance with the
Assignment provisions of the Mortgage Law and the Land
Registration Laws. (NCC, Art. 557)
Refers to a total transfer of ownership of
property by the owner to another person either NOTE: Art. 557 refers to possession of real
gratuitously or onerously. property, and other real rights over real
property (like easement or usufruct)
While in assignment, at no time did the thing not
have a possessor (for possession merely Acts of mere holder
changed hands or control); in abandonment,
there was a time, no matter how short, when GR: Acts relating to possession, executed or
the object did not have any possessor at all. agreed to by one who possesses a thing
Moreover, while assignment may in some cases belonging to another as a mere holder to enjoy
be by onerous title, abandonment is always or keep it, in any character, do not bind or
gratuitous, otherwise it becomes a virtual prejudice the owner.
assignment. Moreover, in assignment, both
possession de facto and de jure are lost, and no XPNS:
action will allow recovery. (Paras, 2008) 1. Unless he gave said holder express
authority to do such acts; or
Q: Does Art. 555 refer to both real and 2. Ratifies them subsequently. (NCC, Art. 558)
personal property?
FINDER OF LOST MOVABLE
A: YES (for the law does not distinguish) except
in the case of paragraph 4, for it is evident that Rule regarding the right of a possessor who
the reference to possession of more than one acquires a movable claimed by another
year concerns only real property, the rule as to
movable property being explicitly stated in Art. If the possessor is in:
556. 1. Bad faith – He has no right.
LOSS OR UNLAWFUL DEPRAVATION OF A 2. Good faith – He has presumed ownership. It
MOVABLE is equivalent to title.
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Property
Q: Suppose a recently stolen property is United Car Sales, Inc. against Jerico for
found in possession of A, is A presumed to be recovery of the car, plaintiff alleges it had
the thief? been unlawfully deprived of its property
through fraud and should, consequently, be
A: YES, it is a disputable presumption “that a allowed to recover it without having to
person found in possession of a thing taken in reimburse the defendant for the price the
the doing of a recent wrongful act is the taker latter had paid. Should the suit prosper?
and doer of the whole act.’’ (Rules of Court, Rule (1998 BAR)
131, Sec. 3[j]) It is true that one who possesses a
movable, acquired in good faith, has what is A: The suit should prosper because the criminal
called an equivalent of title, but this is act of estafa should be deemed to come within
destroyed when it is proved that said movable the meaning of unlawful deprivation under Art.
belongs to somebody else who has lost it, or has 559 as without it, United Car Sales would not
been unlawfully deprived of its possession. have parted with the possession of its car. Thus,
(NCC, Art. 559) (Paras, 2008) it was allowed to recover the property without
Q: In order to contest the title of the having to reimburse the defendant.
possessor in good faith, what should the
true owner do? Possession of wild animals
A: The true owner should present sufficient Wild animals are possessed only while they are
proof of the identity of the object AND that he under one’s control; domesticated or tamed
had either lost it or has been illegally deprived animals are considered domestic or tame, if
of it. This proof is an indispensable requisite a they retain the habit of returning to the
conditio sine qua non in order that the owner of premises of the possessor. (NCC, Art. 560)
the chattel may contest the apparent title of its
possessor. Without adequate proof of such loss Lawful recovery of possession that had been
or illegal deprivation, the present holder cannot unjustly lost
be put on his defense, even if as possessor he
has no actual proprietary title to the movable One who recovers, according to law, possession
property in question. (Paras, 2008) unjustly lost, shall be deemed for all purposes
which may redound to his benefit, to have
Rule when possessor has already become enjoyed it without interruption. (NCC, Art. 561)
the owner
Requisites:
Art. 559 in fact assumes that the possessor is as 1. Possession was lost unlawfully or unjustly;
yet not the owner, for it is obvious that where 2. Possessor lawfully recovers possession; and
the possessor has come to acquire indefeasible 3. Uninterrupted possession is beneficial to
title, let us say adverse possession for the him.
necessary period, no proof of loss, or illegal
deprivation could avail the former owner of the USUFRUCT
chattel. He would no longer be entitled to
recover it under any condition. (Paras, 2008) Usufruct is the right of a person called
usufructuary, to enjoy the property of another
Estafa is considered as unlawful deprivation called the owner, with the obligation of
returning it at the designated time and
Q: Using a falsified manager's check, Justine, preserving its form and substance, unless the
as the buyer, was able to take delivery of a title constituting it or the law provides
secondhand car which she had just bought otherwise. (Pineda, 2009)
from United Car Sales Inc. The sale was
registered with the Land Transportation NOTE: A usufruct can be constituted in favor of
Office. A week later, the seller learned that a town, corporation or association, but it cannot
the check had been dishonored, but by that be for more than 50 years. (NCC, Art. 605)
time, Justine was nowhere to be seen. It
turned out that Justine had sold the car to Characteristics of usufruct (ENA)
Jerico, the present possessor who knew
nothing about the falsified check. In a suit by 1. Essential – Those without which it cannot
249
Property
3. As to the extent of object: giving the usufruct.
a. Total – constituted on the whole 2. In case of deficiency, the provisions on Civil
thing Code. (NCC, Art. 565)
b. Partial – constituted only on a part.
Usufruct vs. Lease
4. As to the subject matter:
a. Over things
i. Normal (or perfect or regular) – BASIS USUFRUCT LEASE
involves non-consumable things
where the form and substance Real right only
are preserved; or if, as in the
ii. Abnormal (or imperfect or case of a lease
irregular) – Involves consumable over real
things – that which involves property, the
things which would be useless to Nature of Always a real lease is
the usufructuary unless they are the right right. registered, or
consumed or expanded. is for more
b. Over rights – involves intangible than one year,
property; rights must not be otherwise it is
personal or intransmissible in a personal
character so present or future right.
support cannot be an object of May not be the
usufruct. owner, as in
Creator of Owner or his the case of a
5. As to the effectivity or extinguishment: Right agent. sub- lessor or
a. Pure – no term or condition a
b. With a term – there is a period which usufructuary.
may be either suspensive or resolutory By contract, by
i. Ex die – from a certain day way of
ii. In diem – up to a certain day exception by
iii. Ex die in diem – from a certain day law (as in the
up to a certain day. case of an
c. Conditional – subject to a condition implied new
which may be either suspensive or lease under
resolutory. By law, Art. 1670), or
contract, will when a builder
GR: No form is required in constituting a Origin of testator or has built in
usufruct. Even an oral usufruct may be by good faith on
constituted. prescription. the land of
another a
XPNs: building, when
1. Usufruct over real property must be the land is
registered to bind third person considerably
2. Statute of Frauds apply in case Real worth more in
Property is involved. If Personal value than the
property, Statute of Frauds will apply building.
where the value is P 500 or higher and Only those
in case the agreement is not to be Extent of All fruits, uses
particular or
performed in one year; Enjoyment and benefits.
specific use.
3. A usufruct by donation or by will must A passive
comply with formalities of a donation owner who
or will An active
allows the
owner who
Cause usufructuary
Rules governing usufruct makes the
to enjoy the
lessee enjoy
object of
1. The agreement of the parties or the title usufruct
251
Property
b. Not bound to refund to the Limitations to Usufructuary Rights
owner the expenses of
cultivation and production The usufructuary cannot:
but without prejudice to 1. Sell, pledge or mortgage the property itself
the right of third persons; because he is not the owner;
2. Sell future crops (growing crops at the
BUT without prejudice to the termination of the usufruct belong to the
right of third persons. Thus, if owner); and
the fruits had been planted by a 3. Lease the thing for a period longer than the
possessor in good faith, the term of the usufruct without the consent of
pending crop expenses and owner
charges shall be pro-rated
between said possessor and the XPN: In lease of rural lands, it may exceed the
usufructuary lifetime of the usufruct and shall subsist during
the agricultural year.
Belong to the owner but he is Q: Can a usufruct be constituted on an
bound to reimburse the encumbered or mortgaged land?
At the usufructuary of the ordinary
termination cultivation expenses (NCC, Art. A: YES. The mortgage remains inactive until the
of the 545) out of the fruits received. debt is not paid, and the mortgage is not for the
usufruct (NCC, Art. 443) The right of purpose of limiting the use of the fruits.
innocent third parties should
not be prejudiced. Right of usufructuary to make useful or
luxurious improvements
NOTE: Civil fruits accrue daily; stock dividends
and cash dividends are considered civil fruits. 1. The usufructuary may construct and make
However, dividends declared from “capital improvements on the property as he may
stocks” are not covered by usufruct because deem proper;
such are not declared from profits of the XPN: If there is an express prohibition to
corporation. that effect.
2. Limitation: the usufructuary cannot alter its
Aside from the right to the fruits, the form and substance;
usufructuary has the right to the enjoyment (use, 3. Removal: usufructuary may generally
not ownership) of: remove provided no injury is made on the
a. Accessions (whether artificial or natural); principal even against the will of the naked
b. Servitudes and easements; and owner. If he has chosen not to remove he
c. All benefits inherent in the property (like cannot be compelled to remove them; and
the right to hunt and fish therein, the right 4. Indemnity: no right to be indemnified if the
to construct rainwater receptacles, etc.) improvements cannot be removed. He may
however set-off the value of the
Reason: improvements against the amount of
damage he had caused to the property.
The usufructuary, as a rule, is entitled to the: (Pineda, 2009)
a. ENTIRE jus fruendi (including fruits of
accessions); and NOTE: If the right of the usufructuary to remove
b. ENTIRE jus utendi (so he can make use for improvements is not registered in the
example of an easement) registration proceedings of the land in usufruct,
an innocent purchaser for value of the property
When the expenses of cultivation and is not bound to respect the right.
production exceeds the proceeds of the
growing fruits Offsetting of damages and improvements
introduced by the usufructuary
If the expenses exceed the proceeds of the
growing fruits, the owner has no obligation to Requisites before set-off can be made:
reimburse the difference. (NCC, Art. 567) 1. Damage must have been caused by the
usufructuary;
Q: Why do improvements accrue to the The usufructuary may alienate (sell, donate,
owner? bequeath, or devise) the usufructuary right
A: Because there is no indemnity for (except a legal usufruct, i.e., the usufruct
improvements. which parents have over the properties of
their unemancipated children, because said
Rights of the usufructuary as to the usufruct usufruct is to be used for certain obligations
itself towards children); or a usufruct granted a
usufructuary in consideration of his person;
1. To Alienate, pledge or mortgage the right of or a usufruct acquired thru a caucion
usufruct, even by gratuitous title (NCC, Art. juratoria, for here, the need of the
572); usufructuary himself is the reason for the
2. In a usufruct to Recover property/real enjoyment. (NCC, Art. 587)
right, to bring the action and to oblige the
owner thereof to give him the proper The usufructuary may pledge or mortgage
authority and the necessary proof to bring the usufructuary right (because he OWNS
the action (NCC, Art. 578); and said right) BUT he cannot pledge or mortgage
3. In a usufruct of part of a Common property, the thing itself because he does not own the
to exercise all the rights pertaining to the thing [NCC, Art. 2085(2)]. Neither can he sell
co-owner with respect to the or in any way alienate the thing itself, or
administration and collection of fruits or future crops, for crops pending at the
interests. termination of the usufruct belong to the
naked owner. (NCC, ArtIcles 567 and 572 and
Lease, alienation and encumbrance of the Mortgage Law, Art. 106)
property subject to usufruct
Q: 120 hectares of land from the NHA
1. Rights with Reference to the THING ITSELF (in property were reserved for the site of the
Addition to the Usufruct) National Government Center. 7 hectares from
which were withdrawn from the operation.
The usufructuary, not being the owner of the These revoked lands were reserved (MSBF)
thing subject to usufruct, cannot alienate, However, MSBF occupied approximately 16
pledge or mortgage the thing itself. hectares and leased a portion thereof to
However, the usufructuary may lease the Bulacan Garden Corporation (BGC) BGC
thing to another (This can be done even occupies 4,590 sqm. Implementing such
without the owner’s consent; moreover, revocation, NHA ordered BGC to vacate its
ordinarily the lease must not extend to a occupied area. BGC then filed a complaint for
period longer than that of the usufruct, injunction. Has BGC any right over the leased
unless the owner consents. Thus, the lease premises?
ends at the time the usufruct ends, except in
the case of rural leases). A: A usufructuary may lease the object held
in usufruct. The owner of the property must
NOTE: If the lessee should damage the respect the lease entered into by the
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Property
usufructuary so long as the usufruct exists. MSBF 1. Pay the APPRAISED value (if appraised
was given a usufruct over only a 7-hectare area. when first delivered); or
NHA cannot evict BGC if the 4,590 square meter 2. If there was no appraisal, return same
portion MSBF leased to BGC is within the 7- kind, quality, and quantity OR pay the
hectare area held in usufruct by MSBF. However, price current at the termination of the
the NHA has the right to evict BGC if BGC usufruct (therefore not at the original
occupied a portion outside of the 7- hectare area price or value)
covered by MSBF's usufructuary rights. (NHA v.
CA, G.R. No. 148830, April 13, 2005) Usufruct on fruit-bearing trees and shrubs
GR: A usufructuary cannot exercise acts of The usufructuary can use (even for firewood,
ownership such as alienation or conveyance. though he is NOT the naked owner) the
following:
XPNs: When what is to be alienated or a. Dead trunks; and
conveyed is a: b. Those cut off or uprooted by accident.
NOTE: If it has not yet been appraised or if it is 1. Of periodical pension, income, dividends
not a consumable, return the same quality (NCC, Art. 570);
(mutuum) 2. Of woodland (NCC, Art. 577);
3. Of right of action to recover real property,
Abnormal usufruct on consumable things real right, or movable property (NCC, Art.
578);
This is another instance of abnormal usufruct, 4. Of part of property owned in common
and is sometimes referred to as a “quasi- (Art. 582);
usufruct” because the form and substance is not 5. Of the entire patrimony of a person (NCC,
really preserved. Thus, this is really a SIMPLE Art. 598);
loan. It has been included however in the title 6. On a mortgaged immovable (NCC, Art. 600);
on usufructs because in what are called and
UNIVERSAL USUFRUCTS, both non-consumable 7. On a flock or herd of livestock. (NCC, Art.
and consumable properties are included. While 591)
we seldom find usufructs on consumable
properties alone, it is a fact that they indeed Special usufruct over a WOODLAND
exist. Thus, the Supreme Court has held that
even money may be the object of a usufruct. This is not a common or frequent usufruct
(Paras, 2008) because:
RULES for this ‘QUASI-USUFRUCT’ 1. Natural resources (including forest or
timber lands) belong to the State (Regalian
1. The usufructuary (debtor-borrower) can Doctrine under Art. XII, Sec. 3 of the 1987
use them (as if he is the owner, with Philippine Constitution);
complete right of pledge or alienation) 2. A license is generally essential if one desires
2. BUT at the end of the usufruct, he must: to gather forest products (Revised
In the enjoyment of the usufruct, the a. If the purpose is the recovery of the
usufructuary: property or right, he is still required under
Art. 578 to obtain the naked owner’s
1. Must bear in mind that he is not the owner, authority.
and therefore, in the exercise of the diligence b. If the purpose is to object to or prevent
in caring for the property (required under disturbance over the property (once the
Art. 589 he must see to it that the woodland property is given him), no special authority
is preserved, either by development or by from the naked owner is needed.
replanting, thus he cannot consume all,
otherwise nothing would be left for the Usufructuary of a part of common property
owner.
2. In the cutting or felling of trees, he must— The usufructuary of a part of a thing held in
common shall exercise all the rights pertaining
a. Follow the owner’s habit or practices; to the owner thereof with respect to the
b. In default thereof, follow the customs of administration and the collection of fruits or
the place (as to MANNER, AMOUNT and interest. Should the co-ownership cease by
SEASON) (NCC, Art. 577) reason of the division of the thing held in
— All without prejudice to the owner, common, the usufruct of the part allotted to the
for while he can USE, he cannot co-owner shall belong to the usufructuary.
ABUSE. (NCC, Art. 582)
NOTE: The rule above is applicable if the A co-owner may give the usufruct of his share
woodland: to another, even without the consent of the
i. Is a COPSE (thicket of small trees); others, unless personal considerations are
or present. (NCC, Art. 493)
ii. Consists of timber for BUILDING.
The usufructuary in such a case takes the
c. If there be no customs, the only time owner’s place as to:
the usufructuary can CUT DOWN trees a. Administration (management); and
will be for REPAIR or IMPROVEMENT, b. Collection of fruits or interest (NCC, Art.
but here the owner must first be 582) (BUT not as to alienation, disposition,
informed (the owner, thus, does not or creation of any real right over the
need to consent) property, since these are strict acts of
ownership, unless of course he is
3. Cannot alienate the trees (for the trees are authorized by the naked owner) (Paras,
not considered fruits) unless he is 2008)
permitted, expressly or impliedly by the
owner (as when the purpose of the usufruct Rights of usufructuary at the expiration of
was really to sell the timber) or unless he the usufruct
needs the money to do some repairs (but in
the last case, the owner must be informed) 1. To collect reimbursement from the owner:
a. For indispensable extraordinary
Rights of usufructuary to recover the repairs made by the usufructuary
property held in usufruct (NCC, Art. 593);
b. For taxes on the capital advanced by
To bring the action, the usufructuary can the usufructuary (NCC, Art. 597);
DEMAND from the owner: c. For damages caused by the naked
owner;
1. Authority to bring the action (usually a d. For payment of increase in value of the
special power of attorney); and immovable by reason of repairs
2. Proofs needed for a recovery. provided the owner is notified of the
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Property
urgency of such repairs but the latter point out discrepancies and omissions in
failed to make said repairs despite the the inventory.
notification, and the repair is
necessary for the preservation of the 2. Conditions of immovables must be
property. (NCC, Art. 594) described; and
3. Movables must be appraised.
2. To retain the thing until reimbursement is
made. (NCC, Art. 612) NOTE: As a rule, no form is required, except
when there are real properties. Expenses
OBLIGATIONS OF USUFRUCTUARY are to be borne by the usufructuary. (Paras,
2008)
The usufructuary has obligations
When inventory is not required
1. Before the usufruct (like the making of
inventory); 1. Waived;
2. During the usufruct (like taking due care of 2. No one will be injured by the lack of
property); and inventory (NCC, Art. 585);
3. After the usufruct (like the duty to return 3. When the donor has reserved to himself the
and indemnify in the proper cases) usufruct of the property donated; or
4. Agreement of both parties.
1. Before the usufruct (NCC, Art. 583)
Effects of failure to post a bond or security
a. Make an inventory; and
b. Give security
1. The owner shall have the following options
(NCC, Art. 586):
This article speaks of two obligations (inventory
a. Receivership of realty;
and security) They are not necessary however
b. Sale of movables;
before the right to the usufruct begins; they are
c. Deposit of securities;
merely necessary before physical possession and
d. Investment of money; or
enjoyment of the property can be had, thus if the
e. Retention of the property as
usufructuary fails to give security (unless
administrator.
exempt) the usufruct still begins but the naked
owner will have the rights granted him under
2. The net product shall be delivered to the
Art. 586. (Paras, 2008)
usufructuary;
3. The usufructuary cannot collect credit due
NOTE: The purpose of giving security is to
or make investments of the capital without
insure fulfillment by the usufruct of the
the consent of the owner or of the court
obligation imposed upon him.
until the bond is given.
After the security has been given by the
Effects of failure to give security
usufructuary, he shall have a right to all the
proceeds and benefits from the day on which, in
1. On the rights of the naked owner:
accordance with the title constituting the
a. May deliver the property to the
usufruct, he should have commenced to receive
usufructuary;
them (retroactive effect of security). (NCC, Art.
b. May choose retention of the property
588)
as administrator; and
c. May demand receivership or
Requirements for the inventory
administration of the real property,
sale of movable, conversion or deposit
1. The naked owner or representative must be
of credit instruments or investment of
previously notified;
cash or profits.
NOTE: The purpose is to enable him to
2. On the rights of the usufructuary:
correct errors in the inventory if he desires.
a. Cannot possess the property until he
His absence is a waiver for corrections. If
gives security;
there is non-notification, the inventory can
b. Cannot administer property;
go on but the naked owner may later on
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Property
2. Those caused by exceptional circumstances 3. After the usufruct/ at the termination
and are indispensable for its preservation. a. Return the thing in usufruct to the
naked owner unless there is a right of
Liabilities: retention;
a. The naked owner shall be held liable; b. Pay legal interest for the time that the
and usufruct lasts; and
b. The usufructuary is allowed to make c. Indemnify the naked owner for any
them with the right to get the increase losses due to his negligence or of his
in value and the right of retention at the transferees.
termination of usufruct, provided there
was notification by the usufructuary and NOTE: The usufructuary may be liable for the
failure to repair by the naked owner. damages suffered by the naked owner on
(Paras, 2008) account of fraud committed by him or through
his negligence.
3. Those caused by exceptional circumstances
but are not needed for its preservation. XPN: the usufructuary is not liable for
Liabilities: deterioration due to:
a. The naked owner is liable; and
b. The usufructuary cannot compel the 1. Wear and tear; or
naked owner to make such repairs and 2. Fortuitous event.
he is not allowed to make them even if
the naked owner has failed to make RIGHTS OF THE OWNER
them. (Paras, 2008)
Rights of a naked owner and the limitations
NOTE: Extraordinary repairs shall be at the
imposed upon him
expense of the owner. The usufructuary is
obliged to notify the owner when the need for
such repairs is urgent.
RIGHTS LIMITATIONS
Right of retention of the usufructuary
Can alienate the thing in
Alienation
The usufructuary has a right of retention even usufruct.
after the termination of the usufruct until he is Cannot alter the form and
Alteration
reimbursed for the increase in value of the substance.
property caused by extraordinary repairs for Cannot do anything
preservation. Enjoyment prejudicial to the
usufructuary
Charges or taxes which the usufructuary Can construct any works
must pay and make any
improvement provided it
Construction and
1. The annual charges (in the fruits); does not diminish the
Improvement
2. The annual taxes on the fruits; and value or the usufruct or
prejudice the rights of the
Taxes imposed directly on the capital usufructuary.
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Property
NOTE: If the usufructuary is a juridical the land but the building is destroyed in
person, the term should not exceed 50 any manner whatsoever before the
years. expiration of the period of usufruct:
6. Renunciation by the usufructuary; and a. The usufruct on the building ends, but
the usufruct on the land continues
NOTE: It partakes the nature of a (usufructuary is still entitled to the use
condonation or donation. It can be made of the land and remaining materials of
expressly or impliedly as long as done the building);
clearly. If done expressly, it must conform b. If the naked owner wants to rebuild
with forms of donation. Renunciation of but the usufructuary refuses, the latter
usufructuary’s rights is NOT an assignment prevails but the use of the land is still
of right. It is really abandonment by the his for the remainder of the period.
usufructuary of his right and does not (Paras, 2008)
require the consent of the naked owner but
it is subject to the rights of creditors. There 2. The usufruct is on the building alone (but
can be a partial waiver except if it is a the building is destroyed before the
universal usufruct. termination of the period):
7. Merger of the usufruct and ownership in a. The usufruct on the building ends, but
the same person who becomes the absolute the usufructuary can still make use of
owner thereof. (NCC, Art. 1275) whatever materials of the building
remain;
Other Causes of termination of usufruct b. The usufructuary is entitled to the use
a. Annulment of the act or title of the land but the naked owner enjoys
constituting the usufruct; preferential right to its use. (Paras,
b. Rescission; 2008)
c. Expropriation;
d. Mutual withdrawal; NOTE: While the usufruct on a building does not
e. Legal causes for terminating legal expressly include the land on which it is
usufruct; or constructed, the land should be deemed
f. Abandonment or dissolution of included, because there can be no building
juridical entity (e.g. corporation) without land. (De Leon, 2006)
granted with usufruct before the lapse
of the period. Payment of insurance on a building held in
usufruct (NCC, Art. 608)
Usufruct cannot be constituted in favor of a
town, corporation or association for more 1. If the naked owner and usufructuary share in
than 50 years the premiums and the property is destroyed:
3. If the naked owner alone paid for the GR: Usufruct is not extinguished by bad use of
insurance but there is failure or omission on the the thing in usufruct.
part of the usufructuary to share:
XPN: If the abuse should cause considerable
The effect is the same as if there was a injury to the owner, the latter may demand
sharing, but the usufructuary must delivery to and administration by him, but he
reimburse the owner of the usufructuary’s will be obliged to pay net proceeds to the
share in the insurance premium. usufructuary. (NCC, Art. 610)
4. If the usufructuary alone pays the insurance Rules in case of multiple usufructs
premium:
a. The insurance indemnity goes to the 1. If constituted simultaneously, all the
usufructuary alone, with no obligation usufructuaries must be alive at the time of
to share it with, nor to give legal interest the constitution. The death of the last
thereon to, the naked owner. survivor extinguishes the usufruct (NCC,
b. The usufruct continues on the land for Art. 611);
the remaining period (unless usufruct 2. If constituted successively by virtue of a
has been constituted on the building donation, all the donee-usufructuaries must
alone) be living at the time of the constitution-
donation of the usufruct (NCC, Art. 756); and
Rule in case of expropriation of the property 3. If constituted successively by virtue of a last
(NCC, Art. 609) will, there should only be two successive
usufructuaries, and both must have been
In case the property held in usufruct is alive at the time of testator’s death.
expropriated for public use:
EASEMENT OR SERVITUDE
1. If the naked owner alone was given the
indemnity, he has the option to: It is an encumbrance imposed upon an
a. Replace it with another thing of the immovable for the benefit of:
same value and of similar condition; or
b. Pay legal interest to usufructuary on 1. Another immovable belonging to a different
the amount of indemnity for the whole owner; or
period of the usufruct, not just the 2. For the benefit of a community or one or
unexpired period. more persons to whom the encumbered
NOTE: If the owner chooses the latter estate does not belong by virtue of which
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Property
the owner is obliged to abstain from doing Essential qualities of easements:
or to permit a certain thing to be done on
his estate. (NCC, Articles 613 and 614) 1. Incorporeal;
2. Imposed upon corporeal property;
Where the easement may be established on any 3. Confers no right to a participation in the
of several tenements surrounding the dominant profits arising from it;
estate, the one where the way is shortest and 4. Imposed for the benefit of corporeal
will cause the least damage should be chosen. property;
However, if these two circumstances do not 5. Has two distinct tenements: dominant and
concur in a single tenement, the way which will servient estate; and
cause the least damage should be used, even if it 6. Cause must be perpetual.
will not be the shortest.
Easement vs. Usufruct
There can be no easement over another
easement for the reason that an easement may
be constituted only on a corporeal immovable BASIS EASEMENT USUFRUCT
property. An easement, although it is real right
over an immovable, is not a corporeal right. On real Real or
Constituted on
(1995 BAR) property personal
Limited to a
Easement vs. Servitude particular or
Includes all
specific use
Use granted uses and
of the
EASEMENT SERVITUDE fruits.
servient
estate.
An English law Involves a
Used in civil law countries
term No right of
Real Real or personal As to right of possessory possession in
The right Burden imposed upon possession right over an an
enjoyed another immovable immovable
or movable.
Characteristics of easement (NICE LIAR) Not
extinguished Extinguished
As to effect of
1. A right limited by the Needs of the by death of by death of
death
dominant owner or estate, without dominant usufructuary.
possession; owner.
2. Inseparable from the estate to which it is Real right Real right
attached – cannot be alienated whether or whether or
Nature of right
independently of the estate (NCC, Art. 617) not not
(2001, 2010 BAR); registered. registered.
3. Cannot consist in the doing of an act unless As to
the act is accessory in relation to a real Transmissibl Transmissibl
transmissibilit
easement; e e
y
4. Involves two (2) neighboring Estates: the Cannot be
dominant estate to which the right belongs May be constituted
and the servient estate upon which an constituted on an
obligation rests; in favor, or, easement but
5. A Limitation on the servient owner’s rights How it may be
burdening, a it may be
of ownership; constituted
piece of land constituted
6. Indivisible – not affected by the division of held in on the land
the estate between two or more persons usufruct. burdened by
(NCC, Art. 618); an easement.
7. It is enjoyed over Another immovable never
on one’s own property; and Q: Can there be an easement over a
8. A Real right but will affect third persons usufruct?
only when registered.
Q: Can there be a usufruct over an NOTE: The necessity of the works for the use
easement? and preservation of the easement is the basis
and the determining factor for the extent of
A: There can be no usufruct over an easement. such works.
While a usufruct may be created over a right,
such right must have an existence of its own The works must be executed in the manner
independent of the property. A servitude least inconvenient to the servient owner, who
cannot be the object of a usufruct because it has cannot recover indemnity for the inevitable
no existence independent of the property to damages or inconveniences which may be
which it attaches. caused thereby.
Q: Is there such thing as judicial easement? But if the work is done badly, the dominant
owner will be liable for damages that may be
A: NO. When the court says that an easement suffered by the servient owner.
exists, it is not creating one. For, even an
injunction cannot be used to create one as there Rights of the dominant owner (MARE)
is no such thing as a judicial easement. The
court merely declares the existence of an 1. Make on the servient estate all works
easement created by the parties. (La Vista necessary for the use and preservation of
Association v. CA, G.R. No. 95252, September 5, the servitude (NCC, Art. 627);
1997) 2. Ask for mandatory injunction to prevent
impairment of his right (Resolme v. Lazo,
PARTIES TO AN EASEMENT G.R. No. L-8654, March 30, 1914);
3. Renounce the easement if he desires to be
1. Dominant estate – refers to the immovable exempt from contributing necessary
for which the easement was established; expenses (NCC, Art. 628); and
and 4. Exercise all rights necessary for the use of
2. Servient estate – the estate which provides the easement. (NCC, Art. 625)
the service or benefit.
Obligations of the dominant owner (CANECO)
Dominant Estate v. Servient Estate
1. He cannot Exercise the easement in any
DOMINANT ESTATE SERVIENT ESTATE other manner than that previously
Immovable in favor of That property or estate established (NCC, Art. 626);
which, the easement is which is subject to the 2. He cannot Alter the easement or render it
established. dominant estate. more burdensome [NCC, Art. 627(1)];
3. He shall Notify the servient owner of works
Which the right Upon which an necessary for the use and preservation of
belongs. obligation rests. the servitude [NCC, Art. 627(2)];
4. He must Choose the most convenient time
and manner of making the necessary works
RIGHTS AND OBLIGATION OF THE OWNERS as to cause the least inconvenience to the
OF THE DOMINANT AND SERVIENT servient owner;
ESTATES 5. If there are several dominant estates he
must Contribute to the necessary expenses
The owner of the dominant estate may make, at in proportion to the benefits derived from
his own expense, on the servient state any the works [NCC, Art. 628(1)]; and
works necessary for the use and preservation of 6. He can may make, at his Own expense, on
the servitude, but without altering it or the servient estate, any works necessary for
rendering it more burdensome. the use of servitude, provided it will not
263
Property
alter or make it more burdensome. [NCC, constituted need not to be the owner
Art.627(1)] of any estate and does not require a
dominant estate because the person in
Servient owner whose favor the easement is
constituted need not to be the
The owner of the immovable whose property is property owner.
subject to easement for the benefit of the
dominant owner. 2. As to the manner of exercise
a. Continuous – Their use may or may not
Rights of the servient owner (RMC) be incessant, without the intervention
of any act of man. E.g. Easement of
1. Retain the ownership of the portion of the drainage (NCC, Art. 615); and
estate on which easement is imposed;
2. Make use of the easement unless there is an NOTE: For acquisitive prescription,
agreement to the contrary [NCC, Art. the easement of aqueduct and
628(2)]; and easement of light and view are
3. Change the place or manner of the use of considered continuous.
the easement, provided it be equally
convenient. [NCC, Art. 629(2)] b. Discontinuous – Used at intervals and
depend upon the acts of man. E.g.
Obligations or limitations imposed on the Easement of right of way
servient owner (IC)
3. As to whether their existence is
1. He cannot Impair the use of the easement. indicated
a. Apparent – Made known and
XPN: (1) When the easement has become continually kept in view by external
very inconvenient to the said servient signs that reveal the use and
owner; and (2) If it prevents him from enjoyment of the same (NCC, Art. 615);
making any important works, repairs, or and
improvements thereon.
NOTE: By way of exception the
2. He must Contribute to the necessary easement of aqueduct is always
expenses in case he uses the easement, apparent, whether or not it can be
unless otherwise agreed upon. [NCC, Art. seen. (NCC, Art. 646)
628(2)]
b. Non-apparent – They show no external
CLASSIFICATIONS OF EASEMENT indication of their existence. (NCC, Art.
615)
1. As to recipient of the benefit
a. Real (or predial) – The easement is in 4. As to the right given
favor of another immovable (NCC, Art. a. Right to partially use the servient
613); and estate;
b. Right to get specific materials or
NOTE: It requires two distinct objects from the servient estate;
immovables belonging to different c. Right to participate in ownership; and
owners to which it relates. d. Right to impede or prevent the
neighboring estate from performing a
b. Personal – The easement is in favor of specific act of ownership. (Paras, 2008)
a community, or of one or more 5. As to source
persons to whom the encumbered a. Legal – Those created by law for public
estate does not belong e.g. easement of use or private interests;
right of way for passage of livestock. b. Voluntary - constituted by will or
(NCC, Art. 614) agreement of the parties or by
testator; and
NOTE: In personal servitude the
person in whose favor the easement is NOTE: Like any other contract, a
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Property
their existence but because of the making of the discontinuous easements, this period shall
NOTARIAL PROHIBITION which makes it be computed from the day on which they
apparent. ceased to be used; and, with respect to
continuous easements from the day on
NOTE: In negative easement there is a need of a which an act contrary to the same took
formal act. place;
3. When either or both of the estates fall into
Doctrine of Apparent Sign such condition that the easement Cannot be
used; but it shall revive if the subsequent
Easements are inseparable from the estate to condition of the estates or either of them
which they actively or passively pertain. The should again permit its use, unless when
existence of apparent sign under Art. 624 is the use becomes possible, sufficient time
equivalent to a title. It is as if there is an implied for prescription has elapsed, in accordance
contract between the two new owners that the with the provisions of the preceding
easement should be constituted, since no one number;
objected to the continued existence of the 4. By the Expiration of the term or the
windows. fulfillment of the condition, if the easement
is temporary or conditional;
NOTE: It is understood that there is an exterior 5. By the Renunciation of the owner of the
sign contrary to the easement of party wall dominant estate; and
whenever: 6. By the Redemption agreed upon between
the owners of the dominant and servient
1. There is a window or opening in the estates. (NCC, Art. 631)
dividing wall of buildings;
2. Entire wall is built within the boundaries of NOTE: The grounds under Article 631 are not
one of the estates; exclusive.
3. The dividing wall bears the burden of the
binding beams, floors and roof frame of one In addition to the foregoing causes enumerated
of the buildings, but not those of the others; in Article 631 of the New Civil Code the
or following may be added: (1) annulment or
4. The lands enclosed by fences or live hedges rescission of title constituting easement; (2)
adjoin others which are not enclosed. termination of the right of the grantor; and (3)
abandonment of the servient estate; and (4)
In all these cases, ownership is deemed to eminent domain. (4 Manresa, 5th ed., 590)
belong exclusively to the owner of the property
which has in its favor the presumption based on Merger
any of these signs.
It is enough that the merger be with respect to
Acknowledgement of an easement in one the portion of the tenement that is affected by
who owns property the servitude, or the part for the benefit of which
it was established.
An acknowledgement of the easement is an
admission that the property belongs to another. Where the merger is temporary or under
(BOMEDCO v. Heirs of Valdez, G.R. No. 124669, resolutory condition, there is at most a
July 31, 2003) suspension, but not an extinguishment of the
servitude.
MODES OF EXTINGUISHMENT
OF EASEMENTS Non-user
1. By Merger in the same person of the because the basis of this cause of extinguishment
ownership of the dominant and servient is a presumptive renunciation.
estates;
2. By Non-user for 10 years; with respect to NOTE: Reckoning point:
The impossibility of use only suspends the Kinds of legal easements (WIND – PLWS)
servitude until such time when it can be used
again. 1. Easement relating to Waters;
Renunciation
Redemption
LEGAL EASEMENT
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Property
Subjacent Support
This is a combined easement for drawing of It is an easement which gives right to make
water and right of way. water flow thru intervening estates in order that
one may make use of said water. However,
Requisites for easement for watering cattle unlike the easement for drawing water or for
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Property
watering animals, the existence of the latter does Q: The original developer of Happy Glen Loop
not necessarily include the easement of (HGL) loaned from T. P. Marcelo Realty
aqueduct. Corporation. HGL failed to settle its debts so
he assigned all his rights to Marcelo over
Requisites for easement of aqueduct several parcels of land in the subdivision.
Marcelo represented to lot buyers that a
1. Indemnity must be paid to the owners of water facility is available in the subdivision.
intervening estates and to the owners of Marcelo sold the lot to Liwag who
lower estates upon which waters may filter subsequently died. The wife of Liwag
or descend. demanded the removal of the overhead
water tank over the parcel of land
NOTE: The amount usually depends on contending that its existence is merely
duration and inconvenience caused. tolerated. HGL Homeowners Association
refused the demand contending that they
2. If for private interests, the easement cannot have used continuously the facility for more
be imposed on existing buildings, than 30 years. Is there an established
courtyards, annexes, out- houses, orchards easement for water facility in the lot?
or gardens but can be on other things, like
road, provided no injury is caused to said A: YES. The water facility is an encumbrance on
properties. the lot of the Subdivision for the benefit of the
community. It is continuous and apparent,
3. There must be a proof: because it is used incessantly without human
intervention, and because it is continually kept
a. That the owner of the dominant estate in view by the overhead water tank, which
can dispose of the water; reveals its use to the public. The easement of
b. That the water is sufficient for the use water facility has been voluntarily established
which it is intended; either by Marcelo, the Subdivision owner and
c. That the proposed course is the most the original developer of the Subdivision. For
convenient and least onerous to third more than 30 years, the facility was
persons and the servient estate; and continuously used as the residents’ sole source
d. That a proper administrative of water. (Liwag vs Happy Glen Loop
permission has been obtained. (Paras, Homeowners Association, Inc., G.R. No. 189755,
2008) July 4, 2012)
The easement of aqueduct does not prevent the Easement of right of way is the right granted to
owner of the servient estate from closing or a person or class of persons to pass over the
fencing it, or from building over the aqueduct in land of another by using a particular pathway
such manner as not to cause the owner of the therein, to reach the former’s estates, which
dominant estate any damage, or render have no adequate outlet to a public highway
necessary repairs and cleanings impossible. subject, however to payment of indemnity to
(NCC, Art. 645) the owner of the land burdened by the right.
(Pineda, 2009)
G. Easement for the Construction of a Stop Lock
or Sluice Gate (NCC, Art. 647) Right of way
To make these structures in the bed of a stream It may refer either to the easement itself, or
from which they needed water for irrigation or simply, to the strip of land over which passage
improvement of the dominant estate will be can be done. (Paras, 2008)
drawn, it is required that the dominant owner
pays the riparian owners where the structures Q: May the easement of right of way be
will be constructed for the damages caused to acquired by prescription?
the latter and to other irrigators who may
sustain damages also. A: Easement of right of way cannot be acquired
Least prejudicial to the servient estate Thus, it was held that where the petitioner
(1996, 2000, 2005, 2010 BAR) could have access to Sucat Road (Paranaque)
through the Lombos Subdivision from which he
“Least prejudicial” in determining the right of acquired his lot and not from Gatchalian Realty
way means it is the shortest way and the one Inc., he cannot claim any right of way from the
which will cause the least damage to the latter. (Ramos vs. Gatchalian Realty, Inc., G.R.
property to the servient estate in favor of the 75905, 154 SCRA 703)
dominant estate.
Legal Easement, Not Dependent Upon
Q: Lots A and B are owned by Demit while Consent
Lot C is owned by Dayum. Lot C has an
existing right of way. After inspection of the The existence of a legal easement does not
area, it has been found out that a fence and depend upon the consent of the servient owner
portion of the residential house owned by or owners
Demit have encroached a part of Dayum’s
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Property
Claimant must be an owner of enclosed road connecting with David’s subdivision. Is
immovable or with real right David entitled to an easement of right of way
through the subdivision of Nestor which he
Adequate outlet claims to be the most adequate and practical
outlet to the highway?
The convenience of the dominant estate has
never been the gauge for the grant of A: NO, David is not entitled to the right of way
compulsory right of way. To be sure, the true being claimed. The isolation of his subdivision
standard for the grant of the legal right is was due to his own act or omission because he
"adequacy." Hence, when there is already an did not develop an access road to the rice fields
existing adequate outlet from the dominant which he was supposed to purchase according
estate to a public highway, as in this case, even to his own representation when he applied for a
when the said outlet, for one reason or another, license to establish the subdivision. (Floro v.
be inconvenient, the need to open up another Llenado, G.R. No. 75723, June 2, 1995)
servitude is entirely unjustified. (Dichoso v.
Marcos, G.R. No. 180282, April 11, 2011; Alicia B. When Adequate Outlet to a Public Highway
Reyes v. Spouses Francisco S. Valentin and is Available Through Water
Anatalia Ramos, G.R. No. 194488, February 11,
2015, as penned by J. Leonen) If the outlet to a highway is through water, like
a river, lake or sea, and the same is not
Q: The coconut farm of Federico is dangerous to cross nor do they pose grave
surrounded by the lands of Romulo. inconvenience, the right of way should not be
Federico seeks a right of way through a granted.
portion of the land of Romulo to bring his
coconut products to the market. He has If the waterway is dangerous and to construct a
chosen a point where he will pass through a bridge over it is too expensive, it is as if there is
housing project of Romulo. The latter wants no available outlet to the highway. In which
him to pass another way which is 1km case, right of way is grantable.
longer. Who should prevail? (2000 BAR)
Determination of proper indemnity to the
A: ROMULO will prevail. Under Art. 650, the servient estate
easement of right of way shall be established at
the point least prejudicial to the servient estate If the passage is:
and where the distance from the dominant
estate to a public highway is the shortest. In 1. Continuous and permanent – The
case of conflict, the criterion of least prejudice indemnity consists of the value of the
prevails over the criterion of shortest distance. land occupied plus the amount of damages
Since the route chosen by Federico will caused to the servient estate; and
prejudice the housing project of Romulo, 2. Temporary – Indemnity consists in the
Romulo has the right to demand that Federico payment of the damage caused.
pass another way even though it will be longer.
Two instances where indemnity is not
Q: David owns a subdivision which does not required
have access to the highway. When he applied
for a license to establish the subdivision, he 1. When a piece of land acquired by sale,
represented that he will purchase a rice exchange or partition is surrounded by
field located between his land and the other estates of the vendor, exchanger or
highway, and develop it into an access road. co-owner. In such case he shall be obliged
However, when the license was granted, he to grant a right of way without indemnity
did not buy the rice field, which remained (NCC, Art. 652); or
unutilized. Instead, he chose to connect his
subdivision with the neighboring 2. When a piece of land acquired by donation
subdivision of Nestor, which has access to surround the estate of the donor or grantor.
the highway. When Nestor and David failed In such case, the donee or grantee shall be
to arrive at an agreement as to obliged to grant a right of way without
compensation, Nestor built a wall across the indemnity. (NCC, Art. 653 (2))
1. The opening of a public road giving access Easement of right of way for the passage of
to isolated estate; or livestock or sevidumbres pecurias
2. When the dominant estate is joined to
another estate (such as when the dominant Governed by the ordinances and regulations
owner bought an adjacent estate) which is relating thereto and in their absence, by the
abutting a public road, the access being usages and customs of the place.
adequate and convenient. (NCC, Art. 655)
Maximum width:
Both cases must substantially meet the needs of
the dominant estate. Otherwise, the easement 1. Animal path – 75 meters;
may not be extinguished.
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Property
2. Animal trail – 37 meters and 50 whenever:
centimeters; and
1. There is a window or opening in the
3. Cattle – 10 meters (unless to the old Civil dividing wall of the buildings;
Code, vested rights has been acquired to a 2. Dividing wall is on one side straight and
greater width). (Paras, 2008; NCC, Art. 657) plumb on all its facement, and on the other,
it has similar conditions on the upper part
EASEMENTS OF PARTY WALL but the lower part slants or projects
outward;
Easement of party wall 3. Entire wall is built within the boundaries of
one of the estates;
The easement of party wall is also called 4. The dividing walls bears the burden of the
servidumbre de medianera. binding beams, floors and roof frame of one
of the buildings, but not those of the others;
Party wall defined 5. The dividing wall between courtyards,
gardens and tenements is constructed in
Is a wall erected on the line between the such a way that the coping sheds the water
adjoining properties belonging to different upon only one of the estates;
persons, for the use of both estates. (Pineda, 6. The dividing wall, being built by masonry,
2009) had stepping stones, which at certain
intervals project from the surface of one
Governed by: side only, but not on the other; or
7. The lands enclosed by fences or live hedges
adjoin others which are not enclosed.
1. The Civil Code;
2. Local ordinances and customs; and
3. The rules co-ownership. (NCC, 658) In all these cases, the ownership is deemed to
belong exclusively to the owner of the property
which has in its favor the presumption based on
Q: Is the easement of party wall really an
any of these signs. (NCC, 660)
easement or is it a case of co-ownership?
Right to Increase Height of Party Wall
A: While it is called an easement by the law, the
law in some articles refers to it as a case of co-
ownership or part-ownership. (NCC, Articles Every part-owner of a party has the right to
662, 665, 666) The truth is that, it is a increase the height of the party wall subject to
compulsory kind of co-ownership (FORGED the following conditions:
INDIVISION) where the shares of each owner
cannot be separated physically (otherwise the 1. The same shall be done at his expense;
wall would be destroyed), although said shares 2. He shall pay for any damage which may be
may in a sense be materially pointed out. Thus, caused by his work, even though such
each co-owner owns the half nearest to him. damage may be temporary; and
(Paras, 2008) 3. If the party wall cannot bear the increased
height, the owner desiring to raise it shall
The existence of an easement of party wall is be obliged to reconstruct it at his own
presumed, unless there is a title, or exterior expense, if it be necessary to make it
sign, or proof to the contrary: thicker, he shall give space required from
his own land. (NCC, 664)
1. In dividing walls of adjoining buildings up
to the point of common elevation; Repairs and Maintenance of a Party Wall
2. In dividing walls of gardens or yards
situated in cities, towns, or in rural GR: The expenses for construction and repairs
communities; or of party walls shall be shouldered by all the
3. In fences, walls and live hedges dividing owners of the party wall.
rural lands. (NCC, Art. 659)
XPN: If a part owner renounces his part
It is understood that there is an exterior ownership on the party wall. The renunciation
sign, contrary to the easement of party wall must be absolute and total because the
A window or opening in the dividing wall of XPN: Even if the window is on the wall of the
buildings is an exterior sign which rebuts the dominant estate, still easement of light and
presumption that the wall is a party wall; one view would be POSITIVE if the window is on the
part-owner may not, therefore, make any balcony or extension extending over the land of
window or opening of any kind thru a party the servient estate.
wall without the consent of others.
Thus, the period of prescription for the
The easement of LIGHT — “Jus luminum” The acquisition shall be counted from the time
opening is for the purpose of admitting light of:
and not for viewing.
1. Opening of the window, if through a party
(as in the case of small windows, not more than wall; or
30 cm. square, at the height of the ceiling joist, 2. The formal prohibition upon the proprietor
the purpose of which is to admit light, and a of the adjoining land, if window is through a
little air, but not VIEW). (Paras. 2008) wall on the dominant estate.
275
Property
party wall without the consent of the others; it measured in cases of direct views from the
can also obstruct the opening unless an outer line of the wall when the openings do not
easement. project, from the outer line of the latter when
they do, and in cases of oblique view from the
The openings allowed by Art. 669 are for the dividing line between the two properties. (NCC,
purpose of admitting light; hence they can be Art. 671)
made only in the walls of buildings.
Where buildings are separated by a public
NOTE: Art. 669 refers to restricted windows. way or alley (NCC, Art. 672)
Direct and oblique views (NCC, Articles 670- The distance provided in Art. 670 is not
671) compulsory where there is a public way or alley
provided that it is not less than three meters
Articles 670 and 671 deal with regular, full wide, the minimum width is necessary for the
windows. sake of privacy and safety.
Direct view - It is that which is obtained from a NOTE: The width of the alley is subject to
wall parallel to the boundary line, such that special regulations and ordinances.
from the opening in such wall it is possible to
see the adjoining tenement without the A private alley opened to the use of the general
necessity of putting out or turning one's head public falls within the provision of Art. 672.
side.
Where easement of direct view had been
NOTE: When windows are opened at a distance acquired (NCC, Art. 673)
less than that prescribed by Art. 670 from the
boundary lines, they constitute unlawful Whenever the easement of direct view has been
openings, however, it is not necessary always acquired by any such title, there is created a
that the wall sustaining the opening and the true easement. The owner of the servient estate
dividing line be exactly and geometrically cannot build thereon at less than a distance of
parallel. three meters from the boundary line.
Oblique view - It is obtained from a wall at an NOTE: The title used in Art. 673 refers to any
angle with the boundary line; in order to see the modes of acquiring easements:
adjoining tenement, it is necessary to turn one's
head to the left or to the right. 1. Contract;
2. Will;
Restrictions as to easement of views 3. Donation; or
4. Prescription.
1. Direct Views: The distance of two (2)
meters between the wall and the boundary The distance may be increased or decreased by
must be observed; and stipulation of the parties provided that in case
of decrease, the minimum distance of two
2. Oblique Views: (Walls perpendicular or at meters or sixty centimeters prescribed in Art.
an angle to the boundary line) must not be 670 must be observed, otherwise it is void. The
60 cm to the nearest edge of the window. said distances involve considerations of public
(NCC, Art. 670) policy and the general welfare; hence, they
should not be rendered ineffective by
Any stipulation to the contrary is void. (NCC, stipulation.
Art. 673) And the owner who opened them may
be ordered by the court to close them. EASEMENT OF DRAINAGE OF BUILDINGS
Prescription may still be acquired as a negative The owner of a building shall be obliged to
easement after ten years from the time of construct its roof or covering in such manner
notarial prohibition. that the rain water shall fall on his own land or
on a street or public place, and not on the land
The distance referred to in Art. 670 shall be of his neighbor, even though the adjacent land
1. There must be no adequate outlet to the Distance in Planting of Trees under Article
rainwater because the yard or court of a 679 of the New Civil Code.
house is surrounded by other houses;
2. The outlet to the water must be at the point 1. The distance authorized by local ordinances
where egress is easiest, and establishing a or customs of the place, if any; or
conduit for drainage; and 2. If there are no ordinance or custom:
3. There must be payment of proper
indemnity. (NCC, Art. 676) a. At least two (2) meters from the
dividing line of the estate in case of tall
Ownership of Rainwater trees; and
b. At a distance of at least 50 centimeters
Pursuant to the provision of the Water Code of in case of shrubs or small trees.
the Philippines, the, rain waters falling on
private lands shall belong to the State. Remedy In Case Of Violation
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Property
A: Right to cut roots can be exercised without General Rule; Exception
notice to the owner of the trees. BUT as to the
branches, it is necessary to ask that they be cut, The owner of a parcel of land is the owner of its
and if the owner of the tree does not do so surface and everything under it. As such, he has
voluntarily, the court may authorize the the right to construct any works thereon or
neighboring owner to cut them. make any plantations and excavations which he
may deem proper. (Art. 437)
Q: Does this right prescribe?
As limitation, he cannot do so to the detriment
A: The right to cut does not prescribe so long as of servitudes. Further, he must observe the
the owner tolerates the branches and roots requirements of special laws and ordinances.
invading his tenement. BUT the moment the
owner of the tenement demanded that the Lateral Support
branches be cut off and the owner of the tree
refuses to do so, the prescription starts to run. This is the support on the vertical side of a land,
the removal of which may cause the land to
Fruits naturally falling upon adjacent land crumble or slide.
Q: Who owns the fruits which fall from the Subjacent Support
adjacent land?
This is the horizontal support underneath a
A: Such fruits belong to the owner of the land or building the removal of which may
adjacent land to compensate him for the cause the sinking or crumbling of the land or
inconvenience causes by the branches of trees building.
extending over his land. Note however that for
the adjacent owner to be entitled to the fruits ‘ Lateral’ Distinguished from ‘Subjacent’
they must not only fall upon his land but the
falling must occur naturally. The support is lateral when both the land being
supported and the supporting land are on the
NOTE: If the fruits fall on public property, the SAME PLANE; when the supported land is
owner of the tree retains ownership. ABOVE the supporting land, the support is
subjacent. (Paras, 2008)
EASEMENT AGAINST NUISANCE
Remedies for violation of Art. 684
Easement against nuisance is a negative
easement because the proprietor or possessor 1. Claim for damages for injuries sustained; or
is prohibited to do something which he could 2. Injunction.
lawfully do were it not for the existence of the
easement. However, a nuisance involves any act NOTE: Any stipulation or testamentary
or omission which is unlawful. provision allowing excavations that cause
danger to an adjacent land or building shall be
NOTE: The easement against nuisance is not an void. (NCC, Art. 685)
easement at all but a restriction upon the
ownership and not every limitation on the right Notice to owners of adjacent lands
of ownership is an easement.
Any proprietor intending to make any
LATERAL AND SUBJACENT SUPPORT excavation contemplated in Articles 684-686
shall notify all owners of adjacent lands.
Proprietor prohibited from making
dangerous excavations The notice is mandatory except where there is
actual knowledge of the proposed excavation.
No proprietor shall make such excavations
upon his land as to deprive any adjacent land or NOTE: The legal easement of lateral and
building of sufficient lateral or subjacent subjacent support are NOT only applicable for
support. (NCC, Art. 684) buildings already constructed at the time of the
excavations but also to future buildings that
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Property
the condominium belong to the same person. There is a
No one can have an easement over his own continuing
property. Even of the assumption that an harm being
Act
easement was created in favor of FMI that alone suffered by
complained of
will not defeat the right of the mortgagee to the aggrieved
Condition is already done
enforce the security if the debtor defaults. party by the
of the act which caused
(Bogo- Medellin v. CA, G.R. No. 124699, July 31, maintenance
the injury to
2003) of the act or
plaintiff
thing which
NUISANCE constitutes
the nuisance.
A nuisance is any act, omission, establishment, Abatement
Abatement is
business, condition of property, or anything without
not available
else which: judicial
as a remedy.
Abatement proceedings is
The remedy is
1. Injures or endangers the health or safety of allowed to
action for
others; suppress the
damages.
2. Annoys or offends the senses; nuisance.
3. Shocks, defies or disregards decency or
morality; NOTE: Nuisance is wrongful in itself due to the
4. Obstructs or interferes with the free injury caused, regardless of the presence or
passage of any public highway or street, or absence of care, while negligence creates
any body of water; or liability due to want of proper care resulting to
5. Hinders or impairs the use of property. another’s injury. (Pineda, 2009)
(NCC, Art. 694) (2005, 2006 BBAR)
Kinds of Nuisance
Nuisance vs. Trespass
1. As to the number of persons affected:
NUISANCE TRESPASS (2005 BAR)
Use of one’s own property
which causes injury to a. Public (or common) – One that affects a
another the property, right Direct community or neighborhood or any
or interest of another, and infringement of considerable number of persons
generally results from the another’s right although the extent of the annoyance,
commission of an act or property. danger or damage upon individuals
beyond the limits of the may be unequal (Suarez, 2011); and
property affected.
Injury is direct b. Private – one which affects an
Injury is consequential. individual or few persons only.
and immediate.
Nuisance per se vs. Nuisance per accidens One who maintains on his premises dangerous
instrumentalities or appliances of a character
PER SE PER ACCIDENS likely to attract children in play, and who fails
As a matter of to exercise ordinary care to prevent children
As a matter of fact.
law. from playing therewith or resorting thereto, is
Depends upon its location liable to a child of tender years who is injured
Need only be
and surroundings, the thereby, even if the child is technically a
proved in any
manner of its conduct or trespasser in the premises. (Jarco Marketing
locality.
other circumstances. Corp. v. CA, G.R. No. 129792, December 21, 1999)
May be May be abated only with
summarily reasonable notice to the Basis for liability
abated under person alleged to be
the law of maintaining or doing such The attractiveness is an invitation to children.
necessity. nuisance. Safeguards to prevent danger must therefore be
set up.
NOTE: The abatement of a nuisance without
judicial proceedings is possible only if it is a Elements of attractive nuisance
nuisance per se. A gas station is not a nuisance
per se or one affecting the immediate safety of 1. It must be attractive; and
persons or property. Hence, it cannot be closed 2. Dangerous to children of tender years.
down or transferred summarily to another
location. (Parayno v. Jovellanos, G.R. No. 148408, Q: Is a swimming pool an attractive
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Property
nuisance? Every successive owner or possessor of
property who fails or refuses to abate a
A: nuisance in that property started by a former
GR: A swimming pool or water tank is not an owner or possessor is liable therefor in the
attractive nuisance, for while it is attractive, it is same manner as the one who created it. (NCC,
merely an imitation of the work of nature. Art. 696)
Hence, if small children are drowned in an
attractive water tank of another, the owner is Extra-judicial abatement (2002 BAR)
not liable even if there be no guards in the
premises. (Hidalgo Enterprises v. Balandan, et. Requisites of extra-judicial abatement (BAR
al, G.R. No. L-3422 June 13, 1952) VID)
XPN: Swimming pool with dangerous slide 1. The nuisance must be especially Injurious
characteristics to the person affected;
2. No Breach of peace or unnecessary injury
NOTE: The doctrine of attractive nuisance does must be committed;
not generally apply to bodies of water, artificial 3. Demand must first be made upon the
as well as natural in the absence of some owner or possessor of the property to abate
unusual condition or artificial feature other the nuisance;
than the mere water and its location. 4. Demand is Rejected;
5. Abatement is Approved by the district
PUBLIC NUISANCE AND PRIVATE NUISANCE health officer and executed with the
assistance of the local police; and
Remedies against public nuisances 6. Value of the destruction does not exceed
P3,000
1. Prosecution under the RPC or any local
ordinance; NOTE: Abatement is the exercise of police
2. Civil action; or power which includes the right to destroy
3. Abatement, summarily and without judicial property regarded as a public health or safety,
proceeding. (NCC, Art. 699) and there is no obligation to give compensation.
NOTE: A private person may file for a civil An extra-judicial abatement can only be applied
action against a public nuisance if the latter is for if what is abated is a nuisance per se and not
injurious to him. Thus, insofar as he is nuisance per accidens.
concerned, the nuisance becomes a private
nuisance which affects him in a special way, Liability for damages in case of extrajudicial
different from that sustained by the public in abatement of nuisance
general.
The private person or a public official
Remedies against private nuisances extrajudicially abating a nuisance is liable for
damages to the owner othe thing abated, if he
1. Civil action; or causes unnecessary injury or if an alleged
2. Abatement, summarily and without judicial nuisance is later declared by courts to be not a
proceedings. (NCC, Art. 705) real nuisance. (NCC, Art. 707)
NOTE: Any person injured by a private NOTE: The right to question the existence of a
nuisance may abate it by removing, or if nuisance does not prescribe; it is
necessary, by destroying the thing which imprescriptible.
constitutes the nuisance, without committing a
breach of the peace or doing unnecessary Q: Respondent Ernesto Lardizabal (Ernesto)
injury. filed a complaint for demolition, before the
City Engineer's Office of Baguio City (City
However, it is indispensable that the procedure Engineer's Office), questioning the ongoing
for extra-judicial abatement of a public construction of a residential structure and
nuisance by a private person be followed. (NCC, garage extension by petitioners on a parcel
Art. 706) of land. Upon investigation, the City
283
Property
1. Real Or Actual Tradition – This succession where inheritance is
contemplates the actual delivery of the transferred upon death of the
thing from the hand of the grantor to the decedent.
hand of the grantee if the thing is a
personality. If it is a realty, it is manifested g. Quasi-Tradition – It consists in the
by certain possessory acts executed by the delivery of incorporeal property like
grantee with the consent of the grantor rights and credits done through the (a)
such as by taking over the property; by placing titles of ownership in the
entering it and occupying it. hands of the grantee or his
representative; or (b) by allowing the
2. Constructive Tradition – The delivery of the grantee to make use of the rights with
thing is not actual but representative or the consent of the grantor
symbolical in essence. But must be the
intention to deliver the ownership. OCCUPATION
285
Property
Longer period of NOTE: Future property means anything which
Shorter period.
possession is required. the donor cannot dispose of at the time of the
donation. (NCC, Art. 751) (2009 BAR)
DONATION
XPN: In donation propter nuptias, however, the
Donation is an act of pure liberality whereby a Family Code allows a donation of future
person disposes gratuitously of a thing or right property between future spouses.
in favor of another who accepts it. (NCC, Art.
725) Donation of future inheritance or the
inchoate right to inherit
Requisites of donation (ACID)
Future inheritance or the inchoate right to
1. Donor must have Capacity to make the inherit cannot be donated because it is future
donation; property.
2. He must have donative Intent (animus
donandi); Q: May a property, the acquisition of which
3. There must be Delivery in certain cases; and is subject to suspensive condition, be
4. Donee must Accept or consent to the donated?
donation during the lifetime of the donor
and of the donee in case of donation inter A: YES, because once the condition is fulfilled, it
vivos (NCC, Art. 746); whereas in case of retroacts to the day the contract is constituted.
donation mortis causa, acceptance is made [NCC, Art. 1187(1)]
after donor’s death because they partake of
a will. (NCC, Art. 728) Donation of ownership and usufruct
It may comprehend all the present property of a. The amount necessary to support him
the donor, or part thereof, provided he and those relatives entitled to support
reserves, in full ownership or in usufruct, from him;
sufficient means for the support of himself, and b. Property sufficient to pay the donor’s
of all relatives who, at the time of the debt contracted prior to the donation.
acceptance of the donation, are by law entitled
to be supported by the donor. (NCC, Art. 750) NOTE: The limitation applies only to simple,
remunerative, and modal donations but not to
Future properties as subject of donation onerous ones, which are governed by the law
(2003 BAR) on contracts. (De Leon, 2006)
287
Property
entitled to be supported by him (NCC, Art. NOTE: It partakes of the nature of testamentary
750); provisions and governed by the rules on
succession. (NCC, Art. 728)
2. Donation cannot comprehend Future
property except donations between future Donation mortis causa must comply with the
husband and wife (FC, Art. 84); and formalities prescribed by law for the validity
of wills
3. No person may give by way of donation
More than he may give by will. Donation mortis causa must comply with the
formalities prescribed by law for the validity of
Some inter vivos donations wills, otherwise, the donation is void and would
produce no effect. That the requirements of
The following donations have been held to be attestation and acknowledgment are embodied
inter vivos: in two separate provisions of the Civil Code
(Articles 805 and 806, respectively) indicate
1. A donation where the causes of revocation that the law contemplates two distinct acts that
have been specified; serve different purposes. An acknowledgment
is made by one executing a deed, declaring
2. A donation where the donor reserved for before a competent officer or court that the
himself a lifetime usufruct of the property, deed or act is his own. On the other hand, the
for if he were still the owner, there would attestation of a will refers to the act of the
be no need of said reservation; instrumental witnesses themselves who certify
to the execution of the instrument before them
3. A donation where the donor warrants the and to the manner of its execution. (Echavez v.
title to the thing which he is donating — DCDC, G.R. No. 192916, October 11, 2010)
there would be no need of warranty if he is
not transferring the title; Some mortis causa Donations
4. Where the donor immediately transferred The following have been held to be mortis
the ownership, possession and causa:
administration of the property to the donee,
but stipulated that the right of the donee to 1. Where the donor has reserved (expressly or
harvest and alienate the fruits would begin impliedly) the option to revoke the
only after the donor’s death. (But if what donation at any time before death, even
had been transferred in the meantime was without the consent of the donee;
only the administration of the property, the 2. Where the donation will be void if the
donation is mortis causa); transferee dies ahead of the transferor.
3. If before the donor’s death, it is revocable at
5. Where the donor stated that while he is his will;
alive, he would not dispose of the property 4. If the donor retains full or naked ownership
or take away the land “because I am and control over the property while he is
reserving it to him (the donee) upon my still alive;
death.” (The Court held this to be inter vivos 5. If what was in the meantime transferred to
because in effect, he had already renounced the done was merely the administration of
the right to dispose of his property); and the property; and
6. If title will pass only after donor’s death.
6. A donation where the donees “should not as
yet get the possession until our demise,” the Donation inter vivos vs. Donation mortis
administration remaining with the donor causa
spouses, or either one surviving.
INTER MORTIS
BASIS
DONATION MORTIS CAUSA VIVOS CAUSA
Takes effect
Takes effect
These are donations which are to take effect As to when it during the
upon donor’s
upon the death of the donor. takes effect lifetime of
death.
the donor,
What is controlling is the nature of the act and Rules of contract govern the onerous portion of
its effectivity. If the act is one of disposition, and donation; rules of donation only apply to the
effective independently of the donor’s death, it excess, if any. Since the donation imposed on
is a donation inter vivos. If it is one of the donee the burden of redeeming the
deposition, but its effectivity is dependent upon property for value, the donation was onerous.
the death of the donor, it is a mortis causa As an endowment for a valuable consideration,
donation. it partakes of the nature of an ordinary
contract; hence, the rules of contract will
NOTE: The title given to a deed of donation is govern and Art. 765 of the New Civil Code finds
NOT a determinative factor which makes the no application with respect to the onerous
donation inter vivos or mortis causa what is portion of the donation. Insofar as the value of
controlling is the provision stated in the deed the land exceeds the redemption price paid for
and must be read in its entirety. by the donee, a donation exists, and the legal
provisions on donation apply. (Calanasan v. Sps.
If there is doubt on the nature of the donation, Dolorito, G.R. No. 171937, November 15, 2013)
289
Property
HOW MADE AND ACCEPTED Donation is perfected from the moment the
donor knows of the acceptance by the donee.
Persons who must accept the donation (NCC, Art. 734)
The donee must accept the donation personally, The donation is perfected, not from the time of
or through an authorized person with a special acceptance but from the time of knowledge by
power for the purpose, or with a general and the donor that the donee has accepted (the
sufficient power, otherwise, the donation shall knowledge may of course be actual or
be void. (NCC, Art. 745) (2010 BAR) constructive). If there is no acceptance, the
donation will be null and void.
Reason for the need for an acceptance
FORMALITIES FOR DONATION OF
Because the donee may not want to accept the REAL/PERSONAL
donor’s liberality or if donation is onerous, he
may not agree with the burden imposed. Formalities required for donation
Status of a donation made by an NOTE: If the conceived child did not become a
incapacitated person person, the donation is null and void. An
unborn child cannot be a donor because it is
Following the laws in contracts (which are of essential for a person to be able to make a
suppletory application to simple donations) donation, he must have full civil capacity.
said donations should be merely considered
voidable. The same answer should be given in When a person is “specially disqualified’’ to
case there was vitiated consent (as in the case accept a donation
of fraud or intimidation).
“Specially disqualified’’ does not refer to those
Q: May an emancipated minor by himself incapacitated to contract like minors or those of
make donation mortis causa? unsound mind, but to people such as those
mentioned in Art. 739 and husbands and wives
A: YES, because at the age of 17, a person of with respect to immoderate donations from
sound mind can already make a valid will. each other (donations of spouses inter se).
Guardians and trustees may of course donate Since the law does not distinguish, both natural
their own properties, unless they are otherwise and juridical persons may become donees. An
disqualified by the law, but not the property unregistered partnership may become a donee
291
Property
because it is a juridical or artificial person and
despite its non-registration. But the conjugal
partnership itself, not being natural or juridical, NOTE: The presumption that the
cannot be a donee. Instead, the donation should donations was made in fraud of
be given by the stranger to the husband and creditors arises when the donor has
wife, the share of the husband being credited to not left sufficient assets to pay his
his capital, and that of the wife being debts, at the time of donation.
considered part of her paraphernal property.
c. The donee shall not be liable beyond
EFFECT OF DONATION/LIMITATIONS the value of donation received.
Rights and actions the donee acquires There is double donation when the same thing
has been donated to two or more persons.
The donee is subrogated to the rights and
actions which in case of eviction would pertain The rule on double sale under Art. 1544 of NCC
to the donor. shall be applicable.
Liability of donors for eviction of hidden Rule: First in time, stronger in right
defects
1. If movable, one who first takes possession
1. If the donation is simple or remunerative, in good faith.
donor is not liable for eviction or hidden 2. If immovable, one who first recorded in the
defects because the donation is gratuitous, registry of property in good faith.
unless the donor acted in bad faith; and
2. If the donation is onerous, the donor is If no inscription, one who first took possession in
liable on his warranty against eviction and good faith.
hidden defects but only to the extent of the
burden. In absence thereof, one who can present oldest
title.
Rules regarding the liability of the donee to
pay the debts of donor EXCESSIVE/INOFFICIOUS
1. Where donor imposes obligation upon the Rule in case of an excessive or inofficious
donee, (NCC, Art. 758) the donee is liable: donation
a. To pay only debts previously 1. A donor may not donate more than what he
contracted; and can give by will. If he donates more than
b. For debts subsequently contracted what he cannot give by will, the donation
only when there is an agreement to will become excessive and to insist on it, the
that effect. legitime of the compulsory heirs will be
impaired. Legitime is reserved for the
NOTE: But he is not liable for debts in compulsory heirs and the same cannot be
excess of the value of donation impaired or disposed of by the testator; and
received, unless the contrary is
intended. 2. The donee cannot receive by way of
donation more than what he may receive by
2. Where there is no stipulation regarding the will. If the donee can receive by donation
payment of debts (NCC, Art. 759): (devise or legacy) more than what the
testator is allowed by law to give, the
a. Donee is generally not liable to pay donation is inofficious and it may be
donor’s debts; suppressed totally or reduced as to its
b. Donee is responsible only if donation excess.
has been made in fraud of creditors;
293
Property
to give support to the donor. imposed in the donation. A judicial action is
essential if the donee refuses to return the
NOTE: The list of grounds for property, or pay its value to the donor, or to
revocation by reason of ingratitude latter’s heirs or assigns. However, the action
under Art. 765 is exclusive. must be filed within the prescriptive period
fixed by law, otherwise, it will be barred. (De
Grounds for reduction of donation Luna vs. Abrigo, GR No. L-57455, January
18,1990)
The same grounds for revocation under Art.
760. The donation shall be reduced insofar as it The breach of the condition in the donation
exceeds the portion that may be freely disposed causes the automatic revocation. All the donor
of by will, taking into account the whole estate has to do is to formally inform the donee of the
of the donor at the time of the birth, revocation. Judicial intervention only becomes
appearance, or adoption of a child. (NCC, Art. necessary if the donee questions the propriety of
761) the revocation. Even then, judicial intervention
is required to merely confirm and not order the
Revocation of perfected donations revocation. Hence, there can be no 10-year
prescriptive period to file an action to speak of.
Once a donation is perfected, it cannot be When the donee does not contest the revocation,
revoked without the consent of the donee no court action is necessary. (Province of
except on grounds provided by law. (NCC, Camarines Sur vs Bodega Glassware, G.R. No.
Articles 760, 764 and 765) 194199, March 22,2017)
Revocation or reduction is NOT automatic. Q: Can the creditors of the deceased file an
action for reduction of inofficious donation?
The emergence of the circumstances
enumerated in Art. 760 do not automatically A: NO. Only compulsory heirs or their heirs and
revoke or reduce the donation. The revocation successors in interest may sue for reduction of
or reduction is authorized only if the amount or inofficious donations. The remedy of the
value of the property donated exceeds the creditor is to sue, during the lifetime of the
disposable free portion. donor, for the annulment of inofficious
donation made in fraud of creditors (NCC, Art.
Q: For purposes of prescription of action, 1387); or they can go against the estate of the
what is the rule in case of concurrence of deceased and not against the donees.
two or more grounds for revocation or
reduction? EFFECTS OF REVOCATION OR REDUCTION
OF DONATION
A: In the event that two or more causes are
present, the earliest among them shall be the Obligations of the donee upon the revocation
starting point in the reckoning of the period of or reduction of donation
prescription of the action. (Pineda, 2009)
1. Return the thing or the object of the
Execution of a donation subject to a donation;
condition 2. If the property had already been alienated
and could not be recovered anymore, its
A donor may execute a donation subject to a value shall be paid to the donor. The value
condition, the non-fulfilment of which shall be the price of the property estimated
authorizes the donor to go to court to seek its at the time of the perfection of the donation;
revocation (not reduction). and
3. If the property had been mortgaged, the
Revocation of donation in a conditional donor may pay the mortgage obligations,
donation subject to reimbursement by the donee.
(NCC, Art. 762)
A donor cannot revoke a conditional donation
unilaterally, that is, without going to court, even Obligation of the donee to return the fruits
if the donee had breached any of the obligations
Q: What if the donor dies within the four- A: NONE. The grounds under Art. 765 are
295
Property
exclusive.
297
Prescription
TIME OF FILING OF TRANSMISSIBILITY OF EXTENT OF RIGHTS TO THE
THE ACTION ACTION REDUCTION FRUITS
1. Failure of the donor to reserve sufficient means for support (Art. 750)
Any time by the Not transmissible. Donation reduced to Donee is entitled to the
donor or by relatives NOTE: the duty to give extent necessary to fruits as owner of the
entitled to support and right to receive provide support. (NCC, property donated.
during the donor’s support are personal. Art. 750) (NCC, Art. 441)
lifetime. (NCC, Art. (FC, Art. 195)
750)
2. Inofficiousness for being in excess of what the donor can give by will (NCC, Art. 750, 771)
Within four years To creditor’s heirs or Property returned for Fruits shall be returned
from perfection of successors-in-interest. the benefit of creditors in case donee acted in
donation or from (NCC, Art. 1178) subject to the rights of bad faith; if impossible
knowledge by the innocent third persons. to return, indemnify
creditor of the (NCC, Art. 1387) the donor’s creditor for
donation. (NCC, Art. damages. (NCC, Art.
1389) 1388)
PRESCRIPTION LACHES
Concept
One acquires ownership and other real rights The failure or neglect, for an unreasonable and
through the lapse of time in the manner and under unexplained length of time, to do that which by
the action laid down by law. 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 it or declined to assert it. It
applies even to imprescriptible actions e.g. an
action to annul a void contract may be barred by
laches.
As to creation
Prescription is purely statutory in origin and is A creation of equity which, as such, is applied not
founded on ground of public policy. Time limit is really to penalize neglect or sleeping upon one's
imposed for a party to enforce his claim so that right, but rather to avoid recognizing a right
title to property and other rights will be stabilized. when to do so would result in a clearly
It protects the person who is diligent and vigilant inequitable situation. (Chavez v. Bonto-Perez, G.R.
in asserting his right, and conversely punishes the No. 109808, March 1, 1995)
person who sleeps on his right. (Fernandez v.
Cuerva, G.R. No. L- 21114 November 28, 1967)
As a defense
GR: Evidentiary in nature and requires full blown Evidentiary in nature and cannot be established
trial. by mere allegations in the pleadings. The party
alleging laches must adduce in court evidence
XPNs: proving such allegation. (Apo v. Sps. Roberto, G.R.
1) When the plaintiff’s complaint on its face or No. 198356, April 20, 2015)
the evidence he presented shows clearly that
indeed the action has prescribed at the time
it was filed; or
2) If, before trial, a party has no means of
knowing that opponent’s claim has already
lapsed, prescription as a defense may be
pleaded later as soon as the true nature of
the claim is discovered. (De Leon, 2011)
299
Prescription
and cannot be raised for the first time on trial or
appeal.
Just title A:
1. Movables
It means that the possessor obtained the a. 4 years ‐ If in good faith; and
possession of the property through one of the b. 8 years ‐ If in bad faith.
modes recognized by law for acquiring 2. Immovables
ownership, but the transferor or grantor was a. 10 years ‐ If in good faith; and
not the owner of the property or he has no b. 30 years ‐ If in bad faith.
power to transmit the right. (NCC, Art. 1129)
Q: How does ownership of personal
NOTE: Just title is never presumed, it must be property prescribe?
proved. (NCC, Art. 1131) The title for
prescription must be true and valid. (NCC, Art. A: Through uninterrupted possession for 8
1130) years, without need of any other condition.
(NCC, Art. 1132)
True title
Q: How about ownership and other real
One which actually exists and is not just a rights over immovables?
pretended one.
A: They prescribe through uninterrupted
Note: An absolutely simulated or fictitious title adverse possession for 30 years, without need
is void and cannot be a basis for ordinary of title or of good faith. (NCC, Art. 1137)
prescription. (Pineda Succession and
Prescription, p. 646, 2009) Q: What are the rules for the computation of
time necessary for prescription?
Valid title
A:
A title which is sufficient to transmit ownership
of the property or right being conveyed had the 1. The present possessor may complete the
transferor or grantor been the real owner period necessary for prescription by
thereof. tacking his possession to that of his grantor
or predecessor in interest;
EXTRAORDINARY PRESCRIPTION
2. It is presumed that the present possessor
Prescription where the possessor is in bad faith. who was also the possessor at a previous
301
Prescription
time, has continued to be in possession it for tax purposes and paid the taxes
during the intervening time, unless there is thereon, and resided there until his death.
proof to the contrary; and After 45 years from the time of donation,
Soledad, one of Sixto’s children, filed a
3. The first day shall be excluded and the last complaint for recovery of ownership, and
day included. (NCC, Art 1138) possession against Silverio. Who is the
rightful owner of the land?
Q: Emilio died, leaving 8 children. In 1960,
His eldest child, Flores, took possession of A: Silverio became the rightful owner of the
and cultivated the land, caused the land by extraordinary acquisitive prescription.
cancellation of the tax declaration in In extraordinary prescription ownership and
Emilio’s name covering a parcel of land and other real rights over immovable property are
caused the issuance of another in his own acquired through uninterrupted adverse
name. The co‐heirs of Flores discovered the possession thereof for 30 years without need of
cancellation. Upon Flores’ death, the heirs of title or of good faith. When Soledad filed the
his sisters together with his surviving sisters case, Silverio was in possession of the land for
filed a complaint in 1999 against the heirs of 45 years counted from the time of the donation.
Flores for partition of the lot and This is more than the required 30 years of
declaration of nullity of the documents. Did uninterrupted adverse possession without just
the heirs of Flores acquire ownership over title and good faith. Such possession was public,
the lot by extraordinary acquisitive adverse and in the concept of an owner. He
prescription? declared the land for taxation purposes and
religiously paid the realty taxes thereon.
A: YES. While the action to demand partition of Together with his actual possession of the land,
a co‐owned property does not prescribe, a co‐ these tax declarations constitute strong
owner may acquire ownership thereof by evidence of ownership of the land occupied by
prescription, where there exists a clear him. (Calicdan v. Cendeña, G.R. No. 155080,
repudiation of the co‐ ownership, and the co‐ February. 5, 2004)
owners are apprised of the claim of adverse and
exclusive ownership. In this case, the Q: Anthony bought a piece of untitled
respondents never possessed the lot, much less agricultural land from Bert. Bert, in turn,
asserted their claim thereto until 1999 when acquired the property by forging Carlo’s
they filed the complaint for partition. In signature in a deed of sale over the
contrast, Flores took possession of the lot after property. Carlo had been in possession of
Emilio’s death and exercised acts of dominion the property for eight years, declared it for
thereon‐ tilling and cultivating the land, tax purposes, and religiously paid all taxes
introducing improvements, and enjoying the due on the property. Anthony is not aware of
produce thereof. The statutory period of the defect in Bert’s title, but has been in
prescription commenced in 1960 when Flores, actual physical possession of the property
who had neither title nor good faith, secured a from the time he bought it from Bert, who
tax declaration in his name and may, therefore, had never been in possession. Anthony has
be said to have adversely claimed ownership of since then been in possession of the
the lot. On said date, respondents were also property for one year.
deemed to have become aware of the adverse
claim. Flores’s possession thus ripened into Can Anthony acquire ownership of the
ownership through acquisitive prescription property by acquisitive prescription? How
after the lapse of 30 years. (Heirs of Restar v. many more years does he have to possess it
Heirs of Cichon, G.R. No. 161720, November. 22, to acquire ownership?
2005)
A: YES. Anthony can acquire ownership of the
Q: Sixto, owner of a parcel of land, died. He property by ordinary acquisitive prescription
was survived by his wife and three children. which requires just title and good faith (NCC,
The subject land was donated by his wife to Art. 1117). There was just title because a deed
Silverio, who immediately entered into of sale was issued in his favor even though it
possession of the land, built a fence around was forged, which fact he was not aware of. He
it, constructed a residential house, declared needs to possess the land in good faith and in
303
Prescription
of a Writ of Possession Prescription and laches cannot apply to
filed by the applicant for registered land covered by the Torrens system"
registered land. because "under the Property Registration
Decree, no title to registered land in derogation
NOTE: Similarly, an action to to that of the registered owner shall be
recover possession of a acquired by prescription or adverse
registered land never possession.” (Jakosalem vs. Barangan, G.R. No.
prescribes. 175025, February 15, 2012)
305
Succession
SUCCESSION Purely personal rights (intuitu personae) are
extinguished by death. Hence, they are not
transmitted to the heirs. Only patrimonial rights
GENERAL PROVISIONS may be transmitted to the heirs.
Succession is a mode of acquisition by virtue of The heirs succeed not only to the rights of the
which the property, rights and obligations to the deceased but also to his obligations subject to
extent of the value of the inheritance of a person, the following rules:
are transmitted through his death to another or
others either by his will or by operation of law. GR: Rights and obligations arising from
(NCC, Art. 774; Heirs of Ciriaco Bayog-Ang v. contracts are binding upon the heirs.
Florence Quinones, G.R. No. 205680, November 21,
XPNs: When the rights and obligations arising
Requisites of succession (DATE) are not transmissible by:
1. Their nature
1. Death of decedent; 2. Stipulation
2. Acceptance of the inheritance by the 3. Provision of law. (NCC, Art. 1311)
successor;
3. Transmissible estate; and INHERITANCE SUCCESSION
4. Existence and capacity of successor, It is the objective element It is the legal
designated by decedent or law. of succession, to the mass mode by which
or totality of the estate of a inheritance is
NOTE : The heir cannot be liable beyond the deceased person. transmitted.
inheritance received. Value to the extent of his
inheritance means that the heirs will only pay to Rules on properties acquired after the
the extent of the value of his inheritance of the execution of a will
debts of the decedent, and nothing more than
that. GR: Property acquired during the period
between the execution of the will and the death
A decedent is a person whose property is of the testator will not pass under the provisions
transmitted through succession whether or not of the will but by the rules on legal succession.
he left a will. If the decedent left a will, he is also Otherwise stated, the property will NOT form
called a testator. (NCC, Art. 775) part of the estate of the testator that will pass on
to his instituted heirs.
Inheritance includes all the property, rights and
obligations of a person which are not XPNs:
extinguished by his death. (NCC, Art. 776)
1. When a contrary intention expressly
The inheritance of a person includes not only the appears in the will (NCC, Art. 793), in which
property and the transmissible rights and case the property will be included in that
obligations existing at the time of his death, but portion of the estate that will pass to the
also those which have accrued thereto since the instituted heirs by way of testamentary
opening of the succession. (NCC, Art. 781) succession; and
NOTE : The rights to a person’s succession are 2. If the property acquired after the execution
transmitted from the moment of his death. In of the will is one which the testator has
addition, the inheritance of a person consists of disposed of under his will as a legacy or
the property, and transmissible rights and device, i.e., the property did not belong to
obligations existing at the time of his death (by the testator at the time he disposed of it as a
virtue of succession), as well as those which have device or as a legacy and he only acquired
accrued thereto (by virue of ownership, by right the same after making his will. (NCC, Art.
of accession) since the opening of the succession. 930) In this case, the legacy or device will be
(Balus v. Balus, G.R. No. 168970, January 10, given effect even if the will is silent with
2010) regard to such an intention on the part of
the testator.
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his interest in the inheritance even pending In Their Capacities As President And Corporate
the settlement of the estate? Secretary, Respectively, Of Philippines
Internationl Life Insurance Company, And Filipino
A: YES, because his hereditary share/interest in Loan Assistance Group v. RTC, G.R. NO. 146006.
the decedent’s estate is transmitted or vested February 23, 2004)
immediately from the moment of decedent’s
death. This is, however, subject to the outcome Actual delivery is NOT necessary for an heir
of the settlement proceedings to determine the to acquire ownership over an inherited
rights and definite portions of the estate property
pertaining to the vendees, assignees, or
creditors. The possession of hereditary property is deemed
transmitted to the heir without interruption and
Future inheritance from the moment of the death of the decedent, in
case the inheritance is transmitted.
GR: No contract may be entered into upon future
inheritance. [NCC, Art. 1347, (2)] Pending a proceeding determining the rightful
heirs, the prospective heirs can demand delivery
XPNs: of their supposed inheritance because
1. Partition inter vivos (NCC, Art. 1080) ownership passes to the heir at the very moment
2. Donations propter nuptias by future spouses of death. The basis of the heirs’ rights to the
to each other of future property fruits is the Right of Accession.
1. The succession has not yet been opened. The rights to the succession are transmitted
2. The object of the contract forms part of the from the moment of the death of the decedent.
inheritance. (NCC, Art. 777) (2000 BAR)
3. The promissory has an expectancy of a right
which is purely hereditary in nature with The moment of death is the determining point
respect to the object. when the heirs acquire a definite right to the
inheritance, whether such right is pure or
An heir CANNOT enter into a compromise conditional. The possession of hereditary
agreement to renounce his rights over a future property is therefore deemed transmitted to the
inheritance. (NCC, Art. 2035, par. 6) heir without interruption and from the moment
of death of the decedent.
Every renunciation or compromise as regards a
future legitime between the person owing it and The right to inherit is vested at the moment of
his compulsory heirs is void, and the latter may death. Even if an heir did not know how much
claim the same upon the death of the former; but she was going to inherit, she could still dispose
they must bring to collation whatever they may of her share in the inheritance. Said right to
have received by virtue of the renunciation or share was hers from the moment of death, and
compromise. (NCC, Art. 905) she could do whatever she wanted with it, even
sell it. (De Borja v. Vda. De Borja, 46 SCRA 577,
A future legitime is merely an expectancy, and 1972)
the heir does not acquire any right over the
same until the death of the testator. Hence, The interest of the heir over the inheritance
juridically, there is nothing on which to prior to the death of the decedent is merely
compromise. Furthermore, Art. 1347 of NCC inchoate or a mere expectancy.
expressly provides that, “no contract may be
entered into upon future inheritance except in It is immaterial whether a short or long period of
cases expressly authorized by law.” time elapses between the death of the
predecessor and the entry in the possession of
NOTE: An heir may only sell his ideal or the properties of the inheritance, because the
undivided share in the estate, not any specific right is always deemed to retroact to the
property therein. (Jose C. Lee And Alma Aggabao, moment of death.
The following shall be presumed dead for all 1. Voluntary or Testamentary Heirs – called
purposes, including the division of the estate to succeed by virtue of the will of the
among the heirs: testator:
1. A person on board a vessel lost during a sea a. Devisee - persons to whom gifts of real
voyage, or an aeroplane which is missing, property are given by virtue of a will
who has not been heard of for four years
since the loss of the vessel or aeroplane; b. Legatee - persons to whom gifts of
2. A person in the armed forces who has taken personal property are given by virtue of
part in war, and has been missing for four a will
years;
3. A person who has been in danger of death NOTE: An heir is one who succeeds to the
under other circumstances and his existence whole (universal) or aliquot part of the
has not been known for four years. (NCC, estate. Devisee or legatee is one who
Art. 391) succeeds to definite, specific, and
individualized properties.
NOTE: If there is a doubt, as between two or
more persons who are called to succeed each 2. Compulsory Heir – called by law to succeed
other, as to which of them died first, whoever to a portion of the testator’s estate known as
alleges the death of one prior to the other, shall legitime. They succeed by force of law to
prove the same; in the absence of proof, it is some portion of the inheritance, in an
presumed that they died at the same time and amount predetermined by law, of which
there shall be no transmission of rights from one they cannot be deprived by the testator,
to the other. (NCC, Art. 43) except by a valid disinheritance.
KINDS OF SUCCESSION AND SUCCESSORS 3. Legal or Intestate Heir – those who succeed
by operation of law through intestate
Kinds of succession succession. Those who succeed to the estate
of the decedent who dies without a valid
1. Testamentary Succession - that which will, or to the portion of such estate not
results from the designation of an heir, disposed of by will.
made in a will executed in the form
prescribed by law. (NCC, Art. 779) Distinctions between heirs and
legatees/devisees
2. Legal or Intestate Succession - that which
takes place if a person dies without a will, or DEVISEES OR
BASIS HEIRS
with a void will, or one which has LEGATEES
subsequently lost its validity. As to Represent the Never
representat juridical represent the
Intestate succession can take place even if ion of personality of personality of
there is a will, such as when the will does decedent’s the deceased the deceased
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juridical and acquire no matter how The effect is:
person their rights, big the legacy a. to annul the institution of heirs insofar
with certain or the devise as it may prejudice the person
exceptions to is. disinherited,
his b. the devises and legacies and other
obligations. testamentary dispositions shall be valid
Inherit an to such extent as will not impair the
undetermined legitime.
quantity
whose exact TESTAMENTARY SUCCESSION
Are always
Determinat amount
given a
ion of cannot be A will is an act whereby a person is permitted,
determinate
amount of known, and with the formalities prescribed by law, to control
thing or a
inheritance which cannot to a certain degree the disposition of his estate,
fixed amount
be fixed until to take effect after his death. (NCC, Art. 783)
the
inheritance is A will has been defined as “a personal, solemn,
liquidated. revocable and free act by which a capacitated
Succeed to person disposes of his property and rights and
Only succeed
the declares or complies with duties to take effect
to the
remainder of after his death.” (Vitug v. Court of Appeals, G.R.
determinate
the properties No. 82027, March 29, 1990; Rabadilla v. CA, G.R.
Extent of thing or
after all the No. 113725, June 29, 2000)
succession quantity
debts and all
al right which is
the legacies Characteristics of a Will
mentioned in
and devices
the legacy or
have been 1. Purely personal act – the disposition of the
devise
paid or given property is soley dependent upon the
Can exist testator
whether the Only in
As to when
succession be testamentary 2. Free from vices of consent – it must be
they exist
testate or succession executed freely, knowingly and voluntarily;
intestate the testator’s consent should not be vitiated
by the causes mentioned in Art. 839,
Q: Suppose a person is named to succeed to paragraphs 2-6 (insanity, violence,
an entire estate. The estate, however, intimidation, fraud, mistake) (see NCC, Art.
consists of only one parcel of land. Is he an 839)
heir or a devisee?
3. Solemn and formal – the testator must
A: It depends on the manner of his designation comply with the provisions of the law
in the will. Here, because he is called to inherit establishing the formalities of a will
the entire estate, he is an heir. (expressed in NCC, Art. 783 )
Instances where the distinctions between NOTE: The requirements as to the form of
heirs and devisees/legatees become the will depends on whether it is attested or
significant holographic.
1. Preterition (NCC, Art. 854) Attested wills – Art. 805-808, 820, and 821;
The effect is:
a. to annul entirely the institution of heirs, Holographic wills – Art. 810-814; and
but
b. the legacies and devises shall be valid Both wills – Art. 804
insofar as they are not inofficious.
4. Revocable or ambulatory – this is because
2. Imperfect/defective disinheritance (NCC, Art. a will only takes effect upon the testator’s
918) death and no rights vest yet as long as the
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What is delegable is only the manner of 1. When there is an imperfect description, or
distribution of property and the designation of when no person or property exactly answers
who are to receive it within the class or cause. the description – mistakes and omissions
must be corrected.
If a third person whom the powers under Art.
786 were delegated to refuses to do his duty, the 2. If the error appears from the context of the
court can compel him to do so; and if ever the will or from extrinsic evidence, excluding the
third persons dies, the court must appoint a oral declarations of the testator as to his
substitute. intention; and when an uncertainty arises
upon the face of the will, as to the application
Construction of a Will’s Provision of any of its provisions.
The words of a will are to receive an Example: Testator gives a legacy “to my
interpretation which will give to every cousin Anna” and it will turn out that the
expression some effect, rather than one which testator has three cousins named “Anna”
will render any of the expressions inoperative;
and of two modes of interpreting a will, that is to 2. Patent (Extrinsic) – when an uncertainty
be preferred which will prevent intestacy. (NCC, arises upon the face of the will as to the
Art. 791) application of any of its provisions. (NCC,
Art. 789)
Reason: Testacy is preferred over intestacy
because testacy is the express will of the Example: Testator gives a devise “to some of
decedent whereas intestacy is only his implied the eleven children of my only brother"
will.
Steps in Resolving Ambiguities
The invalidity of one of several dispositions
contained in a will does not result in the 1. Examine the will itself;
invalidity of the other dispositions unless it is to 2. Refer to extrinsic evidence or the
be presumed that the testator would not have surrounding circumstances, (except oral
made such other dispositions if the first invalid declarations of the testator as to his
disposition had not been made. (NCC, Art. 792) intention); and
3. In the case of patent ambiguities, the
Every devise or legacy shall cover all the interest extrinsic evidence acceptable is limited to
which the testator could devise or bequeath in those pertaining to the circumstances under
the property disposed of, unless it clearly which the will was executed.
appears from the will that he intended to convey
a less interest. (NCC, Art. 794) Law governing the validity of wills
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The requirement that the testator be of The burden of proving that the testator acted in
sound mind is essential only at the time of lucid interval lies on the person who maintains
the making of the will (or execution). the validity of the will. (NCC, Art. 800, par. 2)
If he is not of sound mind at that time, the Being forgetful does not necessarily make a
will is invalid regardless of the state of person mentally unsound so as to render him
mind before or after such execution. unfit to execute a Will. Forgetfulness is not
equivalent to being of unsound mind. (Antonio
NOTE: If the testator was of sound mind at B. Baltazar, et. al. v. Lorenzo Laxa, G.R. No.
the time of the making of the will, the will is 174489, April 07, 2012)
valid even if the testator should later on
become insane and die in that condition. Married woman
Supervening incapacity does not invalidate
an effective will, nor is the will of an A married woman may make a will without the
incapable validated by the supervening consent of her husband, and without the
capacity. (NCC, Art. 801) authority of the court. (NCC, Art 802)
GR: The law presumes that every person is A married woman may dispose by will all her
of sound mind, in the absence of proof to the separate property as well as her share of the
contrary. (NCC, Art. 800, par. 1) conjugal partnership or absolute community
property. (NCC, Art 803)
XPNs: If the testator was:
NOTE: Art. 803 has been superseded by Art. 97
1. Publicly known to be insane, one month of the FC. It provides that either spouse may
or less, before making his will; (NCC, Art. dispose by will, of his or her interest in the
800, par. 2) community property since the ACP or CPG is
2. Under guardianship at the time of the dissolved upon the death of either spouse.
making of the will. (Torres v. Lopez, G.R. (Banale, 2016; FC, Art. 99 and 126)
No. L-25966, November 1, 1926)
FORMAL VALIDITY OF WILLS
NOTE: Mere weakness of mind or partial
imbecility from disease of body or from age Kinds of Wills allowed under the NCC:
does not necessarily render a person
incapable of making a will. 1. Ordinary or Notarial will - requires an
attestation clause, an acknowledgement
SOUNDNESS OF MIND before a notary public;
It is not necessary that the testator be in full 2. Holographic will - must be entirely written,
possession of all his reasoning faculties, or that dated and signed in the handwriting of the
his mind be wholly unbroken, unimpaired, or testator.
unshattered by disease, injury or other cause.
Time criterion - law at the time of execution;
It is sufficient if the testator was able to know at subsequent laws cannot apply retroactively.
the time of making the will to know the ff.:
Place criterion - Under Art 815-817 of NCC, five
1. Nature of the estate to be disposed of; (5) choices are available to the testator; the law
2. Proper objects of his bounty; and of:
3. Character of testamentary act. (NCC, Art.
799) 1. The testator's citizenship;
2. Testator's domicile;
A person suffering from civil interdiction is 3. Place of execution;
qualified to make a will. He is deprived of the 4. Testator's residence; and
power to dispose of his properties through acts 5. Philippines. (Balane, 2016)
inter vivos but not through acts mortis causa.
(RPC, Art. 34) The will of an alien who is abroad produces
effect in the Philippines if:
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b. the testator must be a native or resident Two Requirements:
of said locality. (Abangan v. Abangan,
G.R. No. 13431, November 12, 1919) a. Attesting – an act of witnessing
b. Subscribing – an act of signing their
3. Subscribed at the end thereof by the testator names in the proper places of the will
himself or by the testator’s name written by
some other person in his presence, and by his Test for the Determination of the
express direction; Presence of Witnesses
The signature of the testator of the will must In order that the witnesses be deemed
be at the end of the will, which may be at the present at the time of the execution of the
logical end (last testamentary disposition) will, it suffices that the witnesses were so
or physical end (non-dispositive provisions). situated in a manner that they had the
opportunity to see the testator sign the will.
NOTE: In notarial wills, subscription by It is not necessary that they actually saw the
fingerprint is allowed as long as it is testator affix his/her signature on the will.
voluntarily made (Matias v. Salud, G.R. No. L-
10751, June 23, 1958), but not in holographic The true test of presence of the testator and
wills given the explicit requirement for a the witnesses in the execution of a will is not
holographic will to be entirely written, whether they actually saw each other sign,
dated and signed with the hand of the but whether they might have seen each
testator. other sign had they chosen to do so
considering their mental and physical
Cross as signature condition and position with relation to each
other at the moment of inscription of each
GR: A cross is not a sufficient signature signature.
XPNs: The cross appearing on the will is: The question whether the testator and the
subscribing witnesses to an alleged will sign
a. the customary, habitual signature of the the instrument in the presence of each other
testator; or does not depend upon proof of the fact that
b. one of the ways the testator signs his their eyes were actually cast upon the paper
signature. at the moment of its subscription by each of
them, but whether at that moment existing
The one who alleges that it is the customary, conditions and the position of the parties,
habitual or one of the ways he sign his with relation to each other, were such that
signature has the burden of proof. (Garcia v. by merely casting their eyes in the proper
Lacuesta, G.R. No. L-4067, November 29, direction they could have seen each other
1951) sign. (Nera v. Rimando, G.R. No. L-5971,
February 27, 1911)
Signing by an Agent of the testator
Actual seeing is not required, but the ability
a. must sign in testator’s presence, and to see each other by merely casting their
b. by the testator’s express direction eyes in the proper direction and without any
physical obstruction to prevent his doing so.
The important thing is that it should clearly (Jaboneta v. Gustilo, G.R. No. 1641, January
appear that the name of the testator was 19, 1906)
signed at his express direction, in the
presence of three witnesses, and in the An attestation must state all the details the
presence of the testator and of each other. third paragraph of Article 805 of NCC
(Barut v. Cabacungan, G.R. No. 6285, requires. In the absence of the required
February 15, 1912) avowal by the witnesses themselves, no
attestation clause can be deemed embodied
4. Attested and subscribed by three or more in the Acknowledgement of the Deed of
credible witnesses in the presence of the Donation Mortis Causa. (Echavez v. Dozen
testator and of one another; Cons, G.R. No. 192916, October 11, 2010)
A: YES. Clara’s thumbmark in this case has b. Directory – pagination in letters on the
all the hallmarks of a valid signature. Clara upper part of each page. (Balane, 2010)
clearly intended to use her thumbmark as The pages may be expressed either in
her signature and the circumstances words (e.g. “Page One of Seven”) or in
justified her use of her thumbmark. (Garcia figures (e.g. “Page 1 of 7”)
v. La Cuesta, G.R. No. L-4067, November 29,
1951) 7. Must contain an Attestation clause which
expressly states the following:
5. The testator or the person requested by him
to write his name must also sign every page, a. The number of pages used upon which
except the last, on the left margin in the the will is written;
presence of the witnesses; b. The fact that the testator signed the will
and every page thereof, or caused some
PURPOSE: to prevent the disappearance of other person to write his name, under
the pages. his express direction, in the presence of
the instrumental witnesses;
a. Mandatory – the signing on every page c. The fact that the witnesses witnessed
in the witnesses’ presence and signed the will and all the pages
thereof in the presence of the testator
b. Directory – the place of the signing (on and of one another. (NCC, Art. 805, par.
the left margin). The signature can be 3)
affixed anywhere on the page. (Balane,
2016) The signature of the witnesses must be at
the bottom of the attestation clause. An
If the entire document consists only of two unsigned attestation clause cannot be
sheets, the first containing the will and the considered as an act of the witnesses, since
second, the attestation clause, there need the omission of their signatures at the
not be any marginal signatures at all. bottom thereof negatives their participation.
(Abangan v. Abangan, G.R. No. 13431, (Cagro v. Cagro, G.R. No. L-5826, April 29,
November 12, 1919) 1953)
A will was declared void which contained Inasmuch as the signatures of the three
the necessary signatures on the margin of witnesses to the will do not appear at the
each leaf (folio), but not in the margin of bottom of the attestation clause, although
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Succession
the page containing the same is signed by An acknowledgment is the act of one who
the witnesses on the left hand margin, the has executed a deed in going before some
will is fatally defective. The attestation competent officer or court and declaring it
clause is "a memorandum of the facts to be his act or deed. It involves an extra
attending the execution of the will" required step undertaken whereby the signatory
by law to be made by the attesting actually declares to the notary public that
witnesses, and it must necessarily bear their the same is his or her own free act and deed.
signatures. The acknowledgment in a notarial will has a
two-fold purpose: (1) to safeguard the
The petitioner and appellee contend that testator’s wishes long after his demise and
signatures of the three witnesses on the left (2) to assure that his estate is administered
hand margin conform substantially to the in the manner that he intends it to be done.
law and may be deemed as their signatures (Lee v. Tambago, A.C. No. 5281, 12 February
to the attestation clause. This is untenable, 2008)
because said signatures are in compliance
with the legal mandate that the will be The issue in this case is whether or not the
signed on the left hand margin of all its will “acknowledged” by the testatrix and the
pages. If an attestation clause not signed instrumental witnesses before a notary
by the three witnesses at the bottom public acting outside the place of his
thereof, be admitted as sufficient, it commission satisfies the requirement under
would be easy to add such clause to a will Article 806 of the NCC. Outside the place of
on a subsequent occasion and in the his commission, he is bereft of power to
absence of the testator and any or all of perform any notarial act; he is not notary
the witnesses. (Cagro v. Cagro, GR. No. L- public. Any notarial act outside the limits of
5826 April 29, 1953) his jurisdiction has no force and effect.
(Guerrero v. Bihis, G.R. No. 174144, April 17,
NOTE: An attested will need not be dated, 2007)
but a holographic will must be dated. (NCC,
Art. 810) The absence of the documentary stamp does
not affect the validity of the will. It merely
8. Must be acknowledged before a Notary public prevent it from being presented as evidence.
by the testator and the witnesses. (NCC, Art. (Gabucan v. Manta, G.R. No. L-51546, January
806) (2008 BAR) 28, 1980)
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It is an established rule that “a testament may noted or authenticated with his full signature,
not be disallowed just because the attesting only the particular words erased, corrected,
witness declare against its due execution; altered will be invalidated, not the entirety of
neither does it have to be necessarily allowed the will.
just because all the attesting witness declare in
favor of its legalisation; what is decisive is that XPNs:
the court is convinced by evidence before it, not
necessarily from the attesting witnesses, a. Where the change affects the essence of
although they must testify, that the will was or the will of the testator such as where
was not duly executed in the manner required the alteration partakes the effect of
by law.” (Baltazar v. Laxa, G.R. No. 174489, April revoking a will;
11, 2012)
NOTE: When the holographic will had
This Court has held in a number of occasions only one substantial provision, which
that substantial compliance is acceptable where was altered by substituting the original
the purpose of the law has been satisfied, the heir with another, and the same did not
reason being that the solemnities surrounding carry the requisite full signature of the
the execution of a will are intended to protect testator, the entirety of the will is
the testator from all kinds of fraud and trickery voided or revoked.
but are never intended to be so rigid and
inflexible as to destroy the testamentary Reason: What was cancelled here was
privilege. (Alvarado v. Gaviola, Jr., G.R. No. 74695, the very essence of the will; it amounted
September 14, 1993) to the revocation of the will. Therefore,
neither the altered text nor the original
HOLOGRAPHIC WILLS unaltered text can be given effect.
(Kalaw v. Relova, G.R. No. L-40207,
A holographic will is one entirely written, September 28, 1984)
dated, and signed by the hand of the testator
himself. It is subject to no other form, and may Thus, unless the unauthenticated
be made in or out of the Philippines, and need alterations, cancellations, or insertions
not be witnessed. (NCC, Art. 810) were made on the date of the
holographic will or on testator’s
Formalities Required in the Execution of signature, their presence does not
Holographic Wills: (EDS) invalidate the will itself. The lack of
authentication will only result in
1. Entirely handwritten by the testator disallowance of such changes. (Ajero v.
CA, G.R. No. 106720, September 15, 1994)
An illiterate cannot make a holographic will
because it is required to be in writing by the b. Where the alteration affects the date of
testator. However, he can make an ordinary or the will or the signature of the testator,
notarial will because the law allows a notarial the whole will is void.
will to be written by someone else and in
certain cases, for the will to be read by c. If the words written by a 3rd person
someone else not the testator. were contemporaneous with the
execution of the will, even though
NOTE: A will handwritten by a person other authenticated by the testator, the entire
than the testator is a not a valid holographic will is void for violation of the requisite
will, but it may nonetheless be made valid by that the holographic will must be
complying with the requirements of a notarial entirely in the testator’s handwriting.
will.
2. Dated by the testator
Effects of Insertions or Interpolations
GR: The "date" in a holographic will should
GR: When a number of erasures, corrections, include the day, month, and year of its
cancellation, or insertions are made by the execution.
testator in the will but the same have not been
3. Signed by the hand of the testator himself In the post mortem probate of holographic wills,
the following rules are to be observed as to the
In a holographic will, the signature must be number of witnesses to be presented:
at the end of the will. This can be inferred
from Art. 812 of the NCC by the reference to 1. If the will is not contested, it shall be
dispositions “written below his signature.” necessary that at least one witness who
This phrase implies that the signature is at knows the handwriting and signature of the
the end of the will, and any disposition testator explicitly declares that the will and
below it must further be signed and dated. the signature are in the handwriting of the
testator.
In a holographic will, the dispositions of the
testator written below his signature must be 2. If the will is contested, at least three of such
dated and signed by him in order to make witnesses shall be required to explicitly
them valid as testamentary dispositions. declare that the signature in the will is the
(NCC, Art. 812) If one disposition below the genuine signature of the testator.
signature of the testator is not dated, even if
signed, that particular disposition is void, 3. In the absence of any competent witness
without affecting the validity of the others and if the court deems it necessary, expert
or of the will itself. testimony may be resorted to. (NCC, Art.
811)
When a number of dispositions appearing in
a holographic will are signed without being Presentation of the will is necessary
dated, and the last disposition has a
signature and a date, such date validates the The contents and due execution of a lost
dispositions preceding it, whatever be the holographic will CANNOT be established
time of prior dispositions. (NCC, Art. 813) merely through oral testimonies of witness
who allegedly seen the same. It may not be
NOTE: It is not required that the will be proved by the bare testimony of witnesses who
executed on a single day, at one time and in have seen or read such will. The will itself must
the same ink. The unity of the act is not be presented; otherwise, it shall produce no
required in holographic wills. effect. (Gan v. Yap, G.R. No. L-12190, August 30,
1958)
In case of several additional dispositions
where the additional ones before the last are By its very nature, a holographic will can only be
dated but not signed, only the last will be proven authentic by establishing that the
valid, provided the last is signed and dated. handwriting in which it is written belongs to the
321
Succession
testator himself and this can only be done disposition in the will. (Kalaw v. Relova, G.R. No.
through an examination of the will. L-40207, September 28, 1984)
A holographic will which was lost or could JOINT WILLS (2000, 2008 BAR)
not be found can be proved by means of a
photostatic copy (photocopy). Joint wills are NOT allowed in the
Philippines.
A photostatic copy or xerox copy of the
holographic will may be allowed because Two or more persons cannot make a will jointly,
comparison can be made with the standard or in the same instrument, either for their
writings of the testator. (Rodelas v. Aranza, G.R. reciprocal benefit or for the benefit of a third
No. L-58509, December 7, 1982) person. (NCC, Art. 818)
REQUIREMENTS IN CASE OF ALTERATIONS Wills prohibited by Art. 818 of the NCC executed
by Filipinos in a foreign country shall not be
In case of insertion, cancellation, erasure or valid in the Philippines, even though authorized
alteration in a holographic will, the testator by the laws of the country where they may have
must authenticate the same by his full been executed. (NCC, Art. 819) (2000 BAR)
signature. (NCC, Art. 814)
Reason: Whether in the Philippines or in foreign
Full signature refers to the testator’s habitual, country, Filipino citizens are prohibited from
usual and customary signature. executing joint wills because it is a matter
against public policy. There is danger of undue
GR: If not authenticated with the testator’s influence and of one testator killing the other.
full signature, it is considered as not made, but (Dacanay v. Florendo, G.R. No. L-2071, September
the will is not invalidated. It does not affect the 19, 1950)
validity of the will itself. The will is not thereby
invalidated as a whole, but at most only as NOTE: Mutual wills – Separate wills although
regards the particular words erased, corrected containing reciprocal provisions are not
or inserted. (Kalaw v. Relova, G.R. No. L-40207, prohibited, subject to the rule on disposition
September 28, 1984 citing Velasco v. Lopez, G.R. captatoria.
No. 905, February 12, 1903)
What the law expressly prohibits is the making
XPN: Unless the portion involved is an essential of joint wills either for the testator’s reciprocal
part of the will, such as the date. benefit or for the benefit of a third person. (NCC,
Art. 818) In the case at bench, the Cunanan
Crossing-out of name of heir spouses executed separate wills. Since the two
wills contain essentially the same provisions and
Where the testator himself crossed out the name pertain to properties which in all probability are
of the original heir, and substituted the name of conjugal in nature, practical considerations
another, without proper authentication, it was dictate their joint probate. (Vda. de Perez v.
held that this did not result in making the person Tolete, G.R. No. 76714, June 2, 1994)
whose name was crossed as heir. The
cancellation should not have also been given NOTE: While the execution of joint wills is
effect. The Supreme Court, however, ruled that absolutely prohibited under Philippine laws, the
neither the original heir nor the substituted heir filing of a joint petition for the probate of two or
can receive the estate on the ground that it could more wills is allowed. Multiple wills may be
not ignore what appeared to be a change of submitted for probate in a single proceeding.
heart on the part of the testator. One way to
justify the ruling of the Supreme Court is to Q: John and Paula, British citizens at birth,
consider the cancellation as tantamount to a acquired Philippine citizenship by
revocation of the will. It amounts to a revocation naturalization after their marriage. During
even though the cancellation only pertained to their marriage the couple acquired
the name of the original heir because without substantial landholdings in London and in
the said name, there remains no other Makati. Paula bore John three children,
Peter, Paul and Mary. In one of their trips to
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Succession
SUBSEQUENT The documents or papers incorporated in a will
CODICIL
WILL be considered part of the will even though the
Forms a part of the It is a new or a separate same are not executed in the form of a will. The
original will. will. doctrine of incorporation by reference is not
Supplements the applicable in a holographic will unless, of course,
Makes dispositions the testator executes a holographic will and,
original will,
without reference to superfluously, had it witnessed. (Balane, 2010)
explaining, adding
and independent of the
to, or altering any of
original will.
its dispositions. REVOCATION OF WILLS (1997, 2003 BAR)
If it provides for a full
disposition of the A will may be revoked by the testator at any
testator’s estate, may time before his death. Any waiver or restriction
Does not, as a rule,
revoke the whole prior of this right is void. (NCC, Art. 828)
revoke entirely the
will by substituting a
prior will.
new and last The testator’s right to revoke during his lifetime
disposition for the is absolute because a will is ambulatory. It can
same. neither be waived nor restricted. As a matter of
A prior will and a fact, even if the will has already been admitted to
A will and a codicil,
subsequent will, being probate during the testator’s lifetime, it may still
being regarded as a
two separate wills, may be revoked. This necessarily follows from the
single instrument
be construed principle that “a testament is of force after men
are to be construed
independently of each are dead; otherwise it is of no strength at all
together.
other. while the testator lives.”
If the former will is a notarial will, it is not Governing Law in case of Revocation
required that the codicil be notarial in form as
well. The law only requires that a codicil be in 1. If the revocation takes place in the
the form of a will. It does not require that it be of Philippines, whether the testator is
the same kind as the will it is supplementing. domiciled in the Philippines or in some
What matters is that the codicil complies with other country – Philippine laws
the formalities required of a notarial will or
holographic will, as the case may be. 2. If the revocation takes place outside the
Philippines:
INCORPORATION BY REFERENCE
a. By a testator who is domiciled in the
Incorporation by reference is the Philippines – Philippine laws
incorporation of an extrinsic document or paper b. By a testator who is not domiciled in
into a will by reference so as to become a part this country:
thereof. - Laws of the place where the
will was made, or
Requisites of Incorporation by Reference - Laws of the place in which the
(EDIS) testator had his domicile at
the time of revocation. (NCC,
1. The document or paper referred to in the Art. 829)
will must be in Existence at the time of the
execution of the will; Revocation based on a false or illegal cause is
2. The will must clearly Describe and identify null and void
the same, stating among other things the
number of pages thereof; Requisites:
3. It must be Identified by clear and
satisfactory proof as the document or paper 1. The cause must be concrete, factual and not
referred to therein; and purely subjective.
4. It must be Signed by the testator and the 2. It must be false.
witnesses on each and every page, except in 3. The testator must not know of its falsity.
case of voluminous books of account or
inventories. (NCC, Art. 827)
325
Succession
incompatible, totally or partially, with the 4. Obliterating
prior will; and
4. The revoking will must be admitted to Requisites of Revocation by Physical Act of
probate. Destruction (OTAP)
The fact that the subsequent will is posterior and It may be performed by another person under
incompatible with the first does not mean that his express direction and in his presence. If the
the first is entirely revoked because the destruction done by a person other than the
revocation may be total or partial. Therefore, it testator is made not in his presence or not upon
is possible for a prior will to subsist with a his express direction, there is no revocation.
subsequent will even if they are incompatible.
Q: In 1919, Miguel executed a will. In the post
NOTE: In case of inconsistent wills, the mortem probate, there was a testimony to
subsequent will prevails over the prior will the effect that the will was in the testator’s
because it is the latest expression of possession in 1919, but it can no longer be
testamentary intent of the testator. found. Is the will revoked?
A revocation made in a subsequent will shall A: YES, the Doctrine of Presumed Revocation
take effect even if the new will should become applies. Where a will which cannot be found, is
inoperative by reason of the incapacity of the shown to have been in the possession of the
heirs, devisees or legatees designated therein, or testator when last seen, the presumption is, in
by their renunciation. (NCC, Art. 832) the absence of other competent evidence, that
the same was cancelled or destroyed. The same
Ways of Revocation by Physically Destroying presumption arises where it is shown that the
a Will (BTCO) testator had ready access to the will and it
cannot be found after his death. (Gago v.
1. Burning Mamuyac G.R. No. 26317, January 29, 1927)
2. Tearing
3. Cancelling
327
Succession
NOTE: Probate determines the extrinsic or There can be a valid will even if it contains only a
formal validity of a will only. provision for disinheritance or if only legacies
and devises are contained in the will even
Probate of a Holograhic Will though it does not contain an institution of heir,
or such institution should not comprise the
In the probate of a holographic will, it shall be entire estate, and even though the person so
necessary that at least one witness who knows instituted should not accept the inheritance or
the handwriting and signature of the testator should be incapacitated to succeed. (NCC, Art.
explicitly declare that the will and the signature 841)
are in the handwriting of the testator. If the will
is contested, at least three of such witnesses Requisites of a Valid Institution
shall be required.
1. The will must be extrinsically valid;
In the absence of any competent witness
referred to in the preceding paragraph, and if NOTE: The testator must have the
the court deem it necessary, expert testimony testamentary capacity to make the
may be resorted to. (NCC, Art. 811) institution.
Grounds for Disallowance of a Will (NCC, Art. 2. The institution must be intrinsically valid;
839) and
The will shall be disallowed in any of the NOTE: The legitime must not be impaired,
following cases: the person instituted must be identified or
identifiable, and there is no preterition.
1. If the formalities required by law have not
been complied with; 3. The institution must be effective.
2. If the testator was insane, or otherwise
mentally incapable of making a will, at the NOTE: No repudiation by the heir; testator
time of its execution; is not predeceased by the heir.
3. If it was executed through force or under
duress, or the influence of fear, or threats; Three Principles in the Institution of Heirs
4. If it was procured by undue and improper
pressure and influence, on the part of the 1. Equality – heirs who are instituted without
beneficiary or of some other person; a designation of shares inherit in equal
5. If the signature of the testator was procured parts.
by fraud; or
6. If the testator acted by mistake or did not NOTE: Applies only when the heirs are of
intend that the instrument he signed should the same class or same juridical condition
be his will at the time of affixing his and involves only the free portion.
signature thereto.
As between a compulsory heir and a
INSTITUTION OF HEIRS voluntary heir and they are instituted
without any designation of shares, the
Institution of heirs is an act by virtue of which legitime must first be respected and the free
a testator designates in his will the person or portion shall then be equally divided
persons who are to succeed him in his property between them.
and transmissible rights and obligations. (NCC,
Art. 840) 2. Individuality – heirs collectively instituted
are deemed individually instituted unless
Institution of heirs cannot be allowed to affect contrary intent is proven.
the legitimes of the compulsory heirs.
NOTE: Art. 847 of the NCC provides that
There can be an instituted heir only in when the testator institutes some heirs
testamentary succession. individually and others collectively as when
he says, “I designate my heirs A and B, and
the children or C,” those collectively
3. Simultaneity – when several heirs are 1. If the identity can become certain by some
instituted, they are instituted event or circumstance, the disposition is
simultaneously and not successively, unless valid. It is important, however, that the
the contrary is proved. event or circumstance must appear in the
will itself; it cannot be shown by extrinsic
Designation of Heir evidence, either oral or documentary.
2. A disposition in favor of a definite class or
Generally, an heir must be designated by his group of persons shall be valid.
name and surname. This rule, however, is not
mandatory. Even when the name of the heir has Evidence aliunde CANNOT be presented to
been omitted but the testator has designated the identify the unknown person. The determinate
heir in such a manner that there can be no doubt event or circumstance, sufficient to indicate with
as to who has been instituted, the institution is certainty the person whom the testator wants to
valid. favor, must appear in the will itself; it cannot be
shown by extrinsic evidence, either oral or
If two or more persons have the same names, documentary.
the testator must indicate some circumstance by
which the instituted heir may be known. If there is merely a latent ambiguity as to the
identity of the heir, extrinsic evidence other than
If the testator fails to mention any circumstance the oral declaration of the testator may be used,
regarding the heir instituted and there appears but if his identity is unknown, extrinsic evidence
to be several persons bearing the same name, is not allowed.
there is latent ambiguity and extrinsic evidence
other than the oral declaration of the testator as Effect if the institution of heir is based on a
to his intention is admissible to resolve the false cause
ambiguity.
GR: The institution of heir is valid. The false
A conceived child may be instituted, provided cause shall be considered simply as not written.
the conditions in Arts. 40 and 41 of NCC are
present. (Conceptus pro nato habetur) XPN: If from the will itself, it appears that the
testator would not have made the institution if
NOTE: A conceived child, although as yet he had known the falsity of the cause, the
unborn, has a limited and provisional institution shall be void.
personality. (Quimiguing v. Icao, G.R. No. 26795,
July 31, 1970) Its personality is essentially NOTE: The rule is, if the revocation is based on a
limited because it is only for purposes favorable false or illegal cause, it is null and void (NCC, Art.
to the child. (NCC, Art. 40) Its personality is 833) while institution of heir based on false
provisional because it depends upon the child cause as a general rule does not affect the
being born alive later under the following validity or efficacy of the institution. (NCC, Art.
conditions: 850)
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Succession
Condition is a future or uncertain event or a the latter’s ascendants or descendants, in which
past event unknown to the parties, upon which case, the condition is valid. (NCC, Art. 874)
the performance of an obligation depends.
If the prohibition is relative with respect to
Conditions, terms and modes are not presumed, persons, time or place, such conditions is valid
they must be clearly expressed in the will. The and must be complied with unless the testator
condition must fairly appear from the language renders it impossible for the heir to marry at all.
of the will. Otherwise, it shall be considered
pure. Disposition Captatoria is any disposition made
upon the condition that the heir shall make some
Kinds of Condition provision in his will in favor of the testator or of
any other person shall be void. (NCC, Art. 875)
RESOLUTORY SUSPENSIVE Here, both the condition and the disposition are
CONDITION CONDITION void but the validity of the other provisions,
The disposition becomes including the will itself, shall not be affected.
The effectivity of
effective upon the death
the disposition is Reason for the prohibition: Disposition captatoria
of the testator but is
suspended until the is incompatible with good faith and with the
extinguished upon the
fulfillment of the
happening of the nature of testaments; it is immoral and contrary
condition. to the freedom to make wills.
condition.
GR: The testator CANNOT impose any charge, 3. Once the condition is fulfilled, its effects
condition or substitution whatsoever upon the retroact to the moment of the death of the
legitimes. If a charge condition or substitution is testator.
imposed, it shall be considered as not imposed.
Reason: Capacity to succeed by the
XPN: Testator can validly impose a prohibition conditional heir must be determined both at
against the partition of the legitimes for a period the time of the death of the testator and at
not exceeding 20 years. the time of the fulfillment of the condition.
NOTE: The legitime passes by strict operation of 4. If the suspensive condition is not fulfilled,
law, independently of the testator’s will. As such, the estate will be placed under
any condition, burden, or substitution upon the administration until:
same is merely considered by law as not
imposed. (NCC, Art. 872) a. The condition is fulfilled, in which case
the estate should be given to the
Conditions on the Prohibition to Marry instituted heir;
GR: An absolute condition not to contract a first b. It becomes obvious that it cannot be
or subsequent marriage is not a valid condition fulfilled, in which case, the estate should
and shall be considered as not written. (NCC, Art. be given to the intestate heirs.
874). However, the validity of the disposition
itself shall not be affected. Negative potestative condition consists in the
non-performance of an act or not giving
XPN: If such condition was imposed on the something and he shall comply by giving a
widow or widower by the deceased spouse or by security that he will not do or give that which
has been prohibited by the testator. (NCC, Art.
331
Succession
A “mode” imposes an obligation upon the heir, Preterition is the omission in testator’s will of
devisee or legatee, but it does not affect the one, some or all of the compulsory heirs in the
efficacy of his rights to the succession. The direct line, whether living at the time of
mode obligates but does not suspend. execution of the will or born after the death of
the testator. (NCC, Art. 854) (1999, 2000, 2001,
Mode distinguished from a Condition 2008 BAR)
Obligates but does Suspends but does not 1. There is a total omission in the inheritance;
not suspend obligate
2. The person omitted is a compulsory heir in
In case of doubt, the institution should be the direct line;
considered as modal not conditional.
3. The omitted compulsory heir must survive
Q: The testatrix devised a parcel of land to the testator, or in case the compulsory heir
Dr. Rabadilla. It was provided that Dr. predeceased the testator, there is a right of
Rabadilla will acquire the property subject to representation; and
the obligation, until he dies, to give Maria
100 piculs of sugar, and in the event of non- 4. Nothing must have been received by the heir
fulfillment, the property will pass to the by gratuitous title.
nearest descendants of the testatrix.
A spouse CANNOT be preterited. While a spouse
When Dr. Rabadilla died, Maria filed a is a compulsory heir, he/she is not in the direct
complaint to reconvey the land alleging that line (ascending or descending).
the heirs of Dr. Rabadilla violated the
condition. Is the institution of Dr. Rabadilla, a NOTE: The surviving spouse shall only be
modal institution? entitled to recover his legitime but the
institution of heirs shall not be annulled.
A: YES. It it imposes a charge upon the instituted
heir without, however, affecting the efficacy of There is Total Omission when the heir:
such institution.
1. Receives nothing under the will whether as
In a modal institution, the testator states the heir, legatee, or devisee;
object of the institution, the purpose or
application of the property left by the testator, NOTE: If a compulsory heir is given a share
or the charge imposed by the testator upon the in the inheritance, no matter how small,
heir. A mode imposes an obligation upon the there is no preterition.
heir or legatee, but it does not affect the efficacy
of his rights to the succession. The condition However, if a compulsory heir gets less than
suspends but does not obligate; and the mode his legitime, while this is not a case of
obligates but does not suspend. (Rabadilla v. CA, preterition, he is entitled to a completion of
G.R. No. 113725, June 29, 2000) his legitime under Art. 906 of the NCC. His
remedy is found in Article 906 & 907of the
PRETERITION New Civil Code for the completion of his
legitime.
To constitute preterition, the omission must be 1. Legitimate children and descendants with
total and complete, such that nothing must be respect to their legitimate parents or
given to the compulsory heir. (Aznar v. Duncan, ascendants;
G.R. No. L-24365, June 30, 1966) 2. Legitimate parents of ascendants, with
respect to their legitimate children and
Effects of Preterition descendants;
3. Illegitimate children;
1. Preterition annuls the institution of heirs; 4. The father or mother of illegitimate children.
2. Devices and legacies are valid insofar as
they are not inofficious; Where the deceased left no descendants,
3. If the omitted compulsory heir dies before legitimate or illegitimate, but she left forced
the testator, the institution shall be effectual, heirs in the direct ascending line— her
without prejudice to the right of parents, and her holographic will does not
representation. explicitly disinherit them but simply omits
their names altogether, the case is one of
Example: X has two legitimate children: A preterition of the parents, not a case of
and B. X makes a will which results in the ineffective disinheritance. (Nuguid v. Nuguid, et
preterition of A. A predeceases X but leaves al., GR No. L-23445, June 23, 1966)
a legitimate child A-1, who is himself
completely omitted from the inheritance (A- Exclusion of an Heir in the Extrajudicial
1 being entitled to succeed X by Settlement of Estate
representation). There is preterition, not
because A was preterited but because A-1 Q: Virginia P. Viado died intestate in 1982.
was preterited. (Balane, 2010) In such case, Her part in the conjugal property was
the descendant of A, A-1, can now file an transmitted to her heirs—her husband Julian
action to annul the institution of heirs. and their children Nilo Viado, Rebecca Viado,
333
Succession
Leah Viado and Delia Viado. The inheritance, but only in so far as it heir receives nothing
which vested from the moment of death of prejudices the at all. There is total
the decedent, remained under a co- legitime of the person deprivation.
ownership regime among the heirs until disinherited.
partition. The heirs later on executed a deed
of extrajudicial settlement to the exclusion of Similarities
Delia Viado, alleged to be a retardate. Can
Delia Viado rescind the extrajudicial In both cases, the omitted heir and the
settlement among other heirs? imperfectly disinherited heir get at least their
legitimes.
A: NO. The exclusion of petitioner Delia Viado
Both legacies and devises remain valid insofar
from the deed of extrajudicial settlement verily
as the legitime has not been impaired.
has the effect of preterition. This kind of
preterition, however, in the absence of proof of
fraud and bad faith, does not justify a The mere fact that an heir was omitted in a
collateral attack on Transfer Certificate of will, does NOT automatically equate to
Title. The relief instead rests on Article 1104 of preterition.
the NCC to the effect that where the preterition
is not attended by bad faith and fraud, the One must distinguish whether the omission of a
partition shall not be rescinded but the forced heir in the will of the testator is by
preterited heir shall be paid the value of the mistake or in advertence or voluntary or
share pertaining to her. (Non v. Court of intentional:
Appeals, G.R. No. 137287, February 15, 2000)
1. If by mistake or inadvertence, there is true
Preterition and Defective Disinheritance preterition and total intestacy results.
2. If the omission is intentional, the effect
would be a defective disinheritance covered
DEFECTIVE
PRETERITION by Art. 918 of the NCC in which case the
DISINHERITANCE
institution of heir is not wholly void but only
Distinctions in so far as it prejudices the legitime of the
person disinherited.
A testamentary
disposition depriving Omission in the Effect of Preterition on the Will Itself
any compulsory heir testator’s will of the
of his share in the forced heirs or any of GR: The effect of annulling the institution of
legitime for a cause them. heirs will be, necessarily, the opening of a total
authorized by law. intestacy except that proper legacies and devises
must be respected. Here, the will is not
The institution of
The institution abrogated.
heirs is completely
remains valid, but
annulled. Hence, the
must be reduced XPN: If the will contains a universal institution
annulment is in toto,
insofar as the legitime of heirs to the entire inheritance of the testator,
unless there are in
has been impaired. the will is totally abrogated.
addition,
Such nullity of
testamentary
institution is limited Reason: The nullification of such institution of
dispositions in the
only to that portion of the universal heirs without any other
form of legacies and
which, the testamentary disposition in the will amounts to
devices which shall
disinherited heir has a declaration that nothing at all was written.
remain valid so long
been unlawfully
as they are not
deprived of. PREDECEASE, INCAPACITY, AND
inofficious.
REPUDIATION
The omission is By mere mistake or
intentional in which inadvertence Effect if the Heir Predeceases the Testator
case the institution of resulting in the fact
heir is not wholly void that the compulsory If the heir who predeceases the testator is a
voluntary heir, a devisee or a legatee, he shall
Effect if the Heir Repudiated or Renounced Representation only occurs in the direct
his Inheritance descending line and never in the ascending.
An heir who renounced his inheritance, whether In the direct collateral line, the right of
as compulsory or as voluntary heir, does not representation only takes place in favor of
transmit any right to his own heirs. children of brothers or sisters, whether full or
half-blood.
NOTE: An heir who repudiated his inheritance,
may represent the person whose inheritance he The representation obtains degree by degree,
has renounced. (NCC, Art. 976) and no jump is made.
The reason for this is found under Art. 971 of the Outline of Rules (Balane, 2016)
NCC: “the representative does not succeed the
person represented but the one whom the Disinh
Incapacit Renuncia
person represented would have succeeded. “ Death eritanc
y tion
e
RIGHT OF REPRESENTATION Compulsory Heir
1. TN 1. TN 1. TN 1. TN
Right of representation is the right created by 2. R 2. R 2. No R 2. R
fiction of law, by virtue of which, the Voluntary Heir
representative is raised to the place and degree Not
1. TN 1. TN 1. TN
of the person represented, and acquires the applica
2. No R 2. No R 2. No R
rights which the latter would have if he were ble
living or if he could have inherited. (NCC, Art. Legal Heir
970) Not
1. TN 1. TN 1. TN
applica
2. R 2. R 2. No R
The representative thereby steps into the shoes ble
of the person he represents and succeeds, not
from the latter, but from the person whose TN = Transmit Nothing
estate the person represented would have R = Representation
succeeded.
COMPLETION OF THE LEGITIME
The right of representation is allowed in
compulsory succession with respect to the Any compulsory heir to whom the testator has
legitime, in case the compulsory heir in the left by any title less than the legitime belonging
descending line dies before the testator or to him may demand that the same be fully
becomes incapacitated to succeed. satisfied. (NCC, Art. 906) (2001, 2010 BAR)
Heirs who repudiated their share MAY NOT be NOTE: Testamentary dispositions that impair or
represented. A voluntary heir MAY NOT also be diminish the legitime of the compulsory heirs
represented. shall be reduced on petition of the same, insofar
as they may be inofficious or excessive. (NCC,
Rules in case of representation Art. 907)
It shall take place in cases of: If the testator has instituted only one heir, and
the institution is limited to an aliquot part of the
a. Death inheritance - legal succession takes place with
b. Incapacity respect to the remainder of the estate. (NCC, Art.
c. Disinheritance 851)
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Succession
If the testator instituted several heirs as sole GR: The substitute shall be subject to the
heirs but allotted only an aliquot part of the same charges and conditions imposed upon
inheritance and together, they do not cover the the instituted heir.
whole inheritance, or the whole free portion -
each part shall be increased proportionately. XPNs:
(NCC, Art. 852)
a. If the testator has expressly
If each of the instituted heirs has been given an provided the contrary
aliquot part of the inheritance and the parts b. If the charges or conditions are
together exceed the whole inheritance, or the personally applicable only to the
whole free portion, as the case may be - each heir instituted. (NCC, Art 862)
part shall be reduced proportionately. (NCC, Art.
853) 4. Fideicommissary Substitution (Indirect
Substitution)– It is a substitution by virtue of
SUBSTITUTION OF HEIRS which the fiduciary or first heir instituted is
entrusted with the obligation to preserve
Substitution is the appointment of another heir and to transmit to a second heir the whole
so that he may enter into the inheritance in or part of the inheritance. It shall be valid
default of the heir originally instituted. (NCC, Art provided such substitution does not go
8570) (2002 BAR) beyond one degree from the heir originally
instituted, and provided further, that the
The concept of substitution applies in cases if fiduciary or first heir and the second heir
the heir or heirs instituted should die before the are living at the time of the death of the
testator or should not wish, or should be testator. (NCC, Art. 863) (2002, 2008 BAR)
incapacitated to accept the inheritance.
Parties to a Fideicommissary Substitution
If the Substitute Dies Ahead of the Testator and their Obligations
The fideicommissary inherits not from the first GR: The fiduciary should deliver the property
heir but from the testator, thus, the requirement intact and undiminished to the fideicommissary
that the fideicommissary be alive or at least heir upon arrival of the period.
conceived at the time of the testator’s death.
XPN: The only deductions allowed, in the
Effect if the fideicommissary predeceases the absence of a contrary provision in the will are:
fiduciary
1. Legitimate expenses
If the fideicommissary predeceases the fiduciary, 2. Credits
but survives the testator, his rights pass to his 3. Improvements
own heirs.
The coverage of legitimate expenses and
NOTE: The first heir receives property, either improvements are limited to necessary and
upon the death of the testator or upon the useful expenses, but not to ornamental expenses.
fulfillment of any suspensive condition imposed
by the will. Distinctions between a fiduciary in
fideicommissary substitution and a trustee in
The first heir is almost like a usufructuary with a trust
right to enjoy the property. Thus, like a
usufructuary, he cannot alienate the property. FIDUCIARY TRUSTEE
The first heir is also obliged to make an May be designated
inventory, but he is not required to furnish a either expressly by
bond. Can only be
acts inter vivos or
designated expressly
mortis causa or
by means of a will
Alienation of the property subject to the impliedly by
fideicommissary substitution by the first heir operation of law
Has no usufructuary
Entitled to all of the
Alienation of the property subject to the right over the
fideicommissary substitution by the first heir is rights of a
property which he
not valid. The fiduciary cannot alienate the usufructuary
holds in trust
property either by an act inter vivos or mortis May alienate his right
causa. He is bound to preserve the property and of usufruct but always Cannot alienate
transmit it to the second heir or subject to his anything whatsoever
fideicommissary. obligation of
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Succession
preserving and temporary one, beyond the limit fixed in Art.
transmitting the object 863 of the NCC (20 years). (NCC, Art.870)
to a second heir 3. Those which impose upon the heir the
Fiduciary carries out charge of paying to various persons
not another’s wishes successively, beyond the limit prescribed in
but his own and he Art. 863 of the NCC, a certain income or
Obligation is broader pension.
enjoys the use and the
because it extends
fruits unlike a trustee 4. Those which leave to a person the whole or
not only to the part of the hereditary property in order that
(he is like a
properties but also to he may apply or invest the same according
usufructuary). (Perez
the fruits
v. Gachitorena, G.R. No. to secret instructions communicated to him
L-31703, February 13, by the testator.
1930)
The nullity of the fideicommissary substitution
Express obligation to preserve and transmit DOES NOT prejudice the validity of the
the property institution of the heirs first designated; the
fideicommissary clause shall simply be
The obligation to preserve and transmit must be considered as not written. (NCC, Art. 868)
given clearly and expressly:
Q: Raymond, single, named his sister Ruffa in
1. by giving it a name “fideicommissary his will as a devisee of a parcel of land which
substitution” or he owned. The will imposed upon Ruffa the
obligation of preserving the land and
2. by imposing upon the first heir the absolute transferring it, upon her death, to her
obligation to preserve and deliver the illegitimate daughter Scarlet who was then
property to the second heir. only one year old. Raymond later died,
leaving behind his widowed mother, Ruffa
Remedy of the fideicommissary to protect and Scarlet.
himself against alienation to an innocent
third person a. Is the condition imposed upon Ruffa to
preserve the property and to transmit it
If the first heir was able to register the property upon her death to Scarlet, valid?
in his name, the fideicommissary should annotate b. If Scarlet predeceases Ruffa, who inherits
his claim on the land on the title to protect the property?
himself against any alienation in favor of c. If Ruffa predeceases Raymond, can Scarlet
innocent third parties. inherit the property directly from
Raymond? (2008 BAR)
When the property passes to the
fideicommissary, there is no more prohibition to A:
alienate. a. When an obligation to preserve and
transmit the property to Scarlet was
If the testator gives the usufruct to different imposed on Ruffa, the testator Raymond
persons successively, the provisions on intended to create a fideicommissary
fideicommissary substitution also apply. substitution where Ruffa is the fiduciary
and Scarlet is the fideicommissary. Having
Different dispositions related or analogous to complied with the requirements of Art. 863
fideicommissary substitutions which the law and 869 of the NCC, the fideicommissary
considers as void (NCC, Art. 867) substitution is valid.
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Succession
The devisee entitled to a legitime may retain A: NO, the provision is not valid. At first glance,
the entire property, provided its value does the provision may appear valid as it provides for
not exceed that of the disposable portion the transfer of title in favor of Alex and Rene
and of the share pertaining to him as over the parcel of land. A legacy or devise is to
legitime. (NCC, Art. 912 par. 2) be construed as a donation effective mortis
causa, and it is intended to transfer ownership to
NOTE: If the heirs or devisees do not choose the legatee or devisee. Since the ownership is
to avail themselves of the right granted by legally transferred to the Alex and Rene, they
the preceding article, any heir or devisee cannot be prohibited by the testator from
who did not have such right may exercise it; alienating or partitioning the same perpetually.
should the latter not make use of it, the The dispositions of the testator declaring all or
property shall be sold at public auction at part of the estate inalienable for more than
the instance of any one of the interested twenty years are void. (NCC, Art. 870)
parties. (NCC, Art. 913)
Rules governing succession in the direct
The testator may devise and bequeath the free descending line
portion as he may deem fit. (NCC, Art. 914)
1. Rule on preference between lines–
RULES ON LEGITIME descending line is preferred over the
ascending line;
There is no obligation on the compulsory heirs 2. Rule on proximity– the nearer excludes the
to accept their legitimes. more remote;
3. Right on representation, in case of
GR: The testator cannot deprive the compulsory predecease, incapacity and disinheritance;
heirs of their legitimes. 4. If all the legitimate children repudiate their
legitimes, the next generation of legitimate
XPN: descendants, succeed in their own right.
1. When the testator validly disinherited his Rules governing succession in the ascending
heir. (NCC, Art. 915) line
2. When the partition of the hereditary estate
for a period not exceeding twenty (20) years 1. Rule of proximity– the nearer excludes the
is expressly forbidden by the testator. (NCC, more remote
Art. 1083) 2. Division by line
3. Equal division within the line
NOTE: Only the legitime is reserved. The free
portion may be disposed of by will. Limitations on the Testator’s Rights of
Ownership
Q: Crispin died testate and was survived by
Alex and Josine, his children from his first The testator CANNOT make donations inter
wife; Rene and Ruby, his children from his vivos which upon the legitime or which are
second wife; and Allan, Bea, and Cheska, his inofficious.
children from his third wife. One important
provision in his will reads as follows: NOTE: The prohibition does not cover an
onerous disposition (sale) because this involves
"Ang lupa at bahay-sa-Lungsod ng Maynila ay an exchange of values.
ililipat at ilalagay sa pangalan nila Alex at
Rene hindi bilang pamana ko sa kanila kundi Rules on the donations made by the testator
upang pamahalaan at pangalagaan lamang in favor of his children, legitimate and
nila at nang ang sinuman sa aking mga anak, illegitimate, and strangers and those which
sampung apo at kaapuapuhan ko sa habang are inofficious:
panahon, ay may tutuluyan kung magnanais
na mag-aral sa Maynila o sa kalapit na mga 1. Donations given to children shall be charged
lungsod." Is the provision valid? (2008, 2014 to their legitimes. (NCC, Art. 909 par. 1)
BAR) 2. Donations made to strangers shall be
charged to that part of the estate of which
341
Succession
children portions) themselves.
Illegitimate children
= ½ of the share of each CONCURRENCE AMONG CONCURRING
legitimate child (if the free COMPULSORY HEIRS
portion is insufficient, the
illegitimate children shall Surviving spouse
divide the free portion equally Surviving = 1/3 of the hereditary estate
among themselves) spouse and
illegitimate Illegitimate children
Free portion children = 1/3 of the hereditary estate.
= whatever remains (Rabuya, 2009)
Legitimate child
= ½ of the hereditary estate SECONDARY HEIRS CONCUR WITH
COMPULSORY HEIRS
Surviving spouse
Legitimate parents
= ¼ of the hereditary estate
= ½ of the hereditary estate.
Legitimate
Illegitimate children parents and
Surviving spouse
= ½ of the share of each surviving
One = ¼ of the hereditary estate
legitimate child spouse (1999
legitimate
BAR)
child, the Free portion
Free portion
surviving =¼
= whatever remains
spouse, and
illegitimate Legitimate parents
NOTE: The share of the = ½ of the hereditary estate
children
surviving spouse shall have
preference over those of the Legitimate
Illegitimate children
illegitimate children whose parents and
= ¼ of the hereditary estate
share may suffer reduction pro illegitimate
in equal shares
rata because there is no children
preference as among Free portion
themselves. =¼
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Succession
5. If the legitime is impaired, the following The following are Compulsory Heirs (2003,
reductions shall be made: 2005, 2006, 2008 BAR)
a. First, reduce pro rata the non-preferred 1. Legitimate children and descendants, with
legacies and devices, and the respect to their legitimate parents and
testamentary dispositions. ascendants;
b. Second, reduce pro rata the preferred 2. In default of the foregoing, legitimate
legacies and devises. parents and ascendants, with respect to
c. Third, reduce the donations inter vivos their legitimate children and descendants;
according to the inverse order of their 3. The widow or widower;
dates. 4. Acknowledged natural children, and natural
children by legal fiction;
Order of preference in reducing 5. Other illegitimate children referred to in
testamentary dispositions and Article 287.
donations
Compulsory heirs mentioned in Nos. 3, 4, and 5
1. Reduce pro rata the non- are not excluded by those in Nos. 1 and 2;
preferred legacies and devises neither do they exclude one another. In all cases
(NCC, Art.911, par.2), and the of illegitimate children, their filiation must be
testamentary dispositions that duly proved. The father or mother of illegitimate
impairs or diminish the children of the three classes mentioned shall
legitime of the compulsory inherit from them in the manner and to the
heirs. (NCC, Art. 907) Among extent established by this Code. (NCC, Art. 887)
these legacies, devises, and
testamentary dispositions, Classifications of Compulsory Heirs
there is no preference.
1. Primary – They are not excluded by the
NOTE: Preferred legacies and presence of other compulsory heirs and
devises are those directed by have precedence over and exclude other
testator to be preferred than compulsory heirs. E.g. legitimate children
the others. and / or descendants.
2. Reduce pro rata the preferred 2. Secondary – Those who succeed only in
legacies and devises. (NCC, Art. default of the primary compulsory heirs.
911, last par.) E.g. legitimate parents and/ or legitimate
ascendants; illegitimate parents.
3. Reduce the donations inter
vivos according to the inverse 3. Concurring – Those who succeed together
order of their dates (i.e., the with the primary or secondary compulsory
oldest is the most preferred). heirs. E.g. Surviving spouse and illegitimate
(NCC, Art. 773) children and descendants.
Prior to the marriage of the parents of the child, Surviving spouse NOT a compulsory heir of
he is an illegitimate child since he is born outside her parent-in-law
a valid marriage.
Neither is a widow (surviving spouse) a
Legitimation takes place upon the marriage of compulsory heir of her parent-in-law in
the child’s parents, the marriage being valid or at accordance with the provisions of Article 887 of
least voidable, the child is automatically raised the Civil Code. The aforesaid provision of law
to the status of legitimacy, without need of any refers to the estate of the deceased spouse in
additional act on the part of either the child or which case the surviving spouse (widow or
the parents. Children conceived and born widower) is a compulsory heir. It does not apply
outside of wedlock of parents who, at the time of to the estate of a parent in law. Indeed, the
the conception of the former, were not surviving spouse is considered a third person as
disqualified by any impediment to marry each regards the estate of the parent-in-law. (Rosales
other, or were so disqualified only because v. Rosales, GR No. L-40789 February 27, 1987)
either or both of them were below eighteen (18)
years of age, may be legitimated. (FC, Art. 177 as Q: Ramon Mayaman died intestate, leaving a
amended by R.A. 9858) For purposes of net estate of P10, 000, 000.00. Determine
succession, the opening of succession must
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Succession
how much each heir will receive from the Adette is well-off, he wants to leave to his
estate: illegitimate child as much of his estate as he
can legally do. His estate has an aggregate net
(a) If Ramon is survived by his wife, three amount of P1, 200, 000.00, and all the above-
full-blood brothers, two half-brothers, named relatives are still living. Emil now
and one nephew (the son of a deceased comes to you for advice in making a will. How
full-blooad brother)? Explain. will you distribute his estate according to his
wishes without violating the law on
A: Having died intestate, the estate of Ramon testamentary succession? (2005 BAR)
shall be inherited by his wife and his full and half
blood siblings or their respective A: In his will, Emil should give his compulsory
representatives. In intestacy, if the wife concurs heirs just their respective legitimes and give all
with no one but the sibling of the husband, all of of the free portion to his illegitimate child in
them are the intestate heirs of the deceased addition to the said child’s legitime. He should
husband. The wife will receive half of the divide his estate in his will as follows :
intestate estate, while the siblings or their
respective representatives, will inherit the other Tom – P200, 000 (legitime)
half to be divided among them equally. If some Henry – P200, 000 (legitime)
siblings are of the full-blood and the others of Warlito – P200, 000 (legitime)
the half-blood, a half blood sibling will receive Adette – P200, 000 (legitime)
half of the share of a full-blood sibling. Ramon – P400, 000 (P100, 000 as
legitime and P300, 000 as free portion).
1. The wife of Ramon will, therefore, receive (UPLC, p. 139)
one half of the estate or the amount of P5,
000, 000.00; Q: Andres and Pedro are the owners Lot
2. The three (3) full-blood brothers, will, 2535. Pedro sold to Faustina his portion of
therefore, receive P1, 000, 000.00 each; the subject land as evidenced by a notarized
3. The nephew will receive P1, 000, 000.00 by Deed of Sale. After the death of Faustina and
right of representation; her husband, their heirs executed a
4. The two (2) half-brothers will receive P500, notarized Extra-Judicial Declaration of Heirs
000.00 each. and Deed of Absolute Sale. Lot 2535
consisting of "1,000 square meters, more or
(b) If Ramon is survived by his wife, a half- less," was conveyed to one of their heirs,
sister, and three nephews (sons of a Alejandra. Alejandra sold the land through a
deceased full-blood brother)? Explain. Deed of Absolute Sale to Edith N. Deen, who
(2009 BAR) in turn sold it to Atty. Eddy A. Deen. Upon
Atty. Deen's death, an extra-judicial
A : The wife will receive one half of the estate or settlement of estate, which did not include
P5, 000, 000.00. The other half shall be inherited Lot 2535, was executed by his heirs. Later,
by (1) the full-blood brother, represented by his they executed an Additional Extra-Judicial
3 children, and (2) the half-sister. They will Settlement with Absolute Deed of Sale, which
divide that other half between them such that sold the land to Norberto, who took
the share of the half-sister is just half of the possession of and built a house on it.
share of the full-blood brother. The share of the Norberto then died without a will and was
full-blood brother shall in turn be inherited by succeeded by his niece and only heir, Lolita.
the three (3) nephews in equal shares by right of Subsequently, Lolita learned that a Transfer
representation. Therefore, the three (3) Certificate of Title was issued in the names of
nephews will receive P1, 111, 111.10 each and Andres and Pedro on the basis of a
the half-sister will receive the sum of P1, 666, reconstituted Deed of Conveyance. Lolita
666.60. (UPLC p. 39) sought to register her portion in Lot 2535 but
was denied by the Register of Deeds, citing
Q: Emil, the testator, has three legitimate the need for a court order. Lolita then filed a
children: Tom, Henry, and Warlito; a wife for the cancellation of the titles. After trial,
named Adette; parents named Pepe and the Regional Trial Court ruled in favor of
Pilar; an illegitimate child, Ramon; brother, Lolita. On appeal, the Court of Appeals
Mark; and a sister, Nanette. Since his wife reversed the Regional Trial Court Decision
RESERVA TRONCAL
Reserva Troncal
347
Succession
prepositus, had previously acquired the property 3. Accidental Loss of all the reservable
by gratuitous title from another ascendant, his properties
grandfather, GF, who is the origin of the said 4. Renunciation or waiver by all the
property; and in the third place, the descendant reservatarios provided that no other
had died without any legitimate issue in the reservatario is born subsequently
direct descending line who could inherit from 5. Registration under Act 496 without the
him. Consequently, from the time of the death of reservable character being annotated if it
the descendant-prepositus, P, in 1960, the falls into the hands of a buyer in good faith
ascendant, M, who acquired the property, is for value
obliged to reserve it for the benefit of relatives of 6. By Prescription – reservista seeks to acquire
the prepositus who are within the third degree (30 years – immovable; 8 years- movable)
and who belong to the line from which the said 7. Confusion or merger of rights, as when the
property came. reservatarios acquire the reservista’s right
by a contract inter vivos.
This reservable character of the property will, as
a rule, terminate upon the death of the Reserva Minima vs. Reserva Maxima
ascendant-reservista. Thus, if we extend the
example by presupposing that M died in 1977, A RESERVA MINIMA RESERVA MAXIMA
and B, uncles of the prepositus, P, in the paternal
line, can claim the property as their own in All of the properties
accordance with the provision of Art. 891 of the which the descendant
Code. (Jurado, 2009) All of the properties
had previously
which the descendant
acquired by gratuitous
Prelimary Rules in Reserva Troncal had previously
title from another
acquired by gratuitous
ascendant or from a
1. No inquiry should be made beyond the title from another
brother or sister must
ascendant or from a
Mediate Source or the Origin. He is the first be considered as
party in the scheme of the Reserva Troncal. brother or sister must
passing to the
2. All of the relationships must be legitimate be included in the
ascendant- reservista
becuase of the rationale behind Reserva ascendants legitime
partly by operation of
Troncal. insofar as such
law and partly by force
legitime can contain.
of the descendant’s
Process in Reserva Troncal will.
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Succession
reservista’s ownership of the property is Rights and Obligation of Parties
terminated.
1. To inventory the reserved properties
Resolutory condition: If at the time of the 2. To annotate the reserved character when it
reservista’s death, there still exist relatives comes to movable in the Registry of
within the third degree (reservatarios) of the Property within 90 days from the
prepositus and belonging to the line from acceptance of the Reservista.
which the property came. 3. To appraise movables
4. To secure by means of mortgage :
NOTE: The reservable property is not part a. Indemnity for any deterioiration or
of the estate of the reservista. damage to the property by the
Reservista’s fault or negligence
The reservista can alienate the property. b. Payment of the value of such
Unlike in fideicommissary substitution reserved movables that may have
where the fiduciary heir cannot alienate the been alienated by the Reservista
property because he is merely considered a
usufruct, the reservista can alienate the Persons Qualified as Reservatarios
property being the owner thereof but
subject to the reservation. 1. First degree relatives — This can only
refer to the legitimate father or mother of
GR: The reservista is required to furnish a the descendant-prepositus, since it is evident
bond, security or mortgage to guarantee the that when an ascendant inherits from a
safe delivery later on to the reservatarios of descendant either as a compulsory heir or as
the properties concerned, in the proper an intestate heir, it is because the
cases. descendant has no legitimate descendants of
his own, or, if he has, they cannot inherit
XPN: The bond, security or mortgage is not from him because of disinheritance,
needed when the property has been incapacity or repudiation.
registered or annotated in the certificate of
title as subject to reserva troncal. 2. Second degree relatives — This can only
refer to the grandparents as well as to the
NOTE: Upon the reservista’s death the brothers and sisters of the full or half- blood
ownership of the reserved properties is of the descendant-prepositus belonging to
automatically vested to the reservatarios the line from which the reservable property
who are alive. Hence, the reservista cannot came.
dispose the reserved property by will if
there are reservatarios existing at the time of 3. Third degree relatives – This can only
his death. refer to the great-grandparents, uncles or
aunts (brothers and sisters of the full or
4. Reservatario half-blood of the prepositus’ father or
mother), and nephews or nieces (children of
The reservatarios are relatives within the the prepositus’ brothers or sisters of the full
third degree of the prepositus, who belong to or half-blood) belonging to the line from
the same line from which the property which the reservable property came.
originally came from who will become the (Jurado, 2009)
full owners of the property the moment the
reservista dies, because by such death, the Q: Does the reserva mentioned in Art. 891 of
reserva is extinguished. the Civil Code apply in favor of all the
relatives within the 3rd degree belonging to
NOTE: It is further required that the the line from which the property came,
reservatario should be related by blood not whether they be legitimate or illegitimate ?
only from the prepositus but also to the
other descendant, or brother, or sister, from A: The reserva favors only the legitimate
whom the property came. Only then can he relatives. (Nieva v Alcala, G.R. No. L-
be considered as belonging to the “line from 13386, October 27, 1920) and even then,
which the property came.” preference is given to the direct line as against
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Succession
if these requirements are not complied with. The only way in which a compulsory heir can be
(Jurado, 2009) deprived of his legitime is through valid
disinheritance. It can be effected only through a
NOTE: If the reservista has no cash when he dies, will wherein the legal cause therefor shall be
and the reservable property is money the specified. (NCC, Art. 916)
reserves can either:
Disinheritance is not automatic
1. Select equivalent property from the estate;
or There must be evidence presented to
2. Demand the sale of sufficient property so substantiate the disinheritance and must be for a
that cash may be obtained. (Paras, 2016) valid and sound cause.
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Succession
the person disinherited; but the devises and Reason: Nemo dat quod non habet. You
legacies and other testamentary dispositions cannot give what you don’t have.
shall be valid to such extent as will not impair
the legitime. (NCC, Art. 918) XPN: If subsequent to the making of the
disposition, the thing is acquire by the
Reconciliation testator onerously or gratuitously, such
disposition is validated.
Reconciliation exists when two persons who are
at odds decide to set aside their differences and 2. The testator knows that he does not own but
to resume their relations. They need not go back ordered its acquisition
to their old relation. In order to be effective, the
testator must pardon the disinherited heir. The If the thing given as devise or legacy is not
pardon whether express or tacit, must refer owned by the testator at the time he made
specifically to the heir disinherited and to the the will but he orders his estate to acquire it,
acts he has committed, and must be accepted by it is a valid legacy or devise. The testator
such heir. In disinheritance, reconciliation need knew that he did not own it. There is no
not be in writing. mistake.
GR: The pledge or mortgage must be paid by the 1. The estate is insufficient to cover all devises
estate. (NCC, Art. 934) or legacies ; and
2. When the reason for the reduction is not the
XPN: If the testator provides otherwise. impairment of legitimes. (e.g., there are no
However, any other charge such as easements legitimes because there are no compulsory
and usufruct, with which the thing bequeathed is heirs or the legitimes have already been
burdened, shall be respected by the legatee or satisfied through donations inter vivos).
devisee. (NCC. Art 934, par. 3 & Art. 946) (Balane, 2016)
A legacy of credit takes place when the testator Distinction between Art. 911 and Art. 950
bequeaths to another a credit against a third
person. In effect, it is a novation of the credit by ART. 911, NCC ART. 950, NCC
the subrogation of the legatee in the place of the ORDER OF PREFERENCE
original creditor. 1. Remuneratory
legacies or
A legacy of remission is a testamentary LDPO: devises;
disposition of a debt in favor of the debtor. The 1. Legitime of 2. Preferential
legacy is valid only to the extent of the amount of compulsory legacies or
the credit existing at the time of the testator's heirs; devises;
death. In effect, the debt is extinguished. 2. Donations inter 3. Legacy for
vivos; support;
A legacy of credit or remission: 3. Preferential 4. Legacy for
legacies or education;
1. Applies only to amount still unpaid at the devises; 5. Legacies or
time of the testator’s death (NCC. Art. 935); 4. All Other devises of a
legacies or specific,
2. Revoked if the testator subsequently sues devises pro determinate thing
the debtor for collection (NCC, Art. 936) rata which forms a
3. If generic, applies only to those existing at part of the estate;
the time of the execution of the will, unless 6. All others pro
otherwise provided. (NCC, Art. 793 & 937) rata
(Balane, 2016) WHEN APPLIED
Article 911 will
GR: A legacy or devise to a creditor shall not be Article 950 will apply
apply if the
applied to his credit. (NCC, Art. 938) if the reason for
reductions have to
reduction is not the
be made because
XPN: It will be imputed to the debt if the testator impairment of
the legitimes have
so provides. In such case, if the debt exceeds the legitimes.
been impaired
legacy or devise, the excess may be demanded as
an obligation of the estate. (Ibid.) NOTE: Article 911 will apply if the reductions
have to be made because the legitimes have
Order of Payment of Legacies and Devises been impaired. Article 950 will apply if the
reason for reduction is not the impairment of
1. Remuneratory legacies or devises legitimes.
2. Legacies or devises declared by testator to
be preferential Grounds for the revocation of legacy or
3. Legacies for support devise
4. Legacies for education
5. Legacies or devises of a specific determinate 1. Transformation of the thing in such a
thing which forms part of the estate manner that it does not retain either the
6. All others pro rata (NCC, Art. 950) form or the denomination it had;
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Succession
2. Alienation of the thing bequeathed or any 1. Institution of an heir (bequest, in case of
part thereof. In the latter case, the legacy or legacies or devises)
devise shall be without effect only with 2. Substitution, if proper
respect to the part alienated. (NCC, Art. 957) 3. Representation, if applicable
4. Accretion, if applicable
GR: The alienation revokes the 5. Intestacy, if all of the above are not
legacy/devise, even if for any reason, the applicable
thing reverts to the testator.
Legal or Intestate succession takes place
XPN: when:
a. If the reversion is caused by the
annulment of the alienation and the 1. There is no will, the will is void, or the will is
cause for the annulment was vitiation of revoked;
consent on the grantor’s part, either by 2. The will does not institute an heir to, or
reason of incapacity or of duress. dispose of all the property of the testator
(Fernandez v. Dimagiba, G.R. No. L- (partial intestacy);
23638, October 12, 1967) 3. The suspensive condition attached to the
b. If the reversion is by virtue of inheritance does not happen or is not
redemption in a sale with pacto de fulfilled;
retro. (NCC, Art. 957) 4. The heir predeceased the testator or
repudiates the inheritance, and no
3. Total loss of the thing bequeathed. (Ibid.) substitution and no right of accretion take
place.
This will be a cause for revocation only if it 5. The heir instituted is incapacitated to
takes place before the testator’s death. A succeed.
fortuitous loss after the testator’s death will
simply be an instance of “res perit domino” NOTE: The enumeration is not exclusive; there
and will be borne by the legatee/devisee. are other causes for intestacy which are not
included in the enumeration.
Reason: The loss shall be borne by the
legatee/devisee because the transmission of Example:
ownership retroacts to the time of the death
of the testator. 1. Preterition;
2. Arrival of the resolutory term or period;
4. If the legacy is a credit against a third person 3. Fulfillment of a resolutory condition
or the remission of a debt, and the testator, attached to the inheritance;
subsequent to the making of the will, brings 4. Non-compliance or impossibility of
an action against the debtor for payment. complying with the will of the testator.
(NCC, Art. 936)
Rules on Exclusion and Concurrence in
LEGAL OR INTESTATE SUCCESSION Intestate Succession (Balane, 2016)
357
Succession
NOTE: In the ascending line, only the Legitimate
illegitimate parents are entitled to inherit children The whole estate, each
from the illegitimate child; the other and illegitimate child getting ½
illegitimate descendants are not so entitled. Illegitimate share of one legitimate child
children
4. In default of children or descendants, Legitimate
The whole estate, divided
legitimate or illegitimate, and illegitimate children
equally (the surviving spouse
parents, the surviving spouse shall inherit and
counted as one legitimate
the entire estate. But if the surviving spouse surviving
child)
should survive with brothers and sisters, spouse
nephews and nieces, the surviving spouse Legitimate The whole estate, the
shall inherit one-half of the estate, and the Children, surviving spouse being
latter the other half. The brothers and surviving counted as one legitimate
sisters must be by illegitimate filiation; spouse and child and each illegitimate
otherwise, the Iron Curtain Rule shall apply. illegitimate child getting ½ share of one
children legitimate child
5. Although the law is silent, illegitimate Legitimate
brothers and sisters who survive alone shall The whole estate, divided
parents
get the entire inheritance. The legitimate equally
alone
children of the illegitimate parents are not Legitimate
entitled to inherit from the illegitimate child ascendants The whole estate, observing in
by virtue of Article 992 of the NCC. (other than proper cases, the rule of
parents) division by line
6. The State. (Id. at 691-692) alone
Legitimate Legitimate parents
Q: Bert and Joe, both male and single, lived parents = ½ of the estate
together as common law spouses and agreed and
to raise a son of Bert's living brother as their illegitimate Illegitimate children
child without legally adopting him. Bert children = ½ of the estate
worked while Joe took care of their home and Legitimate Legitimate parents
the boy. In their 20 years of cohabitation they parents = ½ of the estate
were able to acquire real estate assets and
registered in their names as co-owners. surviving Surviving spouse
Unfortunately, Bert died of cardiac arrest, spouse = ½ of the estate
leaving no will. Bert was survived by his Legitimate parents
biological siblings, Joe, and the boy. What are Legitimate = ½ of the estate
the successional rights of the boy Bert Joe parents,
and raised as their son? (2015 BAR) surviving Surviving spouse
spouse and = ¼ of the estate
A : Neither of the two will inherit from Bert. Joe illegitimate
cannot inherit because the law does not children Illegitimate children
recognize the right of a stranger to inherit from = ¼ of the estate
the decedent in the absence of a will. Their Illegitimate
cohabitation will not vest Joe the right to inherit The whole estate, divided
children
from Bert. The child will likewise not inherit equally
alone
from Bert because of the lack of formal adoption Illegitimate Illegitimate children
of the child. A mere ward or “ampon” has no children = ½ of the estate
right to inherit from the adopting parents. and
(Manuel v. Ferrer, G.R. No. 117246, August 21, surviving Surviving spouse
1995) spouse = ½ of the estate
TABLE OF INTESTATE SHARES Surviving
The whole estate
spouse
Legitimate alone
The whole estate divided
Children Surviving No article governing, but Art.
equally
alone spouse and 997 may be applied by
359
Succession
RIGHT OF REPRESENTATION In the collateral line, it takes place only in favor
of the children of brothers or sisters, whether
Representation is a right created by fiction of they are full or half blood. (NCC, Art. 972)
law, by virtue of which the representative is
raised to the place and degree of the person NOTE: This rule applies only when the decedent
represented, and acquires the rights which the does not have descendants. Also, an illegitimate
latter would have if he were living or could have child can represent his father, provided that the
inherited. (NCC, Art. 970) father was also illegitimate.
In order that representation may take place, it is An illegitimate sibling of the decedent can be
necessary that the representative himself be represented. An illegitimate brother or sister of
capable of succeeding the decedent. (NCC, Art. the deceased can be represented by his children,
973) without prejudice to the application of the Iron
Curtain Rule. (Tolentino, Civil Code, 1992 ed.)
Effect of Representation
The right of representation does NOT apply to
Whenever there is succession by representation, adopted children. The right of representation
the division of the estate shall be made per cannot be invoked by adopted children because
stirpes, in such manner that the representative they cannot represent their adopting parents to
or representatives shall not inherit more than the inheritance of the latter’s parents.
what the person they represent would inherit, if
he were living or could inherit. (NCC, Art. 974) Reason: The right of representation cannot be
invoked by adopted children because the legal
NOTE: Per stirpes means inheritance by group, relationship created by adoption is strictly
all those within the group inheriting in equal between the adopter and the adopted. It does
shares. not extend to the relatives of either party.
Right of representation arise because of NOTE: Under R.A. No. 8552 or the Domestic
Adoption Law, the adopted child and the
1. Predecease ; adopting parents have reciprocal successional
2. Incapacity or unworthiness; or rights.
3. Disinheritance.
Rule on Equal Division of Lines
When Right of Representation is NOT
AVAILABLE: GR: Intestate heirs equal in degree inherit in
equal shares. (NCC, Art. 962)
1. As to compulsory heirs: In case of
repudiation, the one who repudiates his XPNs:
inheritance cannot be represented. Their
own heirs inherit in their own right. a. In the ascending line, the rule of division by
line is ½ to the maternal line and ½ to the
2. As to voluntary heirs: Voluntary heirs, paternal line, and within each line, the
legatees and devisees who either: division is per capita. (NCC, Art. 987)
b. In the collateral line, the full-blood
a. Predecease the testator, or brothers/sisters will get double that of the
b. Renounce the inheritance cannot be half-blood. (NCC, Art. 1006)
represented by their own heirs, with respect c. The division in representation, where
to their supposed inheritance. division is per stirpes – the representative
divide only the share pertaining to the
In representation, the representative does NOT person represented.
inherit from the person represented but from
the decedent. NOTE: Compulsory heirs shall, in no case, inherit
ab intestato less than their legitimes as provided
The right of representation takes place in the in testamentary succession.
direct descending line, but never in the
ascending.
Applies to both
The following are also not allowed to have the Applies only in
intestate and testate
right to inherit ab intestato: intestate succession
succession
1. where the illegitimate child had half-
brothers who were legitimate, the latter had
no right to the former’s inheritance;
2. the legitimate collateral relatives of the
mother cannot succeed from her illegitimate
child;
3. a natural child cannot represent his natural
father in the succession to the estate of the
legitimate grandparent;
4. the natural daughter cannot succeed to the
estate of her deceased uncle who is a
legitimate brother of her natural father; and
5. an illegitimate child has no right to inherit
ab intestato from the legitimate children and
relatives of his father. (Manuel v. Ferrer, G.R.
No. 117246, August 21, 1995)
361
Succession
361
Succession
SUCCESSION SUCCESSION cannot take place with
In case of predecease and incapacity respect to legitime.
1. If the right of
representation takes With respect to the FREE PORTION in case of
With respect to the
place, then the predecease, incapacity or renunciation
legitime:
representative 1. Substitution shall take
succeeds to the place if provided for by
1. If the right of
vacant portion. the testator
representation takes
place, then the
NOTE: 2. If no substitution is
representative succeeds
Representation takes provided, the vacant
to the vacant portion.
place in case of share shall go to the co-
predecease and heir by right of accretion
2. If representation is
incapacity with if the requisites are
not available, then the
respect to present and the testator
co-heirs of the same
inheritance has not provided the
degree shall succeed to it
conferred by law. contrary
in their own right and
Hence, it takes place
not by accretion since
in legal or intestate 3. If the requisites of
there is no accretion
succession. accretion are not
with respect to the
present or when the
legitime.
2. If representation testator provides that no
is not available, then accretion shall take
3. In default of the
the vacant portion place, the vacant portion
above, the vacant
shall go to the co- shall pass to the legal
portion shall go to the
heirs in their own heirs if no substitute has
other secondary and/or
right. been designated. (NCC,
other compulsory heirs.
Art. 1022)
In default thereof,
NOTE: Substitution
then the vacant NOTE: In testamentary
cannot take place with
share shall go to the succession,
respect to legitime.
heirs in the next representation takes
order of intestacy. place only with respect
In case of repudiation to the legitime; it does
With respect to the not take place with
legitime: The vacant portion respect to what is
shall go to the other voluntarily given by will.
1. The other co-heirs co-heirs by right of (NCC, Art. 856)
shall succeed to it in accretion. In legal
their own right and not succession, the share
by right of accretion of the person who CAPACITY TO SUCCEED BY WILL OR
since there is no repudiates the INTESTACY
accretion with respect to inheritance always
legitime. accrues to his co- Persons not incapacitated by law may succeed
heirs. by will or ab intestate. The provisions relating to
2. In default thereof, the In default thereof, incapacity by will are equally applicable to
vacant portion shall go the vacant share intestate succession. (NCC, Art. 1024)
to the other secondary shall go to the heirs
and/or compulsory of next degree in In order to be capacitated to inherit, the heir,
heirs. their own right. devisee or legatee must be living at the moment
the succession opens, except in case of
NOTE: Representation In default thereof, it representation, when it is proper.
does not take place in shall go to the heirs
repudiation. in the next order of A child already conceived at the time of the
intestacy. death of the decedent is capable of succeeding
NOTE: Substitution provided it be born later under the conditions
363
Succession
3. The will must be executed during or after or before it is terminated when the guardian is
the spiritual ministration. an: ADBS2
365
Succession
Inheritance is deemed accepted This is an instance of accion pauliana, which is
the right given to creditors to impugn or set
1. When the heir sells, donates, or assigns his aside contracts, transactions or dispositions of
rights to a stranger, to his co-heirs, or to their debtors which will prejudice or defraud
any of them; them. (Balane, 2016)
2. When the heir renounces it, even though
gratuitously, for the benefit of one or more Requisites
heirs;
3. When renunciation is in favor of all heirs 1. The heir who repudiated his inheritance
indiscriminately for a consideration (NCC, must have been indebted at the time when
Art. 1050); or the repudiation is made.
4. Other tacit acts of acceptance: 2. The heir-debtor must have repudiated his
inheritance according to the formalities
a. Heir demands partition of the prescribed by law.
inheritance 3. Such act of repudiation must be prejudicial
b. Heir alienates some objects of the to the creditor or creditors.
inheritance 4. There must be judicial authorization. (NCC,
c. Acts of preservation or administration Art. 1052)
if, through such acts, the title or capacity
of the heir has been assumed PARTITION AND DISTRIBUTION OF ESTATE
d. Under Art. 1057 of the NCC, failure to
signify acceptance or repudiation within Partition, in general, is the separation, division
30 days after an order of distribution by and assignment of a thing held in common
the probate court. among those to whom it may belong. The thing
itself may be divided or its value. (NCC, Art.
Ways by which the repudiation of the 1079) Every act which is intended to put an end
inheritance, legacy or devise may be made to indivision among co-heirs and legatees or
devisees is deemed to be a partition, although it
1. By means of a public instrument should purport to be a sale, an exchange, a
2. By means of an authentic instrument compromise, or any other transaction. (NCC, Art.
3. By means of a petition presented to the 1082)
court having jurisdiction over the
testamentary or intestate proceedings. The partition may be effected either
(filed in the settlement proceedings)
1. By the decedent himself during his lifetime;
Effect of repudiation if an heir is both a 2. Inter vivos or by will;
testate and legal heir 3. By a third person designated by the
decedent or by the heirs themselves; or
If an heir is both a testate and legal heir and he 4. By a competent court in accordance with the
repudiated the inheritance as a testate heir, he is New Rules of Court
understood to have repudiated in both
capacities. However, should he repudiate as a Partition may be demanded by:
legal heir, without knowledge of being a testate
heir, he may still accept the inheritance as a 1. Compulsory heir
testate heir. (NCC. Art. 1055) 2. Voluntary heir
3. Legatee or devisee
Remedy if the heir repudiates the 4. Person who has acquired an interest in the
inheritance to the prejudice of his creditors estate
If the heir repudiates the inheritance to the Partition cannot be demanded when (PAPU)
prejudice of his own creditors, the latter may
petition the court to authorize them to accept it 1. Expressly Prohibited by testator for a period
in the name of the heir. The acceptance shall not exceeding 20 years—this enforced co-
benefit the creditors only to an extent sufficient ownership may cover even legitimes
to cover the amount of their credits. (NCC, Art.
1052)
367
Obligations
OBLIGATIONS The following are the elements of an obligation
(JAPO):
GENERAL PRINCIPLES
1. Juridical tie or vinculum juris or efficient
cause - the efficient cause by virtue of which
An obligation is a juridical necessity to give, to
the debtor becomes bound to perform the
do, or not to do. (Art. 1156)
prestation. (Pineda, 2000)
It is a juridical relation or necessity that allows
NOTE: The vinculum juris is established by:
one person (creditor) to demand the observance
a. Law;
of determinative conduct (i.e. giving, doing, or
b. Bilateral acts;
not doing) from another (debtor), and in case of
c. Unilateral act. (Tolentino, 2002)
breach, the former can demand satisfaction from
the assets of the latter. (Makati Stock Exchange v.
2. Active subject [creditor (CR) or obligee] -
Campos, G.R. No. 138814, April 16, 2009)
The person demanding the performance of
the obligation. It is he in whose favor the
It is a juridical necessity because in case of non-
obligation is constituted, established, or
compliance, the courts of justice may be called
created. (Pineda, 2000)
upon by the aggrieved party to enforce its
fulfillment or, in default thereof, the economic
3. Passive subject [debtor (DR) or obligor] - The
value that it represents.
person bound to perform the prestation to
give, to do, or not to do. (Pineda, 2000)
Art. 1156 refers only to civil obligations that are
enforceable in court when breached. It does not
4. Object or prestation - The subject matter of
cover natural obligations (Arts. 1423 -1430)
the obligation which has a corresponding
because the latter are obligations that cannot be
economic value or susceptible of pecuniary
enforced in court on equity and natural law and
substitution in case of noncompliance. It is a
not on positive law. (Pineda, 2000)
conduct that may consist of giving, doing, or
not doing something. (Pineda, 2000)
When there is a right, there is a corresponding
obligation. Right is the active aspect while
NOTE: In order to be valid, the object or
obligation is the passive aspect. Thus, the
prestation must be:
concepts of credit and debt are two distinct
aspects of a unitary concept of obligation.
a. Licit or lawful;
(Pineda, 2000)
b. Possible, physically, & judicially;
c. Determinate or determinable; and
GR: The law does not require any form in
d. Pecuniary value or possible equivalent
obligations arising from contracts for their
in money.
validity or binding force. (Art. 1356)
The absence of any of the first three makes the
XPNs:
object void.
1. When the form is essential to the validity of
NOTE: Some writers add a fifth one: the form in
the contract as required by law. (Art. 1346)
which the obligation is manifested. This element,
2. When the contract is unenforceable. Unless
however, cannot be considered as essential.
it is in a certain form, such as those under
There is no particular form required to make
the Statute of Frauds as formulated in Art.
obligations binding, except in certain rare cases.
1403.
(Tolentino, 1991)
Obligations arising from other sources (i.e. Art.
1157) do not have any form at all. (De Leon, DIFFERENT KINDS OF PRESTATION
2010)
OBLIGATI OBLIGATI
OBLIGATI
ELEMENTS OF AN OBLIGATION BASIS ON TO ON NOT
ON TO DO
GIVE TO DO
As to Consists in Covers the Refraining
what the rendering from
369
Obligations
a. Simple – there is no penalty imposed for b. When the obligation is subject to a
violation of the terms (NCC. 1226); suspensive condition, from which it
b. Obligations with a penal clause – arises upon fulfillment of the condition;
obligation which imposes a penalty for c. When the obligation is with a period;
violation of the terms. (NCC. 1226; there is already an existing obligation,
Pineda, 2000) but it is only demandable when the
period expires or becomes due.
11. Sanction
3. Quasi Contracts, delicts, quasi-delicts – from
a. Civil – gives a right of action to compel the time designated by the law creating or
their performance; regulating them.
b. Natural– not based on positive law, but
on equity and natural law; does not
grant a right of action to enforce their OBLIGATION EX LEGE
performance, but after voluntary
fulfillment by the obligor, they authorize Obligations derived from law are not presumed.
retention of what has been delivered Only those expressly determined in the Code or
rendered by reason thereof. in special laws are demandable and shall be
c. Moral – cannot be enforced by action regulated by the precepts of the law that
but are binding on the party who makes establishes them and as to what has not been
it in conscience and natural law. foreseen by the provisions of Book IV of NCC.
(NCC, Art. 1158)
SOURCES OF OBLIGATIONS
NOTE: If there is conflict between the NCC and a
1. Law; special law, the latter prevails unless the
2. Contracts; contrary has been expressly stipulated in the
2. Quasi-contracts; NCC. (NCC, Art. 18; Paras, 2008)
3. Delict;
4. Quasi-delict. Characteristics of a legal obligation
This enumeration is exclusive. No obligation 1. Does not need the consent of the obligor;
exists if its source is not one of those 2. Must be expressly set forth in the law creating
enumerated in Art.1157 of the NCC. (Navales v. it and not merely presumed; and
Rias, G.R. No. L-3489, September 7, 1907) 3. In order for the law to be a source of
obligation, it should be the creator of the
NOTE: Actually, there are only two sources (i.e., obligation itself. (NCC, Art. 1158)
law and contracts) because obligations arising
from quasi-contracts, delicts, and quasi-delicts Determining whether an obligation arises
are imposed by law. (Leung Ben v. O’Brien, 38 from law or from some other source
Phil. 182).
1. Arises from law if it establishes obligation;
Time of perfection 2. Arises from the act itself if the law merely
recognizes the existence of an obligation
GR: generated by an act. (Manresa)
GR: These obligations arising from contracts Q: Metro Bottled Water and Andrada
shall be governed primarily by the stipulations, Construction entered into a Construction
clauses, terms, and conditions of the parties’ Agreement for the construction of a
agreements. reinforced concrete manufacturing plant in
Gateway Business Park, General Trias, Cavite
XPN: Contracts with prestations that are for the contract price of ₱45,570,237.90. The
unconscionable or unreasonable. (Pineda, 2009) Construction Agreement covered all
materials, labor, equipment, and tools,
Binding force of obligation ex contractu including any other works required. It
provided: 8. Change Order Without
Obligations arising from contracts have the force invalidating this Agreement, the OWNER
of law between the parties and should be may, at any time, order additions, deletions,
complied with in good faith. (NCC, Art. 1159) or revisions in the Work by means of a
This is known as the “principle of obligatory Change Order. The CONTRACTOR shall
force of contracts.” (Rabuya, 2017) determine whether the Change Order causes
a decrease or increase in the Purchase Price
Good faith is a performance in accordance with or shortening or extension of the Contract
Period. Within three (3) days from receipt of
the stipulation, clauses, terms, and conditions of
the contract. (Pineda, 2000) the Change Order, CONTRACTOR shall give
written notice to the OWNER of the value of
the works required under the Change Order,
GR: Neither party may unilaterally evade his
increasing the Contract Price and the
obligation in the contract.
extension in the Contract Period necessary to
complete such works.
XPNs: Unilateral evasion is allowed when the:
1. Contract authorizes such evasion; or
On the other hand, if the Change Order
2. Other party assents thereto.
involves deletions of some works required in
the original Contract Documents, the value of
Q: FBDC entered into a Trade Contract with
the works deleted shall be deducted from the
MS Maxco Company, Inc. (MS Maxco) for the
Contract Price and the Contract Period
execution of the structural and partial
shortened accordingly. In either case, any
architectural works of one of its
addition or reduction in the Contract Price or
condominium projects. The Trade Contract
extension or shortening of the Contract
likewise provided that MS Maxco is
Period shall be mutually agreed in writing by
prohibited from assigning or transferring
the OWNER and the CONTRACTOR prior to
any of its rights, obligations, or liabilities
the execution of the works covered by the
under the said Contract without the written
Change Order. The project was to be
consent of FBDC. FBDC received a letter from
371
Obligations
completed within 150 calendar days or by payment would be to permit unjust
October 10, 1995, to be reckoned from enrichment at Andrada Construction’s
Andrada Construction's posting of a expense. Is there unjust enrichment?
Performance Bond to answer for liquidated
damages, costs to complete the project, and A: YES. Here, services were rendered for which
third party claims. Is there Unjust compensation was demanded. The contract
Enrichment? between the parties, however, inadequately
provides for the mechanism by which
A: NONE. Article 1724. The contractor who compensation may be due. The fair and
undertakes to build a structure or any other expeditious resolution of the issue requires the
work for a stipulated price, in conformity with arbitral tribunal to instead apply equitable
plans and specifications agreed upon with the principles to arrive at a just conclusion. (Metro
land- owner, can neither withdraw from the Bottled Water Corporation v. Andrada
contract nor demand an increase in the price on Construction & Development Corporation, Inc.,
account of the higher cost of labor or materials, G.R. No. 202430, MARCH 6, 2019, as penned by J.
save when there has been a change in the plans Leonen)
and specifications, provided: (1) Such change
has been authorized by the proprietor in OBLIGATION EX QUASI – CONTRACT
writing; and (2) The additional price to be paid
to the contractor has been determined in writing Quasi-contract
by both parties. It is settled that the contract is
the law between the parties. Without any A juridical relation arising from lawful,
ambiguity in Item No. 8 of the Construction voluntary, and unilateral acts based on the
Agreement, there was no need to resort to other principle that no one shall be unjustly enriched
aids in interpretation, such as Article 1724 of the or benefited at the expense of another. (NCC, Art.
Civil Code, to resolve the issue. (Metro Bottled 2142)
Water Corporation v. Andrada Construction &
Development Corporation, Inc., G.R. No. 202430, Distinguished from “implied contracts”
MARCH 6, 2019, as penned by J. Leonen)
An implied contract, in the proper sense, is a
Q: In 1995, Metro Bottled Water and Andrada contract which arises when the intention of the
Construction entered into a Construction parties is not expressed, but an agreement in
agreement to construct a reinforced concrete fact, creating an obligation, is implied or
manufacturing plant in Gateway Business presumed from their acts, or where there are
Park in Cavite for the contract price of circumstances which show a mutual intent to
₱45,570,237.90. The project was to be contract.
completed within 150 days or by October 10,
1995. On May 10, 1995, however, the Metro An implied contract requires consent, while a
Bottled Water extended the period of quasi-contract, being a unilateral contract, does
completion to November 30, 1995, upon not. The basis of an implied contract is the will of
Andrada Construction’s request, due to the the parties, while the basis of a quasi-contract is
movement of 1 bay of the plant building, law, to the end that there be no unjust
weather conditions, and change orders. In enrichment. (Rabuya, 2017)
November 1995, Metro Bottled Water’s
consultant recommended the forfeiture of Characteristics of a quasi-contract (LUV)
the Andrada Construction’s performance
bond as well as liquidated damages for delay. 1. It must be Lawful;
Andrada Construction opposed the claim for 2. It must be Unilateral; and
lack of legal and factual basis. Soon after, 3. It must be Voluntary. (Pineda, 2000)
Andrada Construction sent letters to Metro
Bottled Water requesting for the payment of Presumptive consent
unpaid work accomplishments. The latter
refused to pay. The CA upheld the findings of
Since a quasi-contract is a unilateral contract
the Arbitration Commission and ruled that
created by the sole act(s) of the gestor, there is
Andrada Construction was entitled to
no express consent given by the other party. The
compensation. Accordingly, to deny the
Rule in case of excess of payment of interest XPNs: When the offended party:
If the borrower pays interest when there has 1. Waives the civil action;
been no stipulation therefor, the provisions of 2. Reserves the right to institute it separately;
the Code concerning solutio indebiti, or natural and
obligations, shall be applied, as the case may be. 3. Institutes the civil action prior to the
criminal action. (Rule 111, Sec. 1, Rules of
If the payment of interest is made out of mistake, Court)
solutio indebiti applies; hence, the amount must
be returned to the debtor. If the payment was Scope of civil liability (IRR)
made after the obligation to pay interest has
already prescribed, natural obligation applies; 1. Restitution;
hence, the creditor is authorized to retain the 2. Reparation for damage caused; and
amount paid. 3. Indemnity for consequential damages. (Art.
104, RPC)
Contract v. Quasi-contract
Acquittal in criminal case
CONTRACT QUASI-CONTRACT
There is a meeting of GR: The acquittal of the accused in criminal case
There is no consent,
the minds or consent; on the ground of reasonable doubt does not
but the same is
the parties must have preclude the filing of a subsequent civil action,
supplied by fiction of
deliberately entered and only preponderance of evidence is required
law to prevent
into a formal to prove the latter.
injustice.
agreement.
XPNs: When the acquittal is on the basis that:
373
Obligations
1. The accused did not commit the crime obligation to return the same on March 20, 1996
charged; or if not sold.
2. There is a declaration in the decision of
acquittal that no negligence can be With the amendment introduced by the Bangko
attributed to the accused, and that the fact Sentral ng Pilipinas Monetary Board in BSP-MB
from which the civil action might arise did Circular No. 799, series of 2013, there is a need
not exist. (NCC, Art. 29) to partially modify the same in that the interest
accruing from the time of the finality of this
Q: Petitioner was charged with estafa. Decision should be imposed at the lower rate of
Respondent averred that on February 20, six percent (6%) p.a., and not twelve percent
1996, she entrusted merchandise worth (12%) p.a. as imposed by the CA. (Dolores Diaz v.
P35,300.00 to petitioner as evidenced by an People, GR No. 208113, December 2, 2015)
acknowledgment receipt. However,
petitioner was only able to remit the amount OBLIGATIONS EX QUASI – DELICTO
of P3,300.00 and thereafter, failed to make
further remittances and ignored Quasi-delict or tort
respondent's demands to remit the proceeds
or return the goods. As a defense, petitioner An act or omission arising from fault or
admitted having previous business dealings negligence which causes damage to another,
with respondent not as an agent but as a there being no pre-existing contractual relations
client who used to buy purchase order cards between the parties. (NCC, Art. 2176)
(POCs) and gift checks (GCs) from
respondent on installment basis. NOTE: A single act or omission may give rise to
two or more causes of action. Thus, an act or
The RTC acquitted petitioner of the charge omission may give rise to an action based on
of estafa but held her civilly liable to pay delict, quasi-delict, or contract.
respondent the amount of P32,000.00, with
interest from the filing of the Information on In negligence cases, prior conduct should be
March 11, 1999 until fully paid, and to pay examined, that is, conduct prior to the injury that
the costs. The RTC convicted the petitioner resulted, or in the proper case, the aggravation
holding him civilly liable, "having admitted thereof.
that she received the [GCs] in the amount of
P32,000.00." In this relation, it further Elements of a quasi-delict
considered the relationship of respondent
and petitioner as in the nature of a principal- 1. Negligent or wrongful act or omission;
agent, which renders the agent civilly liable 2. Damage or injury caused to another;
only for damages which the principal may 3. Causal relation between such negligence or
suffer due to the non-performance of his duty fault and damage; and
under the agency. CA upheld the petitioner's 4. No pre-existing contractual relationship
civil liability. Should the petitioner be held between the parties. (NCC, Art. 2176)
civilly liable? If yes, what is the rate of
interest? Instances when Art. 2176 is inapplicable
A: YES. Respondent was able to prove by 1. When there was a pre-existing contractual
preponderance of evidence the fact of the relation because the breach of contract is the
transaction, as well as petitioner's failure to source of the obligation (Robles v. Yap Wing,
remit the proceeds of the sale of the 41 SCRA 267, G.R. No. L-20442, October 4,
merchandise worth P32,000.00, or to return the 1971);
same to the respondent in case such
merchandise was not sold. This was established
NOTE: However, if the act that breaches the
by presenting the acknowledgment
contract is tortuous, the pre-existing
receipt which, as the document's name connotes,
contractual relation will not bar the
shows that petitioner acknowledged receipt
recovery of damages (Singson v. BPI, G.R. No.
from respondent of the listed items with their
L-24837, June 27, 1968);
corresponding values, and assumed that the
375
Obligations
thing even thing promised, Right of the creditor to the fruits
though they if such thing is
may not have damaged due to The creditor has a right to the fruits of the thing
been lack of care or a from the time the obligation to deliver it arises.
mentioned. general breach However, he shall acquire no real right over it
(NCC, Art. 1166) is committed. until the same has been delivered to him. (NCC,
Pay damages in Pay damages in Art. 1164)
case of breach case of breach
of obligation by of obligation by SOURCE OF WHEN OBLIGATION
reason of delay, reason of delay, OBLIGATION ARISES
Effect of
fraud, fraud, Law, quasi-delict, Based on specific
breach of
negligence, negligence, quasi-contract, or provisions of applicable
obligation
contravention contravention crime. law.
of the tenor of the tenor Subject to a
thereof. (NCC, thereof. (NCC, From the happening of
suspensive
Art. 1170) Art. 1170) the condition.
condition.
Obligation is Subject to a From the constitution,
not suspensive creation or perfection of
Fortuitous
Effect of extinguished term/period. obligation.
event
fortuitous (genus From the constitution,
extinguishes
event nunquam peruit Pure creation or perfection of
the obligation.
– genus never the obligation.
perishes).
Nature of the right of the creditor with
Remedies of the creditor in case of failure to respect to fruits
deliver the thing due
1. Before delivery – Personal right;
The following are the remedies of the creditor in 2. After delivery – Real right.
case of failure to deliver the thing due. (Pineda,
2000) Personal right vs. Real right
377
Obligations
A: YES. The Civil Code mandates common A: NO. Land Bank is neither a mortgagee in good
carriers to observe extraordinary diligence in faith nor an innocent purchaser for value. Land
caring for the goods they are transporting. Bank's defense that it could not have known the
Common carriers must ascertain the identity of criminal action since it was not a party to the
the recipient. Failing to deliver shipment to the case and that there was no notice of lis
designated recipient amounts to a failure to pendens filed by Musni, is unavailing. The rule on
deliver. The shipment shall then be considered "innocent purchasers or mortgagees for value" is
lost, and liability for this loss ensues. FedEx is applied more strictly when the purchaser or the
unable to prove that it exercised extraordinary mortgagee is a bank. Banks are expected to
diligence in ensuring delivery of the package to exercise higher degree of diligence in their
its designated consignee. It claimed to have dealings, including those involving lands. Banks
made a delivery but it even admits that it was may not rely simply on the face of the certificate
not to the designated consignee. (Federal Express of title. Had Land Bank exercised the degree of
Corporation v. Luwalhati R. Antonino and Eliza diligence required of banks, it would have
Bettina Ricasa Antonino, G.R. No. 199455, June 27, ascertained the ownership of one of the
2018, as penned by J. Leonen) properties mortgaged to it. (Land Bank of the
Philippines vs. Lorenzo Musni, G.R. No. 206343,
Q: Lorenzo Musni filed before the Regional February 22, 2017, as penned by J. Leonen)
Trial Court of Tarlac City a complaint for
reconveyance of land and cancellation of TCT Diligence of a good father of a family
No. 333352 against Spouses Nenita Sonza
Santos and Ireneo Santos, Eduardo Sonza, That reasonable diligence which an ordinary
and Land Bank of the Philippines. Musni prudent person would have done under the
alleged that Nenita Sonza Santos falsified a same circumstances.
Deed of Sale, and caused the transfer of title
of the lot in her and her brother Eduardo's Forms of breach of obligations
names. He claimed that the Spouses Santos
and Eduardo mortgaged the lot to Land Bank 1. Voluntary – Debtor is liable for damages if
as security for their loan. Musni said that he he is guilty of:
was dispossessed of the lot when Land Bank
foreclosed the property upon Nenita and a. Default (mora)
Eduardo's failure to pay their loan. Musni b. Fraud (dolo)
also claimed that Nenita and Eduardo were c. Negligence (culpa)
convicted for falsification of a public d. Breach through contravention of the
document which he filed against them before tenor thereof. (NCC, Art. 1170)
the MTC of Tarlac.
2. Involuntary – Debtor is unable to perform
In defense, the Spouses Santos alleged that the obligation due to fortuitous event, thus
they, together with Eduardo, ran a lending not liable for damages.
business. As security for their loan, Musni
and his wife executed a Deed of Sale over the Effects of breach of obligation
lot in favor of the Spouses Santos. The title of
the lot was then transferred to Nenita and If a person obliged to do something fails to do it,
Eduardo. The lot was then mortgaged to Land or if he does it in contravention of the tenor of
Bank, and was foreclosed later. Land Bank the obligation or it is poorly done, the same shall
countered that its transaction with the be undone at his expense. (NCC, Art. 1167)
Spouses Santos and Eduardo was legitimate,
and that it verified the authenticity of the When the obligation consists in not doing, and
title with the Register of Deeds. Further, the the obligor does what has been forbidden him, it
bank loan was secured by another lot owned shall also be undone at his expense. (NCC,
by the Spouses Santos, and not solely by the Art.1168)
lot being claimed by Musni. Is Land Bank a
mortgagee in good faith and an innocent Instances where the remedy under Art. 1168
purchaser for value? is not available
379
Obligations
the foreclosure proceeding, claiming that it 1. The obligation or the law expressly so
was premature and without legal basis. Was declares; or
the foreclosure premature? 2. From the nature and the circumstances of
the obligation it appears that, the
A: NO. Petitioner defaulted in its obligation. designation of time when the thing is to be
Thus, respondent was within its rights to delivered or the service is to be rendered,
foreclose the property. Under the Civil Code, was a controlling motive for the
there is default when a party obliged to deliver establishment of the contract; or
something fails to do so. In Social Security System 3. Demand would be useless, as when the
v. Moonwalk Development & Housing Corp. this obligor has rendered it beyond his power to
Court enumerated the elements of default: perform. (Art. 1169 par. 2)
In order that the debtor may be in default, it is Q: “A” borrowed P2,000 from “B” on
necessary that the following requisites be December 1, 1956. He executed a promissory
present: (1) that the obligation be demandable note promising to pay the indebtedness on
and already liquidated; (2) that the debtor December 1, 1958. Upon the arrival of the
delays performance; and (3) that the creditor designated date for payment, is demand
requires the performance judicially and necessary in order that “A” shall incur delay?
extrajudicially. Default generally begins from the
moment the creditor demands the performance A: YES. For the first exception provided for in
of the obligation. (Gotesco Properties, Inc. v. Solid Art. 1169 of the NCC to apply, it is indispensable
Bank Corporation (Now Metropolitan Bank And that the obligation or the law should expressly
Trust Company), G.R. No. 209452, July 26, 2017, add that the obligor shall incur delay if he fails to
as penned by J. Leonen) fulfill the obligation upon the arrival of the
designated date or that upon the arrival of such
MORA SOLVENDI date, demand shall not be necessary. (Bayla, et
al. v. Silang Traffic Co., G.R. Nos. L-48195 and
Requisites (PDF-MJ) 48196, May 1, 1942)
381
Obligations
Further, the transfer was conditioned on the Airlines, Co., Ltd., G.R. No. 167519, January 14,
approval of the Securities and Exchange 2015, as penned by J. Leonen)
Commission of the issuance of the shares of
stock, and the approval by the Taiwanese Delay in reciprocal obligations
government of U-Land’s acquisition of these
shares of stock. Wellex and U-Land agreed One party incurs in delay from the moment the
that if they were unable to agree on the other party fulfills his obligation, while he,
terms of the share purchase agreement and himself does not comply or is not ready to
the joint development agreement within 40 comply in a proper manner with what is
days from signing, then the First incumbent upon him.
Memorandum of Agreement would cease to
be effective. Demand is only necessary in order for a party to
incur delay when the respective obligations are
The 40-day period lapsed on June 25, 1998. to be performed on separate dates.
Wellex and U-Land were unable to enter into
any share purchase agreement although Effect of non-compliance of both parties in
drafts were exchanged between the two. reciprocal obligations
Whether or not the rescission of the First
Memorandum of Agreement can be subject of If neither party complies with his prestation, the
rescission? default of one compensates for the default of the
other.
A: YES, Respondent U-Land is praying for the
rescission or resolution under Article 1191 Rules on compensatio morae
and not rescission under Art. 1381. The failure
of one of the parties to comply with the UNILATERAL RECIPROCAL
reciprocal obligation allows the wronged OBLIGATIONS OBLIGATIONS
party to seek the remedy of Article 1191. The Default or delay
wronged party is entitled to rescission under begins from
Article 1191 and even the payment of Delay by the
extrajudicial or
damages. It is a principal action precisely other party
Time judicial demand –
because it is a violation of the original begins from the
of mere expiration of
prestation. moment one of
delay the period fixed is
the parties fulfills
Article 1381 and Article 1383 pertains to not enough in order
his obligation.
rescission where creditors or even 3rd persons that debtor may
not privy to the contract can file an action due incur delay.
to lesion or damage as a result of the contract. a) The obligation or
the law expressly
Rescission or resolution under Art. 1191, so dictates;
therefore, is a principal action due to lesion or b) Time is of the
damage as a result of the contract, and it is a essence;
principal action that is immediately available When different
c) Demand would
to the party at the time that the reciprocal dates for the
be useless, as
prestation was breached. Article 1383 XPNs performance of
debtor has
mandating that rescission be deemed a obligation is fixed
rendered it beyond
subsidiary action cannot be applicable to by the parties.
his power to
rescission or resolution under Article 1191. perform; or
Thus, respondent U-Land correctly sought the d) Debtor has
principal relief of rescission or resolution acknowledged that
under Article 1191. The obligations of the he is in default.
parties gave rise to reciprocal prestations,
which arose from the same cause: the desire of FRAUD (Deceit or Dolo)
both parties to enter into a share purchase
agreement that would allow both parties to It is an intentional evasion of the faithful
expand their respective airline operations in performance of the obligation. (8 Manresa 72)
the Philippines and other neighboring
countries. (The Wellex Group, Inc. v. U-Land Kinds of fraud
383
Obligations
damage cause damage or injury resulted in damage to both vehicles, the
damage. even if the act was subsequent death of the truck driver,
done voluntarily. Amancio Asumbrado, and serious physical
As to the Liability injuries to bus driver Salvaña.
Liability may be
mitigation cannot be
mitigated.
of liability mitigated. A complaint for quasi-delict was filed against
GR: Waiver for Salvaña for negligently driving the bus
future negligence causing it to collide with the dump truck.
may be allowed in Respondents denied liability, claiming that
certain cases. prior to the collision, the bus was running
As to the out of control because of a problem in the
Waiver for steering wheel system, which could not have
waiver of XPN: Nature of the
future fraud been avoided despite their maintenance
future obligation or
is void. efforts. Instead, they claimed that
fraud public policy
requires Asumbrado had the last clear chance to avoid
extraordinary the collision had he not driven the dump
diligence. (e.g. truck at a very fast speed. Was Salvaña
common carrier). grossly negligent?
NOTE: When negligence is so gross that it A: YES. When bus driver Salvaña overtook the
amounts to wanton attitude on the part of the jeepney in front of him, he was rounding a blind
debtor or such negligence shows bad faith, the curve along a descending road. Considering the
laws in case of fraud shall apply. road condition and that there was only one lane
on each side of the center line for the movement
Effect of good faith or bad faith of the obligor of traffic in opposite directions, it would have
been more prudent for him to confine his bus to
If the obligor acted in good faith, he is its proper place. Having thus encroached on the
responsible for the natural and probable opposite lane in the process of overtaking the
consequences of the breach of contract and jeepney, without ascertaining that it was clear of
which the parties have reasonably foreseen at oncoming traffic that resulted in the collision
the time of the constitution of the obligation. with the approaching dump truck driven by
deceased Asumbrado, Salvaña was grossly
If the obligor is guilty of fraud, bad faith, malice negligent in driving his bus. He was remiss in his
or wanton attitude, he shall be responsible for duty to determine that the road was clear and
all damages which may be reasonably attributed not to proceed if he could not do so in safety.
to the non-performance of the obligation. (Cresencio Baño v. Bachelor Express, GR No.
191703, March 12, 2012)
Contributory negligence of the creditor
Kinds of negligence or culpa
GR: It reduces or mitigates the damages which
he can recover. 1. Culpa contractual (contractual negligence) -
Negligence which results from the breach of
XPN: If the negligent act or omission of the contract;
creditor is the proximate cause of the event,
which led to the damage or injury complained of, 2. Culpa aquiliana (civil negligence or tort or
he cannot recover. quasi-delict) Acts or omissions that cause
damage to another, there being no
Q: Wenifredo Salvaña was driving the bus contractual relation between the parties
owned by Bachelor Express, Inc./Ceres Liner, (NCC, Art. 2176); and
Inc. along the national highway when he
overtook a PUJ jeepney while negotiating a 3. Culpa criminal (criminal negligence) – Those
blind curve in a descending road causing him which results in the commission of a crime
to intrude into the opposite lane and bump or a delict.
the 10-wheeler Hino dump truck of
petitioner Cresencio Baño running uphill CULPA CULPA CULPA
BASIS
from the opposite direction. The collision CONTRAC AQUILIAN CRIMIN
385
Obligations
4. Debtor is free from any participation in the Fortuitous event Force majeure
aggravation of the injury to the creditor.
Event caused by the
Event which is
NOTE: The fortuitous event must not only be the legitimate or
proximate cause, but it must also be the only and absolutely
illegitimate acts of
sole cause. Contributory negligence of the debtor independent of human
persons other than the
renders him liable despite the fortuitous event. intervention
obligor
(Pineda, 2000)
e.g. Earthquakes, e.g. Armed invasion,
If the negligence was the proximate cause, the storms, floods, robbery, war. (Pineda,
obligation is not extinguished. It is converted epidemics 2000)
into a monetary obligation for damages.
NOTE: There is no essential difference between
Difficulty to foresee fortuitous event and force majeuere; they both
refer to causes independent of the will of the
The mere difficulty to foresee the happening is obligor. (Tolentino, 2002)
not impossibility to foresee the same. (Republic
v. Luzon Stevedoring Corp., G.R. No. L-21749, Q: MIAA entered into a compromise
September 29, 1967) agreement with ALA. MIAA failed to pay
within the period stipulated. Thus, ALA filed
Liability for loss due to fortuitous event a motion for execution to enforce its claim.
MIAA filed a comment and attributed the
GR: There is no liability for loss in case of delays to it being a government agency and
fortuitous event. to the Christmas rush. Is the delay of
payment a fortuitous event?
XPNs: (LaNS-PC-BaG)
A: NO. The act-of-God doctrine requires all
1. Law; human agencies to be excluded from creating
the cause of the mischief. Such doctrine cannot
2. Nature of the obligation requires the be invoked to protect a person who has failed to
assumption of risk; take steps to forestall the possible adverse
consequences of loss or injury. Since the delay in
3. Stipulation; payment in the present case was partly a result
of human participation - whether from active
4. The debtor is guilty of dolo, malice or bad intervention or neglect - the whole occurrence
faith has Promised the same thing to two or was humanized and was therefore outside the
more persons, who does not have the same ambit of a caso fortuito.
interest (NCC, Art. 1165);
First, processing claims against the government
5. The debtor Contributed to the loss (Tan v. are certainly not only foreseeable and
Inchausti & Co., G.R. No. 6092, March 8, expectable, but also dependent upon the human
1912); will. Second, the Christmas season is not a caso
fortuito, but a regularly occurring event. Third,
6. The possessor is in Bad faith (NCC, Art. 552); the occurrence of the Christmas season did not
or at all render impossible the normal fulfillment of
the obligation. Fourth, MIAA cannot argue that it
7. The obligor is Guilty of fraud, negligence or is free from any participation in the delay. It
delay or if he contravened the tenor of the should have laid out on the compromise table
obligation. (Juan Nakpil v. United the problems that would be caused by a deadline
Construction Co., Inc. v. CA, G.R. No. L-47851, falling during the Christmas season.
April 15, 1988) Furthermore, it should have explained to ALA
the process involved in the payment of ALA’s
Act of God vs. Act of Man claim. (MIAA v. Ala Industries Corp., G.R. No.
147349, February 13, 2004)
ACT OF GOD ACT OF MAN
Effects of fortuitous events
(a) Can the labor unrest be considered a A: NO. The law provides that except when it is
fortuitous event? otherwise declared by stipulation, or when the
(b) Can XY Corp. unilaterally and law expressly provides, or when the nature of
immediately cancel the contract? the obligation requires the assumption of risk,
(c) Must AB Corp. return the 50% down no person shall be liable for those events which
payment? (2008 Bar) could not be foreseen or which though foreseen
were inevitable. (NCC, Art. 1174)
A:
In this case, X cannot invoke fortuitous event as
(a) NO. Labor unrest is not a fortuitous event a defense because she had already incurred
that will excuse AB Corp. from complying with delay at the time of the occurrence of the loss.
its obligation of constructing the research and (NCC, Art. 1165)
laboratory facilities of XY Corp. The labor unrest,
which may even be attributed largely to AB REMEDIES
Corp. itself, is not the direct cause of non-
387
Obligations
In case of breach of obligation, the following are were entered into to defraud the latter’s
the remedies available: creditors. Thus, it prayed for the rescission of
the chattel mortgaged executed by SSC in
1. Specific performance, or substituted favor of IEB. Will the action to rescind the
performance by a third person in case of an mortgage prosper?
obligation to deliver a generic thing, and in
obligations to do, unless it is a purely A: NO. Jurisprudence is clear that the following
personal act; successive measures must be taken by a creditor
2. Rescission (or resolution in reciprocal before he may bring an action for rescission of
obligations); an allegedly fraudulent contract: (1) exhaust the
3. Damages, in any case; or properties of the debtor through levying by
4. Subsidiary remedies of creditors: attachment and execution upon all the property
a. Accion subrogatoria of the debtor, except such as are exempt by law
b. Accion pauliana from execution; (2) exercise all the rights and
c. Accion directa actions of the debtor, save those personal to him
(acción subrogatoria); and (3) seek rescission of
SPECIFIC PERFORMANCE the contracts executed by the debtor in fraud of
their rights (acción pauliana). It is thus, apparent
Remedies in connection with specific that an action to rescind, or an acción
performance pauliana, must be of last resort, availed of only
after the creditor has exhausted all the
1. Exhaustion of the properties of the debtor properties of the debtor not exempt from
(not exempt from attachment under the execution or after all other legal remedies have
law); been exhausted and have been proven futile.
(Metropolitan Bank and Trust Company v.
2. Accion subrogatoria (subrogatory action) – International Exchange Bank, G.R. No. 176008,
An indirect action brought in the name of August 10, 2011)
the debtor by the creditor to enforce the
former’s rights except: Q: Jebson entered into a Joint Venture
Agreement (JVA) with Sps. Salonga obligated
a. Personal rights of the debtor; the former to construct ten (10) residential
b. Rights inherent in the person of the units on the latter’s three parcels of land. Out
debtor; of the ten (10) units, seven (7) units will
c. Properties exempt from execution. belong to Jebson. It was also allowed to sell
its allocated units under such terms as it may
e.g. family home deem fit, subject to the condition that the
price agreed upon was with the conformity of
3. Accion pauliana (rescissory action) – An Sps. Salonga. Thereafter, Jebson entered into
action to impugn or assail the acts done or a Contract to Sell with Buenviaje over one of
contracts entered into by the debtor in fraud its units without the conformity of Sps.
of his creditor. Salonga. Buenviaje was able to fully pay for
Jebson’s unit through a swapping
arrangement, which allows the vendee to
NOTE: Resort to the remedies must be in the
order stated above. (NCC, Art. 1177) convey certain properties as consideration
for the sale. Despite this full payment, Jebson
was unable to complete said unit.
Q: Sacramento Steel Corporation (SSC)
executed five separate deeds of chattel
mortgage constituted over various This prompted Buenviaje to demand the
unit’s immediate completion and delivery.
equipment for International Exchange Bank
(IEB) which subsequently, SSC defaulted in Jebson, having failed to comply with the
demand, Buenviaje filed an action before the
the payment of its obligations. IEB’s demand
HLURB against Jebson and Sps. Salonga for
for payment went unheeded. Meanwhile,
Metropolitan Bank and Trust Company specific performance praying for the unit’s
completion and delivery and rescission in the
(Metro Bank) filed a motion for intervention
alternative. Jebson, in its defense, claimed
as a creditor of SSC. Which it contends that
the mortgage contracts between IEB and SSC that they were not able to secure the
389
Obligations
be complied with at the expense of the Valley Exploration, Inc. (GVEI), granting the
debtor. (NCC, Art. 1165) latter "full, exclusive and irrevocable
possession, use, occupancy, and control over
b. Specific thing – Specific performance the mining claims and the processing and
may be demanded, that is, the creditor marketing of the products for a period of 25
may compel the debtor to make the years.” Later, PMC extra-judicially rescinded
delivery. the OA upon GVEI’s violation of Section 5.01,
Article V thereof. GVEI contested PMC’s extra-
RESCISSION (RESOLUTION) (NCC, ART. 1191) judicial rescission of the OA, averring therein
that its obligation to pay royalties to PMC
It refers to the cancellation of the contract or arises only when the mining claims are
reciprocal obligation in case of breach on the placed in commercial production, which
part of one, which breach is violative of the condition has not yet taken place. PMC no
reciprocity between the parties. This is properly longer responded to GVEI’s letter. Is the
called resolution. (2005, 2008 Bar) rescission of the Operating Agreement valid?
NOTE: The rescission under Art. 1380 is A: YES. The rescission is valid. As a general rule,
rescission based on lesion or fraud upon the power to rescind an obligation must be
creditors. invoked judicially and cannot be exercised solely
on a party’s own judgment that the other has
Applicability committed a breach of the obligation. This is so
because rescission of a contract will not be
Rescission or resolution is applicable in permitted for a slight or casual breach, but only
reciprocal obligations, since it is implied therein. for such substantial and fundamental violations
as would defeat the very object of the parties in
Characteristics of the right to rescind making the agreement. As a well-established
exception, however, an injured party need not
resort to court action in order to rescind a
1. Can be demanded only if plaintiff is ready,
contract when the contract itself provides that it
willing, and able to comply with his own
obligation and defendant is not; may be revoked or canceled upon violation of its
terms and conditions. PMC’s unilateral
2. Not absolute;
rescission of the Operating Agreement (OA) due
2. Needs judicial approval in the absence of a
stipulation allowing for extra-judicial to GVEI’s non-payment of royalties considering
the parties’ express stipulation in the OA that
rescission, in cases of non-reciprocal
obligations; said agreement may be canceled on such
ground. (Golden Valley Exploration, Inc. v. Pinkian
3. Subject to judicial review if availed of
Mining Company, G.R. No. 190080, June 11, 2014)
extrajudicially;
4. May be waived, expressly or impliedly; and
5. Implied to exist in reciprocal obligations, Q: Vermen and Seneca entered into an
therefore, need not be expressly stipulated "offsetting agreement," where Seneca is
upon. obliged to deliver construction materials to
Vermen, who is obliged to pay Seneca and to
deliver possession of 2 condominium units to
Fulfillment or rescission of the obligation
Seneca upon its completion. Seneca filed a
complaint for rescission of the offsetting
GR: The injured party can only choose either
against Vermen, alleging that the latter had
fulfillment or rescission of the obligation, and
stopped issuing purchase orders of
not both.
construction materials without a valid
reason, thus resulting in the stoppage of
XPN: If fulfillment has become impossible, Art.
deliveries of construction materials on its
1191 allows the injured party to seek rescission
part, in violation of the Offsetting Agreement.
even after he has chosen fulfillment. (Ayson-
Can the agreement be rescinded?
Simon v. Adamos and Feria, G.R. No. L-39378,
August 28, 1984)
A: YES, because the provisions of the offsetting
agreement are reciprocal in nature. Art. 1191 of
Q: Pikian Mining Company (PMI) entered into
the Civil Code provides the remedy of rescission
an Operating Agreement (OA) with Golden
391
Obligations
cancellation of the subject contract and the Kinds of damages (MENTAL)
forfeiture of the amounts already paid by
respondents on account of the latter's failure to 1. Moral;
pay its monthly amortizations, simply because 2. Exemplary;
petitioners neither prayed for this specific relief 3. Nominal;
nor argued that they were entitled to the same. 4. Temperate;
Worse, petitioners were declared "as in default" 5. Actual;
for failure to file the required pre-trial brief and, 6. Liquidated.
thus, failed to present any evidence in support of
their defense. (Rogelio S. Nolasco v. Celerino S. SUBSIDIARY REMEDIES
Cuerpo, GR No. 210215, December 9, 2015)
ACCION SUBROGATORIA
NOTE: In a contract to sell, the payment of the
purchase price is a positive suspensive An action whereby the creditor, whose claim has
condition, the failure of which is not a breach, not been fully satisfied, may go after the
casual or serious, but a situation that prevents defendant debtor’s debtor (third person). (NCC,
the obligation of the vendor to convey title from Art. 1177)
acquiring an obligatory force. (Ong v. CA, G.R. No.
97347, July 6, 1999) Accion subrogatoria is different and distinct from
active subjective subrogation governed by
Q: Can a contract be rescinded extrajudicially Articles 1300 to 1304. In the latter, there is
despite the absence of a special contractual change of creditors, whereas in the former there
obligation therefore? is no change of creditors; the creditor merely
acts in the name and for the account of the
A: YES. An extrajudicial rescission based on debtor after exhausting the assets of the latter
grounds not specified in the contract would not but not enough to satisfy the claims of the
preclude a party to treat the same as rescinded. creditor.
The rescinding party, however, by such course of
action, subjects himself to the risk of being held Requisites (IPIN)
liable for damages when the extrajudicial
rescission is questioned by the opposing party in 1. The debtor’s assets must be Insufficient to
court. In other words, the party who deems the satisfy claims against him;
contract violated may consider it resolved or 2. The creditor must have Pursued all
rescinded, and accordingly, without previous properties of the debtor subject to
court action, but it proceeds at its own risk. For execution;
it is only the final judgment of the corresponding 3. The right of action must Not be purely
court that will conclusively and finally settle personal; and
whether the action taken was or was not correct 4. The debtor whose right of action is
in law. (Nissan Car Lease Phils, Inc., v. LICA exercised must be Indebted to the creditor.
Management and Proton Pilipinas, Inc., G.R. No.
176986, January 13, 2016) Effects of subrogatory action
Those liable under Art. 1170 shall pay damages NOTE: The excess (if any) must be returned to
only if aside from the breach of contract, the debtor.
prejudice or damage was caused. (Berg v. Teus,
G.R. No. L-6450, October 30, 1954) 2. The bringing of action does not entitle the
creditor to preference.
NOTE: If action is brought for specific
performance, damages sought must be asked in 3. The defendant (the debtor of the debtor)
the same action; otherwise, the damages are may avail himself of all defenses available
deemed waived. (Daywalt v. La Corporacion, G.R. against the creditor.
No. L-13505, February 4, 1919)
393
Obligations
It has two requisites: first, futurity, and second, the parties.
uncertainty. It will happen
at an
Uncertain but past event as a condition exact date or
As to May or may
at an indefinite
fulfillment not happen.
An uncertain but past event itself can never time but is
constitute a condition because, in order to be definite to
classified as a condition, the requisites of arrive.
futurity and uncertainty are required. Neither Futurity and Futurity and
Characteristic
can it constitute a term or period because, in certainty. uncertainty.
order to be classified as a term or period, the May give rise
requisites of futurity and certainty are required. to an
However, the proof or ascertainment of the fact No effect upon
obligation
or event, as distinguished from the fact or event The effect of the existence
(suspensive)
itself, may either constitute a condition or a term its happening of the
or the
depending upon the circumstances of each case. to the obligation but
cessation of
(Jurado, 2009) obligation only in its
one already
demandability.
existing
Constructive fulfillment of a condition (resolutory).
Valid. But the
The condition shall be deemed fulfilled when the If fulfillment is
court is
obligor voluntarily prevents its fulfillment. (NCC, dependent
empowered to
Art. 1186) upon the sole Annulled
fix the
will of the
duration of the
Q: Ramon, the judicial administrator of the debtor
period.
estate of Juan, found out that Rodriguez had The moment
enlarged the area of the land which he the condition
purchased from Juan before his death. Thus, is fulfilled, the
Ramon demanded Rodriguez to vacate the No effects will
portion allegedly encroached by him. Retroactivity
retroactivity. retroact on the
Rodriguez refused and contested there was day of the
indeed a conditional sale with the balance of constitution of
the purchase price payable within five years the obligation.
from the execution of the deed of sale. Ramon
then filed an action for recovery of Suspensive condition
possession of the disputed lot. Is the contract
of sale a conditional one? A condition the fulfillment of which will give rise
to the acquisition of a right. While the condition
A: NO. The stipulation that the "payment of the has not arrived yet, in the meantime, the rights
full consideration based on a survey shall be due and obligations of the parties are suspended.
and payable in five years from the execution of a
formal deed of sale" is not a condition that NOTE: In suspensive condition or condition
affects the efficacy of the contract of sale. It precedent, the efficacy or the obligatory force is
merely provides the manner by which the full subordinated to the happening of a “future and
consideration is to be computed and the time uncertain event”; if the suspensive condition
within which the same is to be paid. But it does does not take place, the parties would stand as if
not affect in any manner the effectivity of the the conditional obligation never existed. (Cheng
contract. (Heirs of San Andres v. Rodriguez, G.R. v. Genato, 300 SCRA 722, GR 129760, December
No. 135634, May 31, 2000) 29, 1998; Pineda, 2000)
1. Creditor – May bring the appropriate actions Requisites for the application of Art. 1189
for the preservation of his right (NCC, Art. (SuRF LIDS)
1188), such as:
1. Must be a Real obligation;
a. Action for prohibition/restraining the 2. Object of the obligation is a Specific thing;
alienation of the thing pending the 3. Obligation is subject to a Suspensive
happening of the suspensive condition; condition.
b. Petition for the annotation of the 4. The condition is Fulfilled; and
creditor’s right with the proper registry; 5. There is Loss, Deterioration or
c. Action to demand security if the debtor Improvement of the thing during the
has become insolvent; pendency of the happening of the
d. Action to set aside alienations made by condition.
the debtor in fraud of creditors; or
e. Action against adverse possessors to NOTE: The same conditions apply to an obligor
interrupt the running of prescriptive in obligations subject to a resolutory condition.
period. In such cases, the third requisite must read,
“subject to a resolutory condition.”
2. Debtor – May recover what, during the same
time, he has paid by mistake in case of a Positive suspensive condition
suspensive condition. (NCC, Art. 1188)
A condition which requires a positive act on the
Effect of loss, deterioration and improvement part of the obligor that gives rise to the
in an obligation to deliver a determinate acquisition of rights.
thing subject to a suspensive condition
In case of a contract to sell, the obligation to
WITH WITHOUT deliver the subject properties becomes
BASIS DEBTOR’S DEBTOR’S demandable only upon the happening of the
FAULT FAULT positive suspensive condition (payment of full
Obligation is purchase price). Without full payment, there can
not be no breach of contract to speak of because the
Obligation
Loss extinguished. seller has no obligation yet to turn over the title.
extinguished.
Debtor pays (Reyes v. Tuparan, G.R. No. 188064, June 1, 2011)
damages.
Deterioration Creditor may Impairment Resolutory condition (1999 Bar)
395
Obligations
A condition where the rights already acquired conditions of the donation. Are the
are lost upon fulfillment of the condition. It is conditions imposed resolutory or
also known as condition subsequent. suspensive?
Effects of fulfillment of resolutory condition A: Under Art. 1181 of the CC, on conditional
obligations, the acquisition of rights, as well as
1. Real obligations: the extinguishment or loss of those already
acquired, shall depend upon the happening of
a. The parties shall return to each other the event which constitutes the condition. Thus,
what they have received (mutual when a person donates land to another on the
restitution); condition that the latter would build upon the
b. Obligation is extinguished; land a school, the condition imposed was not a
c. In case of loss, deterioration or condition precedent or a suspensive condition
improvement of the thing, NCC, Art. but resolutory. It is not correct to say that the
1189, with respect to the debtor, shall school house (or the establishment and use of a
be applied to the party who is bound to medical college in this case) had to be
return. (NCC, Art. 1190) constructed before the donation became
effective, that is, before the donee could become
2. Personal obligations – The courts shall the owner of the land, otherwise, it would be
determine, in each case, the retroactive invading the property rights of the donor. The
effect of the condition that has been donation had to be valid before the fulfillment of
complied with. (NCC, Art. 1187; NCC, Art. the condition. If there was no fulfillment or
1190) compliance with the condition, the donation may
now be revoked and all rights which the donee
Suspensive conditionv. Resolutory condition may have acquired under it shall be deemed lost
and extinguished. (Central Philippine University
SUSPENSIVE RESOLUTORY v. CA, G.R. No. 112127, July 17, 1995)
BASIS
CONDITION CONDITION
Obligation Negative resolutory condition
arises or
Effect of Obligation is An act, which if not done, would give rise to a
becomes
fulfillment extinguished. cause of action against the obligor. It
effective.
contemplates a situation where rights are
If not fulfilled, If not fulfilled, already acquired but subject to an obligation, the
Effect of non-fulfillment of which does not affect the
no juridical juridical
non- rights already acquired but merely gives a cause
relation is relation is
fulfillment of action in favor of the other party. In a contract
created. consolidated.
Rights are not of sale, the buyer’s non-payment of the price is a
yet acquired, Rights are negative resolutory condition. In such case, the
but there is already vested, seller has lost and cannot recover the ownership
When of the property, unless he takes action to set
hope or but subject to
rights are aside the contract of sale. (Heirs of Atienza v.
expectancy the threat or
acquired Espidol, G.R. No. 180665, August 11, 2010)
that they will danger of
soon be extinction.
acquired. Potestative Condition (1997, 2000, 2003 Bar)
Q: The late Don Lopez, Sr., who was then a A condition that depends upon the will of one of
member of the Board of Trustees of CPU, the contracting parties. (NCC, Art. 1182)
executed a deed of donation in favor of the
latter involving a parcel of land subject to the Effects of potestative conditions upon the
condition that it shall be utilized for the obligation
establishment and use of a medical college.
However, the heirs of Don Lopez, Sr., filed an If the condition is potestative in the sense that
action for annulment of the donation, its fulfillment depends exclusively upon the
reconveyance, and damages against CPU, will of the debtor, and the same is suspensive,
alleging that CPU did not comply with the both the condition and obligation are VOID.
397
Obligations
“Day certain” established for the benefit of one of the parties.
(NCC, Art.1196)
It is understood to be that which must
necessarily come, although it may not be known Effect of the term or period
when.
1. When it is for the benefit of the creditor –
Kinds of terms or periods Creditor may demand the performance of
the obligation at any time, but the debtor
1. Ex die – This is a term or period with cannot compel him to accept payment
suspensive effect. The obligation begins before the expiration of the period.
only from a day certain, in other words,
upon the arrival of the period. e.g. “on demand”
2. In diem – A period or term with a resolutory
effect. Up to a certain extent, the obligation 2. When it is for the benefit of the debtor –
remains valid, but upon the arrival of said Debtor may oppose any premature
period, the obligation terminates. demand on the part of the creditor for
3. Legal – A period granted under the performance of the obligation, or if he so
provisions of the law. desires, he may renounce the benefit of the
4. Conventional or voluntary – The period period by performing his obligation in
agreed upon or stipulated by the parties. advance.
5. Judicial – The period or term fixed by the
courts for the performance of an obligation Effect of a fortuitous event to an obligation
or for its termination. with a period
6. Definite – The exact date or time is known
and given. It only relieves the contracting parties from the
7. Indefinite – It is something that will surely fulfillment of their respective obligation during
happen, but the date of happening is the term or period.
unknown.
Instances where the court may fix the period
e.g. “I will pay when my means permit me to (1991, 1997, 2003 Bar)
do so.”
1. If the obligation does not fix a period, but
When the debtor binds himself to pay when his from its nature and circumstances it can be
means permit him to do so, the obligation is inferred that a period was intended by the
deemed with a period. (NCC, Art. 1180) This is parties;
valid because it is not the payment itself that is 2. If the duration of the period depends upon
dependent upon the will of the debtor but the the will of the debtor (1997, 2003 Bar);
moment of payment. 3. In case of reciprocal obligations, when there
is a just cause for fixing the period; or
As the time of payment is not fixed, the court 4. If the debtor binds himself when his means
must fix the same before any action for permit him to do so.
collection may be entertained, unless the prior
action of fixing the term or period will only be a NOTE: Once fixed by the courts, the period
formality and will serve no purpose but delay. cannot be changed by the parties. (NCC, Art.
(Tiglao v. Manila Railroad Co., 98 Phil. 181, GR. L- 1197)
7900, January 12, 1956)
Instances where the debtor loses his right to
Benefit of the period make use of the period
GR: Whenever in an obligation a period is 1. When after the obligation has been
designated, it is presumed to have been contracted, he becomes insolvent, unless he
established for the benefit of both the creditor gives a guaranty or security for the debt;
and the debtor 2. When he does not furnish to the creditor the
guaranties or securities which he has
XPN: When it appears from the tenor of the promised;
period or other circumstances that it was
399
Obligations
or prestation, for one - this The choice made takes effect only upon its
the obligation one must be communication to the other party, and from
is extinguished, delivered. such time, the obligation ceases to be alternative.
even if the (NCC, Art. 1201; NCC, Art. 1205)
substitute If all
obligation is prestations are NOTE: The notice of selection or choice may be
valid. impossible to in any form provided it is sufficient to make the
perform, the other party know that the election has been
obligation is made. (Tolentino,2002)
extinguished.
When alternative obligation becomes a
Loss of the When the simple obligation
substitute choice is given
before the to the creditor, 1. When the debtor has communicated the
substitution is the loss of the choice to the creditor;
Loss of made through alternative
substitute the fault of the through the 2. When debtor loses the right of choice among
debtor doesn’t fault of the the prestations whereby the debtor is
make him debtor renders alternatively bound, only one is practicable.
liable. him liable for (NCC, Art. 1202)
damages.
NOTE: The choice made by the debtor does not
Right to choose prestation in an alternative require the concurrence of the creditor.
obligation Otherwise, it would destroy the very nature of
the right to select given to the debtor.
GR: The right of choice belongs to the debtor.
Impossibility of choice due to creditor’s acts
XPN: Unless it has been expressly given to the
creditor. (NCC, Art. 1200) When choice the choice is rendered impossible
through the creditor’s fault, the debtor may
Limitations on debtor’s right to choose bring an action to rescind the contract with
damages. (NCC, Art. 1203
1. The debtor must absolutely perform the
Plurality of parties
chosen prestation. He cannot compel the
creditor to receive part of one and part of
the other undertaking; When there are various debtors or creditors, and
2. The debtor shall have no right to choose the obligation is joint, the consent of all is
those prestations which are impossible, necessary to make the selection effective
unlawful, or which could not have been the because none of them can extinguish the entire
object of the obligation (NCC, Art. 1200); obligation.
3. The debtor shall lose the right of choice
when among the prestation whereby he is If the obligation is solidary and there is no
alternatively bound, only one is stipulation to the contrary, the choice by one will
practicable (NCC, Art. 1202); be binding personally upon him; the choice of
4. The selection made by the debtor (or the one will be personally binding to him, but not as
creditor when it has been expressly to the others.
granted to him) cannot be subjected by
him to a condition or a term unless the Thus, if A and B solidarily bind themselves to
creditor (or debtor in case the choice is deliver a horse or a carabao to C, the selection of
with the creditor) consents thereto. A of the horse, when communicated to C, will
(Tolentino, 2002) bind him, and he cannot, later on, deliver the
carabao. It is, however, not binding on B, who
Effectivity of the choice in alternative may extinguish the obligation by delivering the
obligations carabao. (Tolentino, 2002)
401
Obligations
obligation. Gonzales, Chiu Chin Gin, Lo Kuan Chin, and
(Tolentino, INIMACO. INIMACO questions the execution,
1999) alleging that the alias writ of execution
altered and changed the tenor of the decision
Character of an obligation by changing their liability from joint to
solidary, by the insertion of the words
GR: When two or more creditors or two or more "AND/OR.” Is the liability of INIMACO
debtors concur in one and the same obligation, pursuant to the decision of the labor arbiter
the presumption is that the obligation is joint. solidary or not?
XPNs: The obligation shall only be solidary A: INIMACO's liability is not solidary but
when: (LEN-CJ) merely joint. Well-entrenched is the rule that
solidary obligation cannot lightly be inferred.
1. Law requires solidarity; There is a solidary liability only when the
obligation expressly so states, when the law so
2. Expressly stipulated that there is solidarity; provides or when the nature of the obligation so
requires.
3. Nature of the obligation requires solidarity;
In the dispositive portion of the labor arbiter,
e.g. Civil liability arising from crime. the word "solidary" does not appear. The said
fallo expressly states the following respondents
4. Charge or condition is imposed upon heirs therein as liable, namely: Filipinas Carbon
or legatees and the will expressly makes the Mining Corporation, Sicat, Gonzales, Chiu Chin
charge or condition in solidum (Manresa); or Gin, Lo Kuan Chin, and INIMACO. Nor can it be
inferred therefrom that the liability of the six
5. Solidary responsibility is imputed by a final respondents in the case below is solidary; thus,
Judgment upon several defendants. their liability should merely be joint. (INIMACO v.
(Gutierrez v. Gutierrez, 56 Phil 177, GR NLRC, G.R. No. 101723, May 11, 2000)
34840, September 23, 1931)
Q: Mactan Rock Industries, through its
Q: Chua bought and imported to the President and Chief Executive Officer
Philippines dicalcium phosphate. When the Tompar, entered into a Technical
cargo arrived at the Port of Manila, it was Consultancy Agreement (TCA) with Germo,
discovered that some were in apparent bad whereby the parties agreed, inter
condition. Thus, Chua filed with Smith Bell alia, that: (a) Germo shall stand as MRII's
and Co., Inc. (claiming agent of First marketing consultant who shall take charge
Insurance Co.) a formal statement of claim of negotiating, perfecting sales, orders,
for the loss. No settlement of the claim having contracts, or services of MRII, but there shall
been made, Chua then filed an action. Is be no employer-employee relationship
Smith, Bell, and Co., solidarily liable upon a between them; and (b) Germo shall be paid
marine insurance policy with its disclosed on a purely commission basis, including a
foreign principal? monthly allowance of P5,000.00. During the
effectivity of the TCA, Germo successfully
A: NO. Art. 1207 of the Civil Code clearly negotiated and closed with International
provides that "there is a solidary liability only Container Terminal Services, Inc. (ICTSI) a
when the obligation expressly so states, or when supply contract of 700 cubic meters of
the law or the nature of the obligation requires purified water per day. Accordingly, MRII
solidarity." The well-entrenched rule is that commenced supplying water to ICTSI on
solidary obligation cannot lightly be inferred. It February 22, 2007, and in turn, the latter
must be positively and clearly expressed. (Smith, religiously paid MRII the corresponding
Bell & Co., Inc. v. CA, G.R. No. 110668, February 6, monthly fees. Despite the foregoing, MRII
1997) allegedly never paid Germo his rightful
commissions amounting to P2,225,969.56 as
Q: The labor arbiter rendered a decision, the of December 2009, inclusive of interest.
fallo of which states the following Initially, Germo filed a complaint before the
respondents as liable, namely: FCMC, Sicat, National Labor Relations Commission
403
Obligations
4. If there are joint creditors, delivery must be JUDICIAL EFFECTS OF ACTIVE AND PASSIVE
made to all unless authorized by others ; SOLIDARITY (TOLENTINO, 2002)
5. Each joint creditor may renounce his share.
Active solidarity
Effects of different permutations of joint
indivisible obligations The essence of active solidarity consists in the
authority of each creditor to claim and enforce
1. If there are two or more debtors, compliance the rights of all, with the resulting obligation of
with the obligation requires the concurrence paying everyone what belongs to him; there is
of all the debtors, although each for his own no merger, much less a renunciation of rights,
share. The obligation can be enforced only but only mutual representation. It is thus
by preceding against all of the debtors; essentially a mutual agency. Its juridical effects
may be summarized as follows:
2. If there are two or more creditors, the
concurrence or collective act of all the 1. Since it is a reciprocal agency, the death of a
creditors, although each of his own shares, is solidary creditor does not transmit the
also necessary for the enforcement of the solidarity to each of his heirs but to all of
obligation; them taken together;
3. Each credit is distinct from one another; 2. Each creditor represents the others in the
therefore, a joint debtor cannot be required act of receiving payment and in all other acts
to pay for the share of another with debtor, which tend to secure the credit or make it
although he may pay if he wants to. more advantageous. Hence, if he receives
only a partial payment, he must divide it
In case of insolvency of one of the debtors, the among the other creditors. He can interrupt
others shall not be liable for his shares. To hold the period of prescription or render the
otherwise would destroy the joint character of debtor in default, for the benefit of all other
the obligation. (NCC, Art. 1209) creditors;
Effect of breach of a joint indivisible 3. One creditor, however, does not represent
obligation by one debtor the others in such acts as novation (even if
the credit becomes more advantageous),
If one of the joint debtors fails to comply with his compensation and remission. In these cases,
undertaking and the obligation can no longer be even if the debtor is released, the other
fulfilled or performed, it will then be converted creditors can still enforce their rights
into one of indemnity for damages. Innocent against the creditor who made the novation,
joint debtor shall not contribute to the compensation, or remission;
indemnity beyond his corresponding share of
the obligation. 4. The creditor and its benefits are divided
equally among the creditors, unless there is
SOLIDARY OBLIGATIONS an agreement among them to divide
differently. Hence, once the credit is
Each of the debtors is obliged to pay the entire collected, an accounting and a distribution
obligation, and each one of the creditors has the of the amount collected should follow ;
right to demand from any of the debtors the
payment or fulfillment of the entire obligation. 5. The debtor may pay to any solidary creditor,
but if a judicial demand is made on him, he
Kinds of solidary obligation must pay only to the plaintiff; and
1. Passive – Solidarity on the part of the 6. Each creditor may renounce his right even
debtors. against the will of the debtor, and the latter
2. Active – Solidarity on the part of the need not thereafter pay the obligation to the
creditors. former.
3. Mixed – Solidarity on both sides.
4. Conventional – agreed by the parties. Passive solidarity
5. Legal – imposed by law.
405
Obligations
not anything prejudicial to them (NCC, A: NO. Iya may not demand the P250,000 from
Article. 1212); however, any novation, Betty because the entire obligation has been
compensation, confusion, or remission of condoned by the creditor Jun. In a solidary
debt made by any solidary creditors or with obligation, the remission of the whole obligation
any of the solidary debtors shall extinguish obtained by one of the solidary debtors does not
the obligation without prejudice to his entitle him to reimbursement from his co-
liability for the shares of other solidary debtors. (NCC, Art. 1220)
creditors. (NCC, Articles. 1215 and 1219)
Q: Juancho, Don, and Pedro borrowed
Q: Joey, Jovy, and Jojo are solidary debtors P150,000 from their friend Cita to put up an
under a loan obligation of P300,000.00 which internet café, orally promising to pay her the
has fallen due. The creditor has, however, full amount after one year. Because of their
condoned Jojo's entire share in the debt. lack of business know-how, their business
Since Jovy has become insolvent, the creditor collapsed. Juancho and Don ended up
makes a demand on Joey to pay the debt. penniless, but Pedro was able to borrow
money and put up a restaurant which did
a. How much, if any, may Joey be compelled well. Can Cita demand that Pedro pay the
to pay? entire obligation since he, together with the
two others, promised to pay the full amount
b. To what extent, if at all, can Jojo be after one year? Defend your answer. (2015
compelled by Joey to contribute to such BAR)
payment? (1998 BAR)
A: NO. The obligation in this case is presumed to
A: be joint. The concurrence of two or more
creditors or two or more debtors in one and the
a. Joey can be compelled to pay only the same obligation does not imply that each one of
remaining balance of P200,000, in view of the former has the right to demand, or that each
the remission of Jojo’s share by the creditor. one of the latter is bound to render the entire
(NCC, Art. 1219) compliance of the prestation. (NCC, Art. 1207) In
a joint obligation, there is no mutual agency
b. Jojo can be compelled by Joey to contribute among the joint debtors such that if one of them
P50,000. When one of the solidary debtors is insolvent the others shall not be liable for his
cannot, because of his insolvency, reimburse share.
his share to the debtor paying the obligation,
such share shall be borne by all his co- To whom payment should be made in a
debtors, in proportion to the debt of each. solidary obligation
[NCC, Art. 1217(3)]
GR: To any of the solidary creditors.
Since the insolvent debtor's share, which
Joey paid was P100,000, and there are only XPN: If demand, judicial or extra-judicial, has
two remaining debtors - namely Joey and been made by one of the creditors, payment
Jojo - these two shall share equally the should be made to him. (NCC, Art. 1214)
burden of reimbursement. Jojo may thus be
compelled by Joey to contribute P50,000. In cases of solidary creditors, one may act for
all
Q: Iya and Betty owed Jun P500,000 for
advancing their equity in a corporation they Each one of the solidary creditors may execute
joined as incorporators. Iya and Betty bound acts that may be useful or beneficial to the
themselves solidarily liable for the debt. others, but he may not do anything which may
Later, Iya and Jun became sweethearts, so be prejudicial to them. (NCC, Art. 1212)
Jun condoned the debt of P500,000. May Iya
demand from Betty P250,000 as her share in NOTE: Prejudicial acts may still have valid legal
the debt? Explain with legal basis? (2015 effects, but the performing creditor shall be
Bar) liable to his co-creditors. (Pineda, 2000)
407
Obligations
4. The provisions of law affecting the also be any other thing stipulated by the parties,
prestation. including an act or abstention.
NOTE: The creditor need not present proof of 3. Penalty is Unconscionable even if there has
actual damages suffered by him in order that the been no performance.
penalty may be demanded. (NCC, Art. 1228) In
this jurisdiction, there is no difference between a Q: When can the creditor demand the
penalty and liquidated damages, so far as the enforcement of the penalty?
results are concerned. Whatever differences
exist between them, as a matter of language, A: Only when the non-performance is due to the
they are legally treated the same. (Rabuya, 2017) fault or fraud of the debtor. But the creditor does
not have to prove that there was fault or fraud of
Effect of incorporating a penal clause in an the debtor. The non-performance gives rise to
obligation the presumption of fault; and in order to avoid
the payment of penalty, the debtor has the
GR: The penalty fixed by the parties is burden of proving an excuse – either that the
compensation or substitute for damages in case failure of the performance was due to force
of breach. majeure or to the acts of the creditor himself.
XPNs: Damages shall still be paid even if there is NOTE: When there are several debtors in an
a penal clause if: obligation with a penal clause, the divisibility of
the principal obligation among the debtors does
1. There is a stipulation to the contrary; not necessarily carry with it the divisibility of
2. The debtor refuses to pay the agreed the penalty among them.
penalty; or
3. The debtor is guilty of fraud in the EXTINGUISHMENT OF OBLIGATIONS
fulfillment of the obligation. (NCC, Art. 1126)
Modes of extinguishment of an obligation
NOTE: The nullity of the penal clause does not
carry with it that of the principal obligation. For Principal modes (PaLoCo3N)
example, the penal clause may be void because it
is contrary to law, morals, good custom, public 1. Payment or performance;
order, or public policy. In such case, the principal 2. Loss of the thing due;
obligation subsists if valid. 3. Condonation or remission of debt;
4. Confusion or merger;
GR: The nullity of the principal obligation carries 5. Compensation;
with it that of the penal clause. (NCC, Art. 1230) 6. Novation (NCC, Art. 1231).
XPNs: The penal clause subsists even if the Other Modes (PARF)
principal obligation cannot be enforced:
7. Annulment;
1. When the penalty is undertaken by a third 8. Rescission;
person precisely for an obligation which is 9. Fulfillment of a resolutory condition;
unenforceable, voidable, or natural, in which 10. Prescription. (NCC, Art. 1231)
409
Obligations
NOTE: The enumeration is not exclusive. XPNs:
Payment may consist not only in the delivery of GR: Thing paid must be the very thing due and
money but also the giving of a thing (other than cannot be another thing even if of the same or
money), the doing of an act, or not doing of an more quality and value.
act. (NCC, Art. 1232)
XPNs:
Characteristics of payment
1. Dation in payment;
Integrity – The payment of the 2. Novation of the obligation; and
obligation must be completely made; 3. Obligation is facultative.
Identity – The payment of the obligation NOTE: In an obligation to do or not to do, an act
must consist in the performance of the very or forbearance cannot be substituted by another
thing due; act or forbearance against the obligee’s will.
411
Obligations
1. The person in whose favor the obligation Dation in Payment
has been constituted;
2. His successor in interest; or Alienation by the debtor of a particular property
3. Any person authorized to receive it. (NCC, in favor of his creditor, with the latter’s consent,
Art. 1240) for the satisfaction of the former’s money
obligation to the latter, with the effect of
NOTE: Payment made to one having apparent extinguishing the said money obligation.
authority to receive the money will, as a rule, be
treated as though actual authority had been Application of Payment
given for its receipt. Likewise, if payment is
Designation of the particular debt being paid by
made to one who by law is authorized to act for
the debtor who has two or more debts or
the creditor, it will work as a discharge. (Sps.
obligations of the same kind in favor of the same
Miniano v. Concepcion, G.R. No. 172825, October
creditor to whom the payment is made.
11, 2012)
Payment by Cession
Payment to an unauthorized person
Debtor cedes his property to his creditors so the
GR: Payment to an unauthorized person is not a latter may sell the same and the proceeds
valid payment (NCC, Art. 1241). realized applied to the debts of the debtor.
2. Payment to a third person insofar as it Act of depositing the object of the obligation
redounded to the benefit of the creditor; with the court or competent authority after the
and creditor has unjustifiably refused to accept the
same or is not in a position to accept it due to
Benefit to the creditor need not be proved: certain reasons or circumstances.
(RRE)
DATION IN PAYMENT (dacion en pago)
a. If after the payment, the third person
acquires the creditor’s Rights; The delivery and transmission of ownership of a
thing by the debtor to the creditor as an
b. If the creditor Ratifies the payment to accepted equivalent of the performance of the
the third person; or obligation. The property given may consist not
only of a thing but also of a real right. (Tolentino,
c. If by the creditor’s conduct, the debtor 2002) (2009 BAR)
has been led to believe that the third
person had authority to receive the NOTE: The undertaking partakes of the nature
payment (Estoppel). (NCC, Art. 1241) of sale; that is, the creditor is really buying the
thing or property of the debtor, payment for
3. Payment in good faith to the possessor of which is to be charged against the debtor’s debt.
credit. (NCC, Art. 1242) As such, the essential elements of a contract of
sale, namely, consent, object certain, and cause
NOTE : Payment made to the creditor by the or consideration, must be present.
debtor after the latter has been judicially
ordered to retain the debt shall not be valid. The requisites for dacion en pago are:
(NCC, Art. 1243)
1. There must be a performance of the
SPECIAL FORMS OF PAYMENT prestation in lieu of payment (animo
solvendi), which may consist in the delivery
3. There must be an agreement between the A: YES. MBTC was a purchaser in good faith.
creditor and debtor that the obligation is MBTC had no knowledge of the stipulation in the
immediately extinguished by reason of the lease contract. Although the same lease was
performance of a prestation different from registered and duly annotated, MBTC was
that due. (Caltex Philippines, Inc. v. IAC, G.R. charged with constructive knowledge only of the
No. 72703, November 13, 1992) fact of the lease of the land and not of the
specific provision stipulating transfer of
Q: Lopez obtained a loan in the amount of ownership of the building to the Jaymes upon
P20,000.00 from the Prudential Bank. He termination of the lease. While the alienation
executed a surety bond in which he, as was in violation of the stipulation in the lease
principal, and PHILAMGEN as surety, bound contract between the Jaymes and Asiancars,
themselves jointly and severally for the MBTC’s own rights could not be prejudiced by
payment of the sum. He also executed a deed Asiancars’ actions unknown to MBTC. Thus, the
of assignment of 4,000 shares of the Baguio transfer of the building in favor of MBTC was
Military Institution in favor of PHILAMGEN. valid and binding. (Jayme v. CA, G.R. No. 128669,
Is the stock assignment made by Lopez October 4, 2002)
dation in payment or pledge?
Assignment of credit
A: The stock assignment constitutes a pledge
and not a dacion en pago. Dation in payment is An agreement by virtue of which the owner of a
the delivery and transmission of ownership of a credit, known as the assignor, by a legal cause,
thing by the debtor to the creditor as an such as sale, dation in payment, exchange or
accepted equivalent of the performance of the donation, and without the consent of the debtor,
obligation. Lopez’s loan has not yet matured transfers his credit and accessory rights to
when he "alienated" his 4,000 shares of stock to another, known as the assignee. The assignee
PHILAMGEN. Lopez's obligation would only acquires the power to enforce it to the same
arise when he defaults in the payment of the extent as the assignor could enforce it against
principal obligation which is the loan, and the debtor. It may be in the form of a sale, but at
Philamgen had to pay for it. Since it is contrary times it may constitute a dation in payment, such
to the nature and concept of dation in payment, as when a debtor, in order to obtain a release
the same could not have been constituted when from his debt, assigns to his creditor a credit he
the stock assignment was executed. In case of has against a third person. As a dation in
doubt as to whether a transaction is a pledge or payment, the assignment of credit operates as a
a dation in payment, the presumption is in favor mode of extinguishing the obligation; the
of pledge, the latter being the lesser delivery and transmission of ownership of a
transmission of rights and interests. (Lopez v. CA, thing (in this case, the credit due from a third
G.R. No. L-33157, June 29, 1982) person) by the debtor to the creditor is accepted
as the equivalent of the performance of the
Q: Cebu Asiancars Inc., with the conformity of obligation.
the lessor, used the leased premises as
collateral to secure payment of a loan which Q: G & P Builders obtained a loan from
Asiancars may obtain from any bank, Metrobank and mortgaged parcels of land as
provided that the proceeds of the loan shall collateral. The parties executed a
be used solely for the construction of a Memorandum of Agreement where they
building which, upon the termination of the agreed that some parcels of the land
lease or the voluntary surrender of the mortgaged would be released and sold. The
leased premises before the expiration of the proceeds amounting to P15,000,000.00 were
contract, shall automatically become the deposited with Metrobank. Elite Union and
property of the lessor. Meeting financial Metrobank entered into a Loan Sale and
413
Obligations
Purchase Agreement where the latter sold G debts, public and private, and which cannot be
& P’s loan account to Elite Union. Metrobank refused by the creditor. (Tolentino, 2002)
claims that it is still entitled to the
P15,000,000.00 proceeds despite the sale of The legal tender covers all notes and coins
G & P’s loan account to Elite Union. issued by the Bangko Sentral ng Pilipinas and
guaranteed by the Republic of the Philippines.
Is Metrobank entitled to the P15,000,000.00 The amount of coins that may be accepted as
deposit? legal tender are:
A: NO. Through the assignment of credit, the 1. One-Peso, Five-Pesos, 10-Pesos coins in
new creditor is entitled to the rights and amount not exceeding P1,000.00
remedies available to the previous creditor.
Moreover, under Article 1627 of the Civil Code, 2. 25 centavos or less – in an amount not
"the assignment of a credit includes all the exceeding P100. 00. (BSP Circular No. 537,
accessory rights, such as a guaranty, mortgage, Series of 2006, July 18, 2006)
pledge, or preference." The Loan Sale and
Purchase Agreement entitled Elite Union to all Q: Northwest Airlines, through its Japan
the rights and interests that petitioner had as a Branch, entered into an International
creditor of respondent G & P, including the Passenger Sales Agency Agreement with CF
securities of the loan account. What was sold to Sharp, authorizing the latter to sell its air
Elite Union under the Loan Sale and Purchase transport tickets. CF Sharp failed to remit the
Agreement was respondent G & P's total loan proceeds of the ticket sales, thus, Northwest
obligation inclusive of the remaining securities Airlines filed a collection suit before the
and proceeds from the sale of some of the Tokyo District Court which rendered
securities as stated in the first MOA. judgment ordering CF Sharp to pay
(Metropolitan Bank & Trust Company v. G & P 83,158,195 Yen and damages for the delay at
Builders, Incorporated, Spouses Elpidio, and Rose the rate of 6% per annum. Unable to execute
Violet Paras, Spouses Jesus and Ma. Consuelo the decision in Japan, Northwest Airlines
Paras and Victoria Paras, G.R. No. 189509, filed a case to enforce said foreign judgment
November 23, 2015, as penned by J. Leonen) with the RTC of Manila. What is the rate of
exchange that should be applied for the
FORM OF PAYMENT payment of the amount?
1. Payment in cash – all monetary obligations A: The repeal of R.A. 529 by R.A. 8183 has the
shall be settled in Philippine currency. effect of removing the prohibition on the
However, the parties may agree that the stipulation of currency other than Philippine
obligation be settled in another currency at currency, such that obligations or transactions
the time of payment. (R.A. 8183, Sec. 1) may now be paid in the currency agreed upon by
the parties. Just like R.A. 529, however, the new
2. Payment in check or other negotiable law does not provide for the applicable rate of
instrument – not considered payment, they exchange for the conversion of foreign currency-
are not considered legal tender and may be incurred obligations in their peso equivalent. It
refused by the creditor except when: follows, therefore, that the jurisprudence
established in R.A. 529 regarding the rate of
a. the document has been encashed; or conversion remains applicable. Thus, in Asia
World Recruitment, Inc. v. National Labor
b. it has been impaired through the fault of Relations Commissio (GR 113363, August 24,
the creditor. (NCC, Art. 1249) 1999), the SC, applying RA 8183, sustained the
ruling of the NLRC that obligations in foreign
currency may be discharged in Philippine
PAYMENT IN CASH (2008 BAR)
currency based on the prevailing rate at the time
of payment. It is just and fair to preserve the real
Legal tender value of the foreign exchange-incurred
obligation to the date of its payment. (C.F. Sharp
Legal tender means such currency which in a & Cp., Inc. v. Northwest Airlines, Inc., G.R. No.
given jurisdiction can be used for the payment of 133498, April 18, 2002).
Q: Diaz & Company obtained a loan from In case an extraordinary inflation or deflation of
Pacific Banking Corp which was secured by a the currency stipulated should supervene, the
real estate mortgage. ABC rented an office value of the currency at the time of the
space in the building constructed on the establishment of the obligation shall be the basis
properties covered by the mortgage contract. of payment unless there is an agreement to the
The parties then agreed that the monthly contrary. (NCC, Art. 1250)
rentals shall be paid directly to the
mortgagee for the lessor's account. The doctrine of unforeseen risks can be applied
Thereafter, FEBTC purchased the credit of when the currency is devaluated in terms
Diaz & Company in favor of PaBC, but it was beyond what could have been reasonably
only after two years that Diaz was informed foreseen by the parties, and the effects of the
about it. Diaz asked the FEBTC to make an devaluation should not be borne by the creditor
accounting of the monthly rental payments alone. The revaluation of the credit in such cases
made by Allied Bank. Diaz tendered to FEBTC must be made according to the principles of
the amount of P1, 450, 000. 00 through an good faith and in view of the circumstances of
Interbank check, in order to prevent the each particular case, recognizing the real value
imposition of additional interests, penalties of the credit as in consonance with the intent of
and surcharges on its loan but FEBTC did not the parties.
accept it as payment, instead, Diaz was asked
to deposit the amount with the FEBTC’s NOTE: Requisites for application of Art. 1250,
Davao City Branch Office. Was there a valid NCC. (Rabuya, 2017)
tender of payment?
415
Obligations
1. That there was an official declaration of extra- a. When there is mutual agreement
ordinary inflation or deflation from the BSP; between the parties (Tolentino, 2002);
b. The application is made by the party
2. That the obligation was contractual in nature; for whose benefit the term has been
and constituted. (NCC, Art. 1252(1])
3. That the parties expressly agreed to consider 5. The payment made is not sufficient to cover
the effects of the extraordinary inflation or all obligations. Right of the debtor in the
deflation. application of payments.
Moreover, if the debtor changes his domicile in As far as the debtor is concerned, the right to
bad faith or after he has incurred in delay, the make an application of payment must be
additional expenses shall be borne by him. exercised at the time payment is made.
(Bachrach Garage and Taxicab Co., v. Golingco,
The foregoing are without prejudice, however, to G.R. No. 13761, July 12, 1919)
the venue under the Rules of Court.
Limitation upon right to apply payment
APPLICATION OF PAYMENTS
If the debt produces interests, payment of the
principal shall not be deemed to have been made
It is the designation of the debt to which the until the interest has been covered. (NCC, Art.
payment must be applied when the debtor has 1253)
several obligations of the same kind in favor of
the same creditor. (NCC, Art. 1252) NOTE: This applies only in the absence of a
verbal or written agreement to the contrary; in
Requisites: other words, it is merely directory and not
mandatory. (Magdalena Estates, Inc. v. Rodriguez,
1. There is only one debtor and creditor; G.R. No. L-18411, December 17, 1966)
2. The debtor owes the creditor two or more
debts; Legal application of payment
3. Debts are of the same kind or identical
nature; If both the creditor and the debtor failed to
exercise the right of application of payment or
e.g. both debts are money obligations legal application of payment will now be
obtained on different dates; governed.
4. All debts are due and demandable, except: Rules on legal application of payment
1. When a person is bound as principal in one Debtor abandons all of his property for the
obligation and as surety in another, the benefit of his creditors in order that from the
former is more onerous. proceeds thereof, the latter may obtain payment
2. When there are various debts, the oldest of credits.
ones are more burdensome.
3. Where one bears interest and the other does Requisites:
not, even if the latter is the older obligation,
the former is considered more onerous. 1. Plurality of debts;
4. Where there is an encumbrance, the debt 2. Partial or relative insolvency of the debtor;
with a guaranty is more onerous than that and
without security. 3. Acceptance of the cession by the creditors.
5. With respect to indemnity for damages, the
debt which is subject to the general rules on
damages is less burdensome than that in Dation in payment vs. Payment in cession
which there is a penal clause.
6. The liquidated debt is more burdensome
DATION IN PAYMENT PAYMENT IN CESSION
than the unliquidated one.
7. An obligation in which the debtor is in Number of creditors
default is more onerous than one in which Maybe one creditor. Plurality of creditors.
he is not. (Tolentino, 2002) Financial condition of the debtor
Not necessarily in
Debtor must be partially
NOTE: The payment shall be applied state of financial
or relatively insolvent.
proportionately if it happens that the debt is difficulty.
of the same nature and burden. Object
Thing delivered is
Universality or property
Effect of creditor’s refusal considered as the
of debtor is what is
equivalent of
ceded.
If the debtor makes a proper application of performance.
payment, but the creditor refuses to accept it Extent of the extinguishment
because he wants to apply it to another debt, Payment
such creditor will incur in delay. (Tolentino, extinguishes
1991) obligation to the Merely releases debtor
extent of the value of for net proceeds of
PAYMENT BY CESSION the thing delivered as things ceded or
agreed upon, proved, assigned, unless there is
Cession or implied from the contrary intention.
conduct of the
Assignment or cession is the abandonment of creditor.
the universality of the property of the debtor for Ownership
the benefit of his creditors in order that such Ownership is
Ownership is not
property may be applied to the payment of the transferred to CR
transferred.
credits. upon delivery.
Novation
The initiative comes from the debtor, but it must An act of novation. Not an act of novation.
be accepted by the creditors in order to become Presumption of insolvency
effective. A voluntary assignment cannot be Does not presuppose
Presupposes insolvency.
imposed upon a creditor who is not willing to insolvency.
accept it.
Tender of payment
If the offer is not accepted by the creditors, the
same end may be attained by a proceeding in The definitive act of offering to the creditor what
insolvency instituted in accordance with is due to him together with the demand that the
Insolvency Law.
417
Obligations
creditor accepts the same. (FEBTC v. Diaz Realty NOTE: Requirement No. 5 may be complied
Inc., G.R. No. 138588, August 23, 2001) with by the service of summons upon the
defendant creditor together with a copy of
Tender of payment is the manifestation by the complaint.
debtors of their desire to comply with or to pay
their obligation. (Sps. Benos v. Sps. Lawilao, G.R. 6. After this notice, the creditor may:
No. 172259, December 5, 2006)
(a) Accept the thing or amount
NOTE: If the creditor refuses the tender of deposited, in which case the matter of
payment without just cause, the debtors are the payment is terminated;
discharged from the obligation by the
consignation of the sum due. (Sps. Benos v. Sps. (b) Refuse to accept the thing or
Lawilao, G.R. No. 172259, December 5, 2006) amount, in which case a trial must be
held to determine the validity of
There must be a fusion of intent, ability, and consignation.
capability to make good such offer, which must
be absolute and must cover the amount due. 7. The creditor may neither accept nor refuse
(FEBTC v. Diaz RealtyInc., G.R. No. 138588, August in which case the debtor may ask the court
23, 2001) to cancel the obligation after showing that
the requisites of consignation have been
Tender of payment is a preparatory act which complied with. (NCC, Art. 1260)
precedes consignation. The tender of payment
by itself does not cause the extinguishment of NOTE: Tender of payment must be valid and
the obligation unless completed by consignation. unconditional. (Sps. Rayos v. Reyes, G.R. No.
(Tolentino, 1991) 150913, February 20, 2003)
419
Obligations
same day, Y also went to the bank and b. The thing lost is without fault of the
offered to pay the loan, but the bank refused debtor; and
to accept the payment. Y then filed an action c. The thing is lost before the debtor has
for consignation without notifying X. Is there incurred delay. (NCC, Art. 1262)
a valid consignation by Y of the balance of the
contract price? GR: The obligation is extinguished when the
object of the obligation is lost or destroyed.
A: NO, there is no valid consignation by Y of (NCC, Art. 1262)
the balance of the contract price. Y filed the
petition for consignation against the bank XPNs: (LAS-CD-PCG)
without notifying X, resulting to the former’s
failure to prove the payment of the balance of a. Law provides otherwise (NCC, Art.
the purchase price and consignation. In fact, 1262);
even before the filing of the consignation case, Y b. Nature of the obligation requires the
never notified X of their offer to pay. (Sps. Benos Assumption of risk;
v. Sps. Lawilao, G.R. No. 172259, December 5, c. Stipulation to the contrary;
2006) d. Debtor Contributed to the loss;
e. Loss the of the thing occurs after the
LOSS OF THE THING DUE debtor incurred in Delay;
f. When debtor Promised to deliver the
Loss here is not contemplated in its strict and same thing to two or more persons who
legal meaning and is not limited to obligations to do not have the same interest (NCC, Art.
give, but extends to those which are personal, 1165);
embracing, therefore, all causes which may g. When the debt of a certain and
render impossible the performance of the determinate thing proceeds from a
prestation. In some Codes, this is designated as Criminal offense (NCC, Art. 1268); and
impossibility of performance. h. When the obligation is Generic. (NCC,
Art. 1263)
NOTE: The impossibility of performance must
be subsequent to the execution of the contract in 2. Generic obligation to give:
order to extinguish the obligation; if the
impossibility already existed when the contract GR: The obligation is not extinguished
was made, the result is not extinguishment but because a generic thing never perishes
inefficacy of the obligation under NCC, Articles (genus nun guam perit). (NCC, Art. 1263)
1348 and 1493.
XPNs:
When a thing is considered lost (DOPE)
a. In case of generic obligations whose
1. It Disappears in such a way that its existence object is a particular class or group with
is unknown; specific or determinate qualities
2. It goes Out of commerce; (delimited generic obligation);
3. It Perishes; or b. In case the generic thing has already
4. Its Existence is unknown or if known, it been segregated or set aside, in which
cannot be recovered. case, it has become specific.
NOTE: The impossibility must be after the NOTE: Principle of unforeseen events applies
constitution of the obligation. If it was when the service has become so difficult as to be
before, there is nothing to extinguish. manifestly beyond the contemplation of the
parties, the obligor may also be released
Effect of partial loss therefrom in whole or in part. (NCC, Art. 1267)
However, this principle cannot be applied
1. Due to the fault or negligence of the debtor – absolutely in contractual relations since parties
Creditor has the right to demand the are presumed to have assumed the risk of
rescission of the obligation or to demand unfavorable developments. (Pineda, 2000) This
specific performance, plus damages, in rule also does not apply to obligations for the
either case. payment of a sum of money when there is a
change in the value of the stipulated currency. In
2. Due to fortuitous event: such case, Art. 1250 will apply. (Tolentino, 2002)
421
Obligations
1267 speaks of a prestation involving service Requisites of condonation (GAIDE)
which has been rendered difficult by unforeseen
subsequent events as to be manifestly beyond 1. Must be Gratuitous;
the contemplation of the parties. Additionally, 2. Acceptance by the debtor;
the Asian Currency Crisis befell from July 1997 3. Must not be Inofficious;
and for some time thereafter, but Comglasco 4. Formalities provided by law on Donations
cannot be permitted to blame its difficulties on must be complied with if condonation is
the said regional economic phenomenon express; and
because it entered into the subject lease only on 5. An Existing demandable debt at the time the
August 2000, more than three years after it remission is made.
began, and by then Comglasco had known what
business risks it assumed when it opened a new NOTE: Remission or condonation of a debt is in
shop in Iloilo City. (Comglasco Corp. v. Santos Car reality a donation. (Jurado, 2010)
Check Center Corp., G.R. No. 202989, March 25,
2015) Form of express remission
Debt which proceeds from a criminal offense It must comply with the forms of donation. (NCC,
Art. 1270)
GR: Debtor shall not be exempted from the
payment of his obligation regardless of the cause Form of implied remission
of the loss.
The Code is silent with respect to the form of
XPN: The thing having been offered by debtor to implied remission. There must be acceptance by
the person who should receive it, the latter the obligor or debtor. (Jurado, 2010)
refused without justification to accept it. (NCC,
Art. 1268) Manner and kinds of remission:
NOTE: Offer referred in Art. 1268 is different 1. Total – Refers to the remission of the whole
from consignation; the former refers to the of the obligation;
extinguishment of obligation through loss, while 2. Partial – Remission of the part of the
the latter refers to the payment of the obligation. obligation: to the amount of indebtedness or
to an accessory obligation only (such as
Creditor’s right of action pledge or interest), or to some other aspect
of the obligation (such as solidary);
The obligation, having been extinguished by 3. Inter vivos - Effective during the lifetime of
the loss of the thing, the creditor shall have all the creditor;
the rights of action which the debtor may have 4. Mortis causa - Effective upon death of the
against third persons by reason of the loss. (NCC, creditor. In this case, the remission must be
Art. 1269) contained in a will or testament (Tolentino,
1991);
This refers not only the rights and actions which 5. Express – When it is made formally, it
the debtor may have against third persons, but should be in accordance with the forms of
also to any indemnity which the debtor may ordinary donations with regard to
have already received. acceptance, amount, and revocation; and
6. Implied – When it can be inferred from the
CONDONATION OR REMISSION OF DEBT acts of the parties
(2000 BAR)
Effect of delivery of evidence of credit to
An act of liberality by virtue of which the debtor
creditor, without receiving any price or
equivalent, renounces the enforcement of the If the creditor voluntarily delivers the private
obligation, as a result of which it is extinguished document evidencing the credit to the debtor,
in its entirety or in that part or aspect of the there is a presumption that he renounces his
same to which the condonation or remission right of action against the latter for the collection
refers. (Pineda, 2000) of the said credit. (Jurado, 2010)
The renunciation of the principal debt shall The creditor and debtor become the same
extinguish the accessory, but the waiver of the person involving the same obligation. Hence, the
latter shall leave the former in force. (NCC, Art. obligation is extinguished. (NCC, Art. 1275)
1273)
There can be partial confusion
NOTE: It is presumed that the accessory
obligation of pledge has been remitted when the It will be definite and complete up to the extent
thing pledged, after its delivery to the creditor, is of the concurrent amount or value, but the
found in the possession of the debtor, or of a remaining obligation subsists. (Pineda, 2000)
third person who owns the thing. (NCC, Art.
1274) Effect of confusion or merger in relation to
the guarantors
Effect of inofficious condonation
1. Merger which takes place in the person of
It may be totally revoked or reduced depending the principal debtor or principal creditor
on whether or not it is totally or only partly benefits the guarantors. The contract of
inofficious. (Pineda, 2000) guaranty is extinguished;
The obligation remitted is considered inofficious 2. Confusion which takes place in the person of
if it impairs the legitime of the compulsory heirs. any of the guarantors does not extinguish
(NCC, Art. 752) the obligation. (NCC, Art. 1276)
423
Obligations
GR: Joint obligation is not extinguished since guarantor who may set up compensation as
confusion is not definite and complete with regards what the creditor may owe the
regard to the entire obligation. A part of the principal (NCC, Articles. 1279-1280);
obligation still remains outstanding. 2. Both debts consist in sum of money, or if the
things due are consumable, they be of the
XPN: Obligation is extinguished with respect same kind and also of the same quality if the
only to the share corresponding to the debtor or latter has been stated;
creditor concerned. In effect, there is only partial 3. Both debts are due;
extinguishment of the entire obligation. (NCC, 4. Both debts are liquidated and demandable;
Art. 1277; Pineda, 2000) 5. Neither debt must be retained in a
controversy commenced by third person
Effect of confusion or merger in one debtor and communicated in due time to the debtor
or creditor in a solidary obligation (neither debt is garnished) (NCC, Art. 1279);
and
If a solidary debtor had paid the entire 6. Compensation must not be prohibited by
obligation, the obligation is totally extinguished law. (NCC, Art. 1290)
without prejudice to the rights of the solidary
debtor who paid, to proceed against his solidary NOTE: When all the requisites mentioned in Art.
co-debtors for the latter’s individual 1279 of the CC are present, compensation takes
contribution or liability. (NCC, Art. 1215) effect by operation of law, and extinguishes both
debts to the concurrent amount, even though the
Revocation of confusion or merger of rights creditors and debtors are not aware of the
compensation. (NCC, Art. 1290)
If the act which created the confusion is revoked
for some causes such as rescission of contracts Effects of compensation:
or nullity of the will or contract, the confusion or
merger is also revoked. The subject obligation is 1. Both debts are extinguished;
revived in the same condition as it was before 2. Interests stop accruing on the extinguished
the confusion. obligation or the part extinguished;
3. The period of prescription stops with
NOTE: During such interregnum, the running of respect to the obligation or part
the period of prescription of the obligation is extinguished; and
suspended. (Pineda, 2000) 4. All accessory obligations of the principal
obligation which has been extinguished are
COMPENSATION also extinguished. (4 Salvat 353)
It is a mode of extinguishing obligations that Q: Team Image and Solar Team both
take place when two persons, in their own right, breached each other’s duties in their
are creditors and debtors of each other. (NCC, compromise agreement. As a result, both
Art. 1278) owe each other 2,000,000. Is compensation
proper?
It is the offsetting of the respective obligation of
two persons who stand as principal creditors A: YES. In order that compensation may be
and debtors of each other, with the effect of proper, it is necessary: (1) That each one of the
extinguishing their obligations to their obligors be bound principally, and that he be at
concurrent amount. the same time a principal creditor of the other;
(2) That both debts consist in a sum of money, or
Requisites of compensation (1998, 2002, if the things due are consumable, they be of the
2008, 2009 BAR) same kind, and also of the same quality if the
latter has been stated; (3) That the two debts be
For the compensation to be proper, it is due; (4) That they be liquidated and
necessary that (NCC, Art. 1279): demandable; (5) That over neither of them there
be any retention or controversy, commenced by
third persons and communicated in due time to
1. Each one of the obligors must be bound
principally, and that he be at the same time a the debtor. (Team Image Entertainment, Inc., And
Felix S. Co. v. Solar Team Entertainment, Inc., G.R.
principal creditor of the other except
425
Obligations
affirm legal compensation. (Union Bank Of The parties Reason: paid; and
Philippines vs. Development Bank Of The Compensatio
Philippines, G.R. No. 191555, January 20, 2014) n operates by Creditor
law, not by must have
Q: May the parties agree upon the the act of the capacity to
compensation of debts which are not due? parties. receive
payment.
A: YES. Under Art. 1282, conventional or The
voluntary compensation is not limited to performance
As the There can be
obligations which are not yet due. The parties must be
susceptibilit partial
may compensate by agreement any obligations, complete and
y of partial extinguishme
in which the objective requisites provided for indivisible
extinguishm nt of the
legal compensation are not present. It is unless waived
ent obligation.
necessary, however, that the parties should have by the
the capacity to dispose of credits which they creditor.
compensate, because the extinguishment of the Legal
Takes effect
obligations in this case arise from their wills and As to the compensation
by the act of
not from law. operation of takes place by
the parties
extinguishin operation of
and involves
Q: May rescissible or voidable debts which g the law without
delivery or
are already compensated be rescinded or obligation simultaneous
action.
annulled? What are its effects? delivery.
It is not
A: YES. Although a rescissible or voidable debt necessary
Parties must
can be compensated before it is rescinded or As to the that the
annulled, the degree of rescission or annulment be mutually
relationship parties be
debtors and
is retroactive, and the compensation must be of the mutually
creditors of
considered as cancelled. And as rescission or parties debtors and
each other.
annulment requires mutual restitution, the party creditors of
whose obligation is annulled or rescinded can each other.
thus recover to the extent that his credit was
extinguished by the compensation; because to Compensation v. Confusion
that extent, he is deemed to have made a
payment. COMPENSATION CONFUSION
(NCC, Articles. 1278- (NCC, Articles.
Compensation v. Payment 1279) 1275-1277)
One person where
COMPENSAT Two persons who are
BASIS PAYMENT qualities of debtor
ION mutual debtors and
and creditor are
A mode of creditors of each other.
merged.
extinguishing At least two obligations. One obligation.
to the
Payment
concurrent Compensation v. Counterclaim or Set-off
means not
amount, the
only delivery
obligations of COUNTERCLAIM/
of money but COMPENSATION
Definition those persons SET-OFF
also
who in their Need not to be
performance
own right are pleaded; and
of an
reciprocally
obligation.
debtors and Takes place by
creditors of operation of law and It must be pleaded to
each other. extinguishes be effectual.
As to the Capacity of Debtor must reciprocally the two
necessity of parties not have capacity debts as soon as they
the capacity necessary. to dispose of exist simultaneously,
of the the thing to the amount of their
Q: When is compensation not proper? NOTE: Compensation is not proper where the
claim of the person asserting the set-off against
the other is not clear or liquidated;
427
Obligations
compensation cannot extend to unliquidated, damages and the amount thereof (NCC, Art.
disputed claim existing from breach of contract. 1283).
(Silahis Marketing Corp. v. IAC, G.R. No. L-74027,
December 7, 1989) NOTE : For judicial set-off to apply, the amount
of damages or the claim sought to be
Q: Atty. Laquihon, in behalf of Pacweld, filed a compensated must be duly proven. (Fermin Ong
pleading addressed to MPCC titled “motion to v. CA, G.R. No. 75819, September 8, 1989)
direct payment of attorney's fee”, invoking a
decision wherein MPCC was adjudged to pay All the requisites mentioned in Art. 1279 must
Pacweld the sum of P10, 000. 00 as attorney's be present, except that at the time of filing the
fees. MPCC filed an opposition stating that pleading, the claim need not be liquidated. The
the said amount is set-off by a like sum of liquidation must be made in the proceedings.
P10, 000. 00, collectible in its favor from
Pacweld also by way of attorney's fees which Facultative compensation
MPCC recovered from the same CFI of Manila
in another civil case. Was there legal One of the parties has a choice of claiming or
compensation? opposing the compensation but waives his
objection thereto such as an obligation of such
A: YES. MPCC and Pacweld were creditors and party is with a period for his benefit alone and
debtors of each other, their debts to each other he renounces the period to make the obligation
consisting in final and executory judgments of become due.
the CFI in two separate cases. The two
obligations, therefore, respectively offset each Facultative compensation is unilateral and does
other, compensation having taken effect by not require mutual agreement; voluntary or
operation of law and extinguished both debts to conventional compensation requires mutual
the concurrent amount of P10,000.00, pursuant consent.
to the provisions of Articles 1278, 1279 and
1290 of the Civil Code, since all the requisites e.g. X owes Y P100,000 demandable and due on
provided in Art. 1279 of the said Code for April 1, 2012. Y owes X P100, 000 demandable
automatic compensation "even though the and due on or before April 15, 2012. Y, who was
creditors and debtors are not aware of the given the benefit of the term, may claim
compensation" were present. (Mindanao compensation on April 1, 2012. On the other
Portland Cement Corp. v. CA, G.R. No. L-62169, hand, X, who demands compensation, can be
February 28, 1983) properly opposed by Y because Y could not be
made to pay until April 15, 2012.
Conventional compensation
NOTE: Compensation can be renounced either at
It is one that takes place by agreement of the the time an obligation is contracted or
parties. afterwards. (Tolentino, 1991) It can be
renounced expressly or impliedly.
Effectivity of conventional compensation
Examples of implied renunciation:
For compensation to become effective:
1. By not setting it up in the litigation;
GR: The mutual debts must be both due. (NCC, 2. By consenting to the assignment of credit
Art. 1279) under NCC, Art. 1285; or
3. By paying debt voluntarily, with knowledge
XPN: The parties may agree that their mutual that it has been extinguished by
debts be compensated even if the same are not compensation. (Tolentino, 1991)
yet due. (NCC, Art. 1282)
Q: Eduardo was granted a loan by XYZ Bank
Judicial compensation for the purpose of improving a building
which XYZ leased from him. Eduardo
If one of the parties to a suit over an obligation executed the promissory note in favor of the
has a claim for damages against the other, the bank, with his friend Ricardo as cosignatory.
former may set it off by proving his right to said In the PN, they both acknowledged that they
b. NO, because there was no prior demand on 5. Civil liability from a crime.
Ricardo, depriving him of the right to
reasonably block the foreclosure by NOTE: NCC, Art. 1288 prohibits compensation if
payment. The waiver of prior demand in the one of the debts consists in civil liability arising
PN is against public policy and violates the from a penal offense. However, the victim is
right to due process. Without demand, there allowed to claim compensation.
is no default and the foreclosure is null and
void. Since the mortgage, insofar as Ricardo
429
Obligations
If one or both debts are rescissible or NOVATION (1994, 2008 Bar)
voidable
It is the substitution or change of an obligation
When one or both debts are rescissible or by another, resulting in its extinguishment or
voidable, they may be compensated against each modification, either by changing the object or
other before they are judicially rescinded or principal conditions, or by substituting another
avoided. (NCC, Art. 1284) If the prescriptive in the place of the debtor or by subrogating a
period had already lapsed, there is automatic third person to the rights of the creditor.
compensation and the same will not be (Pineda, 2000)
disturbed anymore. Whereas, if the debt is
rescinded or annulled, compensation shall be Requisites of novation (OIC –SN)
restitution of what each party had received
before the rescission or annulment. 1. Valid Old obligation;
NOTE: Novation is never presumed and the NOTE: If it is the creditor who
animus novandi (intent to make a new initiated the change of debtor, it is
obligation) whether totally or partially, must considered expromission.
appear by express agreement of the parties or by
their acts that are too clear and unequivocal to 2. Subrogating a third person to the
be mistaken. rights of the creditor (active
novation).
Two-fold functions of novation
c. Mixed – Combination of the objective
1. It extinguishes the old obligation; and and subjective novation.
2. Creates a new obligation in lieu of the old
one. 3. As to form of their constitution
431
Obligations
3. The extinguishment of the old 1. Substitution is upon the initiative or
obligation; and proposal of the old debtor himself by
4. The birth of a valid new obligation. proposing to the creditor the entry of
(Iloilo Traders Finance, Inc., v. Heirs another (third person) as the new debtor
of Soriano, G.R. No. 149683, June 16, who will replace him in payment of the
2003) obligation;
2. The creditor accepts and the new debtor
The extinctive novation would thus have agrees to the proposal of the old debtor; and
the twin effects of first, extinguishing an 3. The old debtor is released from the
existing obligation and second, creating obligation with the consent of the creditor.
a new one in its stead.
Insolvency of the new debtor in delegacion
b. Partial or modificatory – Original
obligation is not extinguished but GR: Insolvency of the new debtor (delegado),
merely modified. who has been proposed by the original debtor
(delegante) and accepted by the creditor
5. As to their origin (delegatario), shall not revive the action of the
latter against the original obligor. (NCC, Art.
a. Legal novation – By operation of law. 1295)
(NCC, Art. 1300 & 1302)
XPNs: Original debtor shall be held liable; if:
b. Conventional novation – By agreement
of the parties. (NCC, Arts. 1300-1301) 1. Insolvency was already existing and of
public knowledge, or known to the debtor
6. As to presence of absence of condition (NCC, Art. 1295); or
2. Insolvency of the new debtor was already
a. Pure – New obligation is not subject to a existing and known to the original debtor at
condition. the time of the delegation of the debt to the
new debtor. (NCC, Art. 1295)
b. Conditional – When the creation of the
new obligation is subject to a condition. NOTE : In both cases, the creditor must NOT
know that the new debtor is insolvent ;
Rights of the new debtor otherwise, the creditor would be considered
estopped.
1. With the debtor’s consent – Right of
reimbursement and subrogation. In both cases, the insolvency must have existed
at the time the old debtor delegated his debt.
2. Without the consent of the old debtor or (Sta. Maria, 2017)
against his will – Right to beneficial
reimbursement. Requisites of expromission
NOTE: Creditor’s consent or acceptance of the Insolvency of the new debtor in expromission
substitution of the old debtor by a new one may
be given at any time and in any form while the If substitution is without the knowledge or
agreement of the debtor subsists. (Asia Banking against the will of the debtor, the new debtor’s
Corp. v. Elser, G.R. No. L-30266, March 25, 1929) insolvency or non-fulfillment of the obligation
shall not give rise to any liability on the part of
Requisites of delegacion the original debtor. (NCC, Art. 1294)
433
Obligations
Person who debtor was old debtor or
initiated the Old debtor Third person already against his will
substitution existing and – the new
It may be express or implied known to the debtor’s
Consent of from his acts but not from his original insolvency or
the creditor mere acceptance of payment by debtor at the non-
a third party. time of the fulfillment of
With or delegation of the obligation
With the the debt to the shall not give
without the
consent of the new debtor. rise to any
Consent of knowledge of
old debtor liability on the
the old the debtor or
(since he
debtor against the part of the
initiated the original
will of the old
substitution). debtor.
debtor.
Consent is
needed but it Q: Metro Corporation obtained a loan from
Consent of need not be Consent is Allied Bank covered by promissory notes,
third person given needed. letters of credit, and trust receipts. By way of
simultaneousl security, Metro’s officers individually
y. executed a continuing guaranty in favor of
Intention of Released from the obligation Allied Bank. Metro’s officers failed to settle
substitution with the consent of the creditor. their obligations prompting Allied Bank to
demand for payment to no avail. In order to
With the settle their debts, they offered the sale of
debtor’s Metro’s remaining assets (machines and
consent – right equipment) to the Bank which the latter
of refused. Meanwhile, Starpeak Corporation,
With the acting through Allied Bank’s counsel, entered
reimbursemen
debtor’s into an agreement with Metro to buy the
t and
consent – right machines that were reduced to mere scraps
Rights of the subrogation.
of of metals. Starpeak, unfortunately, reneged
new debtor Without the
reimburseme on its obligation to Metro. In this regard,
consent of the
nt and Metro asseverates that their failure to pay
old debtor or
subrogation. their outstanding loan obligations to Allied
against his will
– right to Bank must be considered as force majeure,
beneficial and since Allied Bank was the party, through
reimbursemen their counsel, that accepted the terms and
t. conditions of payment proposed by Starpeak,
Shall not With the petitioners must therefore be deemed to
revive the debtor’s have settled their obligations to Allied Bank.
action of the consent - If the Were the loan obligations under the
latter against old debtor promissory notes, letters of credit, and trust
the original gave his receipts have already been extinguished?
obligor. consent and
Insolvency or Original the new A: NO. Article 1231 of the New Civil Code states
nonfulfillme debtor shall debtor could that obligations are extinguished either by
nt of the be held liable: not fulfill the payment or performance, the loss of the thing
obligation of Insolvency obligation, the due, the condonation or remission of the debt,
the new was already old debtor the confusion or merger of the rights of creditor
debtor existing and of should be and debtor, compensation or novation. Starpeak
public liable for the and Metro’s agreement is a sale of assets
knowledge, or payment of his contract, while Metro’s obligations to Allied
known to the original Bank arose from various loan transactions.
debtor. obligation. Absent any showing that the terms and
Insolvency of Without the conditions of the latter transactions have been,
the new consent of the in any way, modified or novated by the terms
435
Obligations
a. Void – Novation is void. (NCC, Art. 1298) Q: Will a contract of suretyship, which is
secondary to a principal obligation, be
b. Voidable – Novation is valid provided extinguished when novation occurs?
that the annulment may be claimed only
by the debtor or when ratification A: IT DEPENDS. A surety is released from its
validates acts. (NCC, Art. 1298) obligation when there is a material alteration of
the principal contract in connection with which
c. If the old obligation was subject to a the bond is given, such as a change which
suspensive or resolutory condition, the imposes a new obligation on the promising
new obligation shall be under the same party, or which takes away some obligation
condition, unless it is otherwise already imposed, or one which changes the legal
stipulated. (NCC, Art. 1299) effect of the original contract and not merely its
form. (Philippine Charter Insurance Corporation
3. If old obligation is conditional and the new v. Petroleum Distributors & Service Corporation,
obligation is pure: G.R. No. 180898, April 18, 2012)
437
Obligations
1. When a creditor pays another creditor who
is preferred, even without the debtor’s
knowledge;
2. When a third person, not interested in the
obligation, pays with the express or tacit
approval of the debtor;
3. When, even without the knowledge of the
debtor, a person interested in the fulfillment
of the obligation pays, without prejudice to
the effects of confusion as to the latter’s
share. (NCC, Art. 1302)
439
Contracts
stipulation or by provisions of law (NCC, 4. Contracts entered into in fraud of creditors;
Art. 1311); (NCC, Art. 1313);
NOTE: The fairest test to determine Q: PCGG filed a complaint for reconveyance,
whether the interest of third person in a reversion, accounting, restitution, and
contract is a stipulation pour autrui or damages before the Sandigan Bayan against
merely an incidental interest, is to rely Ferdinand and Imelda Marcos, and several of
upon the intention of the parties as their cronies including Benedicto and Africa.
disclosed by their contract. In applying PCGG, through its Chairman, David M. Castro,
this test, it matters not whether the entered into a Compromise Agreement with
stipulation is in the nature of a gift or Benedicto where the latter undertook to cede
whether there is an obligation owing to the government properties listed in the
from the promise to the third person. agreement and transfer to the government
(Rabuya, 2017) whatever rights he may have in the assets of
the corporations listed in the same
3. Third persons coming into possession of the agreement. The SB dismissed the case
object of the contract creating real rights against Africa and ruled that since that act
subject to the provisions of Mortgage Law being complained of constituted a quasi-
and the Land Registration Law (NCC, Art. delict or tort and the obligation of the
1312); defendants were solidary therefore the
441
Contracts
collection filed by Borromeo. (Borromeo v. CA, Conversion Agreement with NAPOCOR for a
G.R. No. L-22962, September 28, 1972) 50-megawatt bunker- C fired diesel-
generating power project in General Santos
NOTE: Where an agreement founded on a legal City. Southern Philippines Power
consideration contains several promises, or a Corporation assumed the obligations of the
promise to do several things, and a part only of consortium to the Energy Conversion
the things to be done are illegal, the promises Agreement through the Accession
which can be separated, or the promise, so far as Undertaking. The cooperation period
it can be separated, from the illegality, may be between Southern Philippines Power
valid. (Borromeo v. CA, G.R. No. L-22962, Corporation and the National Power
September 28, 1972) Corporation started when the Power Station
was declared completed.
MUTUALITY OF CONTRACTS
Southern Philippines Power Corporation
The contract must bind both contracting parties requested payment in the amount of
and its validity or compliance cannot be left to P45,840,673.22, attributable to the
the will of one of them. (NCC, Art. 1308) (2001, additional 10% capacity made available to
2004, 2008 BAR) the National Power Corporation since 2005.
NAPOCOR refused to pay. Does the Petitioner
If a party alleges defects in the contract so that it have the right to collect payment from the
could be set aside, he must prove conclusively project?
the existence of the defects because the validity
and fulfillment of the contract cannot be left to A: NO. Section 3.1 of the Agreement's First
the will of one of the contracting parties. (Pineda, Schedule, which provides for the construction of
2009) a five (5)-engine Power Station, cannot be
construed alone. Various stipulations of a
The binding effect of any agreement between contract must be interpreted or read together to
parties to a contract is premised on two settled arrive at its true meaning. The legal effect of a
principles: (1) that any obligation arising from contract is not determined by any particular
contract has the force of law between the provision alone, disconnected from all others,
parties; and (2) that there must be mutuality but from the language used and gathered from
between the parties based on their essential the whole instrument.
equality. Any contract which appears to be
heavily weighed in favor of one of the parties so Specifically, respondent is given the right to "do
as to lead to an unconscionable result is void. all other things necessary or desirable for the
Any stipulation regarding the validity or completion of the Power Station" under the
compliance of the contract which is left solely to specifications set forth in the First Schedule, as
the will of one of the parties, is likewise, invalid. well as to "do all other things necessary or
(Sps. Juico vs. China Banking Corp., G.R. 187678, desirable for the running of the Power Station
April 10, 2013) within the Operating Parameters."
NOTE: A contract containing a condition whose Although it is clear that respondent is given an
efficacy or fulfillment is dependent solely on the allowance of five (5)- megawatt contracted
uncontrolled will of one of the parties is void. capacity or up to a maximum of 55 megawatts, it
(Garcia v. Rita, G.R. No. L-20175, October 30, is not specified in the Agreement that the
1967; PNB v. CA, G.R. No. 88880, April 30, 1991) additional five (5)-megawatt contracted capacity
must be produced only from the original five (5)
However, the termination of the contract does generating units. This omission in the
not necessarily require mutuality, and it can Agreement binds petitioner. (National Power
even be validly left to one party by agreement or Corporation, v. Southern Philippines Power
under a resolutory facultative condition. (Vitug, Corporation, G.R. No. 219627, July 4,2016, as
2006; see also PNB v. CA, 1994) penned by J. Leonen)
Q: The consortium of ALSONS Power Q: DPWH and a Joint Venture entered into a
Holdings Corporation and TOMEN construction contract. However, during the
Corporation entered into an Energy construction, the joint venture’s equipment
443
Contracts
It is a contract in which one of the parties Third person may determine the
prepares the stipulations in the form of a ready- performance of a contract
made contract, which the other party must
accept or reject, but not modify, by affixing his The determination of the performance may be
signature or his “adhesion” thereto; leaving no left to a third person. However, his decision shall
room for negotiation and depriving the latter of not be binding until it has been known to both
the opportunity to bargain on equal footing. the contracting parties. (NCC, Art. 1309)
(Norton Resources and Development Corporation Moreover, the determination made shall not be
v. All Asia Bank Corporation, G.R. No. 162523, obligatory if it is evidently inequitable. In such
November 25, 2009) case, the courts shall decide what is equitable
under the circumstances. (NCC, Art. 1310)
NOTE: Generally, contracts of adhesion are valid,
except when they are highly inequitable. The Unilateral increase of interest rate
courts will not hesitate to rule out blind
adherence to terms where facts and Even assuming that the loan agreement between
circumstances will show that it is one-sided. the creditor and the debtor gave the former a
(Sta. Maria, 2017) license to increase the interest rate at will during
the term of the loan, that license would have
Validity of contract of adhesion been null and void for being violative of the
principle of mutuality essential in contracts.
It is not entirely prohibited since the one who (Rabuya, 2017)
adheres to the contract is, in reality, free to
reject it entirely, and if he adheres, he gives his AUTONOMY OF CONTRACTS / LIBERTY OF
consent. (Premiere Development Bank v. Central CONTRACTS (1996, 2004 BAR)
Surety & Insurance Company, Inc., G.R. No.
176246, February 13, 2009) However, it is void It is the freedom of the parties to contract and to
when the weaker party is imposed upon in stipulate provided the stipulations are not
dealing with the dominant bargaining party, and contrary to law, morals, good customs, public
its option is reduced to the alternative of “taking order or public policy. (NCC, Art. 1306)
or leaving it,” completely depriving such party of
the opportunity to bargain on equal footing. It is the freedom of the parties to create or
(Keppel Cebu Shipyard, Inc. v. Pioneer Insurance establish stipulations, clauses, terms, and
and Surety Corporation, G.R. Nos. 180880-81, conditions as they may deem convenient,
September 25, 2009) provided the stipulations are not contrary to
law, morals, good customs, public order or
Note: Such contracts are not void in themselves. public policy. (NCC, Art. 1306)
They are as binding as ordinary
contracts. Parties who enter into such contracts NOTE: Courts cannot make for the parties better
are free to reject the stipulations entirely. or more equitable agreements than they
(Ermitao vs. CA, G.R. No. 127246, April 21, 1999) themselves have been satisfied to make, or
rewrite contracts because they operate harshly
Interpretation of contract of adhesion or inequitably as to one of the parties, or alter
them for the benefit of one party and to the
In interpreting such contracts, however, courts detriment of the other, or by construction,
are expected to observe greater vigilance in relieve one of the parties from terms which he
order to shield the unwary or weaker party from voluntarily consented to, or impose on him those
deceptive schemes contained in ready-made which he did not. (Angel Bautista v. Court of
covenants. (Premiere Development Bank v. Appeals, G.R. No. 123655, January 19, 2000)
Central Surety Insurance Company, Inc., G.R. No.
176246, February 13, 2009) In case of doubt, Courts are not authorized to extricate parties to
which will cause a great imbalance of rights the consequences of their acts, and the fact that
against one of the parties, the contract shall be the contractual obligations may turn out to be
construed against the party who drafted the financially disadvantageous will not relieve the
same. (Magis Young Achiever’s Learning Center v. latter of their obligations.
Manalo, G.R. No. 178835, February 13, 2009)
Contracts are perfected by mere consent, and 1. The contracting parties must have clearly
from that moment the parties are bound not and deliberately conferred a favor upon the
only to the fulfillment of what has been third person;
expressly stipulated but also to all the 2. The third person’s interest or benefit in such
consequences which, according to their nature, fulfillment must not be merely incidental;
may be in keeping with good faith, usage and and
law. (NCC, Art. 1315) 3. Such third person communicated his
acceptance to the obligor before the
Note: This refers to consensual contracts. stipulations in his favor are revoked.
However, real contracts are perfected by
delivery and formal contracts are perfected ESSENTIAL REQUISITES OF A CONTRACT
upon compliance.
ELEMENTS OF A CONTRACT
EFFECT OF CONTRACTS
1. Natural Elements – Those which are derived
Contracts take effect only between the parties, from the very nature of the contract, and as
and their assigns and heirs, the latter being a consequence, ordinarily accompany the
liable only to the extent of the property received same.
from the decedent. (NCC, Art. 1311) 2. Essential Elements – Those without which
there can be no contract.
Persons affected by a contract 3. Accidental Elements – those which exist only
when the contracting parties expressly
GR: provide for them. (De Leon, 2010)
445
Contracts
be sent to Gammon for the project to CONSENT (2005 BAR)
proceed. But later on Parsons informed
Gammon that MRT was temporarily Consent is manifested by the meeting of the offer
rescinding the Third Notice to Proceed, and the acceptance upon the thing and the cause
noting that it remained unaccepted by which are to constitute the contract. The offer
Gammon. On June 19, 1998, Gammon must be certain and the acceptance absolute. A
qualifiedly accepted the Fourth Notice to qualified acceptance constitutes a counter-offer.
Proceed. MRT treated Gammon's qualified (NCC, Art. 1319)
acceptance as a new offer. In a Letter dated
June 22, 1998, MRT rejected Gammon's It is the concurrence of the wills of the
qualified acceptance and informed Gammon contracting parties with respect to the object
that the contract would be awarded instead and cause, which shall constitute the contract.
to Filsystems if Gammon would not accept (De Leon, 2010)
the Fourth Notice to Proceed within five (5)
days. In a Letter dated July 8, 1998, Gammon NOTE: Consent is essential to the existence of a
wrote MRT, acknowledging the latter's intent contract; and where it is wanting, the contract is
to grant the Fourth Notice to Proceed to non-existent.
another party despite having granted the
First Notice to Proceed to Gammon. Thus, it Requisites of consent (LM-CR)
notified MRT of its claims for reimbursement
for costs, losses, charges, damages, and 1. Legal capacity of the contracting parties;
expenses it had incurred due to the rapid
mobilization program in response to MRT's NOTE: The parties must have full civil
additional work instructions, suspension capacity. Hence, if any one party to a
order, ongoing discussions, and the supposed contract was already dead at the
consequences of its award to another party. time of its execution, such contract is
In a letter dated July 15, 1998, MRT undoubtedly simulated and false and,
expressed its disagreement with Gammon therefore, null and void by reason of its
and its amenability to discussing claims for having been made after the death of the
reimbursement. Whether or not there is a party who appears as one of the contracting
perfected contract between MRT and parties therein. The death of a person
Gammon Philippines? terminates contractual capacity. (Milagros
De Belen Vda. De Cabalu, et. al. v. Sps. Renato
A: YES, there is a perfected contract between Dolores Tabu and Laxamana, G.R. No.
MRT and Gammon. MRT has already awarded 188417, September 24, 2012)
the contract to Gammon, and Gammon's
acceptance of the award was communicated to 2. Manifestation of the conformity of the
MRT before MRT rescinded the contract. The contracting parties;
first Letter shows that Gammon fully consented
to the contents and accepted the prestations of Note: Manifestation may be in writing
the First Notice to Proceed. Gammon's
bearing the signature or marks of the
acceptance is also manifested in its undertakings parties, or it may be implied from the
to mobilize resources, to prepare the conduct of the parties like the acceptance of
Performance and Advance Payment Bonds, and payment.
to procure materials necessary for the Project.
All that remained was the formality of returning
3. Parties’ Conformity to the object, cause,
the contract documents and the Letter of
terms and condition of the contract must be
Comfort, which eventually was complied with by
intelligent, spontaneous and free from all
Gammon. Thus, there is already mutual consent
vices of consent; and
on the object of the contract and its
consideration, and an absolute acceptance of the
NOTE: Intelligence in consent is vitiated by
offer. (Metro Rail Transit Development
error; freedom by violence, intimidation or
Corporation v. Gammon Philippines Inc., G.R. NO.
undue influence; and spontaneity by fraud.
200401, JANUARY 17, 2018, as penned by J.
Leonen)
4. The conformity must be Real.
Elements of a valid offer and acceptance 2. Offers are not interrelated – single
acceptance of each offer results in a
1. Definite – unequivocal perfected contract unless the offeror has
2. Intentional made it clear that one is dependent upon
3. Complete – unconditional the other and acceptance of both is
necessary.
NOTE: It must be so complete that its absolute
acceptance will form an agreement containing Rules on advertisements as offers
all the terms necessary and intended by the
parties. (Sta. Maria, 2017) 1. Business advertisements – not a definite
offer, but mere invitation to make an offer,
We follow the cognitive theory and NOT the unless it appears otherwise. (NCC, Art. 1325)
mailbox theory. Under our Civil Law, the offer
and acceptance concur only when the NOTE: If the advertisement contains all the
acceptance has reached the knowledge of the necessary date need in a contract, its a
offeror (actual knowledge), and not at the time definite offer for the sale of the thing
of sending the acceptance. advertised. Otherwise, it is not a definite
offer, it is a mere invitation to make offer.
Requisites of an effective offer
2. Advertisement for bidders – simply invitation
1. The one offering must have a serious to make proposals and advertiser is not
intention to become bound by his offer; bound to accept the highest or lowest
2. The terms of the offer must be reasonably bidder, unless the contrary appears. (NCC,
certain, definite and complete, so that the Art. 1326)
parties and the court can ascertain the terms
of the offer; and Grounds that would render the offer
3. The offer must be communicated by the ineffective
offeror to the offeree, resulting in the
offeree’s knowledge of the offer. (Rabuya, 1. Death, civil interdiction, insanity or
2017) insolvency of either party before acceptance
is conveyed (NCC, Art. 1323);
Q: The husband assumed sole administration 2. Express or implied revocation of the offer by
of the family’s mango plantation since his the offeree;
wife worked abroad. Subsequently, without 3. Qualified or conditional acceptance of the
his wife’s knowledge, the husband entered offer, which becomes counter-offer;
into an antichretic transaction with a 4. Subject matter becomes illegal or impossible
company, giving it possession and before acceptance is communicated;
management of the plantation with power to
447
Contracts
5. Period given to the offeree to signify his the perfection of the contract). (NCC, Art
acceptance has already lapsed. 1324)
449
Contracts
document, which was in English, explained to A contract is valid even though one of the parties
her. Therefore, the consent of Leonardo was entered into it against his wishes and desires or
invalidated by a substantial mistake or error, even against his better judgment. Contracts are
rendering the agreement voidable. The also valid even though they are entered into by
extrajudicial partition between the Sebastians one of the parties without hope of advantage or
and Leonardo should be annulled and set aside profit. (Martinez v. Hongkong and Shanghai
on the ground of mistake. (Leonardo v. CA, G.R. Banking Corp., G.R. No. L-5496, February 19,
No. 125485, September 13, 2004) 1910)
The test to determine whether or not there is Requisites of Fraud to vitiate consent (In the
undue influence which will invalidate a contract sense of Dolo Causante)
is to determine whether or not the influence
exerted has so overpowered and subjugated the 1. It was applied or utilized by one contracting
mind of the contracting party as to destroy his party upon the other.
free agency, making him express the will of 2. It must be serious deception.
another rather than his own. (Jurado, 2011) 3. It must have induced the victim to enter the
contract without which he would not have
Due influence does not vitiate consent agreed to.
4. It must have induced the victim to enter into
When influence consists in persuasive the contract, which he would not have
arguments or in appeals to the affections which agreed to, absent the employment of such
are not prohibited by law or morals, the consent fraud.
is not vitiated at all. (Pineda, 2009) 5. It must have resulted in damage or injury.
451
Contracts
of a pre- for damages against Santos for fraud and bad
existing faith, claiming that the misrepresentation
obligation. induced him to purchase the store and the
leasehold right. Decide.
Consent is
vitiated by A: Santos was not neither guilty of fraud nor bad
Consent is free
serious faith in claiming that there was implied renewal
Consent and not
deception or of his contract of lease with his lessor. The letter
vitiated.
misrepresentatio given by the lessor led Santos to believe and
n. conclude that his lease contract was impliedly
It is not a renewed, and that the formal renewal thereof
It is a ground for would be made upon the arrival of Tanya
Effect ground for
annulment of the Madrigal. Thus, from the start, it was known to
annulment of
contract. both parties that, insofar as the agreement
the contract.
Action for regarding the transfer of Santos’ leasehold right
Remedy Action for to Samson was concerned, the object thereof
annulment with
damages only. relates to a future right. It is a conditional
damages.
contract, the efficacy of which depends upon an
Dolo Causante vs. Dolo Incidente expectancy of the formal renewal of the lease
contract between Santos and lessor. The efficacy
of the contract between the parties was thus
DOLO DOLO made dependent upon the happening of this
BASIS CAUSANTE INCIDENTE suspensive condition. (Samson v. CA, G.R. No.
(ART. 1338) (ART. 1344) 108245, November 25, 1994)
453
Contracts
contract is only relatively simulated, and the application was then pending in the Bureau of
parties are still bound by their real agreement. Forestry for approval;
Hence, where the essential requisites of a
contract are present and the simulation refers 3. Petitioners, after the execution of the deed of
only to the content or terms of the contract, the assignment, assumed the operation of the
agreement is absolutely binding and enforceable logging concessions of private respondent;
between the parties and their successors in
interest. 4. The statement of advances to respondent
prepared by petitioners stated: "P55,186.39
May the owner-simulator recover? advances to L.A. Tiro be applied to succeeding
shipments. Based on the agreement, we pay
If the absolutely simulated contract does not P10,000.00 every after (sic) shipment. We had
have any illegal purpose, the interested party only 2 shipments;” and
may prove the simulation to recover whatever
he might have given under the fictitious 5. Petitioners entered into a Forest
contract. In the event intended it is intended for Consolidation Agreement with other holders of
an illegal purpose, the contract is void and the forest concessions on the strength of the
parties have no cause of action. (Pineda, 2009) questioned deed of assignment.
NOTE: The most evident and fundamental Cause is the essential or more proximate
requisite in order that a thing, right or service purpose which moves the contracting parties to
may be the object of a contract, is that it should enter into the contract. It is the immediate and
455
Contracts
direct which justifies the creation of an the contract contract
obligation through the will of the contracting Legality or
Legality or
parties. illegality of
As to the illegality of
motive does not
legal effect cause affects
Requisites of a cause: affect the
to the the existence
existence or
contract or validity of
It must: validity of
the contract.
contract.
1. Exist; Cause is
Motive differs
2. Be true; and always the
As to the for each
3. Be licit. same for each
parties contracting
contracting
party.
NOTE: Although the cause is not stated in the party.
contract, it is presumed that it exists and is As to its Always May be known
lawful unless the debtor proves the contrary. knowability known to the other.
(NCC, Art. 1354)
NOTE: The motive may be regarded as the cause
Kinds of cause when the realization of such motive or particular
purpose has been made a condition upon which
1. Cause of onerous contracts – the cause is the contract is made to depend. (Phil. National
understood to be for each contracting party, Construction Corp. v. CA, 272 SCRA 183, 1997)
the prestation or promise of a thing or
service by the other. False Cause
A: Where the moral obligation arises wholly a. Personal property – if the value exceeds
from ethical considerations, unconnected with 5,000, the donation and acceptance
any civil obligation, and as such is demandable must both be written. (NCC, Art. 748)
only in conscience, and not in law, it cannot b. Real property:
constitute a cause to support an onerous i. Donation must be in a public
contract. Where such moral obligation, however, instrument, specifying therein the
is based upon a previous civil obligation which property donated and value of
has already been barred by the statute of charges which donee must satisfy.
limitations at the time when the contract is ii. Acceptance must be written, either in
entered into, it constitutes a sufficient cause or the same deed of donation or in a
consideration to support said contract. (Villaroel separate instrument.
v. Estrada, 71 Phil. 14, GR L-47362, December 19, iii. Acceptance may either be in the same
1940) deed of donation, or in a separate
public instrument, but it shall not take
FORMALITY effect unless it is done during the
lifetime of the donor.
Rules on the form of contracts iv. If acceptance is in a separate
instrument, the donor shall be
GR: Form is not required in consensual notified thereof in an authentic form,
contracts. (Provided, all the essential requisites and this step shall be noted in both
for their validity are present.) instruments. (NCC, Art. 749)
XPNs: When the law requires a contract be in 2. Partnership where real property
writing for its: contributed
The contracting parties may compel each other 4. Agency to sell real property or an
to observe the required form once the contract interest therein - authority of the agent
has been perfected and is enforceable under the must be in writing; otherwise, the sale shall
statute of frauds. This is one of the rights of the be void. (NCC, Art. 1874)
creditor.
5. Stipulation to charge interest - interest
The right to demand the execution of the must be stipulated in writing. (NCC, Art.
document required under Art.1358 is not 1956)
imprescriptible. It is subject to prescription. It
must be pursued within the period prescribed 6. Stipulation limiting common carrier's
by law, which is five (5) years. (Pineda, 2009) duty of extraordinary diligence to
ordinary diligence:
457
Contracts
a. Must be in writing, signed by shipper 6. The cession of actions or rights proceeding
or owner; from an act appearing in a public document.
b. Supported by valuable consideration [NCC, Art. 1358(4)]
other than the service rendered by
the common carrier; NOTE : Article 1358 of the Civil Code which
c. Reasonable, just and not contrary to requires the embodiment of certain contracts in
public policy. (NCC, Art. 1744) a public instrument is only for convenience, and
the registration of the instrument only
7. Chattel mortgage - personal property adversely, affects third parties. Formal
must be recorded in the Chattel Mortgage requirements are, therefore, for the benefit of
Register. (NCC, Art. 2140) third parties. Non-compliance therewith does
not adversely affect the validity of the contract
Contracts which must be in writing to be nor the contractual rights and obligations of the
valid parties. (Fule vs. CA, 286 CRA 700)
4. Antichresis – the amount of the principal 2. Sale or transfer of large cattle. (Cattle
and the interest shall be specified in writing. Registration Act)
(NCC, Art. 2134; Jurado, 2011)
ELECTRONIC COMMERCE ACT OF 2000
Contracts which must appear in a public (RA No. 8792)
document
Legal Recognition of Electronic Documents
1. Donation of real properties (NCC, Art. 719
749); Under Section 7 of the Act, electronic documents
2. Partnership where immovable property or shall have the legal effect, validity or
real rights are contributed to the common enforceability as any other document or legal
fund (NCC, Arts. 1171 1771 & 1773); writing, and —
3. Acts and contracts which have for their
object the creation, transmission, 1. Where the law requires a document to be in
modification or extinguishment of real writing, that requirement is met by an
rights over immovable property; sale of real electronic document if the said electronic
property or of an interest therein is document maintains its integrity and
governed by Arts. 1403, No. 2, and 1405 reliability, and can be authenticated so as to
[NCC, Art. 1358(1)]; be usable for subsequent reference, in that;
4. The cession, repudiation or renunciation of
hereditary rights or of those of the conjugal a. The electronic document has
partnership of gains [NCC, Art. 1358(2)]; remained complete and unaltered,
5. The power to administer property or any apart from the addition of any
other power which has for its object an act endorsement and any authorized
appearing or which should appear in a change, or any change which arises in
public document or should prejudice a third the normal course of communication,
person; [NCC, Art. 1358(3)]; and storage and display; and
459
Contracts
3. Accessory Contracts – those which can exist 3. Remuneratory
only as a consequence of, or in relation with
another prior valid contract. According to the risks involved:
2. Special or Formal Contracts – are those 2. Aleatory Contracts – are those which are
which require a particular form. dependent upon the happening of an
uncertain event, thus, charging the parties
e.g., Donations, Chattel Mortgage. with the risk of loss or gain.
461
Contracts
temporary restraining order and/or It relates back to, and takes effect from the time
preliminary injunction against MATUSCO. of its original execution, especially as between
the parties. (Tolentino, 2002)
Multi-Realty alleged in its complaint that of
the 106 parking slots designated in the Reformation of instruments may be availed of
Master Deed as part of the common areas, judicially or extrajudicially.
only eight (8) slots were actually intended to
be guest parking slots; thus, it retained Basis and nature of the remedy of
ownership of the remaining 98 parking slots. reformation of instrument
Multi-Realty claimed that its ownership over The remedy of reformation of an instrument is
the 98 parking slots was mistakenly not based on the principle of equity where, to
reflected in the Master Deed "since the express the true intention of the contracting
documentation and the terms and conditions parties, an instrument already executed is
therein were all of first impression," allowed by law to be reformed. The right of
considering that Makati Tuscany was one of reformation is necessarily an invasion or
the first condominium developments in the limitation of the parol evidence rule, since, when
Philippines. Is there is a need to reform the a writing is reformed, the result is that an oral
Master Deed and the Deed of Transfer? agreement is by court decree, made legally
effective. The remedy, being an extraordinary
A: NO. Reformation of an instrument is a remedy one, must be subject to the limitations as may be
in equity where a valid existing contract is provided by law. A suit for reformation of an
allowed by law to be revised to express the true instrument must be brought within the period
intentions of the contracting parties. The prescribed by law, otherwise, it will be barred by
rationale is that it would be unjust to enforce a the mere lapse of time. (Bentir v. Leanda, G.R.
written instrument which does not truly reflect 128991, April 12, 2000)
the real agreement of the parties. In reforming
an instrument, no new contract is created for the Reformation of instruments; when allowed
parties, rather, the reformed instrument
establishes the real agreement between the 1. Mutual mistake. – When the mutual mistake
parties as intended, but for some reason, was of the parties causes the failure of the
not embodied in the original instrument. instrument to disclose their agreement
(NCC, Art. 1361);
MATUSCO does not deny that it stayed silent
when Multi-Realty sold the parking slots on Requisites:
several occasions or that it offered to buy the
parking slots from Multi-Realty on at least two a. The mistake should be of fact;
(2) occasions. It excuses itself by saying that just b. The same should be proved by clear
like Multi-Realty, it "also labored under a and convincing evidence;
mistaken appreciation of the nature and c. The mistake should be common to both
ownership of the ninety-eight (98) parking slots parties to the instrument; and
in question." d. The mistake must cause the failure of
the instrument to express their true
Both parties recognized Multi-Realty's intention. (BPI v. Fidelity Surety, Co. 51
ownership of the parking slots. MATUSCO Phil 57, 1927)
initially respected Multi-Realty's ownership
despite the Master Deed's and Deed of Transfer's 2. Mistake on one party and fraud on the other.
stipulations. It was MATUSCO that changed its – In such a way that the instrument does not
position decades after it acted as if it accepted show their true intention, the party
Multi-Realty's ownership. (Makati Tuscany mistaken or defrauded may ask for the
Condominium Corporation v. Multi-Realty reformation of the instrument (NCC, Art.
Development Corporation, G.R. 185530, April 18, 1362);
2018, as penned by J. Leonen)
3. Mistake on one party and concealment on the
Operation and effect of reformation other. – When one party was mistaken and
the other knew or believed that the
463
Contracts
Disfavor of Interpretation Leading to Loss of Orix Leasing and Finance Corp., 387 SCRA 270,
Rights 2002); and the surety contract, being an
accessory contract, must be interpreted with its
The construction of the terms of a contract principal contract, for instance, a loan
leading to the impairment or loss of the right is agreement. (Rabuya, 2017)
not favored.
Words which may have different significations
Principle of effectiveness in contract shall be understood in that which is most in
interpretation keeping with the nature and object of the
contract. (NCC, Art. 1375)
Pursuant to this principle, where two
interpretations of the same contract language The usage or custom of the place shall be borne
are possible, one interpretation having the effect in mind in the interpretation of the ambiguities
of rendering the contract meaningless, while the of a contract, and shall fill the omission of
other would give effect to the contract as a stipulations which are ordinarily established.
whole, the latter interpretation must be adopted. (NCC, Art. 1376)
(PNB v. Utility Assurance & Surety, Co., Inc., 177
SCRA 393, 1989) The interpretation of obscure words or
stipulations in a contract shall not favor the
The various stipulations of a contract shall be party who caused the obscurity. (NCC, Art. 1377)
interpreted together, attributing to the doubtful
ones that sense which may result from all of When it is absolutely impossible to settle doubts
them taken jointly. (NCC, Art. 1374) by the rules established in the preceding articles,
and the doubts refer to incidental circumstances
The various stipulations in a contract must be of a gratuitous contract, the least transmission of
read together to give effect to all. (North Negros rights and interest shall prevail. If the contract is
Sugar Co. v. Compania Gen. De Tabacos, G.R No. L- onerous, the doubt shall be settled in favor of the
9277, 1957) greatest reciprocity of interests.
465
Contracts
DEFECTIVE CONTRACTS
VOID
BASIS RESCISSIBLE VOIDABLE UNENFORCEABLE
/INEXISTENT
Curable by
Curable Curable Not curable Not Curable
Prescription
Can be attacked
Nature of Must be a direct Direct action
Indirect attack allowed directly or
action action. needed.
indirectly.
Susceptible but
Susceptibility
not of ratification Susceptible Susceptible Not Susceptible
of ratification
proper.
467
Contracts
4. It can be attacked only directly. 1. Under Art. 1381, no.1 – within 4 years from
5. It is susceptible of convalidation only by the time the termination of the incapacity of
prescription. (De Leon, 2010) the ward;
Nature of an action for rescission 2. Under Art. 1381, no. 2- within 4 years from
the time the domicile of the absentee is
The action for rescission is subsidiary. It cannot known; or
be instituted except when the party suffering
damage has no other legal means to obtain 3. Under Art. 1381, nos. 3 & 4 & Art. 1382 –
reparation for the same. (NCC, Art. 1383) Hence, within 4 years from the time of the
it must be availed of as the last resort, availed discovery of fraud.
only after all legal remedies have been
exhausted and proven futile. (Khe Hong Cheng v. Requisites that must concur before a contract
CA, G.R. No. 144169, March 28, 2001) may be rescinded on the ground of lesion
Rationale: In order not to disturb other Whether the contract is entered into by a
contracts and to comply with the principle of guardian in behalf of his ward or by a legal
relativity of contracts. representative in behalf of an absentee, before it
can be rescinded on the ground of lesion, it is
However, if it can be proven that the property indispensable that the following requisites must
alienated was the only property of the debtor at concur:
the time of the transaction, the action for
rescission is certainly maintainable because it is 1. The contract must be entered into by the
clear that the creditor has no other remedy guardian in behalf of his ward or by the legal
under the circumstances. (Pineda, 2009 citing representative in behalf of an absentee.
Regalado vs. Luchsinger, 5 Phil. 625) 2. The ward or absentee suffered lesion of
more than 1/4 of the value of the property
NOTE: Rescission shall be only to the extent which is object of the contract.
necessary to cover the damages. (NCC, Art. 1384) 3. The contract must be entered into without
judicial approval.
Persons who may institute an action for the 4. There must be no other legal means for
rescission of a rescissible contract obtaining reparation for the lesion.
5. The person bringing the action must be able
The action for rescission may be instituted by to return whatever he may be obliged to
the following: restore.
6. The object of the contract must not be
1. Injured party; legally in the possession of a third person
2. Contracts entered into by guardians – by who did not act in bad faith.
ward, or by guardian ad litem of ward
during the latter’s incapacity in an action Statutory presumptions of Fraud in Article
against the original guardian; 1387
3. Contracts in representation of absentees –
by the absentee; 1. Alienation by gratuitous title.
4. Contracts defrauding creditors – by the
creditors; When a debtor donates his property
5. Contracts referring to things in litigation – without reserving sufficient property to
by the party litigant; pay all his pre-existing debts, the law
6. Their representatives; presumes that the gratuitous dispositions
7. Their heirs; are made in fraud of creditors.
8. Their creditors by virtue of subrogatory
action defined in Art. 1177, NCC. (Jurado, 2. Alienation by onerous title.
2009)
The contract is presumed fraudulent if at
Prescriptive period of action for rescission the time of alienation, some judgement has
been rendered against him, whether it is on
appeal or has already become final and
469
Contracts
Person who can Initiate the Action Q: Reyes (seller) and Lim (buyer) entered
Even third persons into a contract to sell a parcel of land.
Only the injured party
prejudiced by the Harrison Lumber occupied the property as
to the contract lessee. Reyes offered to return the P10
contract
Fixing of Period by the Court million downpayment to Lim because Reyes
Court may fix a period was having problems in removing the lessee
or grant extension of from the property. Lim rejected Reyes’ offer.
time for the fulfillment Lim learned that Reyes had already sold the
Court cannot grant property to another.
of the obligation when
extension of time
there is sufficient
reason to justify such Both Reyes and Lim are now seeking
extension rescission of the contract to sell. However,
Purpose Reyes does not want to deposit the 10M to
Reparation for the court because according to him, he has
damage or injury, the “right to use, possess and enjoy” of the
Cancellation of the money as its owner before the contract to sell
allowing partial
contract is rescinded. Is Reyes’ contention correct?
rescission of contract.
(Pineda, 2000)
A: NO. There is also no plausible or justifiable
NOTE: While Article 1191 uses the term reason for Reyes to object to the deposit of the
“rescission,” the original term which was used in P10 million down payment in court. The
the old Civil Code, from which the article was contract to sell can no longer be enforced
based, was “resolution.” (Ong v. CA, G.R. No. because Reyes himself subsequently sold the
97347, July 6, 1999) property. Both Lim and Reyes are seeking for
rescission of the contract. By seeking rescission,
Effect of Rescission a seller necessarily offers to return what he has
received from the buyer. Such a seller may not
1. Obligation of mutual restitution (but not take back his offer if the court deems it
absolute); equitable, to prevent unjust enrichment and
2. Abrogation of contract (Absolute); ensure restitution, to put the money in judicial
3. Obligation of third person to restore (if third deposit.
person has nothing to restore, Article does
not apply). (De Leon, 2016) NOTE: In this case, it was just, equitable and
proper for the trial court to order the deposit of
Mutual Restitution the down payment to prevent unjust enrichment
by Reyes at the expense of Lim. Depositing the
Rescission of contract creates an obligation of down payment in court ensure its restitution to
mutual restitution of the objects of the contract, its rightful owner. Lim, on the other hand, has
their fruits, and the price with interest. nothing to refund, as he has not received
anything under the contract to sell. (Reyes v. Lim,
NOTE: Rescission is possible only when the Keng and Harrison Lumber, Inc., G.R. No. 134241,
person demanding rescission can return August 11, 2003)
whatever he may be obliged to restore. A court
of equity will not rescind a contract unless there Q: Goldenrod offered to buy a mortgaged
is restitution, that is, the parties are restored to property owned by Barreto Realty to which it
the status quo ante. (NCC, Art. 1385) paid an earnest money amounting to P1
million. It was agreed upon that Goldenrod
Mutual restitution is not applicable when: would pay the outstanding obligations of
Barreto Realty with UCPB. However,
1. Creditor did not receive anything from Goldenrod did not pay UCPB because of the
contract; or bank’s denial of its request for the extension
2. Thing already in possession of third to pay the obligation. Thereafter, Goldenrod,
persons in good faith; subject to indemnity through its broker, informed Barreto Realty
only, if there are two or more alienations – that it could not go through with the
liability of first infractor. purchase of the property and also demanded
the refund of the earnest money it paid. In
471
Contracts
intimidation, undue influence or fraud." Under GR: Mutual restitution. – the contracting
Article 1338 of the Civil Code "[t]here is fraud parties shall restore to each other things
when, through insidious words or machinations which have been the subject matter of
of one of the contracting parties, the other is the contract, with their fruits and the
induced to enter into a contract which, without price with its interest except in case
them, he would not have agreed to." provided by law. In an obligation to
render services, the value thereof shall
The fraud required to annul or avoid a contract be the basis for damages. (NCC, Art.
"must be so material that had it not been 1398)
present, the defrauded party would not have
entered into the contract." Poole-Blunden's NOTE: No restitution. – The party
contention on how crucial the dimensions and incapacitated is not obliged to make any
area of the Unit are to his decision to proceed restitution except insofar as he has been
with the purchase is well-taken. As he benefited by the thing or the price
emphasized, he opted to register for and received by him. (NCC, Art. 1399)
participate in the auction for the Unit only after
determining that its advertised area was XPN : If and when the application of
spacious enough for his residential needs. mutual restitution will result in unjust
Therefore, there is fraud for the reason that had enrichment of one party at the expense
Poole-Blunden was informed by the UnionBank of another. (4 Tolentino, 607, [1991])
that the floor area was actually less than the
stipulated, he would not have entered the b. Whenever the person obliged by the
Contract to Sell. (Joseph Harry Walter Poole- decree of annulment to return the thing
Blunden v. Union Bank Of The Philippines, cannot do so because it has been lost
Respondent, G.R. No. 205838, November 29, 2017, through his fault, he shall return the
as penned by J. Leonen) fruits received and the value of the thing
at the time of the loss, with interest from
Who may institute an action for annulment the same date. (NCC, Art. 1400)
1. Real party in interest. – All who are Causes of extinction of action to annul
principally or subsidiarily liable ; and
2. One not responsible for the defect of the 1. Prescription – the action for annulment must
contract. be commenced within 4 years depending on
the ground stated.
NOTE: An action for annulment may be
instituted by all who are thereby obliged NOTE: If the action has prescribed, the
principally or subsidiarily. He who has capacity contract can no longer be set aside.
to contract may not invoke the incapacity of the (Villanueva v. Villanueva, 91 Phil 43)
party with whom he has contracted nor can
those who exerted intimidation, violence or 2. Ratification – cleanses the contract of its
undue influence or employed fraud or caused defects from the moment it was constituted.
mistake base their action upon these flaws of the (NCC, Art. 1396)
contract. 3. By loss of the thing which is the object of the
contract through fraud or fault of the person
Effects of annulment of a contract who is entitled to annul the contract. (NCC,
Art. 1401)
1. If contract not yet consummated – parties 4. If the minor is guilty of active
shall be released from the obligations misrepresentation of his age. (Braganza v.
arising therefrom. De Villa Abrille, 1959)
2. If contract has already been consummated – NOTE: If the right of action is based upon the
rules provided in Arts. 1398-1402 shall incapacity of any one of the contracting parties,
govern. the loss of the thing shall not be an obstacle to
the success of the action, unless it took place
a. Restitution through the fraud or fault of the plaintiff. (NCC,
Art. 1401)
1. In cases of intimidation, violence or undue 1. Express –the desire of the innocent party to
influence, from the time the defect of the convalidate the contract, or his waiver or
consent ceases; renunciation of his right to annul the
2. In case of mistake or fraud, from the time of contract is clearly manifested verbally or
the discovery of the same; formally in writing. (Pineda, 2000)
3. And when the action refers to contracts
entered into by minors or other 2. Implied (tacit) – it is the knowledge of the
incapacitated persons, from the time the reason which renders the contract voidable
guardianship ceases. (NCC, Art. 1391) and such reason having ceased, the person
who has a right to invoke it should execute
Ratification an act which necessarily implies an
intention to waive his right. (NCC, Art. 1393)
It is the act or means by virtue of which, efficacy
is given to a contract which suffers from a vice of Effects of ratification
curable nullity. (Manresa)
Ratification cleanses the contract from all its
NOTE: Ratification extinguishes the action to defects from the moment it was constituted,
annul a voidable contract. (NCC, Art. 1392) thereby extinguishing the action to annul a
voidable contract. It results therefore that after a
Requisites of ratification contract is validly ratified, no action to annul the
same can be maintained based upon defects
1. The contract involved must be voidable; relating to its original validity. (Rabuya, 2017)
2. Person ratifying must know the reason for
the voidability; Retroactivity in ratification of contracts
3. The cause for the voidability must
immediately cease after the ratification; and GR: Retroactivity applies in ratification of
4. Ratification must be express or through an contracts.
act implying a waiver of the action to annul;
XPN: When the rights of innocent third persons
NOTE: Ratification entered into by the will be prejudiced, ratification will not take
incapacitated person may be effected by the effect.
guardian of the incapacitated person. (NCC,
Art. 1394) However, this rule does not NOTE: Ratification does not require the
pertain to a rescissible contract entered into conformity of the contracting party who has no
by the guardian in behalf of his ward. right to bring the action for annulment.
The right to ratify is transmitted to the heirs of Q: The Senior Vice President of TERP
the party entitled to such right. (Tolentino, 2002) Construction Corp., Escalona, made a
commitment to Banco Filipino Savings and
Party who may ratify Mortgage Bank that TERP Corp. would pay
interest differentials to the same. However,
1. In contracts entered into by incapacitated after TERP Corp. subsequently paid the
persons. interests as agreed upon, it thereafter
refused to pay its unpaid balance because it
(a) guardian ; argues that Escalona was not authorized to
(b) injured party himself, provided he is make such commitment. Is act of Escalona, as
already capacitated. Senior Vice President of TERP Corp. binding
upon it?
473
Contracts
powers through its board of directors. This third person
power may be validly delegated to its officers, makes the
committees, or agencies. The authority of the contract
board of directors to delegate its corporate rescissible.
powers may either be: (1) actual; or (2) As to the Damage /
apparent. Actual authority may be express or Damage is
necessity of prejudice is
implied. Express actual authority refers to the immaterial
damage material
corporate powers expressly delegated by the
Rescissibility
board of directors. Implied actual authority, on Annulability
As to the of the
the other hand, can be measured by his or her of the
source of contract is
prior acts which have been ratified by the contract is
remedy based on
corporation or whose benefits have been based on law
equity
accepted by the corporation.
As to the kind Public Private
Here, TERP Corp.'s subsequent act of twice of interest the interest interest
paying the additional interest Escalona predominates predominates predominates
committed to Banco Filipino Bank is considered
As to the Not
a ratification of Escalona's acts. Moreover, Susceptible of
susceptibility susceptible of
Escalona likewise had apparent authority to ratification
of ratification ratification
transact on behalf of petitioner. Here, Banco
Filipino Bank relied on Escalona’s apparent As to whether
It is a
authority to promise interest payments, a sanction or It is a remedy
sanction
considering that Escalona was TERP Corp.’s then a remedy
senior vice president. His apparent authority Only parties Third persons
As to who can
was further demonstrated by TERP Corp. paying to the who are
avail the
Banco Filipino Bank after Escalona promised it. contract can affected may
remedies
(Terp Construction Corporation v. Banco Filipino assail it file the action
Savings and Mortgage bank, G.R. No. 221771, It is a It is a
September 18, 2019, as penned by J. Leonen) As to the kind
principal subsidiary
of action
action action
Confirmation v. Recognition
UNENFORCEABLE CONTRACTS
CONFIRMATION RECOGNITION
It is an act whereby a
Those contracts which cannot be enforced by
defect of proof is cured
action or complaint, unless they have been
such as when an oral
It is an act by ratified by the party or parties who did not give
contract is put into writing
which a voidable consent thereto. (Jurado, 2009)
or when a private
contract is cured of
instrument is converted
its vice or defect. Characteristics of unenforceable contract
into a public instrument.
(Luna v. Linatoc, G.R. No. L-
1. It cannot be enforced by a proper action in
48403, October 28, 1942)
court;
2. It may be ratified;
Voidable contract v. Rescissible contract
3. It cannot be assailed by third person; and
4. May only be assailed as a way of defense, not
BASIS VOIDABLE RESCISSIBLE by direct action.
As to the kind 5. The defect of an unenforceable contract is of
Defect is Defect is
of defect a permanent nature and it will exist as long
intrinsic external
present as the contract is not duly ratified. The mere
The damage lapse of time cannot give efficacy to the
Vitiated contract. (Rabuya, 2017)
or prejudice
As to the consent
suffered by
source of makes the NOTE: An unenforceable contract is valid
one of the
defect contract although it produces no legal effect. (Tolentino,
contracting
voidable 2002)
parties or a
The following contracts are unenforceable 1. The contract produces no effect whatsoever
unless they are ratified: either against or in favor of anyone; hence it
does not create, modify, or extinguish the
1. Those entered into the name of another juridical relation to which it refers;
person by one who has been given no 2. No action for annulment is necessary,
authority/legal representation or acted because the nullity exists ipso jure; a
beyond his powers; “Unauthorized judgment of nullity would merely be
contracts”; declaratory;
3. It cannot be confirmed or ratified; and
NOTE: A contract of sale over a piece of land 4. If it has been performed, the restoration of
entered by an agent whose authority is not what has been given is in order. (Tolentino,
in writing, even if he acted beyond the scope 2002)
of his authority is void, not merely
unenforceable. (NCC, Art. 1874) NOTE: The defect of inexistense of a contract is
permanent. It cannot be cured by ratification nor
2. Those that do not comply with the Statute of prescription.
Frauds; and
3. Those where both parties are incapable of Parties affected
giving consent to a contract. (NCC, Art. 1403)
Any person may invoke the inexistence of the
VOID/INEXISTENT CONTRACTS contract whenever juridical effects founded
thereon are asserted against him. (Tolentino,
A void or inexistent contract is one which has no 2002)
force and effect from the very beginning, as if it
had never been entered into, and which cannot
be validated by either by time or ratification.
This definision includes not only those contracts
in which one of the essential requisites is totally
wanting, but also those which are declared by
positive provision of law or statute. A void or
inexistent contract is equivalent to nothing; it is
absolutely wanting in civil effects. (Tolentino,
2002)
475
Natural Obligations
NATURAL OBLIGATIONS When without the knowledge or against the
will of the debtor, a 3rd person pays a debt
Natural obligations, not being based on positive which the obligor is not legally bound to
law but on equity and natural law, do not grant pay because the action thereon has
a right of action to enforce their performance, prescribed, but the debtor later voluntarily
but after voluntary fulfillment by the obligor, reimburses the 3rd person, such debtor can
they authorize the retention of what has been no longer recover such payment. (NCC, Art.
delivered or rendered by reason thereof. (NCC, 1424)
Art. 1423)
3. Contract made by a minor (NCC, Arts. 1426
Rationale of natural obligations (1947 Code and 1427)
Commission)
An incapacitated person is not obliged to
1. On the part of the payor – It gives rise to a make any restitution except insofar as he
moral, rather than a legal duty to pay or has been benefited by the thing or price
perform, but the person performing feels received by him.
that in good conscience he should comply
with his undertaking, which is based on NOTE: A person who is between 18 and 21
moral grounds. years of age is not a minor. In present time,
the age of majority is 18 (RA 6809)
2. On the part of the payee – The payee is
obliged to return the amount received by However, if the law is applicable, the minor
him because the payor was not legally who voluntarily makes payment or
bound to make the payment restitution of what he has obtained by
contract even though he has no legal
NOTE: The foundation of nautral law are equity, obligation to make any payment or
morality and natural justice. (Sta. Maria, 2017) restitution, can no longer recover what he
has returned. (Sta. Maria, 2017)
Examples of Natural Obligations
4. Performance by winning party
1. Paying despite extinctive prescription
When, after an action to enforce a civil
When a right to sue upon a civil obligation obligation has failed the defendant
has lapsed by extinctive prescription, the voluntarily performs the obligation, he
obligor who voluntarily performs the cannot demand return of what he has
contract cannot recover what he has delivered or the payment of the value of the
delivered or the value of the service he has service he has rendered. (NCC, Art. 1428)
rendered. (NCC, Art. 1424)
5. Voluntary payment of an heir in excess of
e.g. The prescriptive period to file a case inherited property (NCC, Art. 1429)
based on a written agreement is 10 years
from the time the right of the action E.g. A is indebted to B for P10,000.00. A
accrues. If the creditor does not collect the later on dies, with C as his heir who is
amount of the loan after 10 years from the entitled only to P5,000.00 from the estate
time it should be paid, such creditor can no of A. If C voluntarily pays B P10,000.00, C
longer collect from the debtor. can no longer recover such amount. (Sta.
Maria, 2017)
If the debtor, despite the lapse of th period
and knowing that the debt has already 6. Payment of a void legacy (NCC, Art. 1430)
prescribed, pays the creditor, such debtor
can no longer recover the payment. (Sta. NOTE: Examples of natural obligations under
Maria, 2017) Title III are NOT exclusive. (Sta. Maria, 2017)
4. To questions of law.
Parties bound
1. Parties thereto; or
477
Special Contracts - Sales
SPECIAL CONTRACTS b. Payment of Interest;
c. Time and Place of Payment; and
SALES d. Penalty.
3. Consummation – occurs when the parties 4. Principal – Its existence does not depend
fulfill or perform the terms agreed upon in upon the existence and validity of another
the contract culminating in the contract.
extinguishment thereof. (SM Investments
Corp. v. Posadas, citing Swedish Match v. CA, 5. Onerous – The thing sold is conveyed in
G.R. No. 200901, December 7, 2015) consideration of the purchase price, and vice
versa.
CHARACTERISTICS OF A CONTRACT OF SALE
6. Nominate – It has a specific name given by
1. Consensual – A sale is perfected by mere law. (Pineda, 2010)
consent, which is manifested by the meeting
of the minds as to the offer and acceptance 7. Title, not a mode – The contract of sale is
thereof on the subject matter, price and not a mode, but merely a title. The sale itself
terms of payment. does not transfer or affect ownership, what
it does is to create the obligation to transfer
NOTE: Delivery of the thing bought or ownership.
payment of the price is not necessary for the
protection of the contract; and failure of the NATURE AND FORM OF CONTRACT
vendee to pay the price after the execution (2002, 2006 BAR)
of the contract does not make the sale null
and void for lack of consideration but results The contract of sale is perfected at the moment
at most in default on the part of the vendee, there is a meeting of minds upon the thing which
for which the vendor may exercise his legal is the object of the contract and upon the price.
remedies. (Rabuya, 2017) From that moment, parties may reciprocally
demand performance, subject to the provisions
2. Bilateral – The seller will deliver and of the law governing the forms of contracts.
transfer a determinate thing to the buyer
and the latter will pay an ascertained price Formal requirement for the validity of a
(or its equivalent). It imposes obligations on contract of sale
both the seller and buyer. The obligations of
each party is the cause for the obligation of GR: A contract of sale may be made in writing, or
the other. by word of mouth, or partly in writing and partly
479
Special Contracts - Sales
by word of mouth, or may be inferred from the from Asiamed Supplies and Equipment
conduct of the parties. (NCC, Art. 1483) Contracts Corporation (“Asiamed”) at a total price of
shall be obligatory, in whatever form they have P31,000,000.00. The machines were
been entered into, provided all the essential delivered on 20 May 2003 and on 17 July
requisites for their validity are present. (NCC, 2003, whereupon two delivery invoices that
Art. 1356) provided for a 12% annual interest and 25%
attorney’s fees charge on overdue accounts,
XPNs: were signed by petitioner Anthony Dee
(“Dee”) and DHFLMC Vice President for
1. If the law requires a document or other Administration.
special form, the contracting parties may
compel each other to observe that form. After the demand for the collection of the
(NCC, Art. 1357) unpaid remaining balance of P25,700,000.00
went unheeded, Asiamed was constrained to
2. Under Statute of Frauds, the following file a complaint for sum of money against the
contracts must be in writing; otherwise, DHLFMC and Dee before the Regional Trial
they shall be unenforceable: Court (“RTC”). Should DHLFMC be held liable
for 12% interest and 25% attorney’s fees
a. Sale of personal property at a price stipulated in the delivery invoices?
not less than P500;
b. Sale of a real property or an interest A: YES. DHLFMC should be held liable for the
therein; interest and attorney’s fees stipulated in the
c. Sale of property not to be delivery invoices, although the attorney’s fees
performed within a year from the should properly be reduced to 10%. These
date thereof; or delivery invoices formed part of the Contract of
d. When an applicable statute requires Sale, given that a contract need not be contained
that the contract of sale be in a in a single writing but may be collected from
certain form. [NCC, Art. 1403(2)] several different writings which do not conflict
with each other and which, when connected,
3. Sale of large cattle which requires that the show the consent of the parties, subject matter,
same be recorded with the city/municipal terms and consideration, as in contracts entered
treasurer and that a certificate of transfer be into by correspondence.
issued. Otherwise, the sale is not valid. (NCC,
Art. 1581) A contract may be encompassed in several
instruments even though every instrument is
NOTE: The contract of sale of REAL not signed by the parties, since it is sufficient if
PROPERTIES even if not complete in form, so the unsigned instruments are clearly identified
long as the essential requisites of consent of the or referred to and made part of the signed
contracting parties, object, and cause of the instrument or instruments. Similarly, a written
obligation concur and they were clearly agreement of which there are two copies, one
established to be present, is valid and effective signed by each of the parties, is binding on both
between the parties. to the same extent as though there had been
only one copy of the agreement and both had
Under Art. 1357 of the NCC, its enforceability is signed it. (DHLFMC, et al. v. Asiamed, G.R. No.
recognized as each contracting party is granted 205638, August 3, 2017, as penned by J. Leonen)
the right to compel the other to execute the
proper public instrument so that the valid Instances where the Statute of Frauds is not
contract of sale of registered land can be truly essential for the enforceability of a contract
registered and can bind third persons. (Rabuya, of sale
2017)
1. When there is a note or memorandum in
Q: On 2 August 2002, Dee Hwa Liong writing and subscribed to by the party or his
Foundation Medical Center (“DHLFMC”) agent (contains essential terms of the
entered into a contract to purchase a contract);
GammaMed Plus Brachytheraphy machine
and a Gammacell Ellan 3000 blood irradiator
481
Special Contracts - Sales
contingency, and in general, where the contract 3. Olivarez Realty undertook to pay the
is subject to certain conditions, usually in the legitimate tenants of the land disturbance
case of the vendee, the full payment of the compensation, while Castillo undertook to
agreed purchase price, and in the case of the clear the land of the tenants within 6 months
vendor, the fulfillment of certain warranties. (De from the signing of the deed. Should Castillo
Leon, 2013) fail to clear the land within 6 months,
Olivarez Realty may suspend its monthly
The full payment of the purchase price partakes down payment until the tenants vacate the
of a suspensive condition, and non-fulfillment of property.
the condition prevents the obligation to sell from
arising. (Nuñez v. Moises-Palma citing Sps. Ramos 4. The parties agreed that Olivarez Realty
v. Sps. Heruela, G.R. No. 224466, March 27, 2019) Corporation may immediately occupy the
property upon signing of the deed. Should
Conditional Sale vs. Absolute Sale (2001 BAR) the contract be cancelled, Olivarez Realty
Corporation agreed to return the property’s
possession to Castillo and forfeit all the
CONDITIONAL SALE ABSOLUTE SALE improvements it may have introduced on the
property.
The seller is granted the The title to the
Olivarez Realty failed to comply with the
right to unilaterally property is not
conditions. Can Castillo rescind the contract?
rescind the contract reserved to the seller
predicated on the or if the seller is not
A: NO. Article 1191 of the Civil Code on the right
fulfillment or non- granted the right to
to rescind reciprocal obligations does not apply
fulfillment, as the case rescind the contract
to contracts to sell. Failure to fully pay the
may be, of the prescribed based on the
purchase price in contracts to sell is not the
condition. fulfillment or non-
breach of contract under Art. 1191.
fulfillment, as the
case may be, of the
Failure to fully pay the purchase price is merely
prescribed condition.
an event which prevents the seller’s obligation
to convey title from acquiring binding force. This
is because there can be no rescission of an
Q: Castillo was the owner of a parcel of land
obligation that is still nonexistent, the
covered by TCT 19972. The Philippine
suspensive condition (the condition of having
Tourism Authority allegedly claimed
the buyer pay the full purchase price) having not
ownership of the same parcel of land based
happened. (Olivarez Realty Corporation and Dr.
on TCT 18493. Castillo and Olivarez Realty
Pablo R. Olivarez v. Benjamin Castillo, G.R. No.
Corporation, represented by Dr. Pablo
196251, July 9, 2014 as penned by J. Leonen)
Olivarez, entered into a contract of
conditional sale over the property. The
Effect of the non-performance of the
details were as follows:
condition or if the condition did not take
place
1. Castillo agreed to sell his property to
Olivarez Realty; with Olivarez Realty
Where the obligation of either party to a
delivering the down payment and the rest to
contract of sale is subject to any condition which
be paid in 30 equal monthly installments
is not performed, such party may:
every 8th of the month beginning in the
month that the parties would receive a
1. Refuse to proceed with the contract; or
decision voiding the PTA’s title to the
2. Waive performance of the condition.
property.
Unlike in a non-fulfillment of a warranty which
2. Olivarez Realty will file the action against
would constitute a breach of the contract, the
PTA with full assistance of Castillo; and
non-happening of the condition, although it may
should the petition be denied, Castillo shall
extinguish the obligation upon which it is based,
reimburse all the amounts paid by Olivarez
generally does not amount to a breach of a
Realty.
contract of sale.
483
Special Contracts - Sales
NOTE: To differentiate Sale and Agency to sell,
A thing is given A thing is the essential clauses of the whole instrument
in exchange of given in shall be considered. (NCC, Art. 1466)
Nature a price certain exchange of
in money or its another 4. Sale vs. Dacion en Pago
equivalent. thing.
BASIS SALE DACION EN
PAGO
Contract where
The transaction is property is
characterized by the manifest No pre-
Existence of alienated to
intention of the parties. existing
Credit extinguish pre-
credit.
If consideration existing
is partly in If intention is credit/debt.
If intention is Novates
money and not clear,
not clear, and creditor-debtor
partly in and the value Buyer-seller
the value of relationship
another thing of thing is Relationship relationship.
thing is equal into seller-
more than
or less than buyer.
amount of
amount of Obligations
money = Obligations are
money = Sale Obligation are created.
Barter extinguished.
Both are governed by law on On the part of
Applicable Law
sales. the debtor:
On the part Extinguishment
of the seller: of the debt;
3. Sale vs. Agency to Sell
Price; On the part of
Consideration On the part the creditor:
BASIS SALE AGENCY TO
of the buyer: The acquisition
SELL
Acquisition of the object
of the object. offered in lieu of
Agent not
the original
obliged to pay
Obligation as Buyer pays credit.
for price; must
Regards the for price of Determination Greater Limited
account for the
Price object. of the Price freedom. freedom.
proceeds of the
The debtor
sale.
Buyer still receives the
Payment of
has to pay payment before
Principal Price
Buyer the price. the contract is
remains the
Transfer of becomes perfected.
owner even if the
Ownership owner of
object delivered
thing. 5. Sale vs. Lease
to agent.
Agent assumes
SALE LEASE
no personal
Seller
liability as long Use of thing is for
Warranty warrants. Obligation to
as within specified period only
authority given. absolutely transfer
with obligation to
Not May be revoked ownership of thing.
return.
unilaterally unilaterally even
Revocability
revocable. without ground.
Consideration is the Consideration is the
Seller
Agent is not price. rental.
As to profit receives
allowed to profit.
profit.
Personal
As to Contract Real contract
contract
485
Special Contracts - Sales
arrearages. 3. Stipulation that deed of sale and
corresponding certificate of sale would be
Dolores’ children, Frederick Ventura, Marites issued only after full payment. (Sps. David v.
Ventura-Roxas, and Philip Ventura filed a Sps. Tiongson, G.R. No. 108169, August 25,
Complaint and, thereafter, an Amended 1999)
Complaint for specific performance, seeking
to compel Sps. Endaya to execute a deed of Contract to Sell vs. Conditional Contract of
sale over the subject properties. They argued Sale
that their parents’ close friendship with Sps.
Endaya, allowed widowed Dolores to pay the BASIS CONTRACT CONDITIONAL
down payment stated in the contract to sell TO SELL CONTRACT OF
and, instead, allowed her to pay amounts as SALE
her means would permit.
The prospective
The total payments made by Dolores and seller does not
petitioners amounted to P952,152.00, more as yet agree or
than the agreed purchase price of consent to
P347,760.00, including the 12% interest p.a. transfer
thereon computed on the outstanding ownership of
balance. the property
subject of the
When Dolores’ children demanded the contract to sell
execution of the corresponding deed of sale, until the The first element
Sps. Endaya refused. Should Sps. Endaya happening of an of consent is
execute a deed of sale over the subject As to event, which present, although
properties in favor of Dolores’ children? consent may be the full it is conditioned
payment of the upon the
A: NO. Spouses Endaya had no obligation to purchase price. happening of a
petitioners to execute a deed of sale over the What the seller contingent event,
subject properties. A contract to sell is defined as agrees or which may or
a bilateral contract whereby the prospective obliges himself may not occur.
seller, while expressly reserving the ownership to do is to fulfill
of the subject property despite delivery thereof his promise to
to the prospective buyer, binds himself to sell sell the subject
the said property exclusively to the latter upon property when
his fulfillment of the conditions agreed upon, i.e., the entire
the full payment of the purchase price and/or amount of the
compliance with the other obligations stated in purchase price
the contract to sell. is delivered to
him.
Given its contingent nature, the failure of the
prospective buyer to make full payment and/or Upon the If the suspensive
abide by his commitments stated in the contract fulfillment of condition is
to sell prevents the obligation of the prospective the suspensive fulfilled, the
seller to execute the corresponding deed of sale condition, contract of sale is
to effect the transfer of ownership to the buyer which is the full thereby
As to effect
from arising. (Ventura v. Heirs of Sps. Endaya, payment of the perfected, such
of
G.R. No. 190016, October 2, 2013) purchase price, that if there had
fulfillment
ownership will already been
of
Instances when a contract to sell may be not previous delivery
suspensive
resorted to: automatically of the property
condition
transfer to the subject of the sale
1. Where subject matter is indeterminate (NCC, buyer although to the buyer,
Arts. 1458 & 1460); the property ownership
2. Sale of future goods except future may have been thereto
inheritance (NCC, Art. 1462); previously automatically
487
Special Contracts - Sales
2. Rescission; or A: NO. This case involves a contract to sell. The
3. Damages Court held that where the seller promises to
execute a deed of absolute sale upon the
Q: Project Movers Realty and Development completion by the buyer of the payment of the
Corporation (PMRDC) was indebted to purchase price, the contract is only a contract to
Keppel Bank for P200M. To pay the debt, sell even if their agreement is denominated as
PMRDC conveyed to the bank 25 properties. a Deed of Conditional Sale, as in this case. In a
Adao occupies one of the properties contract to sell, there being no previous sale of
conveyed. The bank demanded Adao to the property, a third person buying such
vacate the property but he refused. Hence, an property despite the fulfillment of the
ejectment case was filed against Adao. In his suspensive condition such as the full payment of
defense, Adao assailed that he had a Contract the purchase price, for instance, cannot be
to Sell entered between PMRDC and Adao. To deemed a buyer in bad faith and the prospective
prove full payment of the property, he buyer cannot seek the relief of reconveyance of
presented an affidavit. Is Keppel bank bound the property. The action for reconveyance shall
by the contract to sell between PMRDC and fail. (Roque v. Aguado, G.R. No. 193787, April 7,
Adao? 2014)
A: NO. The contract to sell does not by itself give PARTIES TO A CONTRACT OF SALE
Adao the right to possess the property. Unlike in
a contract of sale, here in a contract to sell, there PARTIES
is yet no actual sale nor any transfer of title, until
and unless, full payment is made. The payment
1. Seller – one who sells and transfers the thing
of the purchase price is a positive suspensive
and ownership to the buyer; and
condition. Adao’s lone affidavit is self-serving,
2. Buyer – one who buys the thing upon
and cannot be considered as substantial
payment of the consideration agreed upon.
evidence to prove that there was full payment
made. (Keppel Bank Phils. Inc., v. Adao, G.R. No.
158227, October 19, 2005) CAPACITY OF PARTIES
Q: Spouses Roque and the original owners of Persons who may enter into a contract of sale
an unregistered lot executed a 1997 Deed of
Conditional Sale over a portion of a lot for GR: All persons, whether natural or juridical,
P30,775.00. After the deed’s execution, who can bind themselves, have legal capacity to
Spouses Roque took possession and buy and sell. [NCC, Art. 1489(1)]
introduced improvements on the subject
portion which they utilized as a balut factory. XPNs:
Sabug, Jr, applied for a free patent over the
entire lot and was eventually issued an OCT 1. Minors, insane and demented persons and
in his name. Sabug, Jr., through the deaf-mutes who do not know how to write;
1999 Deed of Absolute Sale, sold the lot 2. Persons under a state of drunkenness or
to Aguado for P2,500,000.00, who, in turn, during hypnotic spell;
caused the cancellation of the OCT and the 3. Persons who are senile (NCC, Art. 24 in
issuance of a TCT. Aguado obtained an realation to Art. 1332; Paragas v. Heirs of
P8,000,000.00 loan from the Land Bank Balacano, G.R. No. 168220, August 31, 2005)
secured by a mortgage over the lot. When she
failed to pay her loan obligation, Land Bank GR: A senile person may enter into
commenced extra-judicial foreclosure contracts, he is not incompetent merely
proceedings and eventually tendered the because of his advanced years, or by reason
highest bid in the auction sale. of his physical infirmities.
Upon Aguado’s failure to redeem the subject
property, Land Bank consolidated its XPN: When such age or infirmity have
ownership and a TCT was issued in its name. impaired his mental faculties so as to
Spouses Roque then filed an action for prevent him from properly, intelligently, and
reconveyance before the RTC. Will the action firmly protecting his rights, then he is
for reconveyance prosper? undeniably incapacitated.
489
Special Contracts - Sales
Property principal by law
of the or estate; Property
ward and can be of the State
Public
during condoned entrusted
Guardian officers and
period of by the to them for
employees
guardiansh private administra
ip parties tion.
themselves
. NOTE: The prohibitions are based upon public
NOTE: policy and morality. The law believes that human
Contracts nature would not be strong enough to resist the
entered by temptations likely to arise of antagonism
guardian in between the interest of the seller and the buyer.
behalf of (Jurado, 2019)
ward are
rescissible The permanent disqualification of public and
if ward judicial officers and lawyers grounded on public
suffers policy differs from the first three cases of
lesion by guardians, agents and administrators (NCC, Art
Voidabl
more than 1491), as to whose transactions it had been
e
¼ of value opined that they may be “ratified” by means of
Property
of and in “the form of a new contact, in which cases
Executors of the
property. its validity shall be determined only by the
and estate
Sale by circumstances at the time the execution of such
administrato under
guardian of new contract.” The causes of nullity which have
rs administra
property ceased to exist cannot impair the validity of the
tion.
belonging new contract. (Jurado, 2019, citing Rubias v.
to a ward Batiller, G.R. No. L-35702, May 29, 1973)
without
Court NOTE: Prohibitions are applicable to sales in
approval is legal redemption, compromises and
void renunciations.
regardless
of the Status of the following contracts of sale
lesion,
hence, 1. Sale entered into by minors
cannot be
ratified. GR: It is voidable, subject to annulment or
ratification.
Property
and rights XPN: Where necessaries are sold and
in delivered to a minor or other person
Cannot be
litigation without capacity to act, he must pay a
ratified.
or levied reasonable price. [NCC, Art. 1489(2)]
upon on
Court Reason: It
execution 2. Sale by & between spouses (NCC, Art.
officers and is not only
before the 1490)
employees Void a private
court
wrong, but
under a. Status of prohibited sales between
also a
their spouses:
public
jurisdictio
wrong.
n GR: Null and void
(Villanueva,
2014)
Others XPN: In case of sale between spouses:
specially
disqualified
2. When there has been a judicial Reason: The condition of those who
separation of property agreed upon incurred guilt would turn out to be better
between them under Article 191 of than those in legal union. To render it
the Family Code. applicable would put common-law
relationships in a better position than those
b. Contract of sale with 3rd parties: legally married. (Villanueva, 2018)
GR: Under the law on sales, it would seem Persons who has (have)the right to assail the
that a spouse may, without the consent of validity of the transaction between spouses
the other spouse, enter into sales
transactions in the regular or normal The following are the only persons who can
pursuit of their profession, vocation or question the sale between spouses:
trade. (in relation to Art. 73, Family Code)
1. The heirs of either of the spouses who have
XPN: Even when the property regime been prejudiced;
prevailing was the conjugal partnership of 2. Prior creditors; and
gains, the Supreme Court held the sale by 3. The State when it comes to the payment of
the husband of a conjugal property the proper taxes due on the transaction.
without the consent of the wife is void,
not merely voidable under Art. 124 of the Status of the contract entered into by a
Family Code since the resulting contract person who has no capacity to act
lacks one of the essential elements of full
consent. (Sps. Guiang v. CA, G.R. No. 1. If only one of the parties has no capacity:
125172, June 26, 1998) VOIDABLE
2. If both parties have no capacity:
XPN to the XPN: The following are valid UNENFORCEABLE
even though they involve conjugal 3. If the incapacity is Senility: VOID
property and are made without the (Villanueva, 2018)
consent of the other spouse:
NOTE: An incapacitated person is NOT obligated
1. If there is a court order; and to make restitution, except insofar as he has
been benefited by the thing/price.
2. If such sale of the conjugal property is
necessary to answer for the conjugal Q: The stipulation between the lawyer and
liabilities mentioned in art. 161 and counsel is as follows, “the attorney’s fees of
162 of the FC. the Atty. X will be ½ of whatever the client
might recover from his share in the property
c. Between common law spouses – also subject of the litigation.” Is the stipulation
null and void. valid?
Sale between common law spouses is A: YES. The stipulation made is one of a
null and void to prevent the exercise of contingent fee which is allowed by the CPE and
undue influence by one spouse over the the CPR. It does not violate the prohibition of
other. The prohibition also applies to a acquisition of property subject of the litigation
couple living as husband and wife by the lawyer provided for in the Civil Code
without the benefit of marriage. since the prohibition applies only to a sale or
assignment to the lawyer by his client during the
A contract of sale made by a husband to pendency of the litigation. The transfer actually
a concubine was null and void for being takes effect after the finality of the judgment and
contrary to morals and public policy. not during the pendency of the case. As such it is
The sale was subversive of the stability valid stipulation between the lawyer and client.
of the family, a basic social institution,
491
Special Contracts - Sales
SPECIAL DISQUALIFICATIONS c. Should not be impossible (within
the commerce of men).
Persons specially disqualified by law to enter
into contracts of sale (ALIEN-UnOS) 2. RIGHTS
Even if the subject matter of the sale was 3. Sale of Undivided Interest or Share
generic, the performance of the seller’s
obligation would require necessarily its physical a. Sole owner may sell an undivided
segregation or particular designation, making interest. (NCC, Art. 1463)
the subject matter determinate at the point of
performance. e.g. A fraction or percentage of such
property.
The buyer does not assume the risk of loss of a
generic subject matter under a valid sale until b. Sale of an undivided share in a specific
the object is made determinate, either by mass of fungible goods makes the buyer a
physical segregation or particular designation. co-owner of the entire mass in
(Villanueva, 2009) proportion to the amount he bought.
(NCC, Art. 1464)
NOTE: The thing may be existing or not at the
time of the perfection of the contract. So long as NOTE: Each co-owner only possesses a
it has the possibility of existence at some future right to sell or alienate his ideal share
time. The law says things that having a potential after partition. However, in case he
existence may be the object of the contract of disposes his share before partition, such
sale. [NCC, Art. 1461(1); Rabuya, 2017] disposition does not make the sale or
alienation null and void. What will be
Sale for a lump sum affected on the sale is only his
proportionate share, subject to the
The boundaries of the land stated in the contract results of the partition. The co-owners
determine the effects and scope of the sale, NOT who did not give their consent to the sale
the area. stand to be unaffected by the alienation.
(Torres, Jr. v. Lapinid, G.R. No. 187987,
The vendors are obligated to deliver all the land November 26, 2014)
included within the boundaries, regardless of
whether the real area should be greater or 4. Sale of Things in Litigation
smaller than that recited in the deed. This is
particularly true where the area is described as a. Sale of things under litigation is
“humigit kumulang,” that is, more or less. rescissible if entered into by the
(Semira v. CA, G.R. No. 76031, March 2, 1994) defendant, without the approval of the
litigants or the court. (NCC, Art. 1381)
Q: Lino entered into a contract to sell with
Ramon, undertaking to convey to the latter NOTE: If the property involved belongs
one of the five lots he owns, without to a ward and the guardian enters into a
specifying which lot it was, for the price of P1 contract involving such property
million. Later, the parties could not agree without court approval, the contract is
which of five lots he owned Lino undertook void, not merely rescissible.
to sell to Ramon. What is the standing of the
contract? (2011 BAR) b. No rescission is allowed where the thing
is legally in the possession of a 3 rd
A: It is a void contract since the particular lot person who did not act in bad faith.
sold cannot be determined.
5. Things subject to Resolutory Condition
KINDS OF OBJECT OF SALE
e.g. Things acquired under legal or
1. Existing Goods – Owned or possessed by conventional right of redemption, or subject
seller at the time of perfection. to reserva troncal. (NCC, Art. 1465)
493
Special Contracts - Sales
6. Indeterminate Quantity of Subject Matter Sale with a future with a present
thing thing – the
NOTE: The fact that the quantity is not hope or
determinate shall not be an obstacle to the expectancy
existence of the contract, provided it is
possible to determine the same without Effectivity Sale is valid only Sale is valid
need of a new contract. (NCC, Art. 1349) if the expected even though
thing will exist. expected
Sale of things with Potential Existence So that if the thing does not
condition is not come into
The validity of sale of things with potential fulfilled, if the existence as
existence depends upon the intention of the thing does not long as the
parties: come into hope itself
existence, the validly existed
1. Emptio rei speratae – If the contract of sale contract cannot e.g., lotto.
is made dependent upon the existence of the have the effect
things such that if it did not come into for lack of an NOTE: Sale of
existence, the contract is not effective, and essential a vain hope or
the buyer will have no obligation to pay the requisite. expectancy
price. Although the however, is
vendee may have void. (NCC,
2. Emptio spei – If the contracting parties reserve his right Art. 1461)
intended the contract of sale to exist at all to claim
events. indemnity from
the vendor in the
Sale of a Mere Hope or Expectancy event that the
latter knew that
GR: The sale is valid even if the expected thing the thing could
did not materialize. not come into
existence.
XPNs: (Rabuya, 2017;
Jurado 2019)
1) The hope or expectancy is vain; or
2) The parties intended that if the hope or NOTE: If there is doubt, the presumption is in
expectancy will not materialize, the sale favor of emptio rei speratae.
is void.
SALE BY A PERSON WHO DOES NOT OWN
The efficacy of the sale of a mere hope or THE THING SOLD
expectancy is deemed subject to the condition
that the thing will come into existence. (NCC, Art. Ownership is not required at the time of
1461) perfection in order for the sale to be valid.
Ownership is material only at the time of
Emptio Rei Speratae vs. Emptio Spei delivery but only for the purpose of transferring
ownership and does not affect the validity of the
BASIS EMPTIO REI EMPTIO SPEI contract of sale.
SPERATAE
Definition Sale of thing Sale of mere Right to transfer ownership
having potential hope or
existence expectancy It is during the delivery that the law requires the
seller to have the right to transfer ownership of
Uncertainty Uncertainty is Uncertainty is the thing sold. In general, a perfected contract of
with regard to with regard to sale cannot be challenged on the ground of the
quantity & the existence seller’s non-ownership of the thing sold at the
quality of the thing time of the perfection of the contract.
(Alcantara-Daus v. Sps. De Leon, G.R. No.
Object of the Contract deals Contract deals 149750, June 16, 2003)
495
Special Contracts - Sales
summarized in Lopez v. Ilustre, “if he is the notifies the seller of his refusal, unless otherwise
owner of an undivided half of a tract of land, he stipulated.
has a right to sell and convey an undivided half,
but he has no right to divide the lot into two No right to refuse – When the buyer’s refusal to
parts, and convey the whole of one part by metes accept the goods is without just cause, the title
and bounds.” (Juan P. Cabrera v. Henry Ysaac, passes to him from the moment they are
G.R. No. 166790, November 19, 2014, as penned placed at his disposal, unless otherwise
by J. Leonen) stipulated.
Instances when the Civil Code recognizes sale 3. Bear expenses for the execution and
of things not actually or already owned by registration of the sale and putting the
the seller at the time of sale goods in a deliverable state, if such is the
stipulation.
1. Sale of a thing having potential existence
(NCC, Art. 1461); Other Obligations of the Buyer
2. Sale of future goods (NCC, Art. 1462); and
3. Contract for the delivery at a certain price of 1. To take care of the goods without the
an article, which the seller in the ordinary obligation to return, where the goods are
course of business manufactures/ procures delivered to the buyer and he rightfully
for the general market, whether the same is refuses to accept (NCC, Art. 1587);
on hand at the time or not. (NCC, Art. 1467)
NOTE: The goods in the buyer’s possession
OBLIGATIONS OF THE VENDEE or BUYER are at the seller’s risk.
GR: Seller is not bound to deliver unless the 3. To pay interest for the period between
purchase price is paid delivery of the thing and the payment of the
price in the following cases:
XPN: A period of payment has been fixed
a. should it have been stipulated;
2. Accept delivery of thing sold (Art. 1582-1585) b. should the thing sold and delivered
produces fruits or income; or
Buyer is deemed to have accepted the goods c. should he be in default, from the time
when he intimates to the seller that he has of judicial or extra-judicial demand for
accepted them, or when the goods have been the payment of the price. (NCC, Art.
delivered to him, and he does any act in 1589)
relation to which is inconsistent with the
ownership of the seller, or when after a lapse OBLIGATIONS OF THE VENDOR or SELLER
of a reasonable time, he retains the goods
without intimating to the seller that he has Obligations of the seller (DDTWTP)
rejected them. (Villanueva, 2018)
1. Deliver the thing sold (NCC, Arts. 1458 &
NOTE: A grace period granted the buyer in 1495);
case of failure to pay is a right not an 2. Deliver fruits & accessions/accessories
obligation. Non-payment would still accruing from perfection of sale (NCC, Arts.
generally require judicial or extrajudicial 1164, 1166, 1495 & 1537);
demand before default can arise. 3. Transfer the ownership;
4. Warranties;
Right to refuse - When goods are delivered to 5. Take care of the thing, pending delivery,
the buyer and he refuses to accept them, having with proper diligence;
the right to do so, he is not bound to return to 6. Pay for the expenses of the deed of sale
the goods to the seller, and it is sufficient that he unless there is a stipulation to the contrary
(NCC, Arts. 1487 & 1521); and
The sum stipulated as the equivalent of the thing GR: The sale is void.
sold and also every incident taken into
consideration for the fixing of the price put to XPN: If it can be shown to be a donation or
the debit of the buyer and agreed to by him. another contract. (NCC, Art. 1471)
(Villanueva, 2009)
When price of securities, grains, liquids and
NOTE: A definite agreement on the manner of things is considered certain
payment of the price is an essential element in
the formation of a binding and enforceable 1. When the price fixed is that which the thing
contract of sale. (Bank of Commerce v. Manalo, would have on a definite day, or in a
G.R. No. 158149, February 9, 2006) particular exchange or market;
Requisites for valid price 2. When the amount is fixed above or below the
price of such day, or in such exchange or
It must be: market, provided said amount be certain.
(NCC, Art. 1472);
1. Real, not fictitious;
2. Paid in money or its equivalent (i.e., valuable 3. When it is by reference to another certain
consideration); thing. (NCC, Art. 1469)
3. Certain or ascertainable at the time of the
perfection of the contract; and NOTE: Art. 1469 is not allowed for the
4. In some cases, must not be grossly inferior to determination of the subject matter of the
the value of the thing sold. sale.
NOTE: There is NO effect on the contract of sale Fixing of the price CANNOT be left to the
in case of breach in the agreed manner of discretion of one of the contracting parties
payment. Payment of the price has nothing to do
with the perfection of the contract. Payment of GR: The price cannot be fixed unilaterally by one
the price goes into the performance of the of the contracting parties.
497
Special Contracts - Sales
XPN: If the price fixed by one of the parties is Where the deed of sale states that the purchase
accepted by the other, the sale is perfected. price has been paid but in fact has never been
paid, the deed of sale is null and void ab initio for
Effect when the price is unilaterally fixed by lack of consideration. Moreover, Art. 1471 of the
one of the contracting parties without Civil Code, provides that “if the price is
consent of the other party simulated, the sale is void.” (Catindig v. Vda. de
Meneses, Roxas v. CA, G.R. No. 165851
There is no meeting of the minds. The sale is & 168875, February 2, 2011; Bacalso v. Aca-ac,
inefficacious. (Pineda, 2010) G.R. No. 172919, January 13, 2016)
Effect when the price is fixed by the third WHEN NO PRICE IS AGREED UPON BY THE
person designated PARTIES
GR: Price fixed by a third person designated by Effect of failure to determine the price
the parties is binding upon them.
1. Where contract is executory – ineffective.
XPNs:
2. Where the thing has been delivered to and
1. When the third person acts in bad faith appropriated by the buyer – the buyer must
or by mistake; and pay a reasonable price therefor.
2. When the third person disregards the
specific instructions or the procedure Q: Nante, a registered owner of a parcel of
marked out by the parties. land in Quezon City, sold the property to
Monica under a deed of sale which reads as
Test of gross inadequacy of price follows:
The price is grossly inadequate if a reasonable “That for and in consideration of the sum of
man will not agree to dispose of his property at P500,000, value to be paid and delivered to
that amount. me, and receipt of which shall be
acknowledged by me to the full satisfaction
Effect of Gross Inadequacy of Price (NCC, Art. of Monica, referred to as a vendee, I hereby
1470) sell, transfer, cede, convey, and assign, as by
these presents, I do have sold, transferred,
GR: It does not affect the validity of the sale. ceded, conveyed and assigned a parcel of
land covered by TCT No. 2468 in favor of the
XPNs: (CoRDS) Vendee.”
499
Special Contracts - Sales
1. Not to offer to any third party the sale of the stated in the covenant granting the right of first
object of the option during the option period; refusal, the same price by which the third-party
2. Not to withdraw the offer or option during buyer bought the property shall be deemed to be
the option period; and the price by which the right of first refusal shall
3. To hold the subject matter for sale to the therefore be exercisable. (Equatorial Realty
offeree in the event that the latter exercises Development, Inc. v. Mayfair Theater, Inc., G.R. No.
his option during the option period. 106063, November 21, 1996)
Effect of acceptance and withdrawal of the Q: Dux leased his house to Iris for a period of
offer 2 years, at the rate of P25,000.00 monthly,
payable annually in advance. The contract
If the offer had already been accepted and such stipulated that it may be renewed for
acceptance has been communicated before the another 2-year period upon mutual
withdrawal is communicated, the acceptance agreement of the parties. The contract also
creates a perfected contract, even if no granted Iris the right of first refusal to
consideration was as yet paid for the option. In purchase the property at any time during the
which case, if the offeror does not perform his lease, if Dux decides to sell the property at
obligations under the perfected contract, he the same price that the property is offered
shall be liable for all consequences arising from for sale to a third party. 23 months after
the breach thereof based on any of the available execution of the lease contract, Dux sold the
remedies such as specific performance, or house. Dux said there was no breach because
rescission with damages in both cases. the property was sold to his mother who is
not a third party. Iris filed an action to
Right of first refusal rescind the sale and to compel Dux to sell the
property to her at the same price.
It is a contractual grant, not of the sale of a Alternatively, she asked the court to extend
property, but of the first priority to buy the the lease for another 2 years on the same
property in the event the owner sells the same. terms. Can Iris seek rescission of the sale of
(Villegas v. Court of Appeals, G.R. Nos. 111495 & the property to Dux’s mother? (2008 BAR)
122404, August 18, 2006)
A: YES. The right of first refusal is included in
NOTE: Where a time is stated in an offer for its the contract signed by the parties. Only if the
acceptance, the offer is terminated at the lessee failed to exercise the right of first refusal
expiration of the time given for its acceptance. could the lessor lawfully sell the subject
(Pineda, 2010) property to others, under no less than the same
terms and conditions previously offered to the
Basis of the right of first refusal lessee. Granting that the mother is not a third
party, this would make her privy to the
It is based on the current offer to sell of the agreement of Dux and Iris, aware of the right of
seller or offer to purchase of any prospective first refusal. This makes the mother a buyer in
buyer. Only after the optionee fails to exercise its bad faith, hence giving more ground for
right of first priority under the same terms and rescission of the sale to her. (Equatorial Realty
within the period contemplated could the owner Development, Inc. v. Mayfair Theater, Inc., G.R. No.
validly offer to sell the property to a third 106063, November 21, 1996)
person, again, under the same terms as offered
to the optionee. (Tanay Recreation Center & Option contract v. Right of first refusal
Development Corp. v. Fausto citing Parañaque
Kings Enterprises, Inc. v. CA, G.R. No. 140182, April BASIS OPTION RIGHT OF
12, 2005) CONTRACT FIRST
REFUSAL
Effect of sale of a property in violation of the Principal Accessory;
right of first refusal Nature contract; stands cannot stand
on its own on its own
The resulting contract is RESCISSIBLE by the Does not need
Needs separate
person in whose favor the right of first refusal Consideration separate
consideration
was given and even though no particular price is consideration
Right of first refusal must be contained in a GR: The sublessee is a stranger to the lessor who
written contract is bound to respect the right of first refusal in
favor of the lessee only.
The right of first refusal be embodied in a
written contract and the grant of such right must XPN: When the contract of lease granted the
be clear and express. lessee the right to assign the lease, the assignee
would be entitled to exercise such right as he
NOTE: It is applicable only to executory steps into the shoes of the original assignee.
contracts and not to contracts which are totally (Villanueva, 2009)
or partially performed.
Q: Tess leased her 1,500 sq. m. lot in Antipolo
Q: Pozzolanic entered into a long-term City to Ruth for a period of three (3) years to
contract with the National Power February 2013. On March 19, 2011, Tess sent
Corporation (NPC) for the purchase of all fly a letter to Ruth, part of which read as follows:
ash to be produced by the latter’s future
power plants. In the contract, NPC granted “I am offering you to buy the property you
Pozzolanic a right of first refusal to purchase are presently leasing at P5,000.00 per sq. m.
the fly ash that may be generated in the or for a total of P7,500,00.00. You can pay the
future. When NPC’s two new power plants contract price by installment for two (2)
started operation, it published an invitation years without interest. I will give you a
to interested buyers for the purchase of the period of one (1) year from the receipt of this
fly ash. Pozzolanic sent letters to NPC letter to decide whether you will buy the
reminding its right of first refusal. NPC property.”
deferred its public bidding with the first
power plant’s fly ash but it nevertheless After the expiration of the lease contract,
continued with the bidding of the second Tess sold the property to her niece for a total
power plant’s fly ash. Pozzolanic filed a consideration of P4 Million. Ruth filed a
complaint, but during the pendency of the complaint for the annulment of the sale,
case, NPC decided to likewise dispose the fly reconveyance and damages against Tess and
ash from the first power plant without her niece. Ruth alleged that the sale of the
allowing Pozzolanic to exercise its right of leased property violated her right to buy
first refusal. Can Pozzolanic exercise its right under the principle of right of first refusal. Is
of first refusal? the allegation of Ruth tenable? (2014 BAR)
A: NO. The right of first refusal granted in favor A: NO, the allegation of Ruth is not tenable. The
of Pozzolanic is invalid for being contrary to letter written by Tess did not grant a right of
public policy as the same violates the first refusal to Ruth. At most, it is to be construed
requirement of competitive public bidding in the as an option contract whereby Ruth was given
award of government contracts. In this the right to buy or not to buy the leased
jurisdiction, public bidding is the established property. An option is itself not a purchase, but it
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Special Contracts - Sales
merely secures the privilege to buy. However, When the seller seeks to rescind the sale, he is
the option is not valid because it was not obliged to return the thing which was the object
supported by cause or consideration distinct of the contract along with fruits and interest.
from the price of the property. (NCC, Art. 1479) (NCC, Art. 1385)
Also, Ruth does not appear to have exercised her
option before the offer was withdrawn by the Option money v. Earnest money
subsequent sale of the property to the niece of
Tess. OPTION EARNEST
BASIS
MONEY MONEY
OPTION MONEY vis-à-vis EARNEST MONEY
Money given as
Option money distinct Forms part of
As to Money
consideration the purchase
Given
It is the distinct consideration in case of an for an option price.
option contract. It does not form part of the contract.
purchase price hence, it cannot be recovered if
the buyer did not continue with the sale. (NCC, Applies to a Given only
Art. 1479) As to
sale not yet when there is
Perfection
perfected. already a sale.
NOTE: Option contract’s distinguishing
characteristic is that it imposes no binding Obligation of Prospective When given,
obligation on the person holding the option, the buyer upon buyer is not the buyer is
aside from the consideration for the offer. payment of required to bound to pay
(Limson v. CA, G.R. No. 135929, April 20, 2001) consideration buy. the balance.
If sale did not
Consideration of payment as option money
materialize, it
If buyer does
must be
Payment is considered option money when it is not decide to
As to Recovery returned.
given as a separate and distinct consideration buy, it cannot
(Villanueva,
from the purchase price. be recovered.
2014; Pineda,
2010)
Earnest money or “arras” (2002 BAR)
Ownership is
Title passes to
reserved to the
This is the money given to the seller by the the buyer
As to Transfer seller and is
prospective buyer to show that the latter is truly upon delivery
of Ownership not to pass
interested in buying the property, and its aim is of the thing
until full
to bind the bargain (Pineda, 2010). It is actually a sold.
payment.
partial payment of the purchase price and is
considered as proof of the perfection of the Specific
Effect of Non- Specific performance
contract. (De Leon, 2011)
payment performance. and
rescission.
NOTE: Option money may become earnest
money if the parties agree. (De Leon, 2011)
Remedy when seller refuses to complete the
Significance of giving an earnest money sale transaction despite down payment of the
buyer
It is considered as:
The action for specific performance will lie.
There is a perfected contract of sale because
1. Part of the purchase price – earnest money
is deducted from the total price; and there was a binding agreement of sale, not just
an option contract. The sale was perfected upon
2. Proof of perfection of the contract. (NCC, Art.
1482) acceptance by the seller of the down payment
from the buyer.
Effect of rescission on earnest money
Seller’s refusal to proceed with the sale
received
despite down payment of buyer on the
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Special Contracts - Sales
terms of Licup’s offer appearing on it. There was the buyer in any of the ways specified by law or
meeting of the minds as to the object and in any manner agreed upon by the parties.
consideration of the contract. But when Licup
ordered a stop-payment on his deposit and PERFECTION CONSUMMATION
proposed in his April 26, 1988 letter to Msgr. From the moment From the time of
Cirilos that the property be instead transferred there is a MEETING OF MUTUAL DELIVERY by
to SSE, a subjective novation took place. The MINDS upon the things the contracting parties
proposed substitution of Licup by SSE opened promised by each party of the things promised
the negotiation stage for a new contract of sale in consideration of the
as between SSE and the owners. (Starbright other
Sales v. Phil. Realty Corp., et al., G.R. No. 177936,
January 18, 2012) TRANSFER OF OWNERSHIP
Q: Spouses Biong and Linda wanted to sell Q: When is ownership deemed transferred?
their house. They found a prospective buyer,
Ray. Linda negotiated with Ray for the sale of
A: The thing shall be understood as delivered
the property. They agreed on a fair price of
when it is placed in the control and possession of
P2 Million. Ray sent Linda a letter confirming
the vendee.
his intention to buy the property. Later,
another couple, Bernie and Elena, offered a
NOTE: The most that a sale does is to create the
similar house at a lower price of P1.5 Million.
obligation to transfer ownership. It is only the
But Ray insisted on buying the house of Biong
title while the mode of transferring ownership is
and Linda for sentimental reasons. Ray
delivery.
prepared a deed of sale to be signed by the
couple and a manager’s check for P2 Million.
Effect of Delivery
After receiving the P2 Million, Biong signed
the deed of sale. However, Linda was not able
GR: Title/ownership is transferred.
to sign it because she was abroad. On her
return, she refused to sign the document
XPN: When the contrary is stipulated as in the
saying she changed her mind. Linda filed suit
case of:
for nullification of the deed of sale and for
moral and exemplary damages against Ray.
1. Pactum reservatii in domini – Agreement
Will the suit prosper? (2006 BAR)
that ownership will remain with seller
until full payment of price (contract to
A: NO, the suit will not prosper. The contract of
sell);
sale was perfected when Linda and Ray agreed
2. Sale on acceptance/approval;
on the object of the sale and the price. (NCC, Art.
3. Sale on return; or
1475) There is therefore consent on her part as
4. There is implied reservation of
the consent need not be given in any specific
ownership.
form. Hence, her consent may be given by
implication, especially since she was aware of,
NOTE: Seller bears expenses of delivery.
and participated in the sale of the property.
(Pelayo v. Perez, G.R. No. 141323, June 8, 2005)
Her action for moral and exemplary damages Kinds of Delivery
will also not prosper because the case does not
fall under any of those mentioned in Arts. 2219 1. ACTUAL or REAL – Thing sold is placed
and 2232 of the Civil Code. under the control and possession of
buyer/agent;
CONSUMMATION STAGE IN A CONTRACT OF
2. CONSTRUCTIVE or LEGAL – Does not
SALE
confer physical possession of the thing, but
by construction of law, is equivalent to acts
Consummation stage in a contract of sale takes of real delivery.
place by the delivery of the thing together with
the payment of the price. Requisites:
NOTE: The ownership of the thing is acquired by
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Special Contracts - Sales
1. FAS (Free along Side) – when goods are 3. When the bill of lading is deliverable to the
delivered alongside the ship, there is already buyer, but the seller retains possession of
delivery to the buyer. The seller pays all the bill of lading (NCC, Art. 1503); and
charges and is subject to risk until the goods 4. When the parties have a different intention
are placed alongside the vessel. (Villanueva, as when the parties did not intend to have
2009) the goods delivered to the buyer through the
carrier. (Pineda, 2010, citing Smith Bell & Co.,
2. FOB (Free on Board) – when goods are Inc. v. Jimenez, G.R. No. L-17617, June 29,
delivered at the point of shipment, delivery 1963)
to carrier by placing the goods on vessel is
delivery to buyer. The seller shall bear all When the object should be delivered:
expenses until the goods are delivered,
depending on whether the goods are to be 1. Stipulated time; or
delivered “f.o.b.” at the point of shipment or 2. If there is none, at a reasonable hour.
at the point of destination. (Villanueva,
2009) Place of delivery (NCC, Art. 1521 in relation to
Art. 1582)
3. CIF (Cost, Insurance, and Freight) – where
the buyer pays a fixed price for which the The place of delivery shall be: (AUBRI)
seller furnishes the goods, pays the freight
and insurance to the point of delivery, and 1. That place agreed upon, if any stipulation
all risks while the goods are in transit are for has been made;
the account of the buyer 2. Place determined by usage of trade;
3. Seller’s place of business;
4. COD (Collect on Delivery) – the carrier acts 4. Seller’s residence; or
for the seller in collecting the purchase 5. In case of specific goods, where they can be
price, which the buyer must pay to obtain found.
possession of the goods.
NOTE: If specific goods are involved in the sale,
Seller’s duties after delivery to the carrier the place where they are found shall be the place
of delivery, in the absence of any agreement or
1. To enter on behalf of the buyer into such applicable usage of trade.
contract reasonable under the
circumstances; and Effects of a sale of goods on installment
2. To give notice to the buyer regarding
necessity of insuring the goods. 1. Goods must be delivered in full except when
stipulated; and
Effect of delivery through a carrier 2. When not examined by the buyer – it is not
accepted until examined or at least had
GR: If the seller is authorized, delivery to carrier reasonable time to examine
is considered delivery to the buyer. The premise
being that the carrier acts as an agent of the Seller not bound to deliver the thing sold
buyer. (Villanueva, 2009)
1. If the buyer has not paid the price;
NOTE: Here, the carrier is deemed the bailee of 2. No period for payment has been fixed in the
the buyer and the seller is deemed the agent of contract; and
the buyer in employing the carrier. (Rabuya, 3. A period for payment has been fixed in the
2017) contract but the buyer has lost the right to
make use of the time.
XPNs:
Suspension of payment by the buyer (NCC,
1. When the seller reserves his right of Art. 1590)
ownership over the goods;
2. When the delivery is directed by the seller GR:
to the place of destination, to himself or his
agent;
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Special Contracts - Sales
or tendering the goods within the time fixed 1. 2 or more sales transactions must constitute
in the contract or within reasonable time. valid sales transactions;
(NCC, Art. 1502)
2. 2 or more sales transactions must pertain to
Sale on trial, approval or satisfaction exactly the same subject matter;
DOUBLE SALE (2001, 2004, 2008 BAR) 1. Buys the property without notice that some
other person has a right to, or interest in
such property; and
There is double sale when the same object of the
2. Pays a full and fair price for the same at the
sale is sold to different vendees. (NCC, Art. 1544)
time of such purchase, or before he has
notice of the claim or interest of some other
Requisites of Double Sales (NCC, Art. 1544)
person in the property. (Uy v. Fule, citing
Principle of prius tempore, potior jure – first The purchaser of a registered land under the
in time, stronger in right Torrens system is merely charged with notice of
the burdens and claims on the property which
Knowledge gained by the first buyer of the are inscribed on the face of certificate of title.
second sale cannot defeat the first buyer’s rights (Pineda, 2010)
except only as provided by the NCC and that is
where the second buyer first registers in good Application of caveat emptor in judicial sales
faith the second sale ahead of the first. (Jurado,
2019) Conversely, knowledge gained by the Caveat emptor is applicable in judicial sales. The
second buyer of the first sale defeats his rights purchaser in a judicial sale acquires no higher or
even if he is first to register, since such better title or right than that of the judgment
knowledge taints his registration with bad faith debtor. If it happens that the judgment debtor
to merit the protection of Art. 1544 (2 nd par.) of has no right, interest, or lien on and to the
NCC, the second realty buyer must act in good property sold, the purchaser acquires none.
faith in registering his deed of sale. (Pineda, 2010)
NOTE: Where one sale is absolute and the other Effect of subsequent foreclosure to a prior
is a pacto de retro transaction where the period purchaser in good faith (2008 BAR)
to redeem has not yet expired, Art. 1544 of NCC
will not apply. (Pineda, 2010) The purchaser in good faith has better title to
the property sold even if subsequently
Q: Does prior registration by the second foreclosed by a mortgagor. Under the Torrens
buyer of a property subject of a double sale System, a buyer of registered lands is not
confer ownership or preferred right in his required by law to inquire further than what the
favor over that of the first buyer? Torrens certificate indicates on its face. If a
person proceeds to buy it relying on the title,
A: Principle of caveat emptor – buyer beware that person is considered a buyer in good faith.
It literally means, ‘Let the buyer beware’. The EFFECTS OF THE CONTRACT WHEN THE
rule requires the purchaser to be aware of the THING SOLD HAS BEEN LOST
supposed title of the vendor and one who buys
without checking the vendor’s title takes all the RISK OF LOSS
risks and losses consequent to such failure.
(Agcaoili, 2015) RISK OF LOSS
Application of caveat emptor in particular
A thing is considered as lost
sale transactions
GR: It is understood that the thing is lost when
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Special Contracts - Sales
it: the latter, he shall pay the remaining part’s
corresponding price in proportion to the total
1. Perishes; sum agreed upon. (NCC, Art. 1493)
2. Goes out of commerce; or
3. Disappears in such a way that its existence is Options of the buyer with regard to the sale
unknown or cannot be recovered. [NCC, Art. in the total or partial loss or deterioration of
1189(2)] a mass of specific goods without the
knowledge of the seller
XPN: In an obligation to deliver a generic thing,
the loss or destruction of anything of the same 1. He may treat the sale as avoided or
kind does not extinguish the obligation. (NCC, cancelled; or
Art. 1263) 2. He may continue with the sale with respect
to the available or remaining goods. (NCC,
Effect when the loss occurred before Art. 1494)
perfection
Effect if the buyer chooses to continue with
GR: The thing perishes with the owner – Res the sale of the remaining goods
perit domino (NCC, Art. 1504; 1999 BAR)
The remaining goods shall pass in ownership to
XPNs: the buyer but subject to proportionate reduction
of the price. But this is applicable only if the
1. Where the delivery has been made either to goods are divisible or capable of being divided.
the buyer or to the bailee for the buyer, but (Pineda, 2010) If indivisible, the only option
ownership in the goods has been retained available is the avoidance of the sale.
by the seller merely to secure performance
by the buyer of his obligations under the Effect when the loss occurred after perfection
contract [NCC, Art. 1504 (1)];) but before delivery
2. Where actual delivery has been delayed
through the fault of either the buyer or GR: Who bears the risk of loss is governed by the
seller, the goods are at the risk of the party stipulations in the contract.
at fault [NCC, Art. 1504 (2)]; and
3. Where goods are sent by the seller to the In the absence of stipulation: there are two
buyer under circumstances in which the conflicting views:
seller knows or ought to know that it is
usual to insure, the seller must give such First view: Res perit creditori or buyer bears the
notice to the buyer as may enable him to risk of loss. (Paras, Vitug, Padilla, and De Leon)
insure them during their transit, and, if the
seller fails to do so, the goods shall be Article 1504 of the Civil Code, which embodies
deemed to be at his risk during such transit. res perit domino, only covers goods. The
[NCC, Art. 1523(3)]) obligation to pay on the part of the buyer is not
extinguished. (Villanueva, 2009)
NOTE: The seller still owns the thing because
there is no delivery or transfer of ownership yet. NOTE: Pursuant to Article 1537 of the Civil
Hence, the seller bears the risk of loss. Code, the vendee must also bear the resulting
(Villanueva, 2004) disadvantages before the delivery but after the
contract has been perfected. This theory is an
Effect when the loss occurred at the time of exception to the rule of res perit domino. On the
perfection of the contract of sale other hand, pursuant to Article 1262 of the Civil
Code, if the thing is lost or destroyed without the
GR: Contract is considered void or inexistent fault of the seller, the obligation to deliver is
because the object did not exist at the time of the extinguished but the obligation to pay subsist.
transaction. (Pineda, 2010) (Pineda, 2010)
XPN: In case of partial loss, the buyer may Second view: Res perit domino or seller bears
choose between withdrawing from the contract the risk of loss. (Tolentino, Jurado, Baviera, and
and demanding the remaining part. If he chooses Villanueva)
Person who bears the risk of loss or NOTE: Recto Law applies only to sale payable in
deterioration installments and not to a sale where there is an
initial payment and the balance is payable in the
SELLER is the owner so future, because such is a straight sale, not a sale
Before Perfection seller bears risk of loss. by installments.
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Special Contracts - Sales
Alternative remedies in case of sale of a. Notice of rescission is sent;
personal property in installments b. Takes possession of subject
matter of sale; and
1. Specific Performance: Exact fulfillment c. Files action for rescission.
should the buyer fail to pay
NOTE: The stipulation that the installments
GR: If availed of, the unpaid seller cannot or rents already paid shall not be returned
anymore choose other remedies. to the vendee shall be valid insofar as the
same may not be unconscionable under the
XPN: If after choosing specific performance, circumstances.
it has become impossible to perform it,
rescission may be pursued. 3. Foreclosure: Foreclose on chattel
mortgage if buyer fails to pay two (2) or
NOTE: If vendor elected fulfillment or more installments. He shall have no
specific performance further action against the purchaser to
recover any unpaid balance of the price.
a. The filing of collection suit barred the Any agreement to the contrary shall be
foreclosure of the mortgage. A mortgagee void.
who files a suit for collection abandons the
remedy of foreclosure of the chattel NOTE: Of the three remedies, only this third
mortgage constituted over the personal remedy bars the recovery of unpaid balance.
properties or security for the debt or value Moreover, payment of damages, and
of the promissory note which he seeks to attorney’s fees are also barred.
recover in the said suit.
GR: Actual foreclosure is necessary to bar
b. Filing of B.P. Blg. 22 does not bar recovery of balance.
foreclosure of mortgage. (Spouses Torres v.
Medina, G.R. No. 166730, March 10, 2010) XPN: Mortgagor refuses to deliver property
to effect foreclosure; expenses incurred in
However, in Chieng v. Spouses Santos (G.R. attorney’s fees in obtaining the property
No. 169647, August 31, 2007), it was held may be recovered by the vendor.
that the filing of the B.P. Blg. 22 case is
equivalent to the filing of a collection suit for The remedies are alternative, not
the recovery of the mortgage-loan. The cumulative.
Court explained that the civil action for the
recovery of the amount of the dishonored GR: The election of one remedy is a waiver of the
checks is impliedly instituted in the criminal right to resort to the other remedies.
action. Hence, the impliedly instituted civil
action in the criminal case for violation of XPN: If the remedy first chosen was not
B.P. Blg. 22 is, in effect, a collection suit or completed or not fully exercised as when there
suit for recovery of mortgage debt. was voluntary desistance, the vendor may still
avail himself of another remedy.
c. Action for recovery of possession with
replevin as provisional remedy preparatory NOTE: In ordinary alternative obligations, a
to extrajudicial foreclosure is not an action mere choice categorically and unequivocally
for collection much less for foreclosure. made and then communicated by the person
entitled to exercise his option concludes the
But if the action for replevin culminated in parties. The creditor may not thereafter exercise
the foreclosure of the chattel mortgage and any other option unless the chosen alternative
the sale of the personal property at the proves to be ineffectual or unavailing due to no
public auction, then Article 1484 now fault on his part. (Rabuya, 2017)
applies. (Rabuya, 2017)
Rationale of Recto Law
2. Rescission: Cancel the sale if buyer fails to
pay 2 or more installments. Deemed chosen To remedy the abuses committed in connection
when: with the foreclosure of chattel mortgages and to
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Special Contracts - Sales
advantage of petitioner – a situation which law installments, an additional five percent (5%)
and equity will never permit. (Equitable Savings every year but not to exceed ninety percent
Bank v. Palces, G.R. No. 214752, March 9, 2016) (90%) of the total payments made.
REALTY INSTALLMENT BUYER ACT or NOTE: This requires a notarial act of rescission
“MACEDA LAW” (2000, 2002 BAR) and the refund to the buyer of the full payment
of the cash surrender value of the payments on
Realty Installment Buyer Act the property. Failure to comply with the
mandatory twin requirement shall result into
Commonly known as the “MACEDA LAW.” It is the contract remaining to be valid and
embodied in R.A. No. 6552. The law declares as subsisting. (Rabuya, 2017)
“public policy to protect buyers of real estate on
installment payments against onerous and 2. In case the installments paid were less than
oppressive conditions.” 2 years, the seller shall give the buyer a
grace period of not less than 60 days. If the
Transactions/sale covered by the Maceda buyer fails to pay the installments due at the
Law expiration of the grace period, the seller may
cancel the contract after 30 days from
The law involves the sale of immovables on receipt by the buyer of the notice of
installment. cancellation or demand for rescission by
notarial act. (Optimum Development Bank v.
Coverage: Residential Real Estate (Villanueva, Spouses Jovellanos, citing Rillo v. CA, G.R. No.
2009) 189145, December 4, 2013)
A: The Maceda Law is applicable to sales of A: NO. When Republic Act No. 6552 or the
immovable property on installments. The most Maceda Law speaks of paying “at least two years
important features are: of installments” in order for the benefits under
its Section 3 to become available, it refers to the
buyer's payment of two (2) years’ worth of the
1. After having paid installments for at least
two years, the buyer is entitled to a stipulated fractional, periodic payments due to
the seller. (Priscilla Zafra Orbe v. Filinvest Land,
mandatory grace period of one month for
Inc., G.R. No. 208185, September 06, 2017 J.
every year of installment payments made, to
pay the unpaid installments without Leonen)
interest.
Other rights granted to a buyer under the
If the contract is cancelled, the seller shall Maceda Law
refund to the buyer the cash surrender value
equivalent to fifty percent (50%) of the total 1. Sell or assign rights to another;
payments made, and after five years of
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Special Contracts - Sales
pay within 30 days from such notarial notice Jovellanos to vacate the subject property only
before rescission may be effected. All these on May 25, 2006. Thus, based on the foregoing,
requirements for a valid rescission were there was a valid and effective cancellation of
not complied with by the seller. Hence, the Contract to Sell and since Sps. Jovellanos
the rescission is invalid. had already lost their right to retain
possession of the subject property as a
Q: Spouses Jovellanos entered into a consequence of such cancellation, their refusal
Contract to Sell with Palmera Homes for the to vacate and turn over possession to
purchase of a residential house and lot Optimum makes out a valid case for unlawful
payable for a period of 10 years. Later, detainer. (Optimum Development Bank v.
Palmera Homes assigned all its rights, title, Jovellanos, G.R. No. 189145, December 4, 2013)
and interest in favor of Optimum Bank.
After some time, Optimum issued a Notice REMEDIES OF AN UNPAID SELLER
of Delinquency and Cancellation of the
Contract to Sell on April 10, 2006 for the Unpaid Seller
spouses’ failure to pay their monthly
payments. Thereafter, a final Demand One is considered as unpaid seller when:
Letter dated May 25, 2006 was issued by
Optimum requesting the Sps. Jovellanos to 1. The whole of the price has not been paid or
vacate and deliver the properties which, tendered; or
however, remained unheeded. This
prompted Optimum to file an unlawful 2. A bill of exchange or other negotiable
detainer case against the spouses. Was the instrument has been received as conditional
cancellation of the contract to sell valid? payment, and the condition on which it was
received has been broken by reason of the
A: YES. The Maceda Law, R.A. No. 6552, dishonor of the instrument, the insolvency
recognizes in conditional sales of all kinds of of the buyer, or otherwise. (NCC, Art. 1525)
real estate (industrial, commercial, residential)
the right of the seller to cancel the contract NOTE: The mere delivery of a negotiable
upon non-payment of an installment by the instrument does not ipso facto extinguish
buyer, which is simply an event that prevents the obligation of the buyer to pay because
the obligation of the vendor to convey title the instrument which has been delivered
from acquiring binding force. It also provides may be dishonored. In which case, the seller
the right of the buyer on installments in case is still an unpaid seller. (US v. Bedoya, G.R.
he defaults in the payment of succeeding No. 5100, November 3, 1909)
installments.
Moreover, bills of exchange or mercantile
Three (3) requisites before the seller may documents shall produce the effect of
actually cancel the contract must exist: first, payment only when they have been cashed
the seller shall give the buyer a 60-day grace or when through the fault of the creditor,
period to be reckoned from the date the they have been impaired.
installment became due; second, the seller
must give the buyer a notice of The term “seller” includes any person who is in
cancellation/demand for rescission by notarial the position of the seller, such as (a) an agent of
act if the buyer fails to pay the installments the seller to whom the bill of lading has been
due at the expiration of the said grace period; indorsed; or (b) a consignor or agent who has
and third, the seller may actually cancel the himself paid, or is directly responsible for the
contract only after thirty (30) days from the price. (Jurado, 2019)
buyer’s receipt of the said notice of
cancellation/demand for rescission by notarial Q: When is a seller considered unpaid
act. despite the title of the goods passing to the
buyer?
It was only after the expiration of the thirty-
day (30) period did Optimum treat the A: Whenever the seller was only paid partially,
contract to sell as effectively cancelled – he remains an unpaid seller. (Pineda, 2010)
making as it did a final demand upon Sps.
1. Action for Price (NCC, Art. 1595) c. Where the buyer becomes
insolvent.
Exercised when:
NOTE: When part of goods delivered,
a. Ownership has passed to buyer; may still exercise right on goods
undelivered.
b. Price is payable on a day
certain; or Moreover, when title to the property
has passed to the buyer, but possession
c. Goods cannot readily be resold remains in the hands of the seller, the
for reasonable price and Art. latter is necessarily holding the goods
1596 of NCC is inapplicable. for the buyer. For his protection, the
seller is entitled to possess the same
2. Action for Damages (NCC, Art. 1596) – until he has been fully paid, or a tender
In case of wrongful neglect or refusal by of the price has been made.
the buyer to accept or pay for the thing
sold. A lien based on a writ of attachment is
inferior to that of the unpaid seller’s
NOTE: The measure of damages is the right of preference under Article 2241.
estimated loss directly and naturally
resulting in the ordinary course of 2. Loss of Lien (NCC, Art. 1529)
events from the buyer’s breach of
contract. a. When he delivers the goods to
the carrier or other bailee for
Where there is an available market purpose of transmission to the
for the goods in question, the buyer without reserving the
measure of damages is, in the absence ownership in the goods or the
of special circumstances showing right to the possession thereof;
proximate damage of a different b. When the buyer or his agent
amount, the difference between the lawfully obtains possession of
contract price and the market or the goods; or
current price at the time or times c. By waiver thereof.
when the goods ought to have been
accepted, or, if no time was fixed for NOTE: Seller loses lien when he
acceptance, then at the time of the parts with good (but still, stoppage
refusal to accept. in transitu can be exercised).
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Special Contracts - Sales
e. Seller must either actually take c. Has manifested his inability to
possession of the goods sold or perform his obligations
give Notice of his claim to the thereunder; or
carrier or other person in d. Has committed a breach
possession; thereof, which must be
f. Goods must be in Transit; and substantial.
g. Unpaid seller.
NOTE: Here, the seller may thereafter
NOTE: Buyer’s insolvency need not be totally rescind the contract of sale by
judicially declared. A person is giving notice of his election to do so to
insolvent who either has ceased to pay the buyer.
his debts in the ordinary course of
business or cannot pay his debts as Q: Nante, a registered owner of a parcel of
they become due, whether insolvency land in Quezon City, sold the property to
proceedings have been commenced or Monica under a deed of sale which reads as
not. [NCC, Art. 1636(2)] follows:
If the buyer, beforehand, knew of the “That for and in consideration of the sum of
insolvency of the buyer, he cannot P500,000.00, value to be paid and delivered
exercise the right of stoppage in to me, and receipt of which shall be
transitu because he is under estoppel. acknowledged by me to the full satisfaction
However, the right is not impaired of Monica, referred to as Vendee, I hereby
even if the insolvency of the buyer has sell, transfer, cede, convey, and assign, as by
been existing at the time of the these presents, I do have sold, transferred,
perfection of the sale as long as the ceded, conveyed and assigned a parcel of
seller was not aware of it. land covered by TCT No. 2468 in favor of the
Vendee.”
4. Special Right to Resell the Goods (NCC,
Art. 1533) After delivery of the initial payment of
P100,000.00, Monica immediately took
Exercised when: possession of the property. Five (5) months
after, Monica failed to pay the remaining
a. Goods are perishable in nature, balance of the purchase price. Nante filed an
b. The seller has expressly action for the recovery of possession of the
reserved the right of resale in property. Nante alleged that the agreement
case of default; or was one to sell, which was not consummated
c. The buyer has been in default in as the full contract price was not paid. Is the
payment for an unreasonable contention of Nante tenable? (2014 BAR)
time.
A: NO. The contention of Nante is not tenable.
NOTE: It is essential before the resale The deed itself states that for consideration
can be made that the unpaid seller received, he sells, transfers, and conveys the
should have a right of lien or should land to Monica and there was delivery of the
have stopped the goods in transitu. property to the latter. The contract is clearly one
(Jurado, 2019) of sale as there was no reservation of ownership
on the part of the seller Nante. The non-payment
5. Special Right to Rescind (NCC, Art. of the price in a contract of sale would only
1597) entitle the seller to rescind the contract but it
does not thereby prevent the transfer of
Requisites: ownership particularly so as in this case, where
there was already delivery to the buyer.
a. Goods have not been delivered
to the buyer; Right of stoppage in transitu
b. Buyer has repudiated the
contract of sale; The unpaid seller may resume possession of the
goods at any time while they are in transit, and
Obtain actual possession of the goods; or XPN: Where the right to resell is not based on
Give notice of his claim to the carrier or other the perishable nature of the goods or upon an
bailee who is in possession of the goods. express provision of the sale.
(NCC, Art. 1532)
NOTE: Notice of time and place of resale is not
Effect of the exercise of this right essential to the validity of such resale. (NCC, Art.
519
Special Contracts - Sales
1533) b. Accept goods & maintain action
against seller for damages;
Effect of exercising the special right to c. Refuse to accept goods & maintain
rescind action against seller for damages;
d. Rescind contract of sale & refuse to
When there is rescission, the unpaid seller receive goods/return them when
resumes his ownership over the goods. already received and recover the
price or any part which has been
The unpaid seller shall not be liable to the buyer paid.
upon the sale, but may recover from the buyer
damages for any loss occasioned by the breach 3. Disturbed in possession or with
of the sale. (NCC, Art. 1534) reasonable grounds to fear disturbance
(anticipatory breach) – Suspend
Cases in which it is allowed: payment until the seller has caused the
disturbance or danger to cease.
1. Where the seller has expressly reserved the
right to rescind in case the buyer should NOTE: When the buyer has claimed and
make default; or been granted a remedy in any of these ways,
2. Where the buyer has been in default in the no other remedy can thereafter be granted,
payment of the price for unreasonable without prejudice to the buyer’s right to
length of time. [NCC, Art. 1534(1)] rescind, even if previously he has chosen
specific performance when fulfillment has
REMEDIES OF THE BUYER become impossible. [Villanueva, 2011; in
relation to NCC, Art. 1191(2)]
I. Immovables in general
PORMANCE OF CONTRACT
1. Disturbed in possession or with
reasonable grounds to fear disturbance Rule when the seller delivers goods lesser
– Suspend payment until the seller has than what he has contracted to sell
caused the disturbance or danger to
cease. 1. The buyer may reject the goods delivered
and he shall have no liability;
3. In case of subdivision or condominium 2. The buyer may accept the goods delivered,
projects – If real estate developer fails to but he will pay the contract rate, if he has
comply with obligation according to knowledge that the seller is not going to
approved plan: deliver all the goods contracted for; or
3. If, however, the buyer has used or disposed
a. Rescind; or of the goods delivered before he knows that
b. Suspend payment until seller the seller is not going to perform his
complies. (PD 957, Secs. 23 &24) contract in full, the buyer shall not be liable
for more than the fair value to him of the
II. Movables goods so received. (NCC, Art. 1522)
1. Failure of seller to deliver – Action for Rule when the seller delivers goods greater
specific performance without giving the than what he has contracted to sell
seller the option of retaining the goods
on payments of damages. 1. The buyer may accept only the goods which
were included in the contract and reject the
2. Breach of seller’s warranty – The buyer excess; or
may, at his election, avail of the 2. The buyer may accept the entire goods
following remedies: delivered and he shall pay for them at the
contract rate. (NCC, Art. 1522)
a. Accept goods & set up breach of
warranty by way of recoupment in Rule when the seller delivers goods which
diminution or extinction of the are mixed with other goods of different
price; description not included in the contract
XPN: If impossible to deliver all, the buyer may Types of documents of title
choose between:
1. Negotiable – A document of title which
a. Proportional reduction of the price; or states that the goods referred to therein are
b. Rescission of the contract, provided that the deliverable to bearer, or to order of any
deficiency is not less than 1/10 of the area person named in such document.
stated in the contract. (NCC, Art. 1539)
2. Non-negotiable – A document of title which
NOTE: The buyer is entitled to rescind the does not state that the goods referred to
contract in the following cases: therein are deliverable to neither bearer nor
to the order of any person named therein.
1. The lack in area is at least 1/10th than that
stated or stipulated in the contract; NEGOTIABLE DOCUMENTS OF TITLE
521
Special Contracts - Sales
1. Delivery alone, in the following cases: with the goods covered thereby.
May be negotiated by (NCC, Art. 1512) 1. Has the right to notify the bailee who issued
the document of the transfer thereof;
1. The owner; or
2. Has the direct obligation of such bailee to
2. Any person to whom the custody or hold possession of the goods for him, to the
possession of the DT has been entrusted by terms of the document; and
the owner.
NOTE: There is no legal relationship
Effects of negotiation (NCC, Art. 1513) between the assignee and the bailee until
the latter is informed by the former of the
The person to whom the negotiable DT has been assignment of the DT.
duly negotiated acquires the following:
Has the title to the goods which must be subject
1. The title to the goods as the person to whose to the terms of agreement with the
order the goods were delivered had, or had transferor, if any. (Villanueva, 2018)
ability to convey;
WARRANTIES
2. The title to the goods as the person who
negotiated the document to him had, or had Warranty
the ability to convey; and
A statement or representation made by the
3. Has the direct obligation of the bailee who seller of goods, as part of the contract of sale,
issued the document to hold possession of having reference to the character, quality, or
the goods, for him according to the terms of title, of the goods, and by which he promises or
the document fully, as if such bailee had undertakes to insure that certain facts are or
contracted directly with him. shall be as he then represents. (De Leon, 2011)
523
Special Contracts - Sales
is recorded in the Registry of Property – action on the sale of defective
unless there is an express warranty that the animals. (NCC, Art. 1577)
thing is free from all burdens and
encumbrances. f. There must be no Waiver of warranty on
the part of the buyer.
(XPN: Warranty is not applicable:
NOTE: Hidden faults or defects pertain only to
a. When the burden or servitude is those that make the object of sale unfit for the
apparent; use for which it was intended at the time of the
sale, or those which considerably decrease such
b. When the buyer had knowledge of the fitness.
encumbrance, whether registered or
not; or Non-applicability of implied warranty (ASAP)
4. Warranty against Hidden Defects (NCC, Art. Under Article 1599 of the Civil Code, once an
1561) express warranty is breached, the buyer can
accept or keep the goods, and maintain an action
Requisites: SHAWNE against the seller for damages. In the absence of
an existing express warranty, a complaint for
a. Defect is important or Serious; damages may be anchored on the enforcement
of an implied warranty against hidden defects.
i. The thing sold is rendered unfit However, this right must be exercised within six
for the use which it is intended; (6) months from the delivery of the thing sold, or
and else his cause of action had become time-
ii. Diminishes its fitness for such barred. (De Guzman v. Toyota Cubao, G.R. No.
use to such an extent that the 141480, November 29, 2006)
buyer would not have acquired
it, had he been aware thereof, Effects of waiver of an implied warranty
or would have at least given a
lower price for it. 1. Seller is in bad faith and there is waiver
against eviction – the waiver is void.
b. Defect is Hidden;
2. When the buyer who is without knowledge
c. Defect Exists at the time of the sale; of a particular risk, made a general
renunciation of warranty – is not a waiver
d. Buyer gives Notice of the defect to the but merely limits liability of seller in case of
seller within a reasonable time; eviction.
e. Action for rescission or reduction of the 3. When the buyer with knowledge of risk of
price is brought within the proper eviction assumed its consequences and
period; made a waiver – seller is not liable
(applicable only to waiver of warranty
i. Within six (6) months from against eviction).
delivery of the thing sold (NCC,
Art. 1571); and WARRANTY AGAINST EVICTION
ii. Within 40 days from delivery,
in the case of a redhibitory In a contract of sale, unless a contrary intention
appears, there is an implied warranty on the
Kinds of waiver of eviction by the buyer Rights of buyer in case of partial eviction
1. Consciente – waiver voluntarily made by the 1. Restitution (with obligation to return the
buyer without the knowledge and thing without other encumbrances than
assumption of the risks of eviction; and those which it had when he acquired it);
2. Intencionada – waiver made by the buyer 2. Rescission of the contract if the part lost by
with knowledge of the risks of eviction and eviction is of such importance, in relation to
assumption of its consequences. (NCC, Art. the whole, that the buyer would not have
1554) bought it without said part, provided that he
returns the thing without other
NOTE: Every waiver is presumed to be encumbrances than those which it had when
consciente unless the contrary is proven. he acquired it; or
The buyer shall have the right to demand the R- WARRANTY AGAINST HIDDEN DEFECT
I-C-E with damages from seller:
Hidden defect (NCC, Art. 1561)
1. The Return of the value which the thing sold
had at the time of the eviction, be it greater One which is unknown or could not have been
or lesser than the price of the sale; known to the buyer. (Diaz, 2006)
2. The Income or fruits, if he has been ordered
to deliver them to the party who won the NOTE: Seller does not warrant patent defects, or
suit against him; those which are visible, or even for those which
3. The Costs of suit which caused the eviction, are not visible if the buyer is an expert or should
and, in a proper case, those of suit brought have known them.
against the vendor for the warranty;
4. The Expenses of contract if buyer has paid Reason: Caveat emptor (buyer beware).
them; and
5. The damages, interests and ornamental Application
expenses if sale was made in bad faith. (NCC,
Art. 1555) The seller shall be responsible for warranty
against “hidden defect” only when:
525
Special Contracts - Sales
1. The nature of the hidden defect is such that hidden faults or defects in the thing sold, even
it should render the subject matter unfit for though he was not aware thereof.
the use for which it is intended; or
2. Should diminish its fitness for such use to When the seller is not answerable for the
such an extent that, had the buyer been defects of the thing sold
aware thereof, he would not have acquired it
or would have given a lower price for it. 1. For patent defects or those which are
visible;
Redhibitory defect 2. Even for those which are not visible if the
buyer is an expert who, by reason of his
It is an imperfection or defect in the article sold trade or profession, should have known
against which defect the seller is bound to them (NCC, Art. 1561); or
warrant. The vice must constitute an 3. If the contrary has been stipulated, and the
imperfection, a defect in its nature, which is of vendor was not aware of the hidden faults
certain importance; and thus, a minor defect or defects in the thing sold. (NCC, Art. 1566)
does not give rise to redhibition. (De Leon, 2011)
Effect of a breach of warranty against hidden
Redhibitory defect on animals (NCC, Art. defects
1576)
It would depend on whether the seller had
If the hidden defect of animals, even in case a knowledge of such defect, and whether there has
professional inspection has been made, should been a waiver of the warranty.
be of such a nature that expert knowledge is not
sufficient to discover it, the defect shall be 1. If the thing should be lost in consequence of
considered as redhibitory. the hidden faults, and seller was aware of
them – he shall:
NOTE: The warranty against hidden defects
shall not apply to animals sold at fairs or at a. bear the loss;
public auctions, or of livestock sold as b. return the price; and
condemned. (NCC, Art. 1574) c. refund the expenses of the contract,
with damages.
Void sale of animal (NCC, Art. 1575)
2. If the thing is lost and the seller was not
The sale is void if the animal is: aware of the hidden faults – he shall:
The vendee may elect between: 1. Accept goods and set up against the seller,
the breach of warranty by way of
1. Withdrawing from the contract, with a claim recoupment in diminution or extinction of
for damages; or the price;
2. Demanding a proportionate reduction of the 2. Accept goods and maintain action against
price, with a claim for damages. seller for damages;
3. Refuse to accept goods and maintain action
Waiver of warranty against eviction hidden against seller for damages; or
defects 4. Rescind contract of sale, refuse to receive
goods/return them when already received,
There is waiver of warranty against eviction and recover the price paid.
hidden defects when the lessee has inspected
the premises and decides to consummate the Remedies of the buyer in case of breach of
contract based on such inspection. Under Arts. warranty NOT absolute
1561 and 1653 of the Civil Code, the lessor is
responsible for warranty against hidden defects, The vendee's remedies against a vendor with
but he is not answerable for patent defects or respect to the warranties against hidden defects
those, which are visible, and which can be seen or encumbrances upon the thing sold, in the case
upon inspection. (Jon and Marissa De Ysasi v. of Arts. 1561, 1562, 1564, 1565 and 1566 of the
Arturo and Estela Arceo, G.R. No. 136586, Civil Code, may either be to withdraw from the
November 22, 2001) contract or demand a proportionate reduction of
the price, with damages in either case.
Specific implied warranties in sale of goods
(NCC, Art. 1562) The vendee may also ask for the annulment of
the contract upon proof of error or fraud, in
1. Warranty of fitness for the purpose which case the ordinary rule on obligations shall
be applicable. Responsibility arising from fraud
That goods are suitable for the special is demandable in all obligations and any waiver
purpose of the buyer which will not be of an action for future fraud is void.
satisfied by mere fitness for general Responsibility arising from negligence is also
purposes. demandable in any obligation, but such liability
may be regulated by the courts, according to the
GR: No implied warranty circumstances.
527
Special Contracts - Sales
3. If he fails to notify the seller within a 2. If imposed on the performance of an
reasonable time of his election to rescind. obligation, the other injured party may:
NOTE: Right to repurchase must be reserved at A sale with conventional redemption is deemed
the time of perfection of sale. (Pineda, 2010) to be an equitable mortgage in any of the
following cases. (NCC, Art. 1602) (AIR-STAR)
Reservation of right to repurchase
529
Special Contracts - Sales
1. Price of the sale with right to repurchase is 2. Money, fruit or other benefit to be received
unusually Inadequate; by the buyer as rent or otherwise shall be
2. Seller Remains in possession as lessee or considered as interest (NCC, Art. 1602);
otherwise; 3. The court may decree that “vendor” pay his
3. Upon or after the expiration of the right to outstanding loan to the “vendee” (Banga v.
repurchase, Another instrument extending Bello, G.R. No. 156705, September 30, 2005);
the period of redemption or granting a new and
period is executed; 4. A remand of the case to the trial court where
4. Purchaser Retains for himself a part of the the latter did not pass upon the mortgagor’s
purchase price; claim that he had paid his mortgage
5. Seller binds himself to pay the Taxes on the obligation, only for the purpose of the
thing sold; determining whether said obligation has
6. In any other case where the real intention of been paid, and if not, how much should still
the parties is that the transaction shall be paid. (Banga v. Bello, G.R. No. 156705,
Secure the payment of a debt or the September 30, 2005)
performance of any other obligation; or
7. Art. 1602 shall also apply to a contract Pactum Commissorium
purporting to be an Absolute sale. (NCC, Art.
1604; 2005 BAR) A stipulation for automatic vesting of title over
the security in the creditor in case of debtor’s
NOTE: In case of doubt in determining whether default. (Villanueva, 2009)
it is equitable mortgage or sale a retro (with
right of repurchase); it shall be construed as The creditor cannot appropriate the things given
equitable mortgage. The remedy is reformation. by way of pledge or mortgage or dispose of
them, otherwise that would result in pactum
Inadequacy of price and Equitable Mortgage commissorium.
Inadequacy of price does NOT constitute proof Article 2088 of NCC prohibits the creditor from
sufficient to declare a contract as one of appropriating the things given by way of pledge
equitable mortgage. Mere inadequacy of the or mortgage, or from disposing of them; any
price is not sufficient. The price must be grossly stipulation to the contrary is null and void.
inadequate, or purely shocking to the
conscience. (Diaz, 2010) NOTE: Articles 2088 and 2141 of Republic Act
No. 386, otherwise known as the “Civil Code of
The decisive factor in evaluating whether or the Philippines,” was repealed by Republic Act
not a deed of sale absolute in form is a No. 11057, otherwise known as the “Personal
mortgage Property Security Act.” Previously, the creditor
has no right to appropriate to himself the things
The intention of the parties, as manifested in the given by way of pledge or mortgage or dispose of
relative situation of the parties at that time, the them because he or she is permitted only to
attitude acts, conduct, declarations of the recover credit from the proceeds of the sale of
parties, the negotiations between them leading the property at a public auction through a public
to the deed, and generally, all pertinent facts officer in the manner prescribed in Sec. 14 of Act
having a tendency to fix and determine the real No. 1508.
nature of their design and understanding, is the
decisive factor in evaluation if the deed is a REDEMPTION v. OPTION TO BUY
mortgage. (Sps. Raymundo, et al. v. Sps. Bandong,
G.R. No. 171250, July 4, 2007) REDEMPTION OPTION TO BUY
As to nature
Effects when sale is adjudged as an equitable
mortgage
1. No period agreed upon – Four (4) years On June 5, 1992, A&A Swiss sold the property
from date of contract; to Mahinay. In the Deed of Absolute Sale,
Mahinay acknowledged that the property
2. When there is agreement – should not had been previously mortgaged by A&A
exceed 10 years; but if it exceeded, valid Swiss to Dura Tire, holding himself liable for
only for the first 10 years (NCC, Art. 1606); any claims that Dura Tire may have against
Move Overland. Therafter, Mahinay sought to
3. When period to redeem has expired & there pay Move Overland's obligation to release
has been a previous suit on the nature of the the property from the mortgage. Dura Tire,
contract – seller still has 30 days from final however, ignored Mahinay's request.
judgment on the basis that contract was a
sale with pacto de retro; and For Move Overland's failure to pay its credit
purchases, Dura Tire applied for
Rationale: No redemption due to erroneous extrajudicial foreclosure of the property.
belief that it is equitable mortgage which Mahinay protested the impending sale and
can be extinguished by paying the loan. filed a third-party claim before the Office of
531
Special Contracts - Sales
the Provincial Sheriff of Cebu. Despite the However, such extension can only be granted
protest, Sheriff Romeo Laurel proceeded when the original period has not yet expired.
with the sale and issued a Certificate of Sale Otherwise, there exists only a promise to sell on
in favor of Dura Tire, the highest bidder at the buyer’s part. (Pineda, 2010)
the sale. The property was purchased at
₱950,000.00, and the Certificate of Sale was EXERCISE OF THE RIGHT TO REDEEM
registered on February 20, 1995.
Obligations the vendor a retro if he desires to
Relying on the Court of Appeals’ finding that redeem (NCC, Art. 1616)
he was a “substitute mortgagor,” Mahinay
filed a Complaint for judicial declaration of The vendor a retro must pay or reimburse the
right to redeem. In the Judgment on the vendee a retro the following:
Pleadings, the Regional Trial Court dismissed
Mahinay’s Complaint for judicial declaration 1. Price of the sale;
of right to redeem. On a pure question of law, 2. Expenses of the contract;
Mahinay directly filed a Petition for Review 3. Other legitimate expenses made by reason
on Certiorari before this Court. Was the one of the sale; and
(1)-year period of redemption tolled when 4. Necessary and useful expenses made on the
Mahinay filed his Complaint for annulment of thing sold. (Pineda, 2010)
foreclosure sale?
Written notice mandatory for the right of
A: NO. The right of redemption being redemption to commence
statutory, the mortgagor may compel the
purchaser to sell back the property within the Written notice is mandatory for the right of
one (1)-year period under Act No. 3135. If the redemption to commence and the notice must be
purchaser refuses to sell back the property, the in writing stating the execution of the sale and
mortgagor may tender payment to the Sheriff its particulars. It may be made in a private or
who conducted the foreclosure sale. Here, public document. (Pineda, 2010)
Mahinay should have tendered payment to
Sheriff Laurel instead of insisting on directly Conversely, the filing of the suit for ejectment or
paying Move Overland's unpaid credit purchases collection of rentals against a co-owner actually
to Dura Tire. Since the period of redemption is dispenses with the need for a written notice, and
fixed, it cannot be tolled or interrupted by the must be construed as commencing the running
filing of cases to annul the foreclosure sale or to of the period to exercise the right of redemption,
enforce the right of redemption. “To rule since the filing of the suit amounted to actual
otherwise ... would constitute a dangerous knowledge of the sale from which the 30-day
precedent. A likely offshoot of such a ruling is period of redemption commences to run.
the institution of frivolous suits for annulment of (Villanueva, 2016)
mortgage intended merely to give the mortgagor
more time to redeem the mortgaged property.” Prescribed form for an offer to redeem
With Mahinay failing to redeem the property
within the one (1)-year period of redemption, There is no prescribed form for an offer to
his right to redeem had already lapsed. As redeem to be properly effected. Hence, it can
discussed, the pendency of an action to annul the either be through a formal tender with
foreclosure sale or to enforce the right to consignation of the redemption price within the
redeem does not toll the running of the period of prescribed period. What is paramount is the
redemption. The trial court correctly dismissed availment of the fixed and definite period within
the Complaint for judicial declaration of right to which to exercise the right of legal redemption.
redeem. (Makilito Mahinay vs. Dura Tire &
Rubber Industries, Inc., G.R. No. 194152, June 5,
NOTE: Art. 1623 of the Civil Code does not
2017, J. Leonen)
prescribe any distinctive method for notifying
the possible redemptioner.
Extension of the time to redeem
Tender of payment NOT necessary for
Parties may extend the period to redeem as long redemption to take effect
as the total period shall not exceed ten years.
There is no obligation on the part of the vendor NOTE: In case two or more adjacent owners
a retro to repurchase. He may or may not desire to exercise the right of redemption, the
exercise the right to repurchase. (Pineda, 2010) following rules on preference is applied:
1. There must be co-ownership of a thing; Other instances when the right of legal
redemption is also granted
2. There must be alienation of all or of any of
the shares of the other co-owners;
3. The sale must be to a third person or 1. Redemption of homesteads;
stranger; and 2. Redemption in tax auction sales;
4. The sale must be before partition 3. Redemption by judgment debtors;
4. Redemption in extrajudicial foreclosure;
Right of legal redemption of adjacent owners 5. Redemption in judicial foreclosure of
of rural lands mortgage;
6. Foreclosures by banking institutions;
Requisites: 7. Foreclosures by rural banks; and
533
Special Contracts - Sales
8. Redemption under the Agrarian Reform small and so situated that a major portion
Code. thereof cannot be used for any practical purpose
within a reasonable time, having been bought
Basis of legal redemption merely for speculation, is about to be re-sold, the
owner of any adjoining land has a right of pre-
It is created partly for reason of public policy emption at a reasonable price. (NCC, Art. 1620)
and partly for the benefit and convenience of the
redemptioner to afford him a way out of what ASSIGNMENT OF CREDITS
might be a disagreeable or inconvenient
association into which he has been in trust. It is Assignment is the process of transferring
intended to minimize co-ownership. (Pineda, gratuitously or onerously the right of the
2010) assignor to the assignee, who would then be
allowed to proceed against the debtor. (Paras,
Running of period of legal redemption 2008)
The right of legal redemption shall not be The assignment involves no transfer of
exercised except within 30 days from the notice ownership but merely effects the transfer of
in writing by the prospective seller, or seller, as rights which the assignor has at the time to the
the case may be. The deed of sale shall not be assignee.
recorded in the Registry of Property unless
accompanied by an affidavit of the seller that he It is an agreement by virtue of which the owner
has given written notice thereof to all possible of a credit, known as the assignor, by a legal
redemptioners. (NCC, Art. 1623) cause, such as sale, dacion en pago, exchange or
donation, and without the consent of the debtor,
Written notice indispensable transfers his credit and accessory rights to
another, known as the assignee, who acquires
The right of legal pre-emption or redemption the power to enforce it to the same extent as the
shall not be exercised except within 30 days assignor could enforce it against the debtor.
from the notice in writing by the prospective (South City Homes, Inc. v. BA Finance Corp, G.R.
vendor, or by the vendor, as the case may be. No. 135462, December 7, 2001)
(NCC, Art. 1623; 2001, 2002 BAR)
NOTE: In assignments, a consideration is not
NOTE: Knowledge is insufficient – the mere fact always a requisite, unlike in sale. Thus, an
that the redemptioner – the person who has the assignee may maintain an action based on his
right to redeem – is already aware of the title and it is immaterial whether or not he paid
existence of the sale will not excuse the written any consideration therefor. Furthermore, in an
notice. Mere knowledge does not satisfy the assignment, title is transferred but possession
requirement; there must still be written notice need not be delivered.
despite such knowledge. (Barcellano v. Banas, et
al., G.R. No. 165287, September 14, 2011) Perfection of contract for assignment of
credit
The right of redemption of co-owners excludes
that of adjoining owners. (NCC, Art. 1623) This The contract for the assignment or transfer of
means that co-owners are preferred if the credit and other incorporeal rights is perfected
property is to be redeemed by a co-owner and from the moment the parties agree upon the
an adjoining owner. credit or right assigned and upon the price even
if neither has been delivered. (NCC, Art. 1475)
Pre-emption However, the assignee will acquire ownership
only upon delivery. (De Leon, 2011)
Redemption presupposes that the property was
already sold or transferred to another. In pre- Effects of Assignment
emption, the right is present before the sale;
there is a right to purchase ahead of or before it 1. Transfers the right to collect the full value of
can be sold or transferred to other persons. the credit, even if the assignee paid a price
less than such value;
E.g., whenever a piece of urban land which is so 2. Transfers all accessory rights; and
The “meeting of the minds” in assignment Reason: First, to prevent fraud which may be
contemplates that between the assignor of the committed by feigning the solvency of the debtor
credit and his assignee, there being no necessity at the time of the assignment when in fact he is
for the consent of the debtor. It is sufficient that insolvent. Second, to oblige the assignee to exert
the assignment be brought to the debtor’s efforts in the recovery of the credit and thereby
knowledge in order to be binding upon him. avoid that by his oversight, the assignor may
(C&C Commercial Corp. v. Philippine National suffer. (De Leon, 2011)
Bank, G.R. No. L-42449 July 5, 1989)
If the assignor in good faith is liable for a
Effect of payment by the debtor after warranty, he is liable only for the expenses of the
assignment of credit contract, and any other legitimate payments
made by reason of the assignment. On the other
1. Before Notice hand, an assignor in bad faith who breaches such
warranties, shall in addition be liable to pay for
Payment to the original creditor is valid and the necessary and useful expenses, plus
debtor shall be released from his obligation. damages. (NCC, Art. 1628)
535
Special Contracts - Sales
The assignor in bad faith is liable not only for the implementation of its provisions and the
payment of the price and all expenses, but also enforcement of contractual rights with respect
for damages. An assignor in bad faith is one who to said category of real estate may take recourse.
has knowledge of any of the circumstances. (Arranza v. B.F. Homes, Inc., G.R. No. 131683, June
(Paras, 2011) 19, 2000)
Legal Redemption in Sale or Credit or other The regulatory functions of the NHA are now
incorporeal right in litigation (NCC, Art. 1634) transferred to the Housing and Land Use
Regulatory Board (HLURB).
Requisites:
NOTE: Under E.O. No. 648 of 1981, the
1. There must be a sale or assignment of implementation of P.D. No. 957 was transferred
credit; from the National Housing Authority (NHA) to
the Housing and Land Regulatory Board
2. There must be a pending litigation at the (HLURB).
time of the assignment;
The law recognized that subdivision and
3. The debtor must pay the assignee: condominium development involves public
interest and welfare, and should be brought to a
a. price paid by him; body, like the HLURB, that has technical
b. judicial cost incurred by him; and expertise. In the exercise of its powers, the
c. interest on the price from the date of HLURB is empowered to interpret and apply
payment; and contracts, and determine the rights of private
parties under these contracts. This ancillary
4. The right must be exercised by the debtor power, generally judicial, is now no longer with
within 30 days from the date the assignee the regular courts to the extent that the
demands (judicially or extra-judicially) pertinent HLURB laws provide. (Chua v. Ang, G.R.
payment from him. No. 156164, September 4, 2009)
GR: Debtor has the right of legal redemption in NOTE: Not every case involving buyers and
sale of credit or incorporeal rights in litigation. sellers of real estate may be filed with the
HLURB. Its jurisdiction is limited to those cases
XPNs: filed by the buyer or owner of a subdivision or
condominium, and based on any of the causes of
1. Sale to a co-heir or co-owner; action enumerated under Section 1 of P.D. No.
2. Sale to a co-owner; and 1344, and which jurisdictional facts must be
3. Sale to the possessor of property in clearly alleged in the complaint. (Delos Santos v.
question Sarmiento, G.R. No. 154877, March 27, 2007)
A tract or a parcel of land registered under Act 4. Broker – any person who, for commission
No. 496 which is partitioned primarily for or other compensation, undertakes to sell or
residential purposes into individual lots with or negotiate the sale of a real estate belonging
without improvements thereon, and offered to to another.
the public for sale, in cash or in installment
terms.
537
Special Contracts - Sales
5. Salesman – person regularly employed by a or other entity, and of all the partners, if it
broker to perform, for and in his behalf, any be a partnership;
or all functions of a real estate broker. 4. The general character of the business
actually transacted or to be transacted by
Procedure for converting of a parcel of land the owner; and
into a subdivision or condominium project 5. A statement of the capitalization of the
by the Registered Owner owner, including the authorized and
outstanding amounts of its capital stock, and
He shall: the proportion thereof which is paid-up.
539
Special Contracts - Sales
Mortgage CANNOT be made by the owner or with the same. The sections also grant to the
developer without permission buyer the option to be reimbursed the total
amount paid. (Villanueva, 2009)
There must be prior written approval of the
HLURB. Defaulting buyers have rights under the
Decree
When approval by the HLURB is given
The rights of the buyer in the event of this failure
When it is shown that the proceeds of the to pay the installments due for reasons other
mortgage loan shall be used for the development than the failure of the owner or developer to
of the condominium or subdivision project and develop the project shall be governed by R.A. No.
effective measures have been provided to ensure 6552 or the Maceda Law. Where the transaction
such utilization. or contract was entered into prior to the
effectivity of R.A. No. 6552 on August 26, 1972,
Rule if the owner desires to make alterations the defaulting buyer shall be entitled to the
in the approved subdivision plan corresponding refund based on the installments
paid after the effectivity of the law in the
GR: No owner or developer shall change or alter absence of any provision in the contract to the
the roads, open spaces, infrastructures, facilities contrary.
for public use and/or other form of subdivision
development as contained in the approved Owner or developer’s obligation in case the
subdivision plan and/or represented in its lot bought and fully-paid by the buyer is
advertisements. mortgaged
XPN: If he has obtained the permission of the In the event a mortgage over the lot or unit is
HLURB and the written conformity or consent of outstanding at the time of the issuance of the
the duly organized homeowners association, or title to the buyer, the owner or developer shall
in the absence of the latter, by the majority of redeem the mortgage or the corresponding
the lot buyers in the subdivision. portion thereof within six months from such
issuance in order that the title over any fully
Q: May payment made by a buyer be forfeited paid lot or unit may be secured and delivered to
in favor of the owner or developer in case the the buyer in accordance herewith.
buyer desists from further payment due to
the failure of the owner or developer to Parties CANNOT waive compliance with the
develop the subdivision or condominium decree
project according to the approved plan
within the time limit provided for such? Any condition, stipulation, or provision in
What is the buyer’s remedy in this case? contract of sale whereby any person waives
compliance with any provision of the Decree or
A: NO, such forfeiture is not allowed. Such buyer of any rule or regulation issued thereunder shall
may, at his option, be reimbursed the total be void.
amount paid including amortization interests
but excluding delinquency interests, with Notice NOT required in the demand of refund
interest thereon at the legal rate.
Section 23 of P.D. 957 does not require that a
NOTE: Sections 23 and 24 of Presidential Decree notice be given first by the buyer to the seller
957, provide that no installment payments made before a demand for refund can be made as the
by the buyer in a subdivision or condominium notice and demand can be made in the same
project for the lot or unit he contracts to buy letter or communication. (Villanueva, 2009)
shall be forfeited in favor of the owner or
developer when the buyer, after due notice to Q: Ernesto Marcelo sold the lot where the
the owner or developer desists from further water tank of the subdivision, Happy Glen
payment due to the failure of the owner or Loop, is located for almost 30 years to
developer to develop the subdivision or Hermogenes Liwag, president of the
condominium project according to the approved Homeowner’s association of the said
plans and within the time limit for complying subdivision. Is the sale of the lot where the
541
Special Contracts - Sales
the corporation will cause the alien interest egress and support through the common
in such corporation to exceed the limits areas is appurtenant to each unit and the
imposed by existing laws. common areas are subject to such
easements.
NOTE: The law provides that no condominium
unit can be sold without at the same time selling Rights of Condominium Owner [Sec. 6 (e), (f),
the corresponding amount of rights, shares or (g), R.A. No. 4726]
other interests in the condominium
management body, the Condominium 1. Exclusive right to paint, repaint, tile, wax,
Corporation; and no one can buy shares in a paper or otherwise refinish and decorate
Condominium Corporation without at the same the inner surfaces of the walls, ceilings,
time buying a condominium unit. floors, windows and doors bounding his
own unit;
It expressly allows foreigners to acquire
condominium units and shares in condominium 2. Exclusive right to mortgage, pledge or
corporations up to not more than 40% of the encumber his condominium and to have the
total and outstanding capital stock of a Filipino- same appraised independently of the other
owned or controlled corporation. Under this set condominiums;
up, the ownership of the land is legally separated
from the unit itself. The land is owned by a NOTE: Any obligation incurred by such
Condominium Corporation and the unit owner is condominium owner is personal to him.
simply a member in this Condominium
Corporation. As long as 60% of the members of 3. Absolute right to sell or dispose of his
this Condominium Corporation are Filipino, the condominium.
remaining members can be foreigners. (Hulst v.
PR Builders, Inc., G.R. No. 156364, September 25, XPN: Unless the master deed contains a
2008) requirement that the property be first
offered to the condominium owners within
Incidents of Condominium Grant (Sec. 6, R.A. a reasonable period of time before the same
No. 4726) is offered to outside parties.
Unless otherwise provided in the enabling law Partition (Sec. 7, R.A. No. 4726)
or master deed or the declaration of restrictions:
GR: Common areas shall remain undivided, and
1. The boundaries of the unit granted are the there shall be no judicial partition thereof.
interior surfaces of the perimeter walls,
floors, ceilings, windows and doors; XPN: Where several persons own
condominiums in a condominium project, an
2. There shall pass with the unit, as an action may be brought by one or more such
appurtenance, an exclusive easement for the persons for partition thereof by sale of the entire
use of the air space encompassed by the project, as if the owners of all of the
boundaries of the unit as it exists at any condominiums in such project were co-owners
particular time and as the unit may lawfully of the entire project in the same proportion as
be altered or reconstructed from time to their interests in the common areas:
time;
NOTE: However, a partition shall be made only
NOTE: Such easement shall be upon a showing that:
automatically terminated in any air space
upon destruction of the unit as to render it 1. Three (3) years after damage or destruction
untenable. to the project which renders material part
thereof unfit for its use prior thereto, the
3. Unless otherwise, provided, the common project has not been rebuilt or repaired
areas are held in common by the holders of substantially to its state prior to its damage
units, in equal shares, one for each unit; or destruction; or
5. The conditions for such partition by sale set Term of a condominium corporation
forth in the declaration of restrictions, duly
registered in accordance with the terms of Co-terminus with the duration of the
the Act, have been met. condominium project, the provisions of the
Corporation Law to the contrary
Registration of declaration of restrictions notwithstanding.
and its effect
Q: May a condominium corporation sell,
The owner of a project shall, prior to the exchange, lease or otherwise dispose of the
conveyance of any condominium therein, common areas owned or held by it in the
register a declaration of restrictions relating to condominium project?
such project.
A:
Such restrictions shall constitute a lien upon
each condominium in the project, and shall GR: During its existence, it cannot do so,
insure to and bind all condominium owners in especially when the master deed contains a
the project. requirement that the property should first be
offered to the other condominium owners
NOTE: Such liens, unless otherwise provided, within a reasonable time before offering it to
may be enforced by any condominium owner in third parties, then it may not.
the project or by the management body of such
project. XPN: If authorized by the affirmative vote of a
simple majority of the register owners, subject
Q: May the management body acquire and to prior notifications to all registered owners
hold, for the benefit of the condominium and only upon the final approval of the Housing
owners, tangible and intangible personal and Land Use Regulatory Board. (Sec. 2, R.A. No.
property and dispose of the same by sale or 7899)
otherwise?
Assessment as lien upon unit (Sec. 20, R.A. No.
A: YES, unless otherwise provided for by the 4726)
543
Special Contracts - Sales
An assessment upon any condominium made in
accordance with a duly registered declaration of
restrictions shall be an obligation of the owner
thereof at the time the assessment is made. The
amount of any such assessment plus any other
charges thereon, such as interests, cost
(including attorney’s fees) and penalties, as such
as may be provided for in the declaration of
restrictions, shall be and become a lien upon the
condominium assessed when the management
body causes a notice of assessment to be
registered with the Registered of Deeds of the
city or province where such condominium
project is located. Such lien shall be superior to
all other liens registered subsequent to the
registration of said notice of assessment except
real property tax liens and may be enforced in
the same manner provided for by law for the
judicial or extra-judicial foreclosure of
mortgages of real property. (Rabuya, 2017)
545
Special Contracts - Trust
legal title, or at least a the property subject the trust.
separation of legal title to the bailment. (De
and equitable interest, Leon, 2019) NOTE: Whether a trust is revocable or
with the legal title in the irrevocable depends on the wordings or
trustee. (De Leon, 2019) language used in the creation of the trust. It will
be presumed revocable unless the creator has
CLASSIFICATION OF TRUST expressed a contrary intention in the trust deed.
(De Leon, 2019)
1. As to Creation – From the viewpoint of the
creative force bringing them into existence, KINDS OF TRUST
they may be either:
Express trust v. Implied trust
a. Express trust (NCC, Arts. 1443-1446) or
one which can come into existence BASIS EXPRESS IMPLIED TRUST
only by the execution of an intention TRUST
to create it by the trustor or the Definition Created by the Comes into being
parties (De Leon, 2019); or (NCC, Art. intention of the by operation of
1441) trustor or of law. It may be
b. Implied trust, or which comes into the parties. either resulting
being by operation of law (NCC, Arts. or constructive.
1447-1457; De Leon, 2014); this latter
trust being either: Manner of Created by the Those which,
creation direct and without being
1. Resulting trust positive acts of expressed, are
2. Constructive trust the parties, by deducible from
some writing the nature of the
2. As to Effectivity – From the viewpoint of or deed or will transaction by
whether they become effective after the or by words operation of law
death of the trustor or during his life, they evidencing an as matters of
may be either (De Leon, 2019): intention to equity,
create a trust. independently of
a. Testamentary Trust – one which is to the particular
take effect upon the trustor’s death. It is intention of the
usually included as part of the will and parties.
does not have a separate trust deed. (De
Leon, 2019) Parole An express An implied trust
evidence trust concerning an
b. Inter Vivos trust or “Living Trust” – one concerning an immovable or
established effective during the owner’s immovable or any interest
life. The grantor executes a “trust deed,” any interest therein may be
and once the trust is created, legal title to therein cannot proved by parole
the trust property passes to the named be proved by evidence. (NCC,
trustee with duty to administer the parole Art. 1457)
property for the benefit of the beneficiary. evidence. (NCC,
(De Leon, 2019) Art. 1443)
One which come into existence only by the NOTE: Technical or particular form of words or
execution of an intention to create it by the phrases are not essential to the manifestation of
trustor or the parties. (De Leon, 2019) an intention to create a trust. It is possible to
create a trust without using the word “trust” or
Elements of express trust “trustee.” (De Leon, 2019)
1. A competent trustor and trustee; No trust shall fail because the trustee appointed
2. An ascertainable trust res; and declines the designation, unless the contrary
3. Sufficiently certain beneficiaries should appear in the instrument constituting the
trust. (NCC, Art. 1445)
NOTE: All of the above elements are required to
be established. (De Leon, 2019) Acceptance by the beneficiary is necessary.
Nevertheless, if the trust imposes no onerous
Evidence to prove express trust condition upon the beneficiary, his acceptance
shall be presumed, if there is no proof to the
No express trust concerning an immovable or contrary. (NCC, Art. 1446)
any interest therein may be proved by parol
evidence. (NCC, Art. 1443) Kinds of express trust
NOTE: The defense that express trusts cannot be 1. Eleemosynary or Charitable trust – one
proved by parol evidence may be waived, either designed for the benefit of a segment of the
by failure to interpose timely objections against public or of the public in general. Created for
presentation of oral evidence not admissible charitable, educational, social, religious, or
under the law or by cross- examining the scientific purposes, or for the general benefit
adverse party and his witnesses along the of the humanity. (De Leon, 2019)
prohibited lines. (Philippines v. Cojuangco G.R. 2. Accumulation trust – one that will
No. 139930, June 26, 2012) accumulate income to be reinvested by the
trustee in the trust for the period of time
An express trust over personal property or any specified. (De Leon, 2019)
interest therein, and an implied trust, whether 3. Spendthrift trust – one established when the
the property subject to the trust is real or beneficiary needs to be protected because of
personal, may be proved by oral evidence. (NCC., his inexperience or immaturity from his
imprudent, spending habits or simply
Art. 1457)
because the beneficiary is spendthrift. (De
Leon, 2019)
NOTE: The general rule is that the burden of
4. Sprinkling trust – one that gives the trustee
proving the existence of a trust is on the party
the right to determine the income of the
alleging its existence; and to discharge the
beneficiaries who should receive income
burden, it is generally required that his proof be
each year and the amount thereof. (De Leon,
clear and satisfactory and convincing. (Heirs of
2019)
Donata Ortiz Briones v. Heirs of Maximino R.
Briones s, G.R. No. 150175, March 10, 2006)
Termination of express trust
NOTE: To affect third persons, a trust
concerning an immovable or any interest therein 1. Destruction of the corpus;
must be embodied in a public instrument and 2. Revocation by the trustor;
registered in the Registry of Property. (De Leon, 3. Achievement of the objective, or happening
2019) of the condition, provided for in the trust
instrument;
547
Special Contracts - Trust
4. Death or legal incapacity of the trustee; presumed that there is a gift in favor of the
5. Confusion or merger of legal title and child. (NCC, Art. 1448)
beneficial title in the same person; and
6. Breach of trust. b. There is also an implied trust when a
donation is made to a person but it appears
Requisites for acquisition of property by that although the legal estate is transmitted
trustee through prescription to the done, he nevertheless is either to
have no beneficial interest or only a part
1. The trustee must expressly repudiate the thereof. (NCC, Art. 1449)
right of the beneficiary;
2. Such act of repudiation must be brought to c. If the price of a sale of property is loaned or
the knowledge of the beneficiary; paid by one person for the benefit of
3. The evidence thereon must be clear and another and the conveyance is made to the
conclusive; and lender or payor to secure the payment of
4. Expiration of the period prescribed by law. the debt, a trust arises by operation of law
(Heirs of Donata Ortiz Briones v. Heirs of in favor of the person to whom the money
Maximino R. Briones, G.R. No. 150175, March is loaned or for whom it is paid. The latter
10, 2006) may redeem the property and compel a
conveyance thereof to him. (NCC, Art. 1450)
IMPLIED TRUST
Q: “X” being unable to pay the purchase
Those which, without being express, are price of a house and lot for his residence has
deducible from the nature of the transaction as requested “Y,” and “Y” agreed to lend him
matters of intent, or which are superinduced on the money under one condition, that the
the transaction by operation of law, as matters Certificate of Title be transferred to him, in
of equity, independently of the particular Y’s own name for his protection and as
intention of the parties. (Tong v. Kun, G.R. No. security of the loan. Later on, “Y” mortgaged
196023, April 21, 2014) the property to the bank without the
knowledge of “X.” When the mortgage
Kinds of implied trust became due, “Y” did not redeem the
mortgage and the property was advertised
1. Resulting trust – broadly defined as a trust for sale. “X” retained you as his lawyer. What
which is raised or created by the act or advise would you give your client and what
construction of law, but in its more legal ground provided by the Code would
restricted sense, it is a trust raised by you assert to defend his rights? Give
implication of law and presumed always to reasons. (1959 BAR)
have been contemplated by the parties, the
intention as to which is to be found in the A: It is clear that in the instant problem, the
nature of their transaction, but not provision of Art. 1450 of the Civil Code is
expressed in the deed or instrument of applicable. It must be observed, however, that
conveyance. (Heirs of Donata Ortiz Briones v. the mortgage of the property by “Y” to the bank
Heirs of Maximino R. Briones, G.R. No. 150175, is perfectly valid inasmuch as the bank was not
March 10, 2006) aware of any flaw or defect in the title or mode
of acquisition by “Y” since the right of “X” has
Examples of resulting trust: not been annotated in the Certificate of Title.
Consequently, the only way by which I would be
a. There is an implied trust when property is able to help “X” would be to advice him to
sold, and the legal estate is granted to one redeem the mortgaged property from the bank.
party but the price is by another for the After this is done, “X” can then institute an
purpose of having the beneficial interest of action to compel “Y’” to reconvey the property
the property. The former is the trustee, to him pursuant to Art. 1450 of the Civil Code. In
while the latter is the beneficiary. However, this action for reconveyance, the amount paid
if the person to whom the title is conveyed by “X” to the bank in redeeming the property
is a child, legitimate or illegitimate, of the can then be applied to the payment of his debt to
one paying the price of the sale, no trust is “Y.” If there is an excess, he can recover the
implied by law, it being disputably amount from “Y.” (Jurado, 2019)
549
Special Contracts - Trust
or inexistence of a void 1410, Civil Code)
or inexistent contract
based on fraudulent
registration of the
subject property.
Based on fraudulent
registration of the Ten (10) years from
subject property but the discovery of the
the action does not fraud. [Art. 1144(2),
involve annulment of Civil Code]
contract.
If the legitimate owner
of the subject property An action to quiet title.,
which was fraudulently therefore,
registered in the name imprescriptible. (Heirs
of another had always of Tappa v. Heirs of
been in possession Malupeg, G.R. No.
thereof. 187633, April 4, 2016)
551
Special Contracts - Partnership
Partnership, Co-ownership and Corporation
CO-
BASIS PARTNERSHIP CORPORATION
OWNERSHIP
Generally created by
By contract or by mere law and can exist
Creation By law.
agreement of the parties. without a contract.
(Albano, 2013)
In the absence of
stipulation to contrary, a
partner may bind
partnership. Each
partner is agent of
partnership. Co-owner cannot
Power to Act with 3rd represent the co- Management is vested
Persons NOTE: Except as ownership. (NCC, with the BOD.
provided by Art. 1825, Art. 491-492)
persons who are not
partners as to each other
are not partners as to
third persons. [NCC, Art.
1769(1); Albano, 2013]
Death of co-owner
Death of a partner Death of stockholder
does not necessarily
Effect of Death results in dissolution of does not dissolve the
dissolve co-
partnership. corporation.
ownership.
In case of a general
GR: The obligation to
partner, his separate and
third persons is limited
personal property shall
to the assets of the
also be liable if the assets
Liability corporation.
of the partnership is not
sufficient to satisfy the
XPN: Partner binds
obligation to third
himself solidarily liable
persons.
A partnership acquires
personality after following the
requisites required by law.
A joint venture has no legal
Firm Name and Liabilities
NOTE: SEC registration is not personality.
required before a partnership
acquires legal personality. (NCC,
Art. 1768)
553
Special Contracts - Partnership
Joint venture GR: Any person capacitated to contract may
enter into a contract of partnership.
It is an association of persons or companies
jointly undertaking some commercial XPNs:
enterprise. Generally, all contribute assets and
share risks. It requires a community of interest 1. Persons who are prohibited from giving
in the performance of the subject matter, a right each other any donation or advantage
to direct and govern the policy in connection cannot enter into a universal partnership
therewith, and a duty which may be altered by (NCC, Art. 1782; 1994 BAR);
agreement to share both in profits and losses.
(Aurbach v. Sanitary Wares Manufacturing NOTE: A husband and wife, however, may
Corp.,180 SCRA 130, December 15, 1989; Del Mar enter into a particular partnership or be
v. PAGCOR et al., G.R. Nos..138298 & 138982, June members thereof. (De Leon, 2014)
19,2001)
2. Persons suffering from civil interdiction;
NOTE: Section 36(h) of R.A. No. 11232 or the and
Revised Corporation Code of the Philippines
provides for the power of a corporation, “to 3. Persons who cannot give consent to a
enter into a partnership, joint venture, contract:
merger, consolidation or other commercial
agreement with natural or juridical a. Minors
persons.” b. Insane persons
c. Deaf-mutes who do not know how
ESSENTIAL FEATURES OF PARTNERSHIP to write
NOTE: A corporation cannot become a member 1. The contract is void ab initio and the
of a partnership in the absence of express partnership never existed in the eyes of the
authorization by statute or charter. This law;
doctrine is based on the following 2. The profits shall be confiscated in favor of
considerations: (1) Mutual agency between the the government;
partners and, (2) Such arrangement would 3. The instruments or tools and proceeds of
improperly allow corporate property to become the crime shall also be forfeited in favor of
subject to risks not contemplated by the the government; and
stockholders when they originally invested in 4. The contributions of the partners shall not
the corporation. (Mendiola v. CA, GR. No. be confiscated unless they fall under No. 3.
159333, July 31, 2006) (De Leon, 2014)
555
Special Contracts - Partnership
charge of solicitation of members and Articles of partnership
collection of loan payments. The parties
executed the “Articles of Agreement” where While partnership relation may be informally
Noynoy would receive 70% of the profits created and its existence proved by
while Cory and Kris would earn 15% each. manifestations of the parties, it is customary to
Later, Noynoy filed a complaint against Cory embody the terms of the association in a
and Kris for misappropriation of funds written document known as “Articles of
allegedly in their capacities as Noynoy’s Partnership” stating the name, nature or
employees. In their answer, Cory and Kris purpose and location of the firm, and defining,
asserted that they were partners and not among others, the powers, rights, duties, and
mere employees of Noynoy. What kind of liabilities of the partners among themselves,
relationship existed between the parties? their contributions, the manner by which the
profits and losses are to be shared, and the
A: A partnership was formed among the parties. procedure for dissolving the partnership. (De
The “Articles of Agreement” stipulated that the Leon, 2014)
signatories shall share in the profits of the
business in a 70-15-15 manner, with Noynoy Commencement of contract of partnership
getting the lion's share. This stipulation clearly
proved the establishment of a partnership. A partnership begins from the moment of the
(Santos v. Spouses Reyes, G.R. No. 135813, execution of the contract, unless it is otherwise
October 25, 2001) stipulated. (NCC, Art. 1784) If there is no
contrary stipulation as to the date of effectivity
Distribution of losses of the same, its registration in the Securities and
Exchange Commission is not essential to give it
Agreeing upon a system of sharing losses is not juridical personality. (De Leon, 2014)
necessary for the obligation is implied in the
partnership relation. If only the share of each Formalities needed for the creation of a
partner in the profits has been agreed upon, the partnership
share of each in the losses shall be in the same
proportion. GR: No special form is required for its validity
or existence. (NCC, Art. 1771) The contract may
The definition of partnership under Art. 1767 be made orally or in writing regardless of the
refers to “profits” only and is silent as to “losses.” value of the contributions. (2009 BAR)
The reason is that the object of partnership is
primarily the sharing of profits, while the NOTE: An agreement to enter in a partnership
distribution of losses is but a “consequence of at a future time, which “by its terms is not
the same.” The right to share in the profits performed within a year from the making
carries with it the duty to contribute to the thereof” is covered by the Statute of Frauds.
losses, of any. [NCC, Art. 1403(2)(a)] Such agreement is
unenforceable unless the same be in writing or
NOTE: The partnership relation is not the at least evidenced by some note or
contract itself, but the result of the contract. The memorandum thereof subscribed by the
relation is evidenced by the terms of the parties. (De Leon, 2014)
contract which may be oral or written, express
or implied from the acts and declarations of the XPN: If property or real rights have been
parties, subject to the provisions of Articles contributed to the partnership:
1771-1773 and to the Statute of Frauds. (De
Leon, 2014) 1. Personal property
557
Special Contracts - Partnership
itself establish a partnership, whether or intention of dividing the same among
not the persons sharing them have a joint themselves, as well as all profits they
or common right or interest in any may acquire therewith. The following
property from which the returns are become the common fund of all the
derived; partners:
559
Special Contracts - Partnership
be included in the business with some degree of continuity, while
stipulation in the latter, it is limited and well-defined, being
confined to an undertaking of a single,
XPN: Only fruits temporary, or ad hoc nature. (De Leon, 2014)
thereof can be
included in the Q: J, P and B formed a limited partnership
stipulation. (NCC, called Suter Co., with P as the general
Art. 1779) partner and J and B as limited partners. J
and B contributed Php 18,000 and Php
Presumption of universal partnership of 20,000 respectively. Later, J and B got
profits married and P sold his share of the
partnership to the spouses which was
When the Articles of Universal Partnership fail recorded in the SEC. Has the limited
to specify whether it is one of all present partnership been dissolved by reason of the
property or of profits, it only constitutes a marriage between the limited partners?
universal partnership of profits (NCC, Art. 1781),
because it imposes lesser obligations on the A: NO. The partnership is not a universal but a
partners since they preserve the ownership of particular one. A universal partnership requires
their separate property. either that the object of the association must be
all present property of the partners as
Persons disqualified from entering into contributed by them to a common fund, or all
universal partnership else that the partners may acquire by their
industry or work. Here, the contributions were
1. Legally married spouses. (Family Code, Art. fixed sums of money and neither one of them
87) However, they can enter into particular were industrial partners. Thus, the firm is not a
partnership. partnership which the spouses are forbidden to
2. Common law spouses. enter into. The subsequent marriage cannot
3. Parties guilty of adultery or concubinage. operate to dissolve it because it is not one of the
4. Criminals convicted for the same offense in causes provided by law. The capital
consideration of the same. [NCC, Art. 739 contributions were owned separately by them
(2)] before their marriage and shall remain to be
5. A person and a public officer (or his wife, separate under the Spanish Civil Code. Their
ascendant or descendants) by reason of his individual interest did not become common
office. [NCC, Art. 739 (3)] property after their marriage. (Commissioner of
Internal Revenue v. Suter, G.R. No. L-25532,
Contribution of future properties February 28, 1969; Heirs of Tang Eng Kee v. CA,
G.R. No. 126881, October 3, 2000)
As a general rule, future properties cannot be
contributed. The very essence of the contract of GENERAL vs. LIMITED
partnership that the properties contributed be
included in the partnership requires the General partnership
contribution of things determinate. (De Leon,
2014) It is a partnership where all partners are
general partners who are liable even with
Particular partnership respect to their individual properties, after the
assets of the partnership have been exhausted.
It is one which has for its object determinate (Paras, 2016)
things, their use or fruits, or a specific
undertaking, or the exercise of a profession or General or real partner
vocation. (NCC, Art. 1783)
He is a partner whose liability to third persons
The fundamental difference between a extends to his separate property; he may be
universal partnership and a particular either a capitalist or an industrial partner. (De
partnership lies in the scope of their subject Leon, 2014)
matter or object. In the former, the object is
vague and indefinite, contemplating a general
561
Special Contracts - Partnership
PARTNERSHIP WITH A FIXED TERM VS. operate a restaurant business. When the
PARTNERSHIP AT WILL restaurant had gone past break-even stage
and started to garner considerable profits, C
Partnership with a fixed term died. A and B continued the business
without dissolving the partnership. They in
It is one in which the term of its existence has fact opened a branch of the restaurant,
been agreed upon by the partners either: incurring obligations in the process.
Creditors started demanding for the
1. Expressly – There is a definite period. payment of their obligations.
2. Impliedly – A particular enterprise or
transaction is undertaken. a. Who are liable for the settlement of the
partnership’s obligations? Explain.
The mere expectation that the business would b. What are the creditors’ recourse/s?
be successful and that the partners would be
able to recoup their investment is not sufficient Explain. (2010 BAR)
to create a partnership for a term.
A:
Fixing the term of the partnership contract
a. The two remaining partners, A and B, are
The partners may fix in their contract any term liable. When any partner dies and the
and they shall be bound to remain under such a business is continued without any
relation for the duration of the term. settlement of accounts as between him or
his estate, the surviving partners are held
Expiration of the partnership contract liable for continuing the business despite
the death of C. (NCC, Arts. 1841, 1785(2) &
The expiration of the term fixed or the 1833)
accomplishment of the particular undertaking
specified will cause the automatic dissolution of b. Creditors can file the appropriate actions,
the partnership. for instance, an action for the collection of
sum of money against the “partnership at
Partnership at will will” and if there are no sufficient funds, the
creditors may go after the private
One in which no fixed term is specified and is properties of A and B. (NCC, Art. 816)
not formed for a particular undertaking or Creditors may also sue the estate of C. The
venture which may be terminated anytime by estate is not excused from the liabilities of
mutual agreement of the partners, or by the will the partnership even if C is dead already but
of any one partner alone; or one for a fixed term only up to the time that he remained a
or particular undertaking which is continued by partner. [NCC, Arts. 1829, 1835(2)]
the partners after the termination of such term However, the liability of C’s individual
or particular undertaking without express property shall be subject first to the
agreement. (De Leon, 2014) payment of his separate debts. (NCC, Art.
1835)
Termination or dissolution of partnership at
will PARTNERSHIP BY ESTOPPEL
A partnership at will may be lawfully It is one who, by words or conduct does any of
terminated or dissolved at any time by the the following:
express will of all or any of the partners.
1. Directly represents himself to anyone as a
The partner who wants the partnership partner in an existing partnership or in a
dissolved must do so in good faith, not that the non-existing partnership.
attendance of bad faith can prevent the 2. Indirectly represents himself by consenting
dissolution of the partnership, but to avoid the to another representing him as a partner in
liability for damages to other partners. an existing partnership or in a non-existing
partnership.
Q: A, B, and C entered into a partnership to
563
Special Contracts - Partnership
financial
interest). GR: Unanimous consent of all the managing
2. Without cause or partners shall be necessary for the validity of
for unjust cause the acts and absence or inability of any
– Unanimous managing partner cannot be alleged.
vote.
Extent of Power XPN: Where there is an imminent danger of
1. If he acts in good As long as he is a grave or irreparable injury to the partnership.
faith, he may do manager, he can
all acts of perform all acts of
Rule when the manner of management has
administration administration (if
not been agreed upon
(despite others oppose, he
opposition of his can be removed).
1. All partners shall be considered agents and
partners);
whatever any one of them may do alone
2. If he acts in bad
shall bind the partnership, without
faith, he cannot.
prejudice to the provisions of Art. 1801 of
the NCC. This right is not dependent on the
Scope of the power of a managing partner
amount or size of the partner’s capital
contribution or services to the business.
As a general rule, a partner appointed as
manager has all the powers of a general agent
NOTE: If two or more partners have been
as well as all the incidental powers necessary to
entrusted with the management of the
carry out the object of the partnership in the
partnership without specification of their
transaction of its business. The exception is
respective duties, or without a stipulation
when the powers of the manager are
that one of them shall not act without the
specifically restricted. (De Leon, 2014)
consent of all the others, each one may
separately execute all acts of
Rule where there are two or more managers
administration, but if any of them should
oppose the acts of the others, the decision
Without specification of their respective of the majority shall prevail. In case of a tie,
duties and without stipulation requiring the matter shall be decided by the partners
unanimity of owning the controlling interest. (NCC, Art.
action 1801; 1992 BAR)
GR: Each may separately execute all acts of 2. None of the partners may, without the
administration (unlimited power to consent of the others, make any important
administer). alteration in the immovable property even
if it may be useful to the partnership. (NCC,
XPN: If any of the managers opposes, decision Art. 1802-1803)
of the majority prevails.
Rule in case where unanimity of action is
NOTE: In case of tie – Decision of the controlling stipulated
interest (who are also managers) shall prevail.
NOTE: If refusal of partner is manifestly
prejudicial to the interest of partnership, the
With stipulation that none of the managing court’s intervention may be sought.
partners shall act without the consent of the
others COMPENSATION
565
Special Contracts - Partnership
complied with his obligation. his interest to the other partners.
When the capital or a part hereof which a Requisites before capitalist partners are
partner is bound to contribute consists of goods, compelled to contribute additional capital
their appraisal must be made in the manner
prescribed in the contract of partnership, and 1. Imminent loss of the business of the
in the absence of stipulation, it shall be current partnership;
prices, the subsequent changes thereof being 2. Majority of the capitalist partners are of the
for the account of the partnership. (NCC, Art. opinion that an additional contribution to
1787) the common fund would save the business;
3. Capitalist partner refuses deliberately to
Rules regarding contribution of money to contribute (not due to financial inability);
the partnership and
4. There is no agreement to the contrary.
1. To contribute on the date fixed the amount
the partner has undertaken to contribute to
the partnership; NOTE: The refusal of the partner to contribute
2. To reimburse any amount the partner may his additional share reflects his lack of interest
have taken from the partnership coffers in the continuance of the partnership. (De Leon,
and converted to his own use; 2014) It shall be obliged to sell his interest to
3. To indemnify the partnership for the the other partners except if there is an
damages caused to it by delay in the agreement to the contrary. (NCC, Art. 1791)
contribution or conversion of any sum for
the partner’s personal benefit; It is to be noted that the industrial partner is
4. To pay the agreed or legal interest, if the exempted from the requirement to contribute
partner fails to pay his contribution on time an additional share. Having contributed his
or in case he takes any amount from the entire industry, he can do nothing further. (De
common fund and converts it to his own Leon, 2014)
use.
Obligations of managing partners who
Rule regarding obligation to contribute to collect his personal receivable from a
partnership capital person who also owes the partnership
Unless there is a stipulation to the contrary, the 1. Apply sum collected to 2 credits in
partners shall contribute equal shares to the proportion to their amounts
capital of the partnership. (NCC, Art. 1790) It is
not applicable to an industrial partner unless, 2. If he received it for the account of
besides his services, he has contributed capital partnership, the whole sum shall be applied
pursuant to an agreement. to partnership credit
The law safeguards the interests of the Rule with regard to the obligation of a
partnership by preventing the possibility of partner as to damages suffered by the
their being subordinated by the managing partnership through his fault
partner to his own interest to the prejudice of
the other partners. (De Leon, 2014) GR: Every partner is responsible to the
partnership for damages suffered by it through
Obligation of a partner who receives share his fault and he cannot compensate them with
of partnership credit the profits and benefits which he may have
earned for the partnership by his industry.
To bring to the partnership capital what he has
received even though he may have given receipt XPN: The courts may equitably lessen this
for his share only. responsibility if through the partner’s
extraordinary efforts in other activities of the
Requisites: partnership, unusual profit has been realized.
(NCC, Art. 1794)
1. A partner has received in whole or in part,
his share of the partnership credit; Set-off of damages caused by a partner
2. Other partners have not collected their
shares; and GR: The damages caused by a partner to the
3. Partnership debtor has become insolvent. partnership cannot be offset by the profits of
benefits which he may have earned for the
Liability of a person who has not directly partnership by his industry.
transacted in behalf of an unincorporated
association for a contract entered into by Ratio: The partner has the obligation to secure
such association benefits for the partnership. Hence, the profits
which he may have earned pertain as a matter
The liability for a contract entered into on of law or right, to the partnership
567
Special Contracts - Partnership
XPN: If unusual profits are realized through the profits derived by him without the consent of
the other partners from any transaction
extraordinary efforts of the partner at fault, the connected with the formation, conduct, or
courts may equitably mitigate or lessen his liquidation of the partnership or from any use
liability for damages. This rule rests on equity. by him of its property. (NCC, Art. 1807)
Note that even in this case, the partner at fault Duty of a partner to act with utmost good
is not allowed to compensate such damages faith towards co-partners continues even
with the profits earned. The law does not after dissolution
specify as to when profits may be considered
“unusual.” The question depends upon the The duty of a partner to act with utmost good
circumstances of the particular case. faith towards his co-partners continues
throughout the entire life of the partnership
Duty of the partners with respect to keeping even after dissolution for whatever reason or
the partnership books whatever means, until the relationship is
terminated, i.e., the winding up of partnership
The partnership books shall be kept, subject to affairs is completed. (De Leon, 2014)
any agreement between partners, at the
principal place of business of the partnership. Failure to disclose facts, when there is a duty to
(NCC, Art. 1805) reveal them, as when parties are bound by
confidential relations, constitutes fraud. (NCC,
Duty to keep partnership book belongs to Art. 1339)
managing or active partner
RIGHTS OF PARTNERS
The duty to keep true and correct books
showing the firm’s accounts, such books being 1. Right to reimbursement for amounts
at all times open to inspection of all members of advanced to the partnership and to
the firm, primarily rests on the managing or indemnification for risks in consequence of
active partner or the particular partner given management (NCC, Art. 1796);
record-keeping duties. (NCC, Art. 1805; De Leon,
2014) 2. Right on the distribution of profits and
losses (NCC, Art. 1797);
Duty of the partners with respect to
information affecting the partnership 3. Right to associate another person with him
in his share without the consent of the other
Partners shall render on demand true and full partners (NCC, Art. 1804);
information of all things affecting the
partnership to: NOTE: Such partnership formed between a
member of a partnership and a third person
1. Any partner; or for a division of the profits coming to him
2. Legal representative of any deceased or any from the partnership enterprise is termed
partner under legal disability. (NCC, Art. sub-partnership. (De Leon, 2014)
1806)
4. Right to free access and to inspect and copy
NOTE: Under the same principle of mutual trust at any reasonable hour the partnership
and confidence among partners, there must be books (NCC, Art. 1805);
no concealment between them in all matters
affecting the partnership. The information, to be 5. Right to formal account as to partnership
sure, must be used only for a partnership affairs:
purpose. (De Leon, 2014)
a. If he is wrongfully excluded from
Accountability of partners to each other as the partnership business or
fiduciary possession of its property by his
co-partners;
Every partner must account to the partnership b. If the right exist under the terms of
for any benefit, and hold as trustee for it any any agreement;
569
Special Contracts - Partnership
partner of “X” in the business? Why? What is 3. Right is limited to his share of what
the nature of the right to demand one’s remains after partnership debts have been
share in the profits of a partnership? Does paid;
this right prescribe? (1989 BAR) 4. Right is not subject to attachment or
execution except on a claim against the
A: YES, because there is an agreement to partnership; and
contribute to a common fund and intent to 5. Right is not subject to legal support
divide profits. It is founded upon an express
trust. It is imprescriptible unless repudiated. Effects of assignment of partner’s whole
interest in the partnership
Rule regarding a stipulation excluding a
partner in the sharing of profits and losses 1. Rights withheld from the assignee: Such
assignment does not grant the assignee the
GR: Such stipulation is void. (NCC, Art. 1799) right to:
XPN: Industrial partner is not liable for losses. a. To interfere in the management;
[NCC, Art. 1797(2)] However, he is not b. To require any information or
exempted from liability insofar as third persons account; and
are concerned. c. To inspect partnership books.
571
Special Contracts - Partnership
Importance of having a firm name Remedies available to the creditors of a
partner
A partnership must have a firm name under
which it will operate. It is necessary to 1. Separate or individual creditors should first
distinguish the partnership which has a distinct secure a judgment on their credit; and
and separate juridical personality from the
individuals composing the partnership and from 2. Apply to the proper court for a charging an
other partnerships and entities. (De Leon, 2014) order subjecting the interest of the debtor-
partner in the partnership for the payment
Liability for the inclusion of name in the firm of the unsatisfied amount of the judgment
name debt with interest thereon. (De Leon, 2014)
Persons who, not being partners, include their NOTE: The court may resort to other courses of
names in the firm name do not acquire the action provided in Art. 1814 of the NCC, (i.e.,
rights of a partner but under Art. 1815, they appointment of receiver, sale of the interest, etc.)
shall be subject to the liability of a partner (NCC, if the judgment debt remains unsatisfied,
Art. 1816) insofar as third persons without notwithstanding the issuance of charging order.
notice are concerned. (De Leon, 2014) (De Leon, 2014)
Title in the partnership’s name; a. Conveyance was done in the usual way of business,
Conveyance in partner’s name or
b. The partner so acting has the authority to act for the
partnership. (De Leon, 2014)
Title in the names of all the partners; Conveyance will pass all the rights in such property. (De
Conveyance executed by all the partners Leon, 2014)
573
Special Contracts - Partnership
DISSOLUTION AND WINDING UP c. Express will of all partners (except
those who have assigned their
DISSOLUTION (2010 BAR) interests or suffered them to be
charged for their separate debts)
either before or after the
Final stages of partnership termination of any specified term
or particular undertaking
1. Dissolution; d. Expulsion of any partner in good
2. Winding up; and faith of a member;
3. Termination.
2. Violating the agreement;
Dissolution, winding-up, and termination 3. Unlawfulness of the business;
4. Loss;
Dissolution Winding Termination a. Specific thing promised as
contribution is lost or perished
up before delivery
b. Loss of a specific thing contributed
before or after delivery, if only the
A change in Settling the Point in time use of such is contributed
the relation of partnership when all
the partners business or partnership NOTE: The partnership shall not be
caused by any affairs after affairs are dissolved by the loss of the thing when
partner dissolution. completely it occurs after the partnership has
ceasing to be wound up or acquired the ownership thereof.
associated in completed;
carrying on the end of the 5. Death of any of the partners;
the business. partnership 6. Insolvency of any partner or of the
life. partnership;
7. Civil interdiction of any partner; and
8. By decree of court under Art. 1831
Partners It is the final It signifies the
cease to carry step after end of the a. A partner has been declared insane
on the dissolution in partnership or of unsound mind
business the life. It takes b. A partner becomes in any other
together. It termination of place after way incapable of performing his
represents the the both part of the partnership contract
demise of a partnership. dissolution c. A partner has been guilty of such
partnership. and winding conduct as tends to affect
Thus, any up have prejudicially the carrying on of the
time a partner occurred. business
leaves the d. A partner willfully or persistently
business, the commits a breach of the
partnership is partnership agreement
dissolved. e. The business of the partnership
can only be carried on at a loss
f. Other circumstances render a
Causes of dissolution (NCC, Art. 1830) dissolution equitable.
575
Special Contracts - Partnership
real properties with permission of the if dissolution had not taken place, provided
surviving partner, X, but her name was not the other party/obligee:
included in the partnership name. She
eventually sold these real properties after a a. Had extended credit to partnership
few years. X now claims that W did not have prior to dissolution; and had no
the authority to manage and sell those knowledge/notice of dissolution; or
properties as she was not a partner. Is the b. Did not extend credit to partnership;
sale valid? Had known of the partnership prior
to dissolution; AND Had no
A: YES. The widow was not a mere agent, knowledge/notice of dissolution/fact
because she had become a partner upon her of dissolution not advertised in a
husband's death, as expressly provided by the newspaper of general circulation in
articles of co-partnership, and by authorizing the place where partnership is
the widow to manage partnership property, X regularly carried on. [NCC, Art. 1834
recognized her as a general partner with (1) & (2)]
authority to administer and alienate
partnership property. It is immaterial that W's XPNs: Partner cannot bind the partnership
name was not included in the firm name, since anymore after dissolution:
no conversion of status is involved, and the
articles of co-partnership expressly 1. Where dissolution is due to unlawfulness to
contemplated the admission of the partner's carry on the business; or
heirs into the partnership. (Goquiolay v. Sycip, 2. Where the partner has become insolvent;
G.R. No. L-11840, December 16, 1963) or
3. Act is not appropriate for winding up or for
Liability of a partner where the dissolution completing unfinished transactions; or
is caused by the act, death or insolvency of a 4. Partner is unauthorized to wind up
partner partnership affairs, except by transaction
with one who:
GR: Each partner is liable to his co-partners for
his share of any liability created by any partner a. Had extended credit to partnership
for the partnership, as if the partnership had prior to dissolution; AND Had no
not been dissolved. knowledge or notice of dissolution;
or
XPNs: Partners shall not be liable when: b. Did not extend credit to partnership
prior to dissolution; Had known
1. The dissolution, being by act of any partner, partnership prior to dissolution;
the partner acting for the partnership had AND Had no knowledge/notice of
knowledge of the dissolution; or dissolution/fact of dissolution not
2. The dissolution, being by the death or advertised in a newspaper of
insolvency of a partner, the partner acting general circulation in the place
for the partnership had knowledge or where partnership is regularly
notice of the death or insolvency. (NCC, Art. carried on [Art. 1834(3)]; or
1833; 2010 BAR)
5. Completely new transactions which would
Q: After the dissolution of a partnership, can bind the partnership if dissolution had not
a partner still bind the partnership? taken place with third persons in bad faith.
1. Transactions to wind up partnership affairs GR: Dissolution does not discharge the existing
or to complete transactions unfinished at liability of a partner. [Art. 1835(1)]
dissolution;
2. Transactions which would bind partnership XPN: Said liability is discharged when there is
Order of priority in the distribution of assets An action for the liquidation of a partnership is a
during the dissolution of a limited personal one; hence, it may be brought in the
partnership place of residence of either the plaintiff or the
defendant. (De Leon, 2014)
In setting accounts after dissolution, the
liabilities of the partnership shall be entitled to Persons authorized to wind up
payment in the following order:
1. Partners designated by the agreement;
1. Those to creditors, in the order of priority 2. In the absence of such, all partners who
as provided by law, except those to limited have not wrongfully dissolved the
partners on account of their contributions, partnership; and
and to general partners; 3. Legal representative of last surviving
2. Those to limited partners in respect to their partner who is not insolvent. (De Leon,
share of the profits and other compensation 2014)
by way of income on their contributions;
3. Those to limited partners in respect to the NOTE: The court may, in its discretion, after
capital of their contributions; considering all the facts and circumstances of
4. Those to general partners other than for the particular case, appoint a receiver to wind
capital and profits; up the partnership affairs where such step is
5. Those to general partners in respect to shown to be to the best interests of all persons
profits; concerned.
6. Those to general partners in respect to
capital. (NCC, Art. 1863) An insolvent partner does not have the right to
wind up partnership affairs. (De Leon, 2014)
NOTE: Subject to any statement in the
certificate or to subsequent agreement, limited Powers of liquidating partner
partners share in the
1. Make new contracts;
partnership assets in respect to their claims for 2. Raise money to pay partnership debts;
capital, and in respect to their claims for profits 3. Incur obligations to complete existing
or for compensation by way of income on their contracts or preserve partnership assets;
contribution respectively, in proportion to the and
respective amounts of such claims. (NCC, Art. 4. Incur expenses necessary in the conduct of
1863) litigation. (De Leon, 2014)
577
Special Contracts - Partnership
1. Those owing to creditors other than cash the net amount owing to the
partners respective partners. (De Leon, 2014)
2. Those owing to partners other than for
capital or profits Rights of a partner where dissolution is in
3. Those owing to partners in respect of contravention of the agreement
capital
4. Those owing to partners in respect to The rights of a partner vary depending upon
profits. [NCC, Art. 1839(2)] whether he is the innocent or guilty partner.
Unless otherwise agreed, the rights of each Rights of injured partner where partnership
partner are as follows: contract is rescinded
1. To have the partnership property applied 1. Right of a lien on, or retention of, the surplus
to discharge the liabilities of partnership; of partnership property after satisfying
and partnership liabilities for any sum of money
2. To have the surplus, if any, applied, to pay in paid or contributed by him;
579
Special Contracts - Partnership
corporation Characteristics of limited partnership
581
Special Contracts - Partnership
additional contributions, they may be paid after liabilities. (De Leon, 2014)
the limited partnership has been formed.
Transactions allowed or prohibited in a
Firm name limited partnership
Admission of additional limited partners NOTE: The prohibition is not absolute because
there is no prohibition if the partnership assets
After a limited partnership had been formed, are sufficient to discharge partnership liabilities
additional limited partners may be admitted, to persons not claiming as general or limited
provided: partners.
NOTE: In the absence of such statement in the Since limited partners are not principals in
certificate, even if there is an agreement, all the transaction of a partnership, their
limited partners shall stand on equal footing in liability as a rule, is to the partnership, not
respect of these matters. to the creditors of the partnership. The
general partners cannot however waive any
Requisites for return of contribution of a liability of the limited partners to the
limited partner (NCC, Art. 1857) prejudice of such creditors.
1. All liabilities of the partnership have been 2. To the partnership creditors and other
paid or if they have not yet been paid, the partners
assets of the partnership are sufficient to
pay such liabilities; a. A limited partner is liable for
2. The consent of all the members (general partnership obligations when he
and limited partners) has been obtained contributed services instead of only
except when the return may be rightfully money or property to the partnership;
demanded; and b. When he allows his surname to appear
3. The certificate of limited partnership is in the firm name;
cancelled or amended. c. When he fails to have a false statement
in the certificate corrected, knowing it
When return of contribution is a matter of to be false;
right d. When he takes part in the control of the
business;
When all liabilities of the partnership, except e. When he receives partnership property
liabilities to general partners and to limited as collateral security, payment,
partners on account of their contributions, have conveyance, or release in fraud of
been paid or there remains property of the partnership creditors;
partnership sufficient to pay them and the f. When there is failure to substantially
certificate is cancelled or so amended as to set comply with the legal requirements
forth the withdrawal or reduction: governing the formation of limited
partnerships.
1. On the dissolution of the partnership;
2. Upon the arrival of the date specified in 3. To separate creditors
the certificate for the return; or
3. After the expiration of six (6)-month As in a general partnership, the creditor of a
notice in writing given by him to the limited partner may, in addition to other
other partners if no time is fixed in the remedies allowed under existing laws, apply to
certificate for the return of the the proper court for a charging order subjecting
contribution or for the dissolution of the interest in the partnership of the debtor
the partnership. partner for the payment of his obligation. (De
Leon, 2014)
583
Special Contracts - Partnership
Requisites for waiver or compromise of partners on account of their contributions,
liabilities and to general partners
2. Those to limited partners in respect to their
The waiver or compromise shall: share of the profits and other compensation
by way of income on their contributions
1. Be made with the consent of all partners; 3. Those to limited partners in respect to the
and capital of their contributions
2. Not prejudice partnership creditors who 4. Those to general partners other than for
extended credit or whose claims arose capital and profits
before the cancellation or amendment of 5. Those to general partners in respect to
the certificate. profits
6. Those to general partners in respect to
When may a limited partner have the capital. (NCC, Art. 1863)
partnership dissolved
NOTE: Subject to any statement in the
1. When his demand for the return of his certificate or to subsequent agreement, limited
contribution is denied although he has a partners share in the partnership assets in
right to such return; or respect to their claims for capital, and in respect
to their claims for profits or for compensation
2. When his contribution is not paid although by way of income on their contribution
he is entitled to its return because the other respectively, in proportion to the respective
liabilities of the partnership have not been amounts of such claims.
paid or the partnership property is
insufficient for their payment. GR: A limited partner is not a proper party to
proceedings:
Effect of retirement, death, civil interdiction,
insanity or insolvency of a partner 1. By a partnership; or
2. Against a partnership.
1. General partner – The partnership is
dissolved (NCC, Art. 1860) unless the XPNs:
business is continued by the remaining
general partners: 1. If he is also a general partner.
2. Where the object is to enforce a limited
a. Under the right stated in the partner’s right against or liability to the
certificate; or partnership. (NCC, Art. 1866)
b. With the consent of all the partners.
SUMMARY OF RIGHTS AND OBLIGATIONS OF
2. Limited partner – The partnership is not PARTNERS
dissolved except all limited partners cease
to be such. GENERAL PARTNER
Rights
Rights of the executor/administrator on the
1. Right in specific partnership property.
death of the limited partner
2. Interest in the partnership (share in the
1. All the rights of a limited partner for the
profits and surplus).
purpose of settling his estate
2. To have the same power as the deceased
3. Right to participate in the management.
had to constitute his assignee as
substituted limited partner.
4. Right to associate another person with him
in his share without the consent of other
In setting accounts after dissolution, the
partners (sub- partnership).
liabilities of the partnership shall be entitled
to payment in the following order
5. Right to inspect and copy partnership
books at any reasonable hour.
1. Those to creditors, in the order of priority
as provided by law, except those to limited
585
Special Contracts - Partnership
decree of court. subjecting the interest in the partnership of the
debtor partner for the payment of his
6. To receive share of profits/other obligation.
compensation by way of income.
Obligations
To the partnership
To separate creditors
Classifications of Agency
Contract of agency (2000, 2003 BAR)
1. As to manner of creation
By the contract of agency, a person binds himself
to render some service or to do something in
a. Express – Agent has been actually
representation or on behalf of another, with the
authorized by the principal, either
consent or authority of the latter. (NCC, Art. 1868)
orally or in writing. (NCC, Art. 1869)
NOTE: The essence of agency is representation.
b. Implied – Agency is implied from the
For a Contract of Agency to exist, it is essential that
acts of the principal, from his silence
the principal consents that the agent shall act on
or lack of action, or his failure to
the former’s behalf and the agent consents so as
repudiate the agency, knowing that
to act. (Rabuya, 2017)
another person is acting on his
behalf without authority. (NCC, Art.
One factor which most clearly distinguishes
1869), or from the acts of the agent
agency from other legal concepts is control; one
which carry out the agency, or from
person – the agent – agrees to act under the
his silence or inaction according to
control or direction of another – the principal.
the circumstances. (NCC, Art. 1870)
Indeed, the very word “agency” has come to
connote control by the principal. (Victorias
2. As to character
Milling Co., Inc. v. Court of Appeals, G.R. No.
117356, June 19, 2000)
a. Gratuitous – Agent receives no
compensation for his services. (NCC,
NATURE, FORMS AND KINDS OF AGENCY Art. 1875)
587
Special Contracts - Agency
a. Ostensible or Representative – Agent Aurora, Inc., G.R. No. 174978, July 21, 2013) (2010
acts in the name and representation BAR)
of the principal. (NCC, Art. 1868)
Rules on implied acceptance of agency
b. Simple or Commission – Agent acts in
his own name but for the account of 1. Between persons who are present – The
the principal. (De Leon, 2014) acceptance of the agency may also be implied
if the principal delivers his power of attorney
Parties to a contract of agency to the agent and the latter receives it without
any objection. (NCC, Art. 1871)
1. Principal (Mandante) – One whom the agent
represents and from whom he derives his 2. Between persons who are absent – The
authority; he is the person represented. acceptance of the agency cannot be implied
from the silence of the agent except:
2. Agent (Mandatario) – One who acts for and
represents another; he is the person acting in a. When the principal transmits his
a representative capacity. The agent has power of attorney to the agent, who
derivative authority in carrying out the receives it without any objection;
principal’s business. (De Leon, 2014) b. When the principal entrusts to him
by letter or telegram a power of
Essential elements of an agency attorney with respect to the business
in which he is habitually engaged as
1. Consent (express or implied) of the parties to an agent and he did not reply to the
establish the relationship. letter or telegram. (NCC, Art. 1872)
NOTE: A person may express his consent: NOTE: Acceptance by the agent may also be
express or implied from his acts which carry out
a. by contract (NCC, Art. 1868), orally the agency, or from his silence or inaction
or in writing; according to the circumstances. (NCC, Art. 1870)
b. by conduct (NCC, Art. 1869);
c. by ratification (NCC, Art. 1910); or Communication of existence of agency
d. the consent may arise by
presumption or operation of law. (De Ways of giving notice of agency:
Leon, 2014)
1. By special information – The person
2. The object is the execution of a juridical act in appointed as agent is considered such with
relation to third persons.; respect to the person to whom it was given.
3. The agent acts as a representative and not for 2. By public advertisement – The agent is
himself.; and considered as such with regard to any
person.
4. The agent acts within the scope of his
authority. (International Exchange Bank v. Nature of the relationship between principal
Spouses Briones, et al., G.R. No. 205657, March and agent
29, 2017, as penned by J. Leonen)
It is fiduciary in nature that is based on trust and
Appointment of an agent confidence. The agent is estopped from asserting
or acquiring an interest adverse to that of his
GR: There are no formal requirements governing principal. (De Leon, 2014)
the appointment of an agent.
Qualifications of a Principal
XPN: When the law requires a specific form, i.e.
when sale of land or any interest therein is 1. Natural or juridical person; and
through an agent, the authority of the latter must 2. Must have capacity to act.
be in writing; otherwise, the sale shall be void.
(NCC, Art. 1874; Yoshizaki v. Joy Training Center of NOTE: If a person is capacitated to act for himself
Insofar as third persons are concerned, it is NOTE: The theory of imputed knowledge
enough that the principal is capacitated. But ascribes the knowledge of the agent to the
insofar as his obligations to his principal are principal, not the other way around. The
concerned, the agent must be able to bind knowledge of the principal cannot be imputed to
himself. his agent. (Sunace International Management
Services, Inc. v. NLRC, G.R. No. 161757, January 25,
Kinds of principal 2006)
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Special Contracts - Agency
authority – innocent agent is not liable. (NCC, of the claim against the insurance company?
Art. 1895)
A: YES. All the elements of agency exist in this
Instances when the agent may incur personal case, namely (1) there is consent, express or
liability implied, of the parties to establish the
relationship of agency; (2) the object is the
1. Agent expressly bound himself; execution of a juridical act in relation to a third
2. Agent exceeded his authority; person; (3) the agent acts as a representative
3. Acts of the agent prevented the performance and not for himself; and (4) the agent acts within
on the part of the principal; the scope of his authority.
4. When a person acted as agent without
authority or without a principal; and Under the promissory note with chattel
5. When a person acted as an agent of an mortgage, Spouses Briones appointed iBank as
incapacitated principal unless the third their attorney-in-fact, authorizing it to file a
person was aware of the incapacity at the claim with the insurance company if the
time of the making of the contract. (De Leon, mortgaged vehicle was lost or damaged. iBank
2010) was also authorized to collect the insurance
proceeds as the beneficiary of the insurance
Q: Spouses Briones took out a loan of policy. Article 1370 of the Civil Code is
₱3,789,216.00 from iBank to purchase a categorical that when “the terms of a contract
BMW Z4 Roadster. The monthly amortization are clear and leave no doubt upon the intention
for two (2) years was ₱78,942.00. They of the contracting parties, the literal meaning of
executed a promissory note with chattel its stipulations shall control. (International
mortgage that required them to take out an Exchange Bank Now Union Bank of the
insurance policy on the vehicle. In the Philippines v. Spouses Jerome and Quinnie
promissory note, the Spouses Briones Briones, and John Doe, G.R. No. 205657, March 29,
constituted iBank as their attorney-in-fact 2017, as penned by J. Leonen)
with full power and authority for the purpose
of filing claims with the insurance company Presumption of contract of agency
as may be necessary to prove the claim and
to collect from the latter the proceeds of GR: Agency is not presumed.
insurance in case of loss or damage to the
vehicle. The mortgaged BMW Z4 Roadster The relation between principal and agent must
was carnapped in Tandang Sora, Quezon City. exist as a fact. Thus, it is held that where the
Spouses Briones declared the loss to iBank, relation of agency is dependent upon the acts of
which instructed them to continue paying the the parties, the law makes no presumption of
next three (3) monthly installments “as a agency, and it is always a fact to be proved, with
sign of good faith.” When the Spouses Briones the burden of proof resting upon the person
finished paying the three (3)-month alleging the agency to show, not only the fact of
installment, iBank sent them a letter its existence, but also its nature and extent.
demanding full payment of the lost vehicle. (Victorias Milling Co., Inc. v. Consolidated Sugar
The Spouses Briones submitted a notice of Corporation, G.R. No. 117356, June 19, 2000)
claim with their insurance company, but the
latter denied the claim due to the delayed XPNs:
reporting of the lost vehicle.
1. Operation of law; and
Thereafter, iBank filed a complaint for the 2. To prevent unjust enrichment. (De Leon,
default of the Spouses to pay monthly 2010)
amortizations. RTC ruled that as the duly
constituted attorney-in-fact of the Spouses Agency by necessity
Briones, iBank had the obligation to facilitate
the filing of the notice of claim and then to Agency cannot be created by necessity. What is
pursue the release of the insurance proceeds. created instead is additional authority in an agent
The CA also dismissed the complaint. Did an appointed and authorized before the emergency
agency relationship exist between the parties arose. By virtue of the existence of an emergency,
which obligated iBank to facilitate the filing the authority of an agent is correspondingly
591
Special Contracts - Agency
Agent is representation represents lessor of
Guardian is
As to the appointed by by the agent the principal. services
appointed by
appointin the principal or worker does not
the court, and
g and can be represent
stands in loco
authority removed by his
parentis.
the latter. employer.
As to being Guardian is not
subject to Agent is subject to the Relationship
Generally,
the subject to directions of the can be
relationship
person directions of ward, but must As to terminated
can be
they the principal. act for the termination of at the will of
terminated
represent ward’s benefit. relationship either
only at the
principal or
Agent can Guardian has no will of both.
agent.
make the power to
As to
principal impose personal The lessor
liability
personally liability on the Agent ordinarily
liable. ward. As to the kind
exercises performs
of function he
discretionary only
Agency vs. Judicial Administration exercises
powers. ministerial
functions.
JUDICIAL
BASIS AGENCY ADMINISTRA Agency vs. Partnership
TION
Judicial BASIS AGENCY PARTNERSHIP
As to the Agent is A partner acts
administrator
source of appointed by not only for his
is appointed
authority the principal Agent acts in co-partners and
by the court As to his
the name of the partnership
Represents actions
the principal. but also as
not only the principal of
As to
Represents court but also himself.
whom they
the principal the heirs and A partner’s
represent
creditors of power to bind
the estate. An agent
his co-partner is
Judicial must submit
As to the not subject to
Administrator, to the
control by the co-partner’s
As to the Agent does before principal’s
the principal right to control,
requireme not file a entering into right to
unless there is
nt of bond bond. his duties, is control.
an agreement to
required to file that effect.
a bond The ordinary
The acts of an agent A partner acting
As to administrator assumes no as agent for the
Agent is personal partnership
control of are subject to
controlled by As to liability liability binds not only
the specific
the principal where he acts the firm
Agent/Ad provisions of
through the within the members but
ministrato law and
agreement. scope of his himself as well.
r orders from
the court. authority.
The alleged The profits
owner or belong to all the
Agency vs. Lease of Services
As to sharing partner takes parties as
of profits his agreed common
LEASE OF
BASIS AGENCY share of proprietors in
SERVICES profits, not as agreed
As to Agent Worker or
BASIS AGENCY TRUST However, the limits of the agent’s authority shall
As to the Agent not be considered exceeded should it have been
Trustee may performed in a manner more advantageous to the
capacity to usually
hold legal title principal than that specified by him. (NCC, Art.
hold title overholds no
to the property. 1882)
the property title at all.
Agent
usually Instances when the act of an agent is binding
Trustee may act to the principal
As to his acts in the
in his own
actions name of
name. 1. When the agent acts as such without
the
principal. expressly binding himself or does not exceed
Agency Trust usually the limits of his authority. (NCC, Art. 1897)
As to the usually ends by the 2. If principal ratifies the act of the agent which
termination may be accomplishment exceeded his authority. (NCC, Art. 1898)
of the terminated of the purposes 3. Circumstances where the principal himself
relationship or revoked for which it was was, or ought to have been aware. (NCC, Art.
any time. formed. 1899)
Agency 4. If such act is within the terms of the power of
As to the attorney, as written. (NCC, Arts. 1900 & 1902)
may not be Trust involves
scope of 5. Principal has ratified, or has signified his
connected control over
authority willingness to ratify the agent’s act. (NCC, Art.
at all with property.
over property 1901)
property.
Agent has
As to the authority Trustee does Effects of the acts of an agent
binding effect to make not necessarily
of the contracts or even possess 1. With authority
contracts which will such authority
entered by be binding to bind the a. In principal’s name – Valid
them on his trustor. b. In his own name – Not binding on the
principal. principal; agent and stranger are the
Trust may be only parties, except regarding things
Agency is belonging to the principal or when
the result of a
As to its really a the principal ratifies the contract or
contract; it may
creation contractual derives benefit therefrom.
also be created
relation.
by law.
2. Without authority
POWERS
a. In principal’s name – Unenforceable
Kinds of agency as to the extent of powers but may be ratified, in which case,
conferred may be validated retroactively from
the beginning.
An agency may be couched in: b. In his own name – Valid on the agent,
but not on the principal.
1. General terms – It is one which is created in
general terms and is deemed to comprise Rule as to when the principal is not bound by
only acts of administration. (NCC, Art. 1877) the act of the agent
593
Special Contracts - Agency
1. GR: When the act is without or beyond the NOTE: Rules of preference in double sale
scope of his authority in the principal’s name.
1. Personal property – possessor in good faith
XPNs:
2. Real property
a. Where the acts of the principal have
contributed to deceive a 3rd person a. Registrant in good faith;
in good faith; b. In the absence of inscription, possessor in
b. Where the limitations upon the good faith;
power created by the principal could c. In the absence of possession, person with
not have been known by the 3rd the oldest title in good faith. (NCC, Art.
person; 1544)
c. Where the principal has placed in
the hands of the agent instruments If agent acted in good faith, the principal shall be
signed by him in blank; and liable for damages to the third person whose
d. Where the principal has ratified the contract must be rejected. If agent is in bad faith,
acts of the agent. he alone shall be liable. (NCC, Art. 1917)
2. GR: When the act is within the scope of the A person acting as an agent cannot escape
agent’s authority but in his own name. criminal liability by virtue of the contract of
agency
XPN: When the transaction involves things
belonging to the principal. (NCC, Art. 1883) The law on agency has no application in criminal
cases. When a person participates in the
NOTE: The limits of the agent’s authority shall not commission of a crime, he cannot escape
be considered exceeded should it have been punishment on the ground that he simply acted
performed in a manner more advantageous to the as an agent of another party. (Ong v. CA, G.R. No.
principal than that specified by him. (NCC, Art. 119858, April 29, 2003)
1882)
An agent cannot maintain an action against
RIGHTS OF AGENTS persons with whom they contracted on behalf
of his principal.
Right of agent to retain in pledge object of
agency (Legal Pledge) (2015 BAR) Agents are not a party with respect to that
contract between his principal and third persons.
The agent may retain in pledge the things which As agents, they only render some service or do
are the object of the agency until the principal something in representation or on behalf of their
effects the reimbursement and pays the principals. The rendering of such service did not
indemnity: make them parties to the contracts of sale
executed in behalf of the latter.
1. If principal fails to reimburse the agent the
necessary sums, including interest, which the The fact that an agent who makes a contract for
latter advanced for the execution of the his principal will gain or suffer loss by the
agency. (NCC, Art. 1912) performance or non-performance of the contract
2. If principal fails to indemnify the agent for all by the principal or by the other party thereto does
damages which the execution of the agency not entitle him to maintain an action on his own
may have caused the latter, without fault or behalf against the other party for its breach.
negligence on his part. (NCC, Art. 1913)
An agent entitled to receive a commission from
Rule where two persons deal separately with his principal upon the performance of a contract
the agent and the principal which he has made on his principal's account
does not, from this fact alone, have any claim
If the two contracts are incompatible with each against the other party for breach of the contract,
other, the one of prior date shall be preferred. either in an action on the contract or otherwise.
This is subject however to the rule on double sale
under Art. 1544 of the NCC. (NCC, Art. 1916) An agent who is not a promisee cannot maintain
1. Carry out the agency (NCC, Art. 1884); 11. Distinguish goods by countermarks and
2. Answer for damages which, through his non- designate the merchandise respectively
performance, the principal may suffer (Ibid.); belonging to each principal, in the case of a
3. Finish the business already begun on the commission agent who handles goods of the
death of the principal, should delay entail any same kind and mark, which belong to
danger (Ibid.); different owners (NCC, Art. 1904);
NOTE: The agency shall also remain in full 12. Be responsible in certain cases for the acts of
force even after the death of the principal if it the substitute appointed by him (NCC, Art.
has been constituted in the common interest 1892); (1999 BAR)
of the latter and of the agent, or in the
interest of a third person who has accepted 13. Pay interest on funds he has applied to his
the stipulation in his favor. (NCC, Art. 1930) own use (NCC, Art. 1896);
4. Observe the diligence of a good father of a 14. Inform the principal, where an authorized
family in the custody and preservation of the sale of credit has been made, of such sale
goods forwarded to him by the owner in case (NCC, Art. 1906);
he declines an agency, until an agent is
appointed. (NCC, Art. 1885); 15. Bear the risk of collection and pay the
principal the proceeds of the sale on the
NOTE: The owner shall as soon as same terms agreed upon with the purchaser,
practicable either appoint an agent or take should he receive also on sale, a guarantee
charge of the goods. commission (NCC, Art. 1907); (2004 BAR)
5. Advance the necessary funds should there be 16. Indemnify the principal for damages for his
a stipulation to do so except when the failure to collect the credits of his principal at
principal is insolvent (NCC, Art. 1886); the time that they become due (NCC, Art.
1908);
6. Act in accordance with the instructions of the
principal and in default thereof, do all that a 17. Be responsible for fraud or negligence. (NCC,
good father of a family would do (NCC, Art. Art. 1909; De Leon, 2014)
1887);
NOTE: The court shall judge with more or less
7. Not to carry out the agency if its execution rigor, the fault or negligence of the agent,
would manifestly result in loss or damage to according to whether the agency was or was not
the principal (NCC, Art. 1888); for compensation. (NCC, Art. 1909)
595
Special Contracts - Agency
is ignorant are said to be secret if the principal apparent scope of the authority with which he
intended them not to be made known to such has been clothed, it matters not that it is directly
party. (De Leon, 2014) contrary to the instructions of the principal. The
principal will, nevertheless, be liable unless the
Obligation of a person who declines an third person with whom the agent dealt knew
agency that he was exceeding his authority or violating
his instructions.
A person who declines an agency is still bound to
observe the diligence of a good father of the Third persons dealing with an agent do so at their
family in the custody and preservation of goods peril and are bound to inquire as to the extent of
forwarded to him by the owner. This is based on his authority but they are not required to
equity. (De Leon, 2014) investigate the instructions of the principal.
Effects of Substitution
Within the scope of authority but in the Principal civilly liable so long as the tort is
agent’s name committed by the agent while performing his
duties in furtherance of the principal’s business.
1. Not binding on the principal;
2. Principal has no cause of action against the Agent in good faith but prejudices 3rd parties
3rd parties and vice versa Principal is liable for damages.
597
Special Contracts - Agency
BASIS EXPRESS IMPLIED Q: When is a third person required to inquire
AGENCY AGENCY into the authority of the agent?
Agent has Implied from
been actually the acts of A:
authorized the principal
As to
by the 1. Where authority is not in writing – Every
definition
principal, person dealing with an assumed agent is put
either orally upon an inquiry and must discover upon his
or in writing peril, if he would hold the principal liable, not
Directly Incidental to only the fact of the agency but the nature and
conferred by the extent of the authority of the agent. (Safic
words transaction Alcan & CIE v. Imperial Vegetable Oil Co., Inc.,
or reasonably G.R. No. 126751, March 28, 2001) If he does
necessary to not make an inquiry, he is chargeable with
accomplish knowledge of the agent’s authority, and his
the purpose ignorance of that authority will not be an
of the agency, excuse.
and
As to therefore, the 2. Where authority is in writing – 3rd person is
authority principal is not required to inquire further than the
deemed to terms of the written power of attorney.
have actually
intended the NOTE: A third person with whom the agent
agent to wishes to contract on behalf of the principal may
possess the require the presentation of the power of attorney
necessary or the instructions as regards the agency. (NCC,
authority to Art. 1902)
act on his
behalf Q: When may the actual or apparent authority
of the agent bind the principal?
Third party’s liabilities toward agent
A: The principal is bound by the acts of the agent
GR: A third party’s liability on agent’s contracts is on his behalf, whether or not the third person
to the principal, not to the agent. dealing with the agent believes that the agent has
actual authority, so long as the agent has actual
XPNs: A third party subjects himself to liability at authority, express or implied.
the hands of the agent where the:
Doctrine of Apparent Authority
1. Agent contracts in his own name for an
undisclosed principal; The doctrine provides that even if no actual
2. Agent possesses a beneficial interest in the authority has been conferred on an agent, his or
subject matter of the agency; her acts, as long as they are within his or her
3. Agent pays money of his principal to a third apparent scope of authority, bind the principal.
party by mistake under a contract which (Calubad v. Ricarcen Development Corporation,
proves subsequently to be illegal, the agent G.R. No. 202364, August 30, 2017, as penned by J.
being ignorant of the illegality; and Leonen)
4. Third party commits a tort against the agent.
The existence of apparent authority may be
Scope of the agent’s authority as to third ascertained through:
persons
1. The general manner in which the principal
It includes not only the actual authorization holds out an agent as having the power to act,
conferred upon the agent by his principal but also with which it clothes him; or
that which is apparent or impliedly delegated to
him. (De Leon, 2014) 2. The acquiescence of the principal in the
agent’s acts of a particular nature, with actual
To prove her authority to execute the three Q: Performance Forex Corp. is a corporation
mortgage contracts on Ricarcen’s behalf, operating as a financial broker/agent
Marilyn presented Calubad with a Board between market participants in foreign
599
Special Contracts - Agency
exchange transactions. Cancio and such representation; and
Pampolina accepted the invitation of 3. Relying upon such representation, such third
Performance Forex Corp.’s agent, Hipol, to person has changed his position to his
open a joint account with Performance Forex detriment. (Country Bankers Insurance Corp.
Corp. Hipol was authorized by Performance v. Keppel Cebu Shipyard, et al., G.R. No.
Forex Corp. to follow and execute the trade 166044, June 18, 2012)
orders of Cancio and Pampolina.
Rules regarding estoppel in agency
However, it was later found out that Hipol
did not execute the orders of Cancio and 1. Estoppel of agent – One professing to act as
Pampolina and instead made unauthorized agent for another may be estopped to deny
transactions resulting into the loss of all of his agency both as against his asserted
their money. Hence, Cancio and Pampolina principal and the third persons interested in
filed a complaint for damages against both the transaction in which he engaged.
Performance Forex Corp. and its agent, Hipol
for what happened. Is Performance Forex 2. Estoppel of principal
Corp. solidarily liable to Cancio and
Pampolina for Hipol’s acts? a. As to agent – One who knows that
another is acting as his agent and
A: NO. A principal who gives broad and fails to repudiate his acts, or accepts
unbridled authorization to his or her agent the benefits, will be estopped to deny
cannot later hold third persons who relied on the agency as against the other.
that authorization liable for damages that may
arise from the agent's fraudulent acts. Hipol was b. As to sub-agent – To estop the
not employed with Performance Forex Corp. He principal from denying his liability to
was categorized as an independent broker for a third person, he must have known
commission. Cancio and Pampolina conferred or be charged with knowledge of the
trading authority to Hipol and thus made him fact of the transaction and the terms
their agent. Performance Forex Corp. was not of the agreement between the agent
privy to how Cancio and Pampolina instructed and sub-agent.
Hipol to carry out their orders.
c. As to third persons – One who
Thus, since the acts of Hipol were the direct knows that another is acting as his
cause of the injury, there is no reason to hold agent or permitted another to
Performance Forex Corp. liable for actual and appear as his agent, to the injury of
moral damages. If there was any fault, the fault third persons who have dealt with
remains with Hipol and him alone. (Belina the apparent agent as such in good
Cancio and Jeremy Pampolina v. Performance faith and in the exercise of
Foreign Exchange Corporation, G.R. No. 182307, reasonable prudence, is estopped to
June 6, 2018, as penned by J. Leonen) deny the agency.
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Special Contracts - Agency
It is the compensation of a factor or commission agent is presumed to include all the necessary
agent. and usual means to carry out the agency into
effect.
Ordinary commission
NOTE: Payment is an act of administration when
It is the fee or compensation for the sale of goods it is made in the ordinary course of management.
which are placed in the agent’s possession and at (NCC, Art. 1878; De Leon, 2014)
his disposal.
The making of customary gifts for charity, or
Guarantee commission or del credere those made to employees in the business
commission (2004 BAR) managed by the agent are considered acts of
administration. (NCC, Art. 1878; De Leon, 2014)
It is the additional fee or compensation which is
given in return for the risk that the agent has to Q: P granted to A a special power to mortgage
bear in the collection of credits. the former’s real estate. By virtue of said
power, A secured a loan from C secured by a
Should the commission agent receive on sale, in mortgage on said real estate. Is P personally
addition to the ordinary commission, a guarantee liable for said loan?
commission shall (i) bear the risk of collection
and (ii) pay the principal the proceeds of the sale A: NO. A special power to mortgage property is
on the same terms agreed upon with the limited to such authority to mortgage and does
purchaser. (NCC, Art. 1907) not bind the grantor personally to other
obligations contracted by the grantee in the
The purpose of the guarantee commission is to absence of any ratification or other similar act
compensate the agent for the risks he will have to that would estoppe the grantor from questioning
bear in the collection of the credit due the or disowning such other obligations contracted
principal. (De, Leon, 2014) by the grantee.
603
Special Contracts - Agency
A: B-2 has a better title. This not a case of double from fault. (Ibid.);
sale since the first sale was void. The law 4. Indemnify the agent for all damages which
provides that when a sale of a piece of land or any the execution of the agency may have caused
interest therein is through an agent, the authority the latter without fault or negligence on his
of the latter shall be in writing; otherwise, the part. (NCC, Art. 1913); and
sale shall be void. (NCC, Art. 1874) 5. Pay the agent the compensation agreed upon,
or if no compensation was specified, the
The property was sold by Y to B1 without any reasonable value of the agent’s services.
written authority from the owner X. Hence, the (NCC, Arts. 1875 and 1306)
sale to B1 was void.
Liability for the expenses incurred by the
AGENCY BY OPERATION OF LAW agent
Instances where an agency is created by GR: Principal is liable for the expenses incurred
operation of law by the agents.
RIGHTS AND OBLIGATIONS OF THE XPN: Where the agent exceeded his authority.
PRINCIPAL (2004 BAR)
XPN to the XPN: When the principal ratifies it
Specific obligations of the principal to the expressly or tacitly. (NCC, Art. 1910)
agent
NOTE: Based on the principle of estoppel, the
1. Comply with all obligations which the agent principal becomes solidarily liable with the agent
may have contracted within the scope of his if the former allowed the latter to act as though
authority [NCC, Art. 1910(1)] and in the name he had full powers even if the agent has exceeded
of the principal; his authority. (NCC, Art. 1911)
2. Advance to the agent, should the latter so
request, the sums necessary for the execution Liability for tort committed by the agent
of the agency. (NCC, Art. 1912);
3. Reimburse the agent for all advances made GR: Where the fault or crime committed by the
by him, even if the business or undertaking agent is not in the performance of an obligation of
was not successful, provided the agent is free the principal, the latter is not bound by the illicit
A: While as a general rule the principal is not GR: Ratification operates upon an unauthorized
liable for the contract entered into by his agent in act to have retroactive effect.
case the agent acted in his own name without
disclosing his principal, such rule does not apply XPNs:
if the contract involves a thing belonging to the
principal. In such case, the principal is liable 1. Where to do so would defeat the rights of
under Article 1883 of the Civil Code. The contract third parties which have accrued between
is deemed made on his behalf. (Sy-Juco v. Sy-Juco, the time of the making of the unauthorized
G.R. No. L-13471, January 12, 1920) contract and the time of the ratification;
2. Where to do so would render wrongful an
Ratification otherwise rightful act or omission;
3. Where to do so would allow the
In agency, ratification is the adoption or circumvention of a rule of law formulated in
confirmation by one person of an act performed the interest of public policy; and
on his behalf by another without authority. The 4. If the third party has withdrawn from the
substance of ratification is the confirmation after contract.
the act, amounting to a substitute for a prior
authority. (Prieto v. Court of Appeals, G.R. No. MODES OF EXTINGUISHMENT
158597, June 18, 2012; see also NCC, Art, 1393)
1. By its revocation;
Conditions for Ratification 2. By the withdrawal of the agent;
3. By the death, civil interdiction, insanity or
1. The principal must have the capacity and insolvency of the principal or of the agent;
power to ratify; 4. By the dissolution of the firm or corporation
2. He must have had knowledge or had reason which entrusted or accepted the agency;
to know of material or essential facts about 5. By the accomplishment of the object or
the transaction; purpose of the agency;
3. He must ratify the acts in its entirety; 6. By the expiration of the period for which the
4. The act must be capable of ratification; and agency was constituted. (NCC, Art. 1919)
5. The act must be done in behalf of the (1997 BAR)
605
Special Contracts - Agency
NOTE: The list is not exclusive. Agency may also is sold, the lawyer was entitled to get 5%
be extinguished by the modes of extinguishment agent's fee plus P1 Million as payment for his
of obligations in general whenever they are unpaid attorney's fees.
applicable, like loss of the thing and novation.
The client, however, subsequently found a
Agency may be terminated: buyer of his own who was willing to buy the
property for a higher amount. Can the client
1. by agreement (Nos. 5 and 6); unilaterally rescind the authority he gave in
favor of his lawyer? Why or why not? (2015
2. by the subsequent acts of the parties which BAR)
may be either:
A: NO, the agency in the case presented is one
a. by the act of both parties or by which is coupled with an interest. As a rule,
mutual consent; or agency is revocable at will except if it was
b. by unilateral act of one of them (Nos. established for the common benefit of the agent
1 and 2); and the principal. In this case, the interest of the
lawyer is not merely limited to his commission
3. by operation of law (Nos. 3 and 4). (De Leon, for the sale of the property but extends to his
2014) right to collect his unpaid professional fees.
Hence, it is not revocable at will. (NCC, Art.1927)
Kinds of revocation
A contract of agency is impliedly revoked
Revocation may either be express or implied. when the principal:
(NCC, Art. 1920) (2014 BAR)
1. Appoints a new agent for the same business
REVOCATION OF AGENCY BY THE PRINCIPAL or transaction provided there is
incompatibility (NCC, Art. 1923);
GR: Agency is revocable at will by the principal. 2. Directly manages the business entrusted to
(NCC, Art. 1920) the agent (NCC, Art. 1924); or
3. After granting general power of attorney to
XPNs: An agency is irrevocable: an agent, grants a special one to another agent
which results in the revocation of the former
1. If a bilateral contract depends upon it. as regards the special matter involved in the
latter. (NCC, Art. 1926)
2. If it is the means of fulfilling an obligation
already contracted.
3. If partner is appointed manager and his NOTE: A special power of attorney is not revoked
removal from the management is by a subsequent general power of attorney given
unjustifiable (NCC, Art 1927); (2010, 2015 to another agent, unless that the latter refers also
BAR) to the act authorized under the special power.
4. If it has been constituted in the common (Tolentino, 1992)
interest of the principal and the agent (NCC,
Art. 1930); or Revocation of agency when the agent is
5. If it has been constituted in the interest of a appointed by two or more principals
third person who has accepted the
stipulation in his favor i.e., stipulation pour When two or more principals have granted a
autrui. (NCC, Art. 1930; Art. 1311) power of attorney for a common transaction, any
one of them may revoke the same without the
XPN to the XPN: When the agent acts to defraud consent of the others. (NCC, Art. 1925)
the principal.
Necessity of notice of revocation
Q: A lawyer was given an authority by means
of a Special Power of Attorney by his client to 1. As to the agent – Express notice is not
sell a parcel of land for the amount of P3 always necessary; sufficient notice if the
Million. Since the client owed the lawyer P1 party to be notified actually knows, or has
Million in attorney's fees in a prior case he reason to know, a fact indicating that his
handled, the client agreed that if the property authority has been terminated or
NOTE: There is implied revocation of the previous A: Under Art. 1818 of the NCC, every partner is an
agency when the principal appoints a new agent agent of the partnership for the purpose of its
for the same business or transaction, provided business and each one may separately execute all
there is incompatibility. But the revocation does acts of administration, unless, under Art. 1801, a
not become effective as between the principal specification of their respective duties has been
and the agent until it is in some way agreed upon, or else it is stipulated that any one
communicated to the latter. of them shall not act without the consent of all the
others. As such, even granting that Zenaida
Effect of the direct management by the exceeded the authority granted by the SPA, being
principal a partner in the constituted partnership between
her and Eduardo, she can still execute acts of
GR: The agency is revoked for there would no administration absent any agreement that one
longer be any basis for the representation cannot act without the consent of all others.
previously conferred. But the principal must act (Mendoza v. Paule, G.R. No. 175885, February 13,
in good faith and not merely to avoid his 2009)
obligation to the agent.
WITHDRAWAL OR RENUNCIATION OF THE
XPN: The only desire of the principal is for him AGENCY BY THE AGENT
and the agent to manage the business together.
When the agent can withdraw from the
Q: Richard sold a large parcel of land in Cebu agency
to Leo for P100 million payable in annual
installments over a period of ten years, but The agent may renounce or withdraw from the
title will remain with Richard until the agency at any time, without the consent of the
purchase price is fully paid. To enable Leo to principal, even in violation of the latter’s
pay the price, Richard gave him a power-of- contractual rights; subject to liability for breach
attorney authorizing him to subdivide the of contract or for tort. (NCC, Art. 1928; De Leon,
land, sell the individual lots, and deliver the 2014)
proceeds to Richard, to be applied to the
purchase price. Five years later, Richard Duties and responsibilities of the
revoked the power of attorney and took over withdrawing agent:
the sale of the subdivision lots himself. Is the
revocation valid or not? Why? (2001 BAR) 1. If the principal should suffer any damage by
reason of the withdrawal by the agent, the
A: The revocation is not valid. The power of latter must indemnify the principal therefor,
attorney given to the buyer is irrevocable because unless the agent should base his withdrawal
it is coupled with an interest – the agency is the upon the impossibility of continuing the
means of fulfilling the obligation of the buyer to performance of the agency without grave
pay the price of the land. (NCC, Art. 1927) In other detriment to himself. (NCC, Art. 1928)
words, a bilateral contract (contract to buy and
607
Special Contracts - Agency
2. The agent must continue to act until the cause which extinguishes the agency.
principal has had reasonable opportunity to (Hererra v. Luy Kim Guan, G.R. No. L-17043,
take the necessary steps to meet the January 31, 1961)
situation, even if he should withdraw from
the agency. (NCC, Art. 1929) 4. The agent is bound by his acceptance to carry
out the agency and is liable for the damages
Kinds of withdrawal by the agent which, through his non-performance, the
principal may suffer. He must also finish the
1. Without just cause – The law imposes upon business already began on the death of the
the agent the duty to give due notice to the principal, should delay entail any danger.
principal and to indemnify the principal (NCC, Art. 1884)
should the latter suffer damage by reason of
such withdrawal. (NCC, Art. 1928) Duty of Agent’s Heirs Upon the Death of Agent
2. With just cause – If the agent withdraws from If the agent dies, his heirs must notify the
the agency for a valid reason (NCC, Art. 1929) principal thereof, and in the meantime adopt
as when the withdrawal is based on the such measures as the circumstances may demand
impossibility of continuing with the agency in the interest of the latter. (NCC, Art. 1932)
without grave detriment to himself (NCC,
Art. 1928) or is due to a fortuitous event Heirs continuing the contract of agency
(NCC, Art. 1174), the agent cannot be held
liable. (De Leon, 2014) GR: Heirs cannot continue the contract of agency.
The rights and obligations of the agent arising
Effect of Death of Principal to the contract of from the contract are not transmissible to his
agency heirs.
GR: The agency is terminated by the death of the Ratio: The agency calls for personal services on
principal even if the agency is for a definite the part of the agent since it is founded on a
period. (Lopez v. Court of Appeals, G.R. No. 163959, fiduciary relationship.
August 1, 2018; NCC, Art. 1919)
XPNs:
XPN:
1. Agency by operation of law, or a presumed or
1. If it has been constituted in common interest tacit agency; and
of the principal and the agent. 2. Agency is coupled with an interest in the
2. If it has been constituted in the interest of a subject matter of the agency (e.g. power of
third person who accepted the stipulation in sale in a mortgage).
his favor. (NCC, Arts. 1911 and 1930).
3. Anything done by the agent, without the Q: Is the sale of the land by the agent after the
knowledge of the death of the principal or on death of the principal valid?
any other cause which extinguishes the
agency is valid and shall be fully effective A: Article 1931 provides that an act done by the
with respect to third persons who may have agent after the death of the principal is valid and
contracted with him in good faith. (NCC, Art. effective if these two requisites concur:
1931)
1. That the agent acted without the
NOTE: The death of the principal knowledge of the death of the principal;
extinguishes the agency; but in the same and
way that revocation of the agency does not 2. That the third person who contracted with
prejudice third persons who have dealt the agent himself acted in good faith.
with the agent in good faith without notice
of the revocation (NCC, Arts. 1921 & 1922) Good faith here means that the third person was
such third persons are protected where it is not aware of the death of the principal at the time
not shown that the agent had knowledge of that he contracted with said agent. (Rallos v. Felix
the termination of the agency because of Go Chan, G.R. No. L-24332, January 31, 1978)
the death of the principal or of any other
War
XPNs:
XPNs:
609
Special Contracts - Lease
2. Object of subject matter; and
LEASE
3. Rent. (Rabuya, 2017)
GENERAL PRINCIPLES
Kinds of Lease according to subject matter
Lease
1. Lease of things – whether real or personal,
involving an obligation on the part of the
The contract of lease may be of things, or of
lessor to deliver the thing, which is the
work and service. A lease of a thing is a contract
object thereof, and the correlative right of
where one of the parties binds himself to give to
the lessee to the peaceful and adequate
another the enjoyment or use of a thing for a
enjoyment thereof for a price certain (NCC,
certain price and for a period which may be
Art. 1654); or
definite or indefinite, but not longer than 99
years. (NCC, Art. 1643; 1997 BAR)
2. Lease of work – which refers to a contract
for a piece of work, involving an obligation
It is a consensual, bilateral, onerous and
on the part of the contractor (lessor) to
commutative contract by which the owner
execute a piece of work for the employer
temporarily grants the use of his property or the
(lessee) in consideration of a certain price or
rendering of some service to another who
compensation. (NCC, Art. 1713)
undertakes to pay some rent, compensation or
price. (Rabuya, 2017)
NOTE: Duties of a contractor who furnishes
work and materials:
NOTE: The lessor’s right of use is impaired,
therein. He may even be ejected by the lessee if
To deliver;
the lessor uses the leased realty. Therefore, lease
To transfer ownership and warrant
is a burden on the land; it is an encumbrance on
title; and
the land. (Roxas v. Court of Appeals, G.R. No.
To warrant against eviction and hidden
92245, June 26, 1991)
defects.
Essential Elements of Lease
3. Lease of service – involving an obligation
on the part of the housekeeper, laborer or
1. Consent
employee, or common carrier to do or
perform a service for the head of a family, or
a. On part of owner – nobody can force an
master, employer, or passenger or shipper
owner to lease out his property if he is
of goods, respectively, in consideration of
not willing.
compensation.
b. On part of lessee
NOTE: Since lease is consensual and is not
GR: No person can be compelled to become
imposed by law, only the lessor has the right
a lessee against his will.
to fix the rents, to which the lessee may or
may not agree. However, the increasing of
XPN: In the case of industrial accession
the rent is not an absolute right on the part
where both the landowner, and the builder,
of the lessor.
planter and sower acted in good faith, the
builder or planter can be compelled to pay
Characteristics or Requisites for Lease of
reasonable rent if they cannot be obliged by
Things
the landowner to buy the land because its
value is considerably more than that of the
1. Consensual;
building or trees. In case of the sower, he
2. Principal;
can also be compelled by the landowner to
3. Nominate;
pay the proper rent. Here, the parties shall
4. Purpose is to allow enjoyment or use of a
agree upon the terms of the lease and in
thing;
case of disagreement, the court shall fix the
NOTE: The person to enjoy is the lessee
terms thereof. (NCC, Art. 448)
while the person allowing the enjoyment by
another is the lessor.
NOTE: Not perpetual; hence, the longest XPN: If the lease of real property is made for
period is 99 years. more than one year, it must be in writing, in
compliance with the Statute of Frauds. [NCC, Art.
8. Period is either definite or indefinite: 1403 (2)(e)]
611
Special Contracts - Lease
A lease of real property Real contract, as it is
becomes a real right perfected only upon
and thereby binds third Consensual contract.
delivery of the object
persons when the lease thereof.
is registered in the
Both contracts consist in the transmission of the
Registry of property.
enjoyment or use of a thing to another.
However, even if not
registered, a lease is a
real right if the term is Lease of Work vs. Lease of Service
for more than one year.
The creator of the right LEASE OF WORK LEASE OF SERVICE
The lessor may or may It is the performance of
must be the owner or The object is the
not be the owner. some service or an
one duly authorized by execution of a piece of
him. employer by a
work for an employer
The lessor has the househelper or laborer
The owner has the by an independent
active obligation to or for a passenger or
passive duty to allow contractor.
maintain the lessee in owner of goods by
the usufructuary to common carrier.
the enjoyment or use of
enjoy or use the same. In both kinds of lease, the employer or
the property.
The usufructuary pays passenger or owner of goods binds himself to
The lessee generally pay some remuneration or compensation in
the annual charges and
pays no taxes. favor of the independent contractor, employee,
taxes on the fruits.
The usufructuary is or common carrier, and the relation of principal
The lessee generally obliged to make the and agent does not exist between the parties.
has no obligation to ordinary repairs
pay for repairs. needed by the thing Lease of Services vs. Contract for a Piece of
given in usufruct. Work
The lessee cannot The usufructuary may
constitute a usufruct on lease the thing in LEASE OF SERVICES CONTRACT FOR A
the property. usufruct to another. (Locatio Operatum PIECE OF WORK
May be created by law, Operarum) (Locatio Operas
As a rule, may be Operis)
contract, last will and
created only by
testament or
contract. The object of the
prescription. The object of the
contract is the work
Generally covers As a rule covers all contract is the labor or
done (the result of the
particular uses limited possible uses of the service itself
labor) without
by the contract. property. performed by the
considering the labor
lessor.
that produced it.
Lease vs. Commodatum The result is generally The result is generally
not important, hence important; the price is
LEASE COMMODATUM the laborer is entitled not payable until the
Onerous contract, to be paid even if there work is completed, and
although the rent is destruction of the said price cannot be
Essentially gratuitous. work through lawfully demanded if
may subsequently be
condoned or fortuitous event or the the work is destroyed
remitted. result intended not before it is finished and
attained. accepted.
Not essentially Purely personal in There is a price certain (compensation).
personal in character, and The relation of principal and agent does not exist
character and, consequently, the death of between the lessor and lessee.
therefore, the right either the bailor or the
may be transmitted bailee extinguishes the
to the heirs. contract. Lease of Services or Work vs. Agency
613
Special Contracts - Lease
If there has been a judicial separation purpose of investment upon the mutual
under Art. 135 of the Family Code. agreement of the parties. (Sec. 4, R.A. No.
(NCC, Art. 1490); 7652)
615
Special Contracts - Lease
1. The lease is not binding on innocent third did not do away with P.D. No. 713, but under ILA
persons such as a purchaser. (Salonga, et al. the consent of DTI is required, while in P.D. No.
v. Acuña, CA, 54 O.G. 2943) 713 no consent is required.
3. When a third person already knows of the 1. Lease is recorded in Registry of Property;
existence and duration of the lease, he is 2. There is a stipulation in the contract of sale
bound by such lease even if it has not been that the purchaser shall respect the lease;
recorded. The reason is simple: actual 3. Purchaser knows the existence of the lease;
knowledge is, for this purpose, equivalent to 4. Sale is fictitious; or
registration. (Soriano v. CA, et al, G.R. No. 5. Sale is made with a right of repurchase.
78975, September 7, 1989)
Term of lease contract
NOTE: But if the sale is fictitious and was
only resorted to for the purpose of GR: The law does not allow perpetual lease.
extinguishing the lease, the supposed There must be a period which may either be
vendee cannot terminate the lease. The sale definite or indefinite.
is presumed fictitious if at that time the
supposed vendee demands the termination When no period is fixed:
of the lease, the sale is not recorded in the
Registry of Property. [NCC, Art. 1676(3)] 1. In case of lease of rural lands – it is
understood to have been made for all the
4. If the stranger knows of the existence of the time necessary for the gathering of the fruits
lease, but has been led to believe that the which the whole estate leased may yield in
lease would expire very soon, or before the one year, or which it may yield once,
new lease in favor of him begins (when in although two or more years may have to
fact this was not true), the stranger can still elapse for the purpose (NCC, Art. 1682);
be considered innocent. (Quimson v. Suarez, 2. In case of lease of urban lands - from year to
G.R. No. L-21381, April 5, 1924) year if rent agreed upon is annual; week to
week if weekly; or day to day if daily.
Rules on lease of things when lessee is an However, the court may fix a longer term, if
alien the lessee has occupied the premises for a
long period of time. (NCC, Art. 1687); or
1. Personal property – 99-year limit applies; 3. A lease of things during the lifetime of one of
2. Aliens cannot lease public lands, and cannot the parties is valid, which is considered one
acquire private lands except through for life, ending upon the death of the party
succession; who could have terminated the contract.
3. If lease of real property (private lands), (Rabuya, 2017)
maximum of 25 years renewable for another 4. If based on the agreement of the parties, the
25 years (P.D. No. 713); and term of the lease is made to depend upon
4. Under the Investor’s Lease Act of 1995 (ILA), the will of one of the contracting parties
the 25-year period was extended to 50 years (e.g., as the lessee shall deem fit), the term
provided the following conditions are met: shall be fixed by the courts. (Eleizegui v.
Lawn Tennis Club, G.R. No. 967, May 19,
a. Lessee must make investments; 1903)
b. Lease is approved by DTI; and
c. If terms are violated, DTI can terminate ASSIGNMENT OF LEASE
it. (1990, 1994, 2005 BAR)
NOTE: The Investor’s Lease Act of 1995 (ILA) Assignment of lease by lessee
Objective: To protect the lessor or owner of the The lessee is still responsible for the
leased property. An assignment of lease without performance of his obligations toward the
the consent of the lessor is a ground for lessor.
rescission of the lease.
A judgment of eviction against the lessee affects
SUBLEASE the sublessee even if the latter is not sued in the
ejectment case.
It is a separate and distinct contract of lease
wherein the original lessee becomes a sublessor Reason: The sublessee (lessee) can invoke no
to a sublessee of the thing, in whole or in part, right superior to that of the sublessor from
without prejudice to his responsibility for the which his own right is derived, and from the
performance of the contract toward the lessor. moment the sublessor is duly ousted from the
(NCC, Art. 1650) premises, the sublessee has no leg to stand on.
The lessee may sublet the thing leased, in whole Parties to a Sublease
or in part, unless expressly prohibited in the
contract of lease. (NCC, Art. 1650) 1. Lessor;
2. Sublessor (original lessee in the contract of
Nature of Sublease lease); and
3. Sublessee
It is a separate and distinct contract of lease
wherein the original lessee becomes a sublessor Juridical relationships in a sublease
to a sublessee. The reason why assignment is arrangement
generally prohibited while subleasing is
generally allowed is because the assignment of 1. Principal lease; and
the lease contract is a novation where the 2. Sublease
personality of the lessee disappears. In sublease,
on the other hand, the lessee remains to be a These relationships co-exist and are intimately
party to the lease contract and he remains liable related to each other but are distinct from one
to the lessor. (Rabuya, 2017) another. (Albano, 2013)
Right of Lessee to Sublease (1990, 1999, Q: Alfonso was the owner of a building being
2005 BAR) leased to Beatriz. The contract allowed
subleasing of the building, thus, Beatriz
Unlike in assignment, a lessee may generally subleased it to Charlie. Charlie directly paid
sublease the property in the absence of express his rent to Alfonso after the lease expired.
617
Special Contracts - Lease
Was Charlie correct? between the lessor and the lessee or with the
nature of the property. It is not necessary that
A: NO. There are two (2) distinct leases the sublessor be joined as a defendant. (NCC, Art.
involved, the principal lease and the sublease. In 1651)
such agreement, the personality of the lessee
does not pass on to or is acquired by the This is true, notwithstanding the fact that the
sublessee. Thus, the payment to the lessor was sublessee is not a party to the lease contract.
not payment to the sublessor. Alfonso was a (Paras, 2008)
stranger to the sublease agreement. (Blas v. CA,
G.R. No. 82813, December 14, 1989) Subsidiary liability of sublessee to lessor
(1999 BAR)
Sublease v. Assignment (1990, 1994, 2005
BAR) 1. Remedy to collect rents from the sublessee
SUBLEASE ASSIGNMENT The law grants the lessor the right to demand
The lessee makes an payment from the sublessee the rents which
The lessee retains an absolute transfer of his the sublessor failed to pay the lessor. The
interest in the lease; he interest as lessee; thus, demand to pay rents made by the lessor on the
remains a party to the he dissociates himself sublessee does not exempt the latter from his
contract. from the original obligation to pay the sublessor the rents which
contract of lease. said sublessee failed to pay the lessor.
The sublessee does not The assignee has a
have any direct action direct action against Purpose: To prevent a situation where the
against the lessor. the lessor. lessee collects rents from the sublessee but
Can be done even does not pay his rents to the lessor.
without the permission
Cannot be done unless 2. Amount of rent recoverable
of the lessor unless
the lessor consents.
there be an express
prohibition. The liability of the sublessee is limited to the
amount of rent due from him to the sublessor
Liability of Sublessee towards Lessor (1999, under the terms of the sublease at the time of
2000 BAR) the extrajudicial demand by the lessor. Future
rents cannot be recovered. He is liable to the
Although the sublessee is not a party to the lessor only for rents the lessee failed to pay
contract of lease, the sublessee is still directly the lessor.
liable to the lessor for acts appertaining to the
use and preservation of the property. This is of NOTE: The liability of the sublessee is
course in addition to the sublessee’s obligation subsidiary.
to the sublessor. (Paras, 2008)
3. Liability for rents paid in advance
Note also that the subsidiary liability of the
sublessee for rent due to the original lessor is The sublessee continues to be subsidiarily
decreed under Art. 1652 of NCC, but only to the liable to the lessor for any rent unpaid by the
extent of the rent still due from him in lessee, although the sublessee may have made
accordance with the terms of the sublease. advance rent payments to the lessee. The rule
Payments of rent in advance by the sublessee is to avoid collusion between the lessee and
shall be deemed not to have been made, so far as the sublessee.
the lessor’s claim is concerned, unless said
payments were effected in virtue of the customs Warranty of the lessor
of the place.
1. That he has a right to lease the thing;
Direct Action by the Lessor (Accion Directa) 2. That the lessee shall enjoy the legal and
peaceful possession of the thing;
The lessor may bring an action directly against 3. That the thing is fit for the use for which it is
the sublessee if he does not use and preserve the intended; and
thing leased in accordance with the agreement
619
Special Contracts - Lease
a. Peaceful and adequate enjoyment refers deprived).
to legal, not physical possession. Hence,
a lessor is not, for instance, liable for NOTE: In either case, rescission may be
physical disturbances in the availed of if the main purpose of the lease is
neighborhood, but is liable if the lessee to provide a dwelling place and the property
is evicted due to non-payment of taxes becomes uninhabitable.
by the lessor. (Paras, 2008)
Effects if the lessor fails to make urgent
b. The lessor’s obligation to maintain the repairs
lessee arises when acts termed “legal
trespass” disturb, dispute, or place The lessee may:
difficulties in the lessee’s peaceful and
adequate enjoyment of the leased 1. Order repairs at the lessor’s cost;
premises that in some manner or other 2. Sue for damages;
cast doubt upon the right of the lessor to 3. Suspend the payment of the rent; or
execute the lease. The lessor must 4. Ask for rescission, in case of substantial
answer for such legal trespass. (Nakpil v. damage to him.
Manila Towers Development
Corporation, G.R. No. 160867, September If the contract of lease is silent as to who will
20, 2006) pay for repair expenses
c. There is mere act of trespass when a Major repairs – Shouldered by the lessor; and
third person claims no right Minor repairs – Shouldered by the lessee.
whatsoever. In trespass in law, the third
person claims a legal right to enjoy the Remedy of the lessee if the lessor fails to
premises. (Rabuya, 2017) make major or necessary repairs
Lease is not extinguished. The lessee is given the NOTE: The use of the thing for an illegal purpose
option to choose between a proportionate entitles the lessor to terminate the contract.
reduction of the rent and rescission of the lease.
Once the choice of the lessee has been 3. Payment of expenses for deed of lease
communicated to the lessor, the former cannot
change it. (NCC, Art. 1201) In lease, the law imposes upon the lessee the
obligation to pay the expenses for the deed of
If reduction of rent is chosen, the same shall be lease. By agreement, the obligation may be
retroactive to the date when the partial assumed by the lessor.
destruction occurred. In case of rescission, the
general rule is that it will not be granted for Other Obligations of the Lessee
slight or trivial causes. The partial destruction,
under the circumstances, should be important or 1. To tolerate the urgent repairs upon the
substantial as to defeat the purpose of the lessee thing leased even if annoying to him, and
in entering into the contract of lease. although during the same, he may be
deprived of a part of the premises [NCC, Art.
NOTE: The choice is on the LESSEE, and not on 1662(1)];
the lessor.
2. To notify the lessor of every usurpation by a
When lessee may suspend payment of rent third person or persons on the property and
of the urgent repairs needed (NCC, Art.
1. When lessor fails to undertake necessary 1663); and
repairs; and
2. When lessor fails to maintain the lessee in NOTE: If the lessee fails to comply, he would be
peaceful and adequate enjoyment of the liable for damages which the lessor would suffer
property leased. and which could have been avoided by lessee’s
diligence.
Effectivity of the suspension
3. To return the property leased upon
1. In the case of repairs, from the time he made termination of the lease in the same
the demand for said repairs, and the condition as he received it, save what has
demand went unheeded; or been lost or impaired by:
2. In the case of eviction, from the time the final
judgment for eviction becomes effective. a. Lapse of time
b. Ordinary wear and tear; or
OBLIGATIONS OF THE LESSEE c. Inevitable cause/fortuitous event.
(NCC, Art. 1665)
Principal Obligations of the Lessee (NCC, Art.
1657) Responsibility for deterioration or loss of the
thing leased
1. Payment of agreed price of lease
GR: The presumption is that the lessee is
The obligation of the lessee to pay the rent responsible for the deterioration or loss of the
agreed upon arises only when the thing leased thing leased unless he proves that it took place
has been delivered to the lessee for the purposes without his fault. Such liability also extends to
stipulated in the contract. deterioration caused by the members of his
household and by guests and visitors.
2. Proper use of the thing leased
XPN: When destruction is due to earthquake,
The lessee must exercise the diligence of a good flood, storm or other natural calamity. (Rabuya,
father of a family in the use of the thing leased. 2017)
621
Special Contracts - Lease
Q: Jude owned a building which he had leased Q: Under a written contract dated December
out to several tenants. Without informing his 1, 1989, Victor leased out his land to Joel for
tenants, Jude sold the building to Ildefonso. a period of five (5) years at a monthly rental
Thereafter, the latter notified all the tenants of P1,000.00, to be increased to P1,200.00
that he is the new owner of the building. and P1,500.00 on the third and fifth year,
Ildefonso ordered the tenants to vacate the respectively. On January 1, 1991, Joel
premises within thirty (30) days from notice subleased the land to Conrad for a period of 2
because he had other plans for the building. years at a monthly rental of P1,500.00. On
The tenants refused to vacate, insisting that December 31, 1992, Joel assigned the lease to
they will only do so when the term of their his compadre, Ernie, who acted on the belief
lease shall have expired. Is Ildefonso bound that Joel was the rightful owner and
to respect the lease contracts between Jude possessor of the said lot. Joel has been
and his tenant? Explain your answer. (2009 faithfully paying the stipulated rentals to
BAR) Victor. When Victor learned on May 15, 1992
about the sublease and assignment, he sued
A: YES. Ildefonso must respect the lease Joel, Conrad and Ernie for rescission of the
contracts between Jude and his tenants. While it contract of lease and for damages.
is true that the said lease contracts were not
registered and annotated on the title to the 1. Will the action prosper? If so, against
property, Ildefonso is still not an innocent whom? Explain.
purchaser for value. He ought to know the
existence of the lease because the building was 2. In case of rescission, discuss the rights and
already occupied by the tenants at the time he obligations of the parties. (2005 BAR)
bought it. Applying the principle of caveat
emptor, he should have checked and known the A:
status of the occupants or their right to occupy
the building before buying it. 1. YES, the action for rescission of the lease will
prosper because Joel cannot assign the lease to
REMEDIES Ernie without the consent of Victor. (NCC, Art.
1649) But Joel may sublet to Conrad because
Accion Directa there is no express prohibition therefor. (NCC,
Art. 1650; Alipio v. CA, G.R. No. 134100,
A direct action which the lessor may bring September 29, 2000)
against a sublessee who misuses the subleased
property or for unpaid rents otherwise due from Victor can rescind the contract of lease with
the original lessee (sublessor). Joel, and the assignment of the lease to Ernie,
on the ground of violation of law and of
Alternative remedies of aggrieved party contract. The sub-lease to Conrad remained
valid for 2 years from January 1, 1991, and had
1. Rescission of the contract with damages not yet lapsed when the action was filed on
May 15, 1992.
Failure of lessor to place the lessee in
possession of the premises leased is a case 2. In case of rescission, the rights and obligations
of lessor’s non-compliance with his of the parties should be as follows: At the time
obligation. (1999, 2001 BAR) that Victor filed suit on May 15, 1992, the
assignment had not yet lapsed. It would lapse
Restrictions to Rescission on December 1, 1994, the very same date that
the 5-year basic lease would expire. Since the
a. Requires judicial action; assignment is void, Victor can get the property
b. Can be brought only by the aggrieved back because of the violation of the lease. Both
party; and Joel and Ernie have to surrender possession
c. Must be substantial, not slight or minor and are liable for damages. But Conrad has not
breach. yet incurred any liability on the sublease
which still subsisted at the time of the filing of
2. Action for damages only, allowing the lease the action on May 15, 1992.
to remain subsisting.
Q: A is the owner of a lot on which he NOTE: On the part of the lessor, instead of
constructed a building in the total cost of rescinding the contract, he may directly file an
P10, 000,000. Of that amount, B contributed action for ejectment against the lessee.
P5,000,000 provided that the building as a
whole would be leased to him (B) for a If the aggrieved party has chosen the option of
period of ten years from January 1, 1985 to rescission under Art. 1659 of NCC, the court has
December 31, 19954 at a rental of P100,000 no discretion to grant the fixing of a period in an
a year. To such condition, A agreed. On ordinary obligation under Art. 1191 of NCC.
December 20, 1990, the building was totally
burned. Soon thereafter, A’s workers cleared Q: What are the damages recoverable in
the debris and started construction of a new ejectment cases?
building. B then served notice upon A that he
would occupy the building being constructed A: Only the rents or the fair rental value of the
upon completion, for the unexpired portion premises.
of the lease term, explaining that he had
spent partly for the construction of the The following cannot be successfully claimed:
building that was burned. A rejected B’s
demand. Did A do right in rejecting B’s 1. Profits plaintiff could have earned were it
demand? (1993 BAR) not for the forcible entry or unlawful
detainer;
A: YES. A was correct in rejecting the demand of 2. Material injury to the premises; and
B. As a result of the total destruction of the 3. Actual, moral, or exemplary damages. (Baens
building by fortuitous event, the lease was v. CA, G.R. No. L-57091, November 23, 1983)
extinguished. (NCC, Art. 1655)
When lessee may immediately terminate the
Grounds for judicial ejectment under the lease (NCC, Art. 1660)
Rental Reform Act of 2002
By notice to the lessor in case the dwelling place
1. Assignment of lease or subleasing of or building is unfit for human habitation and is
residential units in whole or in part, dangerous to life or health.
including the acceptance of boarders or
bedspacers, without the written consent of Even if at the time the contract was perfected,
the lessor; or the lessee KNEW of the dangerous condition or
WAIVED the right to rescind.
2. Rental payment in arrears for 3 months;
Provided, that in case of refusal by the lessor Reason: Public safety cannot be stipulated
to accept the payment of the rent, the lessee against.
may deposit the amount in court or with the
city or municipal treasurer, as the case may Two Kinds of trespass with Respect to the
be, or in the bank in the name of and with Property Leased
notice to the lessor, within one month after
the refusal of the lessor to accept payment. 1. Mere act of trespass (disturbance in fact)
Q: Jane leased a truck to Ed for two (2) years. The physical enjoyment is reduced and may take
After one (1) year from delivery, the truck place in a case of forcible entry. The third person
was destroyed by a strong typhoon. What is claims no right whatever. (Paras, 2008)
the effect of the destruction of the truck with
respect to the lease? NOTE: If the leased premises are expropriated
and the tenant is evicted from the premises, the
623
Special Contracts - Lease
lessor is not liable for damages. The lessee must DAY FIXED, without need of a demand (NCC,
look to the expropriator for his compensation. Art. 1669); or
(Sayo v. Manila Railroad Co., G.R. No. 17357, June
21, 1922) 2. If the understanding between the parties as
to the term of the lease was vague and
2. Trespass in law (disturbance in law) uncertain, it cannot be said that a definite
period was agreed upon; hence the proper
A third person claims a LEGAL right to enjoy the Article to apply would be Art. 1687 of NCC.
premises. The lessor is responsible for trespass (Guitarte v. Sabaco, et al., G.R. No. L-13688-
in law. (Paras, 2008) 91, March 28, 1960)
Lessee is presumed at fault in case of loss or NOTE: Under Article 1687 of NCC, if the period
deterioration of the property for the lease has not been fixed, it is understood
to be from year to year, if the rent agreed upon is
This presumption is rebuttable. The burden of annual; from month to month, if it is monthly;
proof is on the LESSEE to show that the loss or from week to week, if the rent is weekly; and
deterioration is not due to his own fault, such as from day to day, if the rent is to be paid daily.
when the deterioration resulted from lapse of
time, ordinary wear and tear, or from inevitable Q: May the courts fix a different period for
cause. (NCC, Art. 1665) the lease?
Non-applicability of presumption when the loss A: YES. Even though a monthly rent is paid, and
or destruction is due to: no period for the lease has been set, the courts
may fix a longer term for the lease after the
1. Earthquake; lessee has occupied the premises for over one
2. Flood; year. If the rent is weekly, the courts may
3. Storm; and likewise determine a longer period after the
4. Other natural calamities. lessee has been in possession for over six
months. In case of daily rent, the courts may also
Reason: It is unjust to impose upon the lessee fix a longer period after the lessee has stayed in
the burden of proving due diligence. It is more the place for over one month. (NCC, Art. 1687)
probable that in such cases, he was not
negligent. When demand is necessary as a procedural
requirement
NOTE: Ordinarily, fire is NOT a natural calamity.
But if the tenant can prove that he had no fault in For purposes of an action for unlawful detainer
the case of fire, and that it was impossible for on the ground of the lessee’s failure to pay rents
him to stop its spread, he will not be liable. or violation of the terms of the lease, Rule 70
(Lizares v. Hernaez and Alunan, G.R. No. 14977, (Rules of Court) requires that demand be made
March 30, 1920) upon the lessee giving him 5 days (in case of
buildings) and 15 days (in case of land), within
Deterioration caused by others which to pay the unpaid rentals and to vacate
the premises.
Although the deterioration was not caused by
the lessee himself, he is still liable under the law The demand to vacate must be definite and must
if the deterioration was made by his household, not provide an alternative.
guests and visitors. (NCC, Art. 1668) His liability
is akin to civil liability in quasi-delict. (NCC, Art. The demand required under Rule 70 is only a
2180) procedural requirement and does not, if not
complied with, change the fact that the lease
DURATION AND TERMINATION OF LEASE contract has ended upon the termination of the
period fixed for its existence. (Paras, 2008)
When lease is supposed to end
When demand to vacate is unnecessary
1. When the lease was made for a
DETERMINATE TIME, the lease ends on the When the action is to terminate the lease,
625
Special Contracts - Lease
facto possession of the thing leased within a no longer consents to the continued occupation
period of time fixed by law. (Rabuya, 2017) by the lessee of the leased property. (Tagbilaran
Integrated Settlers Assoc. v. CA, G.R. No. 148562,
Arises if at the end of the contract, the lessee November 25, 2004)
should continue enjoying the thing leased for at
least 15 DAYS with the acquiescence of the Instances when implied renewal NOT
lessor — unless of course a notice to the applicable
contrary had previously been given by EITHER
PARTY. 1. Stipulation against implied renewal;
2. Invalidity of original lease;
Effects of the implied new lease 3. Acceptance of rentals beyond original term;
4. Acceptance of rentals less than amounts
1. The period of the new lease is not that stipulated; and
stated in the original contract, but the time 5. Non-payment of rentals.
in Arts. 1682 and 1687 of NCC (month to
month, year to year, etc.); and Rule if lessor objects to lessee’s continued
possession
2. Other terms of the original contract are
revived. (Paras, 2008) Note that under Art. 1671 of NCC, there are
three requisites:
Terms which are revived
1. The contract has expired;
The original terms of the original contract which 2. The lessee continues enjoying the thing; and
are revived are only those which are germane to 3. The lessor has objected to this enjoyment.
the lessee’s right of continued enjoyment of the
property leased or related to such possession, If the three requisites are present, the lessee
such as the amount of rental, the date when it shall be considered a possessor in BAD FAITH.
must be paid, the care of the property, and the
responsibility for repairs. If the lessee still makes a construction after he
has become a possessor in bad faith, he may be
NOTE: No such presumption may be indulged in compelled:
with respect to special agreements which by
their nature are foreign to the right of 1. To forfeit the construction without
occupation or enjoyment inherent in a contract indemnity;
of lease. 2. To buy the land regardless of whether or not
its value is considerably more than the value
e.g., preferential right given to the lessee to of the construction; or
purchase the leased property. 3. To demolish the construction at his expense.
Requisites for an implied renewal of lease: NOTE: In any of the 3 cases hereinabove
referred to, he will still be subject to the
1. The term of the original contract of lease payment of damages. (NCC, Arts. 449-451)
must have already expired;
2. The lessee continues enjoying the thing Judicial Grounds for Ejectment of Lessees
leased for at least 15 days; (1994, 2004 BAR) (ENVI)
3. The continuation of the occupation by the
lessee is with the acquiescence of the lessor; 1. Expiration of period of the lease
and
4. The lessor or lessee has not previously given The period of the lease contract may be:
a notice to vacate.
a. Conventional – when the period is by
NOTE: The notice required under Article 1670 is agreement of the parties; or
the one given after the expiration of the lease
period for the purpose of aborting an implied b. Legal – when the period is fixed by law
renewal of lease. The notice to vacate constitutes under Arts. 1682 and 1687 of NCC;
an express act on the part of the lessor that he
627
Special Contracts - Lease
case the higher court is satisfied that the lessee’s to whom the lessee bound himself to pay.
appeal is frivolous or dilatory (i.e., without
merit) or the lessor’s appeal is prima facie Right of lessee if new owner terminates the
meritorious. unrecorded lease
Reason: The remedy is intended “to put an end The lessee may demand that he be allowed to
to the present state of the law which unjustly gather the fruits of the harvest which
allows the lessee to continue in possession corresponds to the current agricultural year and
during an appeal.” (Report of the Code that the vendor indemnify him for damages
Commission) suffered. [NCC, Art. 1676 (2)]
The lessee is entitled to periods agreed upon in 1. If at the time the supposed buyer demands
the lease contract (conventional) or those the termination of the lease, the deed of sale
established in Articles 1682 and 1687 of NCC is not yet registered in the appropriate
(implied new lease). Registry of Property. [NCC, Art. 1676 (3)]
However, these rights are restricted if there are 2. If it is a simulated sale intended merely to
grounds or causes for the ejectment of the lessee extinguish the existing lease. In the eyes of
under Art. 1673 of NCC. To enjoy peace, the the law, it does not exist. (NCC, Art. 1409)
lessee must be faithful to his obligations as such.
Effect: The false “vendee” cannot terminate the
When the lessee is guilty of a cause of ejectment lease even if the same is unrecorded.
under Art. 1673 of NCC, he is also deprived of
the right to enjoy the period of grace under Art. Reason: To discourage the practice which has
1687 of NCC. developed in recent years of fictitiously selling
the premises in order to oust the lessee before
Effect of Sale of Leased Property on the Lease the termination of the lease.
Contract
Rights of the lessee who introduced
1. The purchaser shall respect the lease in the improvements (1990, 1996 BAR)
following situations:
Introduction of valuable improvement on the
a. When the lease is registered with the leased premises does not give the lessee the
proper Register of Deeds; right of retention and reimbursement which
b. When the deed of sale provides for the rightfully belongs to the builder in good faith.
recognition and respect of the lease by the Otherwise, such a situation would allow the
purchaser until termination of the period; lessee to easily “improve” the lessor out of its
c. When the purchaser has actual knowledge property. (Rabuya, 2017)
of the existence of the lease; or
d. The lease cannot also be terminated by The lessor shall pay the lessee one-half of the
the purchaser in a fictitious sale, and by value of the improvements computed at the time
the purchaser in a sale with pacto de retro of the termination of the lease if the following
until the expiration of the period to conditions are fulfilled:
redeem. Only a purchaser in good faith of
the leased property is granted protection 1. That the lessee should have made the
by the law. useful improvements in good faith;
2. The improvements are suitable to the
2. In any other case, the purchaser is not purpose or use for which the lease is
obliged to respect the lease contract. He has intended; and
the option to continue or discontinue the 3. That the form and substance of the thing
lease. leased are not altered or modified. (NCC,
Art. 1678)
The sale of a leased property places the
vendee into the shoes of the original lessor These requisites will prevent the lessee from
Ornamental Expenses
629
Special Contracts – Credit Transactions
CREDIT TRANSACTIONS the present, with a promise to pay or deliver in
the future.
Note: Per the 2020 Bar Syllabus, the rules
governing Articles 2047-2092; 2124-2131; Kinds of credit transactions
and 2140-2141; and Concurrence and
Preference of Credits (Articles 2236-2251) 1. As contracts of security
are now transferred to the 2020 Golden
Notes for Commercial Law. Nonetheless, the a. Contracts of real security – These
succeeding discussions may include some of are contracts supported by
the foregoing topics for educational purposes collateral/s or burdened by an
and future references.
encumbrance on property such as
mortgage and pledge; and
Note: R.A. No. 11057, or the Personal
Property Security Act, took effect on
b. Contracts of personal security –
December 3, 2019 expressly repealing,
These are contracts where
amending and/or modifying the Civil Code
performance by the principal
provisions on mortgage and pledge,
debtor is not supported by
particularly, Articles 2085-2123, 2127, 2140-
collateral/s, but only by a promise
2141, 2241, 2243 and 2246-2247; Sections 1-
to pay or by the personal
16 of the Chattel Mortgage Law (Act No.
undertaking or commitment of
1508); and Sections 114-116 of the Property
another person such as in surety or
Registration Decree (P.D. No. 1529), among
guaranty.
others. Section 68 of said law, however, states
that notwithstanding the entry into force of
2. As to their existence
this Act under Section 67, the implementation
of the Act shall be conditioned upon the
a. Principal contracts – those that can exist
Registry being established and operational
alone. Its existence does not depend on
under Section 26.
the existence of another contract (e.g.
commodatum and mutuum); and
GENERAL PRINCIPLES
b. Accessory contracts – those the
Credit existence of which depend on another
contract. These accessory contracts
It is a person’s ability to borrow money or things depend on the existence of a principal
by virtue of confidence or trust reposed in him contract of loan (e.g. guaranty proper,
by the lender that he will pay what he may suretyship, pledge, mortgage and
promise. (People v. Concepcion, G.R. No. L-19190, antichresis).
November 29, 1922)
3. As to their consideration
Significance of Credit
a. Onerous – a contract where there is
By virtue of the use of credit, more exchanges consideration or burden imposed like
are possible: persons are able to enjoy a thing interest; and
today but pay it for later, and through the
banking system, the transfer of actual money is b. Gratuitous – a contract where there is
eliminated by cancellation of debts and credits. no stipulation to pay any consideration
(De Leon et. al., 2016) or no burden imposed (e.g.
commodatum).
Credit transaction
Security
It refers to an agreement based on trust or belief
of someone on the ability of another person to It is something given, deposited, or serving as a
comply with his obligations. means to ensure the fulfillment or enforcement
of an obligation or of protecting some interest in
It includes all transactions involving the the property.
purchase or loan of goods, service, or money in
631
Special Contracts – Credit Transactions
Commodatum is a loan of use (because there is a XPN: Non-fungible things may be replaced by
transfer of the use of the thing borrowed) while agreement of the parties. In such case, the
mutuum is a loan of consumption (because there contract is barter and not loan.
is a transfer of the ownership of the thing, which
is generally received for consumption). Delivery essential to perfection of loan
1. If he does not appear and judgment is Effect: Guarantor may only recover so much
rendered against the debtor, he cannot set as was beneficial to the debtor. If payment
up defenses which he could have set up had has not benefitted the debtor at all, the
he appeared. Moreover, he cannot question guarantor does not acquire any claim for
the decision anymore; reimbursement.
2. If he appears such as by filing an answer in
intervention, he may lose or may win the The remedy of the guarantor would be to go
case. If he losses, he is still entitled to the against the creditor for the amount paid, if
benefit of excussion; and there is still a legal basis for the claim. If the
3. There is no waiver of his benefit of guarantors suffer, it is due to his own fault.
excussion by his appearance in the case.
2. Payment by third persons who does not
Compromise agreement between the intend to be reimbursed; and
creditor and the principal debtor
Effect: It is deemed a donation and as such
Compromise is a contract whereby the parties, requires the consent of debtor.
by making reciprocal concessions, avoid
litigation or put an end to one already 3. If the guarantor has paid without notifying
commenced. the debtor and the latter not being aware of
the payment, repeats it, the guarantor has
A compromise between the creditor and the no remedy whatever against the debtor, but
principal debtor is valid if the compromise is only against the creditor. (NCC, Art. 2076)
beneficial to the guarantor; otherwise, it is not
binding upon him. (NCC, first sentence, Art. 2063) XPN:
GR: The guarantor who pays for a debtor must The guarantor has the right of subrogation after
be indemnified by the latter. the payment of the debt is made to the creditor.
The guarantor is subrogated to all the rights
The guarantor is entitled to be reimbursed by which the creditor had against the debtor. [NCC,
debtor for: Art. 2067(1)]
1. Total amount of the debt paid; If the guarantor pays without notice to the
2. Legal interest from the time payment was debtor, the debtor may interpose against the
made known to the debtor (even though it guarantor defenses available to the debtor as
did not earn interest for the creditor); against the creditor at the time payment was
3. Expenses incurred after notifying debtor made.
that demand to pay was made upon him;
and Notification of payment made by the
4. Damages in accordance with law, if they are guarantor
633
Special Contracts – Credit Transactions
GR: Guarantor must first notify the debtor the principal debtor intends to abscond; or
before paying, otherwise, if the debtor pays 7. If the principal debtor is in imminent danger
again, the guarantor can only collect from the of becoming insolvent.
creditor and the guarantor will have no cause of
action against the debtor even if the creditor NOTE: In all these cases, the cause of action of the
becomes insolvent. (NCC, Art. 2070) guarantor is either to obtain release from the
guaranty, or to demand a security that shall
XPN: Guarantor may still recover from debtor if protect him from any proceedings by the creditor
the following circumstances concur: and from the danger of insolvency of the debtor.
(NCC, Art. 2071)
1. Guaranty is gratuitous;
2. Guarantor was prevented by fortuitous Purpose of the right of guarantor to proceed
event from notifying the debtor of the against debtor before payment
payment; and
3. Creditor becomes insolvent. The purpose of this right is to enable the
guarantor to take measures for the protection of
Payment of the guarantor before maturity his interest in view of the probability that he
would be called upon to pay the debt. (De Leon,
GR: The guarantor cannot seek reimbursement 2013)
from the debtor until expiration of the period
stipulated. The guarantor must wait. For being NOTE: The guarantor cannot demand
subsidiary in character, the guaranty is not reimbursement or indemnify because he has not
enforceable until the debt has become due. (NCC, paid the obligation. The proper remedy is to
Art. 2069) obtain release from the guaranty or to demand a
security.
NOTE: A guarantor cannot exercise the right of
subrogation until the principal obligation has Remedy of a guarantor of a third person at
been fully extinguished. (Rabuya, 2017) request of another
XPN: If the premature payment was ratified by The remedy of a person who becomes a
the debtor, he can now be compelled to guarantor at the request of another for the debt
reimburse. of a third person who is not present is the option
of suing either the principal debtor or the
Right of the guarantor to proceed against requesting party. (NCC, Art. 2072)
debtor before payment
NOTE: The provision applies when the
GR: Guarantor cannot proceed against the guarantor has actually paid the debt.
principal debtor even before having paid the
creditor. SUB-GUARANTY
635
Special Contracts – Credit Transactions
extinguished, independently of the principal bed capacity hospital in Cainta, Rizal. Million
obligation; or State Development submitted a surety bond
to Doctors of New Millennium issued by
2. Indirect - when the principal obligation People’s Trans-East Asia Insurance
ends, the accessory obligation of guaranty Corporation, now known as People’s General
naturally ends. (Manresa) (Shannon v. Phil. Insurance Corporation. Million State
Lumber & Trans. Co., 61 Phil. 876) Development, however, failed to comply with
its obligation and so Doctors of New
Grounds for extinguishing a contract of Millennium filed a complaint for breach of
guaranty contract with damages with prayer for the
issuance of preliminary attachment against
1. Principal obligation is extinguished; Million State Development and People’s
General Insurance with the Regional Trial
2. Same causes as all other obligations; Court of Pasig City. Can a surety bond which
guarantees initial payment be impliedly
a. Payment or performance; novated by an insertion of a clause in the
b. Loss of the thing due; principal contract waiving the conditions for
c. By condonation or remission of the the initial payment’s release?
debt;
d. By confusion or merger of the rights of A: NO. The obligations of the surety to the
the creditor and debtor; principal under the surety bond are different
e. By compensation; from the obligations of the contractor to the
f. By novation; client under the principal contract. The surety
g. Other causes such as annulment, guarantees the performance of the contractor’s
rescission, fulfillment of a resolutory obligations upon the contractor’s default, its
condition and prescription. client may demand against the surety bond even
if there was no privity of contract between them
3. Release by acceptance of property by the and this is the essence of a surety agreement.
creditor; (People's Trans-East Asia Insurance Corporation,
A.K.A. People's General Insurance Corporation v.
If the creditor accepts payment in form of Doctors of New Millennium Holdings, Inc., G.R. No.
immovable or immovable property, there is 172404, AUGUST 13, 2014, as penned by J.
a novation on the subject matter. Leonen)
NOTE: Eviction revives the principal Q: Enriquez filed a replevin case against
obligation, but not the guaranty, for the Asuten for the recovery of the Toyota Hi-Ace
creditor here took the risk. (Paras, 2008) van valued at P300,000.00. She applied for a
bond in the amount of P600,000.00 with The
4. Release in favor of one of the guarantors, Mercantile Insurance Company, Inc.
without consent of the others, benefits all to (Mercantile Insurance) in Asuten's favor. The
the extent of the share of the guarantor to Regional Trial Court (RTC) approved the
whom it has been granted (NCC, Art. 2078); bond and ordered the sheriff to recover the
van from Asuten and to deliver it to
5. Extension granted to debtor by creditor petitioner. While the van was in petitioner's
without consent of guarantor (NCC, Art. custody, the RTC dismissed the case without
2079); or prejudice for failure to prosecute. Thus, it
ordered the sheriff to restore the van to
6. When the guarantors through some act of Asuten. When petitioner failed to produce
the creditor cannot be subrogated to the the van, the RTC directed Mercantile
rights, mortgages and preferences of the Insurance to pay Asuten the amount of the
latter. bond. Is Enriquez liable for the replevin bond
despite her failure to return the van,
Q: Doctors of New Millennium Holdings, Inc considering that its effectivity has lapsed
entered into a construction and development without any renewal?
agreement with Million State Development
Corporation for the construction of a 200- A: YES. A surety bond remains effective until the
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Special Contracts – Credit Transactions
E.g. A bond to stay execution of an appealed Philtrust Bank (“Philtrust”) would finance
judgment of a lower court is a judicial bond. the cost of materials and supplies to the
extent of P 900,000.00, while the Spouses
Liability of the surety if the creditor was would shoulder the labor cost of P
negligent in collecting the debt 300,000.00. Paragraph 7 or the “whereas
clause” of the said project contract provided,
A surety is still liable even if the creditor was however, that whether or not the Spouses
negligent in collecting from the debtor. The could provide the funds for the labor costs,
contract of suretyship is not about the obligee Dominguez would bind himself to finish the
seeing to it that the principal pays the debt or project within 150 working days.
fulfills the contract, but that the surety will see Furthermore, a clause for liquidated
that the principal pays or performs. (PNB v. damages amounting to P 1,000.00 per day
Manila Surety & Fidelity Co., Inc., G.R. No. L- was stipulated against Dominguez in case of
20567, July 30, 1965) breach.
Violation by the creditor of the terms of the On 24 May 1979, Dominguez secured a
surety agreement performance bond from FGU Insurance
Corporation (“FGU”) wherein they both
A violation by the creditor of the terms of the agreed to jointly and severally pay Floro
surety entitles the surety to be released Roxas (“Floro”) and Philtrust the amount of P
therefrom. (Associated Ins. & Surety Co. v. 450,000.00 in the event of Dominguez’s non-
Bacolod Murcia Milling Co., G.R. No. L-12334, May performance of his obligation under the
22, 1959) contract.
When the performance of a bond is rendered However, the Spouses borrowed P 73,136.75
impossible of the project-allocated funds from
Dominguez and they also failed to make the
If the performance of a bond is rendered promised payments for the labor cost; hence,
impossible, it is the surety’s duty to inform the Dominguez refused further work on the
court of the happening of the event so that it project. Thus, a complaint was filed against
may take action or decree in the discharge of the Spouses and Philtrust before the Court of
surety when the performance of the bond is First Instance of Manila (“CFI”).
rendered impossible by an act of God, or the
obligee, or the law. (People v. Otiak Omal & Luzon a. Should FGU be liable for the full amount
Co., Inc., G.R. No. L-14457, June 30, 1961) of P 450,000 under the performance
bond?
Remedy if unable to give a bond b. Should the liabilities of the Spouses to
Dominguez be set off against any
A pledgee or mortgage considered sufficient to liability of FGU under the performance
cover his obligation shall be admitted in case a bond?
person bound to give a legal or judicial bond c. Should the Spouses be entitled to
should not be able to do so. liquidated damages under the contract
for building construction?
NOTE: A judicial bondsman cannot demand the A:
exhaustion of the property of the principal a. YES. FGU should be liable for the full amount
debtor. This is to ensure that the fulfillment of of P 450,000.00 solidarily with Dominguez.
the obligation by the guarantor be not delayed A performance bond is a kind of suretyship
or hindered. (Rabuya, 2017) agreement that is designed to afford the
project owner security that the contractor
Q: Spouses Floro and Eufema Roxas will faithfully comply with the requirements
(“Spouses”) entered into a Contract of of the contract and make good on the
Building Construction dated 22 May 1979 damages sustained by the project owner in
with Rosendo P. Dominguez, Jr. case of the contractor’s failure to so
(“Dominguez”), who undertook to be the perform. As a surety, FGU’S liability is direct,
building contractor of a housing project primary, absolute, and solidary with the
known as “Vista Del Mar Executive Houses.” principal debtor, and is determined strictly
639
Special Contracts – Credit Transactions
PLEDGE, MORTGAGE, AND ANTICHRES
REAL ESTATE
PLEDGE CHATTEL MORTGAGE ANTICHRESIS
MORTGAGE
Definition
Chattel mortgage is a It is a contract A contract whereby the
An accessory contract contract by virtue of whereby the debtor creditor acquires the
whereby a debtor delivers which a personal property secures to the right to receive the
to the creditor or a third is recorded in the Chattel creditor the fruits of an immovable
person a movable or Mortgage Register as a fulfillment of a of the debtor, with the
personal property, or security for the principal obligation, obligation to apply
document evidencing performance of an specially subjecting them to the payment of
incorporeal rights, to obligation. to such security, interest, if owing, and
secure the fulfillment of a immovable property thereafter to the
principal obligation with Note: The chattel or real rights over principal of his credit.
the condition that when the mortgage under Act No. immovable
obligation is satisfied, the 1508 is now superseded property, in case the
thing delivered shall be by R.A. No. 11057 or the principal obligation
returned to the pledgor Personal Property is not paid or
with all its fruits and Security Act (PPSA) which complied with at the
accessions, if any. denominates a contract time stipulated.
whereby personal
Note: The Civil Code property is used to secure
provisions governing payment or other
pledge are now superseded performance of an
by R.A. No. 11057 or the obligation as a “security
Personal Property Security agreement.”
Act (PPSA) which
denominates a contract
whereby personal property
is used to secure payment
or other performance of an
obligation as a “security
agreement.”
641
Special Contracts – Credit Transactions
Limited liability of a third person as a
pledgor or mortgagor
NOTE: The pledgor can sell the thing pledged
with the consent of the pledgee (NCC, Art. 2097), GR: A third person who pledged and mortgaged
while the mortgagor can sell the property his property is not liable for any deficiency.
mortgaged even without the consent of the
mortgagee. (NCC, Art. 2130) XPN: If the third party pledgor or mortgagor
expressly agreed to be bound solidarily with the
Similarities of pledge and mortgage principal debtor.
1. Both are constituted to secure a principal Property acquirable in the future cannot be
obligation; they are only accessory contracts mortgaged
(NCC, Arts. 2086, 2052);
2. Both pledgor and mortgagor must be the Where the mortgagor mortgaged a property and
absolute owner of the property (NCC, Arts. under the contract, he agreed to mortgage
2085, par. 2); additional properties which he may acquire in
3. Both pledgor and mortgagor must have the free the future, there was no valid mortgage as to the
disposal of their property or be authorized to latter because he was not yet the owner of the
do so; and properties at the time of the mortgage. (Dilag v.
4. In both, the thing proffered as security may be Heirs of Ressurrecion, G.R. No. 48941, May 6,
sold at public auction, when the principal 1946)
obligation becomes due and no payment is
made by the debtor. Mortgage constituted to secure future
advances
Indivisibility of pledge, mortgage and
antichresis Mortgage constituted to secure future advances
is valid. It is a continuing security and not
GR: A pledge, mortgage or antichresis is discharged by repayment of the amount named
indivisible. in the mortgage, until the full amount of the
advances is paid. However, a chattel mortgage
NOTE: The mortgage is indivisible even if the can only cover obligations existing at the time
obligation of the debtor is joint and not solidary. the mortgage is constituted and not to
Generally, the divisibility of the principal obligations subsequent to the execution of the
obligation is not affected by the indivisibility of mortgage.
the pledge or mortgage. (NCC, Art. 2089)
Mortgage constituted to secure future
XPNs: advances
1. Where each one of several things guarantees Mortgage constituted to secure future advances
determinate portion of the credit (NCC, Art. is valid. It is a continuing security and not
2089); discharged by repayment of the amount named
2. Where only a portion of the loan was in the mortgage, until the full amount of the
released; or advances is paid. However, a chattel mortgage
3. Where there was failure of consideration. can only cover obligations existing at the time
the mortgage is constituted and not to
obligations subsequent to the execution of the
mortgage.
Obligations that can be secured by pledge,
mortgage and antichresis Nature of an assignment of rights to
guarantee an obligation of a debtor
1. Valid obligations;
2. Voidable obligations; An assignment of rights to guarantee an
3. Unenforceable obligations; obligation of a debtor is in effect a mortgage and
4. Natural obligations; and not an absolute conveyance of title which
5. Conditional obligations. confers ownership on the assignee. (Manila
Banking Corp. v. Teodoro, Jr., G.R. No. 53955,
Pactum commissorium is a stipulation whereby A: The shares of stock cannot be deemed owned
the thing pledged or mortgaged or subject of by ABC upon default of MNO. They have to be
antichresis shall automatically become the foreclosed. Under Article 2088, NCC, the creditor
property of the creditor in the event of non- cannot appropriate the things given by way of
payment of the debt within the term fixed. Such pledge. And even if the parties have stipulated
stipulation is null and void. (NCC, Art. 2085) that
Elements of pactum commissorium ABC becomes the owner of the shares in case
MNO defaults on the loan, such stipulation is
1. There is a pledge, mortgage or antichresis of void for being a pactum commissorium.
a property by way of security; and
Q: X borrowed money from Y and gave a
2. There is an express stipulation for the piece of land as security by way of mortgage.
automatic appropriation by the creditor of It was expressly agreed between the parties
the property in case of non- payment. in the mortgage contract that upon
nonpayment of the debt on time by X, the
NOTE: What are prohibited are those mortgaged land would already belong to Y. If
stipulations executed or made simultaneously X defaulted in paying, would Y now become
with the original contract, and not those the owner of the mortgaged land? Why?
subsequently entered into.
643
Special Contracts – Credit Transactions
A: NO, Y would not become the owner of the
If the property
land. The stipulation is in the nature of Pactum If the
is sold, the
commissorium which is prohibited by law. The property is
debtor is not
property should be sold at public auction and the foreclosed,
Excess entitled to the
proceeds thereof applied to the indebtedness. the excess
excess unless
Any excess shall be given to the mortgagor. goes to the
otherwise
debtor.
agreed.
Q: Suppose in the preceding question, the
agreement between X and Y was that if X The
failed to pay the mortgage debt on time, the creditor is
debt shall be paid with the land mortgaged entitled to
by X to Y. Would your answer be the same as recover the
The creditor is deficiency
in the preceding question? Explain. (1999 not entitled to from the
BAR) recover the debtor
Recovery of
deficiency except if
the
A: NO, the answer would not be the same. This is notwithstandin the chattel
deficiency
a valid stipulation and does not constitute g any mortgage is
pactum commissorium. In pactum commissorium, stipulation to a security
the acquisition is automatic without need of any the contrary. for the
further action. In the instant problem another purchase of
act is required to be performed, namely, the property in
conveyance of the property as payment (dacion installment
en pago). s.
Possession Possession
PLEDGE Possession remains with is vested in
the creditor. the debtor.
Pledge is a contract whereby the debtor delivers
Formal
to a creditor or third person a movable or Contract Real contact
contract
document evidencing incorporeal right for the
purpose of securing fulfillment of a principal Must be in a
obligation with the understanding that when the public
obligation is fulfilled, the thing delivered shall be Must be
instrument
returned with all its fruits and accessions, recorded in
containing
a public
Registratio description of
Pledge vs. Chattel Mortgage instrument
n the thing
to bind
pledged and
BASIS PLEDGE CHATTEL third
the date
persons.
MORTGAGE thereof to bind
third persons.
Delivery is
Delivery is
Delivery not Not valid
necessary.
necessary. against
Not valid
third
unless a
Procedure persons
Validity description of
for the sale unless
against the thing and
of the thing registered
third the date of
given as (although
Governing persons pledge appear
NCC, Art. 2112 security is binding
Law in a public
governed between
instrument
by Act No. the
1508, Sec. parties).
14.
It is a real contract which are not perfected until NOTE: If Art. 2093 is not complied with, the
delivery of the object of the obligation. (NCC, Art. pledge is void.
1316)
Continuous possession is required in pledge
645
Special Contracts – Credit Transactions
The mere taking of the property is not enough in person; the buyer of the thing pledged is a third
pledge. There must be continuous possession of person within the meaning of this article.
the thing. However, the pledgee is allowed to
temporarily entrust the physical possession of Q: Juniat, et al. executed a Chattel Mortgage
the thing pledged to the pledgor without over several motorized sewing machines and
invalidating the contract. But here, the pledgor other equipment in favor of Union Bank to
would be in possession as a mere trustee and his secure its obligation but the loan remains
possession is subject to the order of the pledgee. unpaid so the bank filed before the RTC the
issuance of writs of preliminary attachment
When possession or delivery of the thing and replevin. Nonwoven, the possessor of the
pledged was not made mortgaged properties, contends that the
unnotarized Chattel Mortgage executed has
An agreement to constitute a pledge only gives no binding effect on it and it has a better title
rise to a personal action between the contracting over the properties because these were
parties. Unless the movable given as a security assigned/pledged by Juniat pursuant to their
by way of pledge be delivered to and placed in Agreement. Thereafter, Union Bank sold the
the possession of the creditor or of a third mortgaged properties. Both the Chattel
person designated by common agreement, the Mortgage in favor of Union Bank and the
creditor acquires no right to the property Agreement in favor of Nonwoven were not
because pledge is merely a lien and possession is notarized. Can Nonwoven claim that it has the
indispensable to the right of a lien. better right over the proceeds of the sale of
the subject properties?
When the pledge fails to take the property
pledged into his possession A: NO. Nonwoven is not entitled to the proceeds
of the sale of the attached properties because it
If a pledgee fails or neglects to take the property failed to show that it has a better title over the
pledged into his possession, he is presumed to same. Under Article 2096 of the Civil Code, a
have waived the right granted him by the pledge shall not take effect against third persons
contract. (U.S. v. Terrel, G.R. No. 1227, May 13, if a description of the thing pledged and the date
1903) of the pledge do not appear in a public
instrument. Hence, just like the chattel mortgage
Pledge must be embodied in a public executed in favor of Union Bank, the pledge
instrument to affect third persons executed by Juniat in favor of Nonwoven cannot
bind Union Bank. However, since the Chattel
The requisite in Art. 2096 that the pledge must Mortgage in favor of Union Bank was executed
be in a public instrument does not affect its earlier, it has a better right over the motorized
validity. It is still valid between the parties, but it sewing machines and equipment under the
will not bind third person if the said provision is doctrine of "first in time, stronger in right" (prius
not complied with. It is still valid between the tempore, potior jure). (Union Bank of the
parties, but it will not bind third person if the Philippines v. Alain, G.R. No. 171569, August 1,
said provision is not complied with. 2011)
When the contract of pledge is not recorded in a XPN: If the pledge consists of goods stored in a
public instrument, it is void as against third warehouse for purposes, of showing the
The type of delivery will depend upon the nature Art. 559 reads:
and peculiar circumstances of each case.
(Yuliongsiu v. PNB, G.R. No. L- 19227, February “The possession of movable property acquired in
17, 1968) good faith is equivalent to a title. Nevertheless,
one who has lost any movable or has been
Pledge of incorporeal rights unlawfully deprived thereof, may recover it from
the person in possession of the same.
Incorporeal rights evidenced by proper
document can be pledged. It is, however, If the possessor of a movable lost or of which the
required that the actual instrument be delivered owner has been unlawfully deprived, has acquired
to the pledgee. More, if the instrument is a it in good faith at a public sale, the owner cannot
negotiable document, it must be endorsed. (NCC, obtain its return without reimbursing the price
Art. 2095) paid therefore”
A pledge certificate by itself is not a negotiable NOTE: A pledge or mortgage executed by one
instrument, and therefore even if delivered and who is not the owner of the property pledged or
endorsed to an assignee, he would have no right mortgaged is without legal existence and
to redeem the property, unless the creditor- registration cannot validate it. (Philippine
pledgee consents. National Bank v. Rocha G.R. No. L-32260,
December 29, 1930)
Q: Pablo owns a tractor which he left with his
son Mike for safekeeping. Mike then offered When two or more things are pledged
the said tractor to Calibo as security for the
payment of his debt. When Pablo came back When two or more things are pledged, the
and learned that the tractor was in the pledgee may choose which he will cause to be
custody of Calibo, he demanded its return. sold, unless there is a stipulation to the contrary.
Calibo, however, refused. Calibo alleged that (NCC, first sentence, Art. 2119)
the tractor was pledged to him, and in the
alternative, the tractor was left with him in The restriction on the right of the pledgee under
the concept of deposit and he may validly the 1st sentence of Art. 2119 is that he may only
hold on to it until Mike pays his obligation. Is demand the sale of only as many of the things as
Calibo correct? are necessary for the payment of the debt. (NCC,
second sentence, Art. 2119)
A: NO. There is no valid pledge because Mike is
not the absolute owner of the property pledged. Prohibition on double pledge
He who is not the owner or proprietor of the
property pledged or mortgaged to guarantee the A property already pledged cannot be pledged
fulfillment of a principal obligation, cannot again while the first pledge is still subsisting.
legally constitute such a guaranty as may validly (Mission de San Vicente v. Reyes, G.R. No. L-5508,
bind the property in favor of his creditor, and the August 14, 1911)
pledgee or mortgagee in such a case acquires no
right whatsoever in the property pledged or NOTE: A property which has been lawfully
mortgaged. There is likewise no valid deposit, in pledge to a creditor cannot be pledge to another
this case, where the principal purpose for so long as the first one subsists, because the
receiving the object is not safekeeping. (Calibo Jr. thing pledged cannot be delivered to the second
v. CA, G.R. No. 120528, January 29, 2001) creditor since it will remain in the possession of
the first creditor.
Right of an owner of personal property
pledged without authority Q: Donna pledged a set of diamond ring and
earrings to Jane for P200,000.00 She was
An owner of personal property pledged without made to sign an agreement that if she cannot
647
Special Contracts – Credit Transactions
pay her debt within six months, Jane could the preservation of the thing pledged (NCC,
immediately appropriate the jewelry for Art. 2099);
herself. After six months, Donna failed to pay. 4. To apply fruits, interests, or earnings of the
Jane then displayed the earrings and ring set pledge to the interest, if any then to the
in her jewelry shop located in a mall. A buyer, principal of the credit [NCC, Art. 2102(2)];
Juana, bought the jewelry set for 5. To bring any action pertaining to the
P300,000.00. pledgor in order to recover it from or defend
it against a third person (legal subrogation)
a. Was the agreement which Donna signed (NCC, Art. 2103);
with Jane valid? Explain with legal basis. 6. To sell at public auction in case of reasonable
b. Can Donna redeem the jewelry set from grounds to fear destruction or impairment of
Juana by paying the amount she owed the thing without his fault (NCC, Art. 2108);
Jane to Juana? Explain with legal basis. 7. Option to demand replacement or
c. Give an example of a pledge created by immediate payment of debt in case of
operation of law. deception as to substance and quality (NCC,
Art. 2109);
A: 8. To appropriate the thing in case of failure of
second public auction (NCC, Art. 2112);
a. NO. To appropriate the jewelry upon default (2009 BAR)
of Donna is considered Pactum
commissorium and it is considered void by NOTE: This is an exception to Pactum
law. (NCC, Art. 2088) commissorium.
b. NO, Donna cannot redeem it from Juana 9. To bid at public auction, unless he is only the
because the pledge contract is between her bidder (NCC, Art. 2113);
and Jane. Juana is not a party to the pledge 10. To collect and receive amount due on credit
contract. (NCC, Art. 1311) pledged (NCC, Art. 2118);
11. To choose which of several things pledged
c. One example of a pledge created by will be sold (NCC, Art. 2119);
operation of law is the right of the 12. To retain excess value in the public sale;
depositary to retain the thing deposited 13. To retain thing until after full payment of the
until the depositor shall have paid him debt; and
whatever may be due to the depositary by 14. To object the alienation of the thing.
reason of the deposit. Another is the right of
the agent to retain the thing which is the NOTE: The pledgee cannot deposit the thing
object of the agency until the principal pledged with a third person unless there is a
reimburses him the expenses incurred in the stipulation authorizing him to do so. If deposit
execution of the agency. (NCC, Art. 1914) with a third person is allowed, the pledgee is
liable for the loss if he deposited the thing with a
RIGHTS AND OBLIGATIONS OF PLEDGOR AND person who is manifestly careless or unfit. The
PLEDGEE pledgee is also responsible for the acts of his
agents or employees with respect to the thing
Parties in a contract of pledge pledged. (Rabuya, 2017)
NOTE: Pledgee is liable for the loss or 1. If the debtor has paid the debt and its
deterioration of the thing pledged caused interest, with expenses in a proper case
by the acts or negligence of the agents or (NCC, Art. 2105); and
employees of the pledgee.
2. If there are reasonable grounds to fear the
2. Apply the fruits, income, dividends, or destruction or impairment of the thing
interests produced or earned by the pledged, without the fault of the pledgee, the
property, to interests or expenses first, then pledgor may demand the return of the thing,
to the principal (NCC, Art. 2102); upon offering another thing in pledge,
provided the latter is of the same kind as the
GR: Cannot use the thing pledged without former and not of inferior quality, and
authority (NCC, Art. 2104); without prejudice to the right of the pledgee
under the provisions of the following article.
XPNs:
The pledgee is bound to advise the pledgor,
a. If the pledgor had given him authority without delay, of any danger to the thing
or permission to use it; or pledged. (NCC, Art. 2107)
b. If the use of the thing is necessary for
its preservation but only for that NOTE: If the obligation is with a term, there can
purpose be no demand of the property until after the
c. To advise pledgor of the result of the term had arrived. The prescriptive period for the
public auction (NCC, Art. 2116); recovery of the property begins from the time the
debt is extinguished by payment and demand for
d. Return the thing pledged upon return of the property is made. (Sarmiento v.
payment of debt; and Javellana, G.R. No. L-18500, October 2, 1922)
e. Advise pledgor of danger to the thing. When the pledgee may cause the sale of the
thing even if the obligation is not yet due
When the thing pledged is expropriated by
the State If, without the fault of the pledgee, there is a
danger of destruction, impairment, or
The debtor is no longer the owner of the thing in diminution in value of the thing pledged, he may
case the same is expropriated by the State as cause the same to be sold at public auction. The
ownership is transferred to the expropriating proceeds of the auction shall be security for the
authority. The price paid for the expropriated principal obligation in the same manner as the
property shall be applied to the payment of the thing originally pledged. (NCC, Art. 2108)
principal obligation, the interests and other
expenses due to the pledgee. If there is any NOTE: The sale contemplated in this article is a
excess, the same shall be delivered to the “public sale”
pledgor.
Rights of the creditor who is deceived on the
Legal Subrogation – The pledgee is under the substance or quality of the thing pledged
obligation to protect the thing pledge thus the
pledgee may bring actions pertaining to the 1. To demand:
owner of the thing pledged in order to recover it 2. From the pledgor an acceptable substitute of
from, or defend it against a third person. (NCC, the thing; or
Art. 2103) 3. The immediate payment of the principal
obligation. (NCC, Art. 2109)
Return of the pledge, when demandable
NOTE: The remedies are alternative and not
GR: A debtor cannot ask for the return of the cumulative. Only one may be chosen. The law
649
Special Contracts – Credit Transactions
used the conjunctive “or”. Either one is more donation where acceptance is necessary to make
convenient than annulment. the donation valid.
NOTE: It is presumed that the accessory a. Is the liability of IRC deemed paid by
obligation of pledge has been remitted when the virtue of the deed of assignment?
thing pledged, after its delivery to the creditor, is b. Is OBM liable for damages?
found in the possession of the debtor, or of a
third person who owns the thing. (NCC, Art. A:
1274)
a. NO. For all intents and purposes, the deed of
Renunciation of the pledge by the pledgee assignment in this case is actually a pledge.
Where a CTD in a bank, payable at a future
The renunciation or abandonment of the pledge time, was handed over by a debtor to his
by the pledgee requires a statement in writing to creditor, it was not payment, unless there
that effect. (NCC, first sentence, Art. 2111) was an express agreement on the part of the
creditor to receive it as such.
An oral waiver is not sufficient. But if the pledgee
orally renounces the pledge, and return the thing b. YES. While it is true that no interest shall be
pledged to the pledgor, the pledge is thereby due unless it has been expressly stipulated
extinguished not because of Article 2111, but in writing, this applies only to interest for
because of Article 2110, first paragraph. the use of money. It does not comprehend
interest paid as damages. Santos has the
NOTE: The renunciation of the pledge is not right to recover damages resulting from the
contrary to law, public order, public policy, default of OBM and the measure of such
morals or good customs. Further, Art. 1356 of damages is interest at the legal rate of 6%
the NCC, which speaks of the form of contracts, per annum on the amounts due and unpaid
must be complied with. at the expiration of the periods respectively
provided in the contracts. (Integrated Realty
Necessity of acceptance in renunciation Corp. v. PNB, G.R. No. 60705, June 28, 1989)
2. Right to ask that the thing pledged be A pledgee can foreclose the thing pledged when
deposited in one of the following instances: there is no payment of the debt on time, the
object of the pledge may be alienated for the
a. If the creditor uses the thing without purpose of satisfying the claims of the pledgee.
authority (NCC, Art. 2104);
b. Misuses the thing, he may deposit the XPNS:
thing judicially or extrajudicially (NCC,
Art. 2104); or 1. If a credit which has been pledged becomes
c. If the thing is in danger of being lost or due before it is redeemed, the pledgee may
impaired because of negligence or willful collect and receive the amount due. He shall
act of the pledge, he may deposit the apply the same to the payment of his claim,
thing with a third person. (NCC, Art. and deliver the surplus, should there be any,
2106) to the pledgor (NCC, Art. 2118); or
3. Right to demand the return of the thing 2. In Yau Chu v CA, the collateral was money or
pledged in case of reasonable grounds to fear an exchange of “peso for peso.” In such case,
destruction or impairment of the thing all that has to be done to convert the
without the pledgee’s fault, subject to the pledgor’s time deposit certificates into cash
duty of replacement (NCC, Art. 2107); is to present them to the bank for
encashment after due notice to the debtor.
Requisites for the application of Art. 2107 (Rabuya, 2017)
1. The pledgor has reasonable grounds to fear Right of the pledge or mortgagor to foreclose
the destruction or impairment of the thing
pledged; If the debtor failed to pay on maturity date, the
2. There is no fault on the part of the pledgee; thing pledged or mortgaged may be sold at
3. The pledgee is offering in place of the thing, public auction as provided by law so that the
another thing in pledge which is of the same proceeds may be used for payment of the
kind and quality as the former; and obligation.
4. The pledgee does not choose to exercise his
right to cause the thing pledged to be sold at Options of an unpaid creditor
public auction.
1. Foreclose the thing pledged; or
5. To bid and be preferred at the public 2. Abandon the pledge and file a claim for
auction. (NCC, Art. 2113) collection. (NCC, Art. 2087)
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Special Contracts – Credit Transactions
The following can bid in the public auction: (NCC, Art. 2115)
Effect of sale of the thing pledged Application of the proceeds of the sale
1. It extinguishes the principal obligation; The pledgee may collect and receive the amount
due when what has been pledged is a “credit.”
NOTE: The extinction is automatic He shall apply the same to the payment of his
regardless of whether or not the proceeds claim, and deliver the surplus, should there be
realized from the public auction sale are any, to the pledgor. (NCC, Art. 2118)
more or less than the amounts of the
principal obligation and other incidental Extinguishment of pledge
expenses.
1. The same cause of extinguishment of all
2. If the price of the sale is more than the other obligation;
amount of the debt, the excess will go the
pledgee; and 2. If the thing pledged is returned by the
pledgee to the pledgor or owner, the pledge
NOTE: This is to compensate him for the is extinguished (NCC, Art. 2110);
eventuality where the purchase price is
lesser than the amount of the debt, wherein NOTE: If subsequent to the perfection of the
he cannot retrieve any deficiency unless pledge, the thing is in the possession of the
there is a contrary agreement. pledgor or owner, there is a prima facie
presumption that the same has been
3. If the price of the sale is less than the returned by the pledgee. This same
amount of the debt, the pledgee is not presumption exists if the thing pledged is in
entitled to recover the deficiency in all cases the possession of a third person who has
even if there is a stipulation to that effect. received it from the pledgor or owner after
3. A statement in writing by the pledgee that Sale of the thing pledged in legal pledge
he renounces or abandons the pledge (NCC,
Art. 2111); A thing under a pledge by operation of law may
be sold only after demand of the amount for
NOTE: Renunciation or the abandonment which the thing is retained. The public auction
must be in writing. An oral waiver is not shall take place within one month after such
sufficient. But if the pledgee orally demand.
renounces the pledge, and returns the thing
pledged to the pledgor, the pledge is thereby NOTE: If, without just grounds, the creditor does
extinguished, not because of Art. 2111 but not cause the public sale to be held within such
because of Art. 2110, first paragraph. (Paras, period, the debtor may require the return of the
2008) The renunciation of the principal debt thing. (NCC, Art. 2122)
shall extinguish the accessory obligations
but the waiver of the latter shall leave the The remainder of the price of sale shall be
former in force. (NCC, Art. 1273) delivered to the obligor. (NCC, Art. 2121)
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Special Contracts – Credit Transactions
Reason of the law: The contract of XPN: However, he can exercise the right of
commodatum does not transfer ownership. retention on the account of damages suffered
by the bailee because of flaws that the bailor
Characteristics of a contract of commodatum knew of but did not disclose to the bailee.
(NCC, Art. 1944; Art. 1951)
1. Real contract – The delivery of the thing
loaned is necessary for the perfection of the Use of fruits of the property by the bailee
contract;
2. Unilateral contract – once subject matter is GR: The bailee in commodatum acquires only the
delivered, it creates obligations on the part use of the thing loaned but not its fruits. (NCC,
of only one of the parties (the borrower); Art. 1935)
3. Essentially gratuitous; otherwise, it is a
contract of lease; XPN: A stipulation that the bailee may make use
4. Principal contract; of the fruits of the thing loaned is valid, provided
5. Informal contract; that the enjoyment of the fruits must only be
6. Nominate contract; and incidental to the use of the thing itself. (NCC, Art.
7. Purely personal contract. 1940)
Consequence of purely personal character of The stipulation that the bailee may make use of
commodatum (2006, 2007 BAR) the fruits of the thing loaned will not impair the
essence of commodatum because the actual
1. As to death of a party cause or consideration therefore is still the
liberality of the bailor or lender.
GR: Commodatum is purely personal in
character hence death of either bailor or bailee Commodatum v. Contract of Lease
extinguishes the contract. (NCC, Art. 1939)
COMMODATUM LEASE
XPN: By stipulation, the commodatum is Real Contract Consensual
transmitted to the heirs of either or both Object is a non- Object may even be
parties. consumable and non- work or service
fungible thing
2. As to Lease of the thing subject of Essentially gratuitous Onerous
commodatum If the bailor is not Provisions governing
aware of the flaws, he warranty are made
GR: The bailee can neither lend nor lease the is not liable for the applicable.
object of the contract to a third person. (NCC, resulting danger
Art. 1939) caused by such.
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Special Contracts – Credit Transactions
2. Bailee/Comodante/Commodatarius – The of the parties is to lend consumable goods and
recipient/ borrower; the party who receives have the very same goods returned at the end of
the possession or custody of the thing thus the period agreed upon, the loan is commodatum
delivered. and not muttum. (Producers Bank v. Court of
Appeals, G.R. No. 115324, February 19,2003)
Note: The bailor need not be the owner of the
thing since the contract of commodatum does Art. 1937. Movable or immovable property
not transfer ownership. (Pineda, 2006, NCC, Art. may be the object of commodatum.
1938)
Object of commodatum
Liability when there are two or more bailees
Both movable and immovable property may be
When there are two or more bailees to whom a the object of commodatum. (NCC, Art. 1937)
thing is loaned in the same contract, they are
liable solidarily. (NCC, Art. 1945) Their liability is Example of commodatum involving land
solidary in order to protect the bailor’s rights
over the thing loaned. The law presumes that the A borrowed B’s land so that he can erect thereon
bailor takes into account the personal integrity a small barong-barong to be used for the time
and responsibility of all the bailees, therefore, he that A works in B’s province. If there is no rental
could not have constituted commodatum if there this is a case of commodatum, but if rental is
was only one bailee. paid, this would be a lease. (Paras, 2008)
Q: Following the principle of autonomy of NOTE: In Producers Bank of the Philippines vs.
contracts, may the parties to a contract of CA, the loan involving money was classified as
commodatum validly stipulate that the commodatum instead of mutuum because the
liability of the bailees shall be joint? lender agreed to deposit his money in the
savings account of the borrower especially for
A: NO. Article 1245 of the New Civil Code the purpose of making it appear that the latter
expressly provides that in a contract of had sufficient capitalization for incorporation,
commodatum, when there are two or more with the promise that the amount shall not be
bailees to whom a thing is loaned in the same removed and shall be returned within a specific
contract, they are liable solidarily. It constitutes period. (Rabuya, 2017)
as an exception to the general rule of “joint
obligations” where there are two or more Contracts must be interpreted by their
debtors, who concur in one and same obligation constitutive elements as defined and
under Articles 1207 and 1208. Solidarity is denominated by the law and not by the name
provided to safeguard effectively the rights of given by the parties. (Mina v. Pascual G.R. No. L-
the bailor over the thing loaned. 8321, October 14, 1913)
Art. 1936. Consumable goods may be the Art. 1938. The bailor in commodatum need
subject of commodatum if the purpose of the not be the owner of the thing loaned.
contract is not the consumption of the object,
as when it is merely for exhibition.
Art. 1939. Commodatum is purely personal in
character. Consequently:
Subject matter of commodatum
The death of either the bailor or the
GR: Under Art. 1933 of the New Civil Code, the bailee extinguishes the contract;
subject matter of commodatum must be non-
consumable because the thing must be returned.
The bailee can neither lend nor lease the
object of the contract to a third person.
XPN: Consumable goods may be the subject of However, the members of the bailee's
commodatum if the purpose is not to consume
household may make use of the thing
them such as for exhibition purposes.
loaned, unless there is a stipulation to the
contrary, or unless the nature of the
NOTE: If the consumable goods are loaned for thing forbids such use.
the purposes of exhibition, or when the intention
NOTE: Enjoyment of the fruits must only be The obligation of the gratuitous lender goes no
incidental to the use of the thing and must not be further than this, and he cannot be made liable
the main cause. In the latter case, the contract for not communicating anything which he did
ceases to be a commodatum and becomes a not know, whether he ought to have known it or
usufruct. (Pineda, 2006) not.
OBLIGATIONS OF THE BAILOR Cause of action against bailor who did not
disclose flaw or defect
1. To allow the bailee the use of the thing
The cause of action against the bailor who did not
loaned for the duration of the period
disclose the flaw or defect is action for recovery
stipulated or until the accomplishment of
of damages on the ground of quasi-delict because
the purpose (NCC, Art. 1946);
of negligence or bad faith.
2. To refund the extraordinary expenses the
Q: Before he left for Riyadh to work, Pedro
bailee incurred for the preservation of the
left his Adventure van to Tito, with the
thing;
understanding that the latter could use it for
one year for his own use while Pedro works
GR: The bailee must bring to the knowledge
in Riyadh. He did not tell Tito that the brakes
of the bailor such expenses before incurring
of the van were faulty. Tito had the van tuned
the same.
up and the brakes repaired spending a total
amount of P15,000.00. Tito later discovered
XPN: In case there is urgency and delay
that the van consumed too much fuel. To
would cause imminent danger.
make up for the expenses, he leased it to
Annabelle. Two months later, Pedro returned
If the extraordinary expenses arise on the
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Special Contracts – Credit Transactions
to the Philippines and asked Tito to return the b. If the use of the thing is merely tolerated
van. Unfortunately, while being driven by by the owner (NCC, Art. 1947); and
Tito, the van was accidentally damaged by a
cargo truck without his fault. 3. If the bailee commits an act of ingratitude
specified in Article 765 to the bailor (NCC,
Who shall bear the P15,000.00 spent for the Art. 1948), to wit:
repair of the van? (Bar 2005)
a. If the bailee should commit some
A: Tito must bear the P15,000.00 expenses for offense against the person, honor or the
the van. Generally, extraordinary expenses for property of the bailor, or his wife or
the preservation of the thing loaned are paid by children under his parental authority;
the bailor, he being the owner of the thing b. If the bailee imputes to the bailor any
loaned. In this case however, Tito should bear criminal offense, or any act involving
the expenses because he incurred the expenses moral turpitude, even though he should
without first informing Pedro about it. Neither prove it, unless the crime or the act has
was the repair shown to be urgent. Under Art. been committed against the bailee, his
1949, bailor generally bears the extraordinary wife or children under his authority; or
expenses for the preservation of the thing and c. If the bailee unduly refuses the bailor
should refund the said expenses if made by the support when the bailee is legally or
bailee, provided, the bailee brings the same to morally bound to give support to the
the attention of the bailor before incurring them, bailor.
except only if the repair is urgent that reply
cannot be awaited. NOTE: The rationale for the application of Art.
765 of the New Civil Code which refers to
Effect if both parties know the defect donations is the fact that commodatum, like
donation, is gratuitous in nature. The bailee who
The effect if both parties are aware of the flaws commits any of the acts of ingratitude makes
or defects is that the bailee is deemed to have himself unworthy of the trust reposed upon him
assumed a risk. The bailor is not liable for the by the bailor.
damages suffered by the bailee by reason
thereof. Q: If the contract of commodatum is a
precarium, will Art. 1942 (1) and (2) of the
RIGHTS OF THE BAILOR New Civil Code still apply?
Demand the return of the thing loaned (2005 A: IT DEPENDS. If there has been a demand on
Bar) the part of the bailor before the loss of the thing
under the circumstances set forth under Article
GR: The return of the thing loaned may be 1942 (1) and (2) and the bailee did not return
demanded by the bailor only (1) after the the thing, then the latter is liable. However, if
expiration of the period stipulated or (2) after there has been no demand on the part of the
the accomplishment of the use for which it is bailor and the thing was lost, the bailor is
constituted. estopped and cannot hold the bailee liable for
under a contract of precarium, the use of the
XPNs: thing by the bailee depends on the pleasure of
the bailor and no time is fixed for such use.
1. In case of urgent need by the bailor; Hence, demand on the part of the bailor is
needed for the return of the thing. Without such,
2. In case of precarium – the bailor may loss of the thing on the hands of the bailee will
demand the thing at will, and the contractual not make him liable.
relation is called a precarium, in the
following cases: Bailor and ownership of the thing loaned
a. If neither the duration of the contract The bailor in commodatum need not be the
nor the use to which the thing loaned owner of the thing loaned. It is sufficient that he
should be devoted, has been stipulated; has possessory interest over subject matter. (Art.
or 1938) All that is required is that the bailor has
RIGHTS OF A BAILEE
Liable for loss even through
fortuitous event when: 1. Use of the thing;
(2000 Bar) 2. Make use of the fruits of the thing when such
right is stipulated in the contract;
1. When being able to 3. Not answerable for the deterioration of the
save either of the thing thing loaned due to the use thereof and
borrowed or his own without his fault; and
thing, he chose to save 4. Right of retention for damages due to hidden
the latter; defects or flaws of the thing of which he was
not advised by the bailor.
Reason: bailee’s ingratitude.
Art. 1943. The bailee does not answer for the
2. He keeps it longer than deterioration of the thing loaned due only to
the period stipulated,
the use thereof and without his fault.
or after the
accomplishment of its
In absence of an agreement to the contrary, the
use (in default);
depreciation caused by the reasonable and
natural use of the thing is borne by the bailor.
As to the loss Reason: Bailee incurs delay.
of the thing (NCC, Art. 1169)
in case of Q: Art. 1178 of the NCC provides that all
fortuitous 3. The thing loaned has rights acquired by virtue of an obligation are
event been delivered with transmissible. Is the right to use the thing by
appraisal of its value; virtue of a contract of commodatum
transmissible?
Reason: Otherwise, the
parties would not have A: NO, it is not transmissible for two reasons:
appraised the thing.
1. Art. 1178 of the New Civil Code provides
4. When he lends or leases that the transmissibility of said acquired
it to third persons who rights are either subject to the laws or to a
are not members of his contrary stipulation; and
household;
2. Art. 1939 of the New Civil Code provides
Reason: Commodatum is a that a contract of commodatum is purely
purely personal contract. personal in character.
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Special Contracts – Credit Transactions
To rule otherwise would be to run counter to the bailee. (NCC, Art. 1944)
purely personal character of the commodatum
and to the proviso that transmissibility is subject XPN: The bailee has the right of retention for
to the law governing such obligations. claims of damages which the bailee incurred or
suffered by reason of the hidden defects or flaws
Commodatum v. Lease of the thing loaned, of which he was not
informed or advised by the bailor. (NCC, Art.
COMMODATUM LEASE 1951)
Real Contract Consensual
Object is a non- The reason for the general rule that there is no
Object may even be right of retention is that “bailment implies a
consumable and non-
work or service trust that as soon as the time has expired or the
fungible thing
Essentially gratuitous Onerous purpose accomplished, the bailed property must
If the bailor is not be returned to the bailor”. Also, Art. 1287
aware of the flaws, he Provisions governing provides that compensation shall not be proper
is not liable for the warranty are made when one of the debts arises from the
resulting danger applicable. obligations of a bailee in commodatum.
caused by such.
Q: Suppose during the said retention of the
Liability of the bailee for the loss of the thing bailee by reason of hidden defects, the thing
is lost due to a fortuitous event. Can the
Even should there be fortuitous event: bailor hold the bailee liable for said loss
based on Art. 1942(2) of the New Civil Code?
1. If he devotes the thing to any purpose
different from that for which it has been A: NO. The bailee cannot be held liable for the
loaned; loss. Art. 1942(2) of the NCC contemplates
2. If he keeps it longer than the period wrongful retention or a situation where the
stipulated, or after the accomplishment of bailee is not entitled to retain the thing loaned.
the use for which the commodatum has been
constituted; NOTE: Article 1942(2) of the NCC provides that
3. If the thing loaned has been delivered with the bailee is liable for the loss of the thing, even
appraisal of its value, unless there is a if it should be through a fortuitous event if he
stipulation exempting the bailee from keeps it longer than the period stipulated, or
responsibility in case of a fortuitous event; after the accomplishment of the use for which
4. If he lends or leases the thing to a third the commodatum has been constituted.
person, who is not a member of his
household; Art. 1945. When there are two or more
5. If being able to save either that thing bailees to whom a thing is loaned in the same
borrowed or his own thing, he chose to save contract, they are liable solidarily.
the latter. (NCC, Art. 1942)
Solidary Obligation
Deterioration
Each one of the debtors is obliged to pay the
The lowering of the value or character of a thing. entire obligation, and where each one of the
It normally occurs by reason of ordinary wear creditors has the right to demand from any of
and tear. the debtors, the payment or fulfillment of the
entire obligation. (NCC, Art. 1207)
The bailee does not answer for the deterioration
of the thing loaned due only to the use thereof Kinds of Solidary Obligation
and without his fault. (NCC, Art. 1943)
1. Passive Obligation – which is the solidarity
Right of retention in commodatum on the part of the debtors;
GR: Borne equally by the bailor and bailee. 2. If the thing loaned is money, payment must
be made in the currency stipulated, and if it
XPN: Stipulation to the contrary. (NCC, Art. is not possible to deliver such currency, then
1949) in the currency which is legal tender in the
Philippines. (NCC, Art. 1249)
3. Other expenses – The bailee, because they
are not necessary for the preservation of the Note: In case of extraordinary deflation or
thing. (NCC, Art. 1950) inflation, the basis of payment shall be the
value of the currency at the time of the
Q: What if the bailee is entitled to payment or creation of the obligation (NCC, 1250); and
reimbursement of expenses incurred or
damages suffered and the bailor offers the 3. If fungible thing other than money was
thing loaned as payment for said expenses or loaned, the borrower is obliged to pay the
damages, would such offer be valid or not, in lender another thing of the same kind,
view of the prohibition under Art. 1952 quality and quantity even if it should change
which states that the bailor cannot exempt in value. (NCC, Art. 1955[2])
himself from the payment of expenses or
damages by abandoning the thing to the Nature of a contract of mutuum
bailee?
1. The purpose of the contract is consumption;
A: The offer is not valid. It may be considered 2. The subject-matter is either money or
as dation in payment. In this case, the consumable;
abandonment done by the bailor was made in 3. Ownership passes to the borrower;
favor of the bailee for the payment of the 4. It is a real contract;
expenses incurred by the latter, hence, a 5. It may be gratuitous or with stipulation to
violation of what the law has expressly pay interest; and
prohibited under Art. 1952 of the NCC. 6. It is a unilateral contract. (Rabuya, 2017)
The bailee is not entitled to reimbursement for Real contracts, such as deposit, pledge and
the expenses he incurred if, for the purpose of commodatum, are not perfected until the
making use and preservation of the thing, the delivery of the object of the obligation. (NCC, Art.
bailee incurs expenses other than those ordinary 1316) While mutuum or simple loan is not
661
Special Contracts – Credit Transactions
mentioned, it has the same character as of the loan. (NCC, Art. 1955)
commodatum. Hence, mutuum is also a real
contract which cannot be perfected until the Q: Can estafa be committed by a person who
delivery of the object. refuses to pay his debt or denies its
existence?
An accepted promise to make a future loan is a
consensual contract and therefore, binding upon A: NO, because the debtor in mutuum becomes
the parties but it is only after delivery, will the the owner of the thing delivered to him. If he
real contract of loan arise. consumed or disposed of the thing, the act which
is an act of ownership is not misappropriation.
Mere issuance of checks does not perfect the Hence, there is no basis for a criminal
contract of loan. It is only after the checks have prosecution. (See Flores, Jr. vs. Enrile, G.R. No. L-
been encashed that the contact may be deemed 38440, July 20, 1982)
perfected.
Destruction of the thing loaned
Consideration in a simple loan
The destruction of the thing loaned does not
1. As to the borrower – The acquisition of extinguish one’s obligation in a simple loan
money or any other fungible thing; and because his obligation is not to return the thing
2. As to the lender – the right to demand the loaned but to pay a generic thing.
return of the money or any other fungible
thing or its equivalent. Commodatum v. Mutuum (1996, 2004 Bar)
663
Special Contracts – Credit Transactions
with the extensions of credit is a form of a sum of money’’ referred to in Article 2209
deception which the Court cannot countenance. is not confined to a loan or forbearance of
It is against the policy of the State as stated in money. It has also been applied by the
the Truth in Lending Act – to protect its citizens Supreme Court in cases involving default in
from a lack of awareness of the true cost of the payment of price or consideration under
credit to the user by assuring a full disclosure of a contract of sale and an action or damages
such cost with a view of preventing the for injury to persons and loss of property
uninformed use of credit to the detriment of the and an action for damages arising from
national economy. (Sec. 2, R.A. No. 3765; United unpaid insurance claims. (Castelo vs. Court of
Coconut Planters Bank vs. Beluso, G.R. No. 159912, Appeals, G.R. No. 96372, May 22, 1995)
August 17, 2007) Interest as indemnity for damages is payable
only in case of default or non- performance
Requisites for recovery of interest of the contract. As they are distinct claims,
they may be demanded separately. (Sentinel
1. The payment of interest must be expressly Insurance Co. Inc. vs. Court of Appeals, G.R.
stipulated (Tan v. Valdehueza, 66 SCRA 61; No. L-52482, February 23, 1990)
Jardenil v. Salas, 73 Phil. 636);
2. The agreement to pay interest must be in 2. Interest accruing from unpaid interest —
writing (NCC, Art. 1956); and Interest due shall earn interest from the time
3. The interest must be lawful. it is judicially demanded although the
obligation may be silent upon this point.
Rules on interest (NCC, Art. 2212; see Sec. 5, Usury Law) Both
Art. 2212 of the Civil Code and Sec. 5 of the
GR: No interest shall be due unless it is Usury Law are applicable only where
stipulated in writing. (NCC, Art. 1956) (2004 interest has been stipulated by the parties.
Bar) Art. 1212 contemplates the presence of
stipulated or conventional interest which
XPN: has accrued when demand was judicially
made. In cases where no interest had been
1. In case of interest on damages or indemnity stipulated by the parties, no accrued
for damages, it need not be in writing (NCC, conventional interest could further earn
Art. 2209); or interest upon judicial demand. (Isla vs.
2. Interest accruing from unpaid interest. (NCC, Estorga, G.R. No. 233974, July 2, 2018)
Art. 2212)
NOTE: Where the court’s judgment which did
NOTE: Art. 1956 applies only to interest for the not provide for the payment of interest has
use of money and not to interest imposed as already become final, no interest may be
items of damages. awarded. (Santuban vs. Fule, G.R. No. L-59664,
December 26, 1984; Ruiz vs. Caneba, G.R. No.
Stipulation of a particular interest rate 84884, December 3, 1990; Solidbank Corporation
vs. Court of Appeals, G.R. No. 138131, March 12,
If a particular rate of interest has been expressly 2002)
stipulated by the parties, that interest, not the
legal rate of interest shall be applied. (Casa Q: Province of Cebu was chosen by former
Filipina Development Corporation v. Deputy President Gloria Macapagal-Arroyo to host
Executive Secretary, G.R. No. 96494, May 28, the 12th ASEAN Summit. To cater to the
1992) event, it decided to construct the Cebu
International Convention Center (CICC or the
Liability for interest even in the absence of project) which would serve as venue for the
stipulation (exceptions to Art. 1956, NCC) ASEAN Summit. Province of Cebu conducted a
public bidding for the project and WTCI
1. Indemnity for damages — The debtor in delay emerged as the winning bidder for the
is liable to pay legal interest as indemnity for construction of Phase I. After completing
damages even in the absence of stipulation Phase I, WTCI again won the bidding for
for the payment of interest. (De Leon, 2013) Phase II of the project involving the adjacent
The “obligation consisting of the payment of works on CICC. As Phase II neared
665
Special Contracts – Credit Transactions
government's Operation Land Transfer Payment of interest when there is no
Program, pursuant to Presidential Decree stipulation
(PD) No. 27, and distributed to the farmer-
beneficiaries who were issued the 1. A borrower borrowed money. No interest
corresponding Emancipation Patents. The was stipulated. If by mistake he pays, then
Department of Agrarian Reform (DAR) fixed this will be a question of undue payment or
the just compensation using the formula solutio indebiti. We should then apply the
provided under Executive Order No. (EO) rules on the subject.
228. The LBP allowed Santos to collect the
initial valuation for Land 3. It withheld the 2. If a borrower borrows money and orally
release of the valuation for Lands 1 and 2 agrees to pay legal interest at 10% per
until the submission of the certificates of title. annum, there is really no obligation to pay
since the interest was not agreed upon in
Santos was then issued Agrarian Reform (AR) writing. If he nevertheless pays because he
Bonds representing the initial valuation of considers it his moral obligation to pay said
Land 3 and the six percent (6%) increment. interest, he cannot recover the interest that
Finding the valuation unreasonable, Santos he has given voluntarily. This will now be a
filed three (3) petitions for summary natural obligation, and the provisions on
administrative proceedings for the said subject should apply. (Paras, 2008)
determination of just compensation of the
subject lands before the Office of the Q: The court ordered petitioner Nympha S.
Provincial Adjudicator (PARAD). The LBP Odiamar to pay respondent the amount of
also instituted two (2) separate complaints P1,010,049.00 representing the remaining
for the determination of just compensation balance of petitioner's debt to the latter in
before the RTC. The RTC adopted the LBP’s the original amount of P1,400,000.00. In said
uncontested valuation for Land 3 and also motion, respondent prays for the imposition
awarded 12% interest reckoned from of legal interest on the monetary award due
January 1, 2010 until full payment since the her. She likewise insists that petitioner's loan
revaluation of Land 3 already included the obligation to her is not just P1,400,000.00 but
required six percent (6%) annual P2,100,000.00 and, as such, she should be
incremental interest from the time of taking made to pay the latter amount. Whether a
until December 31, 2009. The CA affirmed. Is prayer for the imposition of legal interest on
the reckoning point of interest correct? the monetary award due is proper?
667
Special Contracts – Credit Transactions
the date the judgment of the court is made (at a. For breach of obligations consisting of
which time the quantification of damages may loan or forbearance of money, interest
be deemed to have been reasonably due shall be that stipulated in writing.
ascertained). (Ibid.) Interest due shall itself earn legal
interest from the time it is judicially
The actual base for the computation of legal demanded;
interest shall, in any case, be on the amount
finally adjudged. (Ibid.) b. In the absence of stipulation, the rate of
interest shall be 6% per annum,
Monetary interest and compensatory computed from default (i.e. judicial or
interest extrajudicial demand) subject to
provisions of Art.1169 of the Civil Code;
Monetary interest must be expressly stipulated
in writing and it must be lawful. (NCC, Art. 1956) c. When an obligation, not constituting a
loan or forbearance of money, is
The ruling in Eastern Shipping Lines has now breached, an interest on the amount of
been modified by Bangko Sentral ng Pilipinas damages awarded may be imposed at
Monetary Board Circular No. 799 Series of the discretion of the court at the rate of
2013, providing that: 6% per annum. No interest, however,
shall be adjudged on unliquidated
The rate of interest for the loan or forbearance claims or damages except when or until
of any money, goods or credits and the rate the demand can be established with
allowed in judgments, in the absence of an reasonable certainty.
express contract as to such rate of interest, shall
be six percent (6%) per annum. (BSP Circular No. d. Where the demand is established with
799, July 1, 2013) reasonable certainty, the interest shall
begin to run from the time the claim is
Prospective application of BSP Circular No. made judicially or extrajudicially (NCC,
799 Art. 1169); and
It should be noted, nonetheless, that the new e. When such certainty cannot be so
rate could only be applied prospectively and not reasonably established at the time the
retroactively. Consequently, the twelve percent demand is made, the interest shall begin
(12%) per annum legal interest shall apply only to run only from the date the judgment
until June 30, 2013. Come July 1, 2013 the new of the court is made (at which time the
rate of six percent (6%) per annum shall be the quantification of damages may be
prevailing rate of interest when applicable. deemed to have been reasonably
(Nacar v. Gallery Frames, G.R. No. 189871, August ascertained). The actual base for the
13, 2013) computation of legal interest shall, in
any case, be on the amount finally
The new guidelines on the application of adjudged.
legal Interest
When the judgment of the court awarding a
1. When an obligation, regardless of its source sum of money becomes final and executory,
(i.e.; law, contracts, quasi-contracts, delicts or whether the case falls under under
quasi-delicts) is breached, the contravenor paragraph (a) or (c) above, the rate shall be
can be held liable for damages and the 6% per annum from such finality until its
provisions under Title XVIII on Damages of satisfaction, this interim period being
the Civil Code govern in determining the deemed to be by then an equivalent to a
measure of recoverable damages; and forbearance of credit. (Nacar v. Gallery
Frames, G.R. No. 189871, August 13, 2013)
2. For the award of interest in the concept of
actual and compensatory damages, the rate NOTE: Judgments that have become final and
of interest and its accrual is imposed as executory prior to July 1, 2013, shall not be
follows: disturbed and shall continue to be implemented.
(Ibid)
Basis for the interest rate for compensatory 2. Judicial demand has been made upon the
interest borrower. (NCC, Art. 2212)
1. Central Bank Circular No. 799 – 6% per NOTE: Such accrued interest will bear interest at
annum in cases of: the legal rate (NCC, Art. 2212) unless, a different
rate is stipulated. (Hodges v. Regalado, 69 Phil.
a. Loans; 588)
b. Forbearance of money, goods and
credits; and Increase in Interest Rates
c. Judgment involving such loan or
forbearance No increase in interest shall be due unless such
increase has also been expressly stipulated.
2. Art. 2209 – 6% per annum in cases of: (Security Bank &Trust Co. v RTC, G.R. No. 113926,
October 23, 1996; Spouses Toring v. Ganzon-Olan
a. Other sources (i.e. sale); G.R. No. 168782, October 10, 2008)
b. Damages arising from injury from
person; and The unilateral determination and imposition of
c. Loss of property which does not involve increased rates is violative of the principle of
a loan. mutuality of contracts ordained in Article 1308
of the Civil Code. One-sided impositions do not
3. Interest accruing from unpaid interest have the force of law between the parties,
(compound interest) – Interest due shall earn because such impositions are not based on the
interest from the time it is judicially parties’ essential equality. (NSBCI v. PNB, G.R. No.
demanded although the obligation is silent 148753, July 30, 2004)
upon this point. (NCC, Art. 2212)
Governing rule on usurious transactions
Forbearance
CB Circular No. 905 has expressly removed the
Forbearance signifies the contractual obligation interest ceilings prescribed by Usury Law; thus,
of the creditor to forbear during a given period of the said law has become legally non-existent.
time to require the debtor payment of an existing
debt then due and payable. Such forbearance of NOTE: It did not repeal or amend the usury law
giving time for the payment of a debt is, in but merely suspended its effectivity. (Security
substance, a loan. Bank and Trust Company v. RTC of Makati, G.R.
No. 113926, October 23, 1996)
Compounding of interest
There is certainly nothing in said circular which
There must first be a stipulation of payment of grants lenders carte blanche authority to raise
interest and this interest may earn interest only interest rates to levels which will either enslave
when it is judicially demanded, although the their borrowers or lead to a hemorrhaging of
obligation is silent upon this point. (NCC, Art. their assets. Stipulations authorizing iniquitous
669
Special Contracts – Credit Transactions
or unconscionable interests are contrary to principal at varying rates (7.5% per annum
morals, if not against the law. (Rey vs. Anson, G.R. for dollar obligation and 16.75% or 21% per
No. 211206, November 7, 2018) annum on peso obligation). In default of
payment, ERMA requested for restructuring
When Usury Law does not apply of the agreement and offered a certain
property as collateral. However, Security
1. A contract for the lease of property is not a Bank restructured only partially which ERMA
loan; hence, the rental paid is not governed did not accept. Security Bank demanded
by the Usury Law (Tolentino v. Gonzales, 50 payment against ERMA and the sureties for
Phil. 5, G.R. No. 26085, August 12, 1927); or the loans inclusive of interest and penalty
charges with additional claim for Interest of
2. The increase of the price of a thing sold on 20% per annum on the peso obligation and
credit over its cash sale price is not interest 7.5% per annum on the dollar obligation
within the purview of the Usury Law, if the from November 1, 1994 until fully paid and
sale is made in good faith and not as a mere penalty charge of 2% per month of the total
pretext to cover a usurious loan. (Manila outstanding principal and interest due and
Trading v. Tamaraw, G.R. No. L-22995, unpaid. The RTC ruled in favor of SBC but did
February 28, 1925) not impose the additional claims.
Such price is the selling price for a sale made a. Whether ERMA and sureties are liable for
on the installment plan. Rationale behind the the additional claim?
invalidity of unconscionable interest rate in b. Whether there is novation which would
a loan despite the suspension of the Usury release the sureties from liability?
law.
A:
Courts may simply reduce unreasonable
interests a. NO. The Regional Trial Court denied
Security Bank's additional claims for
Interest stipulated by the contracting parties is interests and penalty charges for being
valid however if the interest rate agreed upon is iniquitous, and imposed instead a 12% legal
iniquitous and unconscionable, the courts may interest on the total outstanding obligation.
reduce the same as reason and equity demand. In making this ruling, the Regional Trial
(Imperial v. Jaucian, G.R No. 149004, April 14, Court took into account the partial payments
2004) (Macalinao v. Bank of the Philippine made by petitioners, their efforts to
Islands, G.R. No. 175490, September 17, 2009) settle/restructure their loan obligations and
the serious slump in their export business in
In the case of Medel v. CA, G.R. No. 131622, 1993. The Regional Trial Court held that,
November 27, 1998, the court ruled that while under those circumstances, it would be
stipulated interest of 5.5% per month on a loan "iniquitous, and tantamount to merciless
is usurious pursuant to CBC No. 905, the same forfeiture of property" if the interests and
must be equitably reduced for being iniquitous, penalty charges would be continually
unconscionable and exorbitant. It is contrary to imposed.
morals. It was reduced to 12% per annum in
consonant with justice and fair play. b. NONE. The Regional Trial Court and the
Court of Appeals were in agreement that
Q: ERMA obtained credit facility from while there were ongoing negotiations
Security Bank Co. by virtue of the Credit between Erma and Security Bank for the
Agreement they executed. They also executed restructuring of the loan, the same did not
Suretyship Agreement whereby Ernesto materialize. Erma offered to restructure its
Marcelo, President, and Sergio Ortiz – Luiz, Jr, entire outstanding obligation and delivered
Vice-President are bound by the Credit TCT No. M-7021 as collateral, to which
Agreement and solidariliy liable with ERMA Security Bank counter-offered a partial
for payment. Erma obtained various peso and restructuring or only up to P5,000,000. This
dollar denominated loans from Security Bank counteroffer was not accepted by Erma.
evidenced by promissory notes. Under these There was no new contract executed
promisorry notes, the Interest on the between the parties evidencing the
671
Special Contracts – Deposit
DEPOSIT 5. Informal – no particular form is required for
the contract.
Deposit is a contract whereby a person
(depositor) delivers a thing to another 6. It is gratuitous, unless there is a:
(depositary), for the principal purpose of
safekeeping it, with the obligation of returning it a. Contrary agreement;
when demanded. (Pineda, 2006) b. The depositary is engaged in the
business of storing goods, like a
A contract of deposit is constituted from the warehouseman (NCC, Art. 1965); or
moment a person receives a thing belonging to c. Where the property is saved from
another, with the obligation of safely keeping it destruction without knowledge of the
and returning the same upon demand. (NCC, Art. owner, the latter is bound to pay the
1962) other person just compensation (as in
case of involuntary deposit).
Its principal purpose is safekeeping and
returning the same. NOTE: Deposit shall be considered as a loan
if there is a stipulation for the payment of
When contract of deposit is perfected interest. (Aquino v. Deala, 63 Phil. 582,
October 21, 1936) The reason is that
A deposit, being a real contract, is perfected by interest can only arise from a contract of
delivery (NCC, Art. 1316), but an agreement to loan (mutuum).
constitute a deposit is merely consensual, and is
therefore binding upon mere consent. (NCC, Art. Q: Is there an instance where there is
1963) compensation even though the
depositary is not engaged in business of
Characteristics of contract of deposit storing goods or there is no agreement
as to compensation?
1. Real contract – it can only be perfected by the
delivery of the object of the contract. (NCC, A: YES. When during a fire, flood, storm, or
Art. 1316) or an agreement to constitute other calamity, property is saved from
deposit is binding but the deposit itself is destruction by another person without the
not perfected until the delivery of the thing. knowledge of the owner, the latter is bound
(NCC, Art. 1963) to pay the former just compensation. (NCC,
Art. 2168)
NOTE: There is no consensual contract of
deposit; there is only a consensual promise 7. The depositary cannot use the thing
to deliver which is binding if such is deposited, unless:
accepted.
a. Expressly permitted by the depositor;
2. Object of the contract must be a movable or
property. This rule applies only to extra- b. Preservation of the thing requires its
judicial deposit. Thus, in cases of judicial use, but only for said purpose. (NCC, Art.
deposit, the subject matter may be a real 1977)
property; or
Deposit v. Mutuum, Commodatum, Agency,
3. Purpose is for the safekeeping of the thing Lease and Sale
deposited. (NCC, Art. 1962) This must be the
principal purpose and not only secondary; DEPOSIT MUTUUM
Purpose
NOTE: If safekeeping is merely secondary, Safekeeping/custody Consumption
the contract is not a deposit but some other When to return
contract. Upon expiration of
Upon demand of the
the term granted to
4. Principal – its existence is not dependent on depositor.
the borrower.
another contract. Subject Matter
673
Special Contracts – Deposit
immovable. but are considered simple loans because they
earn interest. (NCC, Art. 1980) Bank deposits are
in the nature of irregular deposit but they are
Generally
really loans governed by the law on loans. (De
gratuitous
Always Leon, 2013) (1997, 1998, 2009 Bar)
Cause but may be
onerous
compensate
NOTE: An irregular deposit is a deposit in which
d
the depositary is not to return the specific
Upon order of
When money deposited, but he is to return an equal
the court or Upon
must the sum to the depositor.
when demand of
thing be
litigation is depositor.
returned Nature of advance payment in a contract of
ended.
sale
Person who
In whose Depositor or
has a right or
behalf it third person A so called deposit of an advance payment in the
in behalf of
is held designated. case of a sale is not the deposit contemplated
the winner.
under Art. 1962. It is that advance payment
upon which ownership is transferred to the
Ownership of the thing deposited in a
seller once it is given subject to the completion
contract of deposit of payment by the buyer under an agreement.
(Cruz v. Auditor General, G.R. No. L-12233, May
The depositor need not be the owner of the thing 30, 1959)
deposited because the purpose of the contract is
safekeeping and not transfer of ownership. (NCC, PARTIES TO A CONTRACT OF DEPOSIT
Art. 1984)
1. Depositary – to whom the thing is deposited;
NOTE: A deposit may also be made by two or and
more persons each of whom believes himself 2. Depositor – the one who deposits the thing.
entitled to the thing deposited with a third
person, who shall deliver it in a proper case to
Effects of incapacity of the depositary or
the one to whom it belongs.
depositor
Rent of safety deposit boxes
1. If the depositary is capacitated, he is subject
to all the obligations of a depositary whether
The rent of safety deposit boxes is an ordinary the depositor is capacitated or not (NCC, Art.
contract of lease of things and not a special kind
1970); and
of deposit because the General Banking Law of
2000 has excluded the renting out of safety
NOTE: Under the law, “persons who are capable
deposit box where the bank shall act as agent or
cannot allege the incapacity of those with whom
depositary with the obligation to keep the funds,
they contracted.” (NCC, Art. 1397)
securities and other effects which it receives duly
separate from the bank’s own assets and
2. If the depositary is incapacitated, he does not
liabilities.
incur the obligation of a depositary.
However, he is liable to:
The case of Sia v. CA (G.R. No. 102970, May 13,
1993) enunciating that a rent of a safety deposit
(1) return the thing deposited while still in
box is a special kind of deposit, was decided
his possession; or
under the former General Banking Act. However,
the Supreme Court has not yet decided a case
(2) pay the depositor the amount by which he
abandoning the ruling in Sia v. CA, making it
may have benefited himself with the thing or
conform with the General Banking Law of 2000.
its price subject to the right of any third
person who acquired the thing in good faith,
Fixed, savings and current deposits in banks
in which case the depositor may only bring
an action against him for its recovery. (NCC,
Fixed, savings and current deposits in banks and
Art. 1971)
other similar institutions are not true deposits
Diligence required in a contract of deposit Duty of the depositary’s heir who sold the
675
Special Contracts – Deposit
thing deposited in good faith to believe that the thing has not been lawfully
acquired by the depositor, the former may
The *depositor’s heir who in good faith may return the same.
have sold the thing he did not know was
deposited, shall only be bound to return the price If the depositary knew the identity of the
he may have received or to assign his right of owner of the thing deposited
action against the buyer in case the price has not
been paid him. (NCC, Art. 1991) The depositary may not return the thing to the
owner should he knew of the identity of the
The provision applies only when the depositary latter. He is not authorized to return the thing
has died and left heir/s who took possession of unceremoniously to the alleged owner without
the thing in the concept of an owner and sold it the knowledge of the depositor. His duty is
in good faith to a third person. merely to advise the owner of the deposit.
NOTE: The word *“depositor’s” in this part If the depositor insists on his ownership as
should be read as “depositary’s.” (De Leon, against the true owner, the depositary may file
2013) If the heir acted in bad faith, he is liable for an interpleader suit against both of them to avoid
damages. The sale or appropriation of the thing responsibility. If the identity of the true owner
deposited constitutes estafa. [(RPC, Art. 315 (b)] cannot be ascertained, the depositary may return
the thing to the depositor. (Pineda, 2006)
To whom it must be returned
Where it must be returned
1. The depositor, to his heirs and successors,
or to the person who may have been GR: The thing deposited must be returned at the
designated in the contract (NCC, Art. 1972); place agreed upon.
2. If the depositor was incapacitated at the time
of making the deposit, to his guardian or XPN: In the absence of stipulation, at the place
administrator or to the depositor himself where the thing deposited might be, even if it
should he acquire capacity (NCC, Art. 1970,); should not be the same place where the original
3. Even if the depositor had capacity at the deposit was made provided the transfer was
time of making the deposit but he accomplished without malice on the part of the
subsequently loses his capacity during the depositary. (NCC, Art. 1987)
deposit, the thing must be returned to his
legal representative (NCC, Art. 1986); or When it must be returned
4. Two or more persons each claiming to be
entitled to a thing may deposit the same GR: The thing deposited should be returned
with a third person. In such case, the third upon demand or at will, whether or not a period
person assumes the obligation to deliver to has been stipulated.
the one to whom it belongs.
XPNs:
NOTE: The action to compel the depositors to
settle their conflicting claims among themselves 1. The thing is judicially attached while in the
would be in the nature of an interpleader. (Sec. 1, depositary’s possession;
Rule 62, Rules of Court) 2. The depositary was notified of the
opposition of a third person to the return or
Proving the ownership of the thing deposited the removal of the thing deposited (NCC, Art.
1988); or
GR: The depositary cannot demand that the 3. In case of gratuitous deposit, if the
depositor should prove his ownership of the depositary has a justifiable reason for not
thing deposited. (NCC, Art. 1984) keeping the deposit. If the depositor refuses,
the depositary may secure its consignation
XPN: Should he discover that the thing has been from the court. (NCC, Art. 1989)
stolen and who its true owner is, he must advise
the latter of the deposit. VOLUNTARY DEPOSIT
NOTE: If the depositary has reasonable grounds It is a contract or judicial relation wherein a
A contract of deposit may be entered into orally 4. Not to commingle things if so stipulated;
or in writing. (NCC, Art. 1969)
5. GR: Not to make use of the thing deposited;
NOTE: The above article follows the general rule
that contracts shall be obligatory in whatever XPNs:
form they may have been entered into provided
all the essential requisites for their validity are 1. When preservation of thing deposited
present. (NCC, Art. 1356) Thus, except for the requires its use;
delivery of the thing, there are no formalities 2. When authorized by depositor.
required for the existence of the contract. (De
Leon, 2013) NOTE:
Difference between voluntary and necessary GR: In such case, it is no longer a deposit but
deposit a contract of loan or commodatum, as the
case may be.
There is a freedom of action which is implied in
the phrase “delivery is made by the will of the XPN: If the principal reason for the contract
depositor,” unlike in the case of a necessary is still safekeeping, it is still deposit.
deposit. In other words, the depositor in a
voluntary deposit is free to choose the 6. When the thing deposited is delivered
depositary. sealed and closed:
677
Special Contracts – Deposit
receptacle. (Rabuya, 2015) 1. In compliance with a legal obligation –
Governed by the law establishing it, and in
7. GR: Pay for any loss or damage that may case of deficiency, the rules on voluntary
arise due to his fault; deposit; and
2. On occasion of a calamity – Governed by the
XPN: Liability of loss through fortuitous provisions concerning voluntary deposit.
event. (NCC, Art. 1968–1971)
1. It covers liability in hotel rooms which A safety deposit box in a hotel is a contract of
comes under the term “baggage” or articles necessary deposit. The existing relationship is
such as clothing as are ordinarily used by one of depositor and depositary. (YHT Realty
travelers; and Corporation v. CA, G.R. No. 126780, February 17,
2. It includes lost or damages in hotel’s 2005)
annexes such as vehicles in the hotel’s
garage. JUDICIAL DEPOSIT
Q: Venus was the owner of Suzuki Grand Judicial deposit (sequestration) takes place
Vitara which was insured with Pioneer when an attachment or seizure of property in
Insurance for loss and damage. When she litigation is ordered by a court. (NCC, Art. 2005)
arrived and checked in at Heaven’s Hotel
before midnight, its parking attendant, John, It is auxiliary to a case pending in court. The
got the key to said Vitara. At about one in the purpose is to maintain the status quo during the
morning, Venus was awakened in her room pendency of the litigation or to insure the right
by a telephone call from the Hotel Chief of the parties to the property in case of a
Security Officer who informed her that her favorable judgment. (De Leon, 2013)
Vitara was carnapped while it was parked
unattended at the parking area of the bank Object of judicial deposit
near the hotel. May the insurance company,
by right of subrogation, recover from the The object of judicial sequestration may be
hotel the damages it paid to Venus? movables or immovable. (NCC, Art. 2006)
A: YES. The contract of necessary deposit Q: When will the properties sequestered
existed between the insured Venus and the cease to be in custodia legis?
hotel. Article 1962, in relation to Article 1998, of
the Civil Code defines this contract. Plainly, A: They cease to be in custodia legis when the
Venus deposited for safekeeping her vehicle insolvency proceedings of a partnership
through the hotel’s employee. From Venus’ terminated because the assignee in insolvency
delivery, when she handed the keys to John, the has returned the remaining assets to the firm,
contract was perfected. Thus, there is the said properties cease to be in custodia legis. (Ng
obligation of safely keeping it and returning it. Cho Cio, et al. v. Ng Diong & Hodges, L-14832,
Ultimately, the hotel is liable for the loss of January 28, 1961)
Venus’ vehicle. (Durban Apartments Corporation
v. Pioneer Insurance Surety Corporation, G.R. No. Obligation of depositary of sequestered
179419, January 12, 2011) property
Right to retain given to hotel-keeper or inn- The depositary of sequestered property is the
keeper person appointed by the court. (NCC, Art. 2007)
He has the obligation to take care of the property
The hotel-keeper has a right to retain the things with the diligence of a good father of a family
brought into the hotel by the guest, as a security (NCC, Art. 2008) and he may not be relieved of
for credits on account of lodging, and supplies his responsibility until the litigation is ended or
usually furnished to hotel guests. (NCC, Art. the court so orders. (NCC, Art. 2007; De Leon,
2004) 2013)
679
Special Contracts – Deposit
The law on judicial deposit is remedial or Laws that govern contract of real mortgage
procedural in nature. Hence, the Rules of Court
are applicable. The relevant provisions of the 1. NCC;
Rules of Court are Rule 57 (Preliminary 2. Mortgage Law;
Attachment), Rule 59 (Receivership), and Rule 60 3. Property Registration Decree (PD 1529);
(Replevin). Rule 127 provides for attachment in 4. Sec. 194, as amended by Act No. 3344,
criminal cases. (De Leon, 2013) Revised Administrative Code (Phil. Bank of
Commerce v. De Vera, G.R. No. L- 18816,
REAL MORTGAGE December 29, 1962); and
5. R.A. 4882 – law governing aliens who
Real estate mortgage (REM) is a contract become mortgagees.
whereby the debtor secures to the creditor the
fulfillment of the principal obligation, specially Kinds of real mortgages
subjecting to such security immovable property
or real rights over immovable property in case 1. Voluntary or Conventional mortgage – It is
the principal obligation is not fulfilled at the time constituted voluntarily by the contracting
stipulated. (12 Manresa 467) parties or by the will of the owner of the
property on which it was created;
Characteristics of real mortgage
2. Legal mortgage – It is required by law to be
1. It is a real right; executed in favor of certain persons (NCC,
Arts. 2125, par. 2; 2082 and 2083); and
2. It is an accessory contract;
3. Equitable mortgage – Although lacking the
NOTE: If the principal obligation is formalities of a mortgage, shows the
VOID, the mortgage is also VOID. (Reyes intention of the parties to make the property
v. Gonzales, [C.A.] 45 O.G. No. 2, p. 831) a security for debt.
But if a mortgage is void because it was
not made by the owner of the property, Consideration in mortgage
the principal contract of loan may still
be valid. (PNB v. Rocha, G.R. No. L-32260, Its consideration is the same as of the principal
December 29, 1930) contract from which it receives its life, and
without which it cannot exist as an independent
3. Unilateral; it creates only an obligation on contract. (China Banking Corp. v. Lichauco, G.R.
the part of the creditor who must free the No. L-22001, November 4, 1924)
property from encumbrance once the
obligation is fulfilled. Requisites for a valid constitution of a real
mortgage (1991, 1994, 1996, 1999, 2001
4. It is indivisible; Bar)
681
Special Contracts – Deposit
To alienate the mortgaged property but the Registration of mortgage is a matter of right. By
mortgage shall remain attached to the property. executing the mortgage, the mortgagor is
(NCC, Art. 2130) understood to have given his consent to its
registration, and he cannot be permitted to
Q: Bucton alleged that Concepcion borrowed revoke it unilaterally. Registration operates as a
the title to her house and lot on the pretext notice of the mortgage to others, but neither adds
that she was going to show it to an interested to its validity nor converts an invalid mortgage
buyer. However, Concepcion, instead, into a valid one between the parties.
obtained a loan in the amount of P30,000.00
from Rural Bank of El Salvador (Rural Bank) Mortgage as a real and inseparable right
that as security for the loan, Concepcion
mortgaged Bucton’s house and lot to Rural Mortgage is a real and inseparable right. The
Bank in her personal capacity, using a forged mortgage directly and immediately subjects the
SPA. property upon which it is imposed, whoever the
possessor may be, to the fulfillment of the
Would Bucton be bound by such real estate obligation for whose security it was constituted.
mortgage if the Rural Bank later on (NCC, Art. 2126)
forecloses the property, after Concepcion
defaults in payment? Effect of registration as to better right of
third parties
A: NO. The mere fact that the agent was
authorized to mortgage the property is not A registered mortgage right over property
sufficient to bind the principal, unless the deed previously sold is inferior to the buyer’s
was executed and signed by the agent for and on unregistered right.
behalf of his principal. The authorized agent
failed to indicate in the mortgage that she was Reason: If the original owner had sold the thing,
acting for and on behalf of her principal. The then he no longer had ownership and free
Real Estate Mortgage, explicitly shows on its disposal of it so as to be able to mortgage it.
face, that it was signed by Concepcion in her own (State Investment House, Inc. v. CA, G.R. No.
name and in her own personal capacity. Thus, 115548, March 5, 1996)
Bucton cannot be bound by the acts of
Concepcion. (Bucton v. Rural Bank of El Salvador, Prohibition against encumbrance of
G.R. No. 179625, February 24, 2014) mortgaged land, without mortgagors’
consent
Rights of a mortgagee
In this case, rights over the property, which
To claim from a third person in possession of the came into existence after the execution of the
mortgaged property the payment of the part of deed, cannot be annotated as an adverse claim
the credit secured by the property which said on the title of the land over the mortgagee’s
third person possesses. (NCC, Art. 2129) opposition. (Rivera v. Peña, G.R. No. L-11781,
March 24, 1961)
Prior demand must have been made on the
debtor and the latter failed to pay. (Bank of the Subsequent registration of an adverse claim
Philippine Islands v. V. Concepcion E. Hijos, G.R.
No. 27701, July 21, 1928) A prior registration of a lien creates a
preference. Hence, the subsequent annotation of
Right to possession an adverse claim cannot defeat the rights of the
mortgagee or the purchaser at the auction sale
The mortgagee has no right or claim to the whose rights are derived from a prior mortgage
possession of the property. Such possession is validly registered.
only a security for the payment of the sum
borrowed. The debtor merely subjects the Q: Laguna West Multi-Purpose Cooperative is
property to a lien but the ownership thereof is a cooperative recognized under Republic Act
not parted. (De Leon, 2013) No. 6657 or the Comprehensive Agrarian
Reform Law. It allegedly entered into a joint
Registration of mortgage venture agreement with farmer-beneficiaries
683
Special Contracts – Deposit
2128) borrowers as it makes available additional
funds without their having to execute
NOTE: Even if the alienation is not registered, it additional security documents, thereby
would still be valid as between the parties. saving time, travel, loan closing costs, costs
(Lopez v. Alvarez, GR No. L-3438, October 12, of extra legal services, recording fees. etc.
1907) There is no need to obtain the consent of
the debtor/mortgagor. Statement of the amount in a mortgage
contract in a dragnet clause
Stipulations on mortgage contract
The amount stated in the contract is not
1. Including after-acquired properties controlling in case of mortgage securing
future advancements. The amount named
Status: Valid in the contract does not limit the amount
for which the mortgage stand as a security,
Purpose: To maintain, to the extent of the if, from the four corners of the instrument
allowed by the circumstances, the original the intent to secure future and other
value of the property given as a security. indebtedness can be gathered.
Such stipulation is common where the
properties given as collateral are perishable Q: Petitioner obtained a loan of P20K
or subject of inevitable wear and tear. from defendant Rural Bank of Kawit.
The loan was secured by a REM over a
2. Blanket or Dragnet Clause parcel of land. The mortgage contract
states that the mortgage will cover the
Status: Valid payment of the loan of P20K and such
other loans or other advances already
A dragnet clause is a mortgage provision obtained or to be obtained by the
which is specifically phrased to subsume all mortgagors from the bank. The loan of
debts of past or future origin. It is a valid P20k was fully paid. Thereafter they
and legal undertaking, and the amounts again obtained a loan of P18K, secured
specified as consideration in the contracts by the same mortgage. The spouses
do not limit the amount for which the defaulted. The bank extra-judicially
pledge or mortgage stands as security, if foreclosed the mortgage. Was the
from the four corners of the instrument, the foreclosure sale valid?
intent to secure future and other
indebtedness can be gathered. A pledge or A: YES. It has long been settled that
mortgage given to secure future mortgages given to secure future
advancements is a continuing security and advancements are valid and legal contracts;
is not discharged by the repayment of the that the amounts named as consideration in
amount named in the mortgage until the full said contract do not limit the amount for
amount of all advancements shall have which the mortgage may stand as security,
been paid. (Premiere Development Bank v. if from the four corners of the instrument
Central Surety & Insurance, Inc., G.R. No. the intent to secure future and other
176246, February 13, 2009) indebtedness can be gathered. A mortgage
given to secure advancement is a
A mortgage with a dragnet clause is an continuing security and is not discharged
“offer” by the mortgagor to the bank to by repayment of the amount named in the
provide the security of the mortgage for mortgage, until the full amount of the
advances of and when they were made. advancements is paid. (Mojica v. CA, G.R. No.
94247, September 11, 1991)
XPN: it can be said that the “offer” by the
mortgagor to the bank to provide the 3. Forbidding of alienation or assignment of
security of the mortgage for advances of mortgage credit
and when they were made.
Status: Void. (NCC, Art. 2130)
NOTE: It is a clause which operates as a
convenience and accommodation to the Reason: Such prohibition would be contrary
685
Special Contracts – Deposit
against the mortgage-debtor, which is to recover JUDICIAL FORECLOSURE
the debt, but he has the option to either:
Nature of judicial foreclosure
1. File a personal action for collection of sum of
money; or A judicial foreclosure is an action quasi in rem. It
2. Institute a real action to foreclose on the is based on a personal claim against a specific
mortgaged property. property of the defendant. (Ocampo v.
Domalanta, G.R. No. L-21011, August 30, 1967)
NOTE: If he elects to foreclose, he waives the
action for the collection of the unpaid debt, Steps in judicial foreclosure
except only for the recovery of whatever
deficiency may remain in the outstanding 1. Judicial action brought to the proper court
obligation of the debtor-mortgagor after having jurisdiction;
deducting the old price in the public auction sale.
The remedies are alternative, not cumulative, 2. Order by the court for mortgagor to pay
each remedy is complete by itself. mortgage debt if the court finds the
complaint to be well-founded, within a
Kinds of foreclosure period of not less than 90 days nor more
than 120 days from the entry of judgment;
1. Judicial – Governed by Rule 68, Rules of
Court; 3. Sale to the highest bidder at a public auction
2. Extrajudicial – The mortgagee is given a SPA if the mortgagor fails to pay at the time
to sell the mortgaged property. (Act No. directed in the court order;
3135)
4. Confirmation of the sale, which operates to
Judicial foreclosure v. Extrajudicial divest the rights of all parties to the action
foreclosure (1999 BAR) and vest their rights to the purchaser;
NOTE: In the absence of a certificate of sale, There can be no redemption of the property after
no title is passed by the foreclosure confirmation. Such confirmation retroacts to the
proceedings to the vendee. date of the auction sale. After the confirmation,
the previous owners lose any right they may have
Action for foreclosure of mortgage survive had over the property, which rights in turn
the death of mortgagor vested on the Purchaser of the property.
(Lonzame v. Amores, G.R. No. L-53620, January
An action for foreclosure of mortgage survives 31, 1985)
the death of mortgagor because the claim is not
a pure money claim but an action to enforce a Right to recover deficiency
mortgage lien. Being so, the judgment rendered
therein may be enforced by a writ of execution. GR: Mortgagee has the right to recover
The action may be prosecuted by the interested deficiency by way of mere motion.
person against the executor or administrator
independently of the testate or intestate XPN: When the mortgage was executed by a
proceedings of the settlement of the mortgagor’s third person to secure the obligation of a debtor,
estate “for the reason that such claims cannot in such third person not having assumed personal
any just sense be considered claims against the liability for the payment of the debt, the extent of
estate, but the right to subject specific property recovery in the judgment foreclosure shall be
to the claim arises from the contract of the limited to the purchase price at the foreclosure
debtor whereby he has during life set aside sale. The remedy of the mortgagee in such case
certain property for its payment, and such is to proceed against the debtor in an ordinary
property does not, except in so far as its value action for sum of money to recover the balance
may exceed the debt, belong to the estate.” of debt due. (Rabuya, 2017)
(Testamentaria de Don Amadeo Matute Olave v.
Canlas, G.R. No. L- 12709, February 28, 1962) EXTRAJUDICIAL FORECLOSURE
Remedies of the mortgagee in case of death An extrajudicial foreclosure may only be effected
of the debtor if in the mortgage contract covering a real estate,
a clause is incorporated therein giving the
1. To waive the mortgage and claim the entire mortgagee the power, upon default of the debtor,
debt from the estate of the mortgagor as an to foreclose the mortgage by an extrajudicial sale
ordinary claim; of the mortgage property. (Act No. 3135, Sec. 1,
2. To foreclose the mortgage judicially and as amended by Act No. 4148)
prove any deficiency as an ordinary claim;
or Authority to sell
3. To rely on the mortgage exclusively,
foreclosing the same at any time before it is The authority to sell may be done in a separate
barred by prescription, without right to file document but annexed to the contract of
claim for any deficiency. (Maglaque v. mortgage. The authority is not extinguished by
Planters Development Bank, G.R. No. 109472, the death of the mortgagor or mortgagee as it is
May 18, 1999) an essential and inseparable part of a bilateral
agreement. (Perez v. PNB, G.R. No. L-21813, July
Necessity for confirmation of court in 30, 1966)
foreclosure sale (Judicial Foreclosure)
Steps in extrajudicial foreclosure of real
A foreclosure sale (in judicial foreclosure) is not estate mortgage (AM No. 99-10-05-0, January
complete until it is confirmed and before such 15, 2000, further amended on August 7,
687
Special Contracts – Deposit
2001) province in which the property sold is
situated, such sale shall be made in said
1. Filing of an application before the Executive place or in the municipal building of the
Judge through the Clerk of Court; municipality in which the property or part
thereof is situated. (Act No. 3135, Sec. 2)
In extrajudicial foreclosure of real
mortgages in different locations covering a 5. The clerk of court shall issue a certificate of
single indebtedness, only one filing fee payment indicating the amount of
corresponding to such debt shall be indebtedness, the filing fees collected, the
collected. mortgages sought to be foreclosed, the
description of the real estates and their
2. Clerk of court will examine whether the respective locations;
following requirements of the law have been
complied with: 6. The certificate of sale must be approved by
the Executive Judge; and
a. Posting of notice in not less than 20
days in at least three public places of the 7. After the redemption has expired, the clerk
municipality or city where the property of court shall archive the records.
is situated. Notices are given to secure
bidders and to prevent a sacrifice of the NOTE: The law covers only real estate mortgages.
property. (Sps. Suico v. Philippine It is intended merely to regulate the extrajudicial
National Bank, G.R. No. 170215, August sale of the property mortgaged if and when the
28, 2007) mortgagee is given a special power or express
b. Publication (if property is worth more authority to do so in the deed itself or in a
than P400.00) once a week for at least document annexed thereto. (Luna v. Encarnacion,
three consecutive weeks in a newspaper G.R. No. L-4637, June 30, 1952; Ponce de Leon v.
of general circulation in the city or Rehabilitation Finance Corp., G.R. No. L-24571,
municipality. The notice shall be December 18, 1970)
published in a newspaper of general
circulation pursuant to Section 1, P.D. The authority to sell, is not extinguished by the
1079. death of either mortgagor or mortgagee. It is an
essential and inseparable part of a bilateral
3. The application shall be raffled among agreement. (Perez v. PNB, G.R. No. L-21813, July
different sheriffs; 30, 1996)
4. An auction sale may be had even with just Q: The Development Bank of the Philippines
one (1) participating bidder. The name/s of (DBP) and Clarges Realty Corporation
the bidder/s shall be reported by the Sheriff (Clarges) executed a Deed of Absolute Sale
or the Notary Public, who conducted the sale for the property. The parties agreed that all
to the Clerk of Court before the issuance of expenses to be incurred in connection with
the certificate of sale (As amended by the the transfer of title to Clarges would be borne
January 30, 2001 Resolution paragraph 5 of by the DBP. Moreover, the DBP bound itself
A.M. No. 99-10-05-0; Sps. Certeza et.al. v. Phil. under Clause 6 of the Deed of Absolute Sale
Savings Bank, G.R. No. 190078, March 5, to deliver a title to the property "free from
2010); any and all liens and encumbrances on or
before December 15, 1987." The DBP
The indivisibility of a real estate mortgage is succeeded in having the property registered
not violated by conducting two separate under its name. TCT No. S-16279 was
proceedings on mortgaged properties cancelled and, in its place, TCT No. 151178
located in different cities or municipalities was issued. However, TCT No. 151178
as long as each parcel of land is answerable contained annotations from the former TCT
for the entire debt. (Sps. Yu v. Philippine No. S-16279, specifically, the mortgage lien of
Commercial International Bank, G.R. No. the Philippine National Bank and a tax lien
147902, March 17, 2006) for unpaid taxes incurred by Marinduque
Mining and Industrial Corporation. DBP
No sale can be legally made outside the delivered to Clarges the owner's duplicate
A: YES. A lien, until discharged, follows the Sec 3 of Act No. 3135 does not require
property. Hence, when petitioner acquired the personal notice or any particular notice on
property, the bank also acquired the liabilities the mortgagor much less on his successors-
attached to it, among them being the tax liability in-interest where there is no contractual
to the Bureau of Internal Revenue. That the stipulation therefor.
unpaid taxes were incurred by the defunct
Marinduque Industrial and Mining Corporation NOTE: Unless the parties stipulate, personal
is immaterial. In acquiring the property, notice to the mortgagor in extrajudicial
petitioner assumed the obligation to pay for the proceedings is not necessary because Sec. 3
unpaid taxes. With petitioner capable of having of Act No. 3135 only requires the posting of
the tax lien cancelled, it cannot insist on the notice of the sale in three public places and
admission of its third-party complaint against the publication of that notice in a newspaper
the Asset Privatization Trust. The admission of a of general circulation. (Ramirez v. The
third-party complaint requires leave of court; Manila Banking Corp., G.R. No. 198800,
the discretion is with the trial court. If leave is December 11, 2013)
denied, the proper remedy is to file a complaint
to be docketed as a separate case. There was no Requisites for a newspaper to be deemed of
grave abuse of discretion in denying leave to general circulation
admit the third-party complaint against the
Asset Privatization Trust. As the Court of 1. It must be published for the dissemination
Appeals observed, the trial court would have of local news and general information;
wasted time and effort had it admitted the third- 2. It must have a bona fide subscription list of
party complaint. Respondent, the original paying subscribers;
plaintiff, had already rested its case when the 3. It must be published at regular intervals;
Motion for Leave was filed. The original case 4. It must be available to the public in general
would have dragged on with the addition of a and not just to a select few chosen by the
new party at a late stage of the trial. publisher, otherwise, the precise objective of
(Development Bank of the Philippines vs. Clarges publication of notice of sale will not be
Realty Corp., G.R. No. 170060, August 17, 2016, as realized; and
penned by J. Leonen) 5. It must not be devoted to the interests or
published for the entertainment of a
Notes on posting and publication under Act particular profession, trade, calling, race or
No. 3135: religion.
689
Special Contracts – Deposit
Q: MBTC granted a loan to spouses Peñafiel, Enjoining the implementation of writ
who mortgaged their two parcels of land in possession
Mandaluyong. The spouses defaulted in the
payment. MBTC instituted an extrajudicial As a rule, any question regarding the validity of
foreclosure proceeding under Act No. 3135. the mortgage or its foreclosure cannot be a legal
The Notice of Sale was published in ground for refusing the issuance of a writ of
Maharlika Pilipinas, which has no business possession. Regardless of whether or not there is
permit in Mandaluyong and its list of a pending suit for annulment of the mortgage or
subscribers shows that there were no the foreclosure itself, the purchaser is entitled to
subscribers from Mandaluyong. Did MBTC a writ of possession, without prejudice to the
comply with the publication requirement outcome of the case. Hence, an injunction to
under Section 3, Act No. 3135? prohibit the issuance of writ of possession is
entirely out of place. Prohibition does not lie to
A: NO. Maharlika Pilipinas is not a newspaper of enjoin the implementation of a writ of
general circulation in Mandaluyong where the possession. Once the writ of possession has been
property is located. To be a newspaper of issued, the trial court has no alternative but to
general circulation, it is enough that it is enforce the writ without delay. (Sps. Ong v. CA,
published for the dissemination of local news G.R. No. 121494, June 8, 2000)
and general information, that it has a bona fide
subscription list of paying subscribers, and that Effect of inadequacy of price in foreclosure
it is published at regular intervals. The sale
newspaper must be available to the public in
general, and not just to a select few chosen by GR: When there is a right to redeem, inadequacy
the publisher. Otherwise, the precise objective of of price is immaterial because the judgment
publishing the notice of sale in the newspaper debtor may reacquire the property easier at a
will not be realized. (Metropolitan Bank and low price or sell his right to redeem. (PNB v. CA,
Trust Company, Inc. v. Eugenio Peñafiel, G.R. No. G.R. No. 121739, June 14, 1999)
173976, February 27, 2009)
XPN: When the price is so inadequate as to
1. No certificate of posting is required shock the conscience of the court taking into
consideration the peculiarly circumstances
GR: A certificate of posting is not required, attendant thereto. (United Coconut Planters Bank
much less considered indispensable for the v. CA, G.R. No. 155912, August 17, 2007)
validity of a foreclosure sale under Act No.
3135. RECOVERY OF DEFICIENCY
A mortgagee may recover any deficiency in the If the mortgagee is a bank, the mortgagor
mortgage account, which is not realized in a may exercise a right of redemption and this
foreclosure sale. An independent civil action rule applies even if the foreclosure is judicial
may for the recovery be filed even during the in accordance with Rule 68 of the Rules of
period of redemption. (Tarnate v. CA, G.R. No. Court.
100635, February 13, 1995)
Period to exercise: within 90-120 days from
If the deficiency is embodied in a judgment, it is the date of the service of the order of
referred to as deficiency judgment. foreclosure or even thereafter but before the
order of confirmation of the sale.
NOTE: The action prescribes ten (10) years from
the time the right of action accrues. [NCC, Art. NOTE: The subsequent sale by the
1142(2)] purchaser to a third person of the
mortgaged property does not prevent the
REDEMPTION OF MORTGAGE court from granting the mortgagor a period
within which to redeem the property by
Redemption is a transaction by which the paying the judgment debt and the expenses
mortgagor reacquires or buys back the property of the sale and costs.
which may have passed under the mortgage or
divests the property of the lien which the Notice and hearing of a motion for
mortgage may have created. confirmation of sale are essential to the
validity of the order of confirmation. An
Persons entitled to exercise right of order of confirmation which is void due to
redemption lack of notice and hearing, may be set aside
anytime, and the mortgagor may still
1. Mortgagor or one in privity of title with the redeem the mortgaged property.
mortgagor;
2. Successors-in-interest under Sec. 29, Rule 2. Right of redemption – Right of the mortgagor
39, Rules of Court. to redeem the mortgaged property within
one year from the date of registration of the
Kinds of redemption certificate of sale. It applies in case of
extrajudicial foreclosure.
1. Equity of redemption – Right of mortgagor to
redeem the mortgaged property after his Where applicable: Extrajudicial foreclosure
default in the performance of the conditions
of the mortgage but before the sale of the Period to exercise: within 1 year from the
mortgaged property or confirmation of the date of registration of the certificate of sale.
sale by the court. The mortgagor pays the (Rules of Court Sec. 6, Act No. 3135; Sec. 28,
secured debt within the period specified. To Rule 39)
extinguish the mortgage and retain
ownership of the property, the mortgagor The right of redemption, as long as within
must pay the secured debt within the 90-day the period prescribed, may be exercised
period after judgement becomes final, or regardless of whether or not the mortgagee
even after foreclosure sale, but prior to its has subsequently conveyed the property to
confirmation. some other party. (Sta. Ignacia Rural Bank v.
CA, G.R. No. 97872, March 1, 1994)
Where applicable:
NOTE: Notwithstanding Act No 3135,
Judicial foreclosure of real estate mortgage juridical persons whose property is being
691
Special Contracts – Deposit
sold pursuant to an extrajudicial 2. Payment of the purchase price of the
foreclosure, shall have the right to redeem property plus 1% interest per month
the property in accordance with Section 47 together with the taxes thereon, if any, paid
of the General Banking Act until, but not by the purchaser with the same rate of
after, the registration of the certificate of interest computed from the date of
sale with the applicable Register of Deeds registration of the sale;
which in no case shall be more than three
(3) months after foreclosure, from the date 3. Written notice of the redemption must be
of the foreclosure sale, but not after the served on the officer who made the sale and
registration of the certificate of foreclosure a duplicate filed with the proper Register of
sale, whichever is earlier. Owners of Deeds (Sps. Yap v. Sps. Dy, G.R. No. 171868,
property that has been sold in a foreclosure June 27, 2011); and
sale prior to the effectivity of this General
Banking Act shall retain their redemption 4. Tender of payment within the prescribed
rights until their expiration. (RA 8791, Sec. period to make the redemption for future
47) enforcement. (Sec. 26, Act No. 3135; Sec. 8,
Rule 39, Rules of Court)
Q: X and Y, judgment creditors of A, obtained
the transfer of the title of the mortgaged NOTE: The filing of a court action to enforce
property in their names. Earlier, A executed a redemption, being equivalent to a formal offer to
mortgage over the same property in favor of redeem, would have the effect of “freezing” the
FGU Insurance. The latter mortgage was expiration of the one-year period. (Heirs of
registered. When A defaulted, FGU foreclosed Quisumbing v. PNB, G.R. No. 178242, January 20,
the property. A certificate of sale was 2009)
thereafter issued in FGU’s favor, which was
confirmed by the RTC. However, before the Summary of Redemption Period
new TCT could be issued, X and Y filed their
respective motion for intervention and to set 1. Extrajudicial (Act No. 3135)
aside the judgment alleging that they are the
new owners of the property and the failure a. Natural Person- one (1) year from
of FGU to implead X and Y in the action for registration of the certificate of sale
foreclosure deprived the latter of due with the Registry of Deeds.
process. Is the contention of X and Y correct?
NOTE: The statutory period of
A: NO. Subordinate lien holders acquire only a redemption is only directory and can be
lien upon the equity of redemption vested in the extended by agreement of the parties
mortgagor, and their rights are strictly provided:
subordinate to the superior lien of the
mortgagee. Such equity of redemption does not i. The agreement to extend is
constitute a bar to the registration of the voluntary; and
property in the name of the mortgagee. ii. The debtor commits to pay the
Registration may be granted in the name of the redemption price on a fixed date.
mortgagee but subject to the subordinate lien (Gojudo v. Traders Royal Bank, G.R.
holders’ equity of redemption, which should be No. 151098, March 21, 2006)
exercised within ninety (90) days from the date
the decision becomes final. This registration is b. Juridical Person – same rule as natural
merely a necessary consequence of the person.
execution of the final deed of sale in the
foreclosure proceedings. (Looyuko v. CA, G.R. No. c. Juridical Person (mortgagor) and
102696, July 12, 2001) Bank (mortgagee) – three (3) months
after foreclosure or before registration
Requisites for valid right of redemption of certificate of foreclosure whichever is
earlier. (RA 8791, Sec. 47)
1. Must be made within twelve (12) months
from the time of the registration of the sale NOTE: By an amendment by the General
in the Office of the Registry of Property; Banking Law of 2000, juridical mortgagors like
NOTE: Allowing redemption after the lapse of The purchaser or redemptioner shall not be
the statutory period, when the buyer at the entitled to receive the rents, earnings and
foreclosure sale does not object but even income of the property sold on execution or the
consents to the redemption, will uphold the value of the use and occupation thereof while the
policy of the law which is to aid rather than property is in the possession of the tenant. It
defeat the right of redemption. (Ramirez v. CA, shall belong to the judgment obligor until the
G.R. No. 98147, March 5, 1993) expiration of the period of redemption.
693
Special Contracts – Deposit
render the foreclosure ineffective against When writ of possession not available
them.
5. To question the legality of the foreclosure 1. Where mortgaged property under lease
proceedings or the effect of the alleged lack previously registered in the Registry of
of notice to them of such foreclosure. (G. Property or despite non-registration, the
Puyat & Sons v. PNC, G.R. No. L-16843, April mortgagee has prior knowledge of the
30, 1962) existence and duration of the lease (Ibasco v.
Caguioa, G.R. No. L62619, August 19, 1986);
Right to possession of third persons as 2. Where the mortgagor refuses to surrender
purchaser the property sold. The remedy is to file an
ordinary action for the recovery of
The purchaser in an extra-judicial foreclosure possession in order that the mortgagor may
sale is entitled to the possession of the property be given opportunity to be heard; and
and can demand that he be placed in possession 3. When third party is in actual possession
of the same either during (with bond) or after adverse to the judgment debtor. (Rules of
the expiration (without bond) of the redemption Court, Sec. 36, Rule 39; Act No. 3135, Sec. 6)
period therefor. (Sps. Marquez v Sps. Alindog, G.R.
No. 184045, January 22, 2014) Period of redemption is not a prescriptive
period
A writ of possession is an order whereby a
sheriff is commanded to place in possession of The period of redemption is not a prescriptive
real or personal property, the person entitled period, but a condition precedent provided by
thereto such as when the property is law to restrict the right of the person exercising
extrajudicially foreclosed. redemption.
NOTE: The right of the applicant or subsequent If a person exercising the right of redemption
purchaser for the issuance of a writ of has offered to redeem the property within the
possession never prescribes. (Ching v. Family period fixed, he is considered to have complied
Savings Bank, G.R. No. 167835, November 15, with the condition precedent prescribed by law
2010) and may thereafter bring an action to enforce
redemption.
1. Before expiration of redemption period –
possession can be availed of as long as an ex On the other hand, if the period is allowed to
parte motion under oath is filed and a bond lapse before the right of redemption is exercised,
in accordance with Sec. 7 of Act No. 3135 is then the action to enforce redemption will not
posted. (Philippine Bank of Communications prosper, even if the action is brought within the
v. Yeung, G.R. No. 179691, December 4, 2013) ordinary prescriptive period.
2. After lapse of redemption period –
purchaser is not obliged to bring a separate Effect of Failure to Redeem
suit for possession. He must invoke the aid of
the courts and ask a writ of possession. Act No. 3135 provides that if the mortgagor or
(Javelosa v. CA, G.R. No. 124292, December 10, successors-in-interest fail to redeem within the
1996) redemption period, the title over the property
consolidates in the purchaser.
No bond is required of the purchaser after the
redemption period if the property is not The consolidation confirms the purchaser as the
redeemed. Suspension of the implementation of owner entitled to the possession of the property.
the writ of possession is not allowed after the The mortgagor, by failing to redeem loses all
redemption period. interest in the property. (United Coconut Planters
Bank v. Lumbo, GR. No. 162757, December 11,
NOTE: After consolidation of title in the 2013)
purchaser’s name for failure of the mortgagor to
redeem the property, the purchaser’s right to Q: D obtained a loan from C secured by a REM
possession ripens into absolute right of a over a parcel of land. When D defaulted, C
confirmed owner. extrajudicially foreclosed the property. C was
declared the highest bidder in the auction.
695
Special Contracts – Deposit
This Act was enacted to promote economic intermediary;
activity by increasing access to least cost credit b. the grantor and the
by establishing a unified and modern legal secured creditor
framework for securing obligations with
personal property. (R.A. 11057, Section 2) according to which the
issuer or the
This Act shall apply to all transactions of any intermediary agrees to
form that secures an obligation with movable follow instructions from
collateral, except interests in aircrafts and in the secured creditor
ships. (R.A 11057, Section 4) with respect to the
security, without further
Interpretation consent from the
grantor.
If there is conflict between a provision of this Act An agreement in writing
and a provision of any other law, this Act shall among the:
govern unless the other law specially cites are
amends the conflicting provisions of this law. a. deposit-taking
institution,
This act repeals, among others, Sections 1 to 16 b. the grantor and
of Act No. 1508, otherwise known as "The c. the secured
Chattel Mortgage Law"; and Articles 2085-2123, creditor,
2127, 2140-2141, 2241, 2243, and 2246-2247 of
Republic Act No. 386, otherwise known as the Rights to Deposit according to which the
"Civil Code of the Philippines." Account deposit-taking
institution agrees to
The implementation of this Act shall be follow instructions from
conditioned upon the Registry being the secured creditor
established and operational. with respect to the
payment of funds
KINDS OF AGREEMENT credited to the deposit
account without further
1. Commodity Contract – consent from the
grantor.
A commodity futures contract, an option on a Means and agreement in
commodity futures contract, a commodity writing among:
option, or another contract if the contract or
option is: 1. the grantor,
2. secured creditor,
- Traded on or subject to the rules of and
board of trade, that has been designated 3. intermediary,
as a contract market for such a contract;
or according to which the
- Traded on a foreign commodity board of Commodity Contract commodity
trade, exchange or market, and is intermediary will apply
carried on the books of a commodity any value distributed on
intermediary for a commodity account of the
customer; commodity contract as
directed by the secured
2. Control agreement – creditor, without further
consent by the
commodity customer or
CONTROL
WITH RESPECT TO grantor.
AGREEMENT
An agreement in writing
among the:
Securities 3. Security interest - a property right in
a. issuer or the collateral that secures payment or other
NOTE: For the purposes of registration and 1. A security interest shall be perfected when it
priority only, it includes: has been created and the secured creditor
has taken one of the actions in accordance
1. A buyer of account receivable and with Section 12.
2. A lessor of goods under an operating 2. On perfection, a security interest becomes
lease for not less than one (1) year. effective against third parties.
Means of Perfection
CREATION OF SECURITY INTEREST
A security interest may be perfected by:
A security interest shall be created by a security
agreement.
a. Registration of a notice with the Registry;
b. Possession of the collateral by the secured
Security Agreement
creditor; and
c. Control of investment property and deposit
A security agreement must be contained in a account.
written contract signed by the parties. It may
consist of one or more writings that, taken
A security interest in any tangible asset may be
together, establish the intent of the parties to
perfected by registration or possession. A
create a security interest. (R.A. 11057, Section 6)
security interest in investment property and
deposit account may be perfected by registration
Description of Collateral or control
Description of collateral is required in the Perfection of Security Interest in any
security agreement. A description of collateral Tangible Assets, Investment and Deposit
shall be considered sufficient, whether it is account
specific or general, if it reasonably identifies the
collateral.
Registratio Possessio Contr
n n ol
697
Special Contracts – Deposit
Tangible Yes Yes No A security interest shall remain perfected
assets despite a change in the means for achieving
Investme Yes No Yes perfection: Provided, that there was no time
nt when the security interest was not perfected.
Deposit Yes No Yes
account Assignment of Security Interest
2. Nothing in this Act shall require a deposit- 1. An initial notice of security interest shall not
taking institution or an intermediary to be rejected:
enter into a control agreement, even if the
grantor so requests. A deposit-taking a. If it identifies the grantor by an
institution or an intermediary that has identification number, as further
entered into such an agreement shall not be prescribed in the regulations;
required to confirm the existence of the b. If it identifies the secured creditor or an
agreement to another person unless agent of the secured creditor by name;
requested to do so by the grantor. c. If it provides an address for the grantor
and secured creditor or its agent;
Perfection in Proceeds d. If it describes the collateral; and
e. If the prescribed fee has been tendered,
a. Upon disposition of collateral, a security or an arrangement has been made for
interest shall extend to proceeds of the payment of fees by other means.
collateral without further act and be
continuously perfected, if the proceeds are 2. If the Registry rejects to register a notice, it
in the form of money, accounts receivable, shall promptly communicate the fact of and
negotiable instruments or deposit accounts. reason for its rejection to the person who
b. Upon disposition of the collateral, if the submitted the notice.
proceeds are in a form different from
money, accounts receivable, negotiable 3. Each grantor must authorize the registration
instruments or deposit accounts, the of an initial notice by signing a security
security interest in such proceeds must be agreement or otherwise om writing.
perfected by one of the means applicable to
the relevant type of collateral within fifteen 4. A notice may be registered before a security
(15) days after the grantor receives such agreement is concluded. Once a security
proceeds; otherwise, the security interest in agreement is concluded, the date of
such proceeds shall not be effective against registration of the notice shall be reckoned
third parties. from the date the notice was registered.
The effectiveness of a notice may be terminated 1. The current amount of the unpaid secured
by registering a termination notice that: obligation; and
2. A list of assets currently subject to a security
a. Identifies the initial notice by its registration interest. [R.A. 11057, Section 37(a)]
number; and
b. Identifies each secured creditor who is Right to Demand Amendment or Termination
authorizes the registration of the of Notice
termination notice.
A grantor may give a written demand to a
A termination notice terminates effectiveness of secured creditor to amend or terminate the
the notice as to each authorizing secured effectiveness of the notice if:
creditor. (R.A. 11057, Section 34)
1. All the obligations under the security
Compulsory Amendment or Termination by agreement to which the registration relates
Court Order have been performed and there is no
commitment to make future advances;
The court may, on application by the grantor, 2. The secured creditor has agreed to release
issue an order that the notice be terminated or part of the collateral described in the notice:
amended in accordance with the demand, which 3. The collateral described in the notice
order shall be conclusive and binding on the includes an item or kind of property that is
699
Special Contracts – Deposit
not a collateral under a security agreement agreement by the secured creditor for that
between the secured creditor and the purpose; and
grantor; c. The secured creditors have retained the
4. No security agreement exists between the collateral.
parties; or
5. The security interest is extinguished in NOTE: Any person who is entitled to receive a
accordance with this Act. (R.A. 11057, notification of disposition in accordance with
Section 39) this Chapter 6 is entitled to exercise the right of
redemption.
Upon receipt of the demand submitted in
accordance with the above, the secured creditor RIGHTS OF THE SECURED CREDITOR
must register, within fifteen (15) working days,
an amendment or termination notice These are the following:
terminating the registration in a case within
subsections (a), (d) or (e); or amending the a. Right to require payment for a fee for a
registration to release some property that is no request of disclosure of information from
longer collateral under a security agreement the grantor;
between the secured creditor and the grantor in b. Right to take over enforcement;
a case within subsection (c). (R.A. 11057, Section c. Right to expedite Repossession of the
40) If the secured creditor fails to comply with Collateral;
the demand within fifteen (15) working days d. Right to recover in special cases;
after its receipt, the grantor may ask the proper e. Right to Dispose of Collateral; and
court to issue an order terminating or amending f. Right to retain collateral.
the notice as appropriate. (R.A. 11057, Section
41) Right to require payment for a fee for a
request of disclosure of information from the
Right to notification to dispose collateral grantor
from the secured creditor
The secured creditor may require payment of a
Not later than ten (10) days before disposition of fee for each request made by the grantor, but the
the collateral, the secured creditor shall notify grantor is entitled to a reply without charge once
the grantor of the said action. However, the every six (6) months. [R.A. 11057, Section 37(b)]
grantor may waive the right such right.
Provided, the requirement to send a notification However, secured creditor shall not charge any
shall not apply if the collateral is perishable or fee for compliance with a demand received
threatens to decline speedily in value or is of under Section 39. (R.A. 11057, Section 43)
type customarily sold on a recognized market.
(R.A. 11057, Section 51)
ENFORCEMENT OF SECURITY INTEREST
SECURED CREDITOR'S RIGHTS
Right of Redemption
701
Special Contracts – Deposit
instruct the deposit-taking institution to pay was perfected by registration; and
the balance of the deposit account to the
secured creditor’s account. (R.A. 11057, 3. Any other person from whom the secured
Section 48) creditor received notification of a claim of
an interest in the collateral if the notification
Right to Dispose of Collateral was received before the secured creditor
gave notification of the proposed disposition
1. After default, a secured creditor may sell or to the grantor. (R.A. 11057, Section 51)
otherwise dispose of the collateral, publicly
or privately, in its present condition or A notification of disposition is sufficient if it
following any commercially reasonable identifies the grantor and the secured creditor;
preparation or processing. describes the collateral; states the method of
2. The secured creditor may buy the collateral intended disposition; and states the time and
at any public disposition, or at a private place of a public disposition or the time after
disposition but only if the collateral is of a which other disposition is to be made. (Ibid)
kind that is customarily sold on a recognized
market or the subject of widely distributed The requirement to send a notification shall not
standard price quotations. (R.A. 11057, apply if the collateral is perishable or threatens
Section 49) to decline speedily in value or is of a type
customarily sold on a recognized market. (Ibid)
Commercial Reasonableness
Application of Proceeds
In disposing of collateral, the secured creditor
shall act in a commercially reasonable manner. The proceeds of disposition shall be applied in
(R.A. 11057, Section 50) the following order:
a. The debtor and the grantor; If any step or action has been taken to enforce a
b. Any other secured creditor or lien prior interest before the effectivity of this Act,
holder who, five (5) days before the enforcement may continue under prior law or
proposal is sent to the debtor and the may proceed under this Act.
grantor, perfected its security interest
or lien by registration; and ANTICHRESIS
2. Any other person with an interest in the Antichresis is a contract whereby the creditor
collateral who has given a written acquires the right to receive the fruits of an
notification to the secured creditor before immovable of the debtor, with the obligation to
the proposal is sent to the debtor and the apply them to the payment of interest, if owing,
grantor.The secured creditor may retain the and thereafter to the principal of his credit. (NCC,
collateral in the case of: Art. 2132) (1995, 1996, 2007 BAR)
703
Special Contracts – Deposit
4. It is a real right; Q: The spouses Adolfo were the original
5. The creditor has the right to receive the registered owners of a lot. This property was
fruits of the immovable; mortgaged to the then Rehabilitation Finance
6. It can guarantee all kinds of valid obligations Corporation (now Development Bank of the
(NCC, Arts. 2091 & 2139); and Philippines or DBP) and upon default in the
7. Indivisible in nature. (NCC, Art. 2090) payment of the loan obligation, was
foreclosed and ownership was consolidated
NOTE: It is not essential that the loan should in DBP's name. Serafin Adolfo, Sr., however,
earn interest in order that it can be guaranteed repurchased the same on December 1, 1971,
with a contract of antichresis. Antichresis is a year after his wife died in 1970. Sometime
susceptible of guaranteeing all kinds of in 1975, Adolfo allegedly mortgaged the
obligations, pure or conditional. [Javier v. Valliser, subject property for the sum of P12,500.00 to
(CA) N. 2648-R, April 29, 1950; Sta. Rosa v. Noble, Aniceto Bangis who immediately took
35 O.G. 27241] possession of the land. The said transaction
was, however, not reduced into writing.
Stipulation authorizing for appropriation of When Adolfo died, his heirs executed a Deed
property upon non-payment of the debt of Extrajudicial Partition covering the subject
property. The Heirs of Adolfo expressed their
A stipulation authorizing the antichretic creditor intention to redeem the mortgaged property
to appropriate the property upon the non- from Bangis but the latter refused, claiming
payment of the debt within the period agreed that the transaction between him and Adolfo
upon is void. (NCC, Art. 2088) was one of sale. The RTC and CA ruled that
the contract between the plaintiffs and
Form of a contract of antichresis and its defendants as a mere mortgage or antichresis
contents and since the defendants have been in the
possession of the property in 1975 up to the
1. Covers only the fruits of real property but present time enjoying all its fruits or income.
not the immovable itself; Was the transaction one of sale, or a
mortgage or antichresis?
NOTE: Art. 1306 of the Civil Code gives the
parties the freedom to stipulate otherwise. A: There was neither an antichresis nor sale.
The reduction of the amount of the fruits For the contract of antichresis to be valid, Article
available to the creditor does not vary the 2134 of the Civil Code requires that "the amount
nature of the contract. of the principal and of the interest shall be
specified in writing; otherwise the contract of
2. Delivery of the immovable is necessary for antichresis shall be void."
the creditor to receive the fruits and not that
the contract shall be binding; Amount of In this case, the Heirs of Adolfo were
principal and interest must be specified in indisputably unable to produce any document in
writing (NCC, Art. 2134); (1995, 2007 BAR) support of their claim that the contract between
Adolfo and Bangis was an antichresis, hence, the
3. Express agreement that debtor will give CA properly held that no such relationship
possession to the creditor and that the existed between the parties. On the other hand,
creditor will apply the fruits to the interest the Heirs of Bangis presented an Extra-Judicial
and then to the principal. (NCC, Art. 2134) Settlement with Absolute Deed of Sale to justify
their claimed ownership and possession of the
NOTE: The fruits of the immovable which is subject land. However, notwithstanding that the
the object of the antichresis must be subject of inquiry is the very contents of the said
appraised at their actual market value at the document, only its photocopy was presented at
time of the application. (NCC, Art. 2133) The the trial without providing sufficient justification
property delivered stands as a security for for the production of secondary evidence, in
the payment of the obligation of the debtor violation of the best evidence rule embodied
in antichresis. Hence, the debtor cannot under Section 3 in relation to Section 5 of Rule
demand its return until the debt is totally 130 of the Rules of Court. In sum, the Heirs of
paid. Bangis failed to establish the existence and due
execution of the subject deed on which their
705
Special Contracts – Deposit
There is an
express must be in
stipulation writing.
that the
There is no Effect in
Obligation creditor shall In antichresis, debtor loses
such the
to apply apply the control of the subject matter of
obligation on Debtor’s
fruits to fruits to the the contract.
the part of the Control
the interest payment of the
mortgagee
interest, if owing,
and thereafter to Determination of the amount paid in
the principal of antichresis
the debt.
Subject The amount of payment in antichresis is
Real Property determined the actual market value of the fruits
Matter
at the time of the application thereof to the
interest and the principal shall be the measure of
Antichresis v. Pledge
such application. (NCC, Art. 2133)
BASIS ANTICHRESI PLEDGE
Parties to a contract of antichresis
S (now
supersede
1. Antichretic creditor – one who receives the
d by the
fruits on the immovable property of the
PPSA)
debtor.
Kind of Refers to real Personal
Property property property 2. Antichretic debtor – one who pays his debt
through the application of the fruits of his
By delivery immovable property.
(Real)
Rights of antichretic creditor
Note:
Section 12 1. Right to fruits and income of the thing (NCC,
By mere of the PPSA Art. 2132);
Perfecte
consent provides
d
(Consensual) the means 2. Retain the thing until debt is paid (NCC, Art.
by which a 2136);
security
interest NOTE: The property delivered stands as
may be security for the payment of the obligation of
perfected. the debtor in antichresis. Hence, the debtor
Need not be cannot demand its return until
in writing, indebtedness is satisfied and the property
oral is redeemed. (Macapinlac v. Gutierrez
evidence Repide, G.R. No. 18574, September 20, 1992)
Principal and
may be
Necessit interest must 3. Have the thing sold upon non-payment at
allowed to
y of be specified maturity (NCC, Art. 2137);
prove the
Putting in writing,
same.
into otherwise NOTE: In this case, the Rules of Court on
Writing contract is the rules on foreclosure of mortgages shall
Note:
void. apply
Under the
PPSA, a
security 4. Preference to the proceeds of the sale of the
agreement thing; and
1. Pay the taxes and charges assessable against 1. File an action for specific performance; or
the property like real estate taxes and
others (NCC, Art. 2135); 2. File a petition for the public sale of the
property. (Barretto v. Barretto, G.R. No.
NOTE: The creditor has to pay the taxes 11933, December 1, 1917)
even if the fruits be insufficient. If he does
not pay taxes, he is, by law, required to pay NOTE: Parties may agree on an extrajudicial
indemnity for damages to the debtor. foreclosure in the same manner as they are
(Pando v. Gimenez, G.R. No. 31816, February allowed in contracts of mortgage. (Tavera v. El
15, 1930) Creditor may avoid such Hogar Filipino, Inc., G.R. No. L-45963, October 12,
obligation by compelling the debtor to 1939)
reacquire enjoyment of the property, unless
there is a stipulation to the contrary. [NCC, A stipulation authorizing the antichretic creditor
Art. 2136(2)] to appropriate the property upon non-payment
of the debt within the period agreed upon is
2. Bear the necessary expenses for the void. (See NCC, Art. 2088, which, insofar as pledge
preservation and repair of the property; and mortgage are concerned, was technically
3. Apply the fruits received for payment of the repealed by the PPSA as discussed above)
outstanding interests, if any, and thereafter
of the principal (NCC, Art. 2132); and Availability of acquisitive prescription to the
4. To render an account of the fruits to the antichretic creditor
debtor. (Diaz v. De Mendezona, G.R. No. L-
24824, January 30, 1926) The creditor in an antichresis and his successors-
in-interest cannot ordinarily acquire by
Rule on the application of the fruit upon the prescription the land given to him, hence, any
debt agreement to the contrary is void. (Valencia v.
Valencia, G.R. No. 16256, 42 Phil. 177, 1921)
The application of the fruit upon the debt must Possession of the property is not in the concept
be expressly agreed between the creditor and of an owner but that of a mere holder during the
the debtor that the former, having been given existence of the contract. (Ramirez v. CA, G.R. No.
possession of the properties given as security, is L-38185, September 24, 1986)
to apply their fruits to the payment of interest, if
owing, and thereafter to the principal of his REDEMPTION UNDER SEC. 47 OF R.A. NO.
credit. (NCC, Art. 2132) 8791 or THE GENERAL BANKING ACT OF
2000
Return of the property of the antichretic
debtor When applicable
The antichretic debtor can only demand the In the event of foreclosure, judicial or
return of the property after having fully paid his extrajudicial, of any mortgage on real estate
obligations to the creditor. It is not fair for the which is security for any loan or other credit
debtor to regain the possession of the property accommodation granted.
when his debt has not been fully paid. Until there
is full payment of the obligation, the property NOTE: Any petition in court to enjoin or restrain
shall stand as security therefor. (Macapinlac v. the conduct of the foreclosure proceedings
Gutierrez Repide, G.R. No. 18574, September 20, instituted pursuant to Sec. 47 of the General
1922) Banking Act shall be given due course only upon
the filing by petitioner of a bond in the amount
Remedy of the creditor in case of fixed by the court conditioned that he will pay all
nonpayment of his credit damages which the bank may suffer by the
enjoining or the restraint of the foreclosure
Creditor does not acquire ownership of the real proceeding.
707
Special Contracts – Deposit
Who may exercise the right of redemption himself solidarily with principal debtor.
The mortgagor or debtor whose real property Q: Asia Paces Corporation (ASPAC) and Paces
has been sold for the full or partial payment of Industrial Corporation (PICO) entered into a
his obligation. sub-contracting agreement with the
Electrical Projects Company of Libya (ELPCO
When redemption is made for theconstruction and erection of a double
circuit bundle phase conductor transmission
It must be made within one year after the sale of line in the country of Libya. To finance its
the real estate. working capital requirements, ASPAC
obtained loans from foreign banks Banque
NOTE: Notwithstanding Act 3135, juridical Indosuez and PCI Capital (Hong Kong)
persons whose property is being sold pursuant Limited (PCI Capital) which were secured by
to an extrajudicial foreclosure, shall have the several Letters of Guarantee issued by Trade
right to redeem the property in accordance with and Investment Development Corporation of
Sec. 47 of the General Banking Act until, but not the Philippines (TIDCORP), then Philippine
after, the registration of the certificate of Export and Foreign Loan Guarantee Corp.
foreclosure sale with the applicable Register of Under the Letters of Guarantee, TIDCORP
Deeds which in no case shall be more than three irrevocably and unconditionally guaranteed
months after foreclosure, whichever is earlier. full payment of ASPAC’s loan obligations to
Owners of property that has been sold in a Banque Indosuez and PCI Capital in the event
foreclosure sale prior to the effectivity of the of default by the latter.
General Banking Act shall retain their
redemption rights until their expiration. As a condition precedent to the issuance by
TIDCORP of the Letters of Guarantee, ASPAC,
How redemption is made PICO, and ASPAC’s President, Nicolas C.
Balderrama (Balderrama) had to execute
By paying the amount due under the mortgage several Deeds of Undertaking, binding
deed, with interest thereon at rate specified in themselves to jointly and severally pay
the mortgage, and all the costs and expenses TIDCORP for whatever damages or liabilities
incurred by the bank or institution from the sale it may incur under the aforementioned
and custody of said property less the income letters. In the same light, ASPAC, as principal
derived therefrom. debtor, entered into surety agreements
(Surety Bonds) with Paramount, Phoenix,
Right of purchaser at the auction sale over Mega Pacific and Fortune (bonding
the foreclosed property companies), as sureties, also holding
themselves solidarily liable to TIDCORP, as
The purchaser at the auction sale concerned creditor, for whatever damages or
whether in a judicial or extrajudicial foreclosure liabilities the latter may incur under the
shall have the right to enter upon and take Letters of Guarantee.
possession of such property immediately after
the date of the confirmation of the auction sale ASPAC eventually defaulted on its loan
and administer the same in accordance with law. obligations to Banque Indosuez and PCI
Capital. Demand letters to the bonding
GUARANTY AND SURETYSHIP companies were sent but to no avail. Taking
into account the moratorium request issued
by the Minister of Finance of the Republic of
Guaranty
the Philippines, TIDCORP and its various
creditor banks, such as Banque Indosuez and
Guaranty is a contract where a person called the
PCI Capital, forged a Restructuring
guarantor binds himself to the creditor to fulfill
Agreement extending the maturity dates of
the obligation of the principal debtor in case the
the Letters of Guarantee. The bonding
latter should fail to do so. (NCC, Art 2047)
companies were not privy to the
Restructuring Agreement and, hence, did not
Suretyship
give their consent to the payment extensions.
Suretyship is a contract where a person binds
709
Special Contracts – Deposit
is a domestic corporation comprised of about obligations. Petitioner, however, contends that
80 doctors. On March 2, 1999, it entered into the inclusion of the clause “or the Project
a construction and development agreement Owner’s waiver” in Article XIII of the signed
(signed agreement) with Million State agreement made its obligations more onerous
Development Corporation, a contractor, for and, therefore, the surety must be released from
the construction of a 200-bed capacity its bond.
hospital in Cainta, Rizal. According to the
terms of the signed agreement, Doctors of A suretyship consists of two different contracts:
New Millennium obliged itself to pay (1) the surety contract and (2) the principal
P10,000,000.00 to Million State Development contract which it guarantees. Since the insurer’s
at the time of the signing of the agreement to liability is strictly based only on the terms stated
commence the construction of the hospital. in the surety contract in relation to the principal
Million State Development was to shoulder contract, any change in the principal contract,
95% of the project cost and committed itself which materially alters the principal’s
to secure P385,000,000.00 within 25 banking obligations would, in effect, constitute an
days from Doctors of New Millennium’s implied novation of the surety contract. A surety
initial payment, part of which was to be used is released from its obligation when there is a
for the purchase of the lot where the hospital material alteration of the contract in connection
was to be constructed. As part of the with which the bond is given, such as a change
conditions prior to the initial payment, which imposes a new obligation on the
Million State Development submitted a promising party, or which takes away some
surety bond of P10,000,000.00 to Doctors of obligation already imposed, or one which
New Millennium. The surety bond was changes the legal effect of the original contract
issued by People’s Trans-East Asia Insurance and not merely its form. A surety, however, is
Corporation, now known as People’s General not released by a change in the contract which
Insurance Corporation. Doctors of New does not have the effect of making its obligation
Millennium, on the other hand, made the more onerous. Respondent was not privy to the
initial payment of P10,000,000.00. terms of the surety bond entered into by
petitioner and Million State Development. If
Million State Development, however, failed to there were any changes in the contract that
comply with its obligation to secure petitioner should have been aware of, it was
P385,000,000.00 within 25 banking days Million State Development, as its principal,
from initial payment. Then Doctors of New which had the duty to inform them about the
Millenium sent a demand letter from the changes.
time remittance was due. When Million State
Development reneged on its obligations, On the basis of petitioner’s own admissions, the
Doctors of New Millennium sent a demand principal contract of the suretyship is the signed
letter dated June 14, 1999 to People’s agreement. The surety, therefore, is presumed
General Insurance for the return of its initial to have acquiesced to the terms and conditions
payment of P10,000,000.00, in accordance embodied in the principal contract when it
with its surety bond. Whether or not the issued its surety bond.
surety bond guaranteeing respondent
Doctors of New Millennium’s initial payment Accordingly, petitioner cannot argue that the
was impliedly novated by the insertion of a insertion of the clause in the signed agreement
clause in the principal contract, which constituted an implied novation of the obligation
waived the conditions for the initial which extinguished its obligations as a surety
payment’s release? since there was nothing to novate: In order that
an obligation may be extinguished by another
A: NO. In this case, the surety bond was executed which substitutes the same, it is imperative that
“to guarantee the repayment of the down it be so declared in unequivocal terms, or that
payment” and “to secure the full and faithful the old and new obligation be in every point
performance” of Million State Development. incompatible with each other. Novation of a
According to the terms of the bond, People’s contract is never presumed. In the absence of an
General Insurance bound itself to be liable in the express agreement, novation takes place only
amount of P10,000,000.00 in the event that when the old and the new obligations are
Million State Development defaults in its incompatible on every point (People’s General
A: NO. For a writ of preliminary injunction to be Both guarantor and surety promise or undertake
issued, the applicant must show, by prima facie to answer for the debt, default or miscarriage of
evidence, an existing right before trial, a material another person.
and substantial invasion of this right, and that a
writ of preliminary injunction is necessary to Guaranty v. Warranty
prevent irreparable injury. Respondent satisfied
the standards for the issuance of a writ of GUARANTY WARRANT
preliminary injunction. Respondent's lease
711
Special Contracts – Deposit
A contract by which An undertaking that despite the absence of any direct consideration
a person is bound to the title, quality or received by the guarantor or surety, such
another for the quantity of the subject consideration need not pass directly to the
fulfillment of a matter of a contract is guarantor; a consideration moving to the
promise or what it is represented principal will suffice.
undertaking of a to be, and relates to
third person. some agreement made Kinds of guaranty
ordinarily by the party
who makes the 1. General classification
warranty.
a. Personal – A guaranty where an
NOTE: In case of guaranty, the guarantor must be individual personally assumes the
a person distinct from the debtor because a fulfillment of the principal obligation; or
person cannot be the personal guarantor of
himself. A person cannot be both the primary b. Real – The guaranty is property,
debtor and the guarantor of his own debt as this movable, or immovable.
is inconsistent with the very purpose of a
guarantee which is for the creditor to proceed 2. As to its origin
against a third person if the debtor defaults in his
obligation. a. Conventional – It is constituted by
agreement of the parties [NCC, Art.
Unilateral character of guaranty 2051(1)];
NOTE: A guarantor can recover from the debtor a. Single – It is constituted solely to
what the former had to pay the creditor, even if guarantee or secure performance by
the guaranty was without the debtor’s consent the debtor of the principal
or against his will, but the recovery will only be obligation (NCC, Art. 2051, par. 2);
to the extent that the debtor had been benefited. or
(NCC, Arts. 1236 and 1237; De Guzman v. Santos,
G.R. No. 45571; June 30, 1939) b. Double or sub-guaranty – It is
constituted to secure the fulfillment
Gratuitous character of guaranty of the obligation of a guarantor by a
sub- guarantor. (Ibid)
A guaranty is gratuitous, unless there is a
stipulation to the contrary. (NCC, Art. 2048) 5. As to scope and extent
Guaranty or surety agreement is regarded valid a. Definite – One where the guaranty is
Guaranty for present and future debts Acceptance of the creditor in a contract of
guaranty
There can be a guaranty for:
GR: The acceptance of the creditor is not
1. Present debts; and essential in contract of guaranty.
2. Future debts (NCC, Art. 2053), even if the
amount is not yet known. XPN: When there is a mere offer of a guaranty or
a conditional guaranty wherein the obligation
Liquidated debt – a debt is liquidated when it is does not become binding until it is accepted by
for a price fixed in a contract for the delivery of the creditor and notice of such acceptance is
future goods and the seller is now ready to given to the guarantor.
deliver said goods within the period stipulated.
(Smith, Bell & Co. v. National Bank, G.R. No. Construction of a contract of guaranty or
16482, February 1, 1922) surety
713
Special Contracts – Deposit
Guarantor (NCC, Art. 1236 par. 2); and
3. Guarantor cannot compel the creditor to
The guarantor is the person who is bound to subrogate him in his rights. (NCC, Art. 1237)
another for the fulfillment of a promise or 4. If payment is made with the knowledge or
undertaking of a third person. consent of the debtor – The guarantor is
subrogated to all the rights which creditor
Qualifications of a guarantor had against the debtor.
NOTE: To prove that the subject property is Q: On March 1980, Cornelio filed an
alienable and disposable land of the public application for land registration of a parcel of
domain, applicant must: agricultural land. During the trial, Cornelio
claimed that he and his predecessors-in-
1. Present a Community Environment and interest had been in open, continuous,
Natural Resources Office Certificate uninterrupted, public and adverse
(CENRO); possession and occupation of the land for
more than 30 years. He likewise introduced a
certification, dated February 1981 citing a
715
Land Titles and Deeds
presidential declaration that on June 1980, complaint for the annulment of the title and
the subject matter of the application was reversion of the said lot on the ground that
declared alienable and disposable the issuance of the free patent and title was
agricultural land. If you are the judge, will irregular and erroneous, following the
you grant the application for land discovery that the lot is allegedly part of the
registration of Cornelio? (2014 Bar) timberland and forest reserve. Decide on the
case.
A: NO, I will not grant the application. To be
entitled to register the parcel of land, the A: In instances where a parcel of land considered
applicant must show that the land being applied to be inalienable land of the public domain is
for is an alienable land. At the time of the filing found under private ownership,
of the application, the land has not yet been the Government is allowed by law to file an
declared alienable by the state. (Republic v. CA, action for reversion in which the ultimate relief
G.R. No. 144057, January 17, 2005) sought is to revert the land to the government
pursuant to the Regalian doctrine. Nevertheless,
Q: Can Cornelio acquire said agricultural land in applying the Regalian Doctrine, the
through acquisitive prescription, whether paramount considerations of fairness and due
ordinary or extraordinary? (2014 Bar) process must be observed in every claim of right
by the Government against one of its citizens.
A: Cornelio may acquire the land by acquisitive Respondent Orcullo in this case failed to show
prescription only after it was declared part of that the subject lot is part of timberland or forest
alienable land by the state by possession for the reserve it adverted to. (Saad Agro-Industries, Inc.
required number of years through ordinary v. Republic of the Philippines, G.R. No. 152570,
prescription, which requires ten years of September 27, 2006)
possession in good faith with just title; or
extraordinary prescription by possession for THE TORRENS SYSTEM OF REGISTRATION
thirty years without need of any other condition.
(NCC, Art. 1134) In this system, title by registration takes the
place of "title by deeds" of the system under the
Native title "general" law. A sale of land is effected by a
registered transfer, upon which a certificate of
Refers to pre-conquest rights to lands and title is issued. The certificate is guaranteed by
domains which, as far back as memory reaches, statute, and, with certain exceptions, constitutes
have been held under a claim of private indefeasible title to the land mentioned therein.
ownership by Indigenous Cultural (J. Agcaoli, Property Registration Decree &
Communities/Indigenous People (ICCs/IPs), Related Laws : Land Titles and Deeds, 2011)
have never been public lands and are thus
indisputably presumed to have been held that The system generally means those systems of
way since before the Spanish Conquest. [R.A. registration of transactions with interest in land
8371, Sec. 3 (l)] whose declared object, under governmental
authority, to establish and certify to the
Time immemorial possession for native title ownership of an absolute and indefeasible title
to realty, and simplify the transfer. (Ibid.)
Refers to a period when as far back as memory
can go, certain ICCs/IPs are known to have Under the old system the same sale would be
occupied, possessed in the concept of owner, and effected by a conveyance, depending for its
utilized a defined territory devolved to them, by validity, apart from intrinsic flaws, on the
operation of customary law or inherited from correctness of a long series of prior deeds, wills,
their ancestors, in accordance with their etc. The object of the Torrens system, then, is to
customs and traditions. [R.A. 8371, Sec. 3(p)] do away with the delay, uncertainty, and
expense of the old conveyancing system. (Grey
Q: Socorro Orcullo was a grantee of a Free Alba v. Dela Cruz citing Duffy & Eagleson on The
Patent for a parcel of land in Cebu. Transfer of Land Act, G.R. No. 5246, September 16,
Subsequently, the subject lot was sold to 1910)
SAAD Agro-Industries, Inc. by one of Orcullo’s
heirs. Yet, the Solicitor General filed a
717
Land Titles and Deeds
notice to all persons from the time of such Laws that govern land registration
registering, filing or entering. (P.D. 1529, Sec. 52) 1. Property Registration Decree (P.D. 1529, as
amended);
Judicial and quasi-judicial bodies covering
land registration under the Torrens system NOTE: P.D. 1529 amended and superseded
C.A. No. 496, otherwise known as the then
1. Courts; Land Registration Act.
GR: RTCs have plenary jurisdiction over land 2. Cadastral Act (Act 2259, as amended);
registration cases. Regional Trial Courts have 3. Public Land Act (C.A. No. 141, as amended);
exclusive jurisdiction over land registration 4. Emancipation Decree (P.D. 27, as amended);
cases and all petitions after original 5. Comprehensive Agrarian Reform Law of
registration of title, with the power to hear 1988 (R.A. 6657); and
and determine all questions arising upon 6. Indigenous Peoples Rights Act (R.A. 8371).
such applications or petitions. (P.D. 1529, Sec.
2) Original registration
NOTE: The court can now hear and A proceeding filed in the MTC where there is no
decide not only non-controversial cases controversy or opposition, or contested lots
but even contentious issues which where the value of which does not exceed
before were beyond its competence. P100,000.00 (Sec. 4, R.A. 7691) or in the RTC (as
(Lopez v. Querubin, G.R. No. 155405, a land registration court) when the value
March 18, 2015) exceeds P100,000 to determine title or
ownership of land on the basis of an application
XPN: MeTCs, MTCCs, MTCs and MCTCs have for registration or answer/opposition by a
delegated jurisdiction to hear and determine claimant in a cadastral registration.
cadastral or land registration cases in the
following instances: Kinds of original registration
719
Land Titles and Deeds
Object of Registration satisfying the requisite character and period of
possession—possession and occupation that is
Only real property or real rights may be the open, continuous, exclusive, and notorious since
object of registration under the existing land June 12, 1945, or earlier—the land cannot be
registration laws. considered ipso jure converted to private
property even upon the subsequent declaration
Q: Rosario filed her application for land of it as alienable and disposable. Prescription
registration of a rice land that she had never began to run against the State, such that
inherited, owning and possessing it openly, the land has remained ineligible for registration
publicly, uninterruptedly, adversely against under Sec. 14(1) of the Property Registration
the whole world, and in the concept of owner Decree. Likewise, the land continues to be
since then. This was opposed by the The ineligible for land registration under Sec. 14(2)
Republic opposed claiming that Rosario of the Property Registration Decree unless
failed to occupy and possess the land for at Congress enacts a law or the President issues a
least 30 years immediately preceding the proclamation declaring the land as no longer
filing of the application; and that the land intended for public service or for the
applied for, being a portion of a river control development of the national wealth. (Malabanan
system, that could not be subject of v. Republic, G.R. No. 179987, September 3, 2013)
appropriation or land registration. Is the (Bersamin, J.)
land subject of application susceptible of
private acquisition? Q: The AFP-RSBS filed an application for
original registration of parcels of land
A: NO. The land of the public domain, to be the consisting of 48, 151 square meters in Silang,
subject of appropriation, must be declared Cavite. The parcels of land were allegedly
alienable and disposable either by the President acquired from Narciso Ambrad, Alberto
or the Secretary of the DENR. Unless public land Tibayan, and Restituto Tibayan on March 13,
is shown to have been reclassified or alienated 1997. It was also alleged that their
to a private person by the State, it remains part predecessors-in-interest had been in
of the inalienable public domain. Indeed, possession of the properties since June 12,
occupation thereof in the concept of owner, no 1945. Can the AFP-RSBS acquire the land
matter how long, cannot ripen into ownership through acquisitive prescription?
and be registered as a title. (Republic vs. De Joson,
G.R. No. 163767, March 10, 2014) A: YES. The period of possession prior to the
declaration that land is alienable and disposable
Q: Mario applied for registration of his land. agricultural land is included in the computation
He claims that he bought the land from of possession for purposes of acquiring
Eduardo who also claims that his great registration rights over a property if the land has
grandfather owned the land. Mario already been declared as such at the time of the
submitted a CENRO from DENR stating that application for registration. Petitioner’s right to
the land is alienable and disposable in 1982. the original registration of title over the
However, the Republic appealed claiming property is, therefore, dependent on the
that Mario did not adhere to the existence of: a) a declaration that the land is
requirements of time required by the law alienable and disposable at the time of the
and he failed to proof that the land is an application for registration and b) open and
alienable and disposable land. The Court continuous possession in the concept of an
ruled in favor of the Republic stating that the owner through itself or through its
possession of the land before it is declared predecessors-in-interest since June 12, 1945 or
alienable and disposable cannot be included earlier.
in the computation of possession of the land,
thus, Mario did not adhere to the period In this case, there is no dispute that the
required by law. Can Mario register his land? properties were already declared alienable and
disposable land on March 15, 1982. Hence, the
A: NO. Mario failed to present sufficient property was already alienable and disposable at
evidence to establish that they and their the time of petitioner’s application for
predecessors-in-interest had been in possession registration on July 10, 1997. Further, the open,
of the land since June 12, 1945. Without continuous, exclusive, notorious possession of
GR: Vendor a retro may apply for registration. XPN : Where at the time the corporation
acquired land, its predecessor-in-interest had
XPN: Vendee a retro should the period for been in possession and occupation thereof in the
redemption expire during pendency of manner and for the period prescribed by law as
registration proceedings and ownership to to entitle him to registration in his name, then
property is consolidated in vendee a retro. the proscription against corporation acquiring
alienable lands of the public domain except
2. Trust through lease does not apply for the land was no
longer public land but private property. (See
GR: Trustee may apply for registration. Republic of the Philippines v. Iglesia ni Cristo. G.R.
No. 180067, June 30, 2009 ; infra.)
XPN: Unless prohibited by the instrument
creating the trust. Q: Noynoy, Erap, Manny and Gibo are co-
owners of a parcel of land. May Manny seek
NOTE: Trusteeship or trust is a fiduciary registration in his name of the land in its
relationship with respect to property which entirety?
involves the existence of equitable duties
imposed upon the holder of the title to the A: NO. Since a co-owner cannot be considered a
property to deal with it for the benefit of true owner of a specific portion until division or
another. partition is effected, he cannot file an application
for registration of the whole area without joining
3. Reserva troncal the co-owners as applicants.
Reservista has the right to apply for registration Q: In 1998, Iglesia ni Cristo filed its
but the reservable character of the property will application for Registration of Title before
be annotated in the title. the MCTC which the Republic opposed. The
cadastral court held that the essential
NOTE: In reserva troncal, the ascendant who elements for judicial confirmation of an
inherits from his descendant any property which imperfect title over the subject lot have been
the latter may have acquired by gratuitous title complied with. The CA also held that the INC
from another ascendant, or a brother or sister, is has been in continuous, open, and peaceful
obliged to reserve such property as he may have possession and occupation of the lot for more
acquired by operation of law for the benefit of than 40 years. Is the INC entitled to
relatives who are within the third degree and registrable right over the subject lot?
who belong to the line from which said property
came. A: YES. In Naguit, the Court held a less stringent
requirement in the application of Sec. 14(1) of
Eligibility of private corporations to hold P.D. 1529 that the reckoning period for
alienable lands of the public domain possession is the actual possession of property
and it is sufficient that the property sought to be
Private corporations may not hold alienable registered is already alienable and disposable at
lands of the public domain. The word “persons” the time the application for registration of title is
refer to natural persons who are citizens of the filed.
Philippines. Juridical or artificial persons are
excluded. Sec. 3, Art. XII of the 1987
721
Land Titles and Deeds
The possession of INC has been established not disposable. Absent the DENR Secretary's
only from 1952 and 1959 when it purchased the issuance declaring the land alienable and
respective halves of the subject lot, but is also disposable, the land remains part of the public
tacked on to the possession of its predecessors- domain. Thus, even if respondents have shown,
in-interest. These possessions and occupation— through their testimonial evidence, that they and
from Sabuco, including those of his parents, to their predecessors-in-interest have been in
INC; and from Sabuco to Badanguio to INC—had open, continuous, exclusive, and notorious
been in the concept of owners: open, continuous, possession and occupation of the property since
exclusive, and notorious possession and June 12, 1945, they still cannot register the land
occupation under a bona fide claim of acquisition for failing to establish that the land is alienable
of property. These had not been disturbed as and disposable. (Republic of The Philippines v.
attested to by respondent’s witnesses. (Republic Laureana Malijan Javier, GR NO. 214367, APRIL
of the Philippines v. Iglesia ni Cristo, G.R. No. 4,2018, as penned by J. Leonen)
180067, June 30, 2009)
Q: The applicants sought the registration of
Q: Laureana and Iden's application for their titles over the subdivided portions of a
registration of land title over a parcel land. The applicants provided ample
situated in Barangay Tranca, Talisay, evidence to their favor. However, the
Batangas filed in June 2009 before the Solicitor General opposed the application
Municipal Circuit Trial Court of Talisay- using a pro forma opposition. Does the
Laurel, Batangas. The land, regarded as Lot Solicitor General have to produce evidence
No. 1591, Cad. 729, Talisay Cadastre, had an that that the land is a public domain despite
area of 9,629 square meters. The application the theory that all lands belong to the State?
of Laureana and Iden was docketed as Land
Registration Case No. 09-001 (LRA Record A: YES. When the State has no effective
No. N- 79691). On September 10, 2009, opposition, except for a pro forma opposition, to
Republic of the Philippines (Republic) filed controvert an applicant's convincing evidence of
an Opposition to the application based on the possession and occupation, presumptions are
following grounds: (1) Ne[i]ther the tilted to this applicant's favor. (Republic of The
applicants nor their predecessors-in-interest Philippines v. Spouses Joel And Andrea Noval,
have been in open, continuous, exclusive and Ellen N. Delos Reyes, Dale Y. Noval, Winnie T. Refi,
notorious possession and occupation of the Zenaida Lao, And Daisy N. Morales, G.R. No.
land in question in the concept of an owner 170316, September 18, 2017, as penned by J.
since June 12, 1945 or earlier; (2) The tax Leonen)
declarations relied upon by appellees do not
constitute competent and sufficient evidence Adverse possession of land
of a bona fide acquisition of the land by the
appellees; and (3) The parcel of land applied Possession of land is adverse when it is open and
for is a land of public domain and, as such, notorious. It is open when it is patent, visible,
not subject to private appropriation. And the and apparent and it is notorious when it is so
Republic further avers that a CENRO conspicuous that it is generally known and
Certification is not sufficient to prove the talked of by public or the people in the
land's classification as alienable and neighborhood.
disposable. The MTC and CA ruled in granting
the Application for registration. Whether or Q: An Emancipation Patent OCT was issued in
Not Laureana is entitled for the registration Remy’s favor. However, Madarieta filed a
of the land in her name? complaint for annulment and cancellation of
the OCT against Remy before the DARAB,
A: NO. In this case, although respondents were alleging that the Department of Agrarian
able to present a CENRO certification, a DENR- Reform mistakenly included her husband’s
CENRO report with the testimony of the DENR lot as part of Luspo’s property where Remy’s
officer who made the report, and the survey plan house was constructed. What is the nature of
showing that the property is already considered Remy’s possession of the subject land?
alienable and disposable, these pieces of
evidence are still not sufficient to prove that the A: Remy possessed the subject land in the
land sought to be registered is alienable and concept of an owner. No objection was
723
Land Titles and Deeds
KIND OF
TO WHOM GRANTED REQUIREMENTS
PATENT
Homestead To any Filipino Citizen 1) Does not own more than 24 hectares of land in the
Patent over the age of 18 years or Philippines or has not benefitted from any gratuitous
head of a famil allotment of more than 24 hectares;
Free Patent To any Natural Born 1) Does not own more than 12 hectares of land;
Citizen of the Philippines.
2) Has continuously occupied and cultivated, either by
himself or his predecessors-in-interest tract/s of
agricultural public land subject to disposition;
Sales Patent Citizens of the Philippines 1) To have at least 1/5 of the land broken and cultivated
of lawful age or such within five years from the date of the award; and
citizens not of lawful age
who is head of a family may 2) Shall have established actual occupancy, cultivation
purchase public and improvement of at least 1/5 of the land until the date
agricultural land of not of such final payment.
more than 12 hectares.
Special Patent To non-Christian Filipinos Sec. of the DILG shall certify that the majority of the non-
under Sec. 84 of the Public Christian inhabitants of any given reservation have
Land Act. advanced sufficiently in civilization.
725
Land Titles and Deeds
1978. Any claim not so filed will be forever petitioner Mendoza admitted against his interest
barred." The land was first occupied and when he stated in his Joint Affidavit that
cultivated by Francis Maglaya, Nemesio respondent "has continuously occupied and
Jacala, and Laureano Pariñas, who sold all cultivated the land." Elmirando Sabado's
their rights to the portions adjudicated to testimony regarding petitioners' occupation of
them to Spouses Policarpio Valte and Miguela the land in 1929 also lacks credibility as he was
dela Fuente in May 1941. The spouses only four years old in 1929. This court has
immediately took possession. Miguela dela disregarded similar testimonies when it was
Fuente assumed the responsibilities over the shown that the witness was then too young to
land after her husband died. When she aged, understand the concept of the possession of a
she transferred all her rights to their only large tract of land. This court has ruled that an
daughter, Reynosa Valte, who was found in applicant's failure to state in the free patent
actual possession of the land. The Bureau of application that other parties are also in
Lands approved Valte's application and possession of the land applied for "clearly
issued Free Patent No. 586435. The constitutes a concealment of a material fact
Cabanatuan City Register of Deeds issued amounting to fraud and misrepresentation
OCT No. P-10119. Mendoza and Jose Gonzales within the context of [Section 91 of
(Gonzales) filed a protest against Valte's Commonwealth Act No. 141, as amended],
application, claiming to be "the lawful sufficient enough to cause ipso facto the
owners and possessors since 1930 thru cancellation of their patent and title." (Pedro
predecessor-in-interest and who had been in Mendoza [Deceased], Substituted By His Heirs
actual uninterrupted, open, peaceful, Federico Mendoza And Delfin Mendoza, And Jose
exclusive, and adverse possession in the Gonzales V. Reynosa Valte, G.R. 172961,
concept of an owner of the above-described September 7, 2015, as penned by J. Leonen)
property." Mendoza and Gonzales alleged
that Valte procured Free Patent No. 586435 Q: A parcel of land located in Tarlac which
by means of fraud, misrepresentation, and were inherited by Taar. CFI approved the
connivance. Is there is fraud and partition agreement of the subject property.
misrepresentation by respondent Reynosa Based on the CFI’s decision, Taar et.al.
Valte in her free patent application? prepared a subdivision plan which was
approved later on. They then applied for free
A: NO. The burden of proving that respondent patents over the property. Lawan et. al. filed
employed fraud in her free patent application a verified protest alleging that their
falls on petitioners who made this assertion. predecessors-in-interests had been in actual,
Petitioners failed to overcome this burden. physical, exclusive and notorious possession
Different kinds of fraud exist, but the law and occupation of land. DENR Director ruled
allowing fraud as a ground for a review or that Lawan et. al. are the rightful owners of
reopening of a land registration decree the subject property and cancelled the
contemplates actual and extrinsic fraud. Actual subdivision plan. It also denied the free
fraud "proceeds from an intentional deception patent application. Title was issued in favor
practiced by means of the misrepresentation or of Lawan et. al. DENR under the legal affairs
concealment of a material fact." Extrinsic fraud conducted an investigation and concluded
"is employed to deprive parties of their day in that Taar et. al. is entitled for the property.
court and thus prevent them from asserting Secretary of DENR adopted the findings of the
their right to the property registered in the investigating team and ordered cancellation
name of the applicant." of free patents and the title issued in favor of
Lawan et. al. Office of the President reversed
Petitioners did not allege nor show any the decision of Secretary of DENR. Whether
irregularity in the free patent application Lawan et. al. are barred by the principle of
proceedings conducted before the Director of res judicata from instituting free patent
Lands. The presumption that official duty has applications over the Property claimed by
been regularly performed stands. In any event, Taar et. al.
petitioners failed to overcome their burden to
prove fraud by respondent in her claim of A: NO. In this case, only the first three (3)
continuous occupation and cultivation of the elements of res judicata are present. The
land. As observed by the Court of Appeals, principle of res judicata does not require
727
Land Titles and Deeds
days after the execution of the aforestated Torrens Title issued pursuant to the patent
deeds, respondents found that the sale was becomes indefeasible upon the expiration of one
null and void as it was done within the year from the date of such issuance.
prohibitory period and that the sale was not
approved by the secretary of DENR. Thus, XPN: A title emanating from a free patent which
they filed a case for declaration of nullity of was secured through fraud does not become
the deeds of conditional and absolute sale of indefeasible.
the questioned properties. Will the action
prosper? Reason: The patent from whence the title
sprung is itself void and of no effect whatsoever.
A: YES. The five-year prohibitory period The registration of a patent under the Torrens
following the issuance of the homestead patent System does not by itself vest title; it merely
is provided under Sec. 118 of the Public Land confirms the registrant’s already existing one.
Act. It bears stressing that the law was enacted Verily, registration under the Torrens System is
to give the homesteader or patentee every not a mode of acquiring ownership.
chance to preserve for himself and his family the
land that the State had gratuitously given to him NOTE: Nonetheless, a free patent that was
as a reward for his labour in cleaning and fraudulently acquired, and the certificate of title
cultivating it. issued pursuant to the same, may only be
assailed by the government in an action for
In the present case, the negotiations for the reversion pursuant to Sec. 101 of the Public
purchase of the properties covered by the Land Act. (Nancy T. Lorzano v. Juan Tabayag, Jr.,
patents issued in 1991 were made in 1995 and, G.R. No. 189647, February 6, 2012)
eventually, an undated Deed of Conditional Sale
was executed. The prohibition does not Free patent issued over a private land
distinguish between consummated and
executory sale. The conditional sale entered into The settled rule is that a free patent issued over
by the parties is still a conveyance of the a private land is null and void, and produces no
homestead patent; that the formal deed of sale legal effect whatsoever. Private ownership of
was executed after the expiration of the said land-as when there is a prima facie proof of
period did not and could not legalize a contract ownership like a duly registered possessory
that was void from its inception. (Filinvest Land, information or a clear showing of open,
Inc., Efren C. Gutierre v. Abdul Backy, Abehera, continuous, exclusive, and notorious possession,
Baiya, Edris, et al. G.R. No. 174715. October 11, by present or previous occupants is not affected
2012) by the issuance of a free patent over the same
land, because the Public Land Law applies only
To whom free patent may be issued to lands of the public domain. (Heirs of Simplicio
Santiago v. Heirs of Mariano Santiago, G.R. No.
1. A natural-born citizen of the Philippines; 151440, June 17, 2003)
2. Is not the owner of more than 12 hectares of
land; RECLAMATION
3. Has continuously occupied and cultivated,
either by himself or through his Reclamation is the act of filling up of parts of the
predecessors-in-interest, a tract or tracts of sea for conversion to land.
agricultural public land subject to
disposition, for at least 30 years prior to the NOTE: It must be initially owned by the
effectivity of Republic Act No. 6940; and government. It may be subsequently transferred
4. Has paid the real taxes thereon while the to private owners.
same has not been occupied by any person.
(Taar, et al., v. Lawan, et al., G.R. No. 190922, Q: Who may undertake reclamation projects?
October 11, 2017, as penned by J. Leonen)
A: Only the national government may engage in
NOTE : Once a patent is registered and the reclamation projects.
corresponding certificate of title is issued, the
land covered thereby ceases to be part of public Q: To whom does a reclaimed area belong?
domain and becomes private property, and the
1. It is to govern the disposition of lands of the Includes not only the The government
public domain. government lands, but owns real estate,
2. It prescribed rules and regulations for the also other lands of the which is part of the
homesteading, selling, and leasing of government already “public lands,” and
portions of the public domain of the reserved or devoted to other real estate,
Philippine Islands. public use or subject to which is not a part
3. It prescribed the terms and conditions to private right. thereof.
enable persons to perfect their titles to
Equivalent to public
public lands in the Islands.
domain and does not, by
4. It worked on the assumption that the title to
public lands in the Philippines remained in any means, include all
lands of government
the government and goverment’s title to
ownership, but only so
public land came from the Treaty of Paris
much of said lands as are
and other relative treaties. (J. Agcaoli,
thrown open to private
Property Registration Decree & Related Laws:
Land Titles and Deeds, 2011) appropriation and
settlement by homestead
and other like general
Persons qualified for registration under
laws. (Montano v. Insular
Public Land Act or C.A. No. 141
Government, G.R. No. L-
3714, January 26, 1909)
Those who by themselves or through their
predecessors-in-interest have been in open,
continuous, exclusive and notorious possession Patrimonial property v. Public land
and occupation of alienable and disposable
agricultural lands of the public domain, under a PATRIMONIAL
bona fide claim of acquisition or ownership, since PUBLIC LAND
PROPERTY
June 12, 1945, except when prevented by war or
force majeure. All other property of the Property for public
State which is not of the use of provinces and
Requisites: character of public towns.
dominion or not intended
1. The applicant must be a Filipino citizen; for public use, public
2. He must have, by himself or through his service, or for the
predecessors in-interest, possessed and development of national
occupied an alienable and disposable wealth.
agricultural portion of the public domain; Property of public
3. Such possession and occupation must have dominion, when no
been open, continuous, exclusive, notorious longer needed for public
and in the concept of owner, since June, 12, use, or for public service,
1945, except when prevented by war or shall form part of the
force majeure; and patrimonial property of
729
Land Titles and Deeds
OPEN - When it is patent, visible apparent Canlas comes before this court, arguing that
notorious and not clandestine; she has duly overcome the burden of proof
by showing open, continuous, exclusive,
CONTINUOUS - When uninterrupted, unbroken adverse, and notorious possession and
and not intermittent or occasional; occupation of the property. Is Canlas in open,
continuous, exclusive, and notorious
EXCLUSIVE - When the adverse possessor can possession and occupation of the land
show exclusive dominion over the land and an described in plan Psu-04-006561?
appropriation of it to his own use and benefits;
and A: YES. To qualify as open, continuous, exclusive,
and notorious possession and occupation, the
NOTORIOUS - When it is so conspicuous that it possession must be of the following character:
is generally known and talked of by the public or
the people in the neighborhood. (Heirs of Possession is open when it is patent, visible,
731
Land Titles and Deeds
a. What are the laws that you need to (Republic v. Serrano G.R. No. 183063, February
consider in advising Manuel on how he 24, 2010) I also have to file together with the
can perfect his title and register the land application for registration all original
in his name? Explain the relevance of muniments of title or copies thereof and a
these laws to your projected course of survey plan of the land approved by the Bureau
action. of Lands in accordance with Sec. 17 of P.D. 1529.
Manuel may also submit the tax declarations and
b. What do you have to prove to secure tax payment receipts which have been ruled to
Manuel's objectives and what be good indications of possession in the concept
documentation are necessary? (2013 Bar) of owner. (Republic v. Candy Maker, Inc., G.R. No.
163766, June 22, 2006)
A:
Persons qualified for judicial confirmation
(a) For purposes of confirmation of imperfect
title, I will consider the provisions of C.A. No. 1. Filipino citizens who by themselves or
141 as well as the Property Registration Decree through their predecessors-in-interest have
or P.D. 1529. C.A. No. 141 provides two been in open, continuous, exclusive and
requisites for judicial confirmation of imperfect notorious possession and occupation of
title namely: (1) open and continuous, exclusive alienable and disposable lands of public
and notorious possession and occupation of the domain under a bona fide claim of
land by himself or through his predecessor in acquisition since June 12, 1945 or prior
interest under bona fide claim of ownership thereto or since time immemorial ;
since June 12, 1945; and (2) the classification of 2. Filipino citizens who by themselves or their
the land as alienable and disposable land of the predecessors-in-interest have been, prior to
public domain. (Secretary of DENR v. Yap, G.R. No. the effectivity of P.D. 1073 on January 25,
167707, October 8, 2008) 1977, in open, continuous, exclusive and
notorious possession and occupation of
The Property Registration Decree or P.D. 1529 agricultural lands of the public domain
provides that those who by themselves or their under a bona fide claim of acquisition or
predecessors-in-interest have been in open, ownership for at least 30 years, or at least
continuous, exclusive and notorious possession since January 24, 1947 ;
and occupation of alienable and disposable lands 3. Private domestic corporations or
of the public domain under a bona fide claim of associations which had acquired lands from
ownership since June 12, 1945 or earlier. Since Filipino citizens who had possessed the
Manuel’s father Michael had been in open, same in the manner and for the length of
continuous, exclusive and notorious possession time indicated in paragraphs 1 & 2 above ;
of the land since 1935, and that the land was or
declared alienable in the same year, his 4. Natural-born citizens of the Philippines who
possession has ripened into ownership which have lost their citizenship and who has the
entitles him or his successor Manuel to file an legal capacity to enter into a contract under
application for judicial confirmation of imperfect Philippine laws may be a transferee of
title. private land up to a maximum area of 5,000
sq.m., in case of urban land, or three
(b) I have to prove that the land was already hectares in case of rural land to be used by
declared alienable at the time that Manuel or his him for business or other purposes. For
father Michael took possession of the land and residence purposes, the maximum area is
that their possession was open, continuous, 1,000 sq. m. in case of urban lands or one
exclusive and notorious which started prior to hectare in case of rural lands.
or on June 12, 1945 as required by C.A. No.
141. To prove the first requisite, the original NOTE: Aliens are disqualified from acquiring
classification of the land as approved by the public and private lands. (Hulst v. PR Builders,
DENR Secretary (Republic v. T.A.N. Properties, Inc., G.R. No. 156364, September 3, 2007; Krivenko
Inc., G.R. No. 154953, June 26, 2008) or in lieu v. Register of Deeds, G.R. No. L-630, November 15,
thereof, a Certification by the DENR Regional 1947)
office attesting to the alienable and disposable
character of the land must have to be submitted.
733
Land Titles and Deeds
sufficient that the land is already declared as 13. Transcription of decree of registration in the
alienable and disposable land at the time the registration book and issuance of owner’s
application for registration is filed so as to duplicate original certificate of title (OCT) of
entitle the possessor to registration. (Malabanan applicant by RD, upon payment of
v. Republic, G.R. No. 179987, April 29, 2009) It prescribed fees. (Section 14-30, P.D. 1529)
must be stressed, however, that the applicant for
land registration must have been in possession NOTE: After judgment has become final and
of the land sought to be registered since June 12, executory, the issuance of decree and OCT is
1945 or earlier. ministerial on the part of LRA and RD.
Modes of registering land titles The Rules of Court could be applied in land
registration proceedings in a suppletory
There are two modes: character or whenever practicable or
convenient.
1. Original registration proceedings under the
Property Registration Decree (P.D. 1529); NOTE: Motion to intervene in a land registration
and case is not allowed.
2. Confirmation of imperfect or incomplete title
under Sec. 48(b) of the Public Land Act, as APPLICATION
amended.
Form of the application for registration or
Requisites in ordinary registration judicial confirmation
proceedings and judicial confirmation of
imperfect title 1. In writing:
2. Signed by the applicant or person duly
1. Survey of land by Bureau of Lands or any authorized in his behalf;
duly licensed private surveyor; 3. Sworn to before an officer authorized to
2. Filing of application for registration by administer oaths for the province or city
applicant; where the application was actually signed;
3. Setting of date for initial hearing by the and
court; 4. If there is more than one applicant, they
4. Transmittal of application and date of initial shall be signed and sworn to by and in
hearing with all documents or other pieces behalf of each.
of evidence attached thereto by clerk of
court to National Land Titles and Deeds Documents that must accompany the
Registration Administration (NALTDRA); application
5. Publication of notice of filing of application
and date and place of hearing; All muniments of titles and copies thereof with
6. Service of notice by sheriff upon contiguous survey plan approved by Bureau of Lands must
owners, occupants and those known to have accompany the application.
interest in the property;
7. Filing of answer or opposition to the Muniments of title
application by any person whether named in
the notice or not; They are instruments or written evidence which
8. Hearing of case by court; the applicant holds/possesses to enable him to
9. Promulgation of judgment by court; substantiate and prove title to his estate.
10. Issuance of a decree by court declaring the
decision final, and instructing the NALDTRA Rule regarding application covering two or
to issue a decree of confirmation and more parcels
registration;
11. Entry of decree of registration in NALDTRA; An application may include two or more parcels
12. Sending of copy of the decree of registration of land belonging to the applicant/s provided
to corresponding RD; and
There is no controversy or opposition Clearly, the law itself, Sec. 34 of B.P. Blg. 129,
(uncontested lots); or already provides the specific instances when
Value of contested lots does not exceed first level courts may exercise their delegated
P100, 000. (R.A. 7691, Sec. 4) jurisdiction.
In other cases, the RTC has jurisdiction. Q: Leonor Santos filed an application for
registration with the CFI of Rizal. The
NOTE: Appeal is taken to the Court of Appeals. Director of Lands opposed. Notices were
given and the case was set for hearing. Later,
The value of the property is ascertained in three the court issued an order dismissing the
ways: application on the basis of a report from the
LRC that a “homestead patent was issued (to
1. By the affidavit of the claimant; Julio Delgado) by the Director of Lands
2. By agreement of the respective claimants, if during the pendency of the registration
there are more than one; or proceedings.” Was the court divested of its
3. From the corresponding tax declaration of jurisdiction by a subsequent administrative
the real property. (B.P. 129, Sec. 34) act consisting in the issuance by the Director
of Lands of a homestead patent covering the
Q: Bantigue Corp. filed with the RTC an same land subject of the registration case?
application for registration over a lot with an
assessed value of P14,920. However, the RTC A: NO. In her application for registration, Santos
motu proprio remanded the case to the MTC alleged, among other matters, that she is the
since the assessed value of the land is only owner in fee simple of the land. Since the
P14,920. After hearing, the MTC granted the existence or non-existence of applicant’s
application. The Republic appealed arguing registrable title is decisive of the validity or
that the MTC did not acquire jurisdiction nullity of the homestead patent, the court’s
735
Land Titles and Deeds
jurisdiction could not have been divested by the indispensable requirement consistent with
homestead patent's issuance. procedural due process. (Roxas v. Court of
Appeals, G.R. No. 118436, March 21, 1997;
Proceedings for land registration are in rem, Director of Lands v. Court of Appeals and
whereas proceedings for acquisition of Abistado, G.R. No. 102858, July 28, 1997)
homestead patent are not. A homestead patent,
therefore, does not finally dispose of the public NOTE: The requirement of mailing and posting
or private character of the land as far as courts are mandatory.
acting upon proceedings in rem are concerned.
(De los Angeles v. Santos, G.R. No. L-19615, New publication necessary to include
December 24, 1964) additional area
Sec. 2, P.D. 1529 has eliminated the If amendment of the application is made to
distinction between the court’s general include additional area, a new publication of the
jurisdiction and limited jurisdiction. amended application must be made, but not
when the amendment consists in the exclusion
A regional trial court has the authority to hear of a portion form the area originally applied for.
not only applications for original registration but (Benin v. Tuason, G.R. No. L-26127, June 28, 1974)
also all petitions filed after original registration
of title. The amendment aims to avoid Purpose of the publication requirement
multiplicity of suits and simplify registration
proceedings. The court can now hear and decide 1. Confer jurisdiction upon the court over the
not only non-controversial cases but even res; and
contentious issues which before were beyond its 2. Apprise the whole world of the pending
competence. (Lozada v. Bracewell, G.R. No. registration case so that they may assert
179155, April 2, 2014; Averia v. Caguioa, G.R. No. their rights or interests in the land, if any,
L-65129, December 29, 1986) and oppose the application.
NOTE: Publication in the Official Gazette does It deprives the court of jurisdiction. Hence, the
not dispense with the requirement of notice by proceeding will be void.
mailing and posting.
GR: If it is later shown that the decree of
Lack of personal notice does not vitiate the registration had included land or lands not
proceedings included in the publication, then the registration
proceedings and the decree of registration must
Land registration proceedings are proceedings be declared null and void–but only insofar–as the
in rem, not in personam, and therefore it is not land not included in the publication concerned.
necessary to give personal notice to the owners But the proceedings and the decree of
or claimants of the land sought to be registered, registration, relating to the lands that were
in order to vest the courts power or authority included in the publication, are valid.
over the res. Notice of hearing by proper
publication in the Official Gazette is sufficient to XPN: If the difference is not as substantial as
clothe the court with jurisdiction, and the mere would affect the identity of the land, failure to
fact that a person purporting to have a publish the bigger area (insubstantial inclusion)
legitimate claim in the property did not receive does not perforce affect the court’s jurisdiction.
personal notice is not sufficient ground to
invalidate the proceedings. (Adez Realty Inc. v. Q: When may an amendment of the
CA, G.R. No. 100643, December 12, 1995 ; Republic application be made?
v. Castro, G.R. No. 172848, December 10, 2008)
A: Amendments to the application including
Defective publication joinder, substitution, or discontinuance as to the
parties may be allowed by the court at any stage
There is a defective publication if what has been of the proceedings upon just and reasonable
published in the Official Gazette is the terms. (P.D. 1529, Sec. 19)
description of a bigger lot which includes the
lands subject of registration. Necessity of publication and notice in the
amended application
Reasons:
GR: Publication and notice are necessary where
1. Sec. 15, P.D. 1529 requires that the the amendment to the application consists in:
application for registration should contain
the description of the land subject of 1. Substantial change in the boundaries;
registration and this is the description to be 2. Increase in the area of the land applied for;
published; and
3. The inclusion of additional land.
737
Land Titles and Deeds
NOTE: Without such publication, the Heirs of Lopez, Sr., v. Querubin, G.R. No. 155405,
registration court cannot acquire jurisdiction March 18, 2015)
over the area that is added.
Requirements
Situations when publication and notice are
not necessary 1. That the instrument be presented to the
court by the interested party together with a
1. If the amendment consists in the exclusion of motion that the same be considered in relation
a portion of the area covered by the original with the application; and
application and the original plan as
previously published, a new publication is 2. That prior notice be given to the parties to
not necessary; the case. (Mendoza v. CA, G.R. No. L-36637, July
14, 1978)
NOTE: In this case, the jurisdiction of the
court is not affected by the failure of filing a OPPOSITION
new application.
Persons who may oppose the application for
2. If the amendments to the application registration
involves joinder, substitution or
discontinuance as to the parties; and Any person claiming an interest, whether named
in the notice or not, may appear and file an
NOTE: This may be allowed by the court at opposition on or before the date of initial
any stage of the proceedings upon just and hearing, or within such further time as may be
equitable terms. allowed by the court.
NOTE: The oppositor’s interest over the land is In civil cases, there is 2 Kinds :
immaterial whether his interest is in the only one kind of
character of legal owner or is of a purely default. 1. Order of general
equitable nature as where he is a beneficiary of a To lift the order of default - if no person
trust. default It must be appears and answers
shown that the person within the time
Absence of opposition by the government declared in default allowed ; by
does not justify outright registration must have a description in the
meritorious defense, notice “to whom it may
Notwithstanding the absence of opposition from along with the grounds concern”, all the world
the government, the applicant in land : are made parties
registration cases is not relieved of the burden of defendant and shall be
proving the imperfect right or title sought to be 1. Fraud ; concluded by the
confirmed. (Director, Lands Management Bureau 2. Accident ; default order.
v. CA, G.R. No. 112567, February 7, 2000) 3. Mistake ; and
4. Excusable 2. Order of special
Courts are not justified in registering property negligence default - when an
under the Torrens system, simply because there appearance has been
is no opposition offered. Courts may, even in the entered and answer
739
Land Titles and Deeds
filed, default order without need of the prior filing of a motion to set
shall be entered upon aside the order of default. We reaffirm that
against persons who the Lim Toco doctrine, denying such right to
did not appear and appeal unless the order of default has been set
answer. aside, was no longer controlling in this
jurisdiction upon the effectivity of the 1964
Effect of an order of default in land Rules of Court, and up to this day.” (Martinez v.
registration proceedings Republic, G.R. No. 160895, October 30, 2006)
Effect of the absence of an opposition as 1. Declassification – The land applied for has
regards allegations in the application been declassified from the forest or timber
zone and is a public agricultural land, is
All allegations in the application are deemed alienable and disposable, or otherwise
confessed on the part of the opponent. capable of registration;
NOTE: The Court held that the CENRO/PENRO Q: On August 26, 2006, respondents Spouses
certification is not sufficient evidence of the facts Go applied for the registration and
stated therein. (Gaerlan v. Republic, G.R. No. confirmation of title over a parcel of land in
192717, March 12, 2014; See also Republic v. Batangas City covering an area of 1,000
Heirs of Tomasa Estacio and Eulolio Ocol, G.R. No. square meters. The Spouses Go registered
208350, November 14, 2016) the lot in their names for taxation purposes.
741
Land Titles and Deeds
They had paid the real property taxes, v. Spouses Danilo Go and Amorlina Go, G.R. No.
including the arrears, from 1997 to 2006. 197297, August 02, 2017, as penned by J.
They had also established a funeral parlor, Leonen)
San Sebastian Funeral Homes, on the lot.
According to them, there were no other Q: In 1933, Daquer applied for a homestead
claimants over the property. The Spouses Go patent grant over a parcel of land in Palawan
claimed to be in an open, continuous, for his "exclusive personal use and benefit."
exclusive, notorious, and actual possession of In 1936, Director of the Bureau of Lands
the property for seven (7) years since they approved Daquer's application and issued
bought it. They also tacked their possession him Homestead Patent. After registration of
through that of their predecessors-in- the homestead patent in the Register of
interest. However, the Republic of the Deeds, an Original Certificate of Title (OCT)
Philippines opposed spouses’ application for was issued in Daquer's name. Daquer passed
registration; it claimed that Lot No. 4699-B away and was survived by his children (Heirs
was part of the public domain. Are the of Daquer).
spouses the rightful owner of the land?
Upon investigation by the Community
A: Even assuming that there is sufficient Environment and Natural Resource Office
evidence to establish their claim of possession in (CENRO), it was discovered that the subject
the concept of an owner since June 12, 1945, the land covered by Homestead Application and
Spouses Go nevertheless failed to prove the OCT in Daquer's name fell within the zone of
alienable and disposable character of the land. unclassified public forest. Consequently, the
Republic filed a Complaint for Cancellation of
The 1987 Constitution declares that the State Free Patent, Original Certificate of Title and
owns all public lands. Public lands are classified Reversion of land to public domain in 2003.
into agricultural, mineral, timber or forest, and
national parks. Of these four (4) types of public a. Could the mere issuance of a homestead
lands, only agricultural lands may be alienated. patent classify an otherwise unclassified
Article XII, Sections 2 and 3 of the Constitution public land into an alienable and
provide: disposable agricultural land of the public
domain?
Section 2. All lands of the public domain,
waters, minerals, coal, petroleum, and other b. Will the action for reversion prosper?
mineral oils, all forces of potential energy, Explain.
fisheries, forests or timber, wildlife, flora
and fauna, and other natural resources are A:
owned by the State. With the exception of
agricultural lands, all other natural a. NO. The issuance of the Homestead Patent
resources shall not be alienated . . . in favor of Daquer, pursuant to the Public
Land Act, did not, by itself, reclassify the
Section 3. Lands of the public domain are subject lot into alienable and disposable
classified into agricultural, forest or timber, public agricultural land.
mineral lands, and national parks.
Agricultural lands of the public domain may In classifying lands of the public domain as
be further classified by law according to the alienable and disposable, there must be a
uses [to] which they may be devoted. positive act from the government declaring
Alienable lands of the public domain shall be them as open for alienation and disposition.
limited to agricultural lands . . . An act of the government may only be
considered as "express or positive if [it] is
Thus, an applicant has the burden of proving exercised directly for the very purpose of
that the public land has been classified as lifting land from public ownership."
alienable and disposable. To do this, the
applicant must show a positive act from the In this case, the records are bereft of any
government declassifying the land from the evidence showing that the land has been
public domain and converting it into an alienable classified as alienable and disposable. A
and disposable land. (Republic of The Philippines homestead patent is a gratuitous grant from
743
Land Titles and Deeds
boundaries therein laid down, as enclosing the 1. Introducing valuable improvements on the
land and indicating its limits. (Balantakbo v. CA, land like fruit-bearing trees;
G.R. No. 108515, October 16, 1995; See also Del 2. Fencing the area;
Prado v. Caballero, G.R. No. 148225, March 3, 3. Constructing a residential house thereon;
2010) and
4. Declaring the land for taxation purposes.
GR: Boundaries prevail over area.
Mere possession will not defeat the title of a
XPNs: holder of registered land. (Eduarte v. CA, G.R. No.
121038, July 22, 1999)
1. Boundaries relied upon do not identify land
beyond doubt; and NOTE: Evidence to be admissible must,
2. Boundaries given in the registration plan do however, be credible, substantial and
not coincide with outer boundaries of the satisfactory.
land covered and described in the
muniments of title. Q: Exequiel Ampil, as representative of heirs
of the late Albina Ampil, filed a complaint for
Evidence of possession ejectment against Perfecto Manahan, et al.
Allegedly, Albina was the owner of two
It is not enough to simply declare one’s adjoining residential lots located in Bulacan
possession and that of the applicant’s as evidenced by tax declarations. They
predecessors-in-interest to have been “adverse, asserted that Albina allowed Perfecto and his
continuous, open, public, peaceful and in concept family to occupy a portion of said properties
of owner” for the required number of years. The on the condition that they would vacate the
applicant should present specific facts to show same should the need to use it arise. Despite
such nature of possession because bare requests however, Perfecto and his family
allegations, without more, do not amount to refuse to vacate the property. Respondents
preponderant evidence that would shift the aver that they had been in peaceful and
burden to the oppositor. (Diaz v. Republic, G.R. continuous possession of the property in the
No. 141031, August 31, 2004; Wee v. Republic, concept of an owner since time immemorial
G.R. No. 177384, December 8, 2009) and that Albina was never the owner of the
property. Who between the petitioners and
Under Sec. 48(b) of C.A. No. 141 and Sec. 14(1) the respondents have the better right to the
of P.D. 1529, the reckoning point of possession is physical possession of the disputed
June 12, 1945. It is only necessary that the land property?
is already classified as alienable and disposable
at the time of the filing of the application for A: The petitioners have the better right to the
registration. (Malabanan v. Republic, G.R. No. property in question. The bare allegation of
179987, April 29, 2009) respondents that they had been in peaceful and
continuous possession of the lot in question
Possession must be under a claim of because their predecessor-in-interest had been
ownership in possession thereof in the concept of an owner
from time immemorial, cannot prevail over the
Acts of a possessory character by one who holds tax declarations and other documentary
the property by mere tolerance of the owner is evidence presented by petitioners. In the
not in the concept of owner, and do not start the absence of any supporting evidence, that of the
period of prescription. petitioners deserves more probative value. A
perusal of the records shows that respondents’
Actual possession consists of acts of dominion of occupation of the lot in question was by mere
such a nature as a party would naturally exercise tolerance. From the minutes of the meeting in
over his own property. the Barangay Lupon, Perfecto admitted that
Albina permitted them to use the lots on the
Occupation delimits the all-encompassing effect condition that they would vacate the same
of constructive possession. should Albina need it. (Heirs of Albina G. Ampil,
namely Precious A. Zavalla, Eduardo Ampil, et al.
Overt acts of possession
745
Land Titles and Deeds
bona fide claim of ownership since June 12, NOTE: Any evidence that accretion was
1945 or earlier, as to enable confirmation of formed through human intervention negates
title under Section 14(1) of the Property the claim.
Registration Decree. It decried petitioner's
reliance on tax declarations, even if they 4. Presidential issuances and legislative acts.
dated to as far back as 1931, as these
supposedly did not prove ownership: NOTE: It is constitutive of a “fee simple” title
or absolute title in favor of the grantee.
Is Kawayan Hills Corporation entitled to have
title over Lot No. 2512 confirmed and Q: Agustin executed an Affidavit of Transfer
registered in its favor? of Real Property where Ducat is to perform
all the necessary procedures for the
A: YES. The payment of real property taxes since registration and acquisition of title over
as far back as 1931 by petitioner Kawayan Hills' several parcels of land possessed and
predecessor-in interest, Andres, should not be occupied by Agustin. Before Ducat was able
dismissed so easily. To the contrary, coupled to accomplish his task, Agustin died and
with evidence of continuous possession, it is a Bernardo administered the properties. Ducat
strong indicator of possession in the concept of then filed an Application for Free Patent over
owner. the land, which was granted. The parcels of
land were registered in the names of Ducat
Although tax declarations or realty tax payments and Kiong. The heirs of Bernardo sought the
of property are not conclusive evidence of reconveyance of the land with damages but
ownership, nevertheless, they are good indicia of did not question the authenticity of the
possession in the concept of owner for no one in agreement. Who is the rightful owner of the
his right mind would be paying taxes for a property?
property that is not in his actual or at least
constructive possession. They constitute at least A: The spouses Ducat and Kiong. The Affidavit
proof that the holder has a claim of title over the of Transfer of Real Property proved Ducat’s
property. The voluntary declaration of a piece of ownership of the property. It stated that Ducat
property for taxation purposes manifests not bought the subject property from Cecilio and
only one's sincere and honest desire to obtain Bernardo. The heirs did not question the
title to the property and announces his adverse authenticity and due execution of said
claim against the State and all other interested document. It constitutes an admission against
parties, but also the intention to contribute interest made by Bernardo, petitioners'
needed revenues to the Government. Such an act predecessor-in-interest. Bernardo's admission
strengthens one's bona fide claim of acquisition against his own interest is binding on his heirs.
of ownership. The heirs' predecessor-in-interest recognized
Ducat and Kiong as the legal owner of the lot in
When an applicant in the registration of dispute. Thus, there is no proof that the titling of
property proves his or her open, continuous, the subject property was fraudulently obtained
exclusive, and notorious possession of a land for by Ducat and Kiong in their names. (Heirs of
the period required by law, he or she has Bernardo Ulep v. Sps. Cristobal Ducat and Flora
acquired an imperfect title that may be Kiong, G.R. No. 159284, January 27, 2009)
confirmed by the State. The State may not, in the
absence of controverting evidence and in a pro Q: After due hearing for registration, what
forma opposition, indiscriminately take a will the court do?
property without violating due process.
(Kawayan Hills Corporation v. Court of Appeals, et A: If the court, after considering the evidence
al., G.R. No. 203090, September 05, 2018, as and report of the LRA, finds that the applicant or
penned by J. Leonen) the oppositor has sufficient title proper for
registration, it shall render judgment confirming
3. Other kinds of proof the title of the applicant, or the oppositor, to the
land or portions thereof, as the case may be.
e.g. Testimonial evidence (i.e. accretion is on (P.D. 1529, Sec. 29)
a land adjacent to a river);
JUDGMENT AND DECREE OF REGISTRATION
NOTE: A judgment in rem is binding upon the No period within which decree may be issued
whole world, such as a judgment in a land
registration case or probate of a will; and a The fact that no decree has as yet been issued
judgment in personam is binding upon the cannot divest the applicant of his title to and
parties and their successors-in-interest but not ownership of the land in question. There is
upon strangers. nothing in the law that limits the period within
which the court may issue a decree. The reason is
A judgment directing a party to deliver that the judgment is merely declaratory in
possession of a property to another is in character and does not need to be enforced
personam. against the adverse party. (Del Rosario v.
Limcaoco, G.R. No. 177392, November 26, 2012)
An action for declaration of nullity of title and
recovery of ownership of real property, or From another perspective, the judgment does
reconveyance, is a real action but it is an action not have to be executed by motion or enforced by
in personam, for it only binds the parties action within the purview of Rule 39 of the 1997
impleaded although it concerns the right to a Rules of Civil Procedure. (Republic v. Nillas, G.R.
tangible thing. (Muoz v. Yabut, G.R. No. 142676, No. 159595, January 23, 2007)
June 6, 2011)
Decree of registration
Motion for execution of judgment not
required
747
Land Titles and Deeds
It is a document prepared in the prescribed form uncontested portions approved by the Director
by the LRA Administrator, signed by him in the of Lands is previously submitted to the court.
name of the court, embodying the final
disposition of the land by the court and such Effect of a decree of registration
other data found in the record, including the
name and other personal circumstances of the The decree of registration binds the land, quiets
applicant, the technical description of the title, subject only to such exceptions or liens as
property, liens and encumbrances affecting it, may be provided by law. It is conclusive upon all
and such other matters as determined by the persons including the national government and
court in its judgment. all branches thereof. Such conclusiveness does
not cease to exist when the title is transferred to
Q: In a land registration case, the court a successor.
rendered a decision granting Reyes’
application, hence the Director of Lands Land becomes registered land only upon the
appealed. Reyes moved for the issuance of a transcription of the decree in the original
decree of registration pending appeal. May registration book by the Register of Deeds, the
his motion be granted? date and time of such transcription being set forth
in the process and certified to at the foot of each
A: NO. Innocent purchasers may be misled into entry or certificate of title, and not on the date of
purchasing real properties upon reliance on a the issuance of the decree. (Manotok v. CLT
judgment which may be reversed on appeal. A Realty, G.R. No. 123346, November 29, 2005. See
Torrens title issued on the basis of a judgment also Id., G.R. No. 123346, December 14, 2007)
that is not final is a nullity as it violates the
explicit provisions of the LRA, which requires NOTE: Title once registered cannot be
that a decree shall be issued only after the impugned, altered, changed, modified, enlarged
decision adjudicating the title becomes final and or diminished, except in a direct proceeding
executory. (Director of Lands v. Reyes, G.R. No. L- permitted by law. (Section 48, P.D. 1529; Paulino
27594, November 28, 1975; Top Management v. CA, G.R. No. 205065, June 4, 2014)
Programs Corp. v. Fajardo, supra.)
Reopening of judgment or decree of
Scope of decree of registration registration
Only claimed property or a portion thereof can The court has no jurisdiction or authority to
be adjudicated. A land registration court has no reopen the judgment or decree of registration,
jurisdiction to adjudge a land to a person who nor impair the title or other interest of a
has never asserted any right of ownership purchaser holding a certificate for value and in
thereof. good faith, or his heirs and assigns, without his
or their written consent.
A land registration court has no jurisdiction to
order the registration of land already decreed in Effects of the entry of the decree of
the name of another in an earlier land registration in the National Land Titles and
registration case. A second decree for the same Deeds Registration Authority (NALTDRA)
land would be null and void, since the principle
behind the original registration is to register a 1. This serves as the reckoning date to
parcel of land only once. (Rodolfo V. Francisco v. determine the one year period from which
Emilliana M. Rojas, G.R. No. 167120, April 23, one can impugn the validity of the
2014) registration;
2. One year after the date of entry, it becomes
Partial Judgment in land registration incontrovertible, and amendments will not be
proceedings allowed except clerical errors. It is deemed
conclusive as to the whole world; and
Where only a portion of the land, subject of 3. Puts an end to litigation.
registration is contested, the court may render
partial judgment provided that a subdivision NOTE: An application for registration of a titled
plan showing the contested land and land constitutes a collateral attack on the
existing title. (SM Prime Holdings v. Madayag,
An order by which the sheriff is commanded to XPN : The possession of the property shall be
place a person in possession of a real or personal given to the purchaser or last redemptioner
property. (Soliva v. Taleon, A.M. No. P-16-3511, unless a third party is actually holding the
September 6, 2017) property adverse to the judgment obligor. (Sec.
3, Rule 39, Rules of Court)
The writ may be issued not only against the
person defeated in the registration case but also NOTE : The phrase ‘a third party who is actually
against any one adversely occupying the land holding the property adversely to the judgment
during the proceedings up to the issuance of the obligor’ contemplates a situation in which a
decree. (Vencilao v. Vano, G.R. No. L-25660, third party holds the property by adverse title or
February 23, 1990; Heirs of Lopez, Sr., v. right, such as that of a co-owner, tenant or
Querubin, G.R. No. 144405, March 18, 2015) usufructuary. The co-owner, agricultural tenant,
and usufructuary possess the property in their
The writ does not lie against a person who own right, and they are not merely the successor
entered the land after the issuance of the decree or transferee of the right of possession of
and who was not a party in the case. He may another co-owner or the owner of the property.
only be proceeded against in a separate action Notably, the property should not only be
for ejectment or reivindicatory action. (Bernas v. possessed by a third party, but also held by the
Nuevo, G.R. No. L-58438, January 31, 1984) third party adversely to the judgment obligor.
(Marquez v. Alindog, G.R. No 184045, January 22,
The writ is imprescriptible. A writ of demolition 2014)
is but a complement of the writ of possession.
(Gawaran v. Intermediate Appellate Court, G.R. Q: How may possession of property be
No. L-72721, June 16, 1988; Lucero v. Loot, G.R. obtained?
No. L-16995, October 28, 1968)
A: Possession of the property may be obtained
It may be issued by a special order of the court. by filing an ex parte motion with the RTC court
Mandamus is a proper remedy to compel the of the province or place where the property is
issuance of a writ of possession. (Edralin v. situated. Upon filing of the motion and the
Philippine Veterans Bank, G.R. No. 168523, March required bond, it becomes a ministerial duty of
9, 2011) the court to order the issuance of a writ of
possession in favor of the purchaser. After the
Instances where a writ of possession may be expiration of the one-year period without
issued redemption being effected by the property
owner, the right of the purchaser to the
1. In a land registration proceeding, which is a possession of the foreclosed property becomes
proceeding in rem; absolute. (Laureano v. Bormaheco Inc., G.R. No.
2. In an extrajudicial foreclosure of a realty 137619, February 6, 2001)
mortgage;
3. In a judicial foreclosure of mortgage, a quasi Q: PNCB purchased a parcel of land in a
in rem proceeding, provided that the foreclosure sale and applied for a writ of
mortgagor is in possession of the mortgaged possession after the lapse of more than one
realty and no third person, not a party to the year. On appeal, however, it was held that the
foreclosure suit had intervened; and writ of possession cannot be issued because
4. In execution sales. the foreclosure sale, upon which it is based,
was infirm. Is said ruling correct?
Issuance of writ of possession not ministerial
where third party is in adverse possession or A: NO. Any question regarding the regularity
is not a privy to the debtor and validity of the sale, as well as the consequent
cancellation of the writ, is to be determined in a
subsequent proceeding as outlined in Sec. 8, Act
3135, as amended by Act 4118. Such question is
749
Land Titles and Deeds
not to be raised as a justification for opposing the confirm or adjudicate ownership over the
issuance of the writ of possession, since, under the property covered by the reconstituted title
Act, the proceeding is ex parte.As the purchaser unlike in original land registration proceedings
of the properties in the extra-judicial foreclosure wherein a writ of possession may be issued in
sale, PNCB is entitled to a writ of possession. The order to place the applicant-owner in
basis of this right to possession is the possession.
purchaser’s ownership of the property. Mere
filing of an ex parte motion for the issuance of DECREE OF CONFIRMATION AND
the writ of possession would suffice, and no REGISTRATION
bond is required. (Sulit v. CA, G.R. No. 119247,
February 17, 1997; Agcaoili, 2008) It is issued by LRA after finality of judgment, and
contains technical description of the land. It is
Q: If the court granted the registration, must subject only to an appeal. It is conclusive
the applicant move for the issuance of a writ evidence of the ownership of the land referred to
of possession in case he is deprived of therein and becomes indefeasible and
possession over the land subject of the incontrovertible after one year from the
registration proceedings? issuance of the decree.
GR: A petition for the issuance of a writ of A decree of registration or a registered title
possession does not prescribe. cannot be impugned, enlarged, altered, modified,
or diminished either in collateral or direct
XPN: If a party has once made use of the benefit proceeding, after the lapse of one year from the
of a writ of possession, he may not ask for it date of its entry.
again, if afterwards he loses possession of the
property obtained by virtue of the original writ. XPN: Fake or non-existent titles.
751
Land Titles and Deeds
Heirs secured a free patent to Lot No. 20028 canceled only through an action for annulment
through manipulation. They asserted that the of the certificate itself. The petition incidentally
supporting affidavits for the Cascayan Heirs' questioned the validity of the TCT issued in
free patent application were obtained Diopenes’ and Villanueva’s favor in an action
through fraud and deception. seeking a different relief—purportedly for
petitioner to be included as farmer-beneficiary
Were the Spouses Gumallaoi the legal owners in the subject lots. This is a collateral attack on
of Lot No. 20028? the title, and as such, prohibited by law. Similar
to a certificate of title issued in registration
A: YES. In this case, Spouses Gumallaoi proceedings, the registration of a CLOA places
presented sufficient evidence to show that the the subject land under the operation of the
Heirs of Cascayan obtained their title through Torrens system. Once under the Torrens system,
fraud and misrepresentation. Moreover, the a CLOA becomes indefeasible and
evidence did not sufficiently prove the heirs' incontrovertible upon the expiration of one year
claims of possession or ownership over Lot No. from the date of registration with the Office of
20028. The only basis for their claim of the Registry of Deeds. It may only be attacked
possession was tax declarations. through a direct proceeding before the court.
The spouses, on the other hand, sufficiently Moreover, Regional Director has no jurisdiction
identified Lot No. 20028 and proved their title in a Petition for Inclusion as farmer-beneficiary
thereto. Hence, considering the foregoing, it is over lots covered by the Certificates of Title or
proper to say that Spouses Gumallaoi are the registered Certificates of Land Ownership
lawful owners of the subject property. (Heirs Of Award. Thus, all subsequent proceedings are
Cayetano Cascayan, Represented By La Paz void for lack of jurisdiction. Under Batas
Martinez v. Spouses Oliver And Evelyn Gumallaoi, Pambansa Blg. 129, or the Judiciary
And The Municipal Engineer Of Bangui, Ilocos Reorganization Act of 1980, an action for
Norte, G.R. No. 211947, July 03, 2017, as penned annulment of a registered certificate of land
by J. Leonen) ownership award, like the annulment of a
certificate of title, involves title to or possession
Q: Years after the issuance of TCT or CLOA to of real property or any interest therein. This falls
Diopenes and Villanueva, Padillo filed before under the exclusive original jurisdiction of either
the Agrarian Reform Regional Office a the Regional Trial Court or the Municipal Trial
Petition for Inclusion a Farmer-Beneficiary Court, depending on the assessed value. (Aurelio
over the subject lots. The Regional Director Padillo v. Rolly Villanueva and Joseph Diopenes,
granted the petition and declared Padillo a G.R. No. 209661, October 3, 2018, as penned by J.
qualified beneficiary. A Writ of Execution was Leonen)
subsequently issued. Thus, Padillo filed a
Petition for Cancellation of Diopenes’ and REVIEW OF DECREE OF REGISTRATION
Villanueva’s Certificates of Land Ownership
Award before the Provincial Adjudicator. The Available remedies to question the validity of
Department of Agrarian Reform Adjudication judgment in a registration case
Board ordered the cancellation of the TCT
and CLOA. It ruled that the Regional Director 1. New trial or reconsideration (Rule 37, Rules of
had jurisdiction to order Padillo's inclusion Court);
as farmer-beneficiary. On appeal, the CA 2. Appeal to the CA or SC in the manner as
annulled the Decision on the ground of ordinary actions (Section 33, PD 1529);
indefeasibility of title. 3. Relief of judgment (Rule 38, Rules of Court);
4. Annulment of judgment (Rule 37, Rules of
Is the cancellation of the registered Court);
Certificates of Land Ownership Award 5. Claim under Assurance Fund (Section 95, PD
(CLOA) or Transfer Certificates of Title (TCT) 1529);
four (4) years after their issuance proper? 6. Review of Decree of Registration (Section 32,
PD 1529);
A: NO, under Section 48 of Presidential Decree 7. Reversion (Section 101, CA 141);
No. 1529, a registered certificate of land 8. Action for reconveyance;
ownership award may be altered, modified, or 9. Cancellation of title;
1. (FAMEn) - extrinsic fraud, accident, mistake, Q: What kind of accident does the law
or excusable negligence; contemplate?
2. Newly discovered evidence, which he could A: It must appear that there was accident or
not, with reasonable diligence, have surprise which ordinary prudence could not
discovered, and produced at the trial, and have guarded against, and by reason of which
which if presented would probably alter the the party applying has probably been impaired
result; in his rights. Illness constitutes accident over
which a party has no control. Failure to attend
Affidavits of merit required to prove FAMEn trial for lack of advance notice justifies new trial.
(Agcaoili, 2015)
1. Affidavit setting forth the facts and
circumstances alleged to constitute such Q: What kind of mistake does the law
fraud, accident, mistake, or excusable contemplate?
negligence;
A: It is some unintentional act, omission, or
Reason: It is to enable the court to determine if error arising from ignorance, surprise,
the movant’s claim of fraud, etc. is not mere imposition or misplaced confidence. It may arise
conclusion but is indeed borne out by the either from unconsciousness, ignorance,
relevant facts. (Yap v. Tanada, G.R. No. L-32917, forgetfulness, impo- sition, or misplaced
July 19, 1988) confidence. Belief that there is no need to appear
during the trial because there was already a
2. Affidavit setting forth the facts claimed to compromise agreement is a ground for new trial.
constitute the movant’s meritorious cause of (Agcaoili, 2015)
action or defense.
Q: What kind of excusable neglect does the
Reason: It would be useless, a waste of time, to law contemplate?
set aside the judgment and reopen the case to
allow the movant to adduce evidence when he A: It means a failure to take the proper steps at
has no valid cause of action or meritorious the proper time, not in consequence of the
defense. (Yap v. Tanada, G.R. No. L-32917, July 19, party’s own carelessness, inattention, or willful
1988) disregard of the process of the court, but in
consequence of some unexpected or
EXTRINSIC FRAUD INTRINSIC FRAUD unavoidable hindrance or accident, or reliance
on the care and vigilance of his counsel or on
Refers to any Refers to acts of a promises made by the adverse party. (Agcaoili,
fraudulent act of the party in a litigation 2015)
successful party in a during the trial, such
litigation which is as the use of forged MOTION FOR RECONSIDERATION
committed outside the instruments or
trial of a case against perjured testimony, Grounds
the defeated party, or which did not affect
his agents, attorneys the presentation of 1. Damages awarded were excessive.
or witnesses, whereby the case, but did 2. Insufficiency of evidence to support the
said defeated party is prevent a fair and just decision;
prevented from determination of the 3. Final order or decision is contrary to law.
presenting fully and case.
fairly his side of the Similarities of New Trial and
753
Land Titles and Deeds
Reconsideration appeal and a record on appeal within thirty (30)
days from notice of the judgment or final order.
The period to file the motion must be within the
period to take an appeal. NOTE: This is subject to the Fresh Period Rule
where the person who seeks an appeal shal
No motion for extension of time shall be allowed. acquire a fresh period of 15 days from receipt of
the final order or the order dismissing their
Also, a pro forma motion for new trial or motion for reconsideration or new trial. (Neypes
reconsideration shall not toll the reglementary v. Court of Appeals, G.R. No.141524, September 14,
period. 2005)
NOTE: A party who has filed a timely motion for PETITION FOR RELIEF FROM JUDGMENT
new trial cannot file a petition for relief after his
motion has been denied. These two remedies are Grounds: (FAMEn)
exclusive of each other. He should appeal from
the judgment and question such denial. Relief 1. Fraud;
will not be granted to a party who seeks to be 2. Accident;
relieved from the effects of a judgment when the 3. Mistake; and
loss of the remedy at law was due to his own 4. Excusable negligence.
negligence, or a mistaken mode of procedure.
(Feria and Noche, Civil Procedure, Vol. I, 644) Period to file
755
Land Titles and Deeds
Against whom (Spouses Esperanza, et al., v. The Register of Deed,
G.R. No. 224678, July 3, 2018, supra.)
1. The Register of Deeds of the province or city
where the land lies and the National Treasurer - Q: Alfredo V. de Ocampo (de Ocampo) filed an
If the action is brought for the recovery of loss or application before the Court of First Instance
damage or for deprivation of land or of any of Negros Occidental to register two parcels
estate or interest therein arising through fraud, of prime sugar land, Lot No. 2509 of the
negligence, omission, mistake or misfeasance of cadastral survey of Escalante and Lot No. 817
the court personnel, the Register of Deeds or of the cadastral survey of Sagay. The
other employees of the registry in the registration was contested by the Republic of
performance of their duties. the Philippines' Bureau of Education (the
Republic). According to the Republic, the lots
2. The action shall be brought against the de Ocampo sought to register were
Register of Deeds, the National Treasurer and bequeathed to the Bureau of Education by
such other persons - If the action is brought for the late Esteban Jalandoni. Due to the
the recovery of loss or damage or for donation, the Bureau of Education owned the
deprivation of land or of any estate or interest lots as evidenced by Transfer Certificate of
therein arising through fraud, negligence, Title (TCT) No. 6014. While registration
omission, mistake or misfeasance of persons proceedings were pending, de Ocampo
other than the court personnel, the Register of entered into an agreement with Oscar Anglo,
Deeds or other employees of the Registry. Sr. (Anglo, Sr.). Their agreement,
(Section 96, P.D. 1529) denominated as a Deed of Conditional Sale,
included an undertaking that de Ocampo
Limitation on the amount to be recovered would cede, transfer, and convey Lot No.
2509 and part of Lot No. 817 under certain
The plaintiff cannot recover as compensation conditions. Anglo, Sr. and Anglo Agricultural
more than the fair market value of the land at Corporation filed a Complaint for Recovery of
the time he suffered the loss, damage, or Damages from the Assurance Fund against
deprivation thereof. (Sec. 99, Property the Register of Deeds of Negros Occidental
Registration Decree) and the National Treasurer of the Republic of
the Philippines before the Regional Trial
Amendment or cancellation of title Court of Bacolod City, Negros Occidental.
According to their Complaint, Anglo, Sr.
In the event the Assurance Fund is held liable on acquired the lots in good faith and for value
account of the unlawful or erroneous issuance of without any negligence on his part.
a certificate of title, the Register of Deeds, upon Considering that de Ocampo passed away
authority of the LRA Administrator, shall file the and left no property to his heirs before the
necessary action to amend or cancel the title or finality of the Court of Appeals' Decision, the
perform any other act as may be directed by the only available remedy for Anglo, Sr. and
court. Such action may pre-empt any ac tion Anglo Agricultural Corporation was to
against the Assurance Fund. (Agcaoili, 2015) recover the value of the lots from the
Assurance Fund as provided for under Act
Prescriptive period No. 496 and Presidential Decree No. 1529.
Are the respondents Oscar Anglo, Sr. and
The action must be brought within 6 years from Anglo Agricultural Corporation entitled to an
the time the right to bring the action first award of damages from the Assurance Fund
occured. (Sec. 102, Property Registration Decree) under Section 95 of Presidential Decree No.
1529?
NOTE: An action for compensation against the
Assurance Fund is separate and distinct remedy, A: NO. The Torrens system is not infallible. It is
apart from review of decree of registration or possible that through fraud or error, a person
reconveyance of title, which can be availed of who is not the owner acquires a certificate of
when there is an unjust deprivation of property. title over property. The law thus created an
This is evidence from the various provisions of Assurance Fund to address this possibility.
Chapter VII of P.D. 1529 which provide for Under Presidential Decree No. 1529, for every
specific parameters that govern the action. certificate of title issued to a registered owner of
The petition for review must be filed within one Good faith, or the lack of it, is in its last analysis a
year from entry of decree of registration. (Sec. question of intention; but, in ascertaining the
757
Land Titles and Deeds
intention by which one is actuated on a given GR: A forged or fraudulent deed is a nullity and
occasion, we are necessarily controlled by the conveys no title.
evidence as to the conduct and outward acts by
which alone the inward motive may, with safety, XPN: If the certificate of title has already been
be determined. So it is that “the honesty of transferred from the name of the true owner to
intention,” “the honest lawful intent,” which the name of the forger or the name indicated by
constitutes good faith, implies freedom from the forger, and while it remained that way, the
knowledge and circumstances which ought to land was subsequently sold to an innocent
put a person on inquiry,” and so it is that proof purchaser. (Muoz v. Yabut, G.R. No. 142676, June
of such knowledge that overcomes the 6, 2011)
presumption of good faith in which the courts
always indulge in the absence of proof to the Q: If the land subject of the dispute was not
contrary. brought under the operation of the Torrens
system, will the concept of an innocent
It has been held that a purchaser in good purchaser for value apply?
faith is one who buys the property of another
without notice that some other person has a A: NO. If the land in question was not brought
right to or interest on such property and pays a under the operation of Torrens system because
full and fair price for the same at the time of the original certificate of title is null and void ab
such purchase or before he has notice of the initio, the concept of an innocent purchaser for
claim or interest of some other person in the value does not apply.
property.
NOTE: Good faith and bad faith is immaterial in
Q: Sindophil anchors its right to the Tramo case of unregistered land. One who purchases an
property on Transfer Certificate of Title, unregistered land does so at his peril. (Caldito v.
which was purportedly issued by the Obado, G.R. No. 181596, January 30, 2017)
Register of Deeds of Pasay City. The Republic
alleged that the Tramo property was initially Q: Nestor applied for and was granted a Free
registered under the name of Teodoro. Patent over a parcel of agricultural land in
Despite the issuance of certificates of title General Santos City. He presented the Free
over the Tramo property, the Republic Patent to the Register of Deeds, and he was
claimed that the TCT in the name of Teodoro issued a corresponding Original Certificate of
was "spurious or of doubtful authenticity." Title (OCT) No. 375. Subsequently, Nestor
Sindophil countered that the Republic was sold the land to Eddie. The deed of sale was
estopped from questioning the transfers submitted to the Register of Deeds and on the
considering that it had allowed the series of basis thereof, OCT No. 375 was cancelled and
transfers and even accepted the "tremendous Transfer Certificate of Title (TCT) No. 4576
amounts paid" as capital gains tax. Is was issued in the name of Eddie. In 1986, the
Sindophil a purchaser in good faith? Director of Lands filed a complaint for
annulment of OCT No. 375 and TCT No. 4576
A: NO, Sandophil is not a purchaser in good on the ground that Nestor obtained the Free
faith. The presumption of good faith and that a Patent through fraud. Eddie filed a motion to
holder of a title is an innocent purchaser for dismiss on the ground that he was an
value may be overcome by contrary evidence. innocent purchaser for value and in good
These annotations show that the Tramo faith and as such, he has acquired a title to
property is controversial and has been the the property which is valid, unassailable and
subject of several adverse claims, belying indefeasible. Decide the motion. (2000 Bar)
Sindophil's contention that it acquired the
property in good faith. With Sindophil failing to A: Nestor’s motion to dismiss the complaint for
prove that it was a buyer in good faith, it cannot annulment of OCT No. 375 and TCT No. 4576
recover damages. (Sindophil Inc. v. Republic of should be denied for the following reasons:
the Philippines, G.R. No. 204594, November 07,
2018, as penned by J. Leonen) 1. Eddie cannot claim protection as an
innocent purchaser for value nor can he
A forged deed may be the root of a valid title interpose the defense of indefeasibility of
his title, because his TCT is rooted on a
A: YES. Certificates of title issued covering Q: Spouses Rufloe acquired a parcel of land
inalienable and non-disposable public land, even located at Muntinlupa. However, in 1978
in the hands of an alleged innocent purchaser for Delos Reyes forged the signatures of the
value, should be cancelled. The Heirs of Kusop spouses in Deed of Sale to make it appear
didn’t acquire any right to Lot X. The sales that the disputed property was sold to her by
patents over Lot X are null and void, for at the the former. On the basis of the said deed of
time the sales patents were applied for and sale, Delos Reyes succeeded in obtaining title
granted, the land had lost its alienable and in her name. Hence, the Rufloes filed a
disposable character. (Republic of the Philippines complaint for damages against Delos Reyes
759
Land Titles and Deeds
alleging that the Deed of Sale was falsified as the fact that Delos Reyes was not in
their signatures appearing thereon was possession of the subject property when she
forged. sold the same to
the Burgos siblings. Leonarda cannot be
During the pendency of the case, Delos Reyes categorized as a purchaser in good
sold the subject property to the Burgos faith. Since it was the Rufloes who
siblings who then sold the same to their aunt, continued to have actual possession of the
Leonarda Burgos. However, the sale in favor property, Leonarda should have
of Leonarda was not registered. Thus, no title investigated the nature of their possession.
was issued in her name. The subject property (Adoracion Rosales Rufloe, et al., v. Leonarda
remained in the name of the Burgos siblings Burgos et al., G.R. No. 143573, January 30,
who also continued paying the real estate 2009)
taxes thereon.
Q: Cipriano, one of Pablo’s heirs, executed an
a. Are the sales of the subject property by extrajudicial settlement of a sole heir and
Delos Reyes to the Burgos siblings and confirmation of sales, declaring himself as
the subsequent sale to Leonarda valid the only heir and confirmed the sales made
and binding? in favor of the spouses Rodolfo.
Consequently, a certificate of title was issued
b. Are the respondents considered as in the name of the spouses, who then sold the
innocent purchasers in good faith and for property to Guaranteed Homes. Pablo’s other
value despite the forged deed of sale of descendants seek reconveyance of the
their transferor Delos Reyes? property sold to the spouses alleging that the
extrajudicial settlement was forged. Who is
A: the rightful owner of the property?
a. The forged deed of sale was null and void A: Guaranteed Homes is the rightful owner,
and conveyed no title. It is a well-settled even assuming that the extrajudicial settlement
principle that no one can give what one does was a forgery. Generally a forged or fraudulent
not have, nemo dat quod non habet. One can deed is a nullity and conveys no title. There are,
sell only what one owns or is authorized to however, instances when such a fraudulent
sell, and the buyer can acquire no more right document may become the root of a valid title.
than what the seller can transfer legally. Due One such instance is where the certificate of title
to the forged deed of sale, Delos Reyes was already transferred from the name of the
acquired no right over the subject property true owner to the forger, and while it remained
which she could convey to the Burgos that way, the land was subsequently sold to an
siblings. All the transactions subsequent to innocent purchaser. For then, the vendee had
the falsified sale between the spouses Rufloe the right to rely upon what appeared in the
and Delos Reyes are likewise void, including certificate.
the sale made by the Burgos siblings to their
aunt, Leonarda. Also, the extrajudicial settlement was recorded
in the Register of Deeds. Registration in the
b. The evidence shows that the Rufloe caused a public registry is notice to the whole world.
notice of adverse claim to be annotated on (Guaranteed Homes, Inc. v. Heirs of Valdez, Heirs
the title of Delos Reyes as early as of Tugade, Heirs of Gatmin, Hilaria Cobero and
November 5, 1979. The annotation of an Alfredo and Siony Tepol, G.R. No. 171531, January
adverse claim is a measure designed to 30, 2009)
protect the interest of a person over a piece
of real property, and serves as a notice and Q: Spouses X and Y mortgaged a piece of
warning to third parties dealing with said registered land to A, delivering as well the
property that someone is claiming an OCT to the latter, but they continued to
interest on the same or may have a better possess and cultivate the land, giving 1/2 of
right than the registered owner each harvest to A in partial payment of their
thereof. Despite the notice of adverse claim, loan to the latter. A however, without the
the Burgos siblings still purchased the knowledge of X and Y, forged a deed of sale of
property in question. Equally significant is
761
Land Titles and Deeds
injunction against his nephew Reynaldo self-adjudication declaring himself to be the
Andres and Reynaldo’s wife, Janette de Leon, sole heir of Gregoria, and sold the property
PNB, Lydia Andres, and the Register of Deeds to Marietta Yabut (“Yabut”). In 1993, Yabut
of Nueva Ecija. The complaint alleged that obtained a loan from Development Bank of
Reynaldo Andres was in collusion with his the Philippines (“DBP”) and mortgaged the
mother, Lydia Andres, in executing a falsified property to DBP as security. At the time of
document denominated as "Self-Adjudication the loan, the property was covered by Tax
of Sole Heir." Declaration No. 18727 under Yabut’s name,
but subsequently on 26 July 1993, an original
PNB denied the material allegations in the certificate of title was issued in Yabut’s
complaint. It argued that it conducted an favour and the mortgage was annotated
investigation on the property. The title thereon.
presented to PNB by Reynaldo Andres and
his wife was clear and free from adverse Petitioners filed a complaint with the
claims. Is PNB an innocent mortgagee for Regional Trial Court (“RTC”) for the
value and in good faith? annulment of Enrique’s affidavit of self-
adjudication, the deed of sale in favour of
A: YES. A bank that accepts a mortgage based Yabut, and the deed of real estate mortgage
upon a title which appears valid on its face and in favour DBP, with a prayer for the re-
after exercising the requisite care, prudence, and conveyance of their ¾ share in the property.
diligence appropriate to the public interest Meanwhile, foreclosure proceedings were
character of its business can be deemed a instituted by DBP upon Yabut’s default, and
mortgagee in good faith. The subsequent there, DBP became the highest bidder,
consolidation of title in its name after a valid eventually resulting in the title of the
foreclosure shall be respected notwithstanding property being consolidated in its favour.
later proof showing that the title was based
upon a void transaction. Did Yabut and eventually, DBP acquire valid
title to the property under the doctrine of
The standard operating practice for banks when innocent purchaser or mortgagee for value?
acting on a loan application is "to conduct an
ocular inspection of the property offered for A: NO. Under Article 493 of the NCC, Enrique
mortgage and to verify the genuineness of the had no right to sell the undivided portions
title to determine the real owner(s) thereof." belonging to his siblings or their respective
PNB complied with the standard operating heirs, and the sale to Yabut should be void with
practice of banks, which met the requisite level respect to the shares of the other heirs who did
of diligence, when it sent Gerardo Pestano to not consent thereto.
conduct an ocular inspection of the property and
verify the status of its ownership and title. While as a rule, an ordinary buyer may rely on
Consequently, PNB is a mortgagee in good faith. the certificate of title issued in the name of the
The title resulting from the foreclosure sale, seller, and need not look beyond what appears
therefore, is to be protected. The bank is an on the face of the title, the ordinary buyer will
innocent purchaser for value. (Onofre Andres, not be considered an innocent purchaser for
Substituted By His Heirs, Namely: Ferdinand, value if there is anything on the certificate of
Rosalina, Eriberto, Froilan, Ma. Cleofe, Nelson, title that arouses suspicion, and the buyer failed
German, Gloria, Alexander, May, Abraham, And to inquire or take steps to ensure that there is no
Africa, All Surnamed Andres V. Philippine cloud on the title, right or ownership of the
National Bank, G.R. No. 173548, October 15, 2014, property being sold.
as penned by J. Leonen)
Yabut could not be an innocent purchaser for
Q: Gregorio, Enrique, Simplicio and Severino value, because there was no certificate of title to
Lopez inherited a 2734-square-meter rely on when she purchased the property from
property in Bustos, Bulacan originally owned Enrique, at which time the only available
by their grandmother Gregoria Lopez, over document presented her was a tax declaration
which a tax declaration was issued under the under “Heirs of Lopez.” The defense of having
name, “Heirs of Lopez.” On 29 November purchased the property in good faith may be
1990, Enrique Lopez executed an affidavit of availed of only where registered land is involved
763
Land Titles and Deeds
Absolute Sale. Subsequently, Mariano died Considering that the Spouses Po's complaint was
and was survived by his five children filed on November 19, 1996, less than three (3)
(Mariano Heirs). years from the issuance of the Torrens title over
the property on April 6, 1994, it is well within
In 1990, Peter Po (Peter) discovered that the 10-year prescriptive period imposed on an
Ciriaco "had executed a [q]uitclaim action for reconveyance. (Sps. Aboitiz vs. Sps. Po,
renouncing [his] interest over Lot [No.] 2807 G.R. No. 208450, June 5, 2017, as penned by J.
in favor of [petitioner] Roberto." In the Leonen)
quitclaim, Ciriaco stated that he was "the
declared owner of Lot [Nos.] 2835 and 2807." QUIETING OF TITLE
By way of remedy, Ciriaco and the Spouses Po
executed a Memorandum of Agreement in Whenever there is a cloud on title to real
which Ciriaco agreed to pay Peter the property or any interest therein, by reason of
difference between the amount paid by the any instrument, record, claim, encumbrance or
Spouses Po as consideration for the entire proceedings which is apparently valid or
property and the value of the land the effective but is in truth and in fact invalid,
Spouses Po were left with after the ineffective, voidable, or unenforceable, and may
quitclaim. be prejudicial to said title, an action may be
brought to remove such cloud or to quiet the
However, Lot No. 2835 was also sold to title. An action may also be brought to prevent a
Roberto. The Mariano Heirs, including cloud from being cast upon title to real property
Ciriaco, executed separate deeds of absolute or any interest therein. (Art. 476, Civil Code)
sale in favor of Roberto.
Cloud on the title
Thereafter, Roberto immediately developed
the lot as part of a subdivision called North A cloud on title is an outstanding claim or
Town Homes. Eventually, Roberto filed an encumbrance which, if valid, would affect or
application for original registration of Lot No. impair the title of the owner of a particular
2835 which was granted. The Spouses Po estate, and on its face has that effect, but can be
then filed a complaint to recover the land. shown by extrinsic proof to be invalid or
The trial court ruled in favor of the Spouses inapplicable to the estate in question. The
Po. remedy for removing a cloud on title is usually
the means of an action to quiet title. (Black’s Law
On appeal, the Court of Appeals, partially Dictionary, 6th Ed., 255)
affirmed the trial court decision, declaring
the Spouses Po as the rightful owner of the Requisites :
land. However, it ruled that the titles issued
to respondents Jose, Ernesto, and Isabel 1. The plaintiff or complainant has a legal or an
should be respected. Has the action of equitable title to or interest in the real
Spouses Po prescribed? property subject of the action; and
2. The deed, claim, encumbrance or
A: NO. An action for reconveyance based on proceeding claimed to be casting cloud on
implied or constructive trust prescribes in ten his title must be shown to be in fact invalid
years from the alleged fraudulent registration or or inoperative despite its prima facie
date of issuance of the certificate of title over the appearance of validity or legal efficacy.
property. (Spouses Caldito v. Obado, G.R. No. 181596,
January 30, 2017)
It is now well-settled that the prescriptive
period to recover property obtained by fraud or Who may file ?
mistake, giving rise to an implied trust under
Art. 1456 of the Civil Code, is 10 years pursuant GR : The registered owner of a property is the
to Art. 1144. This ten-year prescriptive period proper party to bring an action to quiet title.
begins to run from the date the adverse party
repudiates the implied trust, which repudiation XPN : It has been held that this remedy may also
takes place when the adverse party registers the be availed of by a person other than the
land. registered owner because, in [Article 476 of the
765
Land Titles and Deeds
A certificate of title is conclusive evidence with registry. It accumulates alienated, mortgaged
respect to the ownership of the land described in one document a or assigned, or by
therein, and other matters which can be litigated precise and correct which title to any real
and decided in land registration proceedings. statement of the exact estate may be affected
status of the fee simple in law or equity.
Types of certificates of title title which an owner
possesses.
1. Original Certificate of Title (OCT) – The first
title issued in the name of the registered
owner by the Register of Deeds covering a Ownership as distinguished from title
parcel of land which had been registered
under the Torrens system by virtue of a OWNERSHIP TITLE
judicial or administrative proceeding. It
consists of one original copy filed in the An independent right The cause for
Register of Deeds, and the owner’s duplicate of exclusive enjoyment acquisition of
certificate delivered to the owner; and and control of the thing ownership
for the purpose of
2. Transfer Certificate of Title (TCT) – The title deriving therefrom all e.g. sale = title;
issued by the Register of Deeds in favor of a advantages required delivery = mode of
transferee to whom the ownership of a by the reasonable acquisition of
registered land has been transferred by any needs of the owner and ownership.
legal mode of conveyance. the promotion of the
general welfare but
Who has right to possess owner’s duplicate subject to the
certificate. restrictions imposed
by law and the rights of
The owner’s duplicate certificate shall be issued others. (NCC, Art. 427)
by the Register of Deeds in the name of the
person in whose favor the land was decreed, and NOTE: Registration under the Torrens system,
further disposes that said duplicate shall be not being a mode of acquiring ownership, does
delivered to the registered owner. (Sec. 41 of Act not create or vest title. The Torrens certificate of
No. 496, as amended by P.D. No. 1529) title is merely an evidence of ownership or title
in the particular property described therein. In
Difference between title over land, land title, that sense, the issuance of the certificate of title
certificate of title and deed to a particular person does not preclude the
possibility that persons not named in the
TITLE LAND TITLE certificate may be co-owners of the real property
therein described with the person named
A juridical act or deed The evidence of the therein, or that the registered owner may be
which is not sufficient owner’s right or extent holding the property in trust for another person.
by itself to transfer of interest, by which (Casimiro Development Corporation v. Renato
ownership but he can maintain Mateo, G.R. No. 175485, July 27, 2011)
provides only for a control, and as a rule,
juridical justification to assert right to Q: St. Jude’s Enterprise, Inc. is the registered
effect the acquisition exclusive possession owner of a parcel of land. It subdivided the
or transfer ownership. and enjoyment of said land which was later on found to have
property. expanded with an increase of 1,421 sqm. St.
Jude sold the lots to several individuals.
Thus, the Solicitor General filed an action
CERTIFICATE OF DEED seeking the annulment and cancellation of
TITLE the TCT issued in the name of St. Jude. Is the
The transcript of the The instrument in government estopped from questioning the
decree of registration writing, by which any approved subdivision plan which expanded
made by the Register real estate or interest the areas covered by the TCTs in question?
of Deeds in the therein is created,
Modes of acquiring title over land There can be possession There can be no
without ownership. occupation without
ownership.
1. By possession of land since time
immemorial;
Acquisition of land titles
2. By possession of alienable and disposable
public land; and 1. Public grant;
2. Emancipation patent or grant;
NOTE: Under the Public Land Act (C.A. No. 3. Reclamation;
141), citizens of the Philippines, who by 5. Adverse possession / acquisitive
themselves or through their predecessors- prescription;
in-interest have been in open, continuous, 6. Private grant or voluntary transfer;
exclusive and notorious possession and 7. Accretion;
occupation of alienable and disposable 8. Involuntary alienation; and
agricultural land of the public domain 9. Descent or devise.
under a bona fide claim of ownership
since June 12, 1945, or earlier, (except Torrens Title
when prevented by war or force majeure),
shall be conclusively presumed to have A certificate of ownership issued under the
performed all the conditions essential to a Torrens system of registration by the
government grant and shall be entitled to government, through the Register of Deeds (RD)
a certificate of title. naming and declaring the owner in fee simple of
the real property described therein, free from all
3. By sale, donation, and other modes of liens & encumbrances, except as may be
acquiring ownership. expressly noted there or otherwise reserved by
law.
Modes of acquiring ownership over land
Q: Filomena allegedly bought a parcel of
1. Occupation; unregistered land from Hipolito. When she
2. Law; had the property titled and declared for tax
3. Donation; purposes, she sold it. The Mapili’s question
4. Tradition; the transfer, saying that Filomena falsely
5. Intellectual creation; stated in her Affidavit that Hipolito sold it to
767
Land Titles and Deeds
her in 1949, since by that time, he is already to vacate the contested area but they refused
dead. Filomena maintains that she is the to leave. Hence, the Spouses Encinas filed a
lawful owner of the land by virtue of the complaint for unlawful detainer against
issuance of the Torrens certificate and tax them. According to the Heirs, however, their
declarations in her name. Is Filomena the occupation remained undisturbed for more
lawful owner of such property? than 30 years and the Spouses’ failure to
detail and specify the Heirs’ supposedly
A: NO. A Torrens certificate does not create or tolerated possession suggest that they are
vest title, but is merely an evidence of an aware of their claim over the subject area.
indefeasible and incontrovertible title to the Decide with reason.
property in favor of the person whose name
appears therein. Land registration under the A: The validity of Spouses’ certificate of title
Torrens system was never intended to be a cannot be attacked by the Heirs in this case for
means of acquiring ownership. ejectment. Under Sec. 48 of P.D. No. 1529, a
certificate of title shall not be subject to
Neither does the existence of tax declarations collateral attack. It cannot be altered, modified
create or vest title. It is not a conclusive evidence or cancelled, except in a direct proceeding for
of ownership, but a proof that the holder has a that purpose in accordance with law. Whether or
claim of title over the property. (Larena v. Mapili, not petitioner has the right to claim ownership
et. al., G.R. No. 146341, August 7, 2003) over the property is beyond the power of the
trial court to determine in an action for unlawful
NOTE: A Torrens title is not a conclusive detainer.
evidence of ownership when the land or a
portion covered thereof was illegally or As ruled in Spouses Ragudo v. Fabella Estate
erroneously included thereto. The certificate of Tenants Association, Inc., laches does not operate
title cannot be used to protect a usurper from to deprive the registered owner of a parcel of
the true owner. (Spouses Valenzuela v. Spouses land of his right to recover possession thereof.
Mano, G.R. No. 172611, July 9, 2010) (Heirs of Jose Maligaso, Sr., etc. v. Sps. Simon D.
Encinas and Esperanza E. Encinas, G.R. No.
182716, June 20, 2012)
Torrens title not subject to prescription.
Probative value of a Torrens title
No title to registered land in derogation to that
of the registered owner shall be acquired by A Torrens title may be received as evidence in all
prescription or adverse possession. courts of the Philippines and shall be conclusive
as to all matters contained therein, principally as
Torrens title not subject to collateral attack. to the identity of the land owner, except so far as
provided in the Land Registration Act (LRA).
Torrens title can be attacked only for fraud,
within one year after the date of the issuance of A Torrens certificate is an evidence of
the decree of registration. Such attack must be indefeasible title of property in favor of the
direct, and not by a collateral proceeding The person whose name appears therein–such
title represented by the certificate cannot be holder is entitled to the possession of the
changed, altered, modified, enlarged, or property until his title is nullified. (Heirs of
diminished in a collateral proceeding. Mariano v. City of Naga, G.R. No. 197743, March
12, 2018)
Q: In 1929, an OCT covering the lot in
controversy was issued in the name of Maria Q: Hadji Serad filed an action to quiet title
Ramos, Heirs of Maligaso’s aunt. In 1965, with damages with the RTC. Accordingly,
Maria sold it to the Spouses Encinas which Datu Kiram with several armed men, forcibly
led to the issuance of a TCT in favor of the and unlawfully entered his property and
latter. destroyed the nursery buildings, cabbage
seedlings and other improvements. Datu
30 years from the time they purchased the Kiram however denied the material
lot, Spouses Encinas issued two demand allegations of Hadji Serad, asserting that he
letters to the Heirs of Maligaso asking them and his predecessors-in-interest are the ones
769
Land Titles and Deeds
A: NONE. The rule on indefeasibility of 1. The purchaser or mortgagee is a
certificates of title was applied by the Court in bank/financing institution;
Public Land Patents because such application is 2. The owner still holds a valid and existing
in consonance with the spirit and intent of certificate of title covering the same
homestead laws. property, because the law protects the
lawful holder of a registered title over the
The pertinent pronouncements in cases clearly transfer of a vendor bereft of any
reveal that Sec. 38 of the Land Registration Act, transmissible right;
now Sec. 32 of P.D. 1529 was applied by 3. The purchaser is in bad faith;
implication to the patent issued by the Director 4. The purchaser purchases land with a
of Lands duly approved by the Secretary of certificate of title containing a notice of lis
Natural Resources, under the signature of the pendens;
President of the Philippines in accordance with 5. There are sufficiently strong indications to
law. impel closer inquiry into the location,
boundaries and condition of the lot;
The date of issuance of the patent, therefore, 6. The purchaser had full knowledge of flaws
corresponds to the date of the issuance of the and defects in the title; or
decree in ordinary registration cases because 7. A person buys land not from the registered
the decree finally awards the land applied for owner but from whose rights to the land has
registration to the party entitled to it, and the been merely annotated on the certificate of
patent issued by the Director of Lands equally title.
and finally grants, awards, and conveys the land
applied for to the applicant. Q: Cipriana Delgado was the registered
owner of the lot in controversy. She and her
NOTE: A certificate of title issued under an husband sold the property to Cecilia where it
administrative proceeding pursuant to a was agreed that the latter shall make partial
homestead patent is as indefeasible as a payments from time to time and pay the
certificate of title issued under a judicial balance when the Spouses are ready to
registration proceeding, provided the land execute the deed of sale and transfer title to
covered by said certificate is a disposable public her. After paying the total amount and being
land within the contemplation of the Public Land ready to pay the balance, Cecilia demanded
Law. the execution of the deed which was refused.
Cecilia learned of the sale of the property to
Mirror doctrine the Dys and its subsequent mortgage to
petitioner Philippine Banking Corporation
All persons dealing with a property covered by (Philbank). Thus, a complaint for annulment
Torrens certificate of title are not required to go of the Certificate of title and for specific
beyond what appears on the face of the title. performance and/or reconveyance with
Where there is nothing on the certificate of title damages was filed against Spouses Delgado,
to indicate any cloud or vice in the ownership of the Dys and Philbank. However, Philbank
the property, or any encumbrance thereon, the contends that it is a mortgagee in good faith.
purchaser is not required to explore further than Is the bank’s contention correct?
what the Torrens title upon its face indicates in
quest for any hidden defect or inchoate right A: NO. Primarily, it bears noting that the
that may defeat his right thereto. (Chua v. doctrine of “mortgagee in good faith” is based on
Soriano, GR.No. 150066, April 13, 2007; BPI v. the rule that all persons dealing with property
Sanchez, G.R. No. 179518, November 19, 2014) covered by a Torrens Certificate of Title are not
required to go beyond what appears on the face
Application of mirror doctrine of the title. In the case of banks and other
financial institutions, however, greater care and
GR: Mirror Doctrine applies when title over a due diligence are required since they are imbued
land is registered under the Torrens system. with public interest, failing which renders the
mortgagee in bad faith. Thus, before approving a
XPN: Mirror Doctrine cannot be invoked where: loan application, it is a standard operating
practice for these institutions to conduct an
ocular inspection of the property offered for
Alienable and disposable lands of the State fall NOTE: Naturalized Filipino citizens can
into two categories: acquire private lands. They are considered
Filipino citizens under Art. IV of the 1987
(a) Patrimonial lands of the State, or those Constitution.
classified as lands of private ownership under
Art. 425 of the Civil Code, without limitation; and 2. Filipino corporations and associations as
defined in Sec. 2, Art. XII of the Constitution;
(b) Lands of the public domain, or the public and by exception;
lands as provided by the Constitution, but with
the limitation that the lands must only be NOTE : Only Filipino citizens or
agricultural. corporations at least 60% of its capital is
771
Land Titles and Deeds
owned by Filipinos are qualified to acquire ‘Sec. 5. Save in cases of hereditary succession, no
or hold lands of the public domain. private agricultural land will be transferred or
assigned except to individuals, corporations or
3. Aliens but only by hereditary succession; associations qualified to acquire or hold lands of
and the public domain in the Philippines.’
4. A natural-born citizen of the Philippines Aliens may not acquire private or public
who has lost citizenship may be a transferee agricultural lands and all acquisitions made in
of private lands subject to the limitations contravention of the prohibitions since the
provided by law. (Sec. 8, Art. XII, 1987 fundamental law became effective are null and
Constitution) void per se and ab initio. The prohibition is a
declaration of imperative national policy.
Former Filipinos who became aliens may also (Krivenko v. Register of Deeds, G.R. No. L-630,
acquire private lands. It is provided under R.A. November 15, 1957)
no 9225 (Citizenship Retention and Re-
acquisition Act of 2003), which declares that The constitutional ban against foreigners apply
natural-born citizens of the Philippines who only to ownership of Philippine land and not to
have lost their Philippine citizenship by reason the improvements built thereon. (Beumer v.
of their naturalization as citizens of foreign Amores, G.R. No. 195670, December 3, 2012)
country are hereby deemed to have re-acquired
Philippine citizenship upon taking their oath of NOTE: Under R.A. No. 4726, foreign nationals
allegiance to the Republic of the Philippines and can own Philippine real estate through the
shall enjoy full civil and political rights and be purchase of condominium units or townhouses.
subject to all attendant liabilities and It expressly allows foreigners to acquire
responsibilities under existing laws of the condominium units and shares in condominium
Philippines. corporations up to not more than 40% of the
total and outstanding capital stock of a Filipino
NOTE: Filipino citizens can both acquire or hold owned or controlled corporation. The land is
lands of public domain. owned by the condominium corporation and the
unit owner is simply a member in this
The time to determine whether a person condominium corporation.
acquiring land is qualified is at the time the right
to own is acquired and not the time to register NOTE : While aliens are disqualified from
ownership. (Director of Lands v. IAC and Acme, acquiring lands of the public domain, they may
G.R. No. 73002, December 29, 1986) however lease private land. A lease to an alien
for a reasonable period is valid. So is an option
Acquisition of private land by an alien giving an alien the right to buy real property on
condition that he is granted Philippine
GR: An alien cannot acquire private lands. citizenship. Aliens are not completely excluded
by the Constitution from the use of lands for
XPN: By way of hereditary succession. residential purposes. (Llantino v. Co Liong Chong,
GR No. 29663, Aug. 20, 1990; Philippine Banking
The Krivenko Doctrine Corp v. Lui She, GR No. L-17587, as cited by
Agcaoili, 2018)
“Under section 1 of Article XIII [now Sec. 2, Art.
XII] of the Constitution, ‘natural resources, with Q: Spouses Pinoy and Pinay, both natural-
the exception of public agricultural land, shall born Filipino citizens, purchased property in
not be alienated,’ and with respect to public the Philippines. However, they sought its
agricultural lands, their alienation is limited to registration when they were already
Filipino citizens. But this constitutional purpose naturalized as Canadian citizens. Should the
conserving agricultural resources in the hands of registration be denied on the ground that
Filipino citizens may easily be defeated by the they cannot do so being foreign nationals?
Filipino citizens themselves who may alienate
their agricultural lands in favor of aliens. It is A: NO. For the purpose of transfer and/or
partly to prevent this result that section 5 is acquisition of a parcel of residential land, it is
included in Article XIII, and it reads as follows: not significant whether they are no longer
a. If a land is invalidly transferred to an alien A: The area limitation no longer applies since it
who subsequently becomes a Filipino citizen is the policy of the law “that all Philippine
or transfers it to a Filipino, the flaw in the citizens who become citizens of another country
original transaction is considered cured and shall be deemed not to have lost their Philippine
the title of the transferee is rendered valid. citizenship under this Act.“
(Barsobia v. Cuenco, 199 Phil. 26; Hererra v.
Guan, 1 SCRA 406) Since the ban on aliens is R.A. 9225 expressly grants him the same right,
intended to preserve the nation’s land for as any Filipino citizen to enjoy full civil and
future generations of Filipinos, that aim is political rights upon the re-acquisition of his
achieved by making lawful the acquisition of Filipino citizenship.
real estate by aliens who became Filipino
citizens by naturalization, or those transfers Acquisition of Lands by a Corporation Sole
made by aliens to Filipino citizens. As the
property in dispute is already in the hands A corporation sole consists of only one person. It
of a qualified person, a Filipino citizen, there is vested with the right to purchase and hold real
would be no more public policy to be estate and to register the same in trust for the
protected. The objective of the faithful or members of the religious society or
constitutional provision to keep our lands in church for which the corporation was organized.
Filipino hands has been achieved. (Roman Catholic Apostolic Administrator of
Davao, Inc. v. Land Registration Commission, G.R.
b. NO. If a land is invalidly transferred to an No. L-8451, December 20, 1957)
alien who subsequently becomes a Filipino
citizen, the flaw in the original transaction is It can acquire by purchase a parcel of private
also considered cured and the title of the agricultural land without violating the
transferee is rendered valid. (Borromeo v. constitutional prohibition since it has no
Descallar, G.R. No. 159310, February 24, nationality.
2009)
773
Land Titles and Deeds
Q: Why is citizenship not in question for a were still public or already private–when the
corporation sole? registration proceedings were commenced. If
they are already private lands, the constitutional
A: The framers of the constitution did not have prohibition against acquisitions by a private
in mind the religious corporation sole when they corporation would not apply.
provided that 60 percentum of the capital
thereof be owned by Filipino citizens. A SUBSEQUENT REGISTRATION
corporation sole is not the owner of the
properties that he may acquire but merely the It is where incidental matters after original
administrator thereof. The properties pass, upon registration may be brought before the land
his death, not to his personal heirs but to his registration court by way of motion or petition
successor in office. filed by the registered owner or a party in
interest.
Acquisition of Private Lands by a Corporation
Q: After registering his land, what
1. At least 60% of the capital is owned by conveyances may the registered owner do ?
Filipino citizens (Sec. 2, Art. XII, 1987
Constitution) ; A: An owner of registered land may convey,
2. Restricted as to extent reasonably necessary mortgage, lease, charge or otherwise deal with
to enable it to carry out purpose for which it the same in accordance with existing laws. He
was created; and may use such forms of deeds, mortgages, leases
3. If engaged in agriculture, it is restricted to or other voluntary instruments as are sufficient
1,024 hectares. in law. (Section 51, P.D. 1529)
Patrimonial property of the State (Sec. 3, Art. GR: Such deed, mortgage, lease, or other
XII, 1987 Constitution). voluntary instrument shall operate only as a
contract between the parties and as evidence of
1. Lease (cannot own land of the public authority to the Register of Deeds to make
domain) for 25 years renewable for another registration. It is the act of registration which
25 years; shall operate to convey or affect the land insofar
2. Limited to 1,000 hectares; and as third persons are concerned, and in all cases,
3. .Applies to both Filipinos and foreign the registration shall be made in the office of the
corporations. Citizens of the Philippines may Register of Deeds for the province or city where
lease not more than 500 hectares, or acquire the land lies. The act of registration creates a
not more than 12 hecares thereof by constructive notice to the whole world of such
purchase, homstead, or grant. voluntary or involuntary instrument or court
writ or process. (P.D. 1529, Sec. 52)
NOTE : The 12-hectare limitation on the
acquisition of lands under Sec. 3, Art. XII of XPN: A will purporting to convey or affect
the 1987 Constitution only applies to lands registered land shall take effect as a conveyance
of public domain. Thus the 12-hectare or bind the land, not merely as a contract or
limitation on the acquisition of lands has no evidence of authority of the RD to make
application to private lands. (Republic v. registration. (P.D. 1529, Sec. 51)
Rovency Realty and Development Corp., G.R.
No. 190817, January 10, 2018)
VOLUNTARY DEALINGS
Q: May a corporation apply for registration of
Mortgages and leases
a parcel of land?
GR: The mortgagor should be the absolute
A: YES, through lease not exceeding 1,000
owner of the property to be mortgaged;
hectares. The lease shall not exceed 25 years and
otherwise, the mortgage is considered null and
is renewable for not more than 25 years. (Sec. 3,
void.
Art. XII, 1987 Constitution)
XPN: Doctrine of mortgagee in good faith. All
NOTE : Determinative of this issue is the
persons dealing with property covered by a
character of the parcels of land–whether they
Mortgage lien is a right in rem which follows the A: NO. The effect of the failure to obtain the
property. If, at the time of any transfer, judicial confirmation was only to prevent the
subsisting encumbrances or annotations appear title to the property from being transferred. For
in the registration book, they shall be carried sure, such failure did not give rise to any right in
over and stated in the new certificate or favor of the mortgagor or the respondents as his
certificates; except so far as they may be successors-in-interest to take back the property
simultaneously released or discharged. (P.D. already validly sold through public auction. Nor
1529, Sec. 59) did such failure invalidate the foreclosure
proceedings. To maintain otherwise would
It is inseparable from the property mortgaged as render nugatory the judicial foreclosure and
it is a right in rem — a lien on the property foreclosure sale, thus unduly disturbing judicial
whoever its owner may be. It subsists stability. After all, under the applicable rule
notwithstanding a change in ownership; in earlier cited, the judicial confirmation operated
short, the personality of the owner is only “to divest the rights of all the parties to the
disregarded. (Ligon v. Court of Appeals, GR No. action and to vest their rights in the purchaser,
107751, June 1, 1995) subject to such rights of redemption as may be
allowed by law.” (Robles vs. Yapcinco et. al., G.R.
Q: If the property that was the subject of No. 169569, October 22, 2014)
mortgage was subsequently foreclosed, must
a new certificate of title be automatically REMEDY IN CASE OF LOSS OR DESTRUCTION
issued in favor of the purchaser? OF CERTIFICATE OF TITLE
775
Land Titles and Deeds
Remedy in case a person lost his certificate of certificate of title. (Republic of the Philippines
title v. Apolinaria Catarroja, et al., G.R. No. 171774,
February 12, 2010)
1. If what is lost is the OCT or TCT –
Reconstitution of certificate of title; Jurisdictional requirements in petitions for
2. If, however, it is the duplicate of the OCT or reconstitution of title
TCT – Replacement of lost duplicate
certificate of title. Notice thereof shall be:
To have the same reproduced, after proper NOTE: The above requirements are mandatory
proceedings, in the same form they were when and jurisdictional.
the loss or destruction occurred.
NOTE : Where the owner’s duplicate certificate
The reconstitution or reconstruction of a of title is not in fact lost or destroyed, a petition
certificate of title literally denoted restoration of for the issuance of a new owner’s duplicate
the instrument which is supposed to have been certificate is unwarranted, as in fact the court
lost or destroyed in its original form and has no jurisdiction over the petition, and any
condition. It does not resolve or determine the owner’s duplicate issued pursuant to said
ownership of the land covered by the lost or petition is null and void. (New Durawood Co. v.
destroyed title. Restitution is proper only when Court of Appeals, GR No. 111732, Feb. 20, 1996)
it is satisfactorily shown that the title sought to
be reconstituted is lost or no longer available. Kinds of reconstitution of title
Requisites for the issuance of an order for 2. Administrative – May be availed of only in
reconstitution case of:
1. That the certificate of title had been lost or a. Substantial loss or destruction of the
destroyed; original land titles due to fire, flood, or
2. That the documents presented by petitioner other force majeure as determined by the
are sufficient and proper to warrant Administrator of the Land Registration
reconstitution of the lost or destroyed Authority.
certificate of title; b. The number of certificates of title lost or
3. That the petitioner is the registered owner of damaged should be at least 10% of the
the property or had an interest therein; total number in the possession of the
4. That the certificate of title was in force at the Office of the Register of Deeds
time it was lost or destroyed; and In no case shall the number of certificates
5. That the description, area and boundaries of of title lost or damaged be less than 500.
the property are substantially the same as c. Petitioner must have the duplicate copy of
those contained in the lost or destroyed the certificate of title.
777
Land Titles and Deeds
regional trial court the validity of the Torrens Entry in the day An entry thereof in the day
title already issued to the other person. (Justice book is book is sufficient notice to
Carpio’s separate concurring opinion, Manotok v. insufficient all persons. (Garcia vs. Court
Barque, GR. No. 162335, December 18, 2008) of Appeals, G.R. Nos. L-48971
& 49011 January 22, 1980)
NOTE : Petition for reconstitution can be barred
by laches. Involuntary dealings that must be registered
INVOLUNTARY DEALINGS
Its purpose is to Its purpose is to
Necessity of registration of involuntary apprise third persons protect the rights of
dealings that there is a the party causing the
controversy over the registration of the lis
Involuntary dealings, unlike the voluntary ownership of the land pendens and to advise
dealings, requires the registration. It is the act of and to preserve and third persons who
registration which creates a constructive notice protect the right of the purchase or contract
to the whole world of such instrument or court adverse claimant on the subject
writ or process and is the operative act that during the pendency property that they do
conveys ownership or affects the land insofar as of the controversy. so at their peril and
third persons are concerned. subject to the result of
the pending litigation.
Difference between voluntary and
involuntary dealings
Writ of attachment
VOLUNTARY INVOLUNTARY DEALINGS
Attachment is the legal process of seizing
DEALINGS
another’s property in accordance with a writ or
Does not require Requires registration to
judicial order for the purpose of securing
registration create a constructive notice
satisfaction of a judgment yet to be rendered. It
to the whole world of such
is used primarily to seize the debtor’s property
instrument or court writ
779
Land Titles and Deeds
pendens. When an adverse claim exists NOTE: It is not a lien or encumbrance under our
concurrently with a notice of lis pendens, the civil law. It is mere cautionary notice to
notice of adverse claim may be validly cancelled prospective buyers of certain property that said
after the registration of such notice, since the property is under litigation. The annotation of a
notice of lis pendens also serves the purpose of notice of lis pendens at the back of the original
the adverse claim. copy of the certificate of title on file with the
Register of Deeds is sufficient to constitute
Lifespan of a registered adverse claim constructive notice to purchasers or other
persons subsequently dealing with the same
The adverse claim shall be effective for a period property. One who deals with property subject
of 30 days from the date of registration and it of a notice of lis pendens cannot invoke the right
may be cancelled. of a purchaser in good faith neither can he
acquire better rights that those of his
Effect of the expiration of the period of predecessors-in-interest. (Tanchoco v. Aquino,
effectivity of an adverse claim G.R. No. 30670, January 17, 1990; Mahinay v.
Gako, Jr., G.R. No. 165338, November 28, 2011)
The expiration does not ipso facto terminate the
claim. The cancellation of the adverse claim is Purposes of a notice of lis pendens
still necessary to render it ineffective; otherwise,
the inscription will remain annotated and shall 1. Protect the rights of the party causing the
continue as a lien to the property. registration of the lis pendens; and
Q: May the RD cancel an adverse claim? 2. Advise third persons who purchase or
contract on the subject property that they
A: NO. The RD cannot, on its own, automatically do so at their peril and subject to the result
cancel the adverse claim. of the pending litigation.
NOTE: Before the lapse of 30-day period, the NOTE : A notice of lis pendens may involve
claimant may file a sworn petition withdrawing actions that deal not only with title or
his adverse claim, or a petition for cancellation possession of a property, but also with the use or
of adverse claim may be filed in the proper occupation of a property. The litigation must
Regional Trial Court. directly involve a specific property which is
necessarily affected by the judgment. (Agcaoili,
Q: What must an interested party do if he 2018)
seeks the cancellation of a registered adverse
claim? Q: When may a notice of lis pendens be made
and when may it not be resorted to?
A: The interested party must file with the proper
court a petition for cancellation of adverse claim, A:
and a hearing must also first be conducted.
NOTICE OF LIS PENDENS
Notice of lis pendens
When applicable When Inapplicable
Lis pendens literally means a pending suit. The
doctrine of lis pendens refers to the jurisdiction, 1. Recover possession 1. Preliminary
power or control which a court acquires over of real estate; attachments;
property involved in a suit, pending the 2. Quieting of title; 2. Levy or
continuance of the action, and until final Remove clouds upon execution;
judgment. title; 3. Proceedings on
3. For partition; or probate or wills;
It merely creates a contingency and not a lien. It 4. Any other 4. Administration
does not produce any right or interest which proceeding of any of the real estate
may be exercised over the property of another. It kind in court directly of deceased
only protects the applicant’s rights which will be affecting title to the person; or
determined during trial. land or its use or 5. Proceedings for
occupation or the the recovery of
781
Land Titles and Deeds
hour and minute it was presented and received.
The opening paragraph of Section 113 cannot be The recording of the deed and other instruments
interpreted to include conveyances made by relating to unregistered lands shall be effected
ministerial officers, such as sheriff’s deeds. It by any of annotation on the space provided
contemplates only such instruments as may be therefor in the Registration Book, after the same
created by agreement of the parties. (Agcaoli, shall have been entered in the Primary Entry
2018) Book.
Recording shall be without prejudice to a After recording, the Register of Deeds shall
third party with ‘better right’ endorse on the original of the instrument the file
number and the date as well as the hour and
Section 113(b) states that any recording made minute when the instrument was received,
thereunder shall be without prejudice to a third returning to the registrant the duplicate of the
party with a ‘better right’. Thus, a mortgage of instrument with a certification that he has
unregistered property which is recorded under recorded the same. (Section 113, P.D. 1529;
Act No. 3344 is valid as against everybody Agcaoli, 2018)
except a third person having a better right right.
(Agcaoli, 2018, citing Mota v. Concepcion, G.R. No. NON-REGISTRABLE PROPERTIES
34581, March 31, 1932)
Non-registrable lands
NOTE: Under Section 113(d), a tax sale,
attachment and levy, notice of lis pendens, These are properties of public dominion which,
adverse claim and other instruments in the under existing legislation, are not the subject of
nature of involuntary dealing with respect to private ownership and are reserved for public
unregistered lands, if made in the form sufficient purposes.
in law, may be recorded.
NOTE: The properties of public dominion are
Recording by Register of Deeds is ministerial not susceptible to acquisitive prescription and
only properties of the State that are no longer
The Register of Deeds does not exercise a earmarked for public use, otherwise known as
judicial or quasi-judicial power in the patrimonial, may be acquired by prescription. In
registration of sheriff’s deeds or certificates of Heirs of Mario Malabanan v. Republic, the
sale. His duty with respect to the notation or Supreme Court, in observance of the foregoing,
recording of these instruments, so far at least as clarified the import of Sec. 14(2) and made the
relates to unregistered property, is ministerial following declarations:
only’ and the registration of such instrument
adds nothing to their instrinsic effect. 1. The prescriptive period for purposes of
Registration in such cases is required merely as acquiring an imperfect title over a property
a means of notification of the purchaser’s rights of the State shall commence to run from the
to the public. If the Register of Deeds refuses to date an official declaration is issued that
register the instrument, he shall advise the party such property is no longer intended for
in interest in writing of the grounds for his public service or the development of
refusal, and the latter may elevate the matter to national wealth; and
the Administrator, Land Registration Authority, 2. Prescription will not run as against the State
en consulta pursuant to Section 117 of the even if the property has been previously
Property Registration Decree. (Agcaoli, 2018 classified as alienable and disposable as it is
citing Pua Hermanos v. Register of Deeds, G.R. No. that official declaration that converts the
274349, September 10, 1927) property to patrimonial. (Republic of the
Philippines v. Metro Index Realty and
How recording is effected Development Corporation, G.R. No. 198585,
July 2, 2012)
Register of Deeds shall keep a Primary Entry
Book and a Registration Book. The Primary Reason behind their non-registrability
Entry Book shall contain, among other
particulars, the entry number, the names of the Property of the public domain is beyond the
parties, the nature of the document, the date, commerce of man and not susceptible of private
NOTE: Areas beyond a lake’s natural bed, or It is defined as “a large tract of land covered with
the ground covered by the waters at their a natural growth of trees and underbrush; a
highest ordinary depth during the dry large wood.” If the land forms part of the public
season, may be registered. (Republic v. Court forest, possession thereof, however long, cannot
of Appeals, 131 SCRA 532) convert it into private property as it is within the
exclusive jurisdiction of the Bureau of Forest
A dried up creek is property of public Development and beyond the power and
dominion. (Fernando v. Acuña, G.R. No. jurisdiction of the registration court. (Republic v.
161030, September 14, 2011) Court of Appeals and Lastimado, GR No. L-39473,
April 30, 1979; Director of Lands v. Abanzado, GR
13. Reservations for public and semi-public No. L-21814, July 15, 1975, as cited by Agacaoili,
purposes; 2018)
14. Protected areas;
15. Resources within ancestral domains; and Unless the land is released as A and D, the rules
16. Others of similar character. on confirmation of title do not apply.
(Amunategui v. Director of Forestry; G.R. No. L-
Q: In 1913, Gov. Gen. Forbes reserved a 27873, November 29, 1983)
parcel of land for provincial park purposes.
Sometime thereafter, the court ordered said Foreshore land
land to be registered in Ignacio & Carmen
Palomo’s name. What is the effect of the act of A strip of land that lies between the high and low
Gov. Gen Forbes in reserving the land for water marks and is alternately wet and dry
provincial park purposes? according to the flow of tide. It is that part of the
land adjacent to the sea, which is alternately
A: As part of the reservation for provincial park covered by the ordinary flow of tides.
purposes, they form part of the forest zone. It is
783
Land Titles and Deeds
Foreshore lands are inalienable unless reclaimed mineral agreements with contractors. (RA No.
by the government and classified as agricultural 7942, Sec. 4)
lands of the public domain. (Chavez v. Public
Estates Authority, G.R. No. 133250, November 11, NOTE : Possession of mineral land, no matter
2003) how long, does not confer possessory rights.
Thus, a certificate of title is void when it covers
NOTE: Seashore, foreshore land, and/or property of public domain classified as mineral
portions of the territorial waters and beaches, lands. Any title issued over non-disposable lots,
cannot be registered. Even alluvial formation even in the hands of alleged innocent purchaser
along the seashore is part of the public domain for value, shall be cancelled. (Lepanto
and, therefore, not open to acquisition by Consolidated Mining Co. v. Dumyung, GR No. L-
adverse possession by private persons unless 31666, April 20, 1979)
subsequently declared as no longer needed for
public use. NOTE : Ownership of land does not extend to
mineral underneath. The Regalian doctrine
Mangrove swamps reserves to the State all minerals that may be
found in public and even private lan devoted to
These are mud flats, alternately washed and ’’agricultural, industrial, commercial,
exposed by the tide, in which grows various residential, or (for) any purpoes other than
kindred plants which will not live except when mining.’’ (Republic v. CA & De la Rosa, GR No.
watered by the sea, extending their roots deep 45859, Sept. 28, 1938, as cited in Agcaoili, 2018)
into the mud and casting their seeds, which also
germinate there. These constitute the mangrove Q: Can land be partly mineral and partly
flats of the tropics, which exist naturally, but agricultural?
which are also, to some extent, cultivated by
man for the sake of the combustible wood of the A: NO. The rights over the land are indivisible
mangrove and like trees as well as for the useful and that the land itself cannot be half
nipa palm propagated thereon. (Montano v. agricultural and half mineral. The classification
Insular Government, G.R. No. L-3714, January 26, of land must be categorical; the land must be
1909; Director of Forestry vs. Villareal, G.R. No. either completely mineral or completely
32266, February 27, 1989) agricultural.
A: NO. Mangrove swamps or manglares are It is a land area drained by a stream or fixed
forestall and not alienable agricultural land. body of water and its tributaries having a
common outlet for surface runoff.
Mangrove swamps form part of the public
forests and, therefore, not subject to disposition Watershed reservation
until and unless they are first released as forest
land and classified as alienable agricultural land. It is a forest land reservation established to
(Director of Forestry v. Villareal, G.R. No. L-32266, protect or improve the conditions of the water
February 27, 1989, supra.) yield thereof or reduce sedimentation.
785
Torts
indemnify the latter for the same. (NCC, Art. 20)
TORTS
“Contrary to law” means that the act violated are
GENERAL PRINCIPLES provisions of both the Civil and Penal Codes.
Unjust enrichment claims do not lie simply Civil liabilities which may arise due to an act
because one party benefits from the efforts or or omission of one, causing damage to
obligations of others, but instead it must be another
shown that a party was unjustly enriched in the
sense that the term unjustly could mean illegally 1. Civil liability ex delicto
or unlawfully. (Aquino, 2016)
NOTE: Every person criminally liable for a
Tort felony is also civilly liable. (RPC, Art.100)
787
Torts
only P80,000.00 as the amount paid. Rafael against the offender subject to the caveat under
filed a case for Estafa against Manzano. Article 2177 of the New Civil Code that the
However, the RTC dismissed the complaint plaintiff cannot recover damages twice for the
for Estafa for failure of the prosecution to same act or omission of the defendant. (Santos v.
"prove all the elements of Estafa through Pizardo, G.R. No. 151452, July 29, 2005)
misappropriation. Rafael appealed the civil
aspect of the case. Will the civil aspect based Tortious Act
on ex delicto will prosper?
It is a wrongful act. It is the commission or
A: NO. In the fairly recent case of Dy v. People, omission of an act by one, without right,
the Court discussed the concept of civil whereby another receives, some direct or
liability ex delicto in Estafa cases under indirect injury, in person, property, or
paragraph 1 (b), Article 315 of the RPC (with reputation. (De Leon, 2012)
which Manzano was likewise charged), stating
that when the element of misappropriation GR: An action for damages can only be
or conversion is absent, there can be maintained by the person directly injured, not
no Estafa and concomitantly, the civil by one alleging the collateral injury.
liability ex delicto does not exist. Whenever
the elements of Estafa are not established, and XPN: There are instances where injury to one
that the delivery of any personal property was may operate as an injury to another, e.g. a lone
made pursuant to a contract, any civil liability parent cannot sue for the injury suffered by his
arising from the Estafa cannot be awarded in the child, but may maintain an action in his own
criminal case. This is because the civil liability right for any damages suffered as a result of the
arising from the contract is not civil liability ex injury.
delicto, which arises from the same act or
omission constituting the crime. Civil liability ex Remedies for Torts (CPR):
delicto is the liability sought to be recovered in a
civil action deemed instituted with the criminal 1. Compensatory – actions for sum of money
case." In this case, the Court agrees with the for the damage suffered.
findings of both the R TC and the CA that the 2. Preventive – prayer for injunction, a writ of
prosecution failed to prove all the elements preliminary injunction, and a temporary
of Estafa through misappropriation as defined restraining order, enjoining the defendant
in, and penalized under, paragraph 1 (b ), from continuing the doing of the tortious
[Article 315] of the [RPC]. (Estate Of Honorio conduct.
Poblador, Jr., Represented By Rafael A. Poblador 3. Restitution – to return gains that the
V. Rosario L. Manzano, G.R. No. 192391, June 19, defendant wrongfully obtained by tort.
2017)
Elements
2. Independent civil liabilities, such as
those: 1. A legal Right in favor of a person
2. A correlative legal Obligation on the part of
a. Not arising from an act or omission the defendant to respect such right.
complained of as a felony, e.g., culpa 3. A Wrong, an act or omission in violation of
contractual or obligations arising from such right with consequent injury.
law under Article 31 of the New Civil Code
(such as breach of contract or tort), QUASI-DELICT
intentional torts under Articles 32 and 34,
and culpa aquiliana under Article 2176 of Whoever by act or omission causes damage to
the New Civil Code. another, there being fault or negligence, is
b. Where the injured party is granted a right obliged to pay for the damage done. Such fault or
to file an action independent and distinct negligence, if there is no pre-existing contractual
from the criminal action under Article 33 relation between the parties, is quasi-delict or
of the New Civil Code (in cases of culpa aquilana. (Art. 2176, NCC)
defamation, fraud and physical injuries).
Articles 2176 and 2180 of the Civil Code were
NOTE: Either of these liabilities may be enforced derived from Articles 1902 and 1903 of the
789
Torts
man would not do. (R Transport Corporation vs. 1992)
Yu, G.R. No. 174161, February 18, 2015, supra.)
Nature of responsibility of Vicarious Obligor
NOTE: The existence of negligence in a given
case is not determined by reference to the Primary and direct, not subsidiary. He is
personal judgment of the actor in the situation solidarily liable with the tortfeasor. His
before him. The law considers what would be responsibility is not conditioned upon the
reckless, blameworthy, or negligent in the man insolvency of or prior recourse against the
of ordinary intelligence and prudence and negligent tortfeasor. (De Leon Brokerage v. CA,
determines liability by that. (Picart v. Smith, Jr., G.R. 15247, February 28, 1962)
G.R. No. L-12219, March 15, 1918, supra.)
Persons Vicariously Liable (F-GOES-T)
Rule when negligence shows bad faith
1. Father, or in case of death or incapacity,
When negligence shows bad faith, responsibility mother:
arising from fraud is demandable in all a. Damage caused by minor children
obligations. (NCC, Art. 1171) Furthermore, in b. Living in their company
case of fraud, bad faith, malice or wanton
attitude, the obligor shall be responsible for all 2. Guardians:
damages which may be reasonably attributed to a. For minors or incapacitated persons
the non-performance of the obligation. (NCC, Art. b. Under their authority
2201) c. Living in their company
XPN: 4. Employers:
a. Damages caused by employees and
1. In cases specified by law; household helpers
2. When declared by stipulation; or b. Acting within the scope of their
3. When the nature of the obligation requires assigned tasks
the assumption of risk. c. Even if the employer is not engaged in
any business or industry
NOTE: A person or juridical entity is made liable
solidarily with a tortfeasor simply by reason of 5. State – acting through a special agent and
his relationship with the latter. not when the damage has been caused by
the official to whom the task done properly
Presumption of negligence on persons pertains.
indirectly responsible
6. Teachers or heads of establishments:
The presumption of law is that there was a. Of arts and trades
negligence on the part of the master or employer
either in the selection of the servant or NOTE: Article 2180 of the NCC is applicable to
employee (culpa in eligendo) or in the all schools, whether it be academic or non-
supervision over him after the selection (culpa academic. (Amadora v. CA, G.R. No. L-47745, April
vigilando), or both. 15, 1988)
NOTE: The presumption is juris tantum b. For damages caused by their pupils and
(rebuttable), not juris et de jure (conclusive), and students or apprentices
can be rebutted only by showing proof of having c. So long as they remain in their custody.
exercised and observed all the diligence of a (NCC, Art. 2180)
good father of a family (diligentissimi patris
familias). (Tamargo v. CA, G.R. No. 85044, June 3, NOTE: As regards the principal, the Supreme
Principle of Vicarious Liability or Law on The responsibility of two or more persons who
Imputed Negligence (2001-2006, 2009, 2010 are liable for quasi-delict is solidary. (NCC, Art.
BAR) 2194) Each are liable as principals, to the same
extent and in the same manner as if they had
The obligation imposed by Article 2176 of the performed the wrongful act themselves. (Ruks
NCC for quasi-delicts is demandable not only for Konsult and Construction v. Adworld Sign and
one's own acts or omissions, but also for those Advertising Corp., G.R. No. 204866, January 21,
persons for whom one is responsible. (NCC, Art. 2015)
2180)
Liability of the owner of a vehicle in case of
THE TORTFEASOR an accident (1996, 1998, 2002, 2009 BAR)
Persons liable for quasi-delict In motor vehicle mishaps, the owner is solidarily
liable with his driver, if the former, who was in
Every person legally responsible is liable for a the vehicle, could have, by the use of the due
791
Torts
diligence, prevented the misfortune. It is still sue the said owner under Article 2180 par.
disputably presumed that a driver was negligent, (5) of the New Civil Code for imputed liability.
if he had been found guilty or reckless driving or
violating traffic regulations at least twice within NOTE: Employers shall be liable for the damages
the next preceding two months. (NCC, Art. 2184) caused by their employees and household
helpers acting within the scope of their assigned
Q: Jesmariane Reyes was hit by a van owned tasks, even though the former are not engaged in
and registered by Caravan Travel and Tours any business or industry. (NCC, Article 2180 par.
International, Inc. Bautista who was 5)
employed as the driver of Caravan, was found
to be grossly negligent in driving the vehicle. If no knowledge of owner of vehicle not liable
Reyes’ aunt, Abejar, presented a copy of the
Certification of Registration of the van which An owner of a vehicle cannot be held liable for
attests to Caravan’s ownership thereof. an accident involving the said vehicle if the same
Caravan argues that it cannot be held liable was driven without his consent or knowledge,
since Abejar offered no documentary or and by a person not employed by him. (Duavit v.
testimonial evidence to prove that Bautista CA, G.R. No. 82318, May 18, 1989)
acted within the scope of his assigned tasks
when the accident occurred. Liability of proprietors of buildings
If the car owner is not present in the vehicle and 5. If the engineer or architect supervises the
the driver was negligent, the injured party may construction, he shall be solidarily liable
Liability in tort for injury is determined by In invoking the exempting circumstance of caso
conduct, and can arise regardless of the mental fortuito or accident, human agency must be
state or intent to commit an unlawful. entirely excluded as the proximate cause or
contributory cause of the injury or loss. (Perla
If several persons jointly commit a tort, the Compania v. Sps. Sarangaya, G.R. No. 147746,
plaintiff or person injured, has his election to sue October 25, 2005)
all or some of the parties jointly, or one of them
separately, because the tort is in its nature a PROXIMATE CAUSE
separate act of each individual. (Dean Worcester
v. Ocampo, G.R. No. 5932, February 27, 1912) Proximate cause is that cause, which, in natural
and continuous sequence, unbroken by any
In case of injury to a passenger due to the efficient intervening cause, produces the injury,
negligence of the driver of the bus on which he and without which the result would not have
was riding and of the driver of another vehicle, occurred. (Ramos v. C.O.L. Realty, G.R. No. 184905,
the drivers as well as the owners of the two August 28, 2009)
vehicles are jointly and severally liable for
damages. (Tiu v. Arriesgado, G.R. No. 138060, NOTE: Proximate cause is not necessarily the
September 1, 2004) immediate cause; it’s not necessarily the nearest
time, distance or space. (People v. Elizalde, 59 Off.
ACT OR OMISSION AND ITS MODALITIES Gaz. 1241)
793
Torts
Application of proximate cause It is the cause which, in natural
and continuous sequence,
The doctrine of proximate cause is applicable unbroken by any efficient
PROXIMATE
only in actions for quasi-delict, not in actions intervening cause, produces
CAUSE
involving breach of contract. the injury, and without which
the result would not have
The doctrine is a device for imputing liability to occurred.
a person where there is no relation between him One that destroys the causal
and another party. In such a case, the obligation connection between the
is created by law itself. But, where there is a pre- negligent act and injury and
existing contractual relation between the thereby negatives liability.
parties, it is the parties themselves who create INTERVENING
CAUSE
the obligation, and the function of the law is NOTE: Foreseeable
merely to regulate the relation thus created. Intervening causes cannot be
(Calalas v. CA, G.R. No. 122039. May 31, 2000) considered sufficient
intervening causes.
Principle of concurrent causes That cause which some
independent force merely took
Where the concurrent or successive negligent REMOTE
advantage of to accomplish
acts or omissions of two or more persons, CAUSE
something not the natural
although acting independently, are in effect thereof.
combination with the direct and proximate Causes brought about by the
cause of a single injury to a third person, and it is acts and omissions of third
impossible to determine what proportion each persons which makes the
contributed to the injury, either of them is CONCURRENT
defendant still liable. Here, the
responsible for the whole injury, even though his CAUSE
proximate cause is not
act alone might not have caused the entire necessarily the sole cause of
injury. (Sabido v. Custodio, G.R. No. L-21512, the accident.
August 31, 1966)
SPECIAL LIABILITY IN PARTICULAR
Efficient Intervening Cause (Novus Actus ACTIVITIES
Interviens)
When Efficient Intervening Cause is not GR: The owner has no duty to take reasonable
applicable care towards a trespasser for his protection
from concealed danger. The trespasser come on
There is no efficient intervening cause if the to the premises under his own risk. (Taylor v.
force created by the negligent act or omission Manila Railroad Company, 16 Phil. 8)
have either:
XPN:
1. Remained active itself; or a. Visitors - owners owe a duty of care to
2. Created another force which remained visitors. (Cabigao v. University of the
active until it directly caused the result; or East, G.R. No. 33554)
3. Created a new active risk of being acted
upon by the active force that caused the b. Doctrine of Attractive Nuisance - one
result. (57 Am. Jur. 2d 507) who maintains on his premises
dangerous instrumentalities or
Proximate, Intervening, Remote and appliances of a character likely to
Concurrent causes distinguished attract children in play and fails to
prevent children from playing therewith
The owners and managers of an establishment NOTE: It is not required that the employer is
or enterprise are likewise responsible for engaged in some kind of industry or work.
damages caused by their employees in the (Castilex Industrial Corporation v. Vasquez, G.R.
service of the branches in which the latter are No. 132266 December 21, 1999)
employed or on the occasion of their functions.
[NCC, Art. 2180(4)] a. MANAGER
Employers shall be liable for the damages GR: A mere manager, who does not own the
caused by their employees and household business, is not to be considered as an employer
helpers acting within the scope of their assigned because as a manager, he is just a high-class
tasks, even though the former are not engaged in employee.
any business or industry. [Ibid. (5)] (2005 BAR)
XPN: A manager who is not an owner but who
Owners and managers assumes the responsibility of supervision over
the employees of the owner may be held liable
The terms “owners and managers” are used in for the acts of the employees.
the sense of “employer” and do not include the
manager of a corporation who himself is just an NOTE: To be liable, the manager must be acting
employee. (Phil. Rabbit Bus Lines v. Phil. as an employer of with the same authority as the
American Forwarders, Inc., G.R. No. L-25142, owner.
March 25, 1975)
b. OWNER/EMPLOYER
To make the employer liable under Art. 2180 of
the NCC, it must be established that the injurious To make the employer liable under Art 2180 (5
or tortious act was committed at the time the and 6), it must be established that the injurious
employee was performing his functions. or tortuous act was committed at the time the
(Marquez v. Castillo, G.R. No. 46237, September employee was performing his functions.
795
Torts
NOTE: If there is deviation from the scope of Presumption on the negligence of the
employment, the employer is not liable no employer
matter how short in time is the deviation.
The negligence of the employee is presumed to
When a criminal case is filed against the be the negligence of the employer because the
offender, before the employer’s subsidiary employer is supposed to exercise supervision
liability is exacted, there must be proof that: over the work of the employees. This liability of
the employer is primary and direct. (Standard
1. They are indeed the employer of the Vacuum Oil Co. vs. Tan and Court of Appeals, G.R.
convicted employee; No. L-13048. February 27, 1960)
2. The former are engaged in some kind of
industry; Once the employee’s fault is established, the
3. The crime was committed by the employees employer can then be made liable on the basis of
in the discharge of their duties; and the presumption that the employer failed to
4. That the execution against the latter has not exercise diligentissimi patris familias (diligence
been satisfied due to insolvency. (Philippine of a good father of a family) in the selection and
Rabbit Bus Lines, Inc. v. People, G.R. No. supervision of its employees. (LRTA v. Navidad,
147703, April 14, 2004) G.R. No. 145804, February 6, 2003)
Requisites before an employer may be held The Bayaban Spouses, who were on board
liable under Article 2180 (4) for the act of its the tricycle, sustained injuries requiring
employees therapy and post-medical treatment. The
Bayaban Spouses demanded compensation
1. The employee was chosen by the employer from Imperial, Laraga, and Mercado for the
personally or through another; hospital bills and loss of income that they
2. The service is to be rendered in accordance sustained while undergoing treatment. When
with orders which the employer has the neither Imperial, Laraga, nor Mercado
authority to give all times; and heeded their demand, the Bayaban Spouses
3. That the illicit act of the employee was on filed a Complaint for damages.
the occasion or by reason of the functions
entrusted to him. (Jayme v. Apostol, G.R. No. The RTC ruled in favor of the Bayaban
163609, November 27, 2008) Spouses. It found Laraga negligent and the
797
Torts
the employer is negligent, rebuttable only by However, evidence that by using the employer’s
proof of observance of the diligence of a good vehicle to go to and from meals, an employee is
father of a family. (Delsan Transport Lines v. C & enabled to reduce his time-off and so devote
A Construction, G.R. No. 156034, October 1, 2003) more time to the performance of his duties,
Likewise, if the driver is charged and convicted supports the finding that an employee is acting
in a criminal case for criminal negligence, BT is within the scope of his employment while so
subsidiarily liable for the damages arising from driving the vehicle. (Ibid.)
the criminal act.
Defenses available to an employer
Q: After working overtime up to midnight,
Alberto, an executive of an insurance 1. Exercise of due diligence in the selection and
company drove a company vehicle to a supervision of its employees (except in
favorite Videoke bar where he had some criminal action); and
drinks and sang some songs with friends to
"unwind." At 2:00 a.m., he drove home, but in NOTE: In the selection of prospective
doing so, he bumped a tricycle, resulting in employees, employers are required to
the death of its driver. May the insurance examine them as their qualifications,
company be held liable for the negligent act experience, and service records. On the
of Alberto? Why? (2001 BAR) other hand, with respect to the supervision
of employees, employers should formulate
A: NO. The insurance company is not liable standard operating procedures, monitor
because when the accident occurred, Alberto their implementation, and impose
was not acting within the assigned tasks of his disciplinary measures for breaches thereof.
employment. To establish these factors in a trial involving
the issue of vicarious liability, employees
It is true that under Art. 2180(5), employers are must submit concrete proof, including
liable for damages caused by their employees documentary evidence. (Metro Manila
who were acting within the scope of their Transit v. CA, G.R. No. 141089, August 1,
assigned tasks. However, the mere fact that 2002)
Alberto was using a service vehicle of the
employer at the time of the injurious accident 2. The act or omission was made outside
does not necessarily mean that he was operating working hours and in violation of company’s
the vehicle within the scope of his employment. rules and regulations.
In Castilex Industrial Corporation v. Vasquez, G.R.
No. 132266, December 21, 1999, the Supreme Q: Would the defense of due diligence in the
Court held that notwithstanding the fact that the selection and supervision of the employee be
employee did some overtime work for the available to the employer in both instances?
company, the former was, nevertheless, engaged (1997 BAR)
in his own affairs or carrying out a personal
purpose when he went to a restaurant at 2:00 A: NO. The defense of diligence in the selection
a.m. after coming out from work. The time of the and supervision of the employee under Article
accident (also 2:00 a.m.) was outside normal 2180 of the New Civil Code is available only to
working hours. those primarily liable thereunder, but not to
those subsidiary liable under Article 103 of the
When the employee is considered to be Revised Penal Code. (Yumul v. Juliano, G.R. No.
acting within the scope of employment 47690, April 28, 1941)
An employee who uses his employer’s vehicle in Employer’s Liability under Art. 2180, NCC v.
going from his work to a place where he intends Employer’s Liability under Art. 100, RPC
to eat or in returning to work from a meal is not
ordinarily acting within the scope of his NEW CIVIL CODE RPC
employment in the absence of evidence of some Liability is direct,
special business benefit to the employer. primary, and solidary -
(Castilex Industrial Corporation v. Vasquez, G.R. the employer may be Liability is subsidiary.
No. 132266, December 21, 1999) sued even without
suing the employee.
799
Torts
BANKS time as to give the owner a reasonable
opportunity to observe them and to direct
Sec. 2 of the General Banking Law (RA 8791) his driver to desist therefrom. An owner
declares that the State recognizes the fiduciary who sits in his automobile, or other vehicle,
nature of banking that requires high standards of and permits his driver to continue in a
integrity and performance. violation of the law by the performance of
negligent acts, after he has had a reasonable
Banking is a business that is impressed with opportunity to observe them and to direct
public interest. It affects economies and plays a that the driver cease therefrom, becomes
significant role in business and commerce. xxx himself responsible for such acts.
This is why the Court has recognized the
fiduciary nature of banks’ functions and attached On the other hand, if the driver, by a sudden
a special standard of diligence for the exercise of act of negligence, and without the owner
their functions. (Philippine National Bank v. having a reasonable opportunity to prevent
Santos, G.R. No. 208293 & 208295, December 10, the act or its continuance, injures a person
2014) or violates the criminal law, the owner of the
automobile, although present therein at the
Wrongful Acts of Bank’s Employees time the act was committed, is not
responsible, either civilly or criminally,
Petitioner bank was remiss in its duty and therefor. The act complained of must be
obligation to treat private respondent’s account continued in the presence of the owner for
with the highest degree of care, considering the such a length of time that the owner, by his
fiduciary nature of their relationship. The bank acquiescence, makes his driver's act his
is under obligation to treat the accounts with own.
meticulous care X X X it must bear the blame for
failing to discover the mistake of its employee X The basis of the master's liability in civil law is
X X. (Metropolitan Bank v. CA, G.R. No. 112576, not respondent superior but rather the
October 26, 1994) relationship of pater familias. The theory is that
ultimately the negligence of the servant, if
OWNERS OF MOTOR VEHICLES known to the master and susceptible of timely
correction by him, reflects his own negligence if
he fails to correct it in order to prevent injury or
The applicable law is Article 2184 of the NCC,
damage.
which provides that in motor vehicle mishaps,
the owner is solidarily liable with his driver, if
The test of imputed negligence under Article
the former, who was in the vehicle, could have,
2184 of the Civil Code is, to a great degree,
by the use of due diligence, prevented the
necessarily subjective. Car owners are not held
misfortune. It is disputably presumed that driver
to a uniform and inflexible standard of diligence
was negligent, if he has been found guilty of
as are professional drivers.
reckless driving or violating traffic regulations at
least twice within the next preceding two
months." In many cases they refrain from driving their
own cars and instead hire other persons to drive
for them precisely because they are not trained
Under the foregoing provision, if the causative
or endowed with sufficient discernment to know
factor was the driver's negligence, the owner of
the rules of traffic or to appreciate the relative
the vehicle who was present is likewise held
dangers posed by the different situations that
liable if he could have prevented the mishap by
are continually encountered on the road. What
the exercise of due diligence. The rule is not new,
would be a negligent omission under aforesaid
although formulated as law for the first time in
Article on the part of a car owner who is in the
the new Civil Code.
prime of age and knows how to handle a motor
vehicle is not necessarily so on the part, say, of
It was expressed Chapman vs. Underwood (1914)
an old and infirm person who is not similarly
27 Phil. 374, where this Court held:
equipped.
The same rule applies where the owner is
The law does not require that a person must
present, unless the negligent acts of the
possess a certain measure of skill or proficiency
driver are continued for such a length of
801
Torts
so that a patient, may intelligently exercise his NOTE: R.A. 6809, An those who are insane
judgment by reasonably balancing the probable Act Lowering the Age or imbecile.
risks against the probable risks against the of Majority from
probable benefits. [Canterbury v. Spence Twenty-One to
(464F.2d772)] Eighteen Years, did not
amend Article 236 of
LAWYERS the Family Code with
regard to age.
An attorney is bound to exercise only a
reasonable degree of care and skill, having “Nothing in this code shall be construed to
reference to the business he undertakes. Prone derogate from the duty or responsibility of
to err like any other human being, he is not parents and guardians for children and wards
answerable for every error or mistake, and will below 21 years of age mentioned in the second
be protected as long as he acts honestly and in and third paragraphs of Art. 2180 of the Civil
good faith to the best of his skill and knowledge. Code” (RA 6809).
(Adarne v. Aldaba, A.M. No. 801, June 27, 1978)
Thus, under Article 221 of the Family Code,
HEAD OF THE FAMILY there is no more alternative qualification as to
the civil liability of parents. The liability of both
father and mother is now primary and not
VICARIOUS LIABILITY: PARENTS
subsidiary. (Libi vs. IAC, G.R. No. 70890,
September 18, 1992) Otherwise stated, their
Basis of vicarious liability of the parents responsibility is now simultaneous, and no
(2005 BAR); “Principal of Parental Liability” longer alternative. (Rabuya, 2017)
This liability is made natural as a logical NOTE: Under RA 9344 (Juvenile Justice and
consequence of the duties and responsibilities of Welfare Act of 2006) 15 years of age or younger
parents exercising parental authority which – age of absolute irresponsibility.
includes controlling, disciplining and instructing
their children. In this jurisdiction the parent’s Liability of parents involving either crimes or
liability is vested by law which assumes that quasi-delicts of their minor children;
when a minor or unemancipated child living Primary NOT Subsidiary
with their parent, commits a tortious act, the
parents are presumed negligent in the Primary and Solidary Liability:
performance of their duty to supervise the
children under their custody. (Tamargo v. CA, (a) Under Article 2180 of the NCC
G.R. No. 85044, June 3, 1992)
The civil liability of parents for quasi-delicts of
Requisites of vicarious liability of the parents their minor children, as contemplated in Article
(21-CL) 2180 of the Civil Code, is primary and not
subsidiary. In fact, if we apply Article 2194 of the
1. The child is below 21 years of age; said Code, which provides for solidary liability of
2. The child Committed a tortious act to the joint tortfeasors, the persons responsible for the
damage and prejudice of another person; act or omission, in this case, the minor and the
and father, and in case of his death or incapacity, the
3. The child Lives in the company of the parent mother, are solidarily liable. Accordingly, such
concerned whether single or married. parental liability is primary and not subsidiary,
(Pineda, 2009) hence the last paragraph of Article 2180
provides that “the responsibility treated in this
Minors v. Incapacitated Persons article shall cease when the persons herein
mentioned proved that they observed all the
Incapacitated diligence of a good father of a family to prevent
Minor
Persons damages. (Libi vs. IAC, G.R. No. 70890, September
Those who are below Persons beyond 21 18, 1992)
21 years of age. years of age but are
incapacitated such as (b) Under Article 101 of the RPC
803
Torts
Aspects of liability of the State keep the public market reasonably safe for
people frequenting the place for their marketing
1. Public/Governmental – Where the State is needs. X X X To recapitulate, it appears evident
liable only for the tortious acts of its special that the City of Manila is likewise liable for
agents. The State has voluntarily assumed damages under Article 2189 of the Civil Code,
liability for acts done through special agents. respondent City having retained control and
(Pineda, 2009) supervision over the Sta. Ana Public Market and
as tort-feasor under Article 2176 of the Civil
2. Private/Non-governmental – When the State Code on quasi-delicts. (Jimenez v. City of Manila,
is engaged in private business or enterprise, G.R. No. 71049, May 29, 1987)
it becomes liable as an ordinary employer.
(NIA v. Fontanilla, G.R. No. 61045, December NOTE: It is not even necessary for the defective
1, 1989) road or street to belong to the province, city or
municipality for liability to attach. The article
NOTE: The State is only liable for the negligent only requires that either control or
acts of its officers, agents and employees when supervision is exercised over the defective road
they are acting as special agents. or street. (Guilatco v. City of Dagupan, G.R. No.
61516, 21 Mar 1989)
Special Agent
Lack of knowledge not a defense
A special agent is one who receives a definite
and fixed order or commission, foreign to the The LGU cannot be relieved of liability based on
exercise of the duties of his office. its purported lack of knowledge of the
excavation and the condition of the road when
An employee who on his own responsibility the accident occurred. Its obligation to maintain
performs functions inherent in his office and the safe condition of the road within its territory
naturally pertaining thereto is not a special is a continuing one which is not suspended while
agent. (Meritt v. Government of the Philippine a street is being repaired. (Municipality of San
Islands, G.R. No. 11154, March 21, 1916) Juan v. CA, G.R. No. 121920, 9 Aug 2005)
805
Torts
The student is in the custody of the school school, its administrators and teachers, or the
authorities as long as he is under the control and individual, entity or institution engaged in child
influence of the school and within its premises, care shall have special parental authority and
whether the semester has not ended, or has responsibility over the minor child while under
ended or has not yet begun. The term “custody” their supervision, instruction or custody.
signifies that the student is within the control Authority and responsibility shall apply to all
and influence of the school authorities. The authorized activities whether inside or outside
teacher in charge is the one designated by the the premises of the school, entity or institution.
dean, principal, or other administrative superior
to exercise supervision over the pupils or Liability of the school
students in the specific classes or sections to
which they are assigned. It is not necessary that 1. Vicarious liability as an employer under Art.
at the time of the injury, the teacher is physically 2180 of the NCC;
present, and in a position to prevent it. 2. Direct liability:
a. for quasi-delicts under Art. 2176 of the
Article 218 of the Family Code v. Article 2180 NCC;
of the New Civil Code b. as an institution exercising special
parental authority over minor children
ARTICLE 218, ARTICLE 2180, under Art. 219 of the FC;
Family Code New Civil Code c. for breach of contract; or
School, its Teachers, head of
administrators, establishment in arts NOTE: When a student enrolls, a contract is
teachers engaged in and trades are made entered into between him and the school.
childcare are made expressly liable. Under this contract, the school is supposed
expressly liable. to ensure that adequate steps are taken to
provide an atmosphere conducive to study
Liability of school, its Neither such express and ensure the safety of the student while
administrators, and solidary nor subsidiary inside its premises. (Saludaga v. FEU, G.R.
teachers is solidary liability is stated. No. 179337, April 30, 2008) Thus, any quasi-
and parents are made delict committed by the school’s employee
subsidiary liable. against the student is also actionable under
breach of contractual obligations.
Students involved Students involved are
must be a minor. not necessarily 3. Subsidiary liability for felonies committed by
minors. their servants, pupils, workmen,
apprentices, or employees in the discharge
Defenses available of their duties, under Art. 103 of the RPC.
807
Torts
instrumentalities or appliances of a character Note: While the Sangguniang Bayan may
likely to attract children in play, and who fails to provide for the abatement of a nuisance (Local
exercise ordinary care to prevent children from Government Code, Sec. 149 [ee]), it cannot declare
playing therewith or resorting thereto, is liable a particular thing as a nuisance per se and order
to a child of tender years who is injured thereby, its condemnation. The nuisance can only be so
even if the child is technically a trespasser in the adjudged by judicial determination.
premises.
Municipal councils do not have the power to find
The principal reason for the doctrine is that the as a fact that a particular thing is a nuisance
condition or appliance in question although its when such thing is not a nuisance per se; nor can
danger is apparent to those of age, is so enticing they authorize the extra judicial condemnation
or alluring to children of tender years as to and destruction of that as a nuisance which, in
induce them to approach, get on or use it, and its nature, situation or use is not such. These
this attractiveness is an implied invitation to things must be determined in the ordinary
such children. (Hidalgo Enterprises, Inc. v. courts of law. (Iloilo Cold Storage v. Municipal
Balandan, G.R. No. L-3422, June 13, 1952, 91 PHIL Council, 24 Phil. 47, 1913; Estate of Francisco v.
488-492; Jarco Marketing Corp. v. Court of Court of Appeals, G.R. No. 95279, July 25, 1991,
Appeals, G.R. No. 129792, December 21, 1999, 378 276 PHIL 649-656)
PHIL 991-1008)
PRODUCTS LIABILITY
Example: Swimming pool with “attractive floats
or paraphernalia.” Manufacturers or Processors
However, it should be noted that the attractive Under Article 2187 of the NCC, manufacturers
nuisance doctrine, generally, is not applicable to and processors of foodstuffs, drinks, toilet
bodies of water, artificial as well as natural, in articles, and similar goods shall be liable for
the absence of some unusual condition or death or injuries caused by any noxious or
artificial feature other than the mere water and harmful substances used, although no
its location. (Hidalgo Enterprises, Inc. v. contractual relation exists between them and the
Balandan, G.R. No. L-3422, [June 13, 1952], 91 consumers.
PHIL 488-492)
Consumer’s Act (R.A. No. 7394)
Abatement of Nuisances per se
Section 97 of R.A. No. 7394 provides that any
The general welfare clause authorizes the Filipino or foreign manufacturer, producer, and
abatement of nuisances without judicial any importer, shall be liable for redress,
proceedings. This tenet applies to a nuisance per independently of fault, for damages caused to
se, or one which affects the immediate safety of consumers by defects resulting from design,
persons and property and may be summarily manufacture, construction, assembly and
abated under the undefined law of necessity. erection, formulas and handling and making up,
(Monteverde v. Generoso, 52 Phil. 123, 1982; presentation or packing of their products, as
Estate of Francisco v. Court of Appeals, G.R. No. well as for the insufficient or inadequate
95279, July 25, 1991, 276 PHIL 649-656) information on the use and hazards thereof. (See
Sections 92 – 107 of R.A. No. 7394)
Abatement of Nuisance per accidens
LEGAL INJURY
If it be a nuisance per accidens, or by its nature, it
cannot be said to be injurious to rights of
Concepts
property, health, or comfort of the community, it
may then be so proven in a hearing conducted
Injury The illegal invasion of a legal right.
for that purpose. A nuisance per accidens is
not per se a nuisance warranting its summary The loss, hurt, or harm which
Damage
abatement without judicial intervention. (Estate results from the injury.
of Francisco v. Court of Appeals, G.R. No. 95279, The recompense or compensation
Damages
July 25, 1991, 276 PHIL 649-656) awarded for the damage suffered.
809
Torts
False imprisonment is also known as “dignitary b. Intentional Non-Physical Harms
tort.” It is found under Article 32(4) of the NCC,
and Articles 124 and 267 of the RPC. i. Violation of personal dignity
Illegal serious detention under Article 267 of Under Article 26 of the NCC, the rights of
the RPC, as amended, includes not only the persons are amply protected, and damages are
imprisonment of a person but also the provided for violations of a person's dignity,
deprivation of her liberty in whatever form and personality, privacy and peace of mind.
for whatever length of time. It includes a
situation where the victim cannot go out of The violations mentioned in Articles 26 and
the place of confinement or detention or is 2219 of the NCC are not exclusive but are merely
restricted or impeded in his liberty to move. examples and do not preclude other
(People v. Bisda, G.R. No. 140895, July 17, 2003, similar or analogous acts. Damages therefore are
454 PHIL 194-240) allowable for actions against a person's dignity,
such as profane, insulting, humiliating,
iv. Trespass to land scandalous or abusive language.
The court may award nominal damages in every In the case of Concepcion v. Court of Appeals,
case where any property right has been there is no question that private respondent
invaded. suffered mental anguish, besmirched reputation,
wounded feelings and social humiliation as a
In the case of National Power Corp. v. Spouses proximate result of petitioner's abusive,
Campos, Jr., the Court ruled that the petitioner, in scandalous and insulting language. (Concepcion
blatant disregard of the respondents' v. Court of Appeals, G.R. No. 120706, January 31,
proprietary right, trespassed the subject 2000, 381 PHIL 90-101)
property and conducted engineering surveys
thereon. Under the circumstances, the award of ii. Violation of Privacy
nominal damages is likewise
warranted. (National Power Corp. v. Spouses Under Article 26 of the NCC, every person shall
Campos, Jr., G.R. No. 143643, June 27, 2003, 453 respect the dignity, personality, privacy and
PHIL 79-97) peace of mind of his neighbors and other
persons. The following and similar acts, though
v. Trespass to chattels they may not constitute a criminal offense, shall
produce a cause of action for damages,
vi. Conversion prevention and other relief:
As observed by Chief Justice Fernando, the A tort action for malicious prosecution has been
expenses and annoyance of litigation form part defined as “an action for damages brought by
of the social burden of living in a society which one against another whom a criminal
seeks to attain social control through law. prosecution, civil suit, or other legal proceedings
(Dioquino vs. Laureano, L-25906, May 28, 1970, has been instituted maliciously and without
33 SCRA 65, 72 citing Petroleum Exploration vs. probable cause, after the termination of such
Public Service Commission, 304 US 209) prosecution, suit or proceeding in favor of the
defendant therein. (Aquino, 2016)
A long catena of cases supports the proposition
that moral damages are not recoverable for This Court has drawn the four elements that
unsuccessful suits filed in good faith. (Equitable must be shown to concur to recover damages for
Banking Corp. v. Intermediate Appellate Court, malicious prosecution. Therefore, for a malicious
G.R. No. 66070, October 31, 1984, 218 PHIL 135- prosecution suit to prosper, the plaintiff must
142) prove the following:
iii. Infliction of emotional distress (1) the prosecution did occur, and the
defendant was himself the prosecutor or that
Primarily, an "emotional distress" tort action is he instigated its commencement;
personal in nature, i.e., it is a civil action filed by
an individual to assuage the injuries to his (2) the criminal action finally ended with an
emotional tranquility due to personal attacks on acquittal;
his character.
(3) in bringing the action, the prosecutor acted
Moreover, to recover for the intentional without probable cause; and
infliction of emotional distress the plaintiff must
show that: (4) the prosecution was impelled by legal
malice — an improper or a sinister motive.
(a) The conduct of the defendant was
intentional or in reckless disregard of the The award of damages arising from malicious
plaintiff; prosecution is justified if and only if it is proved
that there was a misuse or abuse of judicial
(b) The conduct was extreme and outrageous; processes. (Tan v. Valeriano, G.R. No. 185559,
August 2, 2017)
(c) There was a causal connection between the
defendant's conduct and the plaintiff's mental In the case of Manila Gas Corp. v. Court of
distress; and Appeals, the Court ruled that in order to
constitute malicious prosecution, there must be
(d) The plaintiff's mental distress was extreme proof that the prosecution was prompted by a
and severe. (MVRS Publications v. Islamic sinister design to vex and humiliate a person
Da'wah Council of the Philippines, G.R. No. that it was initiated deliberately by the
135306, January 28, 2003, 444 PHIL 230-308) defendant knowing that his charges were false
and groundless. Concededly, the mere act of
iv. Malicious prosecution submitting a case to the authorities for
prosecution does not make one liable for
Malicious prosecution is when a person malicious prosecution. (Manila Gas Corp. v. Court
directly insinuates or imputes to an innocent of Appeals, G.R. No. L-44190, October 30, 1980,
person the commission of a crime and the 188 PHIL 582-597)
accused is compelled to defend himself in court.
While generally associated with unfounded v. Defamation
criminal actions, the term has been expanded to
include unfounded civil suits instituted just to Defamation, which includes libel and slander,
vex and humiliate the defendant despite the means the offense of injuring a person's
811
Torts
character, fame or reputation through false and love affairs not only in Gasan but in Boac where
malicious statements. It is that which tends to Lolita used to teach in a barrio school.
injure reputation or to diminish the esteem,
respect, good will or confidence in the plaintiff Indeed, no other conclusion can be drawn from
or to excite derogatory feelings or opinions this chain of events than that defendant not only
about the plaintiff. It is the publication of deliberately, but through a clever strategy,
anything which is injurious to the good name or succeeded in winning the affection and love of
reputation of another or tends to bring him into Lolita to the extent of having illicit relations with
disrepute. Defamation is an invasion of her. The wrong he has caused her and her family
a relational interest since it involves the opinion is indeed immeasurable considering the fact that
which others in the community may have, or he is a married man. Verily, he has committed an
tend to have, of the plaintiff. injury to Lolita's family in a manner contrary to
morals, good customs and public policy as
It must be stressed that words which are merely contemplated in Article 21 of the new Civil
insulting are not actionable as libel or Code. (Pe v. Pe, G.R. No. L-17396, May 30, 1962,
slander per se, and mere words of general abuse 115 PHIL 186-191)
however opprobrious, ill-natured, or vexatious,
whether written or spoken, do not constitute a viii. Unjust dismissal
basis for an action for defamation in the absence
of an allegation for special damages. The fact In the case of Quisaba v. Sta. Ines-Melale Veneer &
that the language is offensive to the plaintiff Plywood Inc, the Court ruled that although the
does not make it actionable by itself. (MVRS acts complained of seemingly appear to
Publications v. Islamic Da'wah Council of the constitute "matters involving employee-
Philippines, G.R. No. 135306, January 28, 2003, employer relations" as Quisaba's dismissal was
444 PHIL 230-308; Figueroa v. People, G.R. No. the severance of a pre-existing employee-
159813, August 9, 2006, 498 SCRA 298) employer relation, his complaint is grounded not
on his dismissal per se, as in fact he does not ask
vi. Fraud or Misrepresentation for reinstatement or backwages, but on
the manner of his dismissal and the consequent
As held in Jekshewitz v. Groswald, where a effects of such dismissal.
person is induced by the fraudulent
representation of another to do an act which, in The "right" of the respondents to dismiss
consequence of such misrepresentation, he Quisaba should not be confused with
believes to be neither illegal nor immoral, but the manner in which the right was exercised and
which is in fact a criminal offense, he has a right the effects flowing therefrom. If the dismissal
of action against the person so inducing him for was done anti-socially or oppressively, as the
damages sustained by him in consequence of his complaint alleges, then the respondents violated
having done such act. (Manuel v. People, G.R. No. Article 1701 of the Civil Code which prohibits
165842, November 29, 2005, 512 PHIL 818-851) acts of oppression by either capital or labor
against the other, and Article 21, which makes a
vii. Seduction person liable for damages if he wilfully causes
loss or injury to another in a manner that is
In the case of Pe v. Pe, the circumstances under contrary to morals, good customs, or public
which defendant tried to win Lolita's affection policy, the sanction for which, by way of moral
cannot lead to any other conclusion than that it damages, is provided in Article 2219, No. 10.
was he who, thru an ingenious scheme or (Quisaba v. Sta. Ines-Melale Veneer & Plywood,
trickery, seduced the latter to the extent of Inc., G.R. No. L-38088, August 30, 1974, 157 PHIL
making her fall in love with him. This is shown 757-761)
by the fact that defendant frequented the house
of Lolita on the pretext that he wanted her to ix. Violation of rights committed by
teach him how to pray the rosary. Because of the
frequency of his visits to the latter's family who public officers
was allowed free access because he was a
collateral relative and was considered as a Under Article 27 of the NCC, any person
member of her family, the two eventually fell in suffering material or moral loss because a public
love with each other and conducted clandestine servant or employee refuses or neglects, without
In addition, under Article 32 of the same Code, An actionable negligence may be culpa
any public officer or employee, or any private contractual, culpa aquiliana, or criminal
individual, who directly or indirectly obstructs, negligence. Thus, an action for damages for
defeats, violates, or in any manner impedes or negligent act of the defendant may be based on
impairs any of the following rights and liberties contract, quasi-delict, or delict. The bases for
of another person under the said Article, shall be liability are separate and distinct from each
liable to the latter for damages. other even if only one act is involved. (Aquino,
2017)
c. Interference with Relations
Motive NOT Material
i. Family relations such as:
Motive is not material on negligence cases. The
a. Alienation of Affection; defendant may still be held liable even if the act
b. Loss of Consortium; or was meant to be a practical joke. (AQUINO, Torts
c. Criminal Conversation (Adultery). and Damages)
813
Torts
exist.
Quasi-delict is Crime is a wrong 1. Simple negligence – Failure to give proper
wrongful act against a against the State or the attention to a task expected of him or her,
private individual. public interest. signifying a disregard of a duty resulting
The quantum of proof The guilt if the accused from carelessness or indifference.
for quasi-delict is must be proved
preponderance of beyond reasonable 2. Gross negligence – Refers to negligence
evidence. doubt. characterized by the want of even slight
The sanction is either The punishment is care, or by acting or omitting to act in a
reparation or either imprisonment, situation where there is a duty to act, not
indemnification of the fine, or both. (Pineda, inadvertently but wilfully and intentionally,
injury or damage. 2019) with a conscious indifference to the
consequences, insofar as other persons may
Test of negligence be affected. It is the omission of that care
that even inattentive and thoughtless men
The test is would a prudent man, in the position never fail to give to their own property.
of the tortfeasor, foresee harm to the person (Office of the Ombudsman v. Samson De Leon,
injured as a reasonable consequence of the G.R. No. 154083, February 27, 2013)
course about to be pursued? If so, the law
imposes a duty on the actor to take precaution Circumstances to be considered in
against its mischievous results, and failure to do determining whether an act is negligent
so constitutes negligence. (Picart v. Smith, G.R.
No. L-12219, March 15, 1918; Romulo Abrogar 1. Person Exposed to the Risk – A higher
and Erlinda Abrogar v. Cosmos Bottling Company degree of diligence is required if the person
and Intergames Inc., G.R. No. 164749, March 15, involved is a child.
2017) 2. Emergency – The actor confronted with an
emergency is not to be held up to the
NOTE: The determination of negligence is a standard of conduct normally applied to an
question of foresight on the part of the actor. individual who is in no such situation.
(Phil. Hawk Corp. v. Vivian Tan Lee, G.R. No. 3. Social Value or Utility of Action – Any act
166869, February 16, 2010) subjecting an innocent person to
unnecessary risk is a negligent act if the risk
Rule when negligence shows bad faith outweighs the advantage accruing to the
actor and even to the innocent person
When negligence shows bad faith, responsibility himself.
arising from fraud is demandable in all 4. Time of the day – May affect the diligence
obligations. (NCC, Art. 1171) Furthermore, in required of the actor (NCC, Art. 1173); e.g. a
case of fraud, bad faith, malice or wanton driver is required to exercise more
attitude, the obligor shall be responsible for all prudence when driving at night.
damages which may be reasonably attributed to 5. Gravity of the Harm to be Avoided – Even
the non-performance of the obligation. (NCC, Art. if the odds that an injury will result are not
2201) high, harm may still be considered
foreseeable if the gravity of harm to be
When is negligence excused avoided is great.
6. Alternative Cause of Action – If the
GR: Negligence is excused when events that alternative presented to the actor is too
transpired were unforeseen or, which though costly, the harm that may result may still be
foreseen, were inevitable. (NCC, Art. 1174) considered unforeseeable to a reasonable
man. More so if there is no alternative
XPN: thereto.
1. In cases specified by law; 7. Place – A man who should occasion to
2. When declared by stipulation; or discharge a gun on an open and extensive
3. When the nature of the obligation requires marsh, or in a forest would be required to
the assumption of risk. use less circumspection and care, than if he
were to do the same thing in an inhabited
Degrees of negligence town, village or city. (A Selection of Cases
XPN: if the defect amounts to a real The negligence of both the plaintiff and the
disability, the standard of conduct is that of defendant are compared for the purpose of
a reasonable person under like disability, reaching an equitable apportionment of their
e.g. the standard conduct of a blind person respective liabilities for the damages caused and
becomes that of a reasonable person who is suffered by the plaintiff. (Pineda, 2009)
blind. (Francisco v. Chemical Bulk Carriers
Incorporated, G.R. No. 193577, September 7, The relative degree of negligence of the parties
2011) is considered in determining whether, and to
what degree, either should be responsible for his
Quantum of proof on negligence negligence (apportionment of damages).
The quantum of proof is preponderance of NOTE: Under the modified form, the plaintiff can
evidence. [Rules of Court, Rule 133(1)] recover only if his negligence is less than or
equals that of the defendant. Expressed in terms
Burden of proof of percentages, a plaintiff who is charged with
80% of the total negligence can recover only
GR: Plaintiff alleging damage due to negligent 20% of his damages. (De Leon, 2012)
acts in his complaint has the burden of proving
such negligence. GOOD FATHER OF A FAMILY OR
REASONABLY PRUDENT MAN
XPN: When the rules or the law provide for
cases when negligence is presumed.
The general standard of test is Bonus Pater
Familias or that of a good father of a family. If the
Disputable presumptions of negligence
law or contract does not state the diligence
which is to be observed in the performance, that
1. Motor vehicle mishaps – a driver is presumed
which is expected of a good father of a family
negligent if he:
shall be required. [NCC, Art. 1173 (2)]
Concept of a good father of the family (pater
a. Was found guilty of reckless driving or
familias)
violating traffic regulations at least
twice within the preceding two months
He is not and is not supposed to be omniscient of
(NCC, Art. 2184); or
the future; rather, he is one who takes
b. Was violating any traffic regulation at
precautions against any harm when there is
the time of the mishap. (NCC, Art. 2185)
something before him to suggest or warn him of
the danger or to foresee it. (Picart v. Smith, G.R.
2. Possession of dangerous weapons or
No. L-12219, March 15, 1918; Al del Cruz v. Capt.
815
Torts
Renato Octaviano and Wilma Octaviano, G.R. No. Application of standard of diligence to
219649, July 26, 2017) children
The law requires a man to possess ordinary GR: The action of a child will not necessarily be
capacity to avoid harming his neighbors unless a judged according to the standard of an adult.
clear and manifest incapacity is shown; but it
does not generally hold him liable for XPN: If the minor is mature enough to
unintentional injury unless, possessing such understand and appreciate the nature and
capacity, he might ought to have foreseen the consequences of his actions. In such a case, he
danger. (Corliss v. Manila Railroad Co., G.R. No. L- shall be considered to have been negligent.
21291, March 28, 1969; Al del Cruz v. Capt.
Renato Octaviano and Wilma Octaviano, G.R. No. NOTE: The age of absolute irresponsibility is 15
219649, July 26, 2017) years old and below. (Juvenile Justice and
Welfare Act of 2006, RA 9344)
Rule in case of fault or negligence of an
obligor Nevertheless, absence of negligence does not
absolutely excuse the child from liability, as his
1. Art. 1173, NCC - Provides that the fault or properties, if any, can be held subsidiarily liable.
negligence of the obligor consists in the Nor will such absence of negligence excuse the
omission of that diligence which is required child’s parent from vicarious liability.
by the nature of the obligation and
corresponds with the circumstances of the “Diligence before the fact”
persons, of the time and of the place. When
negligence shows bad faith, the provisions of The conduct that should be examined in
Articles 1171 and 2201, paragraph 2 of the negligence cases is prior conduct or conduct
NCC shall apply. prior to the injury that resulted or, in proper
cases, the aggravation thereof.
NOTE: Under Art. 1171 of the NCC, responsibility
arising from fraud is demandable in all STANDARD OF CARE
obligations. Any waiver of an action for future
fraud is void. STANDARD OF CONDUCT or
DEGREE OF CARE REQUIRED
2. Art. 2201, NCC - In contracts and quasi- In General
contracts, the damages for which the obligor If the law or contract does not state the diligence
who acted in good faith is liable shall be which is to be observed in the performance, that
those that are the natural and probable which is expected of a good father of a family
consequences of the breach of the shall be required. [Article 1173(2)]
obligation, and which the parties have
foreseen or could have reasonably foreseen NOTE: Diligence of a good father of a family -
at the time the obligation was constituted. bonus pater familias - A reasonable man is
deemed to have knowledge of the facts that a
NOTE: In case of fraud, bad faith, malice or man should be expected to know based on
wanton attitude, the obligor shall be responsible ordinary human experience. (PNR v. IAC, G.R. No.
for all damages which may be reasonably 7054, January 22, 1993; Philippine National
attributed to the non-performance of the Railways and Virgilio Borja v. CA, et. al., G.R. No.
obligation. (Ibid.) 157658, October 15, 2007)
Persons who have Physical Disability
Concept of Good Faith
GR: A weak or accident prone person must come
Good faith refers to the state of the mind which
up to the standard of a reasonable man,
is manifested by the acts of the individual
otherwise, he will be considered as negligent.
concerned. It consists of the intention to abstain
from taking an unconscionable and
XPN: If the defect amounts to a real disability,
unscrupulous advantage of another. (DBP v. CA,
the standard of conduct is that of a reasonable
et al., G.R. No. 137916, December 8, 2004)
person under like disability.
Experts and Professionals
NOTE: This rule does not apply solely or Employees are bound to exercise due care in the
exclusively to professionals who have performance of their functions for the
undergone formal education. employers. Liability may be based on negligence
committed while in the performance of the
XPN: When the activity, by its very nature, duties of the employee. (Araneta v. De Joya, G.R.
requires the exercise of a higher degree of No. L-25172, May 24, 1974)
diligence
NOTE: The existence of the contract constitutes
e.g. Banks; Common carriers no bar to the commission of torts by one against
the other and the consequent recovery of
Insane Persons damages.
Owners, Proprietors and
The insanity of a person does not excuse him or Possessors of Property
his guardian from liability based on quasi-delict
(NCC, Arts. 2180 & 2182). This means that the act GR: The owner has no duty to take reasonable
or omission of the person suffering from mental care towards a trespasser for his protection or
defect will be judged using the standard test of a even to protect him from concealed danger.
reasonable man.
XPNs:
The bases for holding a permanently insane
person liable for his torts are as follows: 1. Visitors – Owners of buildings or premises
owe a duty of care to visitors.
Where one of two innocent persons must suffer a
loss it should be borne by the one who 2. Tolerated Possession - Owner is still liable if
occasioned it; the plaintiff is inside his property by
tolerance or by implied permission.
To induce those interested in the estate of the However, common carriers may be held
insane person (if he has one) to restrain and liable for negligence to persons who stay in
control him; and their premises even if they are not
passengers.
The fear that an insanity defense would lead to
false claims of insanity to avoid liability. 3. Doctrine of Attractive Nuisance- One who
(Breunig v. American Family Insurance Co., maintains on his premises dangerous
173 N.W. 2d 619, February 3, 1970) instrumentalities or appliances of a
character likely to attract children in play,
NOTE: Under the RPC, an insane person is and who fails to exercise ordinary care to
exempt from criminal liability. However, by prevent them from playing therefrom, is
express provision of law, there may be civil liable to a child of tender years who is
liability even when the actor is exempt from injured thereby, even if the child is a
criminal liability. An insane person is still liable trespasser.
with his property for the consequences of his
acts, though they performed unwittingly. (US v. 4. State of Necessity – A situation of present
Baggay, Jr. G.R. No. 6659, September 1, 1911) danger to legally protected interests, in
which there is no other remedy than the
Employers injuring of another’s also legally protected
Employers are required to exercise that degree interest.
of care as mandated by the Labor Code or other
mandatory provisions for proper maintenance of Doctors
the workplace or adequate facilities to ensure
the safety of the employees. If a General Practitioner – Ordinary care and
diligence in the application of his knowledge and
817
Torts
skill in the practice of his profession. ordinary care of his concerns. (Rules of Court,
Rule 131, Sec. 3) There are however exceptions
If a Specialist – The legal duty to the patient is when negligence is presumed:
generally considered to be that of an average
physician. 1. Article 2184, NCC - It is disputably presumed
Lawyers that a driver was negligent, if he had been
found guilty of reckless driving or violating
An attorney is bound to exercise only a traffic regulations at least twice within the
reasonable degree of care and skill, having next preceding two months.
reference to the business he undertakes to do.
(Adarne v. Aldaba, A.M. No. 801, June 27, 1978; Air 2. Article 2185, NCC - Unless there is proof to
Philippines Corporation v. International Business the contrary, it is presumed that a person
Aviation Services Phils., Inc., G.R. No. 151963, driving a motor vehicle has been negligent if
September 9, 2004) at the time of the mishap, he was violating
any traffic regulation.
NOTE: In the Philippines, the courts do not use NOTE: Proof of possession of dangerous
weapons or substances is required.
any formula in determining if the defendant
committed a negligent act or omission. What
4.. Captain of the ship doctrine - A surgeon is
appears to be the norm is to give negligence a
likened to a captain of the ship, such that it
common sense, intuitive interpretation. (Aquino,
is his duty to control everything going on in
2005)
the operating room. The surgeon in charge
of an operation is liable for the negligence of
In the field of negligence, interests are to be
his assistants during the time when those
balanced only in the sense that the purposes of
assistants are under the surgeon’s control.
the actor, the nature of his act and the harm that
(Cantre v. Go, G.R. No. 160889, April 27, 2007)
may result from action or inaction are elements
to be considered. Some may not be considered
5. Article 1756, NCC - In case of death or
depending on the circumstances.
injuries of passengers, common carriers are
presumed to have been at fault or acted
PRESUMPTION OF NEGLIGENCE
negligently, unless they prove that they
(2000, 2009 BAR) observed extraordinary diligence prescribed
in Articles 1733 and 1755 of the NCC.
A person is generally presumed to have taken
819
Torts
safe and effective installation of its facilities. By P2,500,000.00 as indemnity for lost income.
installing its posts and wires haphazardly, It argued that Orient Freight's mishandling of
without regard to how its wires could come in the situation caused the termination of
contact with a previously installed signage, Keihin-Everett's contract with Matsushita.
VECO failed to act in keeping with the diligence When Orient Freight refused to pay, Keihin-
required of it. Had it not been for the transfer, Everett filed a complaint for damages.
VECO's wires would not have touched M.
Lhuillier's signage. (Visayan Electric Company, Was Orient Freight negligent for failing to
Inc. V. Emilio G. Alfeche, Gilbert Alfeche, disclose the facts surrounding the hijacking
Emmanuel Manugas, And M. Lhuillier Pawnshop incident, which led to the termination of the
and Jewelry, G.R. No. 209910, November 29, 2017, Trucking Service Agreement between Keihin-
as penned by J. Leonen) Everett and Matsushita?
Q: On October 16, 2001, Keihin-Everett A: YES. Orient Freight's conduct showed its
entered into a Trucking Service Agreement negligent handling of the investigation and its
with Matsushita. These services were failure to timely disclose the facts of the incident
subcontracted by Keihin-Everett to Orient to Keihin-Everret and Matsushita. Orient Freight
Freight. In April 2002, Matsushita called was clearly negligent in failing to investigate
Keihin-Everett's Sales Manager, Salud Rizada, properly the incident and make a factual report
about a column in the April 19, 2002 issue of to Keihin and Matsushita. Orient Freight failed to
the tabloid newspaper Tempo. This news exercise due diligence in disclosing the true facts
narrated the April 17, 2002 interception by of the incident to plaintiff Keihin and Matsushita.
Caloocan City police of a stolen truck filled As a result, Keihin suffered income losses by
with shipment of video monitors and CCTV reason of Matsushita's cancellation of their
systems owned by Matsushita. When contract which primarily was caused by the
contacted by Keihin-Everett about this news, negligence of Orient Freight. (Orient Freight
Orient Freight stated that the tabloid report International, Inc. V. Keihin-Everett Forwarding
had blown the incident out of proportion. Company, Inc., G.R. No. 191937, August 09, 2017,
They claimed that the incident simply as penned by J. Leonen)
involved the breakdown and towing of the
truck. However, when the shipment arrived TORT CONCEPTS AND DOCTRINES
in Yokohama, Japan on May 8, 2002, it was
discovered that 10 pallets of the shipment's RES IPSA LOQUITUR
218 cartons, worth US$34,226.14, were
missing. Literally, res ipsa loquitur means "the thing
speaks for itself." It is the rule that the fact of the
Keihin-Everett independently investigated occurrence of an injury, taken with the
the incident. During its investigation, it was surrounding circumstances, may permit an
found out that during the incident, Cudas told inference or raise a presumption of negligence,
Aquino to report engine trouble to Orient or make out a plaintiff’s prima facie case, and
Freight and Aquino also later on reported present a question of fact for defendant to meet
that the truck was missing. When the truck with an explanation. (Professional Services Inc. v.
was intercepted by the police, Cudas escaped. Agana, G.R. No. 126297, January 31, 2007)
When confronted with Keihin-Everett's
findings, Orient Freight wrote back to admit However, res ipsa loquitur is not a rule of
that its previous report was erroneous and substantive law and, as such, does not create nor
that pilferage was apparently proven. In a constitute an independent or separate ground of
letter, Matsushita terminated its In-House liability. Instead, it is considered as merely
Brokerage Service Agreement with Keihin- evidentiary or in the nature of a procedural rule.
Everett. Matsushita cited loss of confidence (Professional Services v. Agana, G.R. No. 126297,
for terminating the contract, stating that January 31, 2007)
Keihin-Everett's way of handling the incident
and its nondisclosure of this incident's NOTE: It is also known as the “Doctrine of
relevant facts "amounted to fraud and Common Knowledge.”
signified an utter disregard of the rule of
law." Keihin-Everett demanded Requisites for the application of the doctrine
All that the plaintiff must prove is the accident 1. Plaintiff is placed in danger by his own
itself; no other proof of negligence is required negligent acts and he is unable to get out
beyond the accident itself. It relates to the fact of from such situation by any means;
an injury that sets out an inference to the cause 2. Defendant knows that the plaintiff is in
thereof or establishes the plaintiff’s prima facie danger and knows or should have known
case. The doctrine rests on inference and not on that the plaintiff was unable to extricate
presumption. (Perla Compania de Seguros, Inc. v. himself therefrom; and
Sps. Sarangaya, G.R. No. 147746, October 25, 3. Defendant had the last clear chance or
2005) opportunity to avoid the accident through
the exercise of ordinary care but failed to do
Three uses and applications of the doctrine so, and the accident occurred as a proximate
result of such failure. (Pineda, 2009)
1. In medical negligence cases;
2. In cases where the exercise of judicial Instances when doctrine not applicable
discretion is abused; and
3. In practical instances 1. When the injury or accident cannot be
avoided by the application of all means at
Some cases where doctrine was held hand after the peril has been discovered
inapplicable (Pantranco North Expressway v. Baesa, G.R.
Nos. 79050-51, November 14, 1989; Cresencia
1. Where there is direct proof of absence or Achevara, Alfredo Achevara, and Benigno
presence of negligence; Valdez v. Alvira Ramos, ohn Arnel Ramos, and
2. Where other causes, including the conduct Khristine amille Ramos, G.R. No. 175172,
of the plaintiff and third persons, are not September 29, 2009);
sufficiently eliminated by the evidence; and 2. If the defendant’s negligence is a concurrent
3. When one or more requisites are absent. cause and which was still in operation up to
(Aquino, 2005) the time the injury was inflicted;
3. Where the plaintiff, a passenger, filed an
DOCTRINE OF LAST CLEAR CHANCE action against a carrier based on contract
(DOCTRINE OF DISCOVERED PERIL or (Bustamante v. CA, G.R. No. 89880, February
821
Torts
6, 1991); total or partial collapse, if it should be due to the
4. If the actor, though negligent, was not aware lack of necessary repairs. (NCC, Art. 2190) With
of the danger or risk brought about by the respect to the defense of last clear chance, the
prior fraud or negligent act; same is not tenable as enunciated by the
5. In case of a collapse of a building or Supreme Court in De Roy v. CA (L-80718, January
structure (De Roy v. CA, G.R. No. 80718, 29, 1988), where it held that the doctrine of last
January 29, 1988); clear chance is not applicable in instances
6. Where both parties are negligent (Philippine covered by Art 2190 of the Civil Code. Further, in
National Railways v. Brunty, G.R. No. 169891, Phoenix Construction, Inc. v. IAC (G.R. L-65295,
November 2, 2006); March 10, 1987) the Supreme Court held that the
7. In case of collision, it applies in a suit role of the common law "last clear chance"
between the owners and drivers of colliding doctrine in relation to Art. 2179 of the Civil Code
vehicles and not where a passenger is merely to mitigate damages within the context
demands responsibility from the carrier to of contributory negligence.
enforce its contractual obligations. (Tiu v.
Arriesgado, G.R. No. 138060, September 1, DAMNUM ABSQUE INJURIA
2004) (DAMAGE WITHOUT PREJUDICE)
NOTE: There is a different rule in case of
Damnum absque injuria – The proper exercise
collision of vessels. The doctrine of last clear
of a lawful right cannot constitute a legal wrong
chance in tort is not applicable to collisions of
for which an action will lie, although the act may
vessels as sea under the Code of Commerce, and
result in damage to another, for no legal right
the case is deemed as if the collision is imputable
has been invaded. One may use any lawful
to both vessels; thus, each one of the vessels
means to accomplish a lawful purpose and
shall suffer her own damage, and both shall be
though the means adopted may cause damage to
solidarily liable for the damages occasioned to
another, no cause of action arises in the latter’s
their cargoes. (Arts. 827 & 828, Code of
favor. Any injury or damage occasioned thereby
Commerce; C.B. Williams v. Teodoro Yangco, G.R.
is damnum absque injuria. The courts can give
No. L-8325, March 10, 1914; Gargonio de Sarasola
no redress for hardship to an individual
v. Yu Biao Sontua, G.R. No. 22630. January 31,
resulting from action reasonably calculated to
1925)
achieve a lawful end by lawful means. (The
Orchard Golf & Country Club, Inc., et al. v. Yu and
Q: Mr. and Mrs. R own a burned-out building,
Yuhico, G.R. No. 191033, January 11, 2016)
the firewall of which collapsed and destroyed
the shop occupied by the family of Mr. and
NOTE: When the conjunction of damage and
Mrs. S, which resulted in injuries to said
wrong is wanting there is no damnum absque
couple and the death of their daughter. Mr.
injuria. (Lagon v. CA, G.R. No. 119107, March 18,
and Mrs. S had been warned by Mr. & Mrs. R
2005)
to vacate the shop in view of its proximity to
the weakened wall but the former failed to
The principle does not apply when the exercise
do so. Mr. & Mrs. S filed against Mr, and Mrs.
of this right is suspended or extinguished
R an action for recovery of damages the
pursuant to a court order. (Amonoy v. Gutierrez,
former suffered as a result of the collapse of
651 SCRA 731, 2001)
the firewall. In their defense, Mr. and Mrs. R
relied on the doctrine of last clear chance,
Liability without Fault different from
alleging that Mr. and Mrs. S had the last clear
Damnum Absque Injuria
chance of avoiding the accident, had they
heeded the former’s warning to vacate the
Liability without Fault includes:
shop, and therefore Mr. and Mrs. R’s prior
negligence should be disregarded. If you
1. Strict Liability – there is strict liability if one
were the judge, how would you decide the
is made independent of fault, negligence or
case? (1990 BAR)
intent after establishing certain facts
specified by law. It includes liability for
A: I would decide in favor of Mr. & Mrs. S. The
conversion and for injuries caused by
proprietor of a building or structure is
animals, ultra-hazardous activities and
responsible for the damages resulting from its
nuisance.
Mistakes committed by public officers are not The action for enforcement of civil liability based
actionable absent any clear showing of malice or on culpa criminal Sec. 1 of Rule 111 of the ROC
gross negligence amounting to bad Faith. deems simultaneously instituted with the
(Farolan v. Solmac Marketing Corp., G.R. No. criminal action, unless expressly waived or
83589, March 13, 1991; Tomas Joson III v. reserved for a separate application by the
Commission on Audit, G.R. No. 223762, November offended party. Art. 2177 of the NCC, however
7, 2017) precludes recovery of damages twice for the
same negligent act or omission. (Padua v. Robles,
Extent of recovery of damages G.R. No. L-40486, August 29, 1975)
1. Recovery completely barred - When the NOTE: What is barred by law is the double
plaintiff’s own negligence was the recovery of damages, not the availment double
immediate and proximate cause of his remedies.
injury, he cannot recover damages. (NCC,
Art. 2179)
DOUBLE RECOVERY
823
Damages
DAMAGES violation of a legal duty.
According to purpose
825
Damages
Special/Ordinary
827
Damages
available; or
XPN: Loss need not be proved in the following
cases: 2. The deceased is employed as a daily wage
worker earning less than the minimum wage
1. Liquidated damages have been previously under current labor laws. (Philippine Hawk
agreed upon (NCC, Art. 2226); Corporation v. Vivian Tan Lee, G.R. No.
166869, February 16, 2010)
NOTE: Liquidated damages take the place of If amount admitted by a party
actual damages except when additional
damages are incurred. Even if there are no receipts and yet the amount
claimed is admitted by a party, it should be
2. Forfeiture of bonds in favor of the granted. (People v. Abolidor, G.R. No. 147231,
government for the purpose of promoting February 18, 2004)
public interest or policy (Far Eastern Surety
and Insurance Co. v. CA, G.R. No. L-12019, Docketing fees must be based on allegation of
October 16, 1958); actual damages
3. Loss is presumed (Manzanares v. Moreta,
G.R. No. L-12306, October 22, 1918); The amount of damages claimed must be alleged
4. When the penalty clause is agreed upon in not only in the body of the complaint, petition or
the contract between the parties (NCC, Art. answer but also in the prayer portion thereof.
1226); and (Siapno v. Manalo, G.R. No. 132260, August 30,
5. When death is caused within the 2005)
contemplation of Art. 2206. (Pineda, 2009)
“Such other relief as this Honorable Court
Civil liability ex delicto v. actual or may deem reasonable”
compensatory damages distinguished
The prayer for “such other relief as this
Civil Indemnity Actual or Compensatory Honorable Court may deem reasonable” may
Ex Delicto Damages include actual damages although not alleged in
To be recoverable must the answer, if and when they are proved. (Heirs
additionally be established of Basilisa Justiva v. Gustilo, G.R. No. L-16396,
Can be awarded January 31, 1963)
with reasonable degree of
without need of
certainty.
further proof NOTE: It is broad enough to comprehend an
than the fact of application as well for nominal damages and
(Metro Rail Transit Dev’t.
commission of even exemplary damages.
Corp. v. Gammon Phils., Inc.,
the felony.
G.R. No. 200401, January 17,
2018) Article 21 of NCC cannot be used as a basis for
award of actual damages
NOTE: Rule applies to civil and criminal cases.
(People v. Abaño y Cañares, G.R. No. 188323, Article 21 of the NCC cannot be used as a basis
February 21, 2011) for award of actual damages when there is a pre-
existing contractual relation between the
GR: Documentary evidence should be presented parties. (ACI Philippines, Inc. v. Coquia, G.R. No.
to substantiate the claim for damages for loss of 174466, July 14, 2008)
earning capacity.
Abrazaldo Doctrine
XPN: Damages for loss of earning capacity may
be awarded despite the absence of documentary Temperate damages may be awarded where the
evidence when: amount of the actual damages, the heirs are
entitled to, cannot be shown. Such temperate
1. The deceased is self-employed and earning damages, taking into account current
less than the minimum wage under current jurisprudence fixing the indemnity for death at
labor laws, in which case, judicial notice may P50,000, should be one half thereof, which is
be taken of the fact that in the deceased's P25,000. (People v. Abrazaldo, G.R. No. 124392,
line of work no documentary evidence is February 7, 2003)
To be compensated for loss of earning capacity, Life expectancy should not be based on the
it is not necessary that the victim be gainfully retirement age of government employees, which
employed at the time of the injury or death. is pegged at 65. In calculating the life expectancy
Actual damages are awarded not for the loss of of an individual for the purpose of determining
earnings but for the loss of capacity to earn loss of earning capacity under Art. 2206 (1), it is
money. (People v. Sanchez, G.R. Nos. 121039-45, assumed that the deceased would have earned
October 18, 2001) income even after retirement from a particular
job. (Smith Bell Dodwell Shipping Agency Corp. v.
Determination of amount of damages Borja, G.R. No. 143008, June 10, 2002)
recoverable
Heirs cannot claim as damages the full
Much is left to the discretion of the court amount of earnings of the deceased
considering the moral and material damages
involved. There can be no exact or uniform rule Said damages consist, not of the full amount of
for measuring the value of a human life. (Villa his earnings, but of the support they received or
Rey Transit, Inc., v. CA, G.R. No. L-25499, February would have received from him had he not died in
18, 1970) consequence of the negligence of the bus’s agent.
Stated otherwise, the amount recoverable is not
The life expectancy of the deceased or of the loss of the entire earning, but rather the loss of
beneficiary, whichever is shorter, is an that portion of the earnings which the
important factor. Other factors that are usually beneficiary would have received. In other words,
considered are: only net earnings, not gross earning, are to be
considered.
1. Pecuniary loss to plaintiff or beneficiary;
2. Loss of support; In fixing the amount of that support, the
3. Loss of service; "necessary expenses of his own living" should be
4. Loss of society; deducted from his earnings. Earning capacity, as
5. Mental suffering of beneficiaries; and an element of damages to one's estate for his
6. Medical and funeral expenses. (Ibid.) death by wrongful act, is necessarily his net
earning capacity or his capacity to acquire
NOTE: The formula that has gained acceptance money, less the necessary expense for his own
over time has limited recovery to net earning living. (Villa Rey Transit, Inc. v. CA, et al., G.R. No.
capacity. The premise is obviously that net L-25499, February 18, 1970; People of the
earning capacity is the person’s capacity to Philippines v. Jorie Wahiman y Rayos, G.R. No.
acquire money, less the necessary expense for 200942, June 16, 2015)
his own living. (Philtranco Service Enterprises v.
Felix Paras and Inland Trailways Inc., G.R. No. Medical Expenses are in the nature of actual
161909, April 25, 2012) damages
829
Damages
basis of the doctor’s prescription alone. (People a lawyer for the legal the court to be paid by
v. Enguito, G.R. No. 128812, February 28, 2000) services rendered to a the losing to the
client who has prevailing party in
Adjustment fees do not constitute actual engaged him. litigation.
damages Basis
The fact of In cases authorized by
Adjustment fees and expense of drivers in the employment of the law.
recovery of cargo lost at sea done voluntarily, lawyer by the client.
though unsuccessfully, does not constitute actual To whom payable
damages. (Schmitz Transport & Brokerage Corp. Lawyer Client
v. Transport Venture, Inc., G.R. No. 150255, April
22, 2005) Recovery of attorney’s fees as actual damages
(1991, 1994, 2002 BAR)
Injury to business standing and commercial
credit of plaintiff GR: Attorney’s fees cannot be recovered as
actual damages.
Compensatory damages may be awarded in the
concept of temperate damages for injury to XPNs: (SWISS- MUD- ERC)
business reputation or business standing, loss of 1. Stipulation between parties;
goodwill, and loss of customers who shifted their 2. Recovery of Wages of household helpers,
patronage to competitors. (Article 2205; Coca – laborers and skilled workers;
Cola Bottlers Philippines Inc. v. Sps. Jose Bernardo 3. Actions for Indemnity under workmen's
and Lilibeth Bernardo, doing business under the compensation and employer liability laws;
name and style of “Jolly Beverage Enterprises,” 4. Legal Support actions;
G.R. No. 190667, November 7, 2016) 5. Separate civil action to recover civil liability
arising from crime;
ATTORNEY’S FEES AND 6. Malicious prosecution;
EXPENSES OF LITIGATION 7. Clearly Unfounded civil action or proceeding
against plaintiff;
Two concepts of Attorney’s fees 8. When Double judicial costs are awarded;
9. When Exemplary damages are awarded;
1. Ordinary – reasonable compensation paid to 10. Defendant acted in gross & evident bad faith
a lawyer by this client for the legal services in Refusing to satisfy plaintiff's just &
he has rendered to the latter. demandable claim; and
11. When defendant's act or omission
2. Extraordinary – awarded by the court to the Compelled plaintiff to litigate with third
successful litigant to be paid by the losing persons or incur expenses to protect his
party as indemnity for damages. (Aquino v. interest.
Casabar, G.R. No. 191470, January 26, 2015)
They are actual damages due to the plaintiff. NOTE: It was held that, in respect of attorney’s
fees, where a claim therefore arises out of the
Payable not only to the lawyer but to the filing of the complaint, they too should be
client, unless they have agreed that the considered as in the nature of a compulsory
award shall pertain to the lawyer as counterclaim. They should be pleaded or prayed
additional compensation or as part thereof. for in the answer to the complaint in order to be
(Benedicto v. Villaflores, G.R. No. 185020, recoverable, otherwise, they would be barred.
October 6, 2010) (Tiu Po v. Bautista, G.R. No. L-55514, March 17,
1981; Lafarge Cement Philippines, Inc., et. al. v.
NOTE: In all cases, the attorney’s fees and Continental Cement Corporation, et. al., G.R. No.
expenses of litigation must be reasonable. 155173, November 23, 2004)
(NCC, Art. 2208) Furthermore, moral damages and attorney’s fees
cannot be consolidated for they are different in
ORDINARY EXTRAORDINARY nature and each must be separately determined.
Nature (Philippine Veterans Bank v. NLRC, G.R. No.
The reasonable An indemnity for 130439, October 26, 1999) Attorney’s fees are
compensation paid to damages ordered by recoverable only in the concept of actual not
831
Damages
NOTE: A person is entitled to the physical Lorcon Luzon's ramming into it. National Power
integrity of his or her body; if that integrity Corporation suffered pecuniary loss, albeit its
is violated or diminished, actual injury is precise extent or amount had not been
suffered for which actual or compensatory established. Accordingly, the Court of Appeals'
damages are due and assessable. (Gatchalian conclusion that National Power Corporation is
v. Delim G.R. No. L-56487, October 21, 1991) entitled to temperate damages should be
sustained. (Lorenzo Shipping Corporation v.
Rape - For simple rape or qualified rape, National Power Corporation, G.R. No. 181683,
where the penalty imposed is death but October 07, 2015, as penned by J. Leonen)
reduced to reclusion perpetua because
of RA 9346, the civil indemnity is Mitigation of Actual Damages
₱100,000.00. (People v. Jugueta, G.R. No.
202124, April 5, 2016) Actual damages can be mitigated in the following
cases:
NOTE: Civil indemnity is mandatory upon
the finding of the fact of rape; it is distinct 1. For Contracts:
from and should not be denominated as
moral damages which are based on different a. Violation of terms of the contract by the
jural foundations and assessed by the court plaintiff himself;
in the exercise of sound discretion. (People v. b. Enjoyment of benefit under the contract
Tabayan, G.R. No. 190620, June 18, 2014) by the plaintiff himself;
c. Defendant acted upon advice of counsel
3. Death – P100,000 by way of civil indemnity in cases where the exemplary damages
ex delicto. (People v. Jugueta, G.R. No. 202124, are to be awarded such as under
April 5, 2016) Articles 2230, 2231 and 2232;
4. Physical Injuries – Civil indemnity of d. Defendant has done his best to lessen
P50,000.00 for the victims who suffered the plaintiff’s injury or loss.
mortal/fatal wounds and could have died if
not for a timely medical intervention, and a NOTE: Award of compensatory damages for
civil indemnity of P25,000 for the victims breach of contract may be executed pending
who suffered non-mortal/non-fatal injuries. appeal, but not the moral and exemplary
(ibid.) damages which must await the final
determination of the main cases. (Radio
Q: MV Lorcon Luzon, a commercial vessel Communication of the Philippines, Inc. v.
owned by Lorenzo Shipping, hit and rammed Lantin, G.R. No. L-59311, January 31, 1985;
National Power Corporation’s Power Barge Lucita Tiorosio-Espinosa v. Hon. Hofileña-
104. NPC submitted pieces of evidence to the Europa, et. al., G.R. No. 185746, January 20,
court as basis for actual damages it has 2016)
suffered. However, Lorenzo Shipping pointed
out that these pieces of evidence fall short of 2. For Quasi-contracts:
the standard required for proving pecuniary
loss, which shall be the basis for awarding a. In cases where exemplary damages are
actual damages. The CA awarded temperate to be awarded such as in Article 2232 of
damages to NPC in lieu of actual damages as the NCC;
the amount of damages was not proven by b. Defendant has done his best to lessen
NPC. Is Lorenzo Shipping liable for actual the plaintiff’s injury or loss.
damages?
3. For Quasi-delicts:
A: NO. Article 2199 of the Civil Code spells out
the basic requirement that compensation by way a. That the loss would have resulted in any
of actual damages is awarded only to the extent event because of the negligence or
that pecuniary loss is proven. NPC failed to omission of another, and where such
establish the precise amount of pecuniary loss it negligence or omission is the immediate
suffered. Nevertheless, it remains that Power and proximate cause of the damage or
Barge 104 sustained damage — which may be injury;
reckoned financially — as a result of the MV b. Defendant has done his best to lessen
1. Loss of the earning capacity of the deceased, A) Whether or not quasi-delict was
and the indemnity shall be paid to the heirs committed?
of the latter; such indemnity shall in every
case be assessed and awarded by the court, B) Whether or not loss of earning capacity
unless the deceased on account of should be awarded to Vivian, wife of Rodolfo?
permanent physical disability not caused by
the defendant, had no earning capacity at A:
the time of his death;
A) YES. The requisites for quasi-delict are: (1)
2. If the deceased was obliged to give support damages to the plaintiff; (2) negligence, by act or
according to the provisions of Article 291, omission, of which defendant, or some person
the recipient who is not an heir called to the for whose-acts he must respond, was guilty; and
decedent's inheritance by the law of testate (3) the connection of cause and effect between
or intestate succession, may demand such negligence and the damages. Caballes was
support from the person causing the death, grossly negligent in allowing Aparra to drive the
for a period not exceeding five years, the truck despite being an inexperienced driver.
exact duration to be fixed by the court; Aparra's inexperience caused the accident that
led to the deaths of Rodolfo and Monalisa. It is
NOTE: The article only mentioned heir. undisputed that the deaths of Vivian's husband
Consequently, it cannot speak of devisees and daughter caused damage to her. Clearly, the
and legatees who are receiving support from requisites for a quasi-delict are present in this
the deceased. case.
3. The spouse, legitimate and illegitimate B) YES. Article 2206 provides that the amount
descendants and ascendants of the deceased of damages for death caused by a crime or
may demand moral damages for mental quasi-delict shall be at least Three thousand
anguish by reason of the death of the pesos [P50,000.00], even though there may have
deceased. (1992, 1993, 2007 BAR) been mitigating circumstances. In addition, the
defendant shall be liable, among others, for
NOTE: In case of death caused by quasi-delict, the loss of the earning capacity of the
the brother of the deceased is not entitled to the deceased, and the indemnity shall be paid to the
award of moral damages based on Article 2206 heirs of the latter; such indemnity shall in every
of the New Civil Code. (Sulpicio Lines Inc. v. case be assessed and awarded by the court,
Curso, G.R. No. 157009, March 17, 2010) unless the deceased on account of permanent
833
Damages
physical disability not caused by the defendant, complaint for damages. Assuming that the
had no earning capacity at the time of his death. case will prosper, what kind of damages is
The indemnity for the deceased's lost earning she entitled to?
capacity is meant to compensate the heirs for the
income they would have received had the A: Ayson is entitled to recover moral and
deceased continued to live. (Vivian B. Torreon exemplary damages. Moral damages are
and Felomina F. Abellana v. Generoso Aparra, Jr., designed to compensate and alleviate the
Felix Caballes, and Carmelo Simolde, G.R. No. physical suffering, mental anguish, fright, serious
188493, December 13, 2017, as penned by J. anxiety, besmirched reputation, wounded
Leonen) feelings, moral shock, social humiliation, and
similar harm unjustly caused to a person.
MORAL DAMAGES Exemplary damages may be imposed by way of
example or correction for public good if the
It includes physical suffering, mental anguish, guilty party acted in a wanton, fraudulent,
fright, serious anxiety, besmirched reputation, reckless, oppressive or malevolent manner.
wounded feelings, moral shock, social
humiliation, and similar injury. (NCC, Art. 2217) Here, Ayson can recover moral damages as she
was made to suffer sleepless nights and mental
Although incapable of pecuniary computation, anguish because her right as the owner of the
moral damages, nevertheless, must somehow be subject lot was violated by Fil-Estate in
proportional to and in approximation of the constructing its golf course in the latter's
suffering inflicted. Such damages, to be property. She is also entitled to exemplary
recoverable, must be the proximate result of a damages since despite the notice to vacate, the
wrongful act or omission, the factual basis for latter still proceeded to construct its golf course.
which is satisfactorily established by the (Rosalie Sy Ayson v. Fil-Estate Properties, Inc.
aggrieved party. (Expertravel & Tours, Inc. v. et.al., G.R. No. 223254, December 1, 2016)
Court of Appeals, G.R. No. 152392, May 26, 2005)
NOTE: Moral damages apply both to natural and
It is awarded to enable the injured party to juridical persons. Moral damages are generally
obtain means, diversions or amusement that will not awarded in favor of a juridical person, unless
serve to alleviate the moral suffering he has it enjoys a good reputation that was debased by
undergone by reason of the defendant’s culpable the offending party resulting in social
action. (Prudenciado v. Alliance Transport humiliation. (ABS-CBN v. CA, 301 SCRA 589)
System, Inc., G.R. No. L-33836, March 16, 1987;
Fernando v. Northwest Airlines, G.R. No. 212038, GR: A judicial person is generally not entitled to
February 8, 2017) moral damages because, unlike a natural person,
it cannot experience physical suffering or such
NOTE: A case of simple negligence does not sentiments as wounded feelings, serious anxiety,
justify an award of moral damages. Such is metal anguish or moral shock.
proper only in cases of gross negligence
amounting to bad faith. (Villanueva v. Salvador, XPN: A corporation may have a good reputation
G.R. No. 139436, January 25, 2006) which, if besmirched, may also be a ground for
the award of moral damages. (Mambulao Lumber
Q: Rosalie Sy Ayson discovered that the Fil- Co. v. PNB, et al., G.R. No. L-22973, January 30,
Estate and Fairways illegally entered into her 1968; Herman Crystal, et. al. v. BPI, G.R. No.
property when it constructed its golf course. 172428, November 28, 2008)
Despite receipt of a notice to vacate said
property, the latter still continued to NOTE: In cases of libel, slander, or any other
encroach the subject land. On the other hand, form of defamation under item 7 of Article 2219
Fil-Estate and Fairways contend that it was in (NCC):
good faith in constructing the golf course. It
contended that a certain Villanueva, the This provision expressly authorizes the recovery
former owner of the subject land, gave of moral damages in cases of libel, slander or any
assurances that Ayson will agree to a land other form of defamation. Article 2219(7) does
swap which will be mutually beneficial for not qualify whether the plaintiff is a natural or
the parties. Ayson thereafter filed a juridical person. Therefore, a juridical person
835
Damages
vs. Mabunay Jr., G.R. 206113, November 6, 2017, Court given discretion to determine moral
as penned by J. Leonen) damages
Act or omission must be with bad faith Trial courts are given discretion to determine
moral damages and the Court of Appeals can
Moral damages are recoverable only if the party only modify or change the amount awarded
from whom it is claimed has acted fraudulently when they are palpably and scandalously
or in bad faith or in wanton disregard of his excessive “so as to indicate that it was the result
contractual obligations. (Yamauchi v. Suñiga, G.R. of passion, prejudice or corruption on the part of
No. 199513, April 18, 2018) the trial court.” (Yuchengco v. Manila Chronicle
Publishing Corp., G.R. No. 184315, November 25,
Bad faith imports a dishonest purpose or some 2009)
moral obliquity and conscious doing of a wrong,
a breach of known duty through some motive or Moral damages are not punitive in nature. There
interest or ill will that partakes of the nature of is no hard and fast rule in the determination of
fraud; it is a question of intention, which can be what would be a fair amount of moral damages,
inferred from one’s conduct and/or since each case must be governed by its own
contemporaneous statements. (Peralta v. Raval, peculiar circumstances. (PNB v. CA, G.R. No.
G.R. No. 188467, Mar. 29, 2017) 116181, January 6, 1997; Norma Mangaliag and
Narciso Solano v. Hon. Edelwina Atubig-Pastoral
NOTE: Unless there is a clear showing of malice and Apolinario Serquina, Jr., G.R. No. 143951,
or bad faith or gross negligence, a public officer October 25, 2005; Michael Guy v. Raffy Tulfo, et.
is not liable for moral and exemplary damages al., G.R. No. 21303, April 10, 2019)
for acts done in the performance of duties.
(Rebadulla v. Rep. of the Phils., G.R. No. 222159, When victim bearing a child
Jan. 31, 2018)
An award for the death of a person does not
Elements required for recovery (1991, 2002, cover the case of an unborn foetus that is not
2003 BAR) endowed with personality. The damages
recoverable by the parents of an unborn child
1. An injury clearly sustained by the claimant; are limited to moral damages for the illegal
2. A culpable act or omission factually arrest of the normal development of the foetus
established; on account of distress and anguish attendant to
3. The act or omission must be the proximate its loss. (Geluz v. CA, G.R. No. L-16439, July 20,
result of the physical suffering, mental 1961)
anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, Recovery of moral damages
social humiliation and similar injury; and
wrongful act or omission of the defendant as GR: To recover moral damages, the plaintiff
the proximate cause of the injury sustained must allege and prove:
by the claimant; and
1. The factual basis for moral damages; and
NOTE: The person claiming moral damages 2. The causal relation to the defendant’s act
must prove the existence of bad faith by
clear and convincing evidence for the law XPN: Moral damages may be awarded to the
always presumes good faith; it is not enough victim in criminal proceedings without the need
that one merely suffered sleepless nights, for pleading of proof or the basis thereof.
mental anguish, serious anxiety as the result NOTE: Moral damages are mandatory without
of the actuations of the other party. (Ong need of allegation and proof other than the death
Bun v. Bank of the Phil. Islands, G.R. No. of the victim, owing to the fact of the commission
212362, March 14, 2018) of murder or homicide. (Espineli v. People, G.R.
No. 179535, June 9, 2014)
4. The award of damages predicated on any of
the cases stated in Art. 2219. (Amado v. Award of moral damages to a corporation
Salvador, G.R. No. 171401, December 13,
2007) GR: Juridical person is generally not entitled to
Moral damages recoverable under culpa NOTE: The term ‘physical injury,’ as used in Art.
contractual 2219(1) of the NCC, includes death, and no proof
of pecuniary loss is necessary in order that such
GR: Moral damages are not recoverable in damages may be adjudicated. (People v. Tambis,
actions for damages predicated on a breach of G. R No. 124452, July 28, 1999)
contract.
Tortious acts referred to in chapter of human
XPNS: Moral damages may be awarded in culpa relations of the NCC
contractual, involving common carriers in the
following instances: The plaintiff may recover moral damages:
a. Where the passenger died by reason of 1. Willful acts contrary to morals, good
negligence of the carrier (Art. 1764); or customs or public policy;
b. Where it is proved that the carrier is guilty 2. Disrespect to the dignity, personality,
of fraud or bad faith, even if the death does privacy and peace of mind of neighbors and
not result. (Fores v. Miranda 105 Phil. 266; other persons;
Pineda, 2010; Sulpicio Lines, Inc., v. Napoleon 3. Refusal or neglect of a public servant to
Sesante, G.R. No 172682, 27 July 2016) perform his official duty without just cause;
4. Unfair competition in enterprise or in labor;
NOTE: Even if the negligence of the bank is not 5. Civil action for damages against accused
attended with malice and bad faith, moral acquitted on reasonable doubt;
damages may be granted. (Cavite Development 6. Violation of civil rights;
Bank v. Lim, G.R. No. 131679, February 1, 2000) 7. Civil action for damages against city or
municipal police force; and
Moral damages may be recovered in the 8. When the trial court finds no reasonable
following and analogous cases (1996, 2002, ground to believe that a crime has been
2004, 2006, 2009 BAR) committed after a preliminary investigation
or when the prosecutor refuses or fails to
1. A criminal offense resulting in physical institute criminal proceedings.
injuries;
2. Quasi-delicts causing physical injuries; Moral damages may be awarded in appropriate
3. Seduction, abduction, rape, or other cases referred to in the chapter on human
lascivious acts; relations of the Civil Code (Articles 19 to 36),
4. Adultery or concubinage; without need of proof that the wrongful act
5. Illegal or arbitrary detention or arrest; complained of had caused any physical injury
6. Illegal search; upon the complainant. (Patricio v. Leviste, G.R.
7. Libel, slander or any other form of No. L-51832, April 26, 1989)
defamation;
8. Malicious prosecution; Cases where moral damages is mandatory
9. Acts mentioned in Article 309; and without need of any proof
10. Actions referred to in Articles 21, 26, 27, 28,
29, 30, 32, 34, and 35 (NCC, Art. 2219). 1. Rape cases
NOTE: Art. 2219 of the NCC provides for NOTE: Moral damages are automatically granted
837
Damages
in a rape case without need of further proof Code provides that exemplary damages are
other than the fact of its commission. For it is imposed in addition to moral, temperate,
assumed that a rape victim has actually suffered liquidated or compensatory damages.
moral injuries entitling her to such an award. (Buenaventura v. CA, G.R. No. 127358, March 31,
(People v. Iroy, G.R. No. 187743, March 3, 2010) 2005)
839
Damages
and the deprivation of which is a violation of actual damages were not adequately proven is
property right that entitles the injured party to ultimately a rule drawn from equity, the
an award of damages. Articles 2217 and 2220 of principle affording relief to those definitely
the New Civil Code (“NCC”) allow recovery of injured who are unable to prove how definite the
moral damages in case of willful injury to injury. (Equitable PCI Bank v. Tan, G.R. No.
property. The acts of the other stockholders who 165339, August 23, 2010)
refused to recognize the rights of the plaintiffs
caused mental anguish, serious anxiety and Temperate damages may be awarded in the
social humiliation to the latter. Furthermore, following cases:
under Article 2224 of the NCC, temperate or 1. In lieu of actual damages; or
moderate damages, which are more than 2. In lieu of loss of earning capacity.
nominal but less than compensatory damages,
may be recovered even though not specifically Rationale behind the temperate or moderate
prayed for in the complaint, when the court finds damages (1994 BAR)
that some pecuniary loss has been suffered but
its amount cannot, from the nature of the case, The rationale behind temperate damages is
be provided with certainty. Similarly, the award precisely that from the nature of the case,
of attorney’s fees and litigation expenses was definite proof of pecuniary loss cannot be
proper because plaintiffs were compelled to offered. When the court is convinced that there
litigate to protect or vindicate their has been such loss, the judge is empowered to
stockholders’ rights against the unlawful acts of calculate moderate damages, rather than let the
the other stockholders. (Lydia Lao, et al vs Yao complainant suffer without redress from the
Bio Lim, et al, G.R. 201306, August 9, 2017, as defendant’s wrongful act. (GSIS v. Spouses
penned by Justice Leonen) Labung-Deang, G.R. No. 135644, September 17,
2001)
Award of nominal damages in labor
termination cases Elements of Temperate Damages
841
Damages
reasonable under the circumstances. (Marlon covenanted pre- contract irrespective of the
Bacerra y Tabones vs, People of the Philippines, estimate of damage sustained. (De Leon,
G.R. No. 204544, July 3, 2017, as penned by J. damages. 2012)
Leonen)
Legal Results
LIQUIDATED DAMAGES There is no difference between a penalty and
liquidated damages, as far as legal results are
Liquidated damages are fixed damages concerned. (Lambert v. Fox, G.R. No. L-7991,
previously agreed by the parties to the contract January 29, 1914; Filinvest Land, Inc. v. CA, et. al.,
and payable to the innocent party in case of G.R. No. 138980, eptember 20, 2005)
breach by the other. (Pineda, 2009)
NOTE: Whether as a penalty or indemnity, it is
Liquidated damages are those that the parties necessary that there be a contract the violation
agree to be paid in case of a breach. Under of which give rise to the liquidate damages
Philippine laws, they are in the nature of stipulated upon. (Pineda, 2009)
penalties. They are attached to the obligation in
order to ensure performance. As a precondition Liquidated damages may be equitably
to such award, however, there must be proof of reduced when
the fact of delay in the performance of the
obligation. (Suatengco v. Reyes, G.R. No. 162729, 1. Iniquitous or unconscionable (NCC, Art.
December 17, 2008) 2227)
2. Partial or irregular performance
Nature of Liquidated Damages
When principal obligation is void
A stipulation on liquidated damages is a penalty
clause where the obligor assumes a greater The nullity of the principal obligation carries
liability in case of breach of an obligation. The with it that of the penal clause. (NCC, Art. 1230)
obligor is bound to pay the stipulated amount
without need for proof on the existence and on Rule governing in case of breach of contract
the measure of damages caused by the breach.
(Titan v. Uni-Field, G.R. No. 153874, March 1, When the breach of contract committed by the
2007) defendant is not the one contemplated by the
parties in agreeing upon the liquidated damages,
NOTE: Attorney’s fee is in the concept of actual the law shall determine the measure of damages,
damages except that when it is stipulated and and not the stipulation. (NCC, Art. 2228)
therefore in the form of liquidated damages no
proof of pecuniary loss is required. (NCC, Article EXEMPLARY OR CORRECTIVE DAMAGES
2216) (Santiago v. Dimayuga, G.R. No. L-17883,
December 30, 1961) Exemplary damages or corrective damages are
imposed, by way of example or correction for the
Liquidated damages v. Penalties public good, in addition to the moral, temperate,
liquidated or compensatory damages. (NCC, Art.
Liquidated Penalties 2229) (2003, 2005, 2009 BAR)
Damages
Purpose NOTE: They are also known as “punitive” or
It is a sum It is a sum inserted in a “vindictive” damages.
inserted in a contract as a punishment for
contract as a default, or by way of security Nature of exemplary damages
measure of for actual damages which
compensation may be sustained because of Exemplary damages are mere accessories to
for its breach. the non- performance of the other forms of damages except nominal
contract. damages. They are mere additions which may or
may not be granted at all depending upon the
Nature necessity of setting an example for public good
Its essence is a An agreement to pay a as a form of deterrent to the repetition of the
genuine stipulated sum on breach of same act by anyone. (Pineda, 2009)
843
Damages
nominal damages in the amount of P30,000.00.
A: NO. The requirement in Article 2234 of the (Manila Electric Company, Vicente Montero, Mr.
Civil Code, which requires proof of entitlement Bondoc, And Mr. Bayona v. Nordec Philippines
to moral, temperate or compensatory damages And/Or Marvex Industrial Corp. Represented By
before exemplary damages may be awarded. Its President, Dr. Potenciano R. Malvar, G.R.
Exemplary damages, which cannot be recovered 196020, April 18, 2018, as penned by J. Leonen)
as a matter of right, may not be awarded if no
moral, temperate, or compensatory damages DAMAGES IN CASE OF DEATH
have been granted. Since exemplary damages
cannot be awarded, the award of attorney's fees Damages that can be recovered in case of
should likewise be deleted. death (MEA-I3)
Moral damages are also not proper, in line with 1. Moral damages
Manila Electric Company v. T.E.A.M. Electronics 2. Exemplary damages
Corporation: 3. Attorney's fees and expenses for litigation
4. Indemnity for death
As a rule, a corporation is not entitled to moral 5. Indemnity for loss of earning capacity
damages because, not being a natural person, it 6. Interest in proper cases
cannot experience physical suffering or
sentiments like wounded feelings, serious Rules when crimes and quasi-delict has
anxiety, mental anguish and moral shock. Here, caused death
the records are bereft of evidence that would
show that Nordec's name or reputation suffered The amount of damages for death caused by a
due to the disconnection of its electric supply. crime or quasi-delict shall be at least P75,000,
Moreover, contrary to Nordec's claim, it cannot even though there may have been mitigating
be awarded temperate or moderate damages. circumstances. In addition:
Under Article 2224 of the Civil Code. When the
court finds that a party fails to prove the fact of 1. The defendant shall be liable for the loss of
pecuniary loss, and not just the amount of this the earning capacity of the deceased, and the
loss, then Article 2224 does not apply. Here, the indemnity shall be paid to the heirs of the
Court of Appeals found that Meralco's latter; such indemnity shall in every case be
disconnection had a "domino effect" on Nordec's assessed and awarded by the court, unless
business, but that Nordec did not offer actual the deceased on account of permanent
proof of its losses. Nordec even admitted in its physical disability not caused by the
petition for review that there was an "oversight" defendant, had no earning capacity at the
on its part in "adducing proof of the accurate time of his death;
amount of damages it sustained" due to 2. If the deceased was obliged to give support
Meralco's acts. No pecuniary loss has been according to the provisions of Article 291,
established in this case, apart from the claim in the recipient who is not an heir called to the
Nordec's complaint that the "serious anxiety" of decedent's inheritance by the law of testate
the disconnection had caused Nordec's president or intestate succession, may demand
to cancel business appointments, purchase support from the person causing the death,
orders, and fail to fulfill contractual obligations, for a period not exceeding five years, the
among others. exact duration to be fixed by the court;
3. The spouse, legitimate and illegitimate
In this instance, nominal damages may be descendants and ascendants of the deceased
awarded. Nominal damages are awarded to may demand moral damages for mental
vindicate the violation of a right suffered by a anguish by reason of the death of the
party, in an amount considered by the courts deceased. (NCC, Art. 2206)
reasonable under the circumstances. Meralco's
negligence in not providing Nordec sufficient NOTE:
notice of disconnection of its electric supply,
especially when there was an ongoing dispute Under Art. 2206 of the NCC, the amount of
between them concerning the recomputation of damages for death caused by a crime or quasi-
the electricity bill to be paid, violated Nordec's delict is P3,000.00. At present, however, civil
rights. Because of this, Nordec is entitled to indemnity for death has been increased to
845