CIVIL LAW

BAR REVIEWER
FACULTY ADVISER ATTY. BENJAMIN LERMA
ACADEMICS HEAD PIERRE MARTIN REYES
SUBJECT HEADS FRANCESCO BENZON
ANBOCHI
HANNAH STEPHANIE ANG
 ATENEO CENTRAL BAR OPERATIONS 2012
ACADEMICS COMMITTEE

Academics Head: Pierre Martin Reyes;

Understudy: Clariesse Jami Mari Chan

REVIEW COMMITTEE
Head: Yla Gloria Marie Paras;
Understudy: Ken Koga;
Members: Catherine Dela Rosa, Eric Lavadia, Iris Lucido,
Pearl Charisse Baustista; Mina Reyes

CIVIL LAW COMMITTEE

Heads: Francesco Benzon Anbochi, Hannah Stephanie

Ang;
Understudy: Alessandra Vilches, Ken Patrick Habana;
Volunteers: Rizza Anne Sy, John Benedict Ty, Rose
Angelique Dizon, Geoanne Christi Battad, Paolo de
Guzman, Roberto Miguel Ramiro;
 CIVIL LAW
Table of Contents
PRELIMINARY TITLE……………………………………
5
1. Effect and Effectivity of Law
2. Human Relations

PERSONS…………………………………………………… PRESCRIPTION……………………………………………
…8 ……78
============================== ==============================
===== =====
A. General Provisions
B. Natural Persons A. Definition
C. Juridical Persons B. No Prescription Applicable
D. Domicile C. Prescription or limitation of actions
E. Marriage D. Interruption
F. Legal Separation
G. Rights and Obligations Between Husband and OBLIGATIONS
Wife ………………………………………………… 82
H. Property Relations Between Husband and Wife ==============================
I. The Family =====
J.
Family Home A. Definition
K. Paternity and Filiation B. Elements of an Obligation
L. Adoption C. Different Kinds of Prestations
M. Support D. Classification of Obligations
N. Parental Authority E. Sources of obligations (Arts. 1156-1157)
O. Funerals F. Nature and Effect of Obligations
P. Surname G. Kinds of Civil Obligations
Q. Absence H. Joint and Solidary Obligation
R. Civil Register I. Extinguishment of Obligations

PROPERTY…………………………………………………… CONTRACTS
37 ………………………………………………… 109
==============================
==============================
=====
=====
A. Classification of Property (Arts. 414-418, CC)
A. Essential Requisites (Art. 1261)
B. Ownership (Arts. 427-439, CC)
B. Kinds of Contracts
C. Accessions
C. Formality (Arts. 1356, 1357, 1358)
D. Quieting Title
D. Defective Contracts
E. Co-ownership
E. Effect of contracts (Art. 1311)
F. Condominium Act (RA 4726)
G. Possession
SALES ……………………………………………… 123
H. Usufruct
==============================
I. Easements
=====
J. Modes Of Acquring Ownership
K. Occupation
A. Introduction
L. Intellectual Creation
B. Parties to a Contract of Sale
M. Donation
C. Subject Matter
N. Other Modes of Acquiring Ownership
D. Obligations of the Seller to Transfer Ownership
O. Nuisance
E. Price
F. Formation of Contract of Sale

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G.

Transfer of Ownership E. General vs. Special Agency

H. Risk of Loss F. Agency Couched in General Terms
I. Documents of Title G. Agency Requiring Special Power of Attorney
J. Remedies of an Unpaid Seller H. Agency by Operation of Law
K. Performance of Contract I. Rights and Obligations of Principal
L. Warranties J. Modes of Extinguishment
M. Breach of Contract
N. Extinguishment of the Sale CREDIT
O. The Subdivision and Condominium Buyers' TRANSACTIONS…………………………………………
Protective Decree 235
P. The Condominium Act ==============================
===
SUCCESSION A. Loan
………………………………………………… 155 B. DEPOSIT
============================== C. Guaranty and Suretyship
===== D. Pledge
E. Real Mortgage
A. General Provisions F. Antichresis
B. Testamentary Succession G. Chattel Mortgage
C. Legal or Intestate Succession H. Quasi-contracts
D. Provisions Common to Testate and Intestate I. Concurrence and Preference of Credits
Succession J. Insolvency Law
E. Partition and distribution of estate

LAND TITLES AND DEEDS

LEASE………………………………………………………… …………………………………… 283
199 ==============================
============================== =====
===
A. Lease of Things A. Torrens System
B. Lease of Work or Services B. Regalian Doctrine
C. Lease of Rural and Urban Lands C. Citizen Requirements
D. Contract for Piece of Work D. Non-Registrable Properties
E. Rights and Obligations of Lessor and Lessee E. Original Registration
F. Subsequent Registration
PARTNERSHIP……………………………………………… G. Dealings With Unregistered Land
205
==============================
=== TORTS AND DAMAGES……………………………………
A. Contract Of Partnership 323
B. Rights and Obligations of Partnership ==============================
C. Rights and Obligations of Partners Among =====
Themselves
D. Obligations of Partnership/Partnership to Third Book I--Torts
Persons A. Principles
E. Dissolution B. Classification of Torts
F. Limited Partnership C. The Tortfeasor
D. Act of Omission and Its Modalities
AGENCY……………………………………………………… E. Proximate Cause
… 221 F. Legal Injury
============================== G. Intentional Torts
=== H. Negligence
A. Definition of Agency I. Special Liability in Particular Activities
B. Powers J. Strict Liability
C. Express V. Implied Agency
D. Agency By Estoppel Book II--Damages

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A.

General Considerations
B. Actual and Compensatory Damages
C. Moral Damages
D. Nominal Damages
E. Temperate or Moderate Damages
F. Liquidated Damages
G. Exemplary or Corrective Damages
H. Damages in Case of Death
I. Graduation of Damages
J. Miscellaneous Rules

CIVIL LAW REVIEWER Page 5 of 383

CIVIL LAW REVIEWER Page 6 of 383
 CIVIL LAW
================================
TOPICS UNDER THE SYLLABUS
A. PRELIMINARY TITLE
1. Effect and Effectivity of Law
a. When laws become effective
b. Mandatory effect of laws
c. Irretroactivity of laws
d. Waiver of rights
e. Repeal of laws
f. Judicial decisions
g. Presumption and Applicability
of Custom
h. Computation of Time
i. Governing laws
j. Rules on Prohibitive laws
2. Human Relations
a. Application
b. Duty to act with justice,
observe honesty and good faith
c. Actions for breach of promise
to marry
d. Unjust enrichment at the
expense of others
e. Rights to personal dignity and
privacy
f. Liability of Public Officers
=========================
================
CIVIL LAW – branch of law that regulates
relations of assistance, authority and obedience
among family members as well as members of a
society for the protection of private interests
NEW CIVIL CODE: took effect on August 30,
1950
==============================
===================
TOPICS UNDER THE SYLLABUS
A. PRELIMINARY TITLE
1. Effect and Effectivity of Laws
=========================
=================
1. EFFECT AND EFFECTIVITY OF LAWS
a) When the Laws Become Effective
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When Laws Take Effect (art.2)
General Rule - 15 days after completion of
publication in OG or newspaper of general
circulation
Exception - The law can provide for its own date
of effectivity
b) Mandatory Effect of Laws
 Publication is MANDATORY for all
statutes, including PDs and Eos
 AOs and Regulations must also be
published if their purpose is to enforce or
implement existing law
 An immediate effectivity clause does not
preclude the requirement of publication
 Publication must be in full (otherwise,
it is not deemed published at all) since its
PURPOSE is to inform the public of its
contents
 Non-publication of the law would offend
due process (persons not aware of laws
would be prejudiced)
 Effect of Publication: The people are
deemed to have conclusively been
notified of the law even if they have not
read them.
Compliance with the Law (art.3):
Ignorance of the law excuses no one from
compliance therewith (Ignorantia juris neminem
excusat)
NOTE: Applies only to mandatory and prohibitory
laws (Consunji v. CA, [G.R. 137873 April 20,
2001])
c) Irretroactivity of Laws (art. 4)
General rule: laws are not retroactive
Exceptions: (PIERCER)
1. Penal laws when favorable to the accused
who is not a habitual delinquent or
recidivist
2. Interpretative statutes
3. When the law itself expressly provides
- Exception to the exception:
a. Ex post facto law
b. When retroactivity impairs the
obligations of contracts
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 4. Remedial statutes Customs which are contrary to law, public order
5. Curative statutes or public policy shall not be countenanced. A
6. Emergency laws custom must be proved as a fact according to the
7. Laws creating new substantive rights rules of evidence.

Mandatory and Prohibitory laws (art. 5): h) Computation of Time

General Rule - Acts executed against the
provisions of mandatory or prohibitory laws shall Legal Periods (Art. 13, as amended by Sec.
be void. 31, EO 292)
Year = 12 months; Month = 30 days, unless
Exception - If the law expressly provides for the referring to a specific calendar month; Day = 24
validity of acts committed in violation of a hours; Night = sunset to sunrise
mandatory or prohibitory provision of a statute.
i) Governing Laws (Arts. 14-17)
d) Waiver of Rights (art.6)
LAW Matters/Perso Principle/
General Rule- Rights may be waived ns Bound Doctrine
Penal Laws All those who Principle of
Exceptions - When waiver is live or Territoriality:
1. Contrary to law, public order, public sojourn in follow laws of the
policy, morals, good customs (e.g. waiver of Philippine place where
future inheritance, political rights, future support) territory crime was
2. Prejudicial to a third person with a right committed
recognized by law Status Citizens of Principle of
Laws the Nationality:
e) Repeal of Laws (art. 7) (relating to Philippines, follow one’s own
family rights including national laws
1. Express repeal - repeal of repealing law will and duties, those living
not revive the old law (unless expressly status, legal abroad
provided) capacity)
2. Implied repeal - the provisions of the Property Real and Lex rei sitae:
Laws personal follow laws of the
subsequent law are incompatible with those
property place where
of the previous law
property is
Requisites:
situated
1. Both laws cover the same subject
Laws on Forms and Lex loci
matter
Forms and solemnities celebrationis:
2. The latter law is repugnant to the
Solemnitie of contracts, follow laws of the
earlier law
s wills, public country in which
instruments they are
f) Judicial Decisions
executed
Judgment of the Courts (Arts. 8-9)
j) Rules on Prohibitive Laws (art. 17)
 Decisions of the SC form part of the law
 All judges or courts have the duty to General Rule - Prohibitive laws concerning
render judgment even in the absence of a persons, their acts or property and laws which
law have for their object public order, public policy or
good customs are not rendered ineffective by
g) Presumption & Applicability of laws, judgments promulgated or conventions
Custom (Arts. agreed upon in foreign country.
10-12)
Exception: Art. 26 (2) of Family Code
Construction and interpretation of laws come only
after it has been demonstrated that application is 2. HUMAN RELATIONS
impossible or inadequate without them.

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 a) Application
PRINCIPLE OF ABUSE OF RIGHTS (ART. 19) -
When one’s right is exercised for the purpose of
prejudicing or injuring another
Requisites/ Elements:
1. There is a legal right or duty
2. Which is exercised in bad faith
3. For the sole intent of prejudicing or injuring
another
Standards to observe in the exercise of
one’s rights:
1. Act with justice
2. Give everyone his due
3. Observe honesty and good faith
b) Duty to Act with Justice, Observe
Honesty and Good Faith
ACTS CONTRA BONUS MORES (ART.21)-
When persons wilfully cause loss or injury to
another
Elements:
1. There is an act which is legal
2. But which is contrary to morals, good
customs, public order, or public policy
3. Done with intent to injure
Note:
 Similarities: In Arts. 19-21, at the core
is bad faith or malice; and the
aggrieved party must be indemnified.
 Difference: Under Arts. 19 & 21, the
act must be done intentionally. Art.
20, however, does not distinguish (the
act may be done either willfully or
negligently, as long as the act is be
contrary to law).
d) Unjust Enrichment at the Expense of
Others
ACCION IN REM VERSO (Art. 22) – action for
recovery of what has been paid without just
cause.
Requisites:
1. Defendant has been enriched
2. Plaintiff suffered a loss
3. Unjust Enrichment of defendant is without
just or legal ground
4. Plaintiff has no other action based on
contract, quasi-contract, crime, or quasi-delict
 Distinguished from solutio indebiti: Mistake is
an essential element in solutio indebiti but not
in accion in rem verso.
DUTY TO INDEMNIFY ONE FOR DAMAGE TO
HIS PROPERTY (Art. 23): when defendant was
benefitted even if not due to fault or negligence
DUTY OF COURTS TO PROTECT A PARTY IN A
CONTRACT (Art. 24): When such party is at a
disadvantage on account of his: (MIgIMenTO)
- Moral dependence
- Ignorance
- Indigence
- Mental weakness
- Tender age
- Other handicap
THOUGHTLESS EXTRAVAGANCE (Art. 25)
May be prevented if the ff requisites are present:
1. During an acute public want or emergency
2. Person seeking to stop it is the gov’t or a
private charitable institution
e) Rights to Personal Dignity and
Privacy

c) Actions for Breach of Promise to Protection of Human Dignity (Art. 26)

Marry Every person shall respect the dignity,
personality, privacy and peace of mind of others
General Rule: Breach of promise to marry is not
actionable. The following acts produce a cause of action for
Exception: When one party has already made damages, prevention and other relief:
real efforts to prepare and spend for the wedding. (PryMIVex)
Such act is unjustifiably contrary to good customs 1. Prying into the privacy of another’s residence
for which the defendant must be held answerable 2. Meddling with or disturbing the private life or
for damages in accordance with Art. 21 of the family relations of another
NCC. (Wassmer v. Velez 12 SCRA 649 (1964))

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3.
Intr
iguing to cause another to be alienated from
friends
4. Vexing or humiliating another on account of
his religious beliefs, lowly station in life, place
of birth, physical defect, or other personal
condition
f) Liability of Public Officers

Relief Against Public Officials (Art. 27)

When one suffers material or moral loss because
a public officer fails without cause to perform his
duty, the officer is not protected by his office and
is personally liable.

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I.
PERSONS 2. Insanity
3. State of being Deaf-mute
==============================
4. Imbecility
===================
5. Civil Interdiction
TOPICS UNDER THE SYLLABUS 6. Prodigality – state of squandering money or
A. General Provisions property with a morbid desire to prejudice the
1. Juridical Capacity v Capacity to heirs of a person (Martinez v. Martinez, 1 Phil.
Act 182)
2. Restrictions and Modifications on
Capacity to
Act Circumstances that Modify or Limit Capacity
B. Natural Persons to Act (art. 39)
1. When Personality Begins and Age Penalty Absence
Ends Insanity Prodigality Insolvency
2. Rules on Survivorship (Art.43, CC Imbecility Family Relations Trusteeship
v Rule 131 Sec Deaf-muteness Alienage
jj)
CIVIL PERSONALITY – the aptitude of being the
C. Juridical Persons subject, active or passive, of rights and
1. Who are Juridical Persons obligations
2. When Personality Begins and
Ends B. NATURAL PERSONS
3. Rights of Juridical Persons
D. Domicile NATURAL PERSONS V. JURIDICAL PERSONS
Natural Persons Juridical Persons
=========================
A human being, has Exists only in
================= physical existence contemplation of law
Product of Product of legal
A. GENERAL PROVISIONS procreation fiction

1. Juridical Capacity v. Capacity to Act 1. When Personality Begins and Ends

(Art. 37)
JURIDICAL CAPACITY CAPACITY TO ACT Civil Personality, Natural Persons (Arts. 40-
Fitness to be the Power to do act with 43)
subject of legal legal effects
relations General Rule - Determined by birth,
Passive Active extinguished by death
Inherent Merely acquired
Lost only through death Lost through death and Exception - The conceived child shall be
other causes considered born for all purposes favorable to it,
Can exist without Cannot exist without provided it be born later under the following
capacity to act juridical capacity conditions:
Cannot be limited or Can be restricted, 1. It is alive at the time it is completely
restricted modified, or limited delivered from the mother’s womb
2. BUT if it had an inter-uterine life of less
Full Civil Rights: union of both juridical capacity than 7 months, only if it lives for at
and capacity to act least 24 hours after its complete
2. Restrictions on Capacity to Act delivery from the maternal womb
(Art. 38)
(MInD - ICIP) 2. Rules on Survivorship

Do not exempt the incapacitated person from Doubts as to Order of Death: As between two
certain obligations or more persons called to succeed each other, if
1. Minortiy there is doubt as to which of them died first,
whoever alleges the death of prior to the other

CIVIL LAW REVIEWER Page 11 of 383

shall prove the same. In the absence of proof, it
is presumed that they died at the same time and
there shall be no transmission of rights from one
to the other.
 This rule applies only to cases involving
succession
C. JURIDICAL PERSONS
1. Who are Juridical Persons
Civil Personality, Juridical Persons (Arts. 44-
47)
1. The state and its political subdivisions
2. Other corporations, institutions, and
entities for public interest or purpose,
created by law
3. Corporations, partnerships, and
associations for private interest or
purpose
2. When Personality Begins and Ends
 Creation: (1) and (2) are created by the laws
creating or recognizing them,
private corporations are governed
by the Corp. Code (B.P. 68) and
partnership and associations are
governed by the provisions of the
New Civil Code on partnerships
 Extinguished: by termination of existence
3. Rights of Juridical Persons
1. Acquire and possess property of all kinds
2. Incur obligations
3. Bring civil or criminal actions
CITIZENSHIP
 In the Philippine jurisdiction, what is followed
is the concept of jus sanguinis (citizenship by
blood) as opposed to jus soli (citizenship by
place of birth)
D. DOMICILE
DOMICILE ( Arts. 50-51)
- For natural persons, it is the
place of habitual residence
- For juridical persons, it is where
their legal representation is
established or where they exercise
their principal functions (when the
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law creating them does not fix the
domicile)
A minor follows the domicile of his parents
 Domicile of origin can only be lost when a
change of domicile occurs.
Requirements for the acquisition of new
domicile:
1. Bodily presence in a new locality
2. Intention to remain therein (animus
manendi)
3. Intention to abandon the old domicile
(animus non revertendi)
 The husband and the wife shall fix the family
domicile. In case of disagreement, the court
shall decide
Kinds of Domicile
1. Domicile of origin – received by a person at
birth
2. Domicile of choice – the place freely chosen by
a person sui juris
3. Constructive domicile – assigned to a child by
law at the time of his birth
================================
TOPICS UNDER THE SYLLABUS
E. Marriage (Arts. 1-54, Family
Code)
1. Concept
2. Essential and Formal
Requirements
3. Non-Essential Requirements
4. Marriages Celebrated Outside
the Philippines
a. Validity and Exceptions
b. Foreign Divorce
5. Void Marriages
a. Void ab initio under Art. 35
b. Void under Art. 36
c. Void for Being Incestuous
under Art. 37
d. Void for Reason of Public
Policy under Art. 38
e. Imprescriptibility of action or
defense for declaration of
nullity of marriage. (Art. 39)
Page 12 of 383
 f. Subsequent Marriage Without
Judicial Declaration of Nullity of
Previous Void Marriage (Art. 40)
6. Annullable Marriages
7. Procedure and Effects of
Termination of Marriage
==============================
==================
E. MARRIAGE
1. CONCEPT
Marriage is
1. A special contract
2. of permanent union
3. Between a man and a woman
4. Entered into in accordance with law
5. For the establishment of conjugal and
family life
2. ESENTIAL AND FORMAL REQUIREMENTS
1. Legal capacity of contracting parties
a. Must be between a man and woman
b. Must be at least 18 years old
2. Consent freely given, IN the PRESENCE of
the solemnizing officer
Formal Requisites of Marriage: (ALC)
1. Authority of solemnizing officer
2. Valid marriage license (except in cases where
a marriage license is not required)
 valid only for 120 days from issue in any part
of the Philippines
3. Marriage ceremony where the contracting
parties appear before the solemnizing officer,
with their personal declaration that they take
each other as husband and wife in the
presence of not less than two witnesses of
legal age
Effects:
1. Absence of essential or formal requisites
– void ab initio
Exceptions:
a. If solemnized by unauthorized person, the
marriage will still be valid if either or both
contracting parties believed in good faith that
the solemnizing officer had legal authority
(Article 35(2))
Those exempt from the license requirement.
If either of the contracting parties are
1. at a point of death (articulo
mortis),
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2. or the residence of either party is
located that there is no means of
transportation to enable such
party to appear personally before
the civil registrar,
3. cohabitation for 5 years,
then the marriage may be
solemnized without the necessity of
a marriage license. (Article 27 and
28)
2. Defect in any of the essential requisites –
voidable
3. Irregularity in any of the formal
requisites – does not affect the validity of the
marriage but will make the party responsible
civilly, criminally, or administratively liable
Authorized Solemnizing Officers: (JPCCCM)
1. Incumbent member of the judiciary within
the court’s jurisdiction
2. Duly authorized priest, rabbi, imam or the
minister of any church or religious sect
3. Ship captain or airplane chief only in
articulo mortis between passengers or
crew members while the ship is at sea or
the plane is in flight and also during
stopover at ports of call
4. Military commander of a unit to which a
chaplain is assigned only in articulo
mortis between persons within the zone of
military operations whether members of
the armed forces or civilians and only in
the absence of the chaplain
5. Consul-general, consul or vice-consul only
when contracting parties are both Filipinos
abroad
6. Mayor (Local Government Code of 1991)
The vice mayor, in case the mayor is
temporarily incapacitated to discharge his
duties
Marriages Exempt from License
Requirements:
1. Marriage in articulo mortis (one of the
parties is at the point of death)
2. If the residence of either party is so located
that there is no means of transportation
to enable such party to appear personally
before the civil registrar
3. Marriage solemnized outside the
Philippines where no marriage license is
required by the country where it was
solemnized
Page 13 of 383
4.

Marriage among Muslims or among 3.

members of ethnic cultural communities Marriage at a house or place designated by
in accordance with their customs the parties in a sworn statement upon
5. Marriage between persons who have lived their written request to the solemnizing
together as husband and wife for at least officer
five years and without any legal impediment
to marry each other
Requisites:
a. Man and woman must have been
living together as husband and wife OTHER REQUIREMENTS:
for at least five years before Either or Both Requires
marriage Parties
b. The parties must have no legal 18 years old and Parental consent
impediment to marry each other above but below 21 Marriage counseling
c. The fact of absence of legal 21 years old and Parental advice
impediment between the parties above but below 25 Marriage counseling
must be present at the time of
marriage EFFECTS
d. The parties must execute an Lack of parental Marriage is VOIDABLE
affidavit stating that they have lived consent
together for at least five years (and Lack of parental NO EFFECT on th
are without legal impediment to marry advice or marriage validity of marriage
each other) counselling However, this will
e. The solemnizing officer must suspend the issuance
execute a sworn statement that he of the marriage
had ascertained the qualifications of license for 3 months
the parties and that he had found no from the completion of
legal impediment to their marriage publication
If they get married
 No legal impediment during the entire during the 3-month
period: period without a
This 5-year period should be a period of license, the
cohabitation characterized by exclusivity – marriage shall be
meaning no third party was involved at any VOID
time – that is, unbroken. (Niñal vs. Bayadog, If they are able to
328 SCRA 122 (2000))
obtain a license
during the 3-month
AUTHORIZED VENUES FOR MARRIAGE:
period, the
marriage will still
General Rule: Must be solemnized publicly, and
be valid but civil
not elsewhere, in the:
and criminal
1. Chambers of the
liability may
judge or in open court
attach.
2. Church, chapel or
Office of consul-general, consul or vice-
consul
3. NON-ESSENTIAL REQUIREMENTS

Exceptions: Marriage Certificate

1. While a marriage certificate is considered the
Marriage at the point of death (articulo primary evidence of a marital union, it is not
mortis) regarded as the sole and exclusive evidence of
2. marriage. Jurisprudence teaches that the fact of
Marriage in remote places marriage may be proven by relevant evidence
other than the marriage certificate. Hence, even
a person’s birth certificate may be recognized as

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competent evidence of the marriage between his
parents. (Anonuevo vs. Int. Estate of
Jalandoni, [GR 178221, December 1, 2010])
4. MARRIAGES SOLEMNIZED ABROAD
a) Validity and Exceptions
General Rule: Marriages solemnized outside the
Philippines in accordance with the laws of the
foreign country shall be valid here (lex loci
celebrationis). – Basis: Principle of comity
 However, if solemnized inside the Philippine
Consulate abroad, Philippinelaws must be
observed
Exceptions:
1. Where either or both parties are below
18 years old
2. Bigamous or polygamous marriage
(except Art. 41 on presumptive death of
spouse)
3. Mistake in identity
4. Marriages void under Art. 53 –
contracted following the annulment or
declaration of nullity of a previous
marriage but before partition
5. Psychological incapacity
6. Incestuous marriages
7. Marriage void for reasons of public
policy
b) Foreign Divorce
Divorce by Foreigner-Spouse:
 If a Filipino is married to a foreigner and the
latter subsequently obtains a valid divorce
abroad capacitating him/her to remarry, the
Filipino spouse shall likewise have the
capacity to remarry under the Philippine law.
(Art. 26, par. 2)
 Requisites:
a.) There is a valid marriage that had been
celebrated between Filipino citizen and a
foreigner
b.) A valid divorce is obtained abroad by the
alien spouse capacitating him or her to
remarry
The traditional rule applies when parties at the
time of celebration are a Filipino and an alien
BUT
 This includes cases involving parties who, at
the time of the celebration of the marriage,
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were Filipino citizens but, later on, one of
them becomes naturalized as a foreign citizen
and obtains a divorce decree. The Filipino
spouse should be allowed to remarry as if the
other party was a foreigner at the time of the
solemnization of the marriage. Republic v.
Orbecido III, 472 SCRA 114 (2005)
 For the second paragraph of Article 26 to
apply, a spouse who obtained the divorce
must not be a Filipino at the time of the
divorce. Otherwise, the divorce is not
recognized in the Philippines. Republic v.
Iyoy, G.R. No. 15277, September 21,
2005
 Additionally, an action based on
the second paragraph of Article 26 of the
Family Code is not limited to the recognition
of the foreign divorce decree. If the court
finds that the decree capacitated the alien
spouse to remarry, the courts can declare
that the Filipino spouse is likewise capacitated
to contract another marriage. No court in this
jurisdiction, however, can make a similar
declaration for the alien spouse (other than
that already established by the decree),
whose status and legal capacity are generally
governed by his national law. Corpuz vs.
Sto. Tomas, G.R. No. 186571, August
11, 2010
5. VOID MARRIAGES
a) Void ab initio under Art. 35
1. Contracted by any party below 18 years
old
2. Solemnized by unauthorized solemnizing
officer (Except if either or both parties
believed in good faith that the officer had
authority)
3. Solemnized without marriage license
(Except when license not required)
 A petition to declare the marriage void
due to absence of marriage license, filed
after the court denied a petition to
declare the marriage void due to
psychological incapacity, is barred by
RES JUDICATA. There is only one cause
of action which is the nullity of marriage.
Petitioner is estopped from asserting that
the first marriage had no marriage license
because he impliedly admitted the same
when he did not question the absence of a
Page 15 of 383
 marriage license in the first case. Mallion
v. Alcantara, G.R. No. 141528,
October 31, 2006
4. Bigamous or polygamous marriages
Exception: Art. 41 – Marriage contracted
by a person whose spouse has been
absent for 4 years (ordinary absence) or 2
years (extraordinary absence), where
such person has a well founded belief that
his/her absent spouse is already dead,
and after the absent spouse is judicially
declared presumptively dead, and at the
time of the marriage ceremony is in good
faith together with the subsequent spouse
5. Mistake in identity
 The contemplated mistake here refers
to the actual physical identity of the
other party, and not merely mistake in
the name, character, age, or other
attributes of the person.
6. Subsequent marriage void under Art. 53
- A person whose marriage has been
annulled may remarry as long as after
the marriage is annulled, the properties
of the spouses must be partitioned and
distributed and the presumptive
legitimes of the children be distributed.
Furthermore, the judgment of
annulment or absolute nullity, the
partition and distribution, and the
delivery of the presumptive legitimes
must be recorded in the appropriate
civil registry and registries of property.
Failure to comply with these requisites
will make the subsequent marriage
void ab initio. Further, failure to record
in the proper registries will mean that
such will not affect third persons (Arts.
52-53)
NOTE: The enumeration of void marriages under
Art. 35 is not exclusive.
b) Void under Art. 36
Where any of the parties, who at the time of the
celebration of the marriage, was psychologically
incapacitated to comply with the essential marital
obligations, even if incapacity becomes manifest
only after solemnization.
CIVIL LAW REVIEWER
 Psychological Incapacity must be judged
on a case to case basis. It should refer to
no less than a mental (not physical)
incapacity. It must be characterized by a.
gravity b. juridical antecedence c.
incurability. Carating-Siaynco v.
Siaynco, 441 SCRA 422 (2004)
 Mere showing of irreconcilable differences
and conflicting personalities does NOT
constitute psychological incapacity.
Carating-Siaynco v. Siaynco, 441
SCRA 422 (2004)
 Mere sexual infidelity or perversion and
abandonment do not by themselves
constitute psychological incapacity within
the contemplation of the Family Code.
Neither could emotional immaturity and
irresponsibility be equated with
psychological incapacity. Dedel v. CA
421 SCRA 461 (2004)
 It must be shown that these acts are
manifestations of a disordered personality
which make respondent completely
unable to discharge the essential
obligations of a marital state. Root cause
must be traceable prior to the marriage
ceremony. Dedel v. CA 421 SCRA 461
(2004)
 One of the essential marital obligations is
"To procreate children based on the
universal principle that procreation of
children through sexual cooperation is the
basic end of marriage." Constant non-
fulfillment of this obligation will finally
destroy the integrity or wholeness of the
marriage. The senseless and protracted
refusal of one of the parties to fulfill this
marital obligation is equivalent to
psychological incapacity. Chi Ming Tsoi
v. CA, G.R. No. 119190, January 16,
1997
 Psychological incapacity is not equated
with insanity or total mental inability to
function in all aspects of human life…it is
a ground restricted to psychological
incapacity “to comply with marital
obligations”. Perez-Ferraris v. Ferraris
GR No. 162368 (2006)
Page 16 of 383
  A finding of psychological incapacity on
the part of one spouse shows non-
cognizance of one’s essential marital
obligation, and therefore negates bad
faith. As a consequence moral and
exemplary damages cannot be awarded
against him/her because bad faith is an
essential element in awarding moral and
exemplary damages. Award of moral
damages should be predicated, not on the
mere act of entering into the marriage,
but on specific evidence that is was done
deliberately and with malice by a party
who had known of his or her disability and
yet willfully concealed the same.
Buenaventura v. CA, GR No. 127358,
March 31, 2005
The Court emphasizes that the burden falls
upon petitioner, not just to prove that private
respondent suffers from a psychological
disorder, but also that such psychological
disorder renders her "truly incognitive of the
basic marital covenants that concomitantly
must be assumed and discharged by the parties
to the marriage." Psychological incapacity must
be more than just a "difficulty," a "refusal," or a
"neglect" in the performance of some marital
obligations. An unsatisfactory marriage is not a
null and void marriage. Baccay vs. Baccay,
GR No. 117318, December 1, 2010
JURISPRUDENTIAL GUIDELINES (BRE-IGO-IC)
(Republic v. CA & Molina 268 SCRA 198 (1997))
1. Burden of proof to show the nullity of
marriage is upon the plaintiff
2. The root cause of the psychological
incapacity must be:
a. Medically or clinically identified
b. Alleged in the complaint
c. Sufficiently proven by experts
d. Clearly explained in the decision
3. The incapacity must be proven to be
existing at the time of the celebration of the
marriage
4. Such incapacity must be shown to be
medically or clinically permanent or
incurable
5. Such illness must be grave enough to bring
about the disability of the party to assume
the essential obligations of marriage
6. Essential marital obligations must be those
embraced by Art. 68-71, as well as Art. 220,
221, and 225 of the Family Code.
CIVIL LAW REVIEWER
7. Interpretations given by the National
Appellate Matrimonial Tribunal of the
Catholic Church in the Philippines, while not
controlling or decisive, should be given
great respect by our courts
8. The trial court must order the prosecuting
attorney or fiscal and the Solicitor General
to appear as counsel for the state
 The foregoing guidelines do not require that a
physician examine the person to be declared
psychologically incapacitated. What is
important is that the totality of evidence can
adequately establish the party’s psychological
condition. Republic v. CA & Molina, 268
SCRA 198 (1997)
 In determining if one of the contracting
parties is psychologically incapable, the
courts should interpret the provision on a
case-to-case basis. Courts should be guided
by experience, the findings of experts and
researchers in psychological disciplines, and
by decisions of church tribunals. Te v. Te,
G.R. No. 161793, February 13, 2009
c) Void for Being Incestuous under Art.
37
Whether relationship is legitimate or illegitimate:
1. Between ascendants and descendants of
any degree
2. Between brothers and sisters, whether full
or half blood
d) Void for Reason of Public Policy
under Art. 38
1. Between collateral blood relatives up to
the 4th civil degree
- There is no prohibition regarding
marriages between collateral
blood relatives by half-blood
2. Between step-parents and step-children
3. Between parents-in-law and children-in-
law
4. Between adopting parent and adopted
child
5. Between surviving spouse of the adopter
and the adopted
6. Between surviving spouse of the adopted
and the adopter
7. Between adopted and legitimate child of
adopter
8. Between adopted children of same
adopter
Page 17 of 383
 9. Between parties where one, with the
intention to marry the other, killed that
other person’s spouse or his/her own
spouse
No prior criminal conviction by the
court for the killing is required by the
law since mere preponderance of
evidence is required to prove the
killing.
Article 38 is an exclusive list.
Under the new Family Code, the following can
now marry each other:
a. Brother-in-law
and sister-in-law
b. Stepbrother
and stepsister
c. Guardian and
ward
d. Adopted and
illegitimate child of the adopter
e. Parties who
have been convicted of adultery or
concubinage
NOTE: R.A. 6995 (Mail Order Bride Act) declares
as unlawful the practice of matching Filipino
women for marriage to foreign nationals on a
mail-order basis and other similar practices
including the advertisement, publication, printing
or distribution of brochures, fliers, and other
propaganda materials in furtherance thereof.
e) Imprescriptibility of action or
defense for declaration of nullity of
marriage. (Art. 39)
A marriage that is invalid from the beginning is
non-existent, and in effect, cannot be dissolved.
The judicial decree to declare its nullity is a mere
confirmation of the voidness of the marriage,
hence this petition is imprescriptible.
f) Subsequent Marriage Without
Judicial Declaration of Nullity of
Previous Void Marriage (Art. 40)
-For the purposes of remarriage, the only
legally acceptable basis for declaring a
previous marriage an absolute nullity is a
final judgment declaring such previous
marriage void, whereas, for purposes other
than remarriage, other evidence is
acceptable
CIVIL LAW REVIEWER
-In a case for concubinage, the accused
need not present a final judgment declaring
his marriage void for he can adduce
evidence in the criminal case of nullity of
his marriage other than proof of final
judgment declaring his marriage void.
Hence, the pendency of the civil action for
nullity of marriage does not pose a
prejudicial question in a criminal case for
concubinage.
However, a judicial declaration of nullity is
not needed where no marriage ceremony
at all was performed by a duly authorized
solemnizing officer as where the parties
merely signed a marriage contract on
their own. The mere signing of a marriage
contract bears no semblance to a valid
marriage and thus needs no judicial
declaration of nullity. Lucio Morigo v.
People, G.R. No. 145226, February 6,
2004
Second marriage is still bigamous even if the
first marriage is judicially declared void
after contracting the second marriage,
only if the first marriage ostensibly
transpired as there was a marriage
ceremony. However, if the first marriage
was void due to the fact that no marriage
ceremony was solemnized at all, then the
second marriage is not bigamous. Morigo
v. People, 422 SCRA 376 (2004)
NOTE: Even if a marriage is void, it must be
declared void first by final judgment before
the parties to such void marriage can
remarry. The parties cannot decide for
themselves the invalidity of their marriage.
EXCEPTION: When the purpose is other than
remarriage, a collateral attack of the marriage is
allowed.
PRESUMPTION OF DEATH FOR REMARRIAGE
(Art. 41)
General Rule: Marriage contracted by any
person during the subsistence of a previous
marriage is VOID
Exception: If before the celebration of the
subsequent marriage:
a.The previous spouse had been absent for
4 consecutive years (ordinary absence)
or 2 years (extraordinary absence) and
Page 18 of 383
 b.The remaining spouse has a well-founded
belief that the absent spouse is already
dead
c.Judicial declaration of presumptive death
- In this case, the subsequent marriage
is valid but it shall be automatically
terminated by the recording of the
affidavit of reappearance of the
absent spouse.
- Without filing of the affidavit of
reappearance, there will exist two
valid marriages (valid bigamous
marriage)
Exception to the Exception: If both spouses of
the subsequent marriage acted in bad faith, such
marriage is void ab initio (Art. 44)
Effect of Reappearance
 The subsequent bigamous marriage under
Art. 41 remains valid despite reappearance of
the absentee spouse
 UNLESS, the reappearance made in a sworn
statement is recorded in the civil registry in
the place where the parties to the subsequent
marriage resides. In such case, the
subsequent marriage is automatically
terminated.
 HOWEVER, if there was a previous judgment
annulling or declaring the first marriage a
nullity, the subsequent bigamous marriage
remains valid.
NOTE: Summary proceedings under the Family
Code are final and executory pursuant to Article
247. Hence, summary proceeding for the
declaration of presumptive death of an absent
spouse under Article 41 of the Family Code is non-
appealable. Republic v. Tango, G.R. No.
161062, July 31, 2009
Effects of Termination of Subsequent
Marriage: (LDDRI)
1. Children of the subsequent marriage
conceived prior to its termination shall be
considered legitimate
2. The absolute community or conjugal
partnership shall be dissolved and
liquidated
 If either spouse acted in bad faith,
his/her share in the net profits shall be
forfeited:
a. In favor of the common children
CIVIL LAW REVIEWER
b. If none, in favor of the children of
the guilty spouse by previous
marriage
c. In default of children, in favor of the
innocent spouse
3. Donations by reason of the marriage
remain valid except if the donee
contracted the marriage in bad faith
4. The innocent spouse may revoke the
designation of the spouse in bad faith as
the beneficiary in any insurance policy,
even if designation is stipulated as
irrevocable, and
5. The spouse who contracted the
subsequent marriage in bad faith shall be
disqualified to inherit from the innocent
spouse by testate or intestate succession
NOTE: The above effects apply to voidable
bigamous marriages. Except for (1), the
above effects also apply to marriages
which are annulled or declared void ab
initio under Art. 40.
6. ANNULLABLE MARRIAGES
Grounds for Annulment (art. 45): (PUFFIS)
1. Lack of parental consent
2. Either party is of unsound mind
3. Fraudulent means of obtaining consent of
either party
 Circumstances constituting fraud:
(Art. 46)
a. Non-disclosure of conviction by
final judgment of crime involving
moral turpitude
b. Concealment of pregnancy by
another man
c. Concealment of sexually
transmissible disease, regardless
of nature, existing at the time of
marriage
d. Concealment of drug addiction,
habitual alcoholism,
homosexuality and lesbianism
4. Force, intimidation or undue influence
5. Physical incapability of either party to
consummate the marriage with the other,
and such incapacity continues and
appears to be incurable
Requisites of Annulment due to
Impotence:
a. Impotence exists at the time of the
celebration of marriage
b. Permanent
Page 19 of 383
 c. Incurable The STD must be The STD does not have
d. Unknown to the other spouse serious and incurable to be serious and
e. The other spouse must not also be appears incurable
impotent
 Doctrine of Triennial Cohabitation:
Presumption that the husband is
impotent should the wife still remain a
virgin after 3 years of living together
with her husband.
6. Affliction of Sexually Transmissible
Disease found to be serious and which
appears incurable
Elements:
a. Existing at the time of marriage
b. Sexually transmissible disease
c. Serious
d. Appears incurable

ARTICLE 45 ARTICLE 46
The STD is a ground The STD is a type of
for annulment fraud which in turn is a
ground for annulment
The STD does not The STD must be
have to be concealed concealed

CIVIL LAW REVIEWER Page 20 of 383

 EFFECTS OF TERMINATION OF MARRIAGE
GROUNDS FOR ANNULMENT WHO CAN FILE PRESCRIPTIVE PERIOD RATIFICATION
Lack of parental consent (PC) a. Underage party a. Within 5 years after Free cohabitation after reaching 21
(18-21) turning 21
b. Parent or guardian b. Before child reaches 21

Insanity of one party Sane spouse 2 views: Free cohabitation after insane spouse
(INSANITY) Sempio-Diy: regains sanity
Before death of other party

Dean Del Castillo:

Within 5 years from the time
the right or action accrues

Guardian of insane Anytime before the death

spouse of either party
Insane spouse During the lucid interval or
after regaining sanity also
before death of other party
Fraud Injured Party Within 5 years after Free cohabitation even with full
discovery of Fraud knowledge of facts constituting the
fraud
Vitiated consent Injured Party Within 5 years from time Free cohabitation after the cause (force,
force, intimidations or undue intimidation, undue influence)
influence disappeared or disappeared or ceased
ceased *intimidation can be on the person or the
property of the injured party and his/her
immediate family
Incapability to Consummate/ Injured Party Within 5 years after the No ratification since defect is permanent.
Sexually transmissible disease marriage ceremony
(CONSUMMATE/STD)

CIVIL LAW REVIEWER Page 21 of 383

 EFFECTS OF VOIDABLE BIGAMOUS MARRIAGE, DECLARATION OF NULLITY, AND ANNULMENT
BASIS VOIDABLE BIGAMOUS MARRIAGE (ART. 41) DECLARATION OF ANNULMENT
NULLITY
Status of Children of subsequent marriage conceived before its termination Illegitimate except Children conceived or born before
children – legitimate Art. 36 and Art. 53 annulment decree –
legitimate
Property ACP/CPG shall be liquidated. The share in the net profits of Same Same
Relations community property of the spouse who contracted the marriage
in bad faith, shall be forfeited in favor of common children or if
there are none, children of the guilty spouse by previous
marriage or in default, the innocent spouse (common children
-> children of guilty spouse by previous marriage -> innocent
spouse)
Donations Shall remain VALID except Same Same
Propter If donee contracted the marriage in bad faith, donations
Nuptias propter nuptias made to the donee are revoked by
operation of law.
If both spouses acted in bad faith, donations propter
nuptias made by one in favor of the other are revoked by
operation of law.
Insurance If one spouse acted in bad faith, innocent spouse may revoke Same Same
his designation as beneficiary in the insurance policy even if
such designation be stipulated as irrevocable
Successio If one spouse contracted the marriage in bad faith, he shall be Same Same
n disqualified to inherit from the innocent spouse both testate and
intestate

CIVIL LAW REVIEWER Page 22 of 383

 DISTINCTION BETWEEN VOID AND VOIDABLE MARRIAGES
BASIS VOID VOIDABLE
As to nature Inexistent from the time of performance Valid until annulled
As to susceptibility to Cannot be ratified Can be ratified either by free cohabitation or prescription
ratification
As to effect on property No community property, only co-ownership (Art Absolute community exists unless another system is agreed
147/148) upon in marriage settlement (Default: ACP)
As to effect on children Children are illegitimate Children are legitimate if conceived before decree of
Exceptions: annulment
a. In case of psychological incapacity (Art 36)
b. Children born of subsequent marriage (Art 53)
As to how marriage may a. May be attacked directly or collaterally but for a. Cannot be attacked collaterally, only directly,
be impugned purpose of remarriage, there must be judicial i.e. there must be a decree of annulment
declaration of nullity. b. Can no longer be impugned after death of one
b. Can still be impugned even after death of of the parties
parties c. Action prescribes
c. Action for nullity does not prescribe

CIVIL LAW REVIEWER Page 23 of 383

7. PROCEDURE AND EFFECTS OF legal charge c. During lucid
TERMINATION OF MARRAIGE of insane interval or
after
A.M. No. 02-11-10-SC c. Insane regaining
PROPOSED RULE ON DECLARATION OF spouse sanity
ABSOLUTE NULLITY OF VOID MARRIAGES 3. Fraud Injured Party Within 5 years
AND ANNULMENT OF VOIDABLE from
MARRIAGES discovery of
fraud
SCOPE: 4. Vitiated Injured Party Within 5 years
 Petitions for declaration of absolute nullity Consent from time of
of void marriages and annulment of force,
voidable marriages under the Family Code intimidation or
 The Rules of Court shall apply suppletorily undue
influence
PETITION FOR DECLARATION OF ABSOLUTE disappeared
NULLITY: or ceased
5. Injured Party Within 5 years
Who may file: solely the husband or wife Incapability to after the
Consummate/ marriage
What to allege: If based on psychological Sexually ceremony
incapacity, complete facts showing either one is Transmitted
incapacitated from complying with marital Disease
obligations at the time of the celebration of the
marriage including physical manifestations, if A. Venue: Family Court of the province or city
any where the petitioner or the respondent has
been residing for at least 6 months prior to the
 Actions or defenses shall NOT prescribe date of filing (or non-resident respondent:
where he may be found in the Philippines) AT
PETITION FOR ANNULMENT OF VOIDABLE THE ELECTION OF THE PETITIONER.
MARRIAGES
Who may file: B. Petition shall allege:
GROUND PARTY TO PRESCRIPTIV 1. Complete facts constituting the cause of
FILE THE E PERIOD action
SUIT 2. Names and ages of the common children of
1. No Parental a. Parent or a. Anytime the parties and specify the regime governing
Consent Guardian before charge their property relations, and the properties
having Legal reaches 21 involved
Charge of “no- yrs. old 3. Verified and accompanied by a certification
consent” against forum shopping, which must be
party signed personally by the petitioner

b.“No- b. Within 5  Petition may not be signed solely by

Consent” years after counsel or through an attorney-in-fact
Party reaching 21  If petitioner is in a foreign country, the
2. Insanity a. Sane a. Anytime verification/certification shall be
spouse before death authenticated by the duly authorized
without of either party officer of the Philippine embassy or
knowledge of legation, consul general, consul, vice-
insanity consul, or consular agent in said country
b. Anytime
b. Relative, before death 4. Filed in 6 copies, a copy to be served to the
guardian or of either party OSG and the Office of the City or Provincial
person having Prosecutor, w/in 5 days from the date of its

CIVIL LAW REVIEWER Page 24 of 383

 filing and submit to the court proof of such
service w/in the same period
 Failure to comply with requirements
may be a ground for immediate
dismissal of the petition.
C. Service of Summons
 Governed by the Rule 14 of the Rules of
Court and the following:
1. Respondent cannot be located at his
given address or his whereabouts are
unknown and cannot be ascertained by
diligent inquiry:
(a) Service of summons by publication once
a week for 2 consecutive weeks in a
newspaper of general circulation in the
Philippines and in such places as the
court may order
(b) Served at respondent’s last known
address by registered mail or any other
means the court may deem sufficient
2. Summons to be published shall be
contained in a court order with the
following data:
(a) title of the case
(b) docket number
(c) nature of the petition
(d) principal grounds of the petition and the
reliefs prayed for
(e) a directive for the respondent to answer
w/in 30 days from the last issue of the
publication
D. Motion to Dismiss: not allowed, except
for lack of jurisdiction over the subject matter
or over the parties (however, any ground that
might warrant a dismissal may be raised as an
affirmative defense in an answer)
E. Answer
 Verified by the respondent himself & filed
w/in 15 days from service of summons or
w/in 30 days from the last issue of
publication in case of service of
summons by publication
 Failure to answer shall NOT make him in
default
 Court will order the public prosecutor to
investigate if there is collusion if no
answer is filed or when answer does not
tender an issue
CIVIL LAW REVIEWER
F. Investigation Report of the Public
Prosecutor
 To be made w/in 1 month after the
receipt of the court order
 Shall state whether the parties are in
collusion and basis for such finding,
serve copies to parties & counsels
(a) there is collusion – parties shall file
their respective comments w/in 10
days from receipt of a copy
(b) no collusion – set the case for pre-
trial
 Public prosecutor shall represent the
State
 Investigation is a condition sine qua non
for further proceedings in cases where
the respondent does not answer. This is
true even if during the hearing the fiscal
participated and cross-examined the
witnesses. Corpus vs. Ochoterena,
435 SCRA 446 (2004)
G. Court may require a social worker to conduct
a case study and submit report at least 3 days
before the pre-trial
H. Pre-trial is MANDATORY.
 Notice
1. Notice of pre-trial shall be served to
the parties, their counsels and the
public prosecutor, containing: date
of pre-trial conference and order
directing the parties to file pre-trial
brief, ensuring its receipt by the
adverse party at least 3 days before
the date of pre-trial
2. Notice of pre-trial shall still be sent
to respondent even if he did not file
an answer
 Personal Appearance
1. Parties should appear personally at
the pre-trial
2. Failure of petitioner to appear at the
pre-trial personally w/o the valid
cause, case dismissed
3. Failure to file the pre-trial brief or to
comply with its required contents,
case dismissed
4. If respondent filed his answer but
fails to appear at the pre-trial, the
court shall proceed but public
prosecutor required to investigate
reason for non-appearance (if due to
collusion)
Page 25 of 383


Pre-trial conference F. LEGAL SEPARATION

Court may refer issues to mediator, 1. Grounds
but should this fail or is not availed of,
2. Procedure
proceed with pre-trial conference
 Pre-trial order
3. Defenses
1. Parties are not allowed to raise 4. Liquidation
issues or present witnesses and 5. Effects of Legal Separation
evidence other than those stated in Pendente Lite
the pre-trial order 6. Reconciliation Effects
2. Parties have 5 days from receipt of ========================
pre-trial order to make corrections or ==================
modifications
3. Public prosecutor shall appear for
1. GROUNDS
the State to prevent collusion
(PRC-FAL-BILA)
1. Repeated physical violence or grossly
J. Prohibited Compromise
abusive conduct directed against petitioner,
(a) Civil status of persons
a common child or a child of the petitioner
(b) Validity of marriage or legal separation
2. Physical violence or moral pressure to
(c) Any ground for legal separation
compel the petitioner to change religious or
(d) Future support
political affiliation
(e) Jurisdiction of courts
3. Attempt of respondent to corrupt or induce
(f) Future legitimes
the petitioner, a common child, or a child of
the petitioner, to engage in prostitution, or
K. Decision
connivance in such corruption or
 Copies will be served on the parties, inducement
including the SolGen and public 4. Final judgment sentencing respondent to
prosecutor imprisonment of more than 6 years (even if
 Final after expiration of 15 days from pardoned)
notice to the parties 5. Drug addiction or habitual alcoholism
 Should be registered in the Civil Registry 6. Lesbianism or homosexuality
where the marriage was celebrated and in 7. Subsequent bigamous marriage
the Civil Registry of the place where the 8. Sexual infidelity or perversion
Family Court is located 9. Attempt by respondent against the life of
the petitioner
L. Appeal 10. Abandonment for more than 1 year without
 Not allowed if no motion for justifiable cause
reconsideration or new trial is made w/in
15 days from notice of judgment Grounds to Deny Legal
Separation/Defenses to Legal Separation:
M. Death (C4-D-GRP)
 Party dies before entry of judgment:
case closed and terminated w/o 1. Condonation
prejudice to the settlement of the estate  failure of the husband to look for his
in proper proceedings in the regular adulterous wife is not condonation to
courts wife’s adultery
 Party dies after the entry of judgment: 2. Consent
binding upon the parties and their successors- 3. Connivance
in-interest in the settlement of the estate in the 4. Collusion
regular courts. 5. Mutual guilt
N. Date of Effectivity: March 15, 2003 6. Prescription – action for legal separation
must be filed within five years from the time
============================ of the occurrence of the cause of action
====================
TOPICS UNDER THE SYLLABUS

CIVIL LAW REVIEWER Page 26 of 383

7.
Death of either party during the pendency of
the case Lapuz-Sy v. Eufemio, 43 SCRA
177 (1972)
8. Reconciliation of the spouses during the
pendency of the case
Effects of Separation:
1. Spouses are entitled to live separately
2. Marriage bond is not severed
3. Dissolution of property regime
4. Forfeiture of the share of the guilty spouse
in the net profits of the ACP/CPG
5. Custody of minor children to innocent
spouse (subject to Art. 213: parental
authority shall be exercised by parent
designated by the court)
 The imposed custodial regime under the
second paragraph of Article 213 is limited in
duration, lasting only until the child’s
seventh year. From the eighth year until the
child’s emancipation, the law gives the
separated parents freedom, subject to the
usual contractual limitations, to agree on
custody regimes they see fit to adopt.
(Dacasin vs. Dacasin, GR168785, February
5, 2010)
6. Guilty spouse is disqualified from intestate
succession and provisions made by
innocent spouse in his favor in a will shall
be revoked by operation of law
7. Innocent spouse may revoke the donation
made by him in favor of the offending
spouse. However, alienations, liens and
encumbrances registered in good faith
before the recording of the complaint for
revocation in the registries of property shall
be respected.
8. Innocent spouse may revoke designation of
guilty spouse as beneficiary in the
insurance policy even if such designation be
stipulated as irrevocable
2. PROCEDURE FOR LEGAL SEPARATION
A.M. No. 02-11-11-SC
PROPOSED RULE ON LEGAL SEPARATION
 The Rules of Court shall apply suppletorily
Who may file: solely the husband or wife
When to file: within 5 years from the
occurrence of any of the grounds
CIVIL LAW REVIEWER

P
rocedure is almost the same as in the Rule
on Declaration of Absolute Nullity &
Annulment (see above)
 Creditors are furnished copies of the
petition
 Pre-trial set not earlier than 6 months from
filing of the petition for possibility of
reconciliation (COOLING OFF PERIOD)
Exception: There is no cooling-off period if the
ground alleged are those under R.A. 9262
(Violence Against Women & Children). The
court shall proceed in the main case and other
incidents of the case as soon as possible. R.A.
9262, Sec. 19.
 The abandonment contemplated is one
without justifiable cause for more than
one year. As it was established that
Lucita left William due to his abusive
conduct, such does not constitute
abandonment contemplated by the said
provision. Ong Eng Kiam vs. Ong,
G.R. No. 153206, October 23, 2006
============================
====================
TOPICS UNDER THE SYLLABUS
G. RIGHTS AND OBLIGATIONS
BETWEEN HUSBAND AND WIFE
========================
==================
Obligations of Husband and Wife (L2H2ds)
1. Live together
2. Observe mutual love, respect and fidelity
3. Render mutual help and support
4. Management of the household
5. Fix the family domicile
6. Joint responsibility for the support of the
family
Profession
General Rule - Either spouse may exercise any
legitimate profession/business without the
consent of the other
Exception - The other spouse may object on
valid, serious and moral grounds. In
case of disagreement, the court
shall decide whether
a. The objection is proper AND
b. Benefit has accrued to the family
before and after the objection.
Page 27 of 383
  If benefit accrued to
the family before the objection, the
resulting obligation shall be enforced
against the separate property of the spouse
who has not obtained consent
 If benefit accrued to the family after the
objection has been made, the resulting
obligation shall be enforced against the
community property
============================
====================
TOPICS UNDER THE SYLLABUS
H. PROPERTY RELATIONS BETWEEN
HUSBAND AND WIFE
1. How Governed
2. Marriage Settlements
3. Donations by Reason of
Marriage
4. Property Relations of Union
with Marriage
a.System of Absolute Marriage
b. Conjugal Partnership of Gains
5. Separation of Properties During
Marriage
6. Regime of Separation of
Property
========================
==================
1. WHAT GOVERNS PROPERTY
RELATIONS BETWEEN SPOUSES
1. Marriage settlement – future spouses may
agree upon the regime of ACP, CPG,
complete separation of property, or any
other regime
2. Family Code – if there is no marriage
settlement or when the regime agreed upon
therein is void, the system of ACP shall
govern
3. Local customs
2. MARRIAGE SETTLEMENT
CIVIL LAW REVIEWER
Requisites of a Valid Marriage Settlement:
(WSB-TC-CR)
1. In writing
2. Signed by the parties
3. Executed before the celebration of marriage
4. To fix the terms and conditions of their
property relations
5. If parental consent is needed for the
marriage, the parent/guardian must be
made a party to the agreement
6. If the party executing the settlement is
under civil interdiction or any other
disability, the guardian appointed by the
court must be made a party to the
settlement
7. Registration (to bind 3rd persons)
General Rule: Property Relations are governed
by Philippine laws
Exceptions:
1. When both are aliens, even if married in the
Phils.
2. As to extrinsic validity of contracts
3. Contrary stipulation
3. DONATIONS BY REASON OF
MARRIAGE (Donations Propter
Nuptias)
Before Marriage
General Rule: Future spouses cannot donate
to each other more than 1/5 of their present
property (excess shall be considered void)
Requisites:
1. Made before celebration of marriage
2. In celebration of marriage
3. In favor of one or both future spouses
Exception: If they are governed by ACP
During Marriage
General Rule: Donations made by spouses to
each other during the marriage are VOID
REASON:
1. To protect unsecured creditors from
being defrauded
2. To prevent stronger spouse from
imposing upon the weaker one the
transfer of the latter’s property to the
former
3. To prevent indirect modification of the
marriage settlement
Exceptions:
1. Moderate gifts on the occasion of any
family rejoicing
2. Donation mortis causa
Page 28 of 383
 Applies to common law spouses (Art. 87) Prescriptive Periods for Filing Action for
Revocation of Donation Propter Nuptias
Grounds to Revoke Donation Propter (Based on Sta. Maria)
Nuptias: (CARNIVL) If marriage is not 5 years (Art. 1149
1. Marriage is not celebrated celebrated NCC) from the time
2. Marriage is judicially declared void ab initio (Except: donations in marriage is not
3. Marriage without the needed parental marriage settlements solemnized on the
consent automatically void if fixed date
4. Marriage is annulled and donee is in bad marriage not
faith celebrated)
5. If it is with a resolutory condition and the
condition is complied with If marriage is judicially
6. In legal separation and donee is the guilty declared void, it
spouse depends: By operation of law if
7. Donee commits acts of ingratitude such as: (a) If subsequent donee-spouse
a. Commits an offense against the person, marriage is void contracted subsequent
honor or property of the donor, his wife, or pursuant to Art. 40 in void marriage in bad
his children under his parental authority relation to Arts. 52 and faith
b. Imputes to the donor any criminal offense 53, because
or any act involving moral turpitude, contracted by a
unless the crime was committed against spouse before prior
the donee himself, his wife, or his children void marriage is
under his authority judicially declared void 5 years from finality of
c. Unduly refuses to support the donor when judicial declaration of
he is legally or morally bound to give such (b) Judicially declared nullity (if action to
support void on grounds other recover property)
than Art. 40 in relation
DONATION PROPTER NUPTIAS v. to Arts. 52 and 53
ORDINARY DONATION When marriage takes 5 years
DONATIONS place without the
ORDINARY
BASIS PROPTER required parental
DONATIONS
NUPTIAS consent
Governed by the If resolutory condition 5 years from
rules on ordinary is complied with happening of condition
donations except Governed by When marriage is 5 years from finality of
Formaliti if future rules on annulled and donee in decree
es property, it must donations (Arts. bad faith
conform with 725-773 NCC) If donee commits an 1 year from donor’s
formalities of act of ingratitude knowledge of that fact
wills In cases of legal 5 years from the time
No limit except separation the decree of
May be donated
that donor shall separation has become
Present but up to 1/5 of
leave property final
Property donor's present
enough for his
property
support 4. PROPERTY RELATIONS
May be included
Future provided Cannot be a. System of Absolute Community
Property donation is included (acp)
mortis causa
Grounds The property regime of spouses in the absence
for Art. 86 of Family Arts. 760, 764, of a marriage settlement or when the regime
revocatio Code 765 NCC agreed upon is void.
n

CIVIL LAW REVIEWER Page 29 of 383


NOTE: Shall commence at the precise moment
that the marriage is celebrated. Any stipulation,
express or implied, for the commencement of
the regime at any other time shall be VOID.
No waiver of rights allowed during the marriage
except in case of judicial separation of property.
The waiver must be in a public instrument.
Property acquired during the marriage, whether
acquisition appears to have been made in the
name of one or both spouses, is PRESUMED to
belong to the community.
General Rule: The community property
consists of all the property owned by the
spouses at the time of the celebration of the
marriage or acquired thereafter.
Exceptions/Exclusions from Community
Property:
1. Property acquired
before the marriage by either spouse who
has legitimate descendants by a former
marriage and its fruits and income
2. Property for
personal and exclusive use, except jewelry
3. Property acquired
during the marriage by gratuitous title,
except when the donor, testator, or grantor
expressly provides otherwise
 Encumbrance or disposition of the
community property without the consent of
the other spouse is totally void. Benefit to
the family must always be proven.
Homeowner’s Savings & Loan Bank vs.
Dailo, G.R. No. 153802, March 11, 2005
Charges Upon and Obligations of the ACP:
1. Debts and obligations contracted during the
marriage:
a.) By either spouse without the consent
of the other to the extent that it
benefited the family
b.) By designated administrator-spouse
c.) By both spouses
d.) By one with the consent of the other
2. Taxes, liens, charges and expenses
including major or minor repairs, upon
community property
3. Support of spouses, their common children
and legitimate children of either spouse
CIVIL LAW REVIEWER
4.
E
xpenses of litigation between spouses
unless the suit is found to be groundless
5. Ante-nuptial debts which redounded to the
benefit of the family
6. Taxes and expenses for mere preservation
made during the marriage upon the
separate property of either spouse used by
the family
7. Expenses for professional or vocational
course
8. Other ante-nuptial debts, support of
illegitimate child, and liabilities for crime or
quasi-delicts in absence of separate
property
9. Donated or promised to common legitimate
children for profession, vocational course or
self improvement
If the community property is insufficient to
cover all these liabilities (except those falling
under (8) spouses shall be solidarily liable for
the unpaid balance with their separate
properties
Dissolution of the ACP:
1. Upon death of either spouse
2. Decree of legal separation
3. Marriage is annulled or nullified
4. Judicial separation of property during the
marriage (Arts. 134-138)
Liquidation of the ACP:
1. Inventory of all properties
a. Inventory of community property
b. Inventory of separate property of the wife
c. Inventory of separate property of the
husband
2. Debts and obligations of ACP are paid
3. Remainder of the separate properties of the
spouses are returned to the owner
4. Net remainder of the ACP is divided equally
between husband and wife
5. Presumptive legitimes of children are
delivered
6. Adjudication of conjugal dwelling and
custody of common children
b. System of Conjugal Property of
Gains (cpg)
The spouses contribute the following to a
common fund:
1. Proceeds, products, fruits and income of
separate properties of spouses
Page 30 of 383

2. Everything acquired by spouses through
their efforts
3. Everything acquired by spouses through
chance
 Shall commence at the precise moment that
the marriage is celebrated. Any stipulation,
express or implied, for the commencement
of the regime at any other time shall be
VOID.
 No waiver of rights allowed during the
marriage except in case of judicial
separation of property. The waiver must be
in a public instrument.
 Property acquired during the marriage,
whether acquisition appears to have been
made in the name of one or both spouses,
is PRESUMED to be conjugal.
 The presumption is not rebutted by the
mere fact that the certificate of title of the
property or the tax declaration is in the
name of one of the spouses. Villanueva v.
CA,427 SCRA 439 (2004)
 It is not even necessary to prove that the
properties were acquired with funds of the
partnership. The presumption shall subsist
in the absence of clear, satisfactory and
convincing evidence to overcome the same.
Chine v. CA, 423 SCRA 371 (2004)
Exclusive Property in CPG:
1. That brought into the marriage as
his/her own
2. That acquired during the marriage
gratuitously
3. That acquired by redemption, barter or
exchange with exclusive property
4. That purchased with exclusive money
What Constitutes CPG:
1. Fruits of conjugal property due or received
during the marriage and net fruits of
separate property
2. Those acquired through occupation
3. Livestock in excess of what was brought to
the marriage
4. Those acquired during the marriage with
conjugal funds
5. Share in hidden treasure
6. Those obtained from labor, industry, work or
profession of either or both spouse
CIVIL LAW REVIEWER
7.
T
hose acquired by chance
Rules in Cases of Improvement of
Exclusive Property:
GENERAL RULE: The ownership of
improvements made on the separate property
of the spouses at the expense of the
partnership or through efforts of both spouses
shall pertain to the partnership.
1. Accession – if the cost of the improvement
and any resulting increase in value are equal
or less than the value of the entire property
at the time of the improvement, the entire
property remains the exclusive property of
the owner-spouse (subject to reimbursement
of improvement cost)
2. Reverse Accession – if the cost of the
improvement and any resulting increase in
value are more than the value of the entire
property at the time of the improvement, the
property becomes conjugal (subject to
reimbursement of the value of the property
of the owner-spouse)
Charges upon CPG:
-Same as that under ACP, except that under
taxes and expenses for preservation of
separate property of either spouse during the
marriage -> property need not be used by the
family
NOTE: If the conjugal partnership is
insufficient, the spouses shall be solidarily liable
for the unpaid balance with their separate
properties.
Dissolution of CPG: Same as under ACP
Liquidation of the CPG:
1. Inventory of all property
2. Amounts advanced by CP as payment for
personal debts and obligations of either
spouse are credited
3. Reimbursement for use of exclusive funds
4. Debts and obligations of the CP are paid
5. Remains of exclusive properties are returned
6. Indemnify loss of deterioration of movables
belonging to either spouse used for the
benefit of the family
7. Net remainder of conjugal property is divided
equally
8. Delivery of children’s presumptive legitimes
Page 31 of 383
9.

Adjudication of conjugal dwelling and custody 2. In case one spouse is incapacitated or

of children unable to participate in the
 Prior to the liquidation of the administration of the common properties,
conjugal partnership, the interest of other spouse may assume sole powers
each spouse in the conjugal assets is  These powers do not include:
inchoate, a mere expectancy, which a. disposition and
constitutes neither a legal nor an b. encumbrance
equitable estate, and does not ripen into - Both spouses must approve any
title until after liquidation and disposition or encumbrance. Any
settlement. The right of the husband or encumbrance or disposition is void if
wife to one-half of the conjugal assets without the written consent of the other
does not vest until the dissolution and spouse or the court approval. However,
liquidation of the conjugal partnership or the transaction shall be construed as a
after dissolution of the marriage and continuing offer on the part of the
there are net assets left which can be consenting spouse, which may be
divided between the spouses or their perfected as a binding contract upon
respective heirs. Abalos v. acceptance by the spouse or court
Macatangay, 439 SCRA 649 (2004) approval.
NOTES:
 Property bought on installments paid partly Rules on Games of Chance: (ACP/CPG)
from exclusive funds of the spouses and LOSS: Borne by the loser spouse and shall
partly from conjugal funds: not be charged to the community
a. If full property
ownership is vested before the marriage WINNINGS: Form part of the community
– it shall belong to the buyer-spouse property
b. If full
ownership was vested during the Distinction between ACP and CPG
marriage – it shall belong to the ACP CPG
conjugal partnership All the properties Each spouse retains
(In any case, the amount advanced by the owned by the his/her property
partnership or by either/both spouses shall spouses at the time before the marriage
be reimbursed by the owner upon of marriage become and only the fruits
liquidation) community property and income of such
properties become
 If the community or conjugal properties are part of the conjugal
insufficient, the separate properties shall be properties during the
solidarily and subsidiarily liable for the marriage
obligations Upon dissolution and Upon dissolution of
liquidation of the the partnership, the
 The conjugal partnership property shall community property, separate property of
likewise be liable for the payment of the the net remainder is the spouses are
personal debts of either spouse insofar as divided equally returned and only the
they have redounded to the benefit of the between the spouses. net profits of the
family. partnership are
divided equally
Administration and Enjoyment of the between the spouses
ACP/CPG of their heirs
General Rule: It shall belong to both spouses
jointly c. Separation of Property
Exceptions:
1. In cases of disagreement, husband’s  Separation of property between the spouses
decision shall prevail during the marriage shall not take place
 Wife has recourse to the courts within except by judicial order.
5 years

CIVIL LAW REVIEWER Page 32 of 383

 1.
O

Judicial separation of property may either be ne spouse becomes guardian of the other
voluntary or for sufficient cause. 2. One spouse judicially declared absent
3. One spouse sentenced to penalty with civil
SUFFICIENT CAUSE GROUNDS FOR interdiction
FOR SEPARATION REVIVAL OF 4. One spouse becomes a fugitive from justice
OF PROPERTY FORMER or is hiding as an accused in a criminal case
PROPERTY REGIME
1. Petitioner’s 2. Civil interdiction PROPERTY REGIME OF UNIONS WITHOUT
spouse sentenced to terminates MARRIAGE
penalty with civil BASIS ARTICLE 147 ARTICLE 148
interdiction 1. Man and
2. Petitioner’s 2. Absent spouse re- woman
spouse declared an appears 2. Living 1. Man and woman
absentee together as 2. Living together
3. Loss of parental 3. Parental authority husband and as husband and
authority of judicially restored wife wife
petitioner’s spouse 3. With capacity 3. NOT
declared by court to marry capacitated to
(without legal marry (Art.35(1)
impediment) under 18 years
 At least 18 old)
years old 4. Adulterous
4. Abandonment or 4. When spouse who Applicabil  Not Art. 37 relationship
failure to comply has left conjugal ity (incestuous (e.g.
with marital home without degree void concubinage)
obligations of legal separation marriage) 5. Bigamous/polyg
resumes common life  Not Art. 38 amous marriage
with the other (void (Art.35(4))
5. Spouse abused 5. Court authorizes marriage by 6. Incestuous
power of the resumption of reason of marriages under
administration administration, being public policy) Art.37
granted satisfied that there  Not 7. Void marriages
will be no abuse bigamous by reason of
6. At the time of 6. Spouses reconcile 4. Other void public policy
petition, spouses and resume common marriages / under Art.38
have been separated life live-in
in fact for at least Exclusively owned;
one year and Salaries married party 
Owned in equal
reconciliation is and property of CPG of
shares
highly improbable wages legitimate
7. When after marriage
voluntary dissolution Propertie
of the ACP or CPG s Remains
has been judicially acquired exclusive
decreed, spouses Remains exclusive
through provided there
agree to revive exclusive is proof
former regime (no funds
subsequent Propertie Presumed to be Only the
voluntary separation s obtained in properties
may be granted) acquired equal shares acquired by both
while since it is parties through
GROUNDS FOR TRANSFER OF living presumed to their actual joint
ADMINISTRATION OF EXCLUSIVE together have been contribution of
PROPERTY OF EITHER SPOUSE: (GACA) acquired money, property,

CIVIL LAW REVIEWER Page 33 of 383

 through joint or industry shall ===========================
efforts be owned by them ===================
in common in
If one party did proportion to their FAMILY - basic social institution which public
not participate respective policy cherishes and protects
in acquisition, contributions.  Hence, no suit between members of the
presumed to Properties owned family shall prosper unless earnest efforts
have in common shall towards a compromise have been made but
contributed be presumed to be failed.
through care equal; however,  Allegation of “earnest efforts” is
and proof may be JURISDICTIONAL, if it is absent, the court can
maintenance of shown to show dismiss the case. BUT this rule is
family and that their inapplicable to the following cases: (CLV-
household contribution and FJF)
respective shares 1. Civil status of persons
are not equal. 2. Any ground for legal separation
3. Validity of marriage or legal separation
 The registration of a property in the name 4. Future support
of the paramour who had no income 5. Jurisdiction of courts
whatsoever at the time of the donation by 6. Future legitime
another’s husband is tantamount to a
donation which is void under Article 87 of FAMILY RELATIONS INCLUDE:
the Family Code. The paramour then holds 1. Between husband and wife
the property under a constructive trust 2. Between parents and children
under Article 1456 in favor of the conjugal 3. Among other ascendants and descendants
partnership of the husband with the 4. Among brothers and sisters, full or half
legitimate spouse. Joaquino v. Reyes, 434 blood
SCRA 260 (2004)
============================
 Under Article 148, there must be proof of ====================
actual joint contribution by both the live-in TOPICS UNDER SYLLABUS
partners before the property becomes co- J.
owned by them in proportion to their FAMILY HOME
contribution. Otherwise, there are no
============================
presumptions of co-ownership and equal
====================
sharing. Villanueva v. CA, 427 SCRA 439
(2004)
FAMILY HOME It is deemed constituted from
the time it is occupied as a family residence
 No co-ownership exists between parties to
an adulterous relationship. In such a BENEFICIARIES OF A FAMILY HOME
relationship, it is necessary for each of the 1. Husband and wife, or unmarried head of the
partners to prove his or her actual family
contribution to the acquisition of property in 2. Parents (may include parent-in-laws),
order to be able to lay claim to any portion ascendants, brothers and sisters
of it. Presumptions of co-ownership and (legitimate/illegitimate) living in the family
equal contribution do not apply. Rivera v. home and dependent on head of family for
Heirs of Villanueva, G.R. No. 141501, support
July 21, 2006
1. MANNER OF CONSTITUTION
===========================
=================== GUIDELINES:
TOPICS UNDER SYLLABUS: 1. FH is deemed constituted from time of
I. The Family (Arts 149-151, FC) actual occupation as a family residence
2. FH must be owned by person constituting it

CIVIL LAW REVIEWER Page 34 of 383

3.
FH must be permanent
4. Rule applies to valid, voidable and even to
common-law marriages under Arts. 147 and
148
5. FH continues despite death of one or more
spouses or unmarried head of family for 10
years or as long as there is a minor
beneficiary (Art. 159)
6. Only one FH can be constituted
2. QUALIFIED PROPERTY
Actual value of the family home shall not
exceed P300,000 in URBAN areas and P200,000
in RURAL areas (Art.157)
3. EXEMPTION FROM EXECUTION
General Rule: (Art. 153) The family home
(FH) is exempted from:
1. Execution
2. Forced Sale
3. Attachment
Exceptions: (Art. 155)
1. Non-payment of taxes
2. Debts incurred prior to constitution of home
3. Debts secured by mortgages on the
premises
4. Debts due laborers, mechanics, architects,
builders, materialmen, and others who have
rendered service or furnished materials for
the construction of the building
NOTE: The exemption is limited to the value
allowed by the Family Code
4. SALE
Sale, Alienation, Donation, Assignment, Or
Encumbrance Of The Family Home
1. The person who constituted the same must
give his/her written consent
2. The spouse of the person who constituted
the family home must also give his/her
written consent
3. A majority of the beneficiaries of legal age
must also give their written consent
4. In case of conflict, the court shall decide
Requisites For Creditor To Avail Of The
Right To Execute: (Art. 160)
1. He must be a judgment creditor
2. His claim is not among those excepted
under Art. 155
CIVIL LAW REVIEWER
3.
H
e has reasonable grounds to believe that
the family home is worth more than the
maximum amount fixed in Art. 157
PROCEDURE:
1. Creditor to file a motion in the court
proceeding where he obtained a favorable
for a writ of execution against FH.
2. Hearing on the motion where the creditor
must prove that the actual value of the FH
exceeds the maximum amount fixed by the
Family Code, either at the time of its
constitution or as a result of improvements
introduced thereafter its constitution.
3. If creditor proves that actual value exceeds
the maximum amount the, court will order
its sale in execution.
4. If FH is sold for more than the value
allowed, the proceeds shall be applied as
follows:
a. First, the obligations enumerated in Art.
155 must be paid (listed above)
b. Then the judgment in favor of the
creditor will be paid, plus all the costs of
execution
c. The excess, if any, shall be delivered to
the judgment debtor
============================
==================
TOPICS UNDER SYLLABUS
K. Paternity and Filiation (Arts. 163-
182, FC)
1. Kinds of Filiation
2. Children by Nature
a. Legitimate Children
b. Illegitimate Children
c. Legitimated Children
3. Actions regarding filiation
a. To claim filiation
i. Proof of filiation
ii. Admissibility of Scientific
Testing
b. To impugn filiation
4. Rights of
Legitimate/Legitimated/Illegitimat
e Children
========================
==================
TOPICS UNDER SYLLABUS
Page 35 of 383
G. PATERNITY AND FILIATION
1.Kinds of Filiation
2 Children by Nature
============================
====================
1.KINDS OF FILIATION
2.CHILDREN BY NATURE
a. Legitimate Children
LEGITIMATE CHILDREN -are those conceived
OR born during a valid marriage.
INCLUSIONS: Those children who are:
1. Conceived as a result of artificial
insemination
2. Born of a voidable marriage before decree
of annulment
3. Conceived or born before judgment of
annulment or absolute nullity under Art. 36
(psychological incapacity) becomes final &
executory
4. Conceived or born of a subsequent
marriage under Art. 53 (failure to record the
judgment, partition and distribution of
properties, and delivery of children’s
presumptive legitime)
5. Of mothers who may have declared against
their legitimacy or was sentenced as an
adulteress (Art.167)
6. Legally adopted
7. Legitimated, conceived and born outside of
wedlock of parents without impediment at
the time of conception and who
subsequently married
 A child born inside a valid marriage is
legitimate. Hence a child born inside a
bigamous marriage, which is void, is
considered a child under the first marriage,
which has not been nullified or annulled.
Concepcion v. CA, [G.R. No. 123450,
Aug. 31, 2005]
 An agreement by parties as to the status of
a child is void. Only the law determines
legitimacy or illegitimacy. Thus, the child, in
eyes of the law, is legitimate under the first
marriage notwithstanding the admission in
pleadings by the wife and his second
husband that the child is their legitimate
son. Similarly, any declaration of the
mother that her child is illegitimate has no
CIVIL LAW REVIEWER
probative value. Concepcion v. CA, [G.R.
No. 123450, Aug. 31, 2005]
b. Illegitimate Children
ILLEGITIMATE CHILDREN -are those
conceived AND born outside a valid marriage.
Exceptions: Those children who are:
1. Born of marriages which are void ab initio
such as bigamous and incestuous marriages
and void marriages by reason of public
policy
2. Born of voidable marriages born after the
decree of annulment
c. Legitimated Children
REQUISITES FOR LEGITIMATION:
1. The child was conceived and born outside of
wedlock
2. The parents, at the time of child’s
conception, were not disqualified by any
impediment to marry each other
3. There is a valid marriage subsequent to the
child’s birth
 Legitimation takes place by the subsequent
marriage of the child’s parents
 Effect of legitimation:
-Confers on the child the rights of legitimate
children
-Retroacts to the time of the child’s birth
 Legitimation may be impugned only by
those who are prejudiced in their rights
within 5 years from the time the cause of
action accrues (death of parents of
legitimated child)
3. ACTIONS REGARDING FILIATION
a. To claim filiation
i. Proof of filiation
PROOF OF FILIATION
General Rule: (Art. 172, Par. 1) Filiation of
legitimate or illegitimate children is established
by any of the following:
1. The record of birth appearing in the civil
register or a final judgment
 Must be prepared by the father. A certificate
of live birth purportedly identifying the
Page 36 of 383
 putative father is not competent evidence
of paternity when there is no showing that
the putative father had a hand in the
preparation of said certificate. The local civil
registrar has no authority to record the
paternity of an illegitimate child on the
information of a third person. Cabatania v.
CA, [441 SCRA 96 (2004)]
 Record of Birth merely prima facie
evidence. In Benitez-Badua v. CA, it is well-
settled that a record of birth is merely a
prima facie evidence of the facts contained
therein. It is not conclusive evidence of the
truthfulness of the statements made there
by the interested parties.
2. An admission of legitimate or illegitimate
filiation in a public document or a private
handwritten instrument and signed by the
parent concerned
Exception: (Art. 172, Par. 2) In the absence
of these evidences, the legitimate filiation may
be proved by:
1. Open and continuous possession of the
status of a legitimate (or illegitimate) child
 Definition. Continuous does not mean that
the concession of status shall continue
forever but only that it shall not be of an
intermittent character while it continues.
The possession of such status means that
the father has treated the child as his own,
directly and not through others,
spontaneously and without concealment
though without publicity. Mendoza v. CA,
[G.R. No. 86302, Sept. 21, 1991]
 How to prove. There must be evidence of
the manifestation of the permanent
intention of the supposed father to consider
the child as his, by continuous and clear
manifestations of parental affection and
care, which cannot be attributed to pure
charity. Such acts must be of such a nature
that they reveal not only the conviction of
paternity, but also the apparent desire to
have and treat the child as such in all
relations in society and in life, not
accidentally, but continuously. Jison v. CA,
[G.R. No. 124853, February 24, 1998]
2. Any other evidence allowed by the Rules of
Court and special laws
CIVIL LAW REVIEWER
 The due recognition of an illegitimate child
in a record of birth, a will, a statement
before a court of record, or in any authentic
writing is, in itself, a consummated act of
acknowledgement of the child, and no
further court action is required. In fact, any
authentic writing is treated not just a
ground for compulsory recognition; it is in
itself a voluntary recognition that does not
require a separate action for judicial
approval. Eceta v. Eceta, [428 SCRA 204
(2004)]
NOTE: For illegitimate children: when the
action is based on the par. 2 of Art. 172, the
action may be brought ONLY during the lifetime
of the alleged parent
ii. Admissibility of Scientific Evidence
REQUISITES FOR CHILDREN BY ARTIFICIAL
INSEMINATION TO BE CONSIDERED
LEGITIMATE: (Art. 164)
1. The artificial insemination must made on
the wife;
2. The sperm of the husband, or of a donor, or
both the husband and a donor must be
used;
3. The artificial insemination has been
authorized or ratified by both spouses on a
written instrument executed and signed by
them before the birth of the child; AND
4. The written instrument is recorded in civil
registry together with the birth certificate of
the child
b. To impugn filiation
WHO MAY IMPUGN THE LEGITIMACY OF A
CHILD:
General Rule: Only the husband can impugn
the legitimacy of a child
Exceptions: The heirs of the husband may
impugn the child’s filiation in the following
cases:
a. If the husband dies before the expiration of
period for filing the action
b. If the husband dies after filing without
desisting
c. If the child was born after the death of the
husband
Page 37 of 383
GROUNDS TO IMPUGN THE LEGITIMACY OF
THE CHILD: (EXCLUSIVE LIST) (PBA)
1. It was physically impossible for the husband
to have sexual intercourse with his wife
within the first 120 days of the 300 days
which immediately preceded the birth of the
child because of:
a. Physical incapacity of the husband to
have sexual intercourse with his wife
b. Fact that the husband and wife were
living separately in such a way that
sexual intercourse was not possible, or
c. Serious illness of the husband which
absolutely prevented intercourse
2. If its proved that for biological or other
scientific reasons, the child could not have
been that of the husband, except in the
case of children conceived through artificial
insemination
3. In case of children conceived through
artificial insemination, when the written
authorization or ratification of either parent
was obtained through mistake, fraud,
violence, intimidation, or undue influence
PERIODS FOR FILING OF ACTION TO
IMPUGN LEGITIMACY:
1. If the husband (or his heirs, in proper cases)
resides in the SAME city or municipality:
within 1 year from knowledge of the birth
OR its recording in the civil register
2. If the husband (or his heirs) does NOT
RESIDE in the city or municipality where the
child’s birth took place or was recorded BUT
his residence is IN THE PHILS.: within 2
years
3. If the child’s birth took place or was
recorded in the PHILS. while the husband
has his residence ABROAD, or vice-versa:
within 3 years
NOTE:
 The period shall be counted from the
knowledge of the child’s birth or its
recording in the civil register.
HOWEVER, if the child’s birth was
concealed from or was unknown to the
husband or his heirs, the period shall be
counted from the discovery or knowledge of
the birth of the child or of the act of
registration of said birth, whichever is earlier.
 Legitimacy CANNOT be collaterally attacked
or impugned. It can be impugned only in a
CIVIL LAW REVIEWER
direct suit precisely filed for the purpose of
assailing the legitimacy of the child.
RULE ON STATUS OF A CHILD BORN
WITHIN 300 DAYS AFTER TERMINATION OF
FORMER MARRIAGE (Art. 168):
Rules in the absence of proof to the contrary:
1. If the child was born before 180 days after
celebration of 2nd marriage provided born
within 300 days after the termination of the
1st marriage: considered to have been
conceived during the first marriage.
2. If the child was born after 180 days
following the celebration of the 2nd marriage
whether born within 300 days after
termination of 1st marriage or afterwards:
considered to have been conceived during
the second marriage.
ACTION TO CLAIM LEGITIMACY:
1. The child can bring the action during his
lifetime
2. If the child dies after reaching majority
without filing an action, his heirs can no
longer file the action after death
3. If the child dies during minority or in the
state of insanity, his heirs can file the action
for him within 5 years from the child’s death
4. If the child dies after commencing the
action, the action will survive and his heirs
will substitute for him
5. If the child is a minor, incapacitated or
insane, his guardian can bring the action in
his behalf
4. RIGHTS OF
LEGITIMATE/LEGITIMATED/ILLEGITIMATE
CHILDREN
RIGHTS OF LEGITIMATE AND ILLEGITIMATE
CHILDREN
LEGITIMAT
BASIS ILLEGITIMATE
E
Use of mother’s
surname
Use of NOTE: R.A. 9255
father and amended Art. 176
Surname
mother’s of FC as of March
surname 19, 2004  can
use father’s
surname
Page 38 of 383
Legitime Entitled to Entitled only to ½ 3. Father’s admission in private
legitime and of legitime of handwritten document (R.A. 9255, Sec. 1,
other legitimate child effective March 19, 2004)
successional NOTE: The father under R.A. 9255, Sec. 1
rights has the right to file an action to prove non-
granted to filiation during his lifetime.
them by the
NCC ===========================
Entitled to
==================
receive
support TOPICS UNDER SYLLABUS
from L. ADOPTION (Arts 183-193, FC)
parents,  Inter-country Adoption Law
ascendants, Receive support
 Domestic Adoption Law
Support and in according to the
proper provision of the FC 1. Construction
cases, 2. Qualifications and
brothers and Disqualifications of Adopter
sisters 3. Qualifications and
under Art. Disqualifications of Adopted
174
4. Rights Granted by Adoption
 His/her whole
His/her 5. Rules on Succession
lifetime
whole
regardless of 6. Rescission of Adoption
Action for lifetime ========================
type of proof
claim for regardless
provided under ==================
legitimacy of type of
Art.172 par. 1
or proof
illegitimacy provided  ONLY lifetime of R.A. 8043: INTER-COUNTRY ADOPTION
under Art. alleged parent ACT OF 1995
172 for Art. 172 par.
2 1. CONSTRUCTION
Transmissi
ble to heirs INTER-COUNTRY ADOPTION -is the socio-
Yes No
under legal process of adopting a Filipino child by a
Art.173? foreigner or a Filipino citizen permanently
No right to inherit residing abroad where the petition is filed, the
ab intesto from supervised trial custody is undertaken, and the
Right to legitimate children decree of adoption is issued outside the
inherit ab Yes and relative of Philippines.
intesto father and mother
under Art. 992 2. QUALIFICATIONS AND
NCC DISQUALIFICATIONS OF ADOPTER

NOTE: An alien or a Filipino citizen permanently

 Use the surname of the mother if the
requisites of R.A. 9255 are not complied
with
 Use the surname of the father if the child’s
filiation has been expressly recognized by
the father, either through:
1. Record of birth in civil register
2. Father’s admission in public document
residing abroad may file an application for inter-
country adoption of a Filipino child if:
1. At least 27 years of age and at least 16
years older than the child to be adopted, at
the time of application unless the adopter is
the parent by nature of the child to be
adopted or the spouse of such parent
2. If married, his/her spouse must jointly file
for the adoption

CIVIL LAW REVIEWER Page 39 of 383

3.

Has the capacity to act and assume all rights 1. CONSTRUCTION

and responsibilities of parental authority
under his national laws, and has undergone 2. QUALIFICATIONS AND
the appropriate counseling from an DISQUALIFICATIONS OF ADOPTER
accredited counselor in his/her country
4. Has not been convicted of a crime involving WHO MAY ADOPT:
moral turpitude 1. FILIPINO CITIZEN
5. Eligible to adopt under his/her national law a. Of legal age
6. In a position to provide the proper care and b. In possession of full civil capacity
support and to give the necessary moral and legal rights
values and example to all his children, c. Of good moral character
including the child to be adopted d. Has not been convicted of any crime
7. Agrees to uphold the basic rights of the involving moral turpitude
child as embodied under Philippine laws, e. Emotionally and psychologically
the U.N. Convention on the Rights of the capable of caring for children,
Child, and to abide by the rules and f. At least 16 years older than the
regulations issued to implement the person to be adopted, unless:
provisions of this Act i. The adopter is the natural parent
8. Comes from a country with whom the of the child to be adopted, or
Philippines has diplomatic relations and ii. The adopter is the spouse of the
whose government maintains a similarly legitimate parent of the person
authorized and accredited agency and that to be adopted
adoption is allowed under his/her national g. In a position to support and care for
laws his legitimate and illegitimate
9. Possesses all the qualifications and none of children, in keeping with the means
the disqualifications provided herein and in of the family
other applicable Philippine laws 2. ALIEN
a. Possessing the same qualifications
3. QUALIFICATIONS AND as above stated for Filipino nationals
DISQUALIFICATIONS OF ADOPTED b. His/her country has diplomatic
relations with the Philippines
WHO MAY BE ADOPTED: Only a legally free c. He/she has been living in the
child may be the subject of inter-country Philippines for at least 3 continuous
adoption years prior to the filing of the
application for adoption and
LEGALLY-FREE CHILD - is a child who has maintains such residence until the
been voluntarily or involuntarily committed to adoption decree is entered, EXCEPT
the Department, in accordance with the Child in the case of:
and Youth Welfare Code i. A former Filipino citizen who
seeks to adopt a relative within
 No child shall be matched to a foreign the 4th degree of consanguinity
adoptive family unless it is satisfactorily or affinity; or
shown that the child cannot be adopted ii. One who seeks to adopt the
locally legitimate child of his/her Filipino
 Qualified children: Section 25, Article 8 of spouse; or
the Rules and Regulations provide: any child iii. One who is married to a Filipino
who has been voluntarily or involuntarily citizen and seeks to adopt jointly
committed to the Department as with his/her spouse a relative
dependent, abandoned, or neglected within the 4th degree of
pursuant to the provisions of the Child and consanguinity or affinity of the
Youth Welfare Code may be the subject of Filipino spouse; or
Inter-Country Adoption 3. GUARDIAN - with respect to the ward
after the termination of the guardianship
R.A. 8552: DOMESTIC ADOPTION ACT and clearance of his/her financial
accountabilities

CIVIL LAW REVIEWER Page 40 of 383

RULE ON ADOPTION BY SPOUSES
General Rule: Husband and wife shall jointly
adopt
Exceptions:
1. One spouse seeks to adopt the legitimate
son/daughter of the other; or
2. One spouse seeks to adopt his/her own
illegitimate son/daughter
3. The spouses are legally separated from
each other.
3. QUALIFICATIONS AND
DISQUALIFICATIONS OF ADOPTED
WHO MAY BE ADOPTED:
1. Any person below 18 years of age who has
been administratively or judicially declared
available for adoption;
2. Legitimate son/daughter of one spouse by
the other spouse;
3. Illegitimate son/daughter by a qualified
adopter to improve his/her status to that of
legitimacy;
4. Person of legal age if, prior to the adoption,
said person has been consistently
considered and treated by the adopter as
his/her own child since minority;
5. Child whose adoption has been previously
rescinded; or
6. Child whose biological or adoptive parents
have died provided that no proceedings
shall be initiated within 6 months from the
time of death of said parents.
WRITTEN CONSENT NECESSARY FOR
ADOPTION:
(A-BLISS-A)
1. Adoptee, if 10 years of age or over;
2. Biological parents of the child, if known, or
the legal guardian, or the proper
government instrumentality which has legal
custody of the child
3. Legitimate children of the adopter, 10 years
old or over
4. Illegitimate children of the adopter, 10
years old or over and living with him
5. Spouse of the adopted, if married
6. Spouse of the adopter, if married
7. Adopted children of the adopter, 10 years
old or over
EFFECTIVITY OF DECREE OF ADOPTION
 A decree of adoption is effective as of the
date the original petition was filed. This also
CIVIL LAW REVIEWER
applies in case the petitioner dies before
the issuance of the decree of adoption
 Where the petition for adoption was granted
after the child killed a girl, no retroactive
effect may be given to the decree of
adoption so as to impose a liability upon the
adopting parents accruing at a time when
the adopting parents had no actual or
physically custody over the adopted child.
Retroactive effect may perhaps be given
where such is essential to permit the
accrual of some benefit or advantage in
favor of the adopted child. To hold that
parental authority had been retroactively
lodged in the adopting parents so as to
burden them with liability for a tortuous act
that they could not have foreseen nor
prevented would be unfair and
unconscionable. Tamargo v. CA, [G.R. No.
85044, June 3, 1992]
4. RIGHTS GRANTED BY ADOPTION
EFFECTS OF ADOPTION:
1. Severance of all legal ties between the
biological parents and the adoptee and the
same shall then be vested on the adopters
EXCEPT in cases where the biological parent
is the spouse of the adopter
2. Deemed a legitimate child of the adopter
3. Acquired reciprocal rights and obligations
arising from parent-child relationship
4. Right to use surname of the adopter
5. RULES ON SUCCESSION
In legal and intestate succession, the adopters
and the adoptee shall have reciprocal rights of
succession without distinction from legitimate
filiation. However, if the adoptee and his/her
biological parents had left a will, the law on
testamentary succession shall govern.
6. RECISSION OF ADOPTION
GROUNDS FOR RECISSION OF ADOPTION:
(MASA)
1. Repeated physical and verbal maltreatment
by the adopters despite having undergone
counseling
2. Attempt on the life of the adoptee
3. Sexual assault or violence
4. Abandonment and failure to comply with
parental obligations.
Page 41 of 383
 1.
S

Adoption, being in the best interest of the child, ustenance

shall not be subject to rescission by the
adopter
 Only the adoptee is given the right to
rescind the decree of adoption
 However, the adopters may disinherit the
adoptee for causes provided in Art. 919 NCC
EFFECTS OF THE RESCISSION OF THE
ADOPTION:
1. The parental authority of the adoptee's
biological parents, if known, OR the legal
custody of the DSWD shall be restored if the
adoptee is still a minor or incapacitated.
2. The reciprocal rights and obligations of the
adopters and the adoptee to each other
shall be extinguished.
3. The court shall order the Civil Registrar to
cancel the amended certificate of birth of
the adoptee and restore his/her original
birth certificate.
4. Succession rights shall revert to its status
prior to adoption, but only as of the date of
judgment of judicial rescission. Vested
rights acquired prior to judicial rescission
shall be respected.
============================
====================
TOPICS UNDER SYLLABUS
M. SUPPORT (Arts 194-208)
1. What constitutes support
2. Persons Obliged to Support each
other
a. Spouses
b. Ascendants and Descendants
c. Parents and Legitimate and
Illegitimate
Children/Descendants
d. Legitimate/Illegitimate
Brothers and Sisters
2. Contractual Support
3. Basis of Support
4. Options of Giver
========================
==================
1. WHAT CONSTITUTES SUPPORT
SUPPORT consists of everything indispensable
for:
2. Dwelling
3. Clothing
4. Medical attendance
5. Education – includes schooling (formal
education) or training (non-formal
education) for some profession, trade or
vocation, even beyond the age of majority
6. Transportation – includes expenses going to
and from school, or to and from place of
work (art. 194)
 Makes no distinction between natural
support (basic necessities) and civil support
(those beyond the basics)
NOTE: Amount of support shall be in proportion
to the means of the giver and to the need of
the recipient
2. PERSONS OBLIGED TO SUPPORT EACH
OTHER
Persons Obliged To Support Each Other To
The Whole Extent: (Art. 195)
a. Spouses
b. Ascendants and
Descendants
c. Parents and
Legitimate/Illegitimate
Children/Descendants
d. Legitimate/Illegitimate
Brothers and Sisters
RULES REGARDING SUPPORT TO
ILLEGITIMATE BROTHERS AND SISTERS
(WHETHER FULL OR HALF BLOOD):
1. If the one asking for support is below
majority age, he is entitled to support from
his illegitimate brother or sister to the full
extent, without any condition
2. If the one asking for support is already of
majority age, he is entitled to support only if
his need for support is not due to a cause
imputable to his fault or negligence (Art.
196)
PROPERTIES THAT ARE LIABLE FOR THE
SUPPORT OF THE RELATIVES (SOURCES
OF MUTUAL SUPPORT)
Spouses
Absolute community
of conjugal

CIVIL LAW REVIEWER Page 42 of 383

 partnership can be between
strangers
Common children of Not exempt from
the spouses Absolute community attachment and
or conjugal property execution because it is
not a legal obligation
Children of a spouse
by another marriage Absolute community Exception: If the giver
or conjugal property Exempt from execution contracts with a person
and attachment whom he is obliged by
law to support, in which
Under ACP, separate
case only the excess of
property of parent- what is obliged (based
spouse. But if
on need) can be
insufficient, absolute attached or subject to
community liable but
execution
considered as
Follow rules of
advances on the
contracts which says
share of the parent to
that obligation must be
be paid during If contained in a will,
fulfilled (support must
liquidation apply the rules of
Illegitimate children be given) no matter
contractual support
of either spouse what happens (even if
Under CPG, separate because there is no
you lose your job). BUT
property of parent- more obligation of
if the change in
spouse. But if support to speak of
circumstances are
insufficient, conjugal since the giver is
manifestly beyond that
partnership liable if already dead
contemplation of the
financially capable,
parties, support may be
but support paid shall
adjusted accordingly
be deducted from
share of spouse
during liquidation  Judgment of support is always provisional
Separate property of in character. Res Judicata does not apply.
the obligor-spouse Lam v. Chua, [426 SCRA 29 (2004])

if the same is not 4. OPTIONS OF GIVER

Legitimate
sufficient or there is
ascendants, other Options Of The Person Giving Support:
none, the absolute
legitimate and 1. To give a fixed monthly allowance; or
community or
illegitimate 2. To receive and maintain the recipient in the
conjugal property
descendants, and giver's home or family dwelling (Art. 204)
shall be liable if
legitimate and
financially capable,
illegitimate brothers Exception to # 2: Existence of legal or moral
which support shall be
and sisters obstacle
deducted from the
share of the spouse
upon liquidation of the ORDER OF LIABILITY IF 2 OR MORE ARE
ACP or CPG OBLIGED TO SUPPORT:
1. Spouse
2. Descendants in nearest degree
2. CONTRACTUAL SUPPORT 3. Ascendants in nearest degree
3. BASIS OF SUPPORT 4. Brothers and sisters (Art. 199)

 When the obligation to give support falls

CONTRACTUAL
LEGACY OF SUPPORT upon two or more persons, the payment of
SUPPORT
Based on law Based on contract, so it

CIVIL LAW REVIEWER Page 43 of 383

 the same shall be divided between them in CHILDREN
proportion to the resources of each. From the
From the
 However, in case of urgent need and by communit From the
separate
special circumstances, the judge may order y property community
property of the
only one of them to furnish the support property
spouses
provisionally, without prejudice to his right
to claim from the other obligors the share
due from them. ============================
 When two or more recipients at the same =================
time claim support from one and the same TOPICS UNDER SYLLABUS
person legally obliged to give it, and the
obligor does not have sufficient means to
N. Parental Authority
satisfy all claims: 1. Contempt
-The order established in the preceding 2. Over Person
article shall be followed: 3. Over Property
a. Spouse 4. Substitute and Special Parental
b. Descendants in nearest degree Authority
c. Ascendants in nearest degree
5. Suspension/Termination of
d. Brothers and sisters (Art. 200)
- If the concurrent obligees should be the Parental Authority
spouse and a child subject to parental 6. Liability of Parents for Acts of
authority, the child shall be preferred Children
========================
SOURCES OF SUPPORT ==================
DURING
PENDING AFTER
THE 1. CONTEMPT
LITIGATION LITIGATION
MARRIAGE
SPOUSES PARENTAL AUTHORITY (PATRIA POTESTAS)
From the -is the mass of rights and obligations which
community parents have in relation to the person and
property assets property of their children until their
except if Art. emancipation, and even after, under certain
203 applies, i.e. circumstances.
if the claimant
spouse is the Characteristics Of Parental Authority:
guilty spouse, 1. It is a natural right and duty of the parents
No obligation to
he/she will not (Art. 209)
support except if
be entitled to 2. It cannot be renounced, transferred or
there is legal
support. waived, except in cases authorized by law
From the separation, in
communit which case the (Art. 210)
If the spouses 3. It is jointly exercised by the father and the
y property court may
are under CPG, mother (Art. 211)
require the guilty
support is 4. It is purely personal and cannot be
spouse to give
considered an exercised through agents
support
advance of such 5. It is temporary
spouses' share;
the rule does 2. OVER PERSON
not apply if the
spouses are RULES AS TO THE EXERCISE OF PARENTAL
under ACP, AUTHORITY:
based on Art 1. The father and the mother shall jointly
153 exercise parental authority over the persons
of their common children. In case of
disagreement, the father's decision shall

CIVIL LAW REVIEWER Page 44 of 383


prevail, unless there is a judicial order to
the contrary (Art. 211)
2. If the child is illegitimate, parental authority
is with the mother.
WHO EXERCISES PARENTAL AUTHORITY
Absence
of either Parent present
parent
Death of
either Surviving parent
parent
Remarriag
e of Surviving parent, unless the court
surviving appoints a guardian
parent
Parent designated by the court,
taking into account all relevant
considerations, especially the
choice of the child over 7 years
old, unless the parent chosen is
unfit
GR: A child under 7 years of age
shall not be separated from the
mother UNLESS the court
Separation
finds compelling reasons to
of parents
order otherwise (TENDER
(Art. 213)
YEARS DOCTRINE)
Paramount consideration in
matters of custody of a child is the
welfare and well-being of the child
Tonog v. Court of Appeals,
[G.R. No. 122906, February 7,
2002]
 In case of death, absence or unsuitability of
both parents, the surviving grandparent
shall exercise substitute parental authority
(Art. 214)
 No descendant shall be compelled, in
criminal cases, to testify against his parents
or grandparents, except when such
testimony is indispensable in a crime
against the defendant or by one parent
against the other. (Art 215)
3. OVER PROPERTY
Effect Of Parental Authority Upon The
Property Of The Child:
1. The father and mother shall jointly exercise
legal guardianship over the property of the
minor common child without court
appointment
CIVIL LAW REVIEWER
2.
I
n case of disagreement, the father’s
decision shall prevail, unless there is judicial
order to the contrary
3. If the market value of the property or the
annual income of the child exceeds
P50,000, the parent is required to furnish a
bond of not less than 10% of the value of
the child’s property or income
4. SUBSTITUTE AND SPECIAL PARENTAL
AUTHORITY
Order Of Substitute Parental Authority:
1. The surviving grandparent
2. The oldest brother or sister, over 21 years
old, unless unfit or disqualified
3. The child's actual custodian, over 21 years
old, unless unfit or disqualified (Art. 216)
 In case of foundlings, abandoned children,
neglected children, or abused children,
summary judicial proceedings shall be
instituted so that they may be entrusted to:
a. Heads of children’s homes
b. Orphanages, or
c. Similar institutions duly accredited by
the proper government agency (Art.
217)
Person Exercising Special Parental
Authority:
1. School
2. Administrators and teachers
3. Individual, entity, or institution engaged in
child care
Liability Of Those Exercising Special
Parental Authority Over The Child:
1. They are principally and solidarily liable for
damages caused by the acts or omissions of
the child while under their supervision,
instruction or custody. HOWEVER, this
liability is subject to the defense that the
person exercising parental authority
exercised proper diligence.
2. The parents and judicial guardians of the
minor or those exercising substitute
parental authority over the minor are
subsidiarily liable for said acts and
omissions of the minor.
Page 45 of 383
 DISTINCTION BETWEEN SUBSTITUTE AND leg to stand on to deprive the mother of a
SPECIAL PARENTAL AUTHORITY child below seven years of age, unless there
SUBSTITUTE are compelling reasons to do so. Gualberto
SPECIAL PARENTAL
PARENTAL v. Gualberto, G.R. No. 154994, June 28,
AUTHORITY
AUTHORITY 2005
It is exercised
concurrently with the Cases Where Parental Authority May Be
parental authority of Revived:
It is exercised in 1. Adoption of child
the parents. The
case of death, 2. Appointment of general guardian
parents temporarily
absence, or 3. Judicial declaration of abandonment
relinquish parental
unsuitability of 4. Final judgment divesting parental authority
authority over the child
parents. 5. Judicial declaration of absence or incapacity
to the person with
special parental or person exercising parental authority
authority.
6. LIABILITY OF PARENTS FOR ACTS OF
CHILDREN
5. SUSPENSION/TERMINATION OF
PARENTAL AUTHORITY Liability Of Parents For Torts Committed
By Their Minor Children:
Grounds For Suspension Of Parental  Parents and other persons exercising
Authority: (CHOBA) parental authority shall be civilly liable for
1. Conviction of parent for crime with civil the injuries and damages caused by the
interdiction acts or omissions of their minors PROVIDED
2. Treats child with excessive harshness and the children are living in their company and
cruelty under their parental authority
3. Gives corrupting orders, counsel or example  This is subject to the appropriate defenses
4. Compels child to beg provided by law
5. Subjects to or allows him to be subjected to
acts of lasciviousness NOTE:
 Parental authority and responsibility are
 The suspension or deprivation may be inalienable and may not be transferred and
revoked and the parental authority revived renounced except in cases authorized by
in a case filed for the purpose or in the law
same proceeding if the court finds that the  Parents may exercise parental authority
cause therefore has ceased and will not be over their child’s property
repeated

Grounds For The Permanent Termination ===================

Of Parental Authority : ==============
1. Death of parents
2. Death of child TOPIC UNDER SYLLABUS
3. Emancipation of child N. Funerals (Arts. 305-310,CC)
4. Parents exercising parental authority has O. Surname (Arts 364-380, CC)
subjected the child or allowed him to be P. Absence (Arts. 381-396,CC)
subjected to sexual abuse Q. Civil Register (Arts. 407-413,CC)
 Lesbianism is not compelling reason to
deprive the mother of a child below seven ===================
years of age. To deprive the wife of custody, ==============
the husband must clearly establish that her
moral lapses have had an adverse effect on
N. FUNERAL
the welfare of the child or have distracted
the offending spouse from exercising proper
General Guidelines:
parental care. Writ of habeas corpus has no

CIVIL LAW REVIEWER Page 46 of 383

1.

Duty and right to make arrangement in funerals

in accordance with Art. 199 FC:
a. Spouse
b. Descendants in nearest degree
c. Ascendants in nearest degree
d. Brothers and sisters
2. The funeral shall be in keeping with the
social position of the deceased
3. The funeral shall be in accordance with the
expressed wishes of the deceased WIFE SURNAME TO BE USED
a. In the absence of expressed wishes, his a. First name and
religious beliefs or affiliation shall maiden name + her
determine husband’s surname
b. In case of doubt, the persons in Art. 199 b. First name + her
of FC shall decide husband’s surname
4. Any person who disrespects the dead or c. Her husband’s full
allows the same shall be liable for damages Husband
name, but prefixing a
is living
word indicating that
(Art.
O. SURNAME Valid she is his wife, such
370)
USE OF SURNAME marriag as “Mrs”
e d. Retain the use of her
SURNAME TO BE maiden name (use of
CHILD CONCERNED husband’s surname is
USED
Legitimate child Father’s surname not a duty but merely
Legitimated child Father’s surname an option of the wife)
Adopted child Adopter’s surname Husband
She can use the surname
1. Mother’s surname; is dead
of the husband as if he
or (Art.
were still living
2. Father’s name if 373)
they were Wife is
Illegitimate child She shall resume using
recognized by their the guilty
father in the record her maiden name
party
of birth or in an 1. Resume using her
authentic writing Marriag maiden name; or
Conceived prior to e is 2. Continue employing
the annulment of the Father’s surname annulle her husband’s surname
marriage Wife is
d UNLESS:
Conceived after the the
(Art.37 a. Court decrees
annulment of the Mother’s surname innocent
1) otherwise, or
marriage party
b. She or the former
husband is
 Since a legitimate child can ask for a married again to
change of name, an adopted child can do another person
the same. Continue using the name
and surname she was
 The interest of justice and of the child Legally separated employing prior to the
permits an illegitimate child to change his (Art.372) legal separation Laperal
name adopting the surname of his parent’s v. Republic,[6 SCRA
other spouse. Calderon vs. Republic, [19 357 (1962)]
SCRA 721] IDENTITY OF NAMES AND SURNAMES
Between Younger person is obliged to
persons (Art. use such additional name OR
374) surname as will avoid
confusion

CIVIL LAW REVIEWER Page 47 of 383

 1. Son may use the word
“Junior”
2. Grandsons and other male
Between
descendants, shall either :
ascendants
a. Add a middle name
and
b. Add the mother’s
descendants
surname
(Art.
c. Add the Roman
375)
numerals II, III, and so
on

P. ABSENCE

Persons Who May Be Appointed By Way Of

Court Order As The Representative Of An
Absentee In Case Of Provisional Absence
Or As An Administrator
1. If no legal separation, the spouse present
2. If no spouse or if the spouse present is a
minor, any competent person
 The spouse who is appointed as
administratrix of the absentee spouse’s
property cannot alienate or encumber the
same, or that of the conjugal partnership,
without judicial authority.

When Administration Shall Cease

1. Absentee appears personally or by means
of an agent;
2. Death of the absentee is proved and his
estate or intestate heirs appear;
3. A third person appears, showing by a proper
document that he has acquired the
absentee's property by purchase or other
title
 The property shall be at the disposal of
those who may have a right thereto

CIVIL LAW REVIEWER Page 48 of 383

 STAGES
Provisional Absence
- A person disappears from
his domicile, whereabouts
are unknown and
a. He did not
leave any agent; or
b.He left an agent but
agent's power has
expired
Judicial Declaration of
Absence
-Necessary for interested
persons to be able to
protect the interest of the
absentee
WHEN TO FILE WHO MAY FILE? Presumption of death Spouse
ORDINARY ABSENCE
 4 years  person presumed dead for purposes
of remarriage of the spouse present
 7 years  presumed dead for all purposes
No statutory period a. Interested party
b. Relative EXCEPT for those of succession
c. Friend  10 years  person presumed dead for purposes
of opening succession
EXCEPT if he disappeared after the age of 75, an
absence of 5 years is sufficient
Without administrator a. EXTRAORDINARY ABSENCE
- After 2 years having b. 1. If a person rode an airplane or sea vessel lost in
elapsed without any heirs the course of voyage, from the time of loss of the
news about the c. airplane or sea vessel
absentee or since the heirs 2. If a person joined the armed forces who has
last news d. taken part in war, from the time he is considered
With administrator may have over the missing in action
- After 5 years from time 3.
property of the absentee Danger of death under other circumstances,
of from time of disappearance
some right subordinated
disappearance to the condition of the
absentee's death 4 years  for all purposes including those of opening
succession
 2 years  for purposes of remarriage
CIVIL LAW REVIEWER Page 49 of 383
Q. CIVIL REGISTER
MATTERS RECORDED/ENTERED IN THE CIVIL
REGISTER:
1. Acts, events and judicial decrees concerning
the civil status of persons
2. Birth
3. Marriage
4. Death
5. Legal separation
6. Annulment of marriage
7. Judgments declaring marriage void from the
beginning
8. Legitimation
9. Adoption
10. Acknowledgement of natural children
11. Naturalization
12. Loss of citizenship
13. Recovery of citizenship
14. Civil interdiction
15. Judicial determination
16. Voluntary emancipation of a minor
17. Change of name
General Rule: Entries in the civil register may be
changed or altered only upon a judicial order.
Exception: Clerical or typographical errors or
change in the name or nickname can be changed
administratively through verified petition with the
local office of the civil registrar.
Who may file petition: Any person having direct
and personal interest in any act, event, order or
decree concerning the civil status of persons or
change of name
PROCEDURAL REQUIREMENTS FOR A 1. Use of name is in good faith; and
PETITION FOR CHANGE OF NAME:
1. 3 years residency in the province where change
is sought prior to the filing
2. Must not be filed within 30 days prior to an
election
3. Petition must be verified
PROPER AND REASONABLE CAUSES THAT MAY
WARRANT THE GRANT OF A PETITION FOR
CHANGE OF FIRST NAME/NICKNAME:
1. Petitioner’s true and official name is ridiculous;
2. Petitioner’s true and official name is tainted
with dishonor
3. Petitioner’s true and official name is extremely
difficult to write or pronounce
4. New first name or nickname has been
habitually and continuously used by the
petitioner and he has been publicly known by
the first names and nicknames in the
community
5. When the change is necessary to avoid
confusion (Sec. 4, R.A. 9048)
 R.A. 9048 does not sanction a change of first
name on the ground of sex reassignment.
Rather than avoiding confusion, changing the
first name to make it compatible with the sex
he transformed himself into through surgery
may only create grave complications in the civil
registry and the public interest. Silverio vs.
Republic, G.R. No. 174689, Oct. 22, 2007
6. When the request for change is a consequence
of a change of status, such as when a natural
child is acknowledged or legitimated
USURPATION OF NAME - implies some injury to
the interests of the owner of the name. It consists
in the possibility of confusion of identity between
the owner and the usurper.
ELEMENTS OF USURPATION OF NAME:
1. An actual use of another's name by the
defendant
2. Use is unauthorized
3. Use of another's name is to designate
personality or to identify a person
REMEDIES AVAILABLE TO THE PERSON
WHOSE NAME HAS BEEN USURPED:
1. Civil (insofar as private persons are concerned)
a. Injunction
b. Damages (actual and moral)
2. Criminal (when public affairs are prejudiced)
WHEN USE OF ANOTHER'S NAME IS NOT
ACTIONABLE:
Used as stage, screen, or pen name, provided:
2. By using the name of another, no injury is
caused to that person's right
3. When use is motivated by modesty, a desire to
avoid unnecessary trouble, or other reason not
prohibited by law or morals
 The law does not allow dropping of middle
name from registered name unless there are
justifiable reasons to do so. Mere convenience
is not justifiable. Middle names serve to identify
the maternal lineage filiation of a person as
well as further distinguish him from others who
may have the same given name and surname
as he has.
 An illegitimate child whose filiation is not
recognized by the father bears only a given
name and his mother’s surname, and does not
have a middle name, unless legitimated or
subsequently acknowledged by the father in a
public document or private handwritten
 instrument. In Re: Petition for Change of 2. Change of first
legitimated
Name of Wang,[G.R. No. 159966, March name or nickname
30, 2005]
 If the correction is clerical: summary
proceeding
CHANGE OF ENTRIES IN CIVIL REGISTRY  If the rectification affects the civil status,
WITHOUT JUDICIAL WITH JUDICIAL citizenship or nationality of a party
AUTHORITY AUTHORITY (substantial): adversarial proceeding
Matters which may Change of surname
be made by the can only be done
concerned city or through a court
 Change of sex is not a mere clerical or
municipal registrar or proceeding typographical error. There is no special aw in
consul general (R.A. EXCEPT when the the Philippines governing sex reassignment and
9048): request for change is its effects. Silverio vs. Republic, [G.R. No.
1. Clerical or a consequence of a 174689, Oct. 22, 2007]
typographical error change of status,
 NOT nationality, such as when a NOTE: The new law, R.A. 9048, applies only to
natural child is clerical and typographical errors in entries of name
age, civil status 
acknowledged or and does not modify the rules mentioned above
needs court order
 A. Within the commerce of man (or which
II. PROPERTY may be the objects of contracts or
===================== judicial transactions)
B. Outside the commerce of man
============== 4. Existence
TOPICS UNDER SYLLABUS A. Present property (res existents)
A. Classification of Property (Arts. 414- B. Future property (res futurae)
418, CC) NOTE: Both present and future
property may be the subject of sale but
1. Immovable Property
generally not the subject of donation.
2. Movable Property 5. Materiality or Immateriality
3. According to Ownership A. Tangible or corporeal
a. Public Dominion B. Intangible or incorporeal
b. Private Ownership 6. Dependence or Importance
A. Principal
===================== B. Accessory
============== 7. Capability of Substitution
A. Fungible – capable of substitution by
PROPERTY: An object or a right which is other things of the same quality and
appropriated or susceptible of appropriation by quantity
man, with capacity to satisfy human wants and B. Non-Fungible – incapable of such
needs. substitution, hence, the identical thing
must be given or returned
A. CLASSIFICATION OF PROPERTY 8. Nature or Definiteness
Requisites of Property: (USA) A. Generic – one referring to a group or
1. Utility for the satisfaction of some class
human wants B. Specific – one referring to a single,
 endows property with value susceptible of unique object
pecuniary estimation (e.g. food, shelter, 9. Whether in the Custody of the Court or
clothing, recreation) Free
2. Substantivity or individuality A. In “custodia legis” – in the custody of
 quality of having existence apart from the court
any other thing (e.g. blood, when B. “free” property
separated from the body)
3. Appropriability 1. IMMOVABLE PROPERTY
 susceptibility of being possessed by men
Juridical Classification of Immovable
 not susceptible of appropriation:
Properties: (NIDA)
I. Common things (res communes)
1. By nature – cannot be moved from place
 Exception: those that may be to place because of their nature (Art. 415
appropriated under certain par 1 & 8 NCC)
conditions in a limited way (e.g. A. land, buildings, roads and constructions
Electricity, oxygen) of all kinds adhered to soil
II. Due to physical impossibility (e.g.
 a structure which is merely
Sun)
superimposed on the soil may be
III. Due to legal impossibility (e.g.
considered movable.
Human body)
B. mines, quarries, and slag dumps, while
IV. Due to no ownership (e.g. wild
the matter thereof forms parts of the
animals) or abandonment by the
bed, and waters either running or
owner.
stagnant
Classification of Property
 Once a house is demolished, its character
1. Mobility and Non-mobility
A. Movable or personal property as an immovable ceases. Bicerra v.
B. Immovable or real property Teneza, [6 SCRA 649 (1962)]
2. Ownership
A. Public  A mortgage of land necessarily includes, in
B. Private the absence of stipulation of the
3. Alienability improvements thereon, buildings. Still a
building by itself may be mortgaged apart
 from the land on which it has been built.
Such would be a real estate mortgage for
the building would still be considered
immovable property. Leung Yee v. Strong
Machinery, [37 Phil. 644 (1981)]
 A valid real estate mortgage can be
constituted on the building erected on the
land belonging to another. Prudential
Bank v. Panis, [153 SCRA 390 (1987)]
 The contracting parties may validly
stipulate that a real property be considered
as personal. After agreeing, they are
consequently estopped from claiming
otherwise. However, third persons acting in
good faith are not affected by its stipulation
characterizing the subject machinery as
personal. Serg’s Products v. PCI
Leasing, [328 SCRA 299 (2000)]
2. By incorporation – essentially movables
but attached to an immovable in a fixed
manner to be an integral part of it (Art.
415 par 2,3,4,6)
A. Trees, plants & growing fruits – while
adhered to soil, immovable
 once cut or uprooted, they cease to
be immovables
Except: Uprooted Timber
B. Everything attached to an immovable in
a fixed manner that it cannot be
separated without breaking the
material or deterioration of the object
 intent to attach permanently is
essential
 On temporary separation: 2 points
of view:
I. May still be considered as
immovable – If there is intent to
put them back.
II. Movable – because the material
fact of incorporation is what
determines its condition
C. Statues, reliefs, painting or other
objects for use or ornamentation
Requisites: (OP)
I. Placed by the owner of the
immovable or his agent
II. Intent to attach them
permanently to the tenements
D. Animal houses, pigeon houses,
beehives, fish ponds, or breeding places
of similar nature including the animals
in these places
Requisites: (OP)
I. Placed by the owner of the or
his agent
II. Intent to attach them
permanently to the land
3. By destination – movable placed on
immovable for the utility it gives to the
activity carried thereon (Art. 415 par
4,5,6,7,9)
A. Machinery, receptacles, instruments or
implements intended by owner of the
tenement or his agent for an industry or
works which may be carried on in a
building & which tend directly to meet
the needs of such works/industry
 attachment or incorporation to the
immovable is not essential
Requisites: (COE)
I. industry or works must be
carried on inside the building or
on the land
II. placed by the owner of the
building or property or his agent
III. machines must be essential and
principal elements in carrying
out the industry
 does not include incidentals
(movables without which the
businesses can still continue or
carry on their functions)
 Equipment destined only to repair or
service a transportation business may not
be deemed real property. Mindanao Bus
v. City Assessor, [6 SCRA 197 (1962)]
B. fertilizers – actually used on a piece of
land
C. docks & floating structures – intended
by their nature and object to remain at
a fixed place on a river, lake or coast.
4. By analogy/by law – contracts for public
works, servitude & other real rights over
immovable property (Art. 415 par 10)
2. MOVABLE PROPERTY
Movable Property: (SIFTOS)
1. Susceptible of appropriation that are not
included in enumeration in immovables.
Example−
 ½ interest in the business is personal
property. Involuntary Insolvency of
Strochechker v. Ramirez,[44 Phil
933 (1922)]
2. Immovable that are designated as movable
by special provision of law. Examples−
 Growing crops are considered
immovable under Art. 415(2) but
 personal property by Chattel Mortgage
Law. Sibal v. Valdez, 50 Phil 512
(1927)
 House built on leased land may be
treated insofar as the parties are
concerned as personal property and be
the object of a chattel mortgage.
Navarro v. Reyes,[9 SCRA 63
(1963)]
3. Forces of nature brought under control by
science. Examples−
 Electricity, gas, rays, heat, light,
oxygen, atomic energy, water power
etc.
 Electricity, the same as gas, is an
article bought and sold like other
personal property and is capable of
appropriation by another. United
States v. Carlos,[21 Phil. 364
(1946)]
4. Things which can be transported w/o
impairment of real property where they are
fixed
5. Obligations which have for their object
movables or demandable sums (credits)
 obligations and actions must be legally
demandable
 demandable sums must be liquidated
6. Shares of stocks of agricultural, commercial
& industrial entities although they may
have real estate
Classification Of Movables:
1. According to nature
a. Consumable – cannot be utilized w/o
being consumed
b. Non-consumable
2. According to intention of the
parties/purpose (whether it can be
substituted by other things of same kind,
quality and quantity)
a. Fungible (res fungibles) – only the
equivalent is returned
b. Non-fungible (res nec fungibles) –
identical thing is returned, do not admit
of substitution
Test To Determine Whether Property Is Real
Or Personal
1. Whether the property can be transported or
carried from place to place (Rule of
Description)
2. Whether such change of location can be
made without injuring the immovable to
which the object may be attached (Rule of
Description)
3. Whether the object does not fall within any
of the cases enumerated in Art. 415 (Rule
of Exclusion)
3.
ACCORDING TO OWNERSHIP
a. Public Dominion
Public Dominion – outside the commerce of men.
 KINDS: (USD)
A. intended for public use– can be
used by the public or everybody
B. intended for specific public service
of state, provinces, cities &
municipalities – can be used only by
duly authorized persons, such as
government buildings and vehicles
C. for the development of national
wealth
 Characteristics:
A. Outside the commerce of men –
cannot be alienated or leased or be
the subject of any contract
B. Cannot be acquired by private
individual or even municipalities
through prescription
C. Not subject to attachment &
execution
D. Cannot be burdened by voluntary
easement
E. Cannot be registered under the
Land Registration Law and be the
subject of a Torrens Title
F. In general, can be used by
everybody
NOTE: Fishponds are considered as part of public
dominion and cannot be acquired by private
persons unless it is converted into patrimonial
property. However, fishponds may be leased by the
government.
 Properties which the government owns for
fundamental purposes for rendering
government services are properties of public
dominion. They are held by the local
governments for public service, but at the
same time, they can be removed by the State
from the LGUs without having to pay just
compensation because the LGUs are merely
acting as agents. (City of Zamboanga Del
Norte v. Province of Zamboanga Del
Norte)
b. Private Ownership
KINDS:
Patrimonial property - the property of the State
owned by it in its private or proprietary capacity,
the property is not intended for public use, or for
some public service, or for the development of the
national wealth.
G.
 - Exist for attaining economic ends of
state
- Property of public dominion when no
longer intended for public use/service –
declared patrimonial (Article 422
NCC)
- Subject to prescription
- May be an object of ordinary contract
- Example: property acquired in
execution and tax sales, incomes or
rents of the State
H. Property for LGUs
- Property for public use
- roads, streets, squares, fountains,
public waters, promenades and public
works for public service paid for by the
LGUs
- all other properties possessed by LGUs
without prejudice to special laws are
considered patrimonial
NOTE: Patrimonial properties of LGUs cannot
be removed by the State without paying just
compensation.
I. Property of Private Ownership - all
properties belonging to private persons and
those belonging to the State and any of its
political subdivisions which are patrimonial
in nature
Conversion Of Property Of Public Dominion
To Patrimonial Property
1. Property of the National Government
 formal declaration by the executive or
legislative department that the property
is no longer needed for public use or for
public service
2. Property of political subdivisions
 must be authorized by law
NOTE: Sacred and religious objects are outside the
commerce of man. They are neither public nor
private party.
Political subdivisions cannot register as their own
any part of the public domain, UNLESS:
1. grant has been made
2. possession has been enjoyed during the period
necessary to establish a presumption of
ownership
Aliens have no right to acquire any public or
private agricultural, commercial, or residential
lands except by hereditary succession.
Private individual has superior right over the
property against the state.
 The right of the public to use the city
streets may not be bargained away
through contract. Rule: Local government
cannot withdraw a public street from public
use, unless it has been granted such authority
by law. Dacanay v. Asistio Jr.,[208 SCRA
404 (1992)]
 The power to vacate or withdraw a street or
alley from public use is discretionary and such
will not be interfered with by the courts. The
Charter of Cebu City gives such power to the
City Council. Such withdrawn portion thus
becomes patrimonial property which can be the
object of an ordinary contract. Cebu Oxygen
v. Bercilles, [66 SCRA 481 (1975)]
 A property continues to be part of the
public domain until there is a formal
declaration on the part of the government
to withdraw it from being such. An
abandonment of the intention to use the
property for public service and to make it
patrimonial property must be definite. It cannot
be inferred from the non-use alone. Laurel v.
Garcia, [187 SCRA 797 (1990)]
==============================
======================
TOPICS UNDER SYLLABUS
B. Ownership (Arts. 427-439, CC)
1. Rights of Ownership/Limitations
2. Doctrines of Incomplete
Privilege/Self Help
3. Presumption of Ownership
4. Rule of Hidden Treasure
==========================
==================
OWNERSHIP -is the independent right of a person
to the exclusive enjoyment and control of a thing
including its disposition and recovery subject only
to the restrictions or limitations established by law
and the rights of others.
TITLE -is that which constitutes a just cause of
exclusive possession or which is the foundation of
ownership of property.
Kinds Of Ownership:
1. FULL OWNERSHIP (dominium or jus in re
propia) – includes all the rights of the owner
2. NAKED OWNERSHIP (nuda proprietas) –
where the right to the use and the fruits
has been denied
 Naked ownership + usufruct = Full
ownership
3. SOLE OWNERSHIP – ownership is vested
only in one person
 4. CO-OWNERSHIP/TENANCY IN COMMON
– ownership is vested in two or more
owners; unity of the property, plurality of
the subjects

1. RIGHTS OF OWNERSHIP/LIMITATIONS

Seven Rights Of Ownership:

1. JUS ABUTENDI – right to consume,
transform or abuse by its use
2. JUS ACCESIONES – right to fruits and
accessories
3. JUS DISPONENDI – right to dispose,
including the right not to dispose, or to
alienate
4. JUS FRUENDI – right to fruits
5. JUS POSSIDENDI – right to possess
 does not necessarily include the right to
use (e.g. contract of deposit)
6. JUS UTENDI – right to use and enjoy
 Includes the right to transform and
exclude any person from the enjoyment
and disposal thereof
 Limitation: use in such a manner as not
to injure the rights of a third person
7. JUS VINDICANDI – right to vindicate or
recover

Limitations on the Right of Ownership:

(CLOGS)
1. those arising from conflicts of private
rights (e.g. those which take place in
accession continua)
2. those imposed by law (e.g. Legal
easement)
3. those imposed by the owner himself (e.g.
Voluntary easement, pledge, lease)
4. those imposed by the grantor of the
property on the grantee
A. by contract (e.g. donation)
B. by last will
5. those imposed in general by the State
A. police power
B. power of taxation
C. power of eminent domain

Right of Ownership not absolute

 The welfare of the people is the
supreme law of the land. Salus populi
suprema est lex.
 Use your property so as not to impair
the rights of other. Sic utere tuo ut
alienum non laedas.
ACTIONS FOR POSSESSION:
MOVABLES – Replevin/ Manual Delivery (return of a movable)
 both principal and provisional remedy
 Plaintiff shall state in the affidavit that he is the owner of the property claimed,
particularly describing it or that he is entitled to possession, and that it is wrongfully
detained by the other.
 PERIOD: 4 or 8 years from the time the possession thereof is lost, in accordance with Art.
1132
 machinery and equipment used for an industry and indispensable for the carrying on of
such industry, cannot be the subject of replevin, because they are considered real
properties.
 property validly deposited in custodia legis cannot be the subject of a replevin suit

IMMOVABLES
ACTION CAUSE GROUND ISSUE PERIOD COURT PROCEEDIN
GS
Forcible GROUND: De facto Within 1 year MTC Summary
entry deprivation of or physical from (1) proceeding
(detenci possession through: possession unlawful
on) force, intimidation, deprivation, or
strategy, threat, or from (2)
stealth (FISTS) discovery, in
Accion case of stealth
Interdic or strategy
tal Unlawfu Lessor/person having Physical Within 1 year MTC Summary
l legal right over possession from unlawful proceeding
detainer property deprived of deprivation:
(desahui such when the date of last
co) lessee/person demand or last
withholding property letter of
refuses to surrender demand
possession of
property after
expiration of
lease/right to hold
property
Accion Publiciana Better right of Possession Within a period Depends
possession DE FACTO of 10 years, on
otherwise the ASSESSE
real right of D VALUE
possession is
lost
Accion Recovery of OWNERSH 30 years Depends Civil
Reinvindicatoria dominion of property IP on
based on ownership ASSESSE
D VALUE

I. Injunction
- Generally not available as a remedy.
- When injunction is allowed:
A. Actions for forcible entry
B. Ejectment
- possessor admittedly the owner or in possession in concept of owner
- possessor clearly not entitled to property
- extraordinary cases – where urgency, expediency and necessity so required
II. Writ of possession
- When proper:
A. Land registration cases
B. Foreclosure, judicial or extra-judicial, of mortgage – provided that the mortgagor has
possession and no third party has intervened
C. Execution sales
D. Eminent domain proceedings
E. Ejectment
2.
DOCTRINE OF STATE OF NECESSITY
STATE OF NECESSITY—is the principle which
authorizes the destruction of a property which is
lesser in value to avert the danger poised to
another property the value of which is much
greater.
REQUISITES OF STATE NECESSITY:
1. Interference necessary to avert an imminent
danger
2. Damage to another much greater than damage
to property
 COMPARATIVE DANGE— Danger must be
greater than damage to property. Consider
the economic and sentimental value of the
property.
 MEASURE OF RATIONAL NECESSITY—
the law does not require a person acting in
a state of necessity to be free from
negligence or mistake. He must be given
the benefit of reasonable doubt as to
whether he employed rational means to
avert the threatened injury.
 The owner of the sacrificial property is
obliged to tolerate the act of destruction
but subject to his reimbursement by all
those who benefited.
 In case of conflict between the exercise of
the right of self-help and a proper and licit
state of necessity, the latter prevails
because there is no unlawful aggression
when a person or group of persons acts
pursuant to the right given in a state of
necessity.
3. PRESUMPTION OF OWNERSHIP
a) Requisites to Raise the Disputable
Presumption of Ownership:
1. Actual possession of the property
2. Possession is under the claim of ownership
a. Possessor of property has the presumption
of title in his favor
b. Judicial process contemplated for recovery
of property: ejectment suit or
reinvindicatory action
c. The person claiming better right must
prove:
a. That he has better title to the
property
b. Identity of the property
d. One must depend on strength of his title
and not the weakness of the defense
e. Action is founded on positive rights
f. Evidence required: preponderance of
evidence.
b) Eminent Domain
EMINENT DOMAIN—is the superior right of the
State to acquire private property whether
registered or not for public use upon payment of
just compensation. It is one of the limitations of
the right of ownership.
a. Absolute necessity for expropriation is not
required. It is enough that reasonable
necessity for public use is intended.
b. Just compensation is equivalent to the value of
the land. (Market value plus consequential
damages minus the consequential benefits)
c. The market value should be determined at the
time of the filing of the complaint or at the
time of taking of the property, whichever
transpires first.
d. The ownership over the property taken is
transferred only when the just compensation
with proper interest had been made
Elements for Taking in Eminent Domain:
(CPJD)
1. Taking done by Competent authority
a. Executive branch
b. Municipal corporations, other government
entities, and public service corporations.
2. For Public use
a. That only a few actually benefit does not
diminish its public use
3. Owner paid Just compensation
a. Value at the time of the taking
4. Due process of law observed
Computation for Just Compensation under
Agrarian Reform
LBP v. Cruz, [G.R. No. 175175, Sept. 29,
2008]
How will the computation of just computation
applied? Section 17 of R.A. No. 6657: In
determining just compensation, the cost of
acquisition of the land, the current value of like
properties, its nature, actual use and income, the
sworn valuation by the owner, the tax declarations,
and the assessment made by government
assessors, shall be considered. The social and
economic benefits contributed by the farmers and
the farmworkers and by government to the
property as well as the non-payment of taxes or
loans secured from any government financing
institution on the said land shall be considered as
additional factors to determine its valuation.
Formula by the DAR in using Section 17 POLICE POWER— is another limitation of the right
of RA 6657 (DAR A.O. No. 5, series of of ownership wherein property may be interfered
1998): with, even destroyed, if so demanded by the
LV = Land Value welfare of the community. The owner of the
CNI = Capitalized Net Income property is not entitled to compensation
CS = Comparable Sales
MV = Market Value per declaration Requisites of Police Power: (PRO)
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 1. Public interest
0.1) 2. Reasonably necessary means for the
accomplishment of a purpose
Procedure of Expropriation under Agrarian 3. It is not unduly Oppressive upon individuals
Reform: a. No taking of property involved
LBP is an agency created primarily to provide b. No financial compensation
financial support in all phases of agrarian reform
pursuant to Section 74 of Republic Act (RA) No. SURFACE RIGHTS OF A LANDOWNER— right to
3844 and Section 64 of RA No. 6657. Once an surface & everything under it only as far as
expropriation proceeding for the acquisition of necessary for his practical interest (Benefit or
private agricultural lands is commenced by the Enjoyment)
DAR, the indispensable role of LBP begins. No 1. Rights subject to:
judicial determination of just compensation allowed a. Existing servitudes or easements
without LBP’s participation. Tabuena v. LBP, [G.R. b. Special laws
No. 180557, Sept. 26, 2008]. c. Local ordinances
d. Reasonable requirements of aerial
Abandonment of Property Expropriated: navigation
e. Rights of third persons
MCIAA v. Tudtud, [G.R. No. 174012, Nov. 14,
2008] 4. HIDDEN TREASURE

When a private land is expropriated for public use
and subsequently, the public use was abandoned,
it returns to its owner unless there is a statutory
provision that prohibits it.
MCIAA has the obligation to return to X the land. X
has the obligation to return:
1. What he received as just compensation with
interest computed from default.
2. Necessary expenses incurred by MCIAA in
sustaining lot and monetary value for services
in managing insofar as X was benefitted
services in managing insofar as X was
benefitted
Following Article 1187 of the Civil Code, the MCIAA
may keep whatever income or fruits it may have
obtained from Lot No. 988, and X need not account
for the interests that the amounts they received as
just compensation may have earned in the
meantime.
Concept of Treasure: (HUM)
1. Hidden and unknown
2. Unknown owner
3. Consists of Money, jewels, or other precious
objects. (not raw materials)
Right to Hidden Treasure:
1. Finder is the same as owner of the property –
treasure totally belongs to him.
2. Finder is third person and he discovered it by
chance – finder is entitled to one half of the
value of the treasure.
3. Finder is an intruder – he is not entitled to
anything
4. Finder was given express permission by the
owner – subject to the contract of service and
principle of unjust enrichment

Respondents, as creditors, do not have to settle as

part of the process of restitution the appreciation in
value of Lot 988 which is a natural consequence of
nature and time. x x x,"

c) Police Power
 BASIS ACCION

REPLEVIN FORCIBLE ENTRY UNLAWFUL ACCION REINVINDICATORIA

DETAINER PUBLICIANA
Action or provisional remedy Summary action to Action brought when It is the Action to recover
where the complainant prays recover material or possession by a preliminary ownership of real
for the recovery of the physical possession of landlord, vendor or action to recover property
possession of the personal real property when a vendee or other a better right to
Definitio property person originally in person of any land or possess
n possession was deprived building is being
* NOT APPLICABLE TO thereof by (FISTS) unlawfully withheld
(a) Movables distrained or Force, after the termination
taken for a tax assessment or Intimidation, Strategy, or expiration of the
fine pursuant to law Threat, or right to hold
(b) Those under a writ of Stealth possession, by virtue
execution or preliminary of a contract, express
attachment or implied
(c) Those under custodia legis
Where to MTC or RTC depending on the MTC MTC RTC RTC
file amount of money involved
Issue Recovery of possession of Material or physical Material or physical Better right of Ownership of real
involved personal property possession of real possession of real possession of property
property property real property.
Possession de facto Possession de facto Possession de
jure
Action In Personam Quasi in Rem Quasi in Rem Quasi in Rem Quasi in Rem
Prescripti 1 year from 1 year from the time 10 years 10 or 30 years
on dispossession the possession depending on
FIT – from dispossession became unlawful – whether it’s ordinary
SS – from discovery last date of demand or extraordinary
or letter of demand prescription
Others Steps:  May be brought  If there’s a fixed 2 kinds:  Accion
i. Complaint is filed at against the owner in period – 1 year from a) Possession not reinvindicatoria
commencement or at some cases such as the expiration of the through FISTS can be filed
any time before lease lease - can be filed simultaneously
answer of other party Immediately with FE
 Complaint must  If the reason is non-
ii. Complaint should
state FISTS or else it payment of rent or  Judgment of
allege OWTA (owner, b) 1 year period
wrongfully taken, would just be an non-fulfillment of for ownership usually
taken against law) accion publiciana the conditions of FE or UD has includes the right
iii. Pay bond double the which should be filed the lease – 1 year Elapsed of possession
amount of property with the RTC from demand to

CIVIL LAW REVIEWER Page 39 of 383

 iv.  Should
remember
Sheriff takes property vacate Article 434. In an
v. Doors broken if  Complaint filed 5 action to recover
necessary days after ownership, the
demand property must be
Defendant’s remedy: (buildings) or 15 identified, and the
1. File a bond double the days (land plaintiff must rely
amount, and on the strength of
 Refers to any kind
2. Give copy to plaintiff his title and not
of land
on the weakness
Stranger’s remedy – File a 3rd  It should be
of the defendant’s
party claim alleged that the claim
right to possess
had been
terminated and
that the
continued
possession was
unlawful
 Not the remedy if
what is sought is
specific
performance
 Demand
Necessary - if there
is a breach
Not necessary – if the
fixed period just
expires

CIVIL LAW REVIEWER Page 40 of 383

================================ 2.
Usufruct
TOPICS UNDER THE SYLLABUS
3. Lease of rural lands
C. Accessions 4. Pledge
1. Accession Discreta 5. Antichresis
a. Natural Fruits
b. Industrial Fruits 2. ACCESSION CONTINUA — the extension of
c. Civil Fruits the right of ownership of a person to that
2. Accession Continua which is incorporated or attached to a thing
which belongs to such person. It may take
a.1 Accession Industrial place:
i. Builder/ Planter/ Sower a. With respect to real property
(BPS) in Good Faith a) accession industrial
ii. BPS in Bad Faith b) accession natural
iii. No Claim of Ownership b. With respect to personal property
a.2 Accession Natural i. adjunction or conjunction
a.3 For Personal Property ii. commixtion or confusion
iii. specification
i. Adjucntion/ Conjunction
ii. Mixture a.1 Accession Industrial
iii. Specification
================================ PRINCIPLES:
C. ACCESSION 1. Accessory follows the principal.
2. The incorporation or union must be intimate
ACCESSION— is the right of the owner of a that removal or separation cannot be
thing, real or personal, to become the owner of effected without substantial injury to either or
everything which is produced thereby, or which is both.
incorporated or attached thereto, either naturally 3. Good faith exonerates a person from punitive
or artificially. liability but bad faith may give rise to dire
consequences.
NOTE: It is NOT one of the modes of acquiring 4. Bad faith of one party neutralizes the bad
ownership enumerated in Article 712. faith of the other.
5. No one should enrich himself at the expense
2 KINDS OF ACCESSION: of another.

1. ACCESSION DISCRETA— the extension of OBLIGATIONS:

the right of ownership of a person to the i. Gathered Fruits
products of a thing which belongs to such
person. It takes place with respect to: PLANTER OWNER
a. NATURAL FRUITS – spontaneous Planter Keeps fruits No need to
products of the soil and the young of in Good reimburse the
animals. Faith planter of expenses
b. INDUSTRIAL FRUITS – those produced (GF) since he retains the
by lands of any kind through cultivation fruits
or labor. Planter Reimbursed Gets fruits, pay
c. CIVIL FRUITS – rents of buildings, the in Bad for planter necessary
price of lease of lands and other property Faith expenses expenses
and the amount of perpetual or life (BF) for
annuities or other similar income. production,
gathering,
GENERAL RULE: All fruits belong to the owner and
of a thing. preservation
(necessary
EXCEPTIONS: (PULPA) expenses)
1. Possession in good faith by another

CIVIL LAW REVIEWER Page 41 of

383
 Exception: removal
ii. Standing Crops OM = OM exercises - provided no
BF the right of injury to the work
PLANTER OWNER LO = BF removal constructed or
Planter Reimbursed Owns fruits (as if destruction of the
in GF for expenses provided he pays both in plantings, etc. will
for planter expenses GF) be caused
production, for production, LO = BF Becomes the 1. Entitled to the
gathering, gathering, and OM = owner of the ABSOLUTE right of
and preservation. GF materials but removal and
preservation (forced co- he must pay: damages (whether
ownership) 1. Value or not substantial
Planter Loses Owns fruits 2. Damages injury is caused)
in BF everything. 2. Entitled to
No right to reimbursement and
reimburseme damages (in case
nt he chooses not to
remove)
iii. Re: Offsprng of Animals. When the
male and female animals belong to PLANTING V. SOWING
different owners, under the Partidas, the
owner of the female was considered also 1. PLANTING— pertains to a perennial fact.
the owner of the young, unless there is a Something that will grow and produce fruits
contrary custom or speculation. The legal year after year without having to be
presumption, in the absence of proof to replanted.
the contrary, is that the calf, as well as its 2. SOWING— pertains to an annual crop.
mother belong to the owner of the latter, Something that will grow and produce fruits
by the right of accretion. US v. and then you plant again before it will
Caballero, [25 Phil 356] This is also in produce fruits again.
accord with the maxim “pratus sequitor
ventrem” (the offspring follows the dam ESSENCE OF DISTINGUISHMENT
or mother). In planting: planter may be required to buy
the land.
Right of Accession with Respect to In sowing: sower may be required to pay
Immovables rents.

Two disputable presumptions as to

improvements on land:
1. Works made by the owner
2. Works made at the owner’s expense

WHERE LAND AND MATERIALS BELONG TO

DIFFERENT OWNERS
Land Owner Owner of
(LO) Materials (OM)
OM = Becomes the 1. Entitled to
GF owner of the reimbursement
LO = materials but - provided he does
GF; he must pay for not remove them
their value. 2. Entitled to
Or

CIVIL LAW REVIEWER Page 42 of

383
WHERE A PERSON BUILDS (IN GOOD OR IN THE LAND OF ANOTHER
BAD FAITH) ON

LAND OWNER (LO) BUILDER

LO = GF OPTIONS: 1. Right to indemnification
Builder= GF; 1. Appropriate a. Necessary expenses, w/ right of retention
improvements as his own until reimbursed
Or after paying for indemnity b. Useful expenses, w/ right of retention
2. Compel the builder to buy 2. Right of removal - if the thing suffers no
LO = BF the land where the injury, and if his successor in the possession
Builder = BF building has been built does not prefer to refund the amount
Exception: expended.
(as if both in Value of land > Value of improvements
GF)  rent to be paid

If builder fails to pay the rent:

- no right of retention
- LO entitled to removal of
improvement
LO = GF OPTIONS: 1. Loses what is built, planted, or sown without
Builder= BF 1. Appropriate the improvements right to indemnity
- must pay for: 2. Liability for damages
- a. necessary expenses for the 3. Entitled to reimbursement for the necessary
preservation of the land expenses of preservation of land
- b. damages
- no need to pay for its value or other
expenses
2. right to demolish or removal +
damages
- at the builder’s expense
3. compel the builder or planter to pay
the price of the land, and the sower the
proper rent + damages
- whether or not the value of the land
is considerably more than the value of
the house

- may enforce payment thru an

General Rule: LO has no right of removal or ordinary action for the recovery of a
demolition. money debt (levy and execution)

Exception: Option of right of removal is EXCEPTIONS to the Rule on Builders, etc.

compulsory on the part of the LO when builder fails (HSBC)
to pay. 1. Builder, etc. does not claim ownership over
the land but possesses it as mere Holder,
REMEDIES: agent, usufructuary or tenant; he knows
1. Demolish what has been built, that the land is not his.
sown, or planted
2. Consider price of land as an
ordinary money debt of the builder

CIVIL LAW REVIEWER Page 43 of

383
EXCEPTION TO THE EXCEPTION: Tenant whose
lease is about to expire, but still sows, not knowing
that the crops will no longer belong to him
2. A person constructs a building on his own
land, and then Sells the land but not the
building to another
a. no question of good faith or bad
faith on the part of the builder
b. can be compelled to remove the
building
c. new owner will not be required to
pay any indemnity for the building
3. Builder is a Belligerent occupant
4. Builder, etc. is a Co-owner
a. even if later on, during the partition,
the portion of land used is awarded
to another co-owner;
 For Art. 448 of the NCC to apply, the
construction must be of a permanent
character, attached to the soil with an idea
of perpetuity. It is of a transitory character
or is transferable, there is no accession,
and the builder must remove the
construction. Alviola v. CA, [G.R.
117642, April 12, 1998]
RULES WHEN LANDOWNER SELLS LAND
TO A 3RD PERSON WHO IS IN BAD FAITH
1. Builder must go against him.
2. BUT when the 3rd person paid the landowner:
a. Builder may still file a case against him
b. 3rd person may file a 3rd party complaint
against landowner
 A promised to donate a property to B. B
constructed his house thereon before the
donation. If the property was not donated to
him, can B be considered a possessor in good
faith? Mere promise to donate the property to
B cannot convert him into a builder in good
faith. At the time the improvement was built,
such promise was not yet fulfilled, but a mere
expectancy of ownership that may or may
not be realized. If at all, B is a mere
possessor by tolerance. A person whose
occupation of a realty is by tolerance of its
owners are not possessors in good faith.
Hence, he is not entitled to the value of the
improvements built thereon. Verona Pada-
Kilario v. CA, [G.R. No. 134329, January
19, 2000]
CIVIL LAW REVIEWER
383
RULES WHEN THREE PARTIES ARE
INVOLVED:
Parties:
1. Land owner (LO)
2. Builder, planter, sower (builder)
3. Owner of materials (OM)
 Rights of LO and Builder  same as set
forth in the table
 Rights of OM
a. Bad faith
i. Loses all rights to be indemnified
ii. Can be liable for consequential
damages (as when the materials are of
an inferior quality)
b. Good faith
i. Entitled to reimbursement
ii.In case of insolvency on the part of the
builder LO is subsidiarily liable, if he
makes use of the materials.
RULE: OM bad faith, Builder bad faith, LO
good faith
1. Between OM and Builder, good faith must
govern.  Builder must reimburse OM,
but in case Builder cannot pay, LO will not
be subsidiarily liable because as to him,
OM is in bad faith. If the builder pays, he
cannot ask reimbursement from LO
because as to LO, builder is in bad faith
2. LO  Can ask damages from BOTH; has the
choice to:
a. Appropriate what has been built as his
own
i. Without payment of any indemnity
for useful or necessary expenses for
the building
ii. With indemnity for the necessary
expenses for the preservation of the
land
b. Demand the demolition at builder’s
expense
c. Compel builder to pay the price of the
land
i. Whether the land is considerably
more valuable than the building or
not.
 A lessee cannot be a builder in good faith.
He is estopped to deny his landlord’s title,
or to assert a better title not only in
himself, but also in some third person while
Page 44 of
 he remains in possession of the leased
premises and until he surrenders
possession to the landlord. Munar v. CA,
[230 SCRA 372]; Frederico Geminiano,
et al. v. CA, et al., [G.R. No. 120303,
July 24, 1996]
 Estoppel applies even if the lessor had no
title at the time. The relation of lessor and
lessee was created and may be asserted
not only by the original lessor, but also by
those who succeed to his title. As lessees,
they knew that their occupation of the
premises would continue only for the life of
the lease. They cannot be considered as
possessors nor builders in good faith.
Racaza v. Susan Realty, Inc., [18 SCRA
1172]; Vda. De Bacaling v. Laguna, [54
SCRA 243]; Santos v. CA, [221 SCRA
42]
owner of the land (not the court) Balatan
v. CA, [304 SCRA 34 (1999)]
 Improvements made prior to the annotation
of the notice of lis pendens are deemed to
have been made in good faith. After such
annotation, P can no longer invoke the
rights of a builder in good faith. Should E
opt to appropriate the improvements made
by P, it should only be made to pay for
those improvements at the time good faith
existed to be pegged at its current market
value. Carrascoso v. CA, [G.R. No.
123672, December 14, 2005]

 Even if the lessor promised to sell, it would

not make the lessee possessor or builder in
good faith so as to be covered by the
provisions of Art. 448 of the NCC, if he
improves the land. The latter cannot raise
the mere expectancy of ownership of the
land because the alleged promise to sell
was not fulfilled nor its existence even
proven. (Jurado)

 The owner of the land on which a building

has been built in good faith by another has
the option to buy the building or sell his
land to the builder, he cannot refuse to
exercise either option. Sarmiento v.
Agana, [129 SCRA 122 (1984)]

 Owner of the land on which improvement

was built by another in good faith is entitled
to removal of improvement only after
landowner chose to sell the land and the
builder refused to pay for the same. Where
the land’s value is greater than the
improvement, the landowner cannot
compel the builder to buy the land. A
“forced lease” is then created and the court
shall fix the terms thereof in case the
parties disagree thereon. Depra v.
Dumlao, [136 SCRA 475 (1985)]

 The right to choose between appropriating

the improvement or selling the land on
which the improvement of the builder,
planter or sower stands, is given to the

CIVIL LAW REVIEWER Page 45 of

383
 ACCESSION

Accession Accession
Discreta Continua

Natural Industrial Civil Real Personal

Fruits Fruits Fruits

rents of buildings
price of leases of
land & Accession Accession Adjunction/ Specification Mixed
Spontaneous Industrial Natural Conjunction
products of the other property
soil, amount of
Young and other perpetual or life
products of annuities or
Building Alluvium commixtion
animals other similar (ISTEP)
Planting Avulsion confusion
income Inclusion or
Sowing Change of course
engraftment
of rivers
Formation of
Soldadura or
soldering
islands
Tejido or weaving
Escritura or writing
Pintura or Painting
Accession Natural
i. Alluvium
ALLUVION - the accretion which the banks of
rivers gradually receive from the effects of the
current of the waters and which belong to the
owners of lands adjoining the said banks.
ACCRETION - act or process by which a riparian
land gradually and imperceptively receives
addition made by the water to which the land is
contiguous.
ESSENTIAL ELEMENTS:
1. Deposit or accumulation of soil or sediment
must be gradual and imperceptible.
2. Accretion results from the effects or action of
the current of the waters of the river.
3. The land where accretion takes place must be
adjacent to the bank of a river.
 Registration under the Torrens System
does not protect the riparian owner
against the diminution of the area of his
registered land through gradual changes
in the course of an adjoining stream.
Viajar v. CA, [168 SCRA 405 (1988)]
 Failure to register the acquired alluvial
deposit by accretion for 50 years
subjected said accretion to acquisition
through prescription by third persons.
Reynante v. CA, [207 SCRA 794
(1992)]
 The rules on alluvion do not apply to
man-made or artificial accretions to lands
that adjoin canals or esteros or artificial
drainage system. Ronquillo v. CA, [195
SCRA 433 (1991)]
 Law of Waters: “ART. 4. Lands added to
the shores by accretions and alluvium
deposits caused by the action of the sea,
form part of the public domain. When
they are no longer washed by the waters
of the sea, and are not necessary for the
purposes of public utility, or for the
establishment of special industries, or for
the coastguard service, the Government
shall declare them to be the property of
the owners of the estates adjacent
thereto and as an increment thereof.”
Lanzar v. Dir. Of Lands, [78 SCRA
152]
ii. Avulsion
AVULSION - accretion which takes place when
the current of a river, creek, or torrent
segregates from an estate on its bank a known
portion and transfers it to another estate, in
which case, the owner of the estate to which the
segregated portion belonged, retain the
ownership thereof.
ALLUVIUM vs. AVULSION
ALLUVIUM AVULSION
Deposit of soil is Deposit of soil is sudden
gradual and or abrupt.
imperceptible.
Soil cannot be Soil is identifiable and
identified. verifiable.
Deposit of soil belongs Deposit of soil belongs to
to the owner of the the owner from whose
property to which it is property it was detached.
attached.
ESSENTIAL ELEMENTS:
1. Segregation and transfer must be caused by
the Current of a river, creek or torrent.
2. Segregation and transfer must be Sudden or
abrupt.
3. The portion of land transported must be
Known or identifiable.
NOTE: The owner should remove the transferred
portion within two years; otherwise, it
becomes permanently attached.
Uprooted Trees
1. Trees uprooted and carried away by the
current of the waters
a. Owners do not claim them w/in
6mos  Belong to the owner of the
land upon which they may be cast
b. Owners claim them  owners pay
the expenses incurred in gathering
them or putting them in a safe
place
iii. Change of Riverbed
Requisites:
1. There must be a natural change in the course
of the waters of the river.
2. The change must be abrupt or sudden.
Right of owner of land occupied by new
river course:
1. Right to old bed ipso facto in proportion to
area lost
2. Owner of adjoining land to old bed: right to
acquire the same by paying its value – Value
not to exceed the value of area occupied by
new bed
New River Banks
1. New river banks created  public dominion
2. New river bed may itself be abandoned, due
to natural or artificial causes authorized by
law.
a. owners will get back this previous
property if the course of the river reverts
back to its original place
b. Indemnifies the owner of the
accessories for the values thereof.
Test To Determine Principal:
1. Rule of importance and purpose
2. Greater value - If they are of unequal value
3. Greater volume - If they are of equal value
4. Greater merits

iv. Formation of Islands When Separation Allowed:

ISLAND BELONGS TO THE STATE:
1. On seas within the jurisdiction
Philippines
2. on lakes
3. on navigable or floatable rivers
1. Separation without injury
2. Separation with injury – accessory is much
of the more precious than the principal; the owner
of the former may demand its separation
even though the principal may suffer injury.
3. Owner of principal in bad faith

Islands formed in Non-navigable or Non-

floatable Rivers: RULES AS TO OWNERSHIP
1. Island  to the owners of the margins or OWNER OF OWNER OF
banks of the river nearest to each of them. PRINCIPAL ACCESSORY (OA)
2. If in the MIDDLE of the river  divided (OP)
longitudinally in halves OP = Acquires the May demand
GF accessory reparation:
a.3 For Personal Property OA = - indemnifies a. If no injury will be
GF the former caused
i. Adjunction/ Conjunction owner for its b. If value of
Or value accessory is greater
ADJUNCTION OR CONJUNCTION — Is a process than principal -
whereby two movable things owned by different OP = even if damages
persons are joined together without bad faith, in BF will be caused to
such a way that they form a single object. OA = principal (expenses
GF is to the one who
Requisites: caused the
1. The two things conjunction)
belong to different owners. OP 1. Owns the 1. Loses the thing
2. They form a =GF accessory incorporated
single object. OA = 2. Right to
BF
2. Indemnify the
3. They are damages
OP for the damages
inseparable; that their separation would
OP may have
impair their nature or result in substantial
suffered
injury to either component.
OP = 1. Pay OA Right to choose
CLASSES OF ADJUNCTION: (ISTEP) BF value of between
1. Inclusion (engraftment) OA = accessory or 1. OP paying him
i.e. setting a precious stone on a golden GF 2. Principal its value or
ring and accessory 2. That the thing
2. Soldadura (soldering) be separated belonging to him be
i.e. joining a piece of metal to another PLUS separated even
metal Liability for though it be
a. Feruminatio – same metal damages necessary to
b. Plumbatura – different metals destroy the
principal thing
3. Tejido (weaving)
4. Escritura (writing) ii. Mixture
5. Pintura (painting)
a. Owner of the principal: MIXTURE— takes place when two or more things
a. By law becomes the owner of the belonging to different owners are mixed or
resulting object combined to such extent that the components
lose their identity.
KINDS: principal results
1. COMMIXTION – mixture of solid things The things May either The new object
2. CONFUSION – mixture of liquid things joined retain retain or retains or
their nature lose preserves the
RULES: respective nature of the
1. Mixture by the will of the owners natures original object
a. Rights governed by stipulations
b. Without stipulation: each acquires a right
or interest in proportion to the value of
his material ================================
2. Mixture caused by an owner in GF or by TOPICS UNDER THE SYLLABUS
chance D. Quieting Title
a. Each share shall still be in proportion to ================================
the value of their thing
3. Mixture caused by owner in BF QUIETING OF TITLE— is a remedy or
a. The actor forfeits his thing proceeding which has for its purpose an
b. Liable for damages adjudication that a claim of title to realty or an
interest thereon, adverse to the plaintiff, is
iii. Specification invalid or inoperative, or otherwise defective and
hence, the plaintiff and those claiming under him
SPECIFICATION — imparting of a new form to may forever be free of any hostile claim.
the material belonging to another; or the making
of the material of another into a thing of a Reasons:
different kind.
1. Prevent litigation
RULES: 2. Protect true title & possession
1. When the maker (considered principal) is 3. Real interest of both parties which requires
in GF that precise state of title be known
a. May appropriate but must
indemnify the owner of the ACTION TO QUIET TITLE
material 1. Puts an end to vexatious litigation in respect
b. May not appropriate – when to property involved; plaintiff asserts his own
material transformed > new thing. estate & generally declares that defendant’s
The OM may: claim is w/o foundation
i. Appropriate the new thing 2. Remedial
subject to the payment of 3. QUASI IN REM - suits against a particular
the value of the work, or person or persons in respect to the res May
ii. Demand indemnity for the not be brought for the purpose of settling a
material with damages boundary disputes
b. When the maker is in BF 4. Applicable to real property or any interest
a. OM can appropriate the work therein. The law, however, does not exclude
without paying for the labor or personal property from actions to quiet title.
industry 5. An action to quiet title brought by the person
b. OM can demand indemnity plus in possession of the property is
damages IMPRESCRIPTIBLE.
c. OM cannot appropriate if the value of the 6. If he is not in possession, he must invoke his
work is considerably more than the value remedy within the prescriptive period.
of the material due to artistic or scientific
importance Classifications:
1. Remedial action –to remove cloud on title
COMPARISON OF THE 3 TYPES OF 2. Preventive action –to prevent the casting of a
ACCESSION OF MOVABLES (threatened ) cloud on the title.
ADJUNCTION MIXTURE SPECIFICATION Requisites: (TICR)
Involves at Involves at Involves at least 2 1.
least 2 things least 2 things Plaintiff must have a legal or equitable Title or
things interest in the real property
As a rule, As a rule, As a rule, 2.
accessory co- accessory follows Cloud in such title
follows ownership principal
3.
Such cloud must be due to some Instrument, Purpose To end Procure
record, claim, encumbrance or vexatious cancellation,
proceeding which is: litigation in release of an
a) apparently valid respect to the instrument,
b) but is in truth invalid, ineffective, voidable property encumbrance or
or unenforceable concerned claim in the
c) prejudicial to the plaintiff’s title plaintiff’s title-
4. which affects the
Plaintiff must Return to the defendant all title or enjoyment
benefits received from the latter or reimburse of the property
him for expenses that may have redounded Nature Plaintiff asserts Plaintiff declares
to his benefit own claim and his own claim and
declares that title, and at the
NO APPLICATION TO: the claim of the same time
1. Questions involving interpretation of defendant is indicates the
documents unfounded and source and nature
2. Mere written or oral assertions of claims, calls on the of the defendant’s
EXCEPT defendant to claim, pointing its
a. If made in a legal proceeding justify his claim defects and prays
b. If it is being asserted that the instrument on the property for the declaration
of entry in plaintiff’s favor is not what it that the same of its invalidity
purports to be may be
3. Boundary disputes determined by
4. Deeds by strangers to the title UNLESS the court
purporting to convey the property of the
plaintiff Except: In one case, a piece of land was owned
5. Instruments invalid on their face by as a husband and wife, and it was offered for
6. Where the validity of the instrument involves bail. They executed a mortgage in the land in
pure questions of law favor of the Court. Later on, the land was
foreclosed and the State was the sole bidder.
Deed of Sale was issued in favor of the State. The
ACTION TO REMOVE CLOUD owner of the land could not redeem it. But the
1. Intended to procure cancellation, delivery, State did not change the title to be under its
release of an instrument, encumbrance, or name. Many years after that, the heirs of the
claim constituting a on plaintiff’s title which couple brought an action to quiet title. The
may be used to injure or vex him in the Supreme Court denied the claim. The Court
enjoyment of his title failure of the State to have it registered does not
2. Preventive mean that the title is invalid. The Court also held
CLOUD—is a semblance of title, either legal or that the right for action to quiet title is
equitable, or a claim or a right in real property, imprescriptible so long as the plaintiff is in
appearing in some legal form but which is, in possession of the property.
fact, invalid or which would be inequitable to
enforce. Ruinous Buildings and Trees in Danger of
Falling
Existence of Cloud: (AIP) Liability for damages:
1. Instrument or record or claim or 1. Collapse – engineer, architect or contractor
encumbrance or proceeding which is 2. Collapse resulting from total or partial
Apparently valid or effective damage; no repair made – owner; state may
2. BUT is, in truth and in fact, Invalid, compel him to demolish or make necessary
ineffective, voidable, or unenforceable, or work to prevent if from falling
extinguished (or terminated) or barred by 3. If no action – done by government at expense
extinctive prescription of owner
3. May be Prejudicial to the title
 To constitute an Act of God:
DISTINCTIONS BETWEEN ACTION FOR Requisites:
QUIETING OF TITLE AND ACTION FOR 1. The cause of the breach of obligation
REMOVAL OF CLOUD must be independent of the will of the
BASIS ACTION TO ACTION TO debtor
QUIET TITLE REMOVE CLOUD
 3.
2. The event must be either unforeseeable 3.
or unavoidable Succession
3. The event must be such as to render it 4. Fortuitous event/chance (i.e., commixtion)
impossible for the debtor to fulfill his 5. Occupancy (i.e.,2 persons catch a wild
obligation in a normal manner animal)
4. The debtor must be free form any 6. Donation
participation in, or aggravation of the
injury to the creditor. Nakpil v. CA, [144 Kinds of Co-ownership:
SCRA 595 (1986)] 1. Ordinary – right of partition exists
2. Compulsory – no right partition exists (party
wall)
================================ 3. Legal – created by law
TOPICS UNDER THE SYLLABUS 4. Contractual – created by contract
E. Co-ownership 5. Universal – over universal things (co-heirs)
1. Elements 6. Singular or Particular – over particular or
2. How Created specific thing
3. Rights of Co-owners 7. Incidental – exists independently of the will of
the parties
a. Ownership over Whole
Property DISTINGUISHED FROM PARTNERSHIP
b. Sale/ Alienation BASIS CO- PARTNERSHI
i. Of Individual Interest OWNE P
ii. Of Entire Property RSHIP
iii. Redemption by Other Co- Legal No legal Has legal or
owners personality personality juridical
personality
iv. Prescription
Source Created by Created by
c. Benefits/ Fruits/ Interest/ contract or contract only
Income other things (express or
d. Use/ Possession implied)
e. Management/ Administration Purpose Collective Profit
4. Partition enjoyment of a
a. Demandable Anytime thing
b. Prohibition for Indivision Term Agreement for No term limit
it to exist for set by law
5. Obligations of Co-owners 10 years –
6. Termination valid (If more
================================ than 10 years,
the excess is
void)

NOTE: 20
years is the
E. CO-OWNERSHIP maximum if
imposed by
CO-OWNERSHIP —is a form of ownership which the testator or
exists whenever an undivided thing or right donee of the
belongs to different persons. common
property
1. ELEMENTS Representatio As a rule, no As a rule,
1. Plurality of subjects – many owners n mutual there is
2. Object of ownership must be undivided representation mutual
3. Recognition of ideal shares; no one is an representatio
owner of a specific portion of the property n
until it is partitioned. Effect of death Not dissolved Dissolved by
by death or the death or
2. HOW CREATED incapacity of a incapacity of
1. Law co-owner a partner
2. Contracts Substitution Can dispose of Cannot
 his share substitute ii. Of Entire Property
without another as
consent of partner in his iii. Redemption by Other Co-
others place without owners
consent of
others Right of redemption
Profits Must always May be i. Right to be adjudicated thing (subject
depend on stipulated to right of others to be indemnified)
proportionate upon ii. Right to share in proceeds of sale of
shares thing if thing is indivisible and they
cannot agree that it be allotted to one
DISTINGUISHED FROM JOINT TENANCY of them
BASIS CO- JOINT
OWNERSHIP TENANCY NOTE:
Shares Involves a Involves a  To be exercised w/in 30days from
physical whole. physical whole. written notice of sale of undivided
But there is an But there is no share of another co-owner to a
ideal (abstract) ideal (abstract) stranger
division; each division; each and  Redemption of the whole property
co-owner being all of them own by a co-owner does not vest in
the owner of the whole thing him sole ownership over said
his ideal share property. Redemption within the
Disposal Each co-owner Each co-owner period prescribed by law by a co-
of shares may dispose of may not dispose owner will inure to the benefit of
his ideal or of his own share all co-owners. Hence, it will not
undivided without the put an end to existing co-
share (without consent of all the ownership. Mariano v. CA, [222
boundaries) rest, because he SCRA 736 (1993)]
without the really has no ideal
other’s consent share iv. Prescription
Effect of share goes to share goes by
death his own heirs accretion to the General Rule - A co-owner cannot acquire the
other joint- whole property as against the other co-
tenants by virtue owners by acquisitive prescription.
of their
survivorship or jus Exception - When there is valid repudiation –
accrecendi prescription shall start from such repudiation
Effect of If a co-owner is If one joint-tenant
disability a minor, this is under legal Exception to the Exception - In constructive
does not disability (like trusts, prescription does not run
benefit the minority), this
others for the benefits the other i. A co-owner cannot sell the property
purpose of against whom without the other co-owners’ consent,
prescription, prescription will otherwise, the selling co-owner’s share
and not run shall be the only one valid. Paulmitan v.
prescription CA, [215 SCRA 866 (1992)]
therefore runs
against them ii. While the husband is the recognized
administrator of the conjugal property
3. RIGHTS OF CO-OWNERS under the Civil Code, there are instances
a. Ownership over Whole Property when the wife may assume administrative
powers or ask for the separation of
b. Sale/ Alienation property. Where the husband is absent
and incapable of administering the
i. Of Individual Interest conjugal property, the wife must be
o Right to alienate, assign or expressly authorized by the husband or
mortgage own part; except seek judicial authority to assume powers
personal rights like right to use of administration. Thus, any transaction
and habitation entered by the wife without the court or
 the husband’s authority is unenforceable.
Being an unenforceable contract, the 2nd
Contract is susceptible to ratification. The
husband continued remitting payments
for the satisfaction of the obligation under
the questioned contract. These acts
constitute ratification of the contract.
Fabrigas v. San Francisco, [G.R. No.
152346, Nov. 25, 2005]
c. Benefits/ Fruits/ Interest/ Income
o Right to benefits proportional to
respective interest
i. Stipulation to contrary is void
o Right to full ownership of his part and
fruits
d. Use/ Possession
o Right to use thing co-owned
i. For purpose for which it is
intended
ii. Without prejudice to interest
of ownership
iii. Without preventing other co-
owners from making use
thereof
e. Management/ Administration
o Right to change purpose of co-
ownership by agreement
o Right to bring action in ejectment in
behalf of other co-owner
o Right to compel co-owners to
contribute to necessary expenses for
preservation of thing and taxes
o Right to exempt himself from
obligation of paying necessary
expenses and taxes by renouncing
his share in the pro indiviso interest;
but can’t be made if prejudicial to
co-ownership
o Right to make repairs for
preservation of things; can be made
at will of one co-owner; receive
reimbursement therefrom; notice of
necessity of such repairs must be
given to co-owners, if practicable
o Right to ask for partition anytime
o Right of pre-emption
4. PARTITION
a. Demandable Anytime
General Rule: No co-owner shall be obliged to
remain in the co-ownership. Each co-owner may
at any time demand the partition of the thing
owned in common, insofar as his share is
concerned.
b. Prohibition for Indivision
Exception - A co-owner may not successfully
demand a partition:
1. If by agreement (for a period not
exceeding 10 years, renewable) partition is
prohibited
2. When partition is prohibited by a
donor or testator (for a period not exceeding
20 years) – from whom the property came
3. When partition is prohibited by law
4. When a physical partition would
render the property unserviceable, but in this
case, the property may be allotted to one of
the co-owners, who shall indemnify the
others, or it will be sold, and the proceeds
distributed
5. When the legal nature of the
common property does not allow partition
REQUISITES OF REPUDIATION:
1. Unequivocal acts of repudiation of the co-
ownership amounting to an ouster of the
other co-owners
2. Positive acts of repudiation have been made
Known
3. Evidence is clear and conclusive
4. Open, continuous, exclusive, notorious
possession
5. OBLIGATIONS OF CO-OWNERS
1. Share in charges proportional to respective
interest; stipulation to contrary is void
2. Pay necessary expenses and taxes – may be
exercised by only one co-owner
3. Pay useful and luxurious expenses – if
determined by majority
4. Duty to obtain consent of all if thing is to be
altered even if beneficial; resort to court if
non-consent is manifestly prejudicial
5. Duty to obtain consent of majority with
regards to administration and better
enjoyment of the thing; majority means
majority in the interest not in the number of
co-owners; court intervention if prejudicial –
appointment of administrator
6. No prescription to run in favor co-owner as
long as he recognizes the co-ownership;
requisites for acquisition through prescription
i. He has repudiated through
unequivocal acts
ii. Such act of repudiation is made
known to other co-owners
 iii. Evidence must be clear and
convincing
7. Co-owners cannot ask for physical division if
it would render thing unserviceable; but can
terminate co-ownership
8. After partition, duty to render mutual
accounting of benefits and reimbursements
for expenses
9. Under Art. 493 of the NCC, each co-owner
has full ownership of his part and of the fruits
and benefits pertaining thereto, and he may
alienate, assign or mortgage the portion
which may be allotted to him upon the
termination of the co-ownership. It appears
that while there is a single certificate of title,
the three lots are distinguishable from each
other.
RIGHTS OF 3RD PARTIES
1. Creditors of assignees may take part in
division and object if being effected
without their concurrence, but cannot
impugn unless there is fraud or made
notwithstanding their formal opposition
2. Non-intervenors – retain rights of
mortgage and servitude and other real
rights and personal rights belonging to
them before partition was made
================================
TOPICS UNDER THE SYLLABUS
F. Condominium Act (RA 4726)
================================
CONDOMINIUM – an interest in real property
consisting of a separate interest in a unit in a
residential, commercial or industrial building and
an undivided interest in common, directly or
indirectly, in the land on which it is located and in
other common areas of the building.
a. Any transfer or conveyance of a unit or an
apartment office or store or other space
therein shall include the transfer and
conveyance of the undivided interest in
the common areas or in a proper case,
the membership or shareholdings in the
condominium: provided however, that
where the common areas in the
condominium project are held by the
owners of separate units as co-owners
thereof, no condominium unit therein
shall be conveyed or transferred to
persons other than Filipino citizens or
corporations at least 60% of the capital
stock of which belong to Filipino citizens,
except in cases of hereditary succession.
General Rule: Common areas shall remain
undivided, and there shall be no judicial partition
thereof
Exceptions
1. When the project has not been rebuilt or
repaired substantially to its state prior to its
damage or destruction 3 years after damage or
destruction which rendered a material part
thereof unfit for use;
2. When damage or destruction has rendered ½
or more of the units untenable and that the
condominium owners holding more than 30%
interest in the common areas are opposed to
restoration of the projects;
3. When the project has been in existence for
more than 50 years, and the condominium
owners holding in aggregate more than 50%
interest in the common areas are opposed to
restoration, remodeling or modernizing;
4. When a project or a material part thereof has
been condemned or expropriated and the project
is no longer viable or that the condominium
owners holding in aggregate more than 70%
interest in the common areas are opposed to the
continuation of the condominium regime.
5. When conditions for partition by sale set forth
in the declaration of restrictions duly registered
have been met.
================================
TOPICS UNDER THE SYLLABUS
G. Possession
1. Elements
2. Kinds
3. Requirements—To Ripen into
Ownership
4. Acquisitive Prescription
5. Rights of Legal Processor
a. Peaceful & Uninterrupted
Possession
i. Co-possession
ii. Actions in Case of
Deprivation of Possession
b. Fruits
i. Civil Fruits
ii. Natural/ Industrial Fruits
iii. Pending Fruits
c. Indemnity for Expenses/
Improvements
i. Necessary
ii. Useful
iii. Luxurious
iv. Possession by Lessee
 6. Prescription of Just Title
a. When Applicable
b. Meaning of Just Title
7. Possession of Movables
a. When Lost
b. Unlawful Deprivation
8. Loss of Possession
================================
POSSESSION— is the holding of a thing or
enjoyment of a right
1. ELEMENTS
a. Occupancy
– actual or constructive (corpus)
b. Intent to
possess (animus possidendi)
c. Must be by
virtue of one’s own right
Extent of Possession:
1. Physical/actual – occupancy in fact of the
whole or at least substantially the whole
2. Constructive – occupancy in part in the name
of the whole under such circumstances that
the law extends the occupancy to the
possession of the whole
Subject of possession: things or rights which
are susceptible of being appropriated
Exceptions:
1. Res communes
2. Property of public dominion
3. Discontinuous servitudes
4. Non-apparent servitudes
DEGREES OF POSSESSION:
1. Holding w/o title and in violation of right
of owner (grammatical degree)
Ex. possession of a thief
2. Possession with juridical title but not that
of owner (juridical possession)
Ex. that of a lessee, pledge,
depositary
3. Possession with just title but not from true
owner (possessory right)
Ex. A in good faith buys a car
from B who delivers the same to A
but B merely pretended to be the
owner
4. Possession with just title from true owner
ACQUISITION OF POSSESSION FROM THE
VIEWPOINT OF WHO POSSESSES:
1. Personal
Requisites:
a. Intent to possess
b. Capacity to possess
c. Object must be capable of being
possessed
2. Thru authorized person (agent or legal
representative)
Requisites:
a. Intent to possess for principal (not for
agent)
b. Authority or capacity to possess (for
another)
c. Principal has intent and capacity to
possess
3. Thru Unauthorized person (but only if
subsequently ratified)
Requisites:
a. Intent to possess for another (the
principal)
b. Capacity of “principal” to possess
c. Ratification by principal
2. REQUIREMENTS—TO RIPEN INTO
OWNERSHIP
Classes of Possession:
1. In concept of owner – owner himself or
adverse possessor
Effects:
A. May be converted into ownership
through acquisitive prescription
B. Bring actions necessary to protect
possession
C. Ask for inscription of possession
D. Demand fruits and damages from
one unlawfully detaining property
2. In concept of holder – usufruct, lessee,
bailee in commodatum
3. In oneself – personal acquisition
A. must have capacity to acquire
possession
B. intent to possess
C. possibility to acquire possession
4. In name of another – agent; subject to
authority and ratification if not
authorized; negotiorum gestio
A. Voluntary – as when an agent
possesses for the principal
B. Necessary – as when a mother
possesses for a child still in the
maternal womb
C. Unauthorized – this will become
the principal’s possession only
after there has been a ratification
without prejudice to the effects of
negotiorum gestio
 Possession and ownership are distinct
legal concepts. Ownership confers
certain rights to the owner, among which
are the right to enjoy the thing owned
 and the right to exclude other persons
from possession thereof. On the other
hand, possession is defined as the
holding of a thing or the enjoyment of a
right. Literally, to possess means to
actually and physically occupy a thing
with or without a right. Thus, a person
may be declared an owner but he may
not be entitled to possession. Heirs of
Roman Soriano v. CA, [363 SCRA 86
(2001)]
4. ACQUISITIVE PRESCRIPTION
POSSESSOR IN GOOD FAITH is one who is not
aware that there exist a flaw in the title or mode
w/c invalidates it.
POSSESSOR IN BAD FAITH is one who is aware
of defect.
Notes on Good Faith/Bad Faith
 Mistake upon a doubtful/difficult question
of law  may be the basis of good faith
 Good faith is always presumed. Burden of
proof lies on the one alleging bad faith
 Possession is presumed to be enjoyed in
the same character in which it is
acquired, until contrary is proven.
Ways of Acquiring Possession
1. Material occupation or exercise of a
right
a. TRADICION BREVI MANU– when one
already in possession of a thing by a title
other than ownership continues to
possess the same under a new title, that
of ownership
b. TRADICION CONSTITUTUM
POSSESSORIUM— when the owner
continues in possession of the property
alienated not as owner but in some other
capacity.
b. By the subjection of the thing or right to
our will
a. TRADICION LONGA MANU– effected by
mere consent or agreement of the parties
b. TRADICION SIMBOLICA– effected by
delivering an object (such as key)
symbolizing the placing of one thing
under the control of the vendee
c. By proper acts and legal formalities
established for acquiring such right of
possession
POSSESSION THROUGH SUCCESSION
1. Possession of hereditary property:
a. If ACCEPTED  deemed transmitted w/o
interruption from moment of death
b. If NOT ACCEPTED  deemed never to
have possessed the same
2. Except from date of death of decedent.
EFFECTS OF BAD FAITH OF DECEDENT ON
HEIR
1. Heir shall not suffer the consequences of the
wrongful possession of the decedent (bad
faith is personal)
EXCEPTION: when he becomes aware
of the flaws affecting the decedent’s title
2. Interruption of good faith may take place at
the date of summons or that of the answer if
the date of summons does not appear.
HOWEVER, there is a contrary view espousing
that summons is insufficient to make the
possessor in bad faith.
3. Effects of possession in good faith  counted
only from the date of the decedent’s death
MINORS/INCAPACITATED:
1. May acquire MATERIAL possession but not
right to possession;
2. May only acquire them through guardian or
legal representatives
ACQUISITION: cannot be acquired through force
or intimidation when a possessor objects thereto
– resort to courts
 The execution of a deed of sale is merely a
prima facie presumption of delivery of
possession of a piece of real property, which
is destroyed when the delivery is not effected
because of a legal impediment. Said
construction or symbolic delivery, being
merely presumptive, may be negated by the
failure of the vendee to take actual
possession of the land sold. Copuyoc v. De
Sola, [G.R. No. 151322, October 26,
2006]
5. RIGHTS OF LEGAL POSSESSOR
a. Peaceful & Uninterrupted
Possession
o Right to be respected in his
possession; if disturbed – protected
by means established by law;
spoliation
o Possession acquired and enjoyed in
concept of owner can serve as title for
acquisitive prescription

 Possession has to be in concept of
owner, public, peaceful and
uninterrupted
 Title short of ownership
o Legal presumption of just title (prima
facie) – for person in concept of owner
o Possession of real property presumes
that movables are included
i. Co-possession
Co-possessors deemed to have exclusively
possessed part which may be allotted to him;
interruption in whole or in part shall be to the
prejudice of all
ii. Actions in Case of
Deprivation of Possession
b. Fruits
For possessors in good faith:
1. Entitled to fruits received before possession
is legally interrupted (natural and industrial –
gathered or severed; civil – accrue daily )
2. Entitled to part of net harvest and part of
expenses of cultivation if there are natural or
industrial fruits ( proportionate to time of
possession )
a. Owner has option to require possessor to
finish cultivation and gathering of fruits
and give net proceeds as indemnity for
his part of expenses;
b. If possessor in good faith refuses – barred
from indemnification in other manner
c. Indemnity for Expenses/ Improvements
For possessors in good faith:
1. Right to be reimbursed for useful expenses
with right of retention; owner has option of
paying expenses or paying the increase in
value of property which thing acquired by
reason of useful expenses
2. May remove improvements if can be done
w/o damage to principal thing- unless owner
exercises option of paying; possessor in bad
faith not entitled.
Regardless of good faith/bad faith:
1. Right to be indemnified for necessary
expenses;
2. Possessor in good faith has right of retention
over thing unless necessary expenses paid by
owner
3. Not entitled to payment for luxurious
expense but may remove them provided
principal is not injured – provided owner does
not refund the amount expended
4.
Im
provements caused by nature or time to inure
to the benefit of person who has succeeded
in recovering possession
5. Wild animals possessed while in one’s
control; domesticated – possessed if they
retain habit of returning back home
6. One who recovers, according to law,
possession unjustly lost is deemed to have
enjoyed it w/o interruption
Liabilities/ Duties Of Possessors
1. Return of fruits if in bad faith – fruits
legitimate possessor could have received
2. Bear cost of litigation
3. Possessor in good faith not liable for loss
or deterioration or loss except when fraud
and negligence intervened
4. Possessor in bad faith liable for loss or
deterioration even if caused by fortuitous
event
5. Person who recovers possession not
obliged to pay for improvements which
have ceased to exist at the time of
occupation
General Rule Re: possession as a fact:
Possession as a fact cannot be recognized at the
same time in two different personalities
Exceptions:
1. Co-possessor – there is no conflict of interest,
both of them acting as co-owners, as in the
case of property owned or possessed in
common
2. Possession of different concepts or different
degrees
SUMMARY OF RULES ON NECESSARY/
USEFUL/ LUXURIOUS POSSESSION &
POSSESSION BY LESSEE
BASIS IF IN GOOD IF IN BAD
FAITH FAITH
Necessary 1. Right to Right to 1. On capital  1. On capital 
Expenses reimbursemen reimbursement charged to charged to
t - no right of owner owner
2. Right of retention
retention Taxes and 2. On fruits  2. On fruits 
1. Right to Charges charged to charged to
reimbursemen possessor owner
t of either the
amount spent 3. Charges 
Useful or the increase Possessor must
expenses in value – return value of
“plus value” – fruits already
at owner’s received as well
option (art. as value of fruits
546) which the owner
2. Right of or legitimate
retention until No right to Regarding possessor (not
paid reimbursement gathered or To possessor the possessor in
3. Right of severed BF)
removal fruits could have
(provided no received with
substantial due care or
damage or diligence, MINUS
injury is necessary
caused to the expenses for
principal, cultivation,
reducing its gathering, and
value) – harvesting, to
UNLESS the Cultivation prevent the to
Reimbursed
winner (owner expenses of possessor
or lawful gathered fruits
possessor) – not
exercises the reimbursed to
option in (1) possessor
In general, no In general, no Regarding pro-rating To owner
Luxurious right to refund right of refund or pending or between
or or retention retention but ungathered possessor and
Ornamenta but can can remove if no fruits owner of
l Expenses remove if no substantial expenses, net
substantial injury is caused. harvest, and
injury is However, owner charges
caused. has OPTION to
However, allow:
owner has 1. Possessor to
OPTION to remove
allow: 2. Or retain for
a. Possessor himself (the
to remove owner) the
b. Or retain ornament by
for himself refunding the
(the owner) value it has at
the ornament the time owner
by refunding enters into
the amount possession (art.
spent (art. 549)
548)
 1.
Production No indemnity G
expenses of ood faith
pending fruits 2. Owner voluntarily parted with the possession
– indemnity of the thing
pro rata to 3. In the concept of owner
possessor: a. Possession in good faith - Equivalent
(owner’s to title
option) money b. One who has lost or has been
allowing full unlawfully deprived of it may recover
cultivation and the thing from whomever possesses
gathering of all it, ordinarily, w/o reimbursement.
fruits; if c. Owner must prove:
possessor i. Ownership of the thing
refused, he ii. Loss or unlawful deprivation or
shall lose all bad faith of the possessor
the right to be NOTE: Owner acts negligently or voluntarily
indemnified in parts w/ the thing owned  cannot recover from
any other possessor
manner.
Improveme No No SUMMARY OF RECOVERY OR NON-
nts no reimbursemen reimbursement RECOVERY PRINCIPLE
longer t Owner may1. from possessor in bad
existing recover without faith
reimbursement2. from possessor in good
Liability for Only if acting Liable in every
faith (if owner had lost the
accidental w/ fraudulent case
property or been
loss or intent or
unlawfully deprived of it)
deterioratio negligence,
the acquisition being from
n after summons
a private person [art. 559]
Improveme To owner or To owner or
Owner may if possessor acquired
nts due to lawful lawful possessor
recover but the object in good faith at
time or possessor
should a public sale or auction;
nature
REIMBURSE the owner to pay the price
possessor paid.
Rules in case of conflict or dispute
Owner cannot 1. if possessor had
regarding possession
recover, even if acquired it in good faith by
1. Present possessor shall be preferred
he offers to purchase from a
2. If both are present, the one longer in
reimburse merchant’s store, or in
possession
(whether or not fairs, or markets in
3. If both began to possess at the same time,
the owner had accordance with the Code
the one who present (or has) title
lost or been of Commerce and special
4. If both present a title, the Court will
unlawfully laws
determine. (Meantime, the thing shall be
deprived) 2. if owner is by his
judicially deposited.)
conduct precluded from
denying the seller’s
A NOTICE OF LIS PENDENS is proper in the
authority to sell
following cases: (PORC-Q)
3. if seller has voidable
1. Action to recover possession of real estate
title which has not been
2. Action to quiet title thereto
avoided at the time of sale
3. Action to remove clouds thereon
to the buyer in good faith
4. Action for partition
for value and without
5. Any other proceedings of any kind in Court
notice of the sellers defect
directly affecting the title to the land or the use
in title
or occupation thereof of the buildings thereon
4. if recovery is no longer
possible because of
6. PRESCRIPTION OF JUST TITLE prescription
5. if sale is sanctioned by
7. POSSESSION OF MOVABLES statutory or judicial
authority
Requisites:
 6. if possessor had
obtained the goods Possession Equivalent To Title:
because he was an 1. Possession is in good faith
innocent purchaser for 2. Owner has voluntarily parted with the
value and holder of a possession of the thing - Possessor is in concept
negotiable document of of an owner
title to the goods

ANIMALS
================================
WILD ANIMALS – possessor is the one who has
TOPICS UNDER THE SYLLABUS
control over them H. USUFRUCT
DOMESTICATED AND TAMED ANIMALS – the 1. Nature/Elements
possessor does not lose possession as long as 2. Application to Personal and Real
habitually they return to the possessor’s Properties
premises 3. How constituted
4. Rights of the Usufructuary
NOTE: For ownership, the owner must claim them
a. Fruits
within 20 days from their occupation by another
b. Possession and enjoyments
person
c. Lease of property
Loss Of Possession: (PALA) d. Sale/Alienation of Usufructuary
1. Abandonment of the thing – renunciation rights
of right; intent to lose the thing 5. Obligations of the Usufructuary
2. Assignment made to another by onerous a. Before the Usufruct
or gratuitous title commences
3. Destruction or total loss of the thing or
b. During the Usufruct
thing went out of commerce
4. Possession of another if new possession i. Alteration of form and
lasted longer that 1 year (possession as substance
a fact); real right of possession not lost ii. Exercise of diligence
except after 10 years iii. Repairs
iv. Charges and Taxes
8. LOSS OF POSSESSION v. Insurance
Acts Not Affecting Possession: (not deemed
6. Termination of Usufruct
abandonment of rights); possession not ================================
interrupted
1. Acts merely tolerated USUFRUCT is the right to enjoy the property of
2. Clandestine and unknown acts another with the obligation of preserving its form
3. Acts of violence and substance, unless the title constituting it or
the law otherwise provides
Possession Not Lost When:
2. Even for time being he may not know their Quasi-usufruct is the usufruct pertaining to
whereabouts, possession of movable is not immovables.
deemed lost
3. When agent encumbered property without 1. NATURE/ELEMENTS
express authority – except when ratified
4. Possession may still be recovered: Characteristics or Elements
a. Unlawfully deprived or lost 1. Essential – those without which it cannot be
b. Acquired at public sale in good termed usufruct
faith – with reimbursement a. A real right (whether
c. Provision of law enabling the registered in the Registry of Property or
apparent owner to dispose as if he is not)
owner b. Of a temporary nature or
d. Sale under order of the court duration
e. Purchases made at merchant c. Purpose: to enjoy the benefits
stores, fairs or markets and derive all advantages from the object
f. Negotiable document of title
 as a consequence of normal use or right
exploitation Creator Can be created The lessor may or
2. Natural – that which ordinarily is present, only by the may not be the
but a contrary stipulation can eliminate it owner, or by a owner as when
because it is not essential duly authorized there is a sub-lease
a. Obligation of conserving or agent, acting or when the lessor
preserving the form and substance in behalf of the is only a
(value) of the thing owner usufructuary
3. Accidental – those which may be present Origin May be created May be created as
or absent depending upon the stipulation of by law, a rule only by
the parties contract, last contract; and by
a. Whether it be a pure or a will, or way of exception
conditional usufruct prescription by law (as in the
b. The number of years it will case of an implied
exist new lease, or when
c. Whether it is in favor of one a builder has built
person or several, etc in good faith on
the land of another
DISTINGUISHED FROM EASEMENT a building, when
the land is
BASIS USUFRUCT EASEMENT considerably worth
Object May be real or Involves only more in value than
personal real property the building
property. Can Cause The owner is The owner or
also be on rights, more or less lessor is more or
but not personal passive, and less active, and he
rights he allows the makes the lessee
Extent What can be Limited to a usufructuary to enjoy the thing
enjoyed here are particular use enjoy the thing being leased
all uses and given in
fruits of the usufruct
property Repairs The The lessee
Coverag Cannot be May be usufructuary generally has no
e constituted on an constituted in has the duty to duty to pay for
easement; but it favor or, or make the repairs
may be burdening, a ordinary
constituted on piece of land repairs
the land held in usufruct Taxes The The lessee
burdened by an usufructuary generally pays no
easement pays for the taxes
Effect of Usually Not annual charges
death extinguished by extinguished by and taxes on
death of the death of the the fruits
usufructuary owner of the As to A usufructuary The lessee cannot
dominant estate other may lease the constitute a
things property itself usufruct on the
DISTINGUISHED FROM LEASE to another property leased
BASIS USUFRUCT LEASE
Extent Covers all fruits Generally covers KINDS:
and uses as a only a particular or 1. As to Origin
rule specific use a. Legal – created by law such as usufruct of
Nature Always a real A real right only if, parents over the properties of their
right as in the case of a children
lease over real b. Voluntary or conventional
property, the lease i. Created by will of the parties inter
is registered, or is vivos
for more than 1 ii. Created mortis causa
year, otherwise, it c. Mixed – partly created by law and partly
is only a personal by will

d. Prescriptive – is one acquired by a third
person through continuous use of the
usufruct for the period required by law
2. As to quantity or extent
a. As to fruits
i. Total
ii. Partial
b. As to extent
i. Universal – if over the entire
patrimony
ii. Particular/Singular - if only individual
things are included
3. As to the number of persons enjoying
the right
a. Simple – if only one usufructuary enjoys
the right
b. Multiple – if several usufructuaries enjoy
the right
i. Simultaneous – at the same time
ii. Successive – one after the other
BUT, in this case, if the usufruct is created by
donation, all the donees must be alive, or at least
already conceived, at the time of the perfection
of the donation.
4. As to the quality or kind of objects
involved
a. Usufruct over rights – rights must not be
personal or intransmissible in character,
so present or future support cannot be an
object of usufruct
b. Usufruct over things
i. Normal (or perfect or regular) – this
involves non-consumable things
where the form and substance are
preserved
ii. Abnormal (or imperfect or irregular) –
involves consumable things
5. As to terms or conditions
a. Pure – no term or condition
b. With a term or period
i. Ex die – from a certaign day
ii. In diem – up to a certain day
iii. Ex die in diem – from a certain day up
to a certain day
c. With a condition
i. Suspensive
ii. Resolutory
2. APPLICATION TO PERSONAL AND REAL
PROPERTIES
Some rules regarding Usufruct:
1. Usufruct can be constituted even if the object
is subject to Mortgage
2.
Us
ufruct CANNOT be constituted on an object
subject to Pledge
3. Usufruct can be constituted on an object
subjected previously to a Lease.
4. Usufructuary can lease out the property to
other parties
5. Usufructuary can construct improvements
over property subject to usufruct
3. HOW CONSTITUTED
How to constitute Usufruct
1. Legal Usufruct – but is not evident in today’s
laws
2. Act Inter Vivos
3. By Prescription
4. RIGHTS OF USUFRUCTUARY
a. Fruits
b. Possession and enjoyments
Right to civil, natural & industrial fruits of
property (jus fruendi and jus utendi)
a. Civil Fruits accrue daily
I. Belong to the usufructuary in
proportion in proportion to the time the
usufruct may last
II. Both stock dividends and cash
dividends are considered civil fruits
b. Industrial and Natural Fruits
I. Fruits pending at the beginning of
the usufruct
 Belong to the usufructuary
 No necessity of refunding the
owner for expenses incurred, (for the
owner gave the usufruct evidently
without any thought of being
reimbursed for the pending fruits, or
because the value of said fruits must
have already been taken into
consideration in fixing the terms and
conditions of the usufruct, if for
instance, the usufruct came about
because of contract)
 BUT without prejudice to the right
of 3rd persons. (Thus, if the fruits had
been planted by a possessor in good
faith, the pending crop expenses and
charges shall be pro-rated between
said possessor and the usufructuary)
II. Fruits pending at the termination
of usufruct
 Belong to the owner
 BUT the owner must reimburse the
usufructuary for ordinary cultivation
expenses and for seeds and similar
expenses, from the proceeds of the
fruits. (Hence, the excess of expenses

over the proceeds need not be
reimbursed)
c. Lease of Property
Right to lease the property
General Rule: The lease expires at the end of
the usufruct or earlier
Exception: In the case of leases of rural lands
which continues for the remainder of the
agricultural year;.
If the usufruct should expire before the
termination of the lease, he or his heirs and
successors shall receive only the proportionate
share of the rent that must be paid by the
lessees. (Art 568) If the naked owner allows the
lease to continue even after the expiration of the
usufruct, he will be entitled to the rentals
pertaining to such extension.
d. Sale/Alienation of Usufructuary
rights
Right to transfer usufructuary rights –
gratuitous or onerous; but is co-terminus with
term of usufruct; but cannot do acts of ownership
such as alienation or conveyance except when
property is:
a. Consumable
b. Intended for sale
c. Appraised when delivered; if not
appraised and consumable – return same
quality (mutuum)
OTHER RIGHTS OF THE USUFRUCTUARY:
1. Right to hidden treasure as stranger
2. Right not exempt from execution and
can be sold at public auction by owner
3. Naked owner still have rights but w/o
prejudice to usufructuary; may still
exercise act of ownership – bring action to
preserve ownership
4. Right to necessary expenses from
cultivation at end of usufruct
5. Right to enjoy accessions and servitudes
in its favor and all benefits inherent
therein
6. Right to make use of dead trunks of
fruit bearing trees and shrubs or those
uprooted/cut by accident but obliged to
plant anew
7.
Ri
ght of usufructuary of woodland –
ordinary cutting as owner does habitually or
custom of place; cannot cut down trees
unless it is for the restoration of improvement
of things in usufruct – must notify owner first
8. Right to leave dead, uprooted trees at
the disposal of owner with right to demand
that owner should clear and remove them – if
caused by calamity or extraordinary event –
impossible to replace them
9. Right to oblige owner to give authority
and furnish him proofs if usufruct is
extended to recover real property or real
right
10. Right to introduce useful and luxurious
expenses but with no obligation of
reimbursement on part of owner; may
remove improvement if can be done without
damage
11. Right to set-off improvements against
damages he made against the property
12. Right to administer when property is co-
owned; if co-ownership cease – usufruct of
part allotted to co-owner belongs to
usufructuary – not affected
13. Right to demand the increase in value of
property if owner did not spend for
extraordinary repairs; when urgent and
necessary for preservation of thing
5. OBLIGATIONS OF THE USUFRUCTUARY
 Pay expenses to 3rd persons for
cultivation and production at beginning
of usufruct; those who have right to fruits
should reimburse expenses incurred
 Generally, usufructuary has no liability
when due to wear and tear, thing
deteriorates, obliged to return in that
state; except when there is fraud or
negligence, then he shall be liable
a. Before the Usufruct commences
Before entering into Usufructuary:
a. Notice of inventory of property
(appraisal of movables and description)
b. Posting of security
i. Not applicable to parents who are
usufructuary of children except when 2nd
marriage contracted
ii. Caucion Juratoria – promise under
oath to deliver:
 A. Furniture necessary for the use of the
usufructuary
B. House included in the usufruct
C. Implements, tools and other movable
property necessary for an industry or
vocation for which he is engaged
iii. Excused – allowed by owner, not
required by law or no one will be injured
Failure to give security, owner may demand
that:
A. Immovables be placed under administration
B. Negotiable instruments can be converted into
registered certificates or deposited in bank
C. Capital and proceeds of sale of movables be
invested in safe securities
D. Interest on proceeds or property under
administration belong to usufructuary
E. Owner may retain property as administrator
w/ obligation to deliver fruits to usufructuary
until he gives sufficient security
F. Effect of security is retroactive to day he is
entitled to fruits
b. During the Usufruct
i. Alteration of form and substance
ii. Exercise of diligence
Obligation to exercise diligence:
1. Take care of property as a good father of
family
2. Liable for negligence and fault of person who
substitute him
iii. Repairs
Obligation to make ordinary repairs – wear
and tear due to natural use of thing and are
indispensable for preservation; owner may make
them at expense of usufructuary – during
existence of usufruct
iv. Charges and Taxes
Obligation to charges and taxes:
A. Obliged to make expenses due to his fault;
cannot escape by renouncing usufruct
B. Pay legal interest from extraordinary
expenses made by owner
C. Payment of expenses, charges and taxes
affecting fruits
D. Payment of interest on amount paid by owner
charges on capital
E. Expenses, cost and liabilities in suits brought
with regard to usufructuary – borne by
usufructuary
v. Insurance
OTHER OBLIGATIONS OF THE
USUFRUCTUARY
1. Obliged to notify owner of act of 3 rd
person prejudicial to rights of ownership
– he is liable if he does not do so for damages
– as if it was caused through his own fault
2. If usufruct is constituted on animals –
duty bound to replace dead animals that
die from natural causes or became prey;
if all of them perish w/o fault but due to
contagious disease / uncommon event –
deliver remains saved; if perish in part due to
accident – continue on remaining portion; if
on sterile animals – as if fungible – replace
same kind & quality
RIGHTS OF THE NAKED OWNER
1. Alienate thing
2. Cannot alter form or substance
3. Cannot do anything prejudicial to
usufructuary
4. Construct any works and make any
improvement provided it does not diminish
value or usufruct or prejudice right of
usufructuary
OBLIGATIONS OF THE NAKED OWNER
1. Extraordinary expenses; usufructuary obliged
to inform owner when urgent and there is the
need to make them
2. Expenses after renunciation of usufruct
3. Taxes and expenses imposed directly on
capital
4. If property is mortgaged, usufructuary has no
obligation to pay mortgage; if attached,
owner to be liable for whatever is lost by
usufructuary
5. If property is expropriated for public use –
owner obliged to either replace it or pay legal
interest to usufructuary of net proceeds of
the same
6. TERMINATION OF USUFRUCT
Extinguishment of Usufruct: (PLDTERM)
1. Prescription – use by 3rd person
2. Termination of right of person constituting
usufruct
3. Total loss of thing
4. Death of usufructuary – unless contrary
intention appears
5. Expiration of period of usufruct
6. Renunciation of usufructuary – express
7. Merger of usufruct and ownership
 Loss in part – remaining part shall
continue to be held in usufruct

Usufruct cannot be constituted in favor of a town,
corporation or association for more than 50
years
 Usufruct constituted on
immovable whereby a building is erected –
and building is destroyed – right to make use
of land and materials
 If owner wishes to construct a new
building – pay usufructuary the value of
interest of land and materials
 Both share in insurance if both
pay premium; if owner only – then proceeds
will go to owner only
 Effect of bad use of the thing –
owner may demand the delivery of and
administration of the thing with responsibility
to deliver net fruits to usufructuary at
termination of usufruct
 Thing to be delivered to owner
with right of retention for taxes and
extraordinary expenses w/c should be
reimbursed, security of mortgage shall be
cancelled
================================
TOPICS UNDER THE SYLLABUS
I. EASEMENTS
1. Kinds of Easements
2. Rights and Obligations
3. Modes of Extinguishment
4. Legal Easements
a. Public
b. Private
i. Waters
ii. Right of Way
iii. Party Wall
iv. Light and View
v. Drainage of Building
vi. Intermediate Distances
vii. Against Nuisance
viii. Lateral and Subjacent
Support
================================
EASEMENT is an encumbrance imposed upon an
immovable for the benefit of another immovable
belonging to a different owner. The immovable
in favor of which the easement is established is
called the dominant estate; that which is
subject thereto, the servient estate.
1.
KINDS
a) According to purpose of easement or
the nature of limitation
a. Positive – one which imposes upon the
servient estate the obligation of allowing
something to be done or of doing it
himself
b. Negative – that which prohibits the
owner of the servient estate from doing
something which he could lawfully do if
the easement did not exist
b) According to party given the benefit
a. Real (or predial) – for the benefit of
another belonging to a different owner
(e.g. easement of water where lower
estates are obliged to allow water
naturally descending from upper estates
to flow into them)
b. Personal – for the benefit of one or more
persons or community (e.g. easement of
right of way for passage of livestock)
c) According to the manner they are
exercised
i. Continuous – their use is incessant or may
be incessant
a. for legal purposes for acquisitive
prescription, the easement of
aqueduct is considered continuous;
easement of light and view is also
continuous
ii. Discontinuous – used at intervals and
depend upon
the acts of man
Ex. right of way because it can only
be used if a man passes
d) According to whether or not their
existence is indicated
i. Apparent – make known and continually
kept in view
by external signs that reveal the use and
enjoyment of
the same
Ex. right of way when there is an
alley or a permanent path
ii. Non-apparent – they show no external
indication of
their existence
Ex. easement of not building to more
than certain height
DOCTRINE OF APPARENT SIGN - Easements
are inseparable from the estate to which they
actively or passively pertain. The existence of
the apparent sign under Art. 624 is equivalent to
a 2.
title. It is as if there is an implied contract
between the two new owners that the easement
should be constituted, since no one objected to
the continued existence of the windows. Amor v.
Florentino, 74 Phil 404 (1951)
e) According to right given
i. Right to partially use the servient
estate
Ex. right of way
ii. Right to get specific materials or
objects from the servient estate
iii. Right to participate in ownership
Ex. easement of party wall
iv. Right to impede or prevent the
neighboring estate from performing a
specific act of ownership
f) According to source or origin and
establishment of easement
a. Voluntary – constituted by will or
agreement of the parties or by a testator
b. Mixed – created partly by agreement and
partly by law
c. Legal – constituted by law for public use
or for private interest
How established:
1. By law (Legal)
2. By the will of the owners (Voluntary)
3. Through prescription (only for continuous and
apparent easements)
 Resultantly, when the court says that an
easement exists, it is not creating one. For,
even an injunction cannot be used to create
one as there is no such thing as a judicial
easement. The court merely declares the
existence of an easement created by the
parties. La Vista Association v. CA, 278
SCRA 498 (1997)
Essential qualities of easements:
1. Incorporeal
2. Imposed upon corporeal property
3. Confer no right to a participation in the
profits arising from it
4. Imposed for the benefit of corporeal property
5. Has 2 distinct tenements – dominant and
servient estate
6. Cause must be perpetual
2. RIGHTS AND OBLIGATIONS
a) Rights Of Dominant Owner
1. Exercise all rights necessary for the use of
the easement
M
ake any works necessary for the use and
preservation of the servitude; subject to the
following conditions:
A. The works shall be at his expense, are
necessary for the use and preservation of
the servitude;
B. They do not alter or render the servitude
more burdensome;
C. The dominant owner, before making the
works, must notify the servient owner;
and
D. They shall be done at the most
convenient time and manner so as to
cause the least inconvenience to the
servient owner
3. Renounce the easement if he desires to
exempt himself from contribution to
necessary expenses
4. Ask for mandatory injunction to prevent
impairment of his use of the easement
b) Obligations Of The Dominant Owner
1. Notify the servient owner of works necessary
for the use and preservation of the servitude
2. Contribute to the necessary expenses if there
are several dominant estates in proportion to
the benefits derived from the works
3. Cannot alter or impose added burden on the
easement
4. Choose the most convenient time and
manner in making the necessary works as to
cause the least inconvenience to the servient
owner
c) Rights Of The Servient Owner
1. Retain ownership of the portion on which the
easement is established, and may use it in
such a manner as not to affect the exercise of
the easement
2. Change the place or manner of the use of the
easement, provided it be equally convenient
3. Use the property subject of the easement,
unless there is an agreement to the contrary
d) Obligations Of The Servient Owner
1. Contribute to the necessary expenses in case
he uses the easement, unless there is an
agreement to the contrary
2. Not to impair the use of the easement
3. MODES OF EXTINGUISHMENT
How extinguished:
1. Merger in the same person of the ownership
of the dominant and servient estates;
2. Non-user for 10 years
a. If discontinuous easements  period
computed from the day it was ceased to
be used

b. If continuous  period from the day on
which an act contrary to the same took
place
3. Expiration of the term or fulfillment of the
condition (if temporary or conditional)
4. Renunciation of the owner of the dominant
estate
5. Redemption agreed upon between owners of
the dominant and servient estates
6. When either or both estates fall into a
condition that the easement cannot be used;
revived if subsequent condition should again
permit its use, unless sufficient time for
prescription has elapsed
4.LEGAL EASEMENTS
LEGAL EASEMENTS are those imposed by law
having for their object either public use or the
interest of private persons. They shall be
governed by the special laws and regulations
relating thereto, and in the absence thereof, by
the Civil Code.
Kinds Of Legal Easements:
1. Public – for public or communal use
2. Private – for the interest of private
persons/private use, including those relating
to: (WRPL-DIAL)
a. Waters
b. Right of Way
c. Party Wall
d. Light and View
e. Drainage of Building
f. Intermediate Distances
g. Against Nuisance
h. Lateral and Subjacent Support
a) Easement Relating To Waters
 Lower estates are obliged to receive the
waters which naturally and without the
intervention of man descend from the higher
estates, as well as stones or earth which they
carry with them
 Cannot construct works which will impede
the easement; neither can the owner of the
higher estate make works which will increase
the burden
 Banks of rivers and streams, although of
private ownership, are subject throughout
their entire length and within a zone of 3
meters along their margins, to the easement
of public use in the general interest of
navigation, floatage, fishing and salvage
 Estates adjoining the banks of navigable
and floatable rivers are, subject to the
easement of towpath, for the exclusive
service of river navigation and floatage

Co
mpulsory easements for drawing of water
and for watering animals can be imposed for
reasons of public use in favor of a town or
village, after payment of the proper
indemnity
 Use of any water by anyone can be
disposed by having the water flow through
the intervening estates but is obliged to do
the following:
1. Prove that he can dispose of the water
and that it is sufficient for the use
intended
2. Show that the proposed right of way is
the most convenient and least onerous to
3rd persons
3. Indemnify the owner of the servient
estate
 Easement of aqueduct is continuous and
apparent even though the flow of water may
not be continuous
b) Easement Of Right Of Way
 Right granted to a person or class of persons
to pass over the land of another by using a
particular pathway therein, to reach the
former’s estates, which have no adequate
outlet to a public highway, subject, however
to payment of indemnity to the owner of the
servient estate
Requisites: (LIPO NA)
1. Claimant must be an owner of enclosed
immovable or one w/ real right
2. No adequate outlet to public highway
3. Right of way is absolutely necessary
4. Least prejudicial
5. Isolation not due to claimant’s own act
6. Proper indemnity
a. Not compulsory if the isolation of the
immovable is due to the proprietor’s own
acts
b. Right of Way is granted without indemnity
if land was acquired by and is surrounded
by the other estates of the vendor,
exchanger or co-owner through:
i. Sale
ii. Exchange
iii. Partition
 Burden of proof of proving the requisites
on the owner of the dominant estate
EXTINGUISHMENT: Legal or compulsory
right of way
 When the dominant estate is joined to
another estate (such as when the dominant
owner bought an adjacent estate) which is

abutting a public road, the access being
adequate and convenient
 When a new road is opened giving access
to the isolated estate
 In both cases: must substantially meet
the needs of the dominant estate. Otherwise,
the easement may not be extinguished.
 Extinguishment NOT ipso facto
 If extinguished, must return the amount
received as indemnity to the dominant owner
without any interest. Interest shall be
deemed in payment for the rent.
 The only servitude w/c a private owner is
required to recognize in favor of the
government is the easement of a public
highway, way, private way established by
law, or any government canal or lateral that
has been pre-existing at the time of the
registration of the land. If the easement is
NOT PRE-EXISTING and is sought to be
imposed only AFTER the land has been
registered under the Land Registration Act,
proper expropriation proceedings should be
had, and just compensation paid to the
registered owner. Eslaban v. Vda. De
Onorio, G.R. No. 146062 (2001)
 Easement of right of way is DISCONTINUOUS.
It may be exercised only if a person passes or
sets foot on somebody else’s land. An
easement of right of way of railroad tracks is
discontinuous because the right is exercised
only if and when a train operation by a
person passes over another’s property.
Bomedco v. Valdez, G.R. No. 124669
(2003)
c) Easement Of A Party Wall
 A wall erected on the line between two
adjoining properties belonging to different
persons, for the use of both estates.
 Presumed, unless there is a title, or exterior
sign, or proof to the contrary:
1. In dividing walls of adjoining buildings up
to the point of common elevation
2. In dividing walls of gardens or yards
situated in cities, towns, or in rural
communities
3. In fences, walls and live hedges dividing
rural lands
Exterior signs rebutting presumption:
1. There is a window or opening in the dividing
wall of buildings
2.
Di
viding wall is on one side straight and plumb
on all its facement, and on the other, it has
similar conditions on the upper part but the
lower part slants or projects outward
3. Entire wall is built within the boundaries of
one of the estates
4. The dividing wall bears the burden of the
binding beams, floors and roof frame of one
of the buildings, but not those of the others
5. The dividing wall between courtyards,
gardens and tenements is constructed in
such a way that the coping sheds the water
upon only one of the estates
6. The dividing wall, being built by masonry, has
stepping stones, which at certain intervals
project from the surface of one side only, but
not on the other
7. The lands enclosed by fences or live hedges
adjoin others which are not enclosed
In all these cases, the ownership is deemed to
belong exclusively to the owner of the property
which has in its favor the presumption based on
any of these signs.
d) Easement Of Light And View
 Period of prescription for the acquisition shall
be counted:
1. From the time of opening of the window,
if through a party wall
2. From the time of the formal prohibition
upon the proprietor of the adjoining land,
if window is through a wall on the
dominant estate
4. VOLUNTARY EASEMENTS are those which
may be established by the owner of a tenement
of piece of land as he may deem suitable, and in
the manner and form which he may deem best,
provided that he does not contravene the laws,
public policy or public order.
================================
TOPICS UNDER THE SYLLABUS
J. Modes of Acquiring Ownership
1. Mode v. Title
2. Original/Derivative Modes
K. Occupation
L. Intellectual Creation
M. Donation
1. Essential Elements
2. Kinds
3. Conditional Donations
a. Effect of Impossible/Illegal
Conditions
 4. Inter Vivos/Mortis Causa Derivative Mode – there was a preceding
Donations owner
5. Form
Modes Of Extinguising Ownership:
a. Onerous Donations 1. Absolute – all persons are affected
6. Capacity a. Physical loss or destruction
a. Of Donor b. Legal loss or destruction (when it
b. Of Donee goes out of the commerce of man)
7. Revocation 2. Relative – only for certain persons for
a. Birth, Survival or Adoption others may acquire their ownership
a. Law
b. Ingratitude b. Succession
c. Non-fulfillment of Condition c. Tradition as a consequence of
d. Innoficiousness certain contracts
N. OTHER MODES OF ACQUIRING d. Donation
OWNERSHIP e. Abandonment
1. Law f. Destruction of the prior title or
right (like expropriation, rescission,
2. Prescription
annulment, fulfillment of a resolutory
O. NUISANCE condition)
================================ g. Prescription
MODES OF ACQUIRING OWNERSHIP:
(OLDTIPS) OCCUPATION is the acquisition of ownership by
1. Occupation seizing corporeal things w/c have no
2. Law owner, made with the intention of
3. Donation acquiring them, and accomplished
4. Tradition according to legal rules
5. Intellectual Creation
6. Prescription Requisites:
7. Succession 1. Seizure or apprehension
 The holding of the material is not
1. MODE V. TITLE
required as long as there is right of
disposition
Difference between Mode and Title
2. Property must be corporeal personal property
3. Property must be susceptible of appropriation
MODE is the process of acquiring or transferring
a. Abandoned
ownership property – res derelicata, a thing is
considered abandoned when:
TITLE is the juridical act, right or condition which i. The
gives the juridical justification for a mode or
spes recuperandi (expectation to
means to their acquisition but which in itself is recover) is gone
insufficient to produce them
ii. The
animo revertendi (intention to return
Mode Title or to have it returned) has been given
Directly and Serves merely to up by the owner
immediately give the occasion for b. Unowned
produces a real right its acquisition or property – res nullius
existence 4. Without an owner
The cause The means 5. Intent to appropriate
Proximate cause Remote cause 6. Compliance with the requisites or conditions
Essence of the right Means whereby that of the law
which is to be essence is  Abandonment requires (1) a clear and
created or transmitted absolute intention to renounce a right or a
transmitted claim or to abandon a right or property; and
(2) an external act by which that intention is
2. ORIGINAL/DERIVATIVE MODES expressed or carried into effect. The intention
to abandon implies a departure, with the
Original Mode – independent of any pre- avowed intent of never returning, resuming
existing or preceding title or right of another or claiming the right and the interest that
 have been abandoned. Castellano v.
Francisco, [G.R. No. 155640, May 7,
2008]
Things Susceptible to Occupation
1. Things w/c has no owner – res nullius;
abandoned
2. Stolen property cannot be subject of
occupation
3. Animals that are the object of hunting and
fishing
NOTE: Hunting and fishing are regulated by
special laws: Act 2590; Fisheries Act 4003 as
amended by CA 116, CA 147 and RA 659; Act
1499 as amended by Act 1685; PD 534;
Municipal ordinances.
Kinds Of Animals
a. Wild – considered res nullius when not yet
captured; when captured and escaped –
becomes res nullius again
b. Domesticated animals – originally wild but
have been captured and tamed; now belong
to their capturer; has habit of returning to
premises of owner; becomes res nullius if
they lose that habit of returning and regain
their original state of freedom
c. Domestic/tamed animals – born and
ordinarily raised under the care of people;
become res nullius when abandoned by
owner
 Hidden treasure (only when found on
things not belonging to anyone)
 Abandoned movables
Animals
1. Swarm of bees
- owner shall have right to pursue
them to another’s land (owner to identify
latter for damages, if any)
- land owner shall occupy/retain the
bees if after 2 days, owner did not pursue
the bees
2. Domesticated animals
- may be redeemed within 20 days
from occupation of another person; if no
redemption is made, they shall pertain to
the one who caught them
3. Pigeons and fish
- when they go to another breeding
place, they shall be owned by the new
owner provided they are not enticed
Movables:
1. Treasure found on another’s property
2. Movable found w/c is not treasure:
c. Must be returned to owner
d. If finder retains the thing found – he may
be charged with theft
e. If owner is unknown, give to mayor;
mayor shall announce finding of the
movable for 2 weeks in a way he deems
best
f. If owner does not appear 6 months after
publication, thing found shall be awarded
to the finder
g. If owner appears, he is obliged to pay the
finder 1/10 of value of property as price
h. If movable is perishable or cannot be kept
w/o deterioration or w/o expenses it shall
be sold at public auction 8 days after the
publication
Ownership of a piece of land cannot be
acquired by occupation
 Because when a land is without an owner, it
pertains to the State
 Land that does not belong to anyone is
presumed to be public land
 But when a property is private and it is
abandoned it can be object of occupation
J. INTELLECTUAL CREATION
 By Article 722 and Decree Intellectual
Property (P.D. 49), the author, composer,
artist, or scientist can be considered as the
owner of the creation or product even if it has
not been copyrighted or patented. (Jurado)
 Letters and other private communications in
writing are owned by the person to whom
they are addressed and delivered, but they
cannot be published or disseminated without
the consent of the writer or his heirs EXCEPT
when the court so authorize if the public good
or the interest of justice so requires.
K. DONATION
DONATION is an act of liberality whereby a
person disposes gratuitously of a thing or right in
favor of another, who accepts it
1. ESSENTIAL ELEMENTS
Characteristics
1. Unilateral – obligation imposed on the donor
2. Consensual – perfected at time donor knows
of acceptance
Requisites: (CIDA)
1. The donor must have capacity to make the
donation of a thing or right
2.
Donative intent (animus donandi) or intent to reasons provided for
make the donation out of liberality to benefit by law (except
the donee onerous donations)
3. Delivery, whether actual or constructive of
the thing or right donated b) As to Consideration
4. donee must accept or consent to donation 1. Simple – the cause of which is the pure
 The donation is perfected once the liberality of the donor in consideration of
acceptance of the donation was made known the donee’s merits
to the donor. Accordingly, ownership will only 2. Remuneratory or compensatory – it is
revert to the donor if the resolutory condition given out of gratitude on account of the
is not fulfilled. Quijada v. CA, 299 SCRA services rendered by the donee to the
695 (1998) donor, provided they do not constitute a
demandable debt.
Requirements of a Donation: 3. Modal – imposes upon the donee a
1. Subject matter – anything of value; burden less than the value of the gift
present and not future property, must 4. Onerous – the value of which is
not impair legitime considered the equivalent of the
2. Cause – anything to support a consideration for which it is given and
consideration, generosity, charity, thus governed by the rules of obligations
goodwill, past service, debt and contracts
3. Capacity to donate, dispose and accept
donation c) As to Effectivity of Extinguishment
4. Form – depends on value of donation 1. Pure – not subject to any condition
(uncertain event) or period
2. KINDS 2. Conditional – subject to suspensive or
resolutory condition
a) As to Effectivity 3. With a Term – subject to a period,
1. Inter vivos – takes effect during the suspensive or resolutory
lifetime of the donor 3. CONDITIONAL DONATIONS
2. Mortis Causa – takes effect upon the
death of the donor a. Effect of Impossible/Illegal
3. Propter Nuptias – made by reason of Conditions
marriage and before its celebration, in
consideration of the same and in favor of Conditional – subject to suspensive or
one or both of the future spouses. resolutory condition

DONATION INTER DONATION MORTIS 4. INTER VIVOS/MORTIS CAUSA DONATIONS

VIVOS CAUSA
Disposition and Disposition happens Inter vivos – takes effect during the lifetime of
acceptance to take upon the death of the donor
effect during lifetime donor
of donor and donee Mortis Causa – takes effect upon the death of
Already pertains to Even if there is a term the donor
the donee unless of effectivity and
there is a contrary effectivity is upon the 5. FORM
intent death of the donor, still a. Onerous Donations
entitled to fruits
Formalities required - Formalities required - ONEROUS – the value of which is considered the
follow law on follow law on equivalent of the consideration for which it is
donations and certain succession to be valid, given and thus governed by the rules of
kinds of donations and and donation must be obligations and contracts
law on obligations and in the form of a will
contracts (suppletory) 6. CAPACITY
Irrevocable at the Revocable ad mutuum a. Of Donor
instance of the donor; (exclusive will of
may be revoked only donor) Who may give donations
by reasons provided All persons who may contract and dispose of
by law their property ― donor’s capacity shall be
Revoked only for
determined as of the time of the making of the
donation
b. Of Donee
Who may accept donations
1. Natural and juridical persons not especially
disqualified by law
2. Minors and other incapacitated
A. By themselves
I. If pure and simple donation
II. If it does not require written
acceptance
B. By guardian, legal representatives if
needs written acceptance
I. Natural guardian – not more than
50,000
II. Court appointed – more than 50,000
4. Conceived and unborn child, represented by
person who would have been guardian if
already born
Who are disqualified to donate
1. Guardians and trustees with respect to
property entrusted to them
2. Husband and wife
3. Between paramours/persons guilty of
adultery or concubinage at the time of
donation
4. Between parties guilty of same criminal
offense
5. Made to public officers, wife, descendant,
ascendant, by reason of his office
The prohibition against donations between
spouses must likewise apply to donations
between persons living together in illicit
relations. Joaquino v. Reyes, [G.R. No.
154645, July 13, 2003]
Other persons disqualified to receive
donations
1. Priest who heard confession of donor during
his last illness
2. Relatives of priest within 4th degree, church,
order or community where priest belongs
3. Physician, nurse, etc. who took care of donor
during his last illness
4. Individuals, corporations and associations not
permitted
Acceptance
a. Acceptance must be made personally or
thru agent
b. Donation may be made orally or in
writing:
 Movable:
5,000 and below – may be oral or written,
if oral it must be with simultaneous
delivery of thing/document & acceptance
need not be in writing
above 5,000 - must be written and
accepted also in writing
 Immovable - must be in a public
instrument and acceptance must also be
in a public instrument (in same
instrument or in other instrument);
otherwise it is void
c. Must be made during the lifetime of the
donor and donee
In case of doubt with regard to nature of
donation: inter vivos
Badges of mortis causa:
2. Title remains with donor (full or naked
ownership) and conveyed only upon
death
3. Donor can revoke ad mutuum
4. Transfer is void if transferor survives
transferee
 A donation mortis causa must comply with
the formalities of a last will and testament
otherwise, it would be void and would
produce no effect. If the donation is made in
such a way that the full and naked ownership
will pass to the donee upon the death of the
donor, then it is at that time when the
donation will take effect and it is the donation
mortis causa which should be embodied in
the last will and testament. Maglasang v.
Cabatingan, [G.R. No. 131953, June 2,
2002]
SOME RULES ON DETERMINATION WHETHER
MORTIS CAUSA OR INTER VIVOS:
1. A donation made “in consideration of love and
affection of the donor and the donee” but further
stipulates that “It became effective upon the
death of the donor provided that in the event the
donee should die before the donor, the present
donation shall be deemed automatically
rescinded and of no force and effect.”  mortis
causa since the right of disposition is not
transferred to donee while donor is still alive.
Sicad v. CA
5. A donation made stipulating that it will take
effect after the death of the donor but further
stipulates that (1) the donor will not dispose
nor take it away from the donee and that (2)
the donor is parting with the beneficial
ownership while he lived  inter vivos
Donation Of The Same Thing To 2 Or More
Different Persons
 Rules on double sale will apply
CLASSIFICATION OF DONATION INTER VIVOS  Inter vivos – takes effect
1. From the viewpoint of motive, purpose, before the death
or cause
 In praesenti – to be
PURE/ REMUNERA COND ONEROU delivered in future (also considered inter
SIMPLE TORY ITION S vivos)
AL  Mortis causa
Consider Liberality Valuable Valuable 3. From the viewpoint of occasion
a-tion or merits considera considera  Ordinary donation
Merits of of donee -tion is -tion  Donation propter nuptias
donee or imposed given 4. From the viewpoint of object donated
burden/ but value  Corporeal property
charge of is less A. Donation of real property
past than B. Donation of personal property
services value of  Incorporeal property – donation of
provided thing inalienable rights
they do donated
not What may be given
constitute  All or part of donor’s present property
demanda
provided he reserves sufficient means for the
ble debt
support of the ff:
Law to Law on Extent of Law on a. Himself
apply/ donations burden obligation
b. Relatives who by law are entitled to his
forms s support
Law on imposed
c. Legitimes shall not be impaired
donations >
 when w/o reservation or if inofficious, may be
ObliCon
reduced on petition of persons affected
excess>
donation  Exception: conditional donation and
Form of Required Required Required donation mortis causa
accepta  Exception To The Exception: future
nce property (cannot be disposed of at the time
Required of donation)
Reservat Applicabl Applicabl Not
ion e e Applicabl  A donation would not be legally feasible if the
w/regar e donor has neither ownership nor real rights
d to that he can transmit to the donee. Hemedes
personal v. CA, [G.R. No. 107132, October 8,
support 2008]
and
legitime DOUBLE DONATIONS:
Applicabl Rule: Priority in time, priority in right
e 1. If movable – one who first takes possession in
Warrant In bad In bad Applies good faith
y faith only faith only 2. If immovable – one who recorded in registry
against of property in good faith
eviction  No inscription, one who first took
and possession in good faith
hidden  In absence thereof, one who presents
defects oldest title
In bad
faith only 7. REVOCATION
Revocati Applicabl Applicabl Applicabl
on e e e Grounds For Revocation
Applicabl 1. Birth, Adoption, Reappearance of a child
e  Period of 4 years from the time of birth,
adoption or reappearance to revoke the
donation
2. From the viewpoint of the taking effect
  Transmissible to the heirs of the donor if
the donor dies within the 4 year period, in
which case the remaining period shall
apply to the donor’s heirs
 Reduction shall be based on the
inofficiousness of the donation
2. Non-fulfillment of the conditions
3. Ingratitude
 Cannot be passed to the donor’s heir
Action for
 Period of 1 year from knowledge of the
ingratitude
act of ingratitude, and it was possible for
him to bring the action
Grounds For Reduction
1. Failure of the donor to reserve sufficient
means for support of himself or dependent
relatives
2. Failure of donor to reserve sufficient
property to pay off existing debts
3. Inofficiousness, that is, the donation
exceeds that which the donor can give by will
4. Birth, appearance or adoption of a child
General rule is that if the period is not fixed
in the contract, the court can fix the period.
However, it has been 50 years, more than
enough time to comply. The Court refused to
fix a period and ruled that the donation can
be revoked for failure to comply with
condition. Central Philippine University v.
CA, 246 SCRA 511
revocation by reason of
1. Donee commits offense against person,
honor, property of donor, spouse, children
under his parental authority
2. Donee imputes to donor any criminal
offense or any act involving moral
turpitude even if he should prove it unless
act/crime has been committed against
donee himself, spouse or children under
his parental authority
3. Donee unduly refuses to give support to
donor when legally or morally bound to
give support to donor

AUTOMATIC REVOCATION BIRTH OF NON- INGRTITAUD

 In contracts providing for automatic CHILD FULFILLMEN E
revocation, judicial intervention is necessary T OF
not for purposes of obtaining a judicial CONDITION
declaration rescinding a contract already Ipso jure Needs court Needs court
deemed rescinded by virtue of an agreement revocation, no action action
providing for rescission even without judicial need for
intervention, but in order to determine action, court
whether or not the rescission was proper the decision is
stipulation of the parties providing for merely
automatic revocation of the deed of donation, declaratory
without prior judicial action for that purpose, Extent: Extent: whole Extent: Whole
is valid subject to the determination of the portion which portion but portion
propriety of the rescission sought. Where may impair court may returned
such propriety is sustained, the decision of legitime of rule partial
the court will be merely declaratory of the heirs revocation
revocation, but it is not in itself the only
revocatory act. Zamboanga Barter Traders Property must Property in Property to be
v. Plagata, [G.R. No. 148433] be returned excess returned
Alienation/mor Alienations/m Prior ones are
Revocation Of Donations tgages done ortgages void; demand
 Affects the whole donation prior to imposed are value of
 Applies only to donation inter vivos recording in void unless property
 Not applicable to onerous donations Register of registered when
Deeds: with Register alienated and
 Donor can revoke donation if the donee
If already sold of Deeds cannot be
fails to comply with the conditions imposed or cannot be recovered or
by the donor. Prescription: 4 years from the returned – the redeemed
non-compliance with condition. value must be from 3rd
returned persons
 X donated a parcel of land to the University If mortgaged –
on the condition that the latter will establish donor may
a medical college named after X. After 50 redeem the
years, X’s heirs filed annulment for failure to mortgage with
abide by the condition. Can this be revoked? right to
recover from 6. Effect of declaration as inofficious: the
donee donation is annulled only as to the
Fruits to be Fruits to be portion diminishing the legitime
returned at returned at
filing of action filing of  Cause of action arising from the
for revocation complainant inofficiousness of donation arises only upon
Prescription of Prescription is Prescription is death of the donor, as the value of the
action is 4 4 years from 1 year from donation will be contrasted with the net value
years from non- knowledge of of the estate of the donor decedent. Eloy
birth, etc. fulfillment fact and it Imperial v. CA,[ G.R. No. 112483 (1999)]
was possible
for him to Checklist For Donation:
bring action 1. Whether onerous or gratuitous – if onerous,
Action cannot Action cannot governed by law on contracts
be renounced be renounced 2. If gratuitous, whether mortis causa or inter
in advance vivos – if mortis causa, governed by law on
Right of action Right of action Heirs cannot succession
transmitted to at instance of file action 3. If inter vivos, whether perfected or not (made
heirs donor but known to the donor). If no perfection,
may be donation is void.
transmitted to 4. If perfected, check for the capacity of the
heirs donor to give and the donee to receive. If no
Action extends Action does capacity, donation is void.
to donee’s not extend to 5. Compliance with Art 748 (movable) and 749
heirs donee’s heirs (immovable) of NCC. Non-compliance,
donation is void.
Exception to rule on intransmissibility of
action with regard to revocation due to ILLEGAL AND IMPOSSIBLE CONDITIONS
ingratitude: - In Simple/Remunatory donations – shall be
1. Personal to the donor; general rule is heir considered as not imposed (Art 727)
cannot institute if donor did not institute - In Onerous/Contract – annuls obligation;
2. Heirs can only file in the following cases: obligation and conditions are void (Art 1183)
a. Donor has instituted proceedings but dies
before bringing civil action for revocation N. Other Modes of Acquiring
b. Donor already instituted civil action but Ownership
died, heirs can substitute 1. LAW
c. Donee killed donor or his ingratitude
caused the death of the donor Refers to those instances where the law,
d. Donor died w/o having known the independently of the other modes of acquiring
ingratitude done ownership, automatically and directly vests the
e. Criminal action filed but abated by death ownership of the thing in a certain individual
3. Can only make heirs of donee liable if once the prescribed requisites or conditions are
complaint was already filed when donee died present or complied with (Jurado).

Inofficious donations: 2. PRESCRIPTION

1. Shall be reduced with regard to the PRESCRIPTION is a mode by which one acquires
excess ownership and other real rights thru lapse of
2. Action to reduce shall be filed by heirs time; also a means by which one loses
who have right to legitime at time of ownership, rights and actions; retroactive from
donation the moment period began to run; founded on
3. Donees/creditors of deceased donor grounds of public policy; regarded as a statute of
cannot ask for reduction of donation repose
4. If there are 2 or more donation: recent
ones shall be suppressed Kinds:
5. If 2 or more donation at same time – 1. Acquisitive
treated equally and reduction is pro rata General Requisites:
but donor may impose preference which A. Capacity to acquire by prescription
must be expressly stated in donation B. Thing capable of acquisition by
prescription
 C. Possession of thing under certain
conditions
D. Lapse of time provided by law
2. Extinctive – also called as limitation of actions
Morales v CFI, 97 SCRA 872, 1980

Who may acquire by prescription

1. Person who is capable of acquiring property
by other legal modes
2. State
3. Minors – through guardians or personally

Against whom prescription may run

1. Minors and incapacitated person who
have guardians
2. Absentees who have administrators
3. Persons living abroad who have
administrators
4. Juridical persons except the state with
regard to property not patrimonial in
character
5. Between husband and wife
6. Between parents and children (during
minority/insanity)
7. Between guardian and ward (during
guardianship)
8. Between co-heirs/co-owners
9. Between owner of property and
person in possession of property in concept
of holder

Prescription does NOT run
1. Between husband and wife, even
though there be a separation of property
agreed upon in the marriage settlements or
by judicial decree
2. Between parents and children, during
the minority or insanity of the latter
3. Between guardian and ward during
the continuance of the guardianship
Things subject to prescription: all things
within the commerce of men
1. Private property
2. Patrimonial property of the State
Things not subject to prescription
1. Public domain
2. Intransmissible rights
3. Movables possessed through a crime
4. Registered land
Renunciation of Prescription
 Persons with capacity to alienate may
renounce prescription already obtained but
not the right to prescribe in the future
 May be express or tacit
 Prescription is deemed to have been
tacitly renounced; renunciation results from
the acts w/c imply abandonment of right
acquired
 Creditors and persons interested in
making prescription effective may avail it
themselves notwithstanding express or tacit
renunciation
PRESCRIPTION OF OWNERSHIP AND OTHER
REAL RIGHTS
Kinds of Acquisitive prescription
1. Ordinary
a. Possession in good faith
b. Just title
c. Within time fixed by law
i. 4 years for movables
ii. 8 years for immovables
d. In concept of an owner
e. Public, peaceful, uninterrupted
2. Extra-ordinary
a. Just title is proved
b. Within time fixed by law
i. 10 years for movables
ii. 30 years for immovables
1. In concept of an owner
2. Public, peaceful, uninterrupted
GOOD FAITH

Re
asonable belief that person who transferred
the thing is the owner and could validly
transmit ownership
 Must exist throughout the entire period
required for prescription
JUST TITLE (TRUE and VALID) – must be
proved and never presumed; only Titulo Colorado
is required
 Titulo Colorado – such title where there was a
mode of transferring ownership but
something is wrong because the grantor is
not the owner
 Titulo putativo - a person believes he has
obtained title but he has not because there
was no mode of acquiring ownership, as
when one is in possession of a thing in the
mistaken belief that it had been bequeathed
to him. Doliendo v Biarnesa, 7 Phil. 232,
1906
 Title must be one which would have been
sufficient to transfer ownership if grantor had
been the owner
 Through one of the modes of transferring
ownership but there is vice/defect in capacity
of grantor to transmit ownership
IN CONCEPT OF OWNER
 Possession not by mere tolerance of owner
but adverse to that of the owner
 Claim that he owns the property
PUBLIC, PEACEFUL & UNINTERRUPTED
 Must be known to the owner of the
thing
 Acquired and maintained w/o violence
 Uninterrupted (no act of deprivation
by others) in the enjoyment of property
INTERRUPTION
1. Natural
A. Through any cause, possession ceases for
more than 1 year
B. If 1 year of less – as if no interruption
2. Civil
A. Produced by judicial summons; EXCEPT:
i. Void for lack of legal solemnities
ii. Plaintiff desists from complaint/allows
proceedings to lapse
iii. Possessor is absolved from complaint
 Express or tacit renunciation
 Possession in wartime
RULES IN COMPUTATION OF PERIOD
 Present possessor may tack his possession to
that of his grantor or predecessor in interest
 4.
Present possessor presumed to be in continuous O
possession even with intervening time unless bstructs or interferes with the free passage of
contrary is proved any public highway or street, or any body of
 First day excluded, last day included water
5. Hinders or impairs the use of property
TACKING PERIOD
 Lapse of time cannot legalize any nuisance,
 There must be privity between previous and
whether public or private
present possessor
 Possible when there is succession of rights
Kinds of Nuisances According To Number of
 If character of possession different: Persons Affected:
- predecessor in bad faith possessor in 1. Public (or common) nuisance – affects a
good faith – use extraordinary community or neighborhood or considerable
prescription number of persons
2. Private nuisance – affects a an individual or
PRESCRIPTION OF ACTIONS few persons only
PRESCRIPTIV ACTION
E PERIOD Other Classification:
30 yrs 1. action over immovables - 1. Nuisance Per Se – always a nuisance
from time possession is lost because of its nature regardless of location or
10 yrs 1. m surroundings
ortgage action 2. Nuisance Per Accidens – nuisance by
2. action upon written contract reason of location, surrounding or in the
3. action upon obligation manner it is conducted or managed.
created by law
4. action upon a judgment DOCTRINE OF ATTRACTIVE NUISANCE:
8 yrs 1. action to recover movables - 1. REASON for the doctrine: one who maintains
from time possession is lost on his premises dangerous instrumentalities
6 yrs 1. action upon an oral contract or appliances of a character likely to attract
2. action upon a quasi-contract children in play, and who fails to exercise
4 yrs 1. upon injury to rights of ordinary care to prevent children from
plaintiff playing therewith or resorting thereto, is
2. upon a quasi-delict liable to a child of tender years who is injured
1 yr 1. forcible entry and unlawful thereby, even if the child is technically a
detainer trespasser in the premises. The principal
2. defamation reason for the doctrine is that the condition
5 yrs 1. others where periods are not or appliance in question although its danger
fixed by law is apparent to those of age, is so enticing or
alluring to children of tender years as to
Rights not extinguished by prescription: induce them to approach, get on or use it,
1. Demand right of way and this attractiveness is an implied
2. Abate public/private nuisance invitation to such children. Hidalgo
3. Declare contract void Enterprises, Inc. v. Balandan, 91 Phil.
4. Recover property subject to expressed trust 488 (1952)
5. Probate of a will 2. Application to bodies of water – generally not
6. Quiet title applicable to bodies of water, artificial as well
as natural in the absence of some unusual
O. NUISANCE condition or artificial feature other than the
mere water and its location.
NUISANCE is any act, omission, establishment,
business, condition of property, or anything else Remedies against a public nuisance:
which: 1. Prosecution under the Penal Code or any local
1. Injures or endangers the health or safety of ordinance
others 2. Civil action
2. Annoys or offends the senses 3. Extra-judicial abatement
3. Shocks, defies or disregards decency or  All remedies may be simultaneously pursued
morality to remove a nuisance
Requirements for abatement of a
public/private nuisance by a private person:
1. Demand has been made
2. Demand has been rejected
3. Abatement be approved by the district health
officer and executed with the assistance of
the local police
4. Value of the destruction does not exceed
P3000
5. If public nuisance, it must be specially
injurious to him

A private person or a public official extra-

judicially abating a nuisance shall be liable
for damages:
1. If he causes unnecessary injury
2. If an alleged nuisance is later declared by the
courts to be not a real nuisance

Remedies against a private nuisance:

1. Civil action
2. Abatement, without judicial proceedings

NOTE:
1. No legalization of nuisance, whether private
or public, by prescription
2. Even if nuisance no longer exists, the
aggrieved person may still pursue a civil
action for damages for the injuries suffered
during the existence of nuisance
3. Subsequent owner of the property, having full
knowledge of the existence of the nuisance,
did not remove the nuisance is solidarily
liable for the injuries and damages caused
4. Owner of nuisance property is not entitled to
compensation
5. Civil action against a public nuisance shall be
commenced by the mayor of the locality
6. A private person may commence a civil
action to eliminate a public nuisance only if
he suffered a particular harm or injury which
is different from the harm or damage suffered
by the general public by reason thereof
OBLIGATIONS by reason of which the debtor is bound in favor
of the creditor to perform the obligation. It can
be established by various sources of obligations
A. GENERAL PROVISIONS (law, contract, quasi-contracts, delicts, and
quasi-delicts) and may arise either from bilateral
================================ or unilateral acts of persons.
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS D. OBJECT/ SUBJECT MATTER: the prestation
1. Definition or conduct which has to be observed by the
2. Elements of an Obligation debtor/obligor. It is not a thing but a particular
conduct of the debtor.
3. Different Kinds of Prestation
4. Classification of Obligations REQUISITES OF A VALID PRESTATION:
5. Sources of Obligations a. Licit
A. Art. 1157 b. Possible
B. Natural obligations c. Determinate/ Determinable
C. Extra-contractual obligations d. Must have pecuniary value

========================================= Ang Yu Asuncion vs Court of Appeals [G.R.

TOPICS UNDER THE SYLLABUS No. 109125, December 2, 1994].
A. GENERAL PROVISIONS
The obligation is constituted upon the
1. Definition
concurrence of the essential elements thereof,
=========================================
viz.: (a) The vinculum juris or the juridical tie
which is the efficient cause established by the
1. DEFINITION various sources of obligations (law, contracts,
quasi-contracts, delicts and quasi-delicts); (b)
OBLIGATION: the object which is the prestation or conduct,
1. A juridical necessity to give, to do or not to required to be observed (to give, to do, or not to
do. (Art. 1156) do); and (c) subject-persons who, viewed from
2. It is a “legal bond whereby constraint is laid the demandability of the obligation, are the
upon a person or group of persons to act or active (obligee) and the passive (obligor)
forbear on behalf of another person or group of subjects.
persons.”1

========================================= NOTE: The form in which the obligation is

TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS
2. Elements of an Obligation
=========================================
2. ELEMENTS OF AN OBLIGATION
ELEMENTS OF AN OBLIGATION: ARTS. 1156
– 1162 (PAVO)
A. PASSIVE SUBJECT (obligor/debtor): one who
has the duty of giving, doing or not doing;
person bound to the fulfillment
B. ACTIVE SUBJECT (obligee/creditor): one in
whose favor the obligation is constituted; person
entitled to demand
C. VINCULUM JURIS/ LEGAL TIE: the efficient
cause or the juridical tie between two subjects
1 William F. Elliot, Commentaries on the Law of Contracts,
Volume 1, 1913 edition, Indianapolis, The Bobbs-Merrill
Company, page 6, citing Anson Cont. 5, 23.
manifested is sometimes added as a fifth
element. This element, however, cannot be
considered as essential as there is no particular
form required to make obligations binding,
except in rare cases.
=========================================
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS
3. Different Kinds of Prestation
=========================================
3. DIFFERENT KINDS OF OBLIGATION
a) To give
b) To do
c) Not to do – consists in abstaining from some
act, includes “not to give,” both being negative
obligations

CIVIL LAW REVIEWER Page 85 of 383


=========================================
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS
4. Classification of Obligations
=========================================
4. CLASSIFICATION OF OBLIGATIONS
A. Viewpoint of Sanction
a. Civil Obligations – give a right of action
to compel their performance
b. Natural Obligations – not based on
positive law but on equity and natural
law, do not grant a right of action to
enforce their performance, but after
voluntary fulfillment by the obligor, they
authorize retention of what has been
delivered or rendered by reason thereof.
c. Moral Obligations – those that cannot
be enforced by action but which are
binding on the party who makes it in
conscience and natural law.
B. Viewpoint of Performance
a. Positive Obligation – to give; to do.
b. Negative Obligation – not to do.
C. Viewpoint of Subject Matter
a. Personal Obligation
b. Real Obligation
I. Determinate or Specific
II. Generic
III. Limited Generic
D. Viewpoint of Person Obliged
a. Unilateral – only one party is bound
b. Bilateral – both parties are bound
Distinguish a Civil Obligation from Natural
Obligation
CIVIL OBLIGATION NATURAL
OBLIGATION
Art. 1156 Arts. 1423- 1430
Based on positive Based on equity and
law natural justice
Enforceable by court Cannot be compeled
action by cour action but
depends exclusively
upon the good
CIVIL LAW REVIEWER
conscience of the
debtor
=========================================
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS
5. Sources of Obligations
=========================================
5. SOURCES OF OBLIGATION
A. ARTICLE 1157. OBLIGATIONS ARISE
FROM
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts
NOTE: The list is exclusive (Sagrado Orden v.
Nacoco, [G.R. No. L-37756, June 30, 1952]).
However, some writers expressly recognize that
a UNILATERAL PROMISE can give rise to
obligations (Tolentino, Volume IV, p. 62).
A.1. LAW (OBLIGATION EX LEGE)
 The law cannot exist as a source of
obligations, unless the acts to which its
principles may be applied exist.
 Once the acts or facts exist, the
obligations arising therefrom by virtue of
the express provisions of the law are
entirely independent of the agreement of
the parties. And such obligations and
their correlative rights are governed by
the law by which they are created.
 It must be expressly or impliedly set
forth and cannot be presumed.
A.2. CONTRACTS (OBLIGATION EX
CONTRACTU)
 A juridical conventions manifested in
legal form, by virtue of which one or
more persons bind themselves in favor
another, or others, or reciprocally, to the
fulfillment of a prestation to give, to do,
or not to do. (Sanchez Roman)
 Obligations arising from contracts have
the force of law between the
contracting parties and should be
complied with in good faith. (Art. 1159)
Page 86 of 383
  The terms of the contracts determine the
respective obligations of the parties.
 If the terms of the contract are clear and
leave no doubt upon the contracting
parties’ intention, such terms should be
applied in their literal meaning.
 Neither party may unilaterally evade his
obligation in the contract, unless the
contract authorizes it or the other party
assents.
 Parties may freely enter into any
stipulations provided they are not
contrary to law, morals, good customs,
public order or public policy.
A.3. QUASI-CONTRACTS (Obligation Ex
Quasi-Contractu)
 Juridical relations resulting from lawful,
voluntary and unilateral acts, which has
for its purpose, the payment of
indemnity to the end that no one shall be
unjustly enriched or benefited at the
expense of another.
 Distinguished from other Sources
(LUV)
a. The act giving rise to a quasi-contract
must be LAWFUL distinguishing it from
delict;
b. The act must be VOLUNTARY
distinguishing it from a quasi-delict
which is based on fault or negligence;
c. The act must be UNILATERAL
distinguishing it from contract which is
based on agreement. (Tolentino, Volume
IV, p. 68)
KINDS OF QUASI-CONTRACT
a. Negotiorum Gestio: is the voluntary
management of the property or affairs of
another without the knowledge or consent of
the latter. (Art. 2144)
b. Solutio indebiti: is the juridical relation,
which is created when something is received
when there is no right to demand it and it
was unduly delivered through mistake. (Art.
2145) The requisites are:
c. There is no right to receive the thing
delivered;
d. The thing was delivered through mistake.
e. Other cases (Art. 2164-2175)
CIVIL LAW REVIEWER
A.4. DELICTS (OBLIGATION EX MALEFICIO
OR EX DELICTO)
 Article 100 of the Revised Penal Code –
Every person criminally liable for a felony is
also civilly liable.
 The civil liability springs out and is
dependent upon the facts which, if true,
would constitute a crime.
 Such civil liability is a necessary
consequence of criminal responsibility, and
is to be declared and generally enforced in
the criminal proceeding except where the
injured party reserves his right to avail
himself of it in a distinct civil action or in
cases where an independent civil action is
allowed by law.
GOVERNING RULES:
1. Articles 100-113 of the RPC and other penal
laws subject to Art 2177 Civil Code (quasi-
delict);
2. Chapter 2, Preliminary title, on Human
Relations ( Civil Code )
3. Title 18 of Book IV of the Civil Code on
damages
SCOPE OF CIVIL LIABILITY
1. Restitution
2. Reparation for damage caused
3. Indemnity for Consequential damages
EFFECT OF ACQUITTAL IN CRIMINAL CASE
GENERAL RULE: The acquittal of the accused
in the criminal case does not prejudice the civil
action, in which the offended party may still be
able to recover damages by a preponderance of
evidence.
EXCEPTION: Where the judgment of acquittal
contained a declaration that no negligence can
be attributed to the accused and that the fact
from which the civil action might arise did not
exist
CRIMES WITHOUT CIVIL LIABILITY
1. Contempt
2. Insults to persons in authority
3. Gambling
4. Violations of traffic regulations (De
Leon, 2003 ed.,p. 23)
EXTINGUISHMENT OF LIABILITY: The civil
liability for crimes is extinguished by the same
causes provided by the Civil Code for the
extinguishment of other obligations.
Page 87 of 383

A.5. QUASI-DELICT/TORTS (OBLIGATION EX
QUASI-DELICTO/ EX QUASI MALEFICIO)
 It is an act or omission arising from fault
or negligence which causes damage to
another, there being no pre-existing
contractual relations between the parties
 ELEMENTS:
1. That there exists a wrongful act or
omission imputable to the defendant by
reason of his fault or negligence;
2. That there exists a damage or injury,
which must be proved by the person
claiming recovery;
3. That there must be a direct causal
connection or a relation of cause and
effect between the fault or negligence
and the damage or injury; or that the
fault or negligence be the cause of the
damage or injury.
DISTINCT FROM A CRIME: An injured party or
his heirs has the choice of either:
(a) An action to enforce civil liability arising from
crime under Article 100 of the RPC, or
(b) An action from quasi-delict under Articles
2176-2194 of the Civil Code.
NEGLIGENCE: Failure to observe for the
protection of the interests of another person,
that degree of care, precaution and vigilance
which the circumstances justly demand,
whereby such other person suffers injury. US v.
Barrias, [23 Phil. 434, (1912)]
 ELEMENTS OF NEGLIGENCE: (DFI)
a. A duty on the part of the defendant
to protect the plaintiff from the
injury of which the latter complains;
b. A failure to perform that duty; and
c. An injury to the plaintiff through
such failure.
 TEST of NEGLIGENCE: “Would a prudent
man, in the position of the person to whom
negligence is attributed, foresee harm to the
person injured as a reasonable consequence
of the course about to be pursued?” Picart
v. Smith, [37 Phil. 809]
B. NATURAL OBLIGATIONS (Arts. 1423 –
1430)
NATURAL OBLIGATIONS
1. They are real obligations to which the
law denies an action, but which the debtor
may perform voluntarily.
CIVIL LAW REVIEWER
2.
It
is patrimonial, and presupposes a prestation.
3. The binding tie of these obligations is in
the conscience of man, for under the law, they
do not have the necessary efficacy to give rise
to an action.
EXAMPLES OF NATURAL OBLIGATIONS
ENUMERATED UNDER THE CIVIL CODE:
1. Performance after the civil obligation has
prescribed
2. Reimbursement of a third person for a
debt that has prescribed
3. Restitution by minor after annulment of
contract
4. Delivery by minor of money or fungible
thing in fulfillment of obligation
5. Performance after action to enforce civil
obligation has failed
6. Payment by heir of debt exceeding value
of property inherited
7. Payment of legacy after will have been
declared void.
C. EXTRA-CONTRACTUAL OBLIGATIONS
C.1. ESTOPPEL (Arts. 1431 – 1439)
ESTOPPEL - a condition or state by virtue of
which an admission or representation is
rendered conclusive upon the person making it
and cannot be denied or disproved as against
the person relying thereon.
KINDS:
1. Estoppel in pais (by conduct)
a. Estoppel by silence
b. Estoppel by acceptance of benefits
2. Technical Estoppel
a. Estoppel by deed
b. Estoppel by record
c. Estoppel by judgment
d. Estoppel by laches
C.2. LACHES OR STALE DEMANDS
LACHES – Failure or neglect, for an
unreasonable and unexplained length of time to
do that which, by exercising due diligence, could
or should have been done earlier; it is
negligence or omission to assert a right within
reasonable time warranting a presumption that
the party entitled to assert it either has
abandoned it or declined to assert it
Page 88 of 383
 2. Obligation to do or not to do
ELEMENTS (CDLI) 3. Breaches of obligations
1. Conduct on part of the defendant, or of one
A. Complete failure to perform
under whom he claims, giving rise to the
situation of which complaint is made and for B. Default or Delay (Art. 1169)
which the complaint seeks a remedy B.1. Mora solvendi
2. Delay in asserting the complainant’s B.2. Mora accipiendi
rights, the complainant having knowledge or B.3. Compesatio morae
notice, of the defendant’s conduct and having
C. Fraud
been afforded the opportunity to institute a suit
3. Lack of knowledge or notice on the part C.1. Waiver of future fraud is void
of the defendant that the complainant would (Art. 1171)
assert the right on which he bases his suit D. Negligence
4. Injury to the defendant in the event relief D.1. Ordinary Diligence
is accorded to the complainant, or the suit in not
D.2 Exceptions
held to be barred.
E. Contravention of the tenor of
Distinguish Laches from Prescription obligation
F. Fortuitous Event
LACHES PRESCRIPTION

Concerned with effect of Concerned with 4. Remedies of Obligations

delay
Question of inequity of
permitting the claim to be
enforced
Not statutory
Applies in equity
Not based on a fixed time
END OF DISCUSSION ON TOPIC
A. GENERAL PROVISIONS
================================
B. NATURE AND EFFECT OF
OBLIGATIONS
================================
TOPICS UNDER THE SYLLABUS
B. NATURE AND EFFECT OF
OBLIGATIONS
1. Obligation to give
A. A determinate or specific thing
B. An indeterminate or generic
thing
fact of delay A. Specific Performance
Question or A.1. Substituted performance by a
matter of time third person on obligation to deliver
generic thing and in obligation to do,
unless a purely personal act
Statutory
B. Rescission (resolution in
Applies at law reciprocal obligations)
C. Damages, in any event
Based on a fixed
time D. Subsidiary remedies of creditors
(Art. 1177)
D.1. Accion subrogatoria
D.2. Accion pauliana
D.3. Accion directa (Arts. 1652,
1608, 1729, 1893)
========================================
TOPICS UNDER THE SYLLABUS
B. NATURE AND EFFECT OF
OBLIGATIONS
1. Obligation to give
=========================================
Personal Obligations: obligations to do or not
to do; where the subject matter is an act to be
done or not to be done
a. Positive – obligation to do
b. Negative – obligation not to do

CIVIL LAW REVIEWER Page 89 of 383

Real Obligations: obligations to give; where
the subject matter is a thing which the obligor
must deliver to the obligee
a. Determinate or specific – object is
particularly designated or physically
segregated from all other things of the
same class
b. Generic –object is designated by its class
or genus
c. Limited Generic – generic objects
confined to a particular class
a. Ex: An obligation to deliver one
of my horses (Tolentino, Volume
IV, p. 91; De Leon, 2003 ed., p. 7)
1. OBLIGATION TO GIVE
A. DUTIES OF OBLIGOR IN AN OBLIGATION
TO GIVE A DETERMINATE THING (Arts.
1163, 1164, 1166.)
To preserve or take care of the thing due with
the diligence of a good father of a family
EXCEPTION: if the law requires or the parties
stipulate another standard of care
B. DUTIES OF OBLIGOR IN AN OBLIGATION
TO GIVE A GENERIC THING (Arts. 1246 AND
1170)
To deliver the thing of the quality intended
by the parties, taking into consideration the
purpose of the obligation, intent of the parties,
and other circumstances;
To be liable for damages in case of fraud,
negligence, or delay, in the performance of his
obligation, or contravention of the tenor thereof.
1. To deliver the fruits of the thing: Right to
the fruits of the thing from the time the
obligation to deliver it arises;
2. To deliver its accessions and accessories
(Art. 1166)
a. Accessions – additions to or improvements
upon a thing. Ex: air conditioner in a car.
b. Accessories – things joined to, or included
with the principal thing for its better use,
embellishment or completion. Ex: key of a
house; frame of a picture (De Leon, 2003
ed., pp. 37-38)
3. To deliver the thing itself (Specific
Performance)
CIVIL LAW REVIEWER
4. To pay damages in case of breach of the
obligation by reason of delay, fraud, negligence
or contravention of the tenor of the obligation.
RIGHTS OF THE CREDITOR TO THE FRUITS
1. Before Delivery – personal right
2. After Delivery – real right
RIGHTS OF THE CREDITOR IN REAL
OBLIGATION TO GIVE (Art. 1165)
1. GENERIC REAL OBLIGATION (Obligation to
deliver a generic thing):
a. To ask for performance of the obligation
b. To ask that obligation be complied with at
the expense of the obligor
c. To recover damages in case of breach of
obligation
NOTE: A generic real obligation can be
performed by a third person since the object is
expressed only according to its family or genus.
2. DETERMINATE OR SPECIFIC REAL
OBLIGATION (Obligation to deliver a
determinate thing):
a.To demand specific performance or
fulfillment (if it is still possible) of the
obligation with a right to indemnity for
damages
b. To demand rescission of the obligation
with right to recover damages
c.To demand payment of damages when it
is the only feasible remedy
d. If the obligor delays, or has promised
to deliver the same thing to two or more
persons who do not have the same interest,
he shall be responsible for any fortuitous
event until he has effected delivery.
NOTE: In an obligation to deliver a determinate
thing, the very thing itself must be delivered and
consequently, only the debtor can comply with
the obligation.
WHEN OBLIGATION TO DELIVER THE THING
AND FRUIT ARISES
1. If the source of the obligation is law, quasi-
contract, delict, quasi-delict, it arises from
the time designated by the law creating or
regulating them;
2. If the source is contract, it arises from the
time of the perfection of the contract (i.e.
meeting of the minds between the parties),
unless
Page 90 of 383
 a.the parties made a stipulation to the
contrary,
b. the obligation is subject to a suspensive
condition or period; arises upon fulfillment
of the condition or arrival of the period
c.in a contract to sell, the obligation arises
from the perfection of the contract even if
the obligation is subject to a suspensive
condition or a suspensive period where the
price has been paid
=========================================
TOPICS UNDER THE SYLLABUS
B. NATURE AND EFFECT OF
OBLIGATIONS
2. Obligation to do or not to do
=========================================
2. OBLIGATION TO DO OR NOT TO DO
RIGHTS OF A CREDITOR IN PERSONAL
OBLIGATION (TO DO OR NOT TO DO)
A. POSITIVE PERSONAL OBLIGATIONS:
1. Performance at debtor’s cause: The
obligee is entitled to have the thing done in a
proper manner, by himself or by a third person,
at the expense of the debtor.
2. To demand what has been poorly done be
undone
3. To recover damages because of breach of the
obligation
B. NEGATIVE PERSONAL OBLIGATION
1. To have it undone at the expense of the
obligor; and
2. To ask for damages
DISTINGUISH PERSONAL RIGHT FROM
REAL RIGHT
PERSONAL REAL
Jus ad rem, a right Jus in re, a right
enforceable only enforceable against
against a definite the whole world
person or group of
persons
fulfillment of the against whom the
prestation to give, right may be
to do or not to do. personally enforced
========================================
TOPICS UNDER THE SYLLABUS
B. NATURE AND EFFECT OF
OBLIGATIONS
3. Breaches of obligations
========================================
3. BREACHES OF OBLIGATIONS (Arts. 1170
– 1174)
A. Voluntary – debtor in the performance of the
obligation is guilty of:
1. Delay (Mora)
2. Fraud (Dolo)
3. Negligence (Culpa)
4. Contravention of the tenor of the
obligation
NOTE: debtor is liable for damages
B. Involuntary – debtor is unable to comply
with his obligation due to fortuitous event/s
NOTE: debtor is not liable for damages
A.1. DEFAULT OR DELAY
GENERAL RULE: Those obliged to deliver or to
do something incur in delay from the time the
obligee judicially or extrajudicially demands
from them the fulfillment of their obligation.
(Art. 1169)
EXCEPTION: Demand by the creditor shall not
be necessary in order that delay may exist:
(1) When the obligation or the law expressly so
declares;
(2) When from the nature and the circumstances
of the obligation it appears that the designation
of the time when the thing is to be delivered or
the service is to be rendered was a controlling
motive for the establishment of the contract; or
(3) When the demand would be useless, as
when the obligor has rendered it beyond his
power to perform.

Right pertaining to a Right pertaining to a In reciprocal obligations, neither party incurs in

person to demand person over a delay if the other does not comply or is not
from another, as a specific thing, ready to comply in a proper manner with what is
definite passive without a definite incumbent upon him. From the moment one of
subject, the passive subject

CIVIL LAW REVIEWER Page 91 of 383


the parties fulfills his obligation, delay by the
other begins.
NOTE: Art. 1169 is applicable only when the
obligation is to do something other than the
payment of money. In case of obligation for
payment of sum of money, the interest replaces
the damages.
a
dishonest purpose or some moral obliquity and
conscious doing of wrong. Bad faith is thus
synonymous with fraud and involves a design to
mislead or deceive another, not prompted by an
honest mistake as to one’s rights or duties, but
by some interested or sinister motive.

KINDS OF DELAY:
1. Mora solvendi – delay or default committed by TYPES OF FRAUD:
debtor 1. Causal Fraud (Dolo Causante): fraud
2. Mora accipiendi – delay or default committed employed in the execution of the contract
by creditor 2. Incidental Fraud (Dolo Incidente): fraud
3. Compensatio Morae – default of both parties in performance of obligation already existing
in reciprocal obligations because of a contract
GENERAL RULE: An action or suit can be filed
at anytime after the non-compliance of the other
FRAUD IN THE CAUSAL FRAUD/
party. However, damages or interest shall only
PERFORMANCE/ DOLO CAUSANTE
start to run after judicial or extra-judicial
DOLO INCIDENTE (ART. 1338)
demand.
(ART. 1170)
EXCEPTION: In ejectment and consignment
Present during the Present during the
cases, the extra-judicial demand should first be
performance of a perfection of a
made prior to the filing of a civil suit.
pre-existing obligation contract
DEMAND IS NOT NECESSARY WHEN: Purpose is to evade Purpose is to secure
1. Law or obligation expressly declares so
the normal the consent of
2. Time is of the essence
3. Demand would be useless fulfillment of the another to enter into
obligation the contract
NOTE: In reciprocal obligations, a party does not
incur in delay for failure of the other party to Results in the breach Results in vitiation of
assume and perform the obligation imposed of an obligation consent; voidable
upon him/her. contract

A.2. FRAUD (Dolo) Gives rise to a right in Gives rise to a right of

It is the deliberate or intentional evasion of the favor of the creditor to an innocent party to
normal fulfillment of an obligation. (8 Manresa recover damages annul the contract
72)

It is the fraud in the performance or fulfillment
of an obligation already existing, as
distinguished from the fraud referred to in
Article 1338 which is the cause of nullity of
contracts and which exists before and at the
moment of creating the obligation.
Samson vs Court of Appeals [G.R. No.
108245, November 25, 1994].
Bad faith is essentially a state of mind
affirmatively operating with furtive design or
with some motive of ill-will. It does not simply
connote bad judgment or negligence. It imports
NOTE: Future fraud cannot be waived. However,
the law does not prohibit renunciation of the
action for damages on the ground of past fraud.
REMEDIES OF DEFRAUDED PARTY
a. Specific performance (Art 1233)
b. Resolve contract (Art 1191)
c. Damages, in either case
A.3. NEGLIGENCE (Culpa)
 Any voluntary act or omission, there
being no malice which prevents the
normal fulfillment of an obligation

CIVIL LAW REVIEWER Page 92 of 383

  Consists in the omission of that diligence DISTINGUISH FRAUD FROM NEGLIGENCE
which is required by the nature of the
obligation and corresponds with the
FRAUD
circumstances of the persons, of the
NEGLIGENCE
time and of the place (Art. 1173)
There is deliberate There is no
intention to cause deliberate intention
damage. to cause damage.
KINDS OF NEGLIGENCE
a. Quasi-Delict (Culpa aquiliana/culpa Liability cannot be Liability may be
extra contractual) – source of obligation; mitigated. mitigated.
wrong or negligence committed independent
Presumed from the Must be clearly
of contract and without criminal intent
b. Contractual Negligence (Culpa breach of a proved
Contractual) – wrong or negligence in the contractual obligation
performance of a obligation/contract
Waiver for future Waiver for future
c. Criminal Negligence (Culpa
fraud is void. negligence may be
Criminal) – wrong or negligence in the
allowed in certain
commission of a crime
cases
INSTANCES WHERE THE LAW REQUIRES A
HIGHER STANDARD OF CARE:
DISTINGUISH NEGLIGENCE FROM CRIME
C.1. Banks – as a business affected with public
interest, and because of the nature of its NEGLIGENCE CRIME
functions, the bank is under obligation to treat
WHAT IT Any act with Acts
the accounts of its depositors with
PUNISHABLE fault or punishable by
meticulous care, always having in mind the
negligence law
fiduciary nature of their relationship. (Simex v.
CA, 183 SCRA 360) CONDITION Criminal intent Necessary
OF THE unnecessary
EXCEPTION: Extraordinary diligence does not MIND
cover transactions outside bank deposits, ie: LIABILITY Damages may Some crimes
commercial transactions (Reyes v. CA, 363 FOR be awarded to do not give
SCRA 51) DAMAGES injured party rise to civil
liability
C.2. Common Carriers – from the nature of their NATURE OF Violation of Public rights
business and for reasons of public policy, THE RIGHT private rights
common carriers are bound to observe VIOLATED
extraordinary diligence in the vigilance over the AMOUNT OF Preponderance Proof beyond
goods and for the safety of the passengers EVIDENCE of evidence reasonable
transported by them, according to all the doubt
circumstances of each case (Art. 1733)
COMPROMIS Can be Criminal
Diligence of a good father of a family: E compromised liability can
ordinary care or that diligence which an average as any other never be
or reasonably prudent person would exercise civil liability compromised
PRESUMPTIO Presumption of Presumption
over his own property.)
N negligence of innocence
NOTE: Rule on Standard of Care
KINDS OF NEGLIGENCE, DISTINGUISHED
 That which the law requires; or
 That stipulated by the parties; or
CULPA AQUILIANA CULPA CONTRACTUAL
 In the absence of the two, diligence of a
good father of a family

CIVIL LAW REVIEWER Page 93 of 383

Negligence is Negligence merely an impossible
substantive and incident of performance condition for
independent of an obligation existence

There may or may not There is a pre-existing Condition ONLY THE AFFECTED
be a pre-existing contractual relation IMPOSSIBLE BUT OBLIGATION IS VOID.
contractual obligation Obligation
DIVISIBLE
Source of the Source of the obligation
obligation is the is the breach of the
negligence itself contractual obligation A.4. CONTRAVENTION OF THE TENOR OF
THE OBLIGATION
Negligence must be Proof of existing of the
proved contract and its breach B. FORTUITOUS EVENT (Force Majeure)
is prima facie sufficient GENERAL RULE: No one should be held to
to warrant recovery account for fortuitous cases, which are those
situations that could not be foreseen, or which
Diligence in the Diligence in the though foreseen, were inevitable.
selection and selection and
supervision of the supervision of the EXCEPTION: There concurs a corresponding
employees is a employees is not fraud, negligence, delay or violation or
defense available as a defense contravention in any manner of the tenor of the
obligation.

EFFECTS OF CONTRIBUTORY NEGLIGENCE ELEMENTS OF A FORTUITOUS EVENT:

OF THE OBLIGEE 1. The cause of breach is independent of the
GENERAL RULE: Reduces or mitigates the debtor’s will.
damages which he can recover 2. The event must be unforeseeable or
unavoidable
EXCEPTION: If the negligent act or omission of 3. The events render performance impossible
the creditor is the proximate cause of the event, 4. The debtor must be free from any
which led to the damage or injury complained participation, or aggravation of the injury.
of, he cannot recover.
NOTE: In the case of Republic v. Luzon
EFFECTS OF IMPOSSIBLE AND ILLEGAL Stevedoring [G.R. No. L-21749, September
CONDITIONS 29, 1967], the Court held that the person
obliged to perform an obligation shall not be
CONDITION EFFECT ON EFFECT ON excused from a fortuitous event when the nature
OBLIGATIO CONDITION of the obligation requires the assumption of risk.
N In other words, it is not enough that the event
should not be foreseen or anticipated, but it
TO DO VOID VOID must be one that is impossible to foresee or to
impossible OR avoid.
illegal
========================================
NOT to Do an VALID VALID TOPICS UNDER THE SYLLABUS
Illegal Thing B. NATURE AND EFFECT OF
NOT to do an VALID DISREGARD OBLIGATIONS
impossible thing CONDITION
4. Remedies of obligations
Condition is pre- VALID VOID ========================================
existing and NOT
dependent on
the fulfillment of

CIVIL LAW REVIEWER Page 94 of 383

GENERAL RULE: The law protects the creditors. 3. Accion Directa - (Arts. 1652, 1608, 1729,
The creditors are given by law all possible 1893)
remedies to enforce such obligations.

A. SPECIFIC PERFORMANCE END OF DISCUSSION ON TOPIC

B. NATURE AND EFFECT OF
To demand specific performance or fulfillment OBLIGATIONS
of the obligation with a right to indemnity for ================================
damages

B. RESCISSION C. KINDS OF CIVIL


It means to abrogate the contract from the
OBLIGATIONS
beginning and to restore the parties to their
================================
relative positions as if no contract has been
TOPICS UNDER THE SYLLABUS
made.

It is “to declare the contract void at its C. KINDS OF CIVIL OBLIGATIONS
inception and to put an end to it as though it 1. Pure Obligations (Arts. 1179-1180)
never was.”2 2. Conditional Obligations (Art. 1181)

It is predicated on the breach of faith by any A. Suspensive Condition
party that violates the reciprocity between B. Resolutory Condition
them.
C. Potestative; casual or mixed
NOTE: In the case of Adorable v. Court of C.1. Obligations subject to
Appeals [G.R. No. 119466, November 25, potestative suspensive conditions
1999], the Court held that unless a debtor are void (Art. 1182)
acted in fraud of his creditor, the creditor has no
D. Effect of the happening of
right to rescind a sale made by the debtor to
suspensive condition or resolutory
someone on the mere ground that such sale will
prejudice the creditors’ rights in collecting later condition (Art. 1187)
on from the debtor. The creditor’s right against D.1. Extent of retroactivity
the debtor is only a personal right to receive E. Effect of improvement, loss or
payment for the loan; it is not a real right over deterioration of specific thing
the lot subject of the deed of sale transferring before the happening of a
the debtor’s property.3
suspensive condition in obligation
C. DAMAGES to do or not to do (Art. 1189)
To demand payment of damages when it is a F. Effect when a resolutory
feasible remedy
condition in obligation to do or not
D. SUSIDIARY REMEDIES OF CREDITORS to do happens and there is
1. Accion Subrogatoria – action which the improvement, loss or deterioration
creditor may exercise in the place of his of the specific thing (Art. 1190, par.
negligent debtor in order to preserve or recover
3)
for the patrimony of the debtor the product of
such action, and then obtain therefrom the 3. Obligation with a period or a term
satisfaction of his own credit (Art.1193)
2. Accion Pauliana – action to revoke or A. Presumption that period is for
rescind acts which the debtor may have done to the benefit of both debtor and
defraud his creditor.
creditor (Art. 1196)

2 SPOUSES VELARDE V. COURT OF APPEALS, [G.R. NO. 108346,

JULY 11,2001].
3 MELENCIO S. STA. MARIA, JR., OBLIGATIONS AND CONTRACTS:
TEXT AND CASES 101 (2 ND ED. 2003).

CIVIL LAW REVIEWER Page 95 of 383

 B. Effect if suspensive period is for
the benefit of both debtor and
creditor
C. Effect if given to debtor alone
C.1. Instances when debtor losses
benefit of period (Art. 1198)
D. Resolutory period
E. Definite or indefinite period
E.1. Instances when courts may fix
the period (Art. 1197)
E.2. Creditor must ask court to set
the period before he can demand
payment
4. Alternative or facultative (Art.
1199)
A. Difference between alternative
and facultative obligations
B. Effect of loss of specific things or
impossibility of performance of
alternative, through fault of
debtor/creditor or through
fortuitous events
=========================================
TOPICS UNDER THE SYLLABUS
C. KINDS OF CIVIL OBLIGATION
1. Pure Obligations
=========================================
1. PURE OBLIGATIONS
It is an unqualified obligation which is
demandable immediately. It is an obligation
whose performance does not depend upon a
future and uncertain event, or past event
unknown to the parties. (Art. 1179)
=========================================
TOPICS UNDER THE SYLLABUS
C. KINDS OF CIVIL OBLIGATION
2. Conditional Obligations
=========================================
2. CONDITIONAL OBLIGATIONS
It is exactly the reverse of a pure obligation. The
performance in conditional obligations depends
upon a future or uncertain event or upon a past
event unknown to parties.
CIVIL LAW REVIEWER
A. RESOLUTORY CONDITION
 Demandable at once
 Once the condition is established or
acknowledged, the right to demand
performance immediately exists and
therefore the obligation concomitant to the
right can be demanded at once.
 It is also known as “condition subsequent”
 It extinguishes obligations
NOTE: In case of a contract with a reciprocal
obligation, the obligation of one is a resolutory
condition of the obligation of the other, the non-
fulfillment of which entitles the other party to
rescind the contract.
B. SUSPENSIVE CONDITION
 Not demandable at once
 It gives rise to the performance of an
obligation (ex. Contract to Sell)
 It is also known as “condition precedent”
 It gives birth to obligations
C. POTESTATIVE CONDITION
The fulfillment of the condition entirely depends
upon the sole will of the debtor.
GENERAL RULE: All potestative conditions are
void.
EXCEPTION: Potestative resolutory conditions
are not void. If the potestative condition is
imposed not on the birth (suspensive) of the
obligation but on its fulfillment (resolutory), only
the condition is avoided, leaving unaffected the
obligation itself.
D. EFFECT OF SUSPENSIVE AND
RESOLUTORY CONDITIONS
Art. 1187:
 When the obligation imposes reciprocal
prestations, the fruits and interests during
the pendency of the condition shall be
deemed to have been mutually
compensated.
 If the obligation is unilateral, the debtor or
obligor shall appropriate the fruits and
interests received, unless from the nature
and circumstances of the obligation it should
be inferred that the intention of the person
constituting the same is different.
Page 96 of 383
D.1. Extent of Retroactivity
 In resolutory conditions, retroactivity is
irrelevant.
 In suspensive conditions, the effect of a
conditional obligation “to give” retroacts to
the day of the constitution of the obligation
(Art 1187)
E. IMPROVEMENT, LOSS, AND
DETERIORATION
Constructive fulfillment - The condition shall
be deemed fulfilled when the obligor (debtor)
voluntarily prevents its fulfillment (Art. 1186)
NOTE: “LOSS” happens when the thing
perishes, goes out of commerce, or it disappears
in such a way that its existence is unknown or it
cannot be recovered. (Art. 1189)
E.1. Before the happening of a suspensive
condition in an obligation to do or not to
do (Art. 1189)
 If the thing is lost without the fault of debtor,
the obligation shall be extinguished.
 If the thing is lost with the fault of debtor, he
shall be obliged to pay damages.
 If the thing deteriorates without the fault of
debtor, the impairment is to be borne by
creditor
 If the thing deteriorates with the fault of
debtor, the creditor may choose between
rescission of the obligation and its
fulfillment, with indemnity for damages in
either case
 If the thing improves by its nature or by
time, the benefit shall inure to the benefit of
the creditor.
 If the thing improves at the expense of
debtor, he shall have no other right than
that granted to the usufructuary.
E.2. When a resolutory condition in an
obligation to do or not to do happens (Art.
1190, par. 3)
 In obligations to do and not to do, the court
shall determine the effect of the
extinguishment of the obligation
=========================================
TOPICS UNDER THE SYLLABUS
CIVIL LAW REVIEWER
C. KINDS OF CIVIL OBLIGATION
3. Obligations with a Period or Term
=========================================
3. OBLIGATIONS WITH A PERIOD OR
TERM
 WITH A PERIOD – An obligation whose
demandability or extinguishment depends
on a future and certain event; subject to the
expiration of a term of period (Arts 1193,
1196)]
 PERIOD – Interval of time, which, exerting
an influence on an obligation as a
consequence of a juridical act, either
suspends its demandability or produces its
extinguishment
REQUISITES:
1. Future
2. Certain
3. Legally and physically possible
WHEN STIPULATION SAYS “PAYABLE WHEN
ABLE”
 When the obligor binds himself to pay when
his means permit him to do so, the
obligation shall be deemed to be one with a
period.
 Remedy:
1. Agreement among parties
2. Court shall fix period of payment when
parties unable to agree
KINDS OF OBLIGATIONS WITH A PERIOD:
1. According to effect:
a. Resolutory (in diem) – demandable at
once but terminates upon arrival of the
day certain
 Day certain – that which must
necessarily come, although it may not be
known when
b. Suspensive (ex die) – obligation
becomes demandable on the day
stipulated
2. According to source
a. Legal - when it is provided by laws
b. Conventional or Voluntary - when it is
agreed to by the parties
c. Judicial - when it is fixed by the court
3. According to definiteness:
Page 97 of 383
 4.
a.Definite - when it is fixed or it is known If
when it will come the debtor binds himself when his means
b. Indefinite - when it is not fixed or it is permit him to do so
not known when it will come
PERIOD, FOR WHOSE BENEFIT
GENERAL RULE: When a period is designated
for the performance or fulfillment of an
obligation, it is presumed to have been
established for the benefit of both parties.
EXCEPTION: When it appears from the tenor of
the obligation or other circumstances that the
TERM VS. CONDITION, DISTINGUISHED period has been established in favor of one or
the other.
TERM CONDITION
PERIOD FOR THE BENEFIT OF THE
Interval of time Fact or event which is
CREDITOR
which is future and future or uncertain or a
 Creditor may demand the fulfillment of the
certain past event unknown to
obligation at any time but the debtor cannot
the parties
compel him to accept before the expiration
Time w/c must Future and uncertain of the period
necessarily come fact or event which may
PERIOD FOR THE BENEFIT OF THE DEBTOR
although it may not or may not happen
 Debtor may oppose any premature demand
be known when
of the creditor but he may renounce the
Exerts an influence Exerts an influence benefit of the period by performing his
upon the time of upon the very existence obligation in advance (Manresa)
demandability or of the obligation itself WHEN DEBTOR LOSES RIGHT TO PERIOD
extinguishment of an (Art 1198)
1. Insolvency of debtor, unless security
obligation
provided
Does not have any Has retroactive effect 2. Did not deliver security promised
3. Impaired security through his own acts or
retroactive effect
through fortuitous event unless he gives new
unless there is an
securities equally satisfactory
agreement to the
4. Violates undertaking in consideration of
contrary
extension of period
When it is left When it is left 5. Attempts to abscond
exclusively to the will exclusively to the will of
=========================================
of the debtor, the the debtor, the TOPICS UNDER THE SYLLABUS
existence of the obligation is void C. KINDS OF CIVIL OBLIGATION
obligation is affected 4. Alternative or Facultative
Obligation
WHEN COURTS MAY FIX PERIOD: =========================================
1. If the obligation does not fix a period, but
from its nature and circumstances it can be 4. ALTERNATIVE OR FACULTATIVE
inferred that a period was intended by the OBLIGATION
parties (ARTS. 1199 – 1206)
2. If the duration of the period depends
upon the will of the debtor FACULTATIVE - only one prestation has been
3. In case of reciprocal obligations, when there agreed upon but another may be given in
is a just cause for fixing a period substitution

CIVIL LAW REVIEWER Page 98 of 383

 2.
EFFECT OF LOSS OR DETERIORA0TION If
THRU NEGLIGENCE, DELAY OR FRAUD OF right of choice belongs to the creditor
OBLIGOR:  If 1 of the things is lost through a
 Of thing intended as substitute - no liability fortuitous event, the debtor shall
 Of the substitute after substitution is made – perform the obligation by delivering that
with liability which the creditor should choose from
among the remainder or that which
ALTERNATIVE – bound by different prestations remains if only 1 subsists
but only one is due  If the loss of 1 of the things occurs
through the fault of the debtor, the
RIGHT OF CHOICE IN ALTERNATIVE creditor may claim any of those
OBLIGATIONS subsisting or the price of that which,
GENERAL RULE: the right of choice belongs to
through the fault of the former, has
debtor
disappeared with a right to damages
EXCEPTION:
 If all the things are lost through the fault
1. Expressly granted to creditor
2. Expressly granted to third person of the debtor, the choice by the creditor
shall fall upon the price of any 1 of them,
LIMITATIONS ON THE RIGHT OF CHOICE OF also with indemnity for damages.
THE DEBTOR
The debtor shall not have the right to choose the REQUISITES FOR MAKING THE CHOICE:
prestations, which are: 1. Made properly so that creditor or his agent
a. Impossible will actually know
b. Unlawful 2. Made with full knowledge that a selection is
c. Those which could not have been the indeed being made
object of the obligation 3. Made voluntarily and freely
4. Made in due time – before or upon maturity
WHEN CONVERTED TO SIMPLE OBLIGATION: 5. Made to all proper persons
1. When the person who has a right of choice 6. Made w/o conditions unless agreed by the
has communicated his choice creditor
2. Only one is practicable 7. May be waived, expressly or impliedly

EFFECT OF LOSS OF OBJECTS OF DISTINGUISH ALTERNATIVE FROM

ALTERNATIVE OBLIGATIONS FACULTATIVE
1. If the right of choice belongs to the
debtor ALTERNATIVE FACULTATIVE
 If through a fortuitous event all were lost,
Various things are due Only one thing is due
debtor cannot be held liable for damages
 If 1 or more but not all of the things are but the giving but a substitute may
lost or one or some but not all of the principally of one is be given to render
prestations cannot be performed due to sufficient payment/fulfillment
fortuitous event or fault of the debtor, easy
creditor cannot hold the debtor liable for If one of prestations is If principal
damages because the debtor can still illegal, others may be obligations is void
comply with his obligation valid but obligation and there is no
 If all things, except one, were lost, the
remains necessity of giving
debtor must comply by performing that the substitute; nullity
which remain of P carries with it
 If all were lost by fault of the debtor the
nullity of S
later is liable for the value of the last
thing or service which became
impossible

CIVIL LAW REVIEWER Page 99 of 383

If it is impossible to If it is impossible to 2. Joint (Indivisible) Obligation
give all except one, give the principal, A. Obligation cannot be performed in
the last one must still the substitute does parts but debtors are bound jointly
be given not have to be given;
B. In case of failure of one joint
if it is impossible to
give the substitute,
debtor to perform his part (share),
the principal must there is default but only the guilty
still be given shall be liable for damages

Right to choose may The right of choice is

be given either to given only to the
debtor or creditor debtor
END OF DISCUSSION ON TOPIC
C. KINDS OF CIVIL OBLIGATION
================================
D. JOINT AND SOLIDARY
OBLIGATION
================================
TOPICS UNDER THE SYLLABUS
D. JOINT AND SOLIDARY OBLIGATION
1. Joint (Divisible) Obligation
A. Concurrence of two or more
creditors and/or two or more debtors
A.1. Joint obligation is presumed,
unless otherwise indicated by the
law or nature of obligation (Art.
1207)
A.2. Obligation presumed to be
divided into as many equal shares
as there are creditors or debtors
A.3. Each credit is distinct from one
another, therefore a joint debtor
cannot be required to pay for the
share of another with debtor,
although he may pay if he wants to
(Art. 1209)
A.4. Insolvency of a joint debtor,
others not liable for his share (Art.
1209)
3. Solidary Obligation
A. Mutual agency among solidary
debtors (Arts. 1214-1215)
B. Mutual guaranty among solidary
debtors (Arts. 1216, 1217, 1222)
C. Each one of solidary creditors may
do whatever may be useful to the
others, but not anything prejudicial
to them (Art. 1212)
C.1. Effect of any novation,
compensation, confusion or
remission of debt executed by a
solidary creditor
4. Divisible and Indivisible (Art.
1225)
5. Obligations with a Penal Clause
(Arts. 1226, 1228-1230)
=========================================
TOPICS UNDER THE SYLLABUS
D. JOINT AND SOLIDARY
OBLIGATIONS
1. Joint (Divisible) Obligation
=========================================
1. JOINT (DIVISIBLE) OBLIGATION
JOINT OBLIGATION (Obligacion
Mancumunada) – The whole obligation is to be
paid or fulfilled proportionately by different
debtors or demanded proportionately by the
different obligees
GENERAL RULE: The presumption of the law is
that an obligation is always joint.

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383
EXCEPTIONS TO THE PRESUMPTION be enforced only by proceeding against all of
1. When expressly stated that there is the debtors.
solidarity 2. If there are 2 or more creditors, the
2. When the law requires solidarity concurrence or collective act of all the
3. When the nature of the obligation requires
creditors, although each for his own share, is
solidarity
also necessary for the enforcement of the
4. When a charge or condition is imposed upon
obligation
heirs or legatees and the testament
expressly makes the charge or condition in EFFECT OF BREACH
solidum (Manresa) If one of the joint debtors fails to comply with his
5. When a solidary responsibility is imputed by undertaking, the obligation can no longer be
a final judgment upon several defendants fulfilled or performed. Consequently, it is
(Gutierrez v. Gutierrez) converted into one of indemnity for damages.
Innocent joint debtor shall not contribute to the
EFFECTS OF JOINT LIABILITY
1. Demand on one produces delay only with indemnity beyond their corresponding share of
respect to the debt the obligation.
2. Interruption in payment by one does not
INDIVISIBILITY and SOLIDARITY,
benefit or prejudice the other
3. Vices of one debtor to creditor has no effect DISTINGUISHED
on the others
INDIVISIBILITY SOLIDARITY
4. Insolvency of one debtor does not affect
other debtors Refers to the Refers to the legal tie
prestation which and consequently to
JOINT DIVISIBLE OBLIGATIONS
1. Each creditor can demand for the payment constitutes the the subjects or parties
of his proportionate share of the credit, while object of the of the obligation
each debtor can be held liable only for the obligation
payment of his proportionate share of the
Plurality of subjects Plurality of subjects is
debt
is not required indispensable
2. A joint creditor cannot act in representation
of the other creditors while a joint debtor In case of breach, When there is liability
cannot be compelled to answer for the acts obligation is on the part of the
or liability of the other debtors converted into 1 of debtors because of the
indemnity for breach, the solidarity
NOTE: Unless there is no specification as to
damages because among the debtors
their proportionate share in the credit or in the
debt, the creditors and debtors in a joint of breach, remains
obligation shall be entitled or shall make indivisibility of the
payment in equal proportion. obligation is
terminated
=========================================
TOPICS UNDER THE SYLLABUS
D. JOINT AND SOLIDARY PASSIVE SOLIDARITY SURETYSHIP
OBLIGATIONS Stands for some other person
2. Joint (Indivisible) Obligation May be reimbursed after payment
========================================= liable for his and co- only the
debtor's share principal's share
2. JOINT (INDIVISIBLE) OBLIGATION
Primary Secondary
1. If there are 2 or more debtors, the fulfillment
Extension of time, Released
of or compliance with the obligation requires not released
the concurrence of all the debtors, although
each for his own share. The obligation can

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========================================= a. Payment made before debt is due, no
TOPICS UNDER THE SYLLABUS interest can be charged, otherwise –
D. JOINT AND SOLIDARY interest can be charged
OBLIGATIONS b. Insolvency of one – others are liable for
3. Solidary Obligation share pro-rata
========================================= c. If different terms and conditions – collect
only what is due, later on collect from
3. SOLIDARY OBLIGATION any
d. No reimbursement if payment is made
SOLIDARY OBLIGATION (Obligacion after prescription or became illegal
Solidaria) – must be expressed in stipulation or e. Remission made after payment is made –
provided by law or by nature of obligation co-debtor still entitled to reimbursement
f. Effect of insolvency or death of co-debtor
1. Active – on the part of creditor or oblige – still liable for whole amount
EFFECTS: g. Fault of any debtor – everyone is
 Death of 1 solidary creditor transmits share responsible – price, damage and interest
to heirs (but collectively) h. Complete/ personal defense – total or
 Each creditor represents the other in the act partial ( up to amount of share only ) if
of recovery of payment not personal to him
 Credit is divided equally between creditors
as among themselves EFFECT OF LOSS OR IMPOSSIBILITY OF THE
 Debtor may pay any of the solidary creditors PRESTATION:
1. If without fault – no liability
2. Passive – on the part of debtors or obligors 2. If with fault – there is liability (also for
EFFECTS: damage and interest)
 Each debtor may be requested to pay whole 3. Loss due to fortuitous event after default –
obligation with right to recover from co- there is liability (because of default)
debtors
 Interruption of prescription to one creditor NOTE: The law clearly provides that the creditor
affects all who may have executed any acts mentioned in
 Interest from delay on 1 debtor is borne by Art. 1215 (Novation, Compensation, Merger or
all Confusion), as well as he or she who collects the
debts, shall be liable to the others for the share
3. Mixed – on the part of the obligors and in the obligation corresponding to them.
obligees, or the part of the debtors and the
creditors =========================================
TOPICS UNDER THE SYLLABUS
4. Conventional – agreed upon by the parties D. JOINT AND SOLIDARY
OBLIGATIONS
5. Legal – imposed by law 4. Divisible and Indivisible Obligation
 Instances where law imposes =========================================
solidary obligation:
a. Obligations arising from tort 4. DIVISIBLE AND INDIVISIBLE OBLIGATION
b. Obligations arising from quasi-contracts
c. Legal provisions regarding obligation of DIVISIBLE - obligation that is capable of partial
devisees and legatees performance
d. Liability of principals, accomplices, and  Execution of certain no of days work
accessories of a felony  Expressed by metrical units
e. Bailees in commodatum  Nature of obligation – susceptible of
partial fulfillment
 EFFECTS:

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INDIVISIBLE - one not capable of partial obligation
performance
 To give definite things Debtor may not Debtor may choose
choose between among the
 Not susceptible of partial performance
principal and penalty prestations
 Provided by law
 Intention of parties

NOTES: PENAL CLAUSE DISTINGUISHED FROM

FACULTATIVE OBLIGATION
 Divisibility or indivisibility of the obligation
PENAL CLAUSE FACULTATIVE
refers to the performance of the prestation OBLIGATION
and not to the thing which is the object Penalty of payment Power to choose
thereof in lieu of the prestation is absolute
 Intention of parties should be taken into principal must be
account to determine whether obligation is expressly granted
divisible or not Creditor may Creditor may not
demand both if demand both principal
========================================= expressly granted and penalty
TOPICS UNDER THE SYLLABUS
D. JOINT AND SOLIDARY
OBLIGATIONS
5. Obligations with a Penal Clause
=========================================

5. OBLIGATIONS WITH A PENAL CLAUSE

WITH A PENAL CLAUSE – One to which an

accessory undertaking is attached for the PENAL CLAUSE DISTINGUISHED FROM
GUARANTEE
purpose of insuring its performance by virtue of
PENAL CLAUSE GUARANTEE
which the obligor is bound to pay a stipulated
Insure performance of principal obligation
indemnity or perform a stipulated prestation in
Accessory and subsidiary obligations
case of breach.
Obligation to pay the Object of the
penalty is different from principal and the
PENAL CLAUSE DISTINGUISHED FROM the principal obligation guarantee is the
CONDITION same
PENAL CLAUSE CONDITION Principal and penalty No
Constitutes an Not an obligation can be assumed by the
obligation same person
Demandable in default Never demandable Penalty is extinguished Guarantee subsists
Obligation exists No obligation until by the nullity of the even if the principal
condition happens principal obligation is
Depends on the non- Principal itself is voidable,
performance of the dependent on an unenforceable or a
principal obligation uncertain event natural one, same
applies if penal
clause is assumed
PENAL CLAUSE DISTIGUISHED FROM by a guarantee
ALTERNATIVE OBLIGATIONS
PENAL CLAUSE ALTERNATIVE PURPOSE OF PENALTY:
OBLIGATIONS 1. Funcion coercitiva o de garantia – to
Only 1 prestation Several prestations insure the performance of the obligation
Impossibility of Impossibility of 1 2. Funcion liquidatoria – to liquidate the
principal extinguishes prestation does not amount of damages to be awarded to the
penalty extinguish the

CIVIL LAW REVIEWER Page 103 of

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injured party in case of breach of the
principal obligation (compensatory), and
3. Funcion estrictamente penal – in certain
exceptional cases, to punish the obligor in
case of breach of the principal obligation
(punitive).
CHARACTERISTICS OF PENAL CLAUSES:
1. Subsidiary - As a general rule, only penalty
can be demanded, principal cannot be
demanded, except: Penalty is joint or
cumulative
2. Exclusive - takes place of damage, damage
can only be demanded in the ff. cases:
a. Stipulation – granting right
b. Refusal to pay penalty
c. With dolo ( not of creditor )
PENALTY AS SUSTITUTE FOR DAMAGES
GENERAL RULE: the penalty fixed by the
parties is or substitute for damages in case of
breach
EXCEPTIONS:
1. When there is a stipulation to the contrary
2. When the debtor is sued for refusal to pay
the agreed penalty; and
3. When debtor is guilty of fraud
DOUBLE FUNCTIONS OF PENALTY
1. to provide for liquidated damages
2. to strengthen the coercive force of
the obligation by the threat of greater
responsibility in the event of breach
KINDS OF PENALTIES:
1. Legal – constituted by law
2. Conventional – constituted by
agreement of the parties
3. Compensatory – established
for the purpose of indemnifying the damages
suffered by the obligee or creditor in case of
breach of the obligation
4. Punitive – established for the
purpose of punishing the obligor or debtor in
case of breach of the obligation
5. Subsidiary or alternative- in
case of non-performance only the penalty is
demandable
6. Joint or cumulative – both the
principal undertaking and the penalty may
be demanded
CAUSES FOR REDUCTION OF PENALTY:
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383
1.
P
artial/irregular performance
2. Penalty provided is iniquitous/
unconscionable
END OF DISCUSSION ON TOPIC
D. JOINT AND SOLIDARY OBLIGATION
================================
E. EXTINGUISHMENT OF
OBLIGATIONS
================================
TOPICS UNDER THE SYLLABUS
E. EXTINGUISHMENT OF
OBLIGATIONS
1. Payment (Arts. 1236-1238)
A. Dation in payment (Art. 1245)
B. Form of payment (Art. 1249)
C. Extraordinary inflation or
deflation (Art. 1250)
D. Application of payment (Arts.
1252-1254)
E. Tender of payment and
consignation (Arts. 1256-1261)
2. Loss of determinate thing due or
impossibility or difficulty of
performance (Arts. 1262, 1266-
1267)
3. Condonation or remission of debt
A. Express condonations and
required formality thereof (Art.
1270)
B. Implied (Arts. 1271, 1272,
1274)
4. Confusion or Merger of Rights
(Arts. 1275, 1272)
5. Compensation
A. Kinds (Arts. 1278, 1279)
Page 104 of
 A.1. Legal compensation (Arts.
1286-1290)
A.2. Agreement (Art. 1282)
A.3. Voluntary (Art. 1282)
A.4. Judicial (Art. 1283)
A.5. Facultative
B. Obligations not compensable
(Arts. 1287-1288)
6. Novation (Arts. 1291-1288)
=========================================
TOPICS UNDER THE SYLLABUS
E. EXTINGUISHMENT OF
OBLIGATIONS
1. Payment
=========================================
Principal Modes: (PAL-CoCoCo-No)
1. Payment or performance
2. Loss of the thing due
3. Condonation or remission of debt
4. Confusion or merger of rights
5. Compensation
6. Novation
Other Modes:
7. Annulment
8. Rescission
9. Fulfillment of resolutory condition
10. Prescription
Not Stated in the Civil Code:
11. Death of a Party in Personal Obligations
12. Mutual Desistance
13. Compromise
14. Impossibility of Fulfillment
15. Happening of Fortuitous Event
16. Arrival of Resolutory Period
17. Will of One of the Parties Due to
Indeterminate Duration or Nature of the
Prestation/ Unilateral Withdrawal
Partnerships
18. Change of Civil Status
19. Rebus Sic Stantibus (Art. 1267)
20. Want of Interest in Some Circumstances
21. Abandonment in Special Cases
22. Insolvency Judicially Declared and Debtor is
Discharged
1. PAYMENT OR PERFORMANCE
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383
Delivery of money and performance, in any
other manner of the obligation
REQUISITES FOR VALID
PAYMENT/PERFORMANCE
1. With respect to prestation itself
a. Identity
b. Integrity or completeness
c. Indivisibility
2. With respect to parties - must be made by
proper party to proper party
a. Payor
1. Payor - the one performing, he can be the
debtor himself or his heirs or assigns or his
agent, or anyone interested in the fulfillment of
the obligation; can be anyone as long as it is
with the creditor's consent
2. 3RD person pays/performs - only the
creditor's consent; if performance is done also
with debtor's consent - he takes the place of the
debtor. There is subrogation except if the 3rd
person intended it to be a donation
3. 3rd person pays/performs with consent of
creditor but not with debtor's consent, the
repayment is only to the extent that the
payment has been beneficial to debtor
b. Payee
i. Payee - creditor or obligee or successor
in interest of transferee, or agent
ii. 3rd person - if any of the ff. concur:
a.It must have redounded to the
obligee's
b. benefit and only to the extent of
such benefit
c.It falls under art 1241, par 1,2,3 - the
benefit is total so, performance is total
iii. Anyone in possession of the credit - but
will apply only if debt has not been
previously garnished
PRINCIPLE OF INTEGRITY (Art. 1233)
GENERAL RULE: A debt shall not be
in
understood to have been paid unless a thing or
service of which the obligation consists has been
completely delivered or rendered, as the case
maybe.
EXCEPTIONS:
1. When the obligation has been substantially
performed in good faith (Art. 1234);
2. When the obligee accepts performance
despite its incompleteness or irregularity and
without expressing any protest or correction.
(Art. 1235)
Page 105 of

PERSONS FROM WHOM THE CREDITOR
MUST ACCEPT PAYMENT
1. Debtor himself or his legal representative
2. Any person who has interest in the
obligation (i.e., guarantor)
3. A 3rd person who has no interest in the
obligation, when there is a stipulation to the
contrary
PAYMENT MADE BY 3Rd PERSON
 If payment was made without the knowledge
or against the will: the recovery is only up to
the extent or the amount of the debt at the
time of the payment; the defense may only
be availed of by the obligor
 If payment was with knowledge: the rights of
reimbursements and subrogation are
acquired by the 3rd person
TO WHOM PAYMENY MUST BE MADE
1. The person in whose favor the obligation has
been constituted
2. His successor-in-interest
3. Any person authorized by law or by the
obligee at the time when payment is due to
receive it (not during the time when the
obligation is constituted)
PAYMENT TO AN INCAPACITATED PERSON,
VALID IF:
1. Incapacitated person kept the thing
delivered, or
2. Insofar as the payment has been
beneficial to him
PAYMENT TO 3RD PERSON
GENERAL RULE: Payment is not valid, even
though made in good faith
EXCEPTIONS:
1. Payment which redounded to the benefit of
the obligee
 Instances when the presumption that the
payment redounded to the benefit of the
obligee:
1. After payment, 3rd person acquires the
creditor’s rights (subrogation)
2. Creditor ratifies payment to 3rd person
3. By creditor’s conduct, debtor has been
led to make the payment (estoppel)
2. Payment to the possessor of the credit, when
made in good faith
 REQUISITES:
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383
1.
P
ayment by debtor must be made in good faith
2. Creditor must be in possession of the
credit and not merely the evidence of
indebtedness
NOTE: With respect to time and place of
payment - must be according to the obligation
WHERE PAYMENT SHOULD BE MADE
1. In the place designated in the obligation
2. If there is no express stipulation and the
undertaking is to deliver a specific thing – at the
place where the thing might be at the moment
the obligation was constituted
3. In other case – in the place of the domicile of
the debtor
 Time of payment - time stipulated
 Effect of payment – extinguish obligation
Except: order to retain debt
SUBSTANTIAL PERFORMANCE
A debt shall not be understood to have been
paid unless the thing or service in which the
obligation consists has been completely
delivered or rendered, as the case may be.
If the obligation has been substantially
performed in good faith, the obligor may recover
as though there had been a strict and complete
fulfillment, less damages suffered by the
obligee.
When the obligee accepts the performance,
knowing its incompleteness or irregularity, and
without expressing any protest or objection, the
obligation is deemed fully complied with
 Attempt in Good Faith to perform without
willful or intentional departure
 Deviation is slight
 Omission/Defect is technical or unimportant
 Must not be so material that intention of
parties is not attained
EFFECT OF SUBSTANTIAL PERFORMANCE IN
GOOD FAITH
 Obligor may recover as though there has
been strict and complete fulfillment, less
damages suffered by the oblige
 Right to rescind cannot be used for slight
breach
SPECIAL RULES/FORMS OF PAYMENT
1. Application of Payments
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 2. Dation in Payment/ Dacion en Pago/
Adjudication/ Dacion in Solutum/
Adjudicacion en Pago/ Payment in Kind/
Dation en Paiement
3. Payment by Cession/Cession en Pago
4. Tender of Payment and Consignation
A. APPLICATION OF PAYMENTS – the
designation of the debt which payment shall
be made, out of 2 or more debts owing the
same creditor: stipulation or application of
party given benefit of period – OK; to be
valid: must be debtor’s choice or w/ consent
of debtor
REQUISITES FOR THE APPLICATION OF
PAYMENT:
a. There must be only one debtor and
only one creditor
b. Two or more debts of the same kind
c. All debts must be due
EXCEPTION: there may be application of
payment even if all debts are not yet due
if:
i. Parties so stipulate
ii. When application of payment is
made by the party for whose benefit
the term has been constituted
iii. Payment is not enough to extinguish
all debts
d. Amount paid by the debtor is insufficient
to cover the total amount of all debts.
HOW APPLICATION IS MADE:
a. Debtor makes the designation
b. If not, creditor makes it by so stating in
the receipt that he issues – unless
there is cause for invalidating the
contract
c. If neither the debtor nor creditor has
made the application or if the
application is not valid, then
application, is made by operation of
law
WHO MAKES APPLICATION OF DEBTS
GENERAL RULE: Debtor
EXCEPTION: Creditor
a. Debtor without protest accepts receipt in
which creditor specified expressly and
unmistakably the obligation to which such
payment was to be applied – debtor in this
case renounced the right of choice
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383
b. When monthly statements were made by
the bank specifying the application and the
debtor signed said statements approving the
status of her account as thus sent to her
monthly by the bank
c. In case no application is made:
 Apply payment to the most onerous
 If debts are of the same nature and
burden, application shall be made to
all proportionately
B. DACION EN PAGO: mode of extinguishing
an obligation whereby the debtor alienates
in favor of the creditor property for the
satisfaction of monetary debt; extinguish up
to amount of property unless w/ contrary
stipulation; A special form of payment
because 1 element of payment is missing:
IDENTITY
REQUISITES FOR A VALID DACION EN PAGO:
a. There must be the performance of the
prestation in lieu of payment (animo
solvendi) which may consist in the delivery
of a corporeal thing or a real right or a credit
against the third person
b. There must be some difference between the
prestation due and that which is given in
substitution (aliud pro alio)
c. There must be an agreement between the
creditor and debtor that the obligation is
immediately extinguished by reason of the
performance of a prestation different from
that due
CONDITIONS FOR A VALID DACION:
a. If creditor consents, because a sale
presupposes the consent of both parties
b. If dacion will not prejudice the other
creditors
c. If debtor is not judicially declared
insolvent
NOTE: DACION is governed by the law on sales
DACION EN PAGO DISTINGUISHED FROM
PACTUM COMMISORIUM
DACION EN PAGO PACTUM
COMMISORIUM
There is an Generally, only one
intervening single contract
agreement where the parties
subsequent and agree that in the event
independent from debtor fails to pay, the
Page 107 of
 the original mortgaged or pledged KINDS OF ASSIGNMENT:
contract is entered property shall a. Legal – governed by the insolvency law
into by the parties automatically be b. Voluntary – agreement of creditors
to have the appropriated or owned
property by the creditor REQUISITES OF VOLUNTARY ASSIGNMENT:
collaterizes in the a. More than one debt
original agreement b. More than one creditor
as payment of the c. Complete or partial insolvency of debtor
debt d. Abandonment of all debtor’s property not
Valid Void exempt from execution
e. Acceptance or consent on the part of the
creditors

EFFECTS OF ASSIGNMENT:
a. Creditors do not become the owner; they
are merely assignees with authority to
sell
DACION EN PAGO DISTINGUISHED FROM
b. Debtor is released up to the amount of
PLEDGE
DACION EN PAGO PLEDGE the net proceeds of the sale, unless
Delivery and Delivery but no there is a stipulation to the contrary
transfer of transfer of ownership c. Creditors will collect credits in the order
ownership of preference agreed upon, or in default
Presumed since less of agreement, in the order ordinarily
transmission of rights established by law

DACION EN PAGO DISTINGUISHED FROM DATION IN PAYMENT DISTINGUISHED FROM

SALE CESSION IN PAYMENT
DACION EN PAGO SALE
Preexisting credit None DATION IN PAYMENT CESSION IN
Obligation extinguished Obligation rises PAYMENT
Less freedom in Greater freedom
determining the price One creditor Plurality of creditors
Total or partial Payment of price
extinguishment generally totally Not necessarily in Debtor must b
extinguishes state of financial partially or relatively
if done by mistake, ... recovery of the difficulty insolvent
recovery of the thing price paid
Thing delivered is Universality of
DACION EN PAGO DISTINGUISHED FROM considered as property of debtor is
ASSIGNMENT equivalent of what is ceded
DACION EN PAGO ASSIGNMENT
performance
Substitute forms of performance
1 creditor Several creditors Payment extinguishes Merely releases
Debtor not partially Debtor partially obligation to the debtor for net
insolvent insolvent
extent of the value of proceeds of things
C. CESSION or ASSIGNMENT (IN FAVOR the thing delivered as ceded of, assigned,
OF CREDITORS) – the process by which debtor agreed upon, proved unless there is a
transfer all the properties not subject to or implied from the contrary intention
execution in favor of creditors is that the latter conduct of the creditor
may sell them and thus, apply the proceeds to
their credits; extinguish up to amount of net D. TENDER AND CONSIGNATION
proceeds ( unless w/ contrary stipulation)

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TENDER -the act of offering the creditor what is
due him together with a demand that the TENDER OF PAYMENT DISTINGUISHED
creditor accept the same (When creditor refuses FROM CONSIGNATION
TENDER OF CONSIGNATION
w/o just cause to accept payment, he becomes
PAYMENT
in mora accepiendi and debtor is released from antecedent act; principal act;
responsibility if he consigns the thing or sum preparatory produces the effects
due) of payment
extrajudicial judicial
CONSIGNATION – the act of depositing the
thing due with the court or judicial authorities =========================================
whenever the creditor cannot accept or refuses TOPICS UNDER THE SYLLABUS
to accept payment; generally requires prior E. EXTINGUISHMENT OF
tender of payment OBLIGATIONS
REQUISITES OF VALID CONSIGNATION:
2. Loss of determinate thing due or
a. Existence of valid debt impossibility or difficulty of
b. Consignation was made because of some performance
legal cause - previous valid tender was =========================================
unjustly refused or circumstances
making previous tender exempt 2. LOSS OF DETERMINATE THING OR
c. Prior Notice of Consignation had been IMPOSSIBILITY OR DIFFICULTY OF
given to the person interested in PERFORMANCE
performance of obligation (1st notice)
d. Actual deposit/Consignation with proper LOSS OF THE THING DUE: partial or total/
judicial authorities includes impossibility of performance
e. Subsequent notice of Consignation (2nd
notice) WHEN IS THERE A LOSS
a. When the object perishes (physically)
EFFECTS: EXTINGUISHMENT OF b. When it goes out of commerce
OBLIGATION c. When it disappears in such a way that:
a. Debtor may ask judge to order its existence is unknown or it cannot be
cancellation of obligation recovered
b. Running of interest is suspended
c. Before creditor accepts or before judge
declares consignation has been properly WHEN IS THERE IMPOSSIBILITY OF
made, obligation remains (debtor bears PERFORMANCE:
risk of loss at the meantime, after a. Physical impossibility
acceptance by creditor or after judge b. Legal impossibility
declares that consignation has been i. Directly – caused as when prohibited
properly made – risk of loss is shifted to by law
ii. Indirectly – caused as when debtor is
creditor)
required to enter a military draft
CONSIGNATION W/O PRIOR TENDER –
EFFECT OF LOSS IN OBLIGATION TO
allowed in:
a. Creditor absent or unknown/ does not DELIVER A SPECIFIC THING
appear at the place of payment
GENERAL RULE: Loss shall extinguish the
b. Incapacitated to receive payment at the
obligation
time it is due
EXCEPTIONS:
c. Refuses to issue receipt w/o just cause
a. If by law the obligor is liable even for
d. 2 or more creditor claiming the same
fortuitous event
right to collect
e. Title of obligation has been lost

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 b. If by stipulation the obligor is liable even
for fortuitous event
c. If the nature of the obligation requires the
assumption of the risk
d. If the loss of the thing occurs after the
obligor incurred in delay
e. If the loss of the thing occurs after the
obligor incurred delay
f. If the obligor promised to deliver the same
thing to two or more persons who do not
have the same interest
g. IF the obligation is generic, unless the
object is a particular class or group with
specific or determinate qualities
OBLIGATION TO DELIVER A GENERIC THING
GENERAL RULE: Not extinguished
EXCEPTIONS:
a. If the generic thing is delimited
b. If the generic thing has already been
segregated
c. Monetary obligation
EFFECT OF IMPOSSIBILITY OF
PERFROMANCE IN OBLIGATION TO DO
GENERAL RULE: Debtor is released when
prestation becomes legally or physically
impossible without fault on part of debtor
EFFECT OF PARTIAL LOSS
a. When loss is significant – may be
enough to extinguish obligation
b. When loss insignificant – not enough to
extinguish obligation
NOTE:
 Judicial determination of extent is
necessary
 Doctrine of Unforeseen Events: The
court is authorized to release the obligor,
in whole or in part, when the service has
become so difficult as to be manifestly
beyond the contemplation of the parties.
 Doctrine of Subjective Impossibility:
The obligation undoubtedly becomes
impossible if there is no physical or legal
loss but the object obligation belongs to
another person; the obligor must
indemnify the obligee for the damages
suffered by the latter.
WHEN THING IS LOST IN THE POSSESSION
OF THE DEBTOR
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Presumption: Loss due to debtor’s fault
(disputable)
Exception: natural calamity, earthquake, flood,
storm
REBUS SIC STANTIBUS: agreement is valid
only if the same conditions prevailing at time of
contracting continue to exist at the time of
performance; Obligor may be released in whole
or in part based on this ground
REQUISITES:
A. The event or change could not have been
foreseen at the time of the execution of the
contract
B. The performance is extremely difficult, but
not impossible (because if it is impossible, it is
extinguished by impossibility)
C. The event was not due to the act of any of the
parties
D. The contract is for a future prestation
==========================================
TOPICS UNDER THE SYLLABUS
E. EXTINGUISHMENT OF
OBLIGATIONS
3. Condonation or Remission of Debt
=========================================
3. CONDONATION OR REMISSION OF DEBT
CONDONATION/REMISSION OF THE DEBT –
gratuitous abandonment of debt; right to
claim; donation; rules of donation applies;
express or implied
REQUISITES:
a. There must be an agreement
b. There must be a subject matter (object
of the remission, otherwise there would
be nothing to condone)
c. Cause of consideration must be liberality
(Essentially gratuitous, an act of
liberality )
d. Parties must be capacitated and must
consent; requires acceptance by obligor;
implied in mortis causa and expressed
inter vivos
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 e. Formalities of a donation are required in 4. CONFUSION OR MERGER
the case of an express remission
f. Revocable – subject to rule on inofficious CONFUSION OR MERGER: – character of
donation ( excessive, legitime is debtor and creditor is merged in same person
impaired ) and ingratitude and condition with respect to same obligation
not followed
g. Obligation remitted must have been REQUISITES:
demandable at the time of remission a. It must take place between principal
h. Waivers or remission are not to be debtor and principal creditor only
presumed generally b. Merger must be clear and definite
c. The obligation involved must be same and
identical – one obligation only
FORMS EXTENT KINDS d. Revocable, if reason for confusion
ceases, the obligation is revived
a. Express – a. Total a. Principal –
formalities of accessory also =========================================
donation condoned TOPICS UNDER THE SYLLABUS
E. EXTINGUISHMENT OF
b. Implied – b. Partial b. Accessory – OBLIGATIONS
conduct is principal still 5. Compensation
=========================================
sufficient outstanding

c. Accessory 5. COMPENSATION
obligation of pledge
– condoned; COMPENSATION: Set off; it is a mode of
presumption only, extinguishment to the concurrent amount the
rebuttable obligation of persons who are in their own right
reciprocally debtors or creditors
REQUISITES:
REQUISITES OF IMPLIED CONDONATION a. Both parties must be mutually creditors
1. Voluntary delivery – presumption; when and debtors - in their own right and as
evidence of indebtedness is w/ debtor – principals
presumed voluntarily delivery by creditor; b. Both debts must consist in sum of money
rebuttable or if consumable , of the same kind or
2. Effect of delivery of evidence of quality
indebtedness is conclusion that debt is c. Both debts are due
condoned – already conclusion; voluntary d. Both debts are liquidated and
delivery of private document demandable (determined)
a. If in hands of joint debtor – only his share e. Neither debt must be retained in a
is condoned controversy commenced by 3rd person
b. If in hands of solidary debtor - whole and communicated w/ debtor (neither
debt is condoned debt is garnished)
c. Tacit – voluntary destruction of
instrument by creditor; made to prescribe w/o
demanding 1. Kinds OF COMPENSATION
a. Legal – by operation of law; as long as 5
========================================== requisites concur- even if unknown to
TOPICS UNDER THE SYLLABUS parties and if payable in diff places;
E. EXTINGUISHMENT OF indemnity for expense of exchanges;
OBLIGATIONS even if not equal debts – only up to
4. Confusion or Merger concurring amount
=========================================

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 b. Conventional – agreement of parties is capacity not capacity to dispose and
enough, forget other requirement as long necessary capacity to receive
required
as both consented
c. Facultative – one party has choice of may be partial must be complete
performance performance
claiming/opposing one who has benefit
Simpler
of period may choose to compensate:
i. Not all requisites are present more guarantee and
ii. Depositum; commodatum; less risk
criminal offense; claim for future may take place by involves action or
operation of law delivery of the amount
support; taxes
paid
d. Judicial – set off; upon order of the
court; needs pleading and proof; all
requirements must concur except
liquidation
e. Total – when 2 debts are of the same
amount COMPENSATION DISTINGUISHED FROM
f. Partial – when 2 debts are not of the COUNTERCLAIM
COMPENSATION COUNTERCLAIM
same amount
takes place by operation must be pleaded
EFFECT OF ASSIGNMENT OF CREDIT TO 3 RD of law and extinguishes to be effectual
reciprocally 2 claims as
PERSON; CAN THERE STILL BE
soon as they exist
COMPENSATION simultaneously to the
a. If made after compensation took place – concurrent amounts
no effect; compensation already
perfected
b. If made before compensation took place 2. Obligations Not Compensable
– depends  When one of the debts arises from a
i. With consent of debtor – debtor is depositum or from the obligations of a
estopped unless he reserves his right depositary or of a baliee in
and gave notice to assignee commodatum. (Art. 1287)
ii. With knowledge but w/o consent of
debtor – compensation may be set  Against a creditor who has a claim for
up as to debts maturing prior to support due by gratuitous title, without
assignment prejudice to Article 301 par. 2 (Article
iii. W/o knowledge – compensation may 1287)
be set-up on all debts prior to his
knowledge  If one of the debts consists in civil
liability arising from a penal offense. (Art.
1288)
COMPENSATION DISTINGUISHED FROM
CONFUSION
COMPENSATION CONFUSION =========================================
2 persons; each is a only 1 person who is TOPICS UNDER THE SYLLABUS
debtor and creditor of creditor and debtor
each other of himself
E. EXTINGUISHMENT OF
OBLIGATIONS
2 obligations one obligation
5. Novation
indirect payment impossibility of =========================================
payment
5. NOVATION
COMPENSATION DISTINGUISHED FROM
PAYMENT NOVATION: Extinguishment of obligation by
COMPENSATION PAYMENT creating/ substituting a new one in its place

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
Changing object or principal conditions from obligation; subject to full
 Substituting person of debtor reimbursement and subrogation
 Subrogating 3rd person in right of creditor if made w/ consent of old
debtor; if w/o consent or against
REQUISITES:
will , only beneficial
a.Valid obligation
b. Intent to extinguish old obligation – reimbursement; if new debtor is
expressed or implied: insolvent, not responsible since
completely/substantially incompatible old w/o his consent
and new obligation on every point
 DELEGACION: initiative of old
c.Capacity and consent of parties to the new
obligation debtor; all parties to consent;
d. Valid new obligation full reimbursement; if insolvent
new debtor – not responsible old
EFFECTS OF NOVATION: debtor because obligation
a. Extinguishment of principal carries extinguished by valid novation
accessory, except: unless: insolvency already
i. Stipulation to contrary existing and of public knowledge
ii. Stipulation pour autrui unless
or know to him at time of
beneficiary consents
delegacion
iii. Modificatory novation only; obliged
1. Delegante – old debtor
to w/c is less onerous 2. Delegatario - creditor
iv. Old obligation is void 3. Delegado – new debtor
b. Old obligation subsists if new obligation is
void or voidable but annulled already
(except: intention of parties)
c. If old obligation has condition
i. If Resolutory and it occurred – old
EXPROMISION DISTINGUISHED FROM
obligation already extinguished; no
DELEGACION
new obligation since nothing to EXPROMISIO DELEGACION
novate N
ii. If Suspensive and it never occurred Intention: old debtor be released from the
–as if no obligation; also nothing to obligation
novate Consent of creditor may be express or tacit
d. If old obligation has condition, must be but not presumed by acceptance of
compatible with the new obligation; if new is payment from third person
w/o condition – deemed attached to new Donation cannot be presumed
e. If new obligation has condition consent of consent of debtor
i. If resolutory: valid creditor and (initiates), creditor and
ii. If suspensive and did not third person third person; need not be
materialize: old obligation is enforced given simultaneously
governed by same applies in the
KINDS OF NOVATION: the rules of absence of an agreement
1. REAL/OBJECTIVE – change object, payment by by old and new debtors
third persons
cause/consideration or principal condition
if w/o subrogation
2. PERSONAL/SUBJECTIVE knowledge of
i. Substituting person of debtor debtor,
beneficial
(passive) reimbursement
, no
 EXPROMISION: initiative is subrogation
from 3rd person or new debtor; new debtor's same unless new debtor is
new debtor and creditor to insolvency known to the public as
consent; old debtor released does not make insolvent or old debtor

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 old debtor knows of such insolvency 3rd person has no new debtor is obliged to
liable at the time of delegacion obligation to pay pay
creditor may not recover
if insolvent
from old debtor if he
knows of such insolvency
of the new debtor
quite rare delegante (old)
delegado (new) CONVENTIONAL SUBROGATION
delegatario (creditor)
DISTINGUISHED FROM ASSIGNMENT OF
ii. Subrogating 3 person to rights of creditor
rd RIGHTS
( active )
CONVENTIONA ASSIGNMENT OF RIGHTS
1. Conventional - agreement and consent of all
L
parties; clearly established
2. Legal - takes place by operation of law; no SUBROGATION
need for consent; not presumed
Governed by Governed by Arts. 1624 to
except as provided for in law:
Arts. 1300-1304 1627
PRESUMED WHEN -
debtor’s consent debtor’s consent is not
• Creditor pays another preferred creditor
is required required
even w/o debtor’s knowledge
• 3rd person not interested in obligation pays extinguishes the transmission of right of the
w/ approval of debtor obligation and creditor to third person
• Person interested in fulfillment of obligation
gives rise to a without modifying or
pays debt even w/o knowledge of debtor
new one extinguishing the obligation

defects and vices defects and vices in the old

in the old obligation and not cured
obligation are
cured

takes effect upon as far as the debtor is

DIFFERENCE FROM PAYMENT BY 3 rd moment of concerned, takes effect
PERSON vs CHANGE OF DEBTOR novation or upon notification
subrogation
DIFFERENCE CHANGE OF DEBTOR
FROM PAYMENT
BY 3RD PERSON
END OF DISCUSSION ON TOPIC
debtor is not debtor is released ================================
necessarily
released from
debt

can be done w/o needs consent of creditor

consent of – express or implied
creditor

one obligation two obligations; one is

extinguished and new one
created

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 CONTRACTS
A. GENERAL PROVISIONS
================================
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS
1. Essential Requisites (Art. 1261)
2. Kinds of Contracts
A. Consensual
B. Real
C. Formal or solemn
C.1. Donations (Arts. 748-749)
C.2. Partnership where real
property contributed (Arts. 1771,
1773)
C.3. Antichresis (Art. 2134)
C.4. Agency to sell real property
or an interest therein (Art. 1874)
C.5. Stipulation to charge interest
(Art. 1956)
C.6. Stipulation limiting common
carrier’s duty of extraordinary
diligence to ordinary diligence
(Art. 1744)
C.7. Chattel mortgage
C.8. Sale of large cattle
3. Formality (Arts. 1356, 1357, 1358)
4. Reformation of Contracts
5. Interpretation of Contracts
6. Defective Contracts
A. Rescissible contracts (Art. 1381)
A.1. Difference with rescission
(resolution) under Art. 1191
B. Voidable contracts (Arts. 1328-
1344, 1390-1402)
C. Unenforceable contracts (Arts.
1403-1408, 1317)
D. Void contracts (Arts. 1409, 1346)
(1) Pactum commissorium (Arts.
2088, 2130, 1390)
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(2) Pactum de non alienando (Art.
2130)
(3) Pactum leonine (Art. 1799)
7. Effect of contracts (Art. 1311)
=========================================
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS
1. Essential Requisites
=========================================
1. ESSENTIAL REQUISITES
ESSENTIAL ELEMENTS:
1. Consent
2. Subject Matter
3. Consideration
A. CONSENT
CONSENT – meeting of minds between parties
on subject matter and cause of contract;
concurrence of offer and acceptance
REQUIREMENTS:
1. Must be manifested by the concurrence of
the offer and payment;
2. Parties are legally capacitate to enter into
contracts
3. Consent must be intelligent, free,
spontaneous, and real
AUTO CONTRACTS - made by a person acting
in another’s name in one capacity
COLLECTIVE CONTRACTS - will of majority
binds a minority to an agreement
notwithstanding the opposition of the latter
CONTRACTS OF ADHESION - one party has
already a prepared form of a contract,
containing the stipulations he desires, and he
simply asks the other party to agree to them if
he wants to enter into the contract
NOTE: We follow the theory of cognition and not
the theory of manifestation.
Under our Civil Law, the offer and acceptance
concur only when the offeror comes to know,
and not when the offeree merely manifests his
acceptance.
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OFFER – a proposal made by one party to
another to enter into a contract; must be certain
or definite, complete and intentional
ELEMENTS OF VALID OFFER / ELEMENTS OF
VALID ACCEPTANCE
1. Definite--unequivocal
2. Complete--unconditional
3. Intentional
WHEN OFFER BECOMES INEFFECTIVE:
1. Death, civil interdiction, insanity or
insolvency of either party before acceptance
is conveyed
2. Express or implied revocation of the offer by
the offeree
3. Qualified or conditional acceptance of the
offer, which becomes a counter-offer
4. Subject matter becomes illegal or impossible
before acceptance is communicated
ACCEPTANCE - manifestation by the offeree of
his assent to the terms of the offer; must be
absolute
NOTE: A qualified acceptance constitutes
counter-offer
PERIOD FOR ACCEPTANCE
1. Stated fixed period in the offer
2. No stated fixed period
a. Offer is made to a person present –
acceptance must be made immediately
b. Offer is made to a person absent –
acceptance may be made within such
time that, under normal circumstances,
an answer can be received from him
NOTE: Acceptance may be revoked before it
comes to the knowledge of the offeror.
(withdrawal of offer)
AMPLIFIED ACCEPTANCE
Under certain circumstances, a mere
amplification on the offer must be understood as
an acceptance of the original offer, plus a new
offer, which is contained in the amplification.
RULE ON COMPLEX OFFERS
1. Offers are interrelated – contract is
perfected if all the offers are accepted
2. Offers are not interrelated – single
acceptance of each offer results in a
perfected contract unless the offeror has
made it clear that one is dependent upon
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the other and acceptance of both is
necessary.
 Offer inter praesentes must be
accepted IMMEDIATELY. If the parties
intended that there should be an express
acceptance, the contract will be
perfected only upon knowledge by the
offeror of the express acceptance by the
offeree of the offer. An acceptance which
is not made in the manner prescribe by
the offeror is NOT EFFECTIVE, BUT A
COUNTER-OFFER which the offeror may
accept or reject. Malbarosa v. CA,
[G.R. No. 125761, April 30, 2003]
RULE ON ADVERTISEMENTS AS OFFERS
Business advertisements – Not a definite
offer, but mere invitation to make an offer,
unless it appears otherwise
Advertisement for Bidders – only invitation to
make proposals and advertiser is not bound to
accept the highest or lowest bidder, unless
appears otherwise
THE 4 THEORIES IN ACCEPTANCE OF OFFER
BY TELEGRAM OR LETTER
1. Manifestation – perfected from the moment
the acceptance is declared or made
2. Expedition – perfected from the moment the
offeree transmits the notification of acceptance
3. Reception – perfected from the moment the
offeror receives the letter
4. Cognition – perfected from the moment the
acceptance comes to the knowledge of the
offeror
NOTE: Contracts under the Civil Code generally
adhere to the Cognition Theory while
transactions under the Code of Commerce use
the Manifestation Theory.
When the offeror refuses to open the letter or
telegram he is held to have a constructive notice
of the contents thereof and will be bound by the
acceptance of the offeree. (Jurado citing Castan)
OPTION: option may be withdrawn anytime
before acceptance is communicated but not
when supported by a consideration other than
purchase price: option money
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EFFECTS OF OPTION: DISQUALIFIED TO ENTER INTO CONTRACTS:
 NOT supported by independent (contracts entered into are void)
consideration – the offeror can withdraw 1. Those under civil interdiction
the privilege at any time by 2. Hospitalized lepers
3. Prodigals
communicating the withdrawal before 4. Deaf and dumb who are unable to read
acceptance and write
 Supported by independent consideration 5. Those who by reason of age, disease,
– the offeror cannot withdraw his offer weak mind and other similar causes, cannot
without outside aid, take care of themselves and
PERSONS WHO CANNOT GIVE CONSENT TO
manage their property, becoming an easy prey
A CONTRACT:
1. Minors for deceit and exploitation (Rule 92, Sec.2, Rules
2. Insane or demented persons, unless the of Court)
contract was entered into during a lucid
interval
3. Illiterates/ deaf-mutes who do not know
INCAPACITY DISTINGUISHED FROM
how to write
DISQUALIFICATION
4. Intoxicated and under hypnotic spell
5. Art 1331 - person under mistake; mistake
INCAPACITY DISQUALIFICATION
may deprive intelligence
6. Art 1338 - person induced by fraud (dolo Restrains the Restrains the very right
causante) exercise of the right itself
NOTE: Dolus bonus (usual exaggerations in
to contract
trade) are not in themselves fraudulent
May still enter into Absolutely disqualified
RULE ON CONTRACTS ENTERED INTO BY
contract through
MINORS
GENERAL RULE: VOIDABLE parent, guardian or
EXCEPTIONS: legal representative
a. Upon reaching age of majority – they
Based upon Based upon public
ratify the same
b. They were entered unto by a guardian subjective policy and morality
and the court having jurisdiction had circumstance of
approved the same certain person
c. They were contracts for necessities
Contracts entered Contracts entered into
such as food, but here the persons who
into are merely are void
are bound to give them support should
voidable
pay therefor
d. Minor is estopped and cannot be
absolved from the contract they CAUSES WHICH VITIATE FREEDOM
entered into for having 1. Violence
misrepresented his age and misled  REQUISITES
the other party through his active a. Irresistible physical force
misrepresentation. Mercado vs. b. Such force is the determining cause for
Espiritu, [37 Phil 215] HOWEVER, giving consent
minors can set up the defense of
2. Intimidation
minority to resist the claim when there
 REQUISITES:
is only passive misrepresentation, as
b. Determining cause for the contract
they did not disclose their minority c. Threatened act is unjust and unlawful
because they had no juridical duty to d. Real and serious
disclose their inability. (Braganza vs.
De Villa Abrille, [105 Phil 456]

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e. Produces a well grounded fear that the
person making it will carry it over
Reluctant consent – a contract is valid
even though one of the parties entered
into it against his wishes and desires or
even against his better judgment.
Contracts are also valid even though
they are entered into by one of the
parties without hope of advantage or
profit. Martinez vs. Hongkong and
Shanghai Bank, [15 Phil 252]
3. Mistake
 Not only wrong conception of the thing
but also the lack of knowledge with
respect to it (Manresa)
Two General Kinds of Mistake:
a.Mistake of Fact – when one or both of
the contracting parties believe that a fact
exist when in reality it does not, or that such
fact does not exist when in reality it does
b.
Mistake of Law
General Rule: Mistake does not vitiate
consent
Exception: Mutual error as to the effect of
an agreement when the real purpose of the
parties is frustrated
4. Fraud
 When, through insidious words or
machinations of 1 of the contracting
parties, the other is induced to enter into
a contract which, without them, he would
not have agreed to.
KINDS:
o Causal Fraud (Dolo Causante)- Fraud in
the PERFECTION of the contract
 Deception of serious character, without
which the other party would not have
entered into
 It is the cause which induces the party to
enter into a contract
 Renders the contract voidable. Insidious
words or machinations are employed
 Not employed by both or by third person
 Ground for annulment
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o
I
ncidental Fraud (Dolo Incidente)- Fraud in
the PERFORMANCE of an obligation
 Deception which are not serious and
without which the other party would still
have entered into the contract
 It is not the cause which induced the
party to enter into a contract
 Renders the party liable for damages
5. Undue influence
 When a person takes improper
advantage of his power over the will of
another, depriving the latter of a
reasonable freedom of choice
SIMULATED CONTRACTS
1. Absolute – no intention to be bound at
all, fictitious only – void from beginning
2. Relative – there is intention to be
bound but concealed; concealed contract
binds:
c. No prejudice to 3rd persons
d. Not contrary to law, morals, etc.
B. OBJECT
REQUISITES:
1. Within the commerce of man – either
existing or in potency
2. Licit or not contrary to law, good customs
3. Possible
4. Determinate as to its kind or determinable
w/o need to enter into a new contract
5. Transmissible
THINGS WHICH CANNOT BE THE OBJECT OF
CONTRACT:
1. Things which are outside the commerce of
men
2. Intransmissible rights
3. Future inheritance, except in cases expressly
authorized by law
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4.
WANT OF EFFECT proximate reason of a reasons
CAUSE contract

ABSENCE Void - produce no legal effect Objective and juridical Psychological or purely
OF CAUSA reason of contract personal reason

ILLEGALITY Void - produce no legal effect Cause us always same The motive differs for
OF CAUSA for each contracting each contracting party
party
FALSITY OF Voidable – party must prove
CAUSA that cause is untruthful; Legality or illegality of Legality or illegality of
presumption of validity but cause affects the motive does not affect
rebuttable existence or validity of the existence or
the contract validity of contract
CAUSA NOT Presumed to Exist - burden of
STATED IN proof is on the person
CONTRACT assailing its existence CAUSA IN SOME CONTRACTS:
1. Onerous contracts – the prestation of
INADEQUAC Does not Invalidate Contract promise of a thing or service by the other
Y OF CAUSA per se 2. Remuneratory contracts – the service or
Exceptions: benefit remunerated
3. Pure Beneficence – mere liberality of the
* Fraud donor or benefactor
* Mistake 4. Accessory – identical with cause of principal
* Undue influence contract, the loan which it derived its life
* Cases specified by law and existence (ex: mortgage or pledge)
- contracts entered when
ward suffers lesion of more Want of Cause - There is a total lack or
than 25% absence of cause

Services which are contrary to law, morals, good Illegal Cause – The cause is contrary to law,
customs, public order or public policy morals, good customs, public order and public
5. Impossible things or services policy
6. Objects which are not possible of
determination as to their kind False Cause – The cause is stated but it is not
true
C. CAUSE (CAUSA)
CAUSA- Immediate, direct and most proximate Moral Obligation as Cause
reason why parties enter into contract  Where the moral obligation arises wholly
REQUISITES:
from ethical considerations, unconnected with
1. It must exist
2. It must be true any civil obligations, it cannot constitute a
3. It must be licit sufficient cause or consideration to support an
onerous contract. Fisher vs. Robb [69 Phil
MOTIVE: 101]
Purely private reason; illegality does not  Where such moral obligation is based upon a
invalidate contract except when it previous civil obligation which has already been
predetermines purpose of contract; when barred by the statute of limitations at the time
merged into one when the contract is entered into, it constitutes
a sufficient cause or consideration to support a
CAUSE DISTINGUISHED FROM MOTIVE
contract Villaroel vs. Estrada 71 Phil 14]
CAUSE MOTIVE A contract is a meeting of minds between two
Direct and most Indirect or remote persons whereby one binds himself, with respect

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to the other, to give something or to render
some service B. EXCEPTION TO RELATIVITY:
1. Accion Pauliana
2. Accion directa
CONTRACT DISTINGUISHED FROM 3. Stipulation pour autrui
OBLIGATION
C. REQUISITES OF STIPULATION POUR
CONTRACT OBLIGATION AUTRUI
1. Parties must have clearly and
One of the sources of Legal tie or relation deliberately conferred a favor upon a 3rd person
obligations itself 2. The stipulation in favor of a 3rd person
should be a part of, not the whole contract
There must be an There need not be a 3. That the favorable stipulation should not
obligation contract be conditioned or compensated by any kind of
obligation whatsoever
4. Neither of the contracting parties bears
CONTRACT DISTINGUISHED FROM
the legal representation or authorization of 3rd
AGREEMENT
party
5. The third person communicates his
CONTRACT AGREEMENT
acceptance before revocation by the original
Agreements Cannot be enforced parties
enforceable through by action in courts of 6. Art 1312; Art 1314
legal proceedings justice
In contracts creating real rights, third persons
Should have all the Need not have all who come into possession of the object of the
requisites of a contract the requisites contract are bound thereby, subject to the
provisions of the Mortgage Law and the Land
There must be an There need not be a Registration Laws
agreement contract
D. REQUISITES:
1. Existence of a valid contract
A. PRINCIPAL CHARACTERISTICS: 2. Knowledge of the contract by a 3rd person
1. Autonomy of wills – parties may 3. Interference by the 3rd person
stipulate anything as long as not illegal,
immoral, etc. E. TEST OF BENFICIAL SITUATION
2. Mutuality – performance or validity  The fairest to determine whether the
binds both parties; not left to will of one of interest of 3rd person in a contract is a
parties stipulation pour autrui or merely an
3. Obligatory Force and Consensuality incidental interest is to rely upon the
– parties are bound from perfection of intention of the parties as disclosed by
contract; contracts are perfected by mere their contract. Determine whether
consent and from that moment the parties contracting parties desired to tender him
are bound not only to the fulfillment of what such interest Uy Tam vs. Leonard, [30
has been expressly stipulated but also to all Phil 471]
consequences which, according to their =========================================
nature may be in keeping with good faith, TOPICS UNDER THE SYLLABUS
usage and law. A. GENERAL PROVISIONS
4. Fulfill what has been expressly 2. Kinds of Contracts
stipulated =========================================
5. All consequences w/c may be in keeping
with good faith, usage and law 2. KINDS OF CONTRACTS
6. Relativity – binding only between the 1. As to perfection or formation
parties, their assigns, heirs; strangers cannot
demand enforcement

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 a. Consensual – perfected by agreement NOTE: According to some authorities, do ut des
of parties is no longer an innominate contract. It has
b. Real – perfected by delivery (e.g. already been given a name of its own, i.e. barter
commodatum, pledge, deposit) or exchange. (Art. 1638)
c. Formal/solemn – perfected by
conformity to essential formalities STAGES IN A CONTRACT:
(donation ) 1. Preparation - negotiation
2. As to cause 2. Perfection/birth
a. Onerous – with valuable consideration 3. Consummation – performance
b. Gratuitous – founded on liberality
c. Remunerative – prestation is given for FORMAL CONTRACTS
service previously rendered not as 1. Donation
obligation  The donation of a movable may be made
3. As to importance or dependence of one orally or in writing (Article 748)
upon another  An oral donation requires the
a. Principal – contract may stand alone simultaneous delivery of the thing or of
b. Accessory – depends on another the document representing the right
contract for its existence; may not exist donated. (Article 748)
on its own  If the value of the personal property
c. Preparatory – not an end by itself; a donated exceeds five thousand pesos,
means through which future contracts the donation and the acceptance shall be
may be made made in writing. Otherwise, the donation
4. As to parties obliged shall be void. (Article 748)
a. Unilateral – only one of the parties has  In order that the donation of an
an obligations immovable may be valid, it must be
b. Bilateral – both parties are required to
made in a public document, specifying
render reciprocal prestations
therein the property donated and the
5. As to form
a. Common or informal – require no value of the charges which the donee
particular form must satisfy. (Article 749)
b. Special or formal – require some  The acceptance may be made in the
particular same deed of donation or in a separate
Form public document, but it shall not take
6. As to their purpose effect unless it is done during the
a. Transfer of ownership lifetime of the donor. (Article 749)
b. Conveyance of use  If the acceptance is made in a separate
c. Rendition of service instrument, the donor shall be notified
7. As to their subject matter
thereof in an authentic form, and this
a. Things
b. Services step shall be noted in both instruments.
8. As to the risk involved (Article 749)
a. Commutative – example lease
b. Aleatory – example insurance 2. Partnership
9. As to name or designation  A partnership may be constituted in any
a. Nominate – those which have their own form, except where immovable property
distinctive individuality and are or real rights are contributed thereto, in
regulated by special provisions of law which case a public instrument shall be
b. Innominate – those which lack necessary. (Article 1771)
individuality and are not regulated by  A contract of partnership is void,
special provisions of law whenever immovable property is
II. Do ut des – I give that you may give contributed thereto, if an inventory of
III. Do ut facias – I give that you may do
said property is not made, signed by the
IV. Facio ut des – I do that you may give
V. Facio ut facias – I do that you may do parties, and attached to the public
instrument. (Article 1773)

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3.
Antichresis
 The amount of the principal and of the
interest shall be specified in writing;
otherwise, the contract of antichresis
shall be void
4. Agency to Sell Real Property
 When a sale of a piece of land or any
interest therein is through an agent, the
authority of the latter shall be in writing;
otherwise, the sale shall be void. (Article
1874)
5. Interest
 No interest shall be due unless it has
been expressly stipulated in writing
(Article 1876)
6. Ordinary Diligence
 A stipulation between the common
carrier and the shipper or owner limiting
the liability of the former for the loss,
destruction, or deterioration of the goods
to a degree less than extraordinary
diligence shall be valid, provided it be:
o In writing, signed by the shipper
or owner;
o Supported by a valuable
consideration other than the
service rendered by the common
carrier; and
o Reasonable, just and not contrary
to public policy. (Article 1744)
7. Chattel Mortgage
 By a chattel mortgage, personal property
is recorded in the Chattel Mortgage
Register as a security for the
performance of an obligation. If the
movable, instead of being recorded, is
delivered to the creditor or a third
person, the contract is a pledge and not
a chattel mortgage.
8. Sale of Large Cattle
 The form of sale of large cattle shall be
governed by special laws. (Article 1581)
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=========================================
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS
3. Formality
=========================================
3. FORM OF CONTRACTS
FORM: in some kind of contracts only as
contracts are generally consensual; form is a
manner in which a contract is executed or
manifested
1. Informal – may be entered into whatever
form as long as there is consent, object and
cause
2. Formal – required by law to be in certain
specified form such as: donation of real
property, stipulation to pay interest, transfer
of large cattle, sale of land thru agent,
contract of antichresis, contract of
partnership, registration of chattel
mortgage, donation of personal prop in
excess of 5,000
3. Real – creation of real rights over
immovable prop must be written
WHEN FORM IS IMPORTANT:
1. For validity (formal/solemn contracts)
2. For enforceability (statute of frauds)
3. For convenience
 GENERAL RULE: contract is valid and
binding in whatever form provided that 3
essential requisites concur
 EXCEPTIONS
a. Law requires contract to be in some
form for validity - donation and
acceptance of real property
b. Law requires contract to be in some
form to be enforceable - Statute of
Frauds; contract is valid but right to
enforce cannot be exercised; need
ratification to be enforceable
c. Law requires contract to be in some
form for convenience - contract is valid
and enforceable, needed only to bind
3rd parties
Ex: public documents needed for the ff:
i. Contracts w/c object is creation,
transmission or reformation of real
rights over immovables
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 ii. Cession, repudiation, renunciation
of hereditary rights/CPG
iii. Power to administer property for
another
iv. Cession of action of rights
proceeding from an act appearing
in a public inst.
v. All other docs where amount
involved is in excess of 500 (must
be written even private docs )
NOTE: RA 8792 (E-COMMERCE ACT) – formal
requirements to make contracts effective as
against third persons and to establish the
existence of a contract are deemed complied
with provided that the electronic document is
unaltered and can be authenticated as to be
useable for future reference.
=========================================
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS
4. Reformation of Instruments
=========================================
4. REFORMATION OF INSTRUMENTS
REFORMATION OF CONTRACTS: remedy to
conform to real intention of parties due to
mistake, fraud, inequitable conduct, accident
CAUSES/GROUNDS:
1. Mutual: instrument includes something w/c
should not be there or omit what should be
there
a. Mutual
b. Mistake of fact
c. Clear and convincing proof
d. Causes failure of instrument to express
true intention
2. Unilateral
a. One party was mistaken
b. Other either acted fraudulently or
inequitably or knew but concealed
c. Party in good faith may ask for
reformation
3. Mistake by 3rd persons – due to ignorance,
lack of skill, negligence, bad faith of drafter,
clerk or typist
4. Others specified by law – to avoid
frustration of true intent
Requisites:
a.There is a written instrument
b. There is meeting of minds
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c.True intention not expressed in instrument
d. Clear and convincing proof
e.Facts put in issue in pleadings
NOTE:
 Prescribes in 10 years from date of execution
of instrument
 When one of the parties has brought an
action to enforce the instrument, no subsequent
reformation can be asked. (principle of estoppel)
 Reformation is based on justice and equity
 When there is no meeting of the minds, the
proper remedy is annulment and not reformation
WHEN REFORMATION NOT AVAILABLE:
1. Simple donation inter vivos
2. Wills
3. When real agreement is void
4. Estoppel when party has brought suit to
enforce it
=========================================
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS
5. Interpretation of Contracts
=========================================
5. INTERPRETATION OF CONTRACTS
GENERAL RULE: If the terms of the contract
are clear and leave no doubt upon the intention
of the contracting parties, the literal meaning of
its stipulations shall control. (Art. 1370)
EXCEPTION: It is alleged and proved that the
intention of the parties is otherwise.
Sec. 13 Rule 130 of the Rules of Court:
“When an instrument consists partly of written
words and partly of a printed form, and the two
are inconsistent, the former controls the latter.”
NOTE:
1. If the law is clear, there is no room for
interpretation
2. In case of ambiguity, the most important
guideline is intention of the parties.
3. Ambiguity is construed against the one who
caused it because he had control (e.g. contract
of adhesion). However, this rule does not apply
to all contracts of adhesion (e.g. if contract is
negotiated)
4. In order to judge the intention of the
contracting parties, their contemporaneous and
subsequent acts shall be principally considered.
(Art. 1371)
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5. Words which may have different significations
shall be understood in that which is most in
keeping with the nature and object of the
contract. (Art. 1375)
6. The interpretation of obscure words or
stipulations in a contract shall not favor the
party who caused the obscurity. (Art. 1377)
7. If the court cannot resolve the ambiguity
based on the elements of the contract:
a. If a gratuitous contract, the least
transmission of rights and interests shall
prevail
b. If an onerous contract, doubt shall be
settled in favor of the greatest
reciprocity of interest
8. The principles of interpretation stated in Rule
123 of the Rules of Court shall likewise be
observed in the construction of contracts
In the case of Felipe v. Heirs of Maximo
Aldon [G.R. No. L-60174, February 16,
1983], the Court stated that the description
that a contract is “invalid” is no longer precise,
since the Civil Code uses specific names in
designating defective contract (e.g. rescissible,
voidable, unenforceable, and void or inexistent
contracts)
=========================================
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS
6. Defective Contracts
=========================================
6. DEFECTIVE CONTRACTS
KINDS OF DEFECTIVE CONTRACTS:
A. RESCISSIBLE CONTRACTS
RESCISSIBLE CONTRACTS - Those which have
caused a particular economic damage either to
one of the parties or to a 3rd person and which
may be set aside even if valid. It may be set
aside in whole or in part, to the extent of the
damage caused
REQUISITES:
(a) Contract must be rescissible
Under Art 1381: Contracts entered into by
persons exercising fiduciary capacity:
1. Entered into by guardian whenever ward
suffers damage by more than 1/4 of value of
object
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2.
A
greed upon in representation of absentees, if
absentee suffers lesion by more than ¼ of
value of property
3. Contracts where rescission is based on fraud
committed on creditor (accion pauliana)
4. Objects of litigation; contract entered into by
defendant w/o knowledge or approval of
litigants or judicial authority
5. Provided for by law – Arts 1526, 1534, 1539,
1542, 1556, 1560, 1567 and 1659
 Art. 1526 – Unpaid seller of goods,
notwithstanding that the ownership
in the goods may have passed to the
buyer, subject to other provisions on
Sales
 Art. 1534 – Unpaid seller having the
right of lien or having stopped the
goods in transit, where he expressly
reserved his right to do so in case
the buyer should make default, or
the buyer has been in default in
the payment of the price for an
unreasonable time
 Art. 1539 – In the sale of real estate
at a rate of a certain price for a unit
of measure or number, at the will of
the vendee, when the inferior value
of the thing sold exceeds one-
tenth of the price agreed upon, or if
the vendee would not have bought
the immovable had he known of
its smaller area or inferior quality
 Art. 1542 – In the sale of real estate,
made for a lump sum, where the
boundaries are mentioned and the
area or number within the
boundaries exceed that specified in
the contract, when the vendee does
not accede to the failure to
deliver what has been stipulated
 Art. 1556 – Should the vendee lose,
by reason of eviction, a part of the
thing sold of such importance, in
relation to the whole, that he would
not have bought it without said part
 Art. 1560 – Vendee may ask for
recession if the immovable sold
should be encumbered with any
non-apparent burden or
servitude, not mentioned in the
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 agreement, of such a nature that it Under Art. 1382 - Payments made in a state of
must be presumed that the vendee insolvency
would not have acquired it had he 1. Plaintiff has no other means to obtain
been aware thereof reparation.
 Art. 1567 – In cases of breach of 2. Plaintiff must be able to return whatever he
warranty against hidden defects of may be obliged to return due to rescission
3. The things must not have been passed to 3rd
or encumbrances upon the thing sold
parties who did not act in bad faith
 Art. 1658 – If the lessor or lessee
4. It must be made within the prescribed period
should not comply with their
(of 4 years)
obligations, the aggrieved party
may ask for rescission REQUISITES before a contract entered into
in fraud of creditors may be rescinded:
ART 1191 COMPARED TO ART 1381 1. There must be credit existing prior to the
celebration of the contract.
RESCISSION IN RESCISSION 2. There must be fraud, or at least, the intent
ART 1191 PROPER IN ART to commit fraud to the prejudice of the
1381 creditor seeking rescission
3. The creditor cannot in any legal manner
It is a principal it is a subsidiary
collect his credit (subsidiary character of
action retaliatory in remedy
rescission)
character 4. The object of the contract must not be
Only ground is non- There are 5 grounds legally in the possession of a 3rd person who
performance of to rescind. Non- did not act in bad faith.
one’s obligation or performance by the
OBLIGATION CREATED BY THE RESCISSION
what is incumbent other is not important
OF THE CONTRACT: Mutual Restitution
upon him a. Things w/c are the objects of the contract
and their fruits
Applies only to Applies to both
b. Price with interest
reciprocal obligation unilateral and
reciprocal obligations MUTUAL RESTITUTION NOT APPLICABLE
WHEN
Only a party to the Even a third person a. creditor did not receive anything from
contract may who is prejudiced by contract
demand fulfillment the contract may b. thing already in possession of party in
or seek the demand the rescission good faith; subject to indemnity only; if
rescission of the of the contract. there are 2 or more alienations – liability
contract of 1st infractor
Court may fix a Court cannot grant BADGES OF FRAUD
period or grant extension of time for a. consideration of the conveyance is
extension of time fulfillment of the inadequate or fictitious
for the fulfillment of obligation b. transfer was made by a debtor after a
the obligation suit has been begun and while it is
pending against him
Its purpose is to Its purpose is to seek c. sale upon credit by an insolvent debtor
cancel the contract reparation for the d. evidence of indebtedness or complete
damage or injury insolvency
caused, thus allowing e. transfer of all his property by a debtor
partial rescission of when he is financially embarrassed or
the contract insolvent

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 f. transfer made between father and son
where there is present any of the above
circumstances
g. failure of the vendee to take exclusive
possession of the property
B. VOIDABLE CONTRACTS
VOIDABLE CONTRACTS -intrinsic defect; valid
until annulled; defect is due to vice of consent or
legal incapacity
CHARACTERISTICS:
a. Effective until set aside
b. May be assailed or attacked only in an
action for that purpose
c. Can be confirmed (NOTE: confirmation is
the proper term for curing the defect of a
voidable contract)
d. Can be assailed only by the party whose
consent was defective or his heirs or assigns
WHAT CONTRACTS ARE VOIDABLE:
a. Minors
b. Insane unless acted in lucid interval
c. Deaf mute who can’t read or write
d. Persons specially disqualified: civil
interdiction
e. In state of drunkenness
f. In state of hypnotic spell
MISTAKE
False belief of something which is contrary to
the real intention of the parties
REQUISITES:
a. Refers to the subject of the thing which is
the object of the contract
b. Refers to the nature of the contract
c. Refers to the principal conditions in an
agreement
d. Error as to person - when it is the principal
consideration of the contract
e. Error as to legal effect - when mistake is
mutual and frustrates the real purpose of
parties
VIOLENCE
Serious or irresistible force is employed to wrest
consent
INTIMIDATION
One party is compelled by a reasonable and
well-grounded fear of an imminent and grave
danger upon person and property of himself,
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spouse, ascendants or descendants (moral
coercion)
UNDUE INFLUENCE
Person takes improper advantage of his power
over will of another depriving latter of
reasonable freedom of choice
The doctrine on reluctant consent provides
that a contract is still valid even if one of the
parties entered it against his wishes or even
against his better judgment. Contracts are also
valid even though they are entered into by one
of the parties without hope of advantage or
profit. Martinez vs. HSBC, [12 Phil 252]
FRAUD
Thru insidious words or machinations of
contracting parties, other is induced to enter
into contract w/o w/c he will not enter (dolo
causante)
KINDS OF FRAUD IN THE PERFORMANCE OF
OBLIGATION OR CONTRACTS
a. Causal Fraud (dolo causante) – deception
of serious character without which the other
party would not have entered into; contract is
VOIDABLE (Art. 1338)
b. Incidental Fraud (dolo incidente) –
deception which are not serious and without
which the other party would still have entered
into the contract; holds the guilty party liable for
DAMAGES (Art. 1344)
c. Tolerated Fraud – includes minimizing the
defects of the thing, exaggeration of its god
qualities and giving it qualities it does not have;
LAWFUL misrepresentation
NOTE:
Expression of an opinion – not fraud unless
made by expert and other party relied on the
former’s special knowledge
Fraud by third person – does not vitiate
consent; only action for damages except if there
is collusion between one party and the third
person, or resulted to substantial mistake,
mutual between parties.
CAUSES OF EXTINCTION OF ACTION TO
ANNUL
a.PRESCRIPTION - Period to bring an action
for Annulment
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 i. Intimidation, violence, undue influence - 4
years from time defect of consent ceases
ii.Mistake, fraud – 4 years from time of
discovery
iii. Incapacity - to comply with Statute of Frauds
From time guardianship ceases
 Discovery of fraud must be reckoned to have
taken place from the time the document was
registered in the office of the register of
deeds. Registration constitutes constructive
notice to the whole world. Carantes v. CA,
[76 SCRA 514]
b. RATIFICATION
REQUISITES:
i. Knowledge of reason rendering
contract voidable
ii. Such reason must have ceased, except
in case of ratification effected by the
guardian to contracts entered into by
an incapacitated,
iii. The injured party must have executed
an act which expressly or impliedly
conveys an intention to waive his right
c. LOSS OF THE THING which is the object of
the contract through fraud or fault of the
person who is entitled to annul the contract
NOTE: Object is lost through a fortuitous event,
the contract can still be annulled, but the person
obliged to return the same can be held liable
only for the value of the thing at the time of the
loss, but without interest thereon.
Ratification cleanses the contract of its defects
from the moment it was constituted.
C. UNENFORCEABLE CONTRACT
UNENFORCEABLE CONTRACT – valid but cannot
compel its execution unless ratified; extrinsic
defect; produce legal effects only after ratified
KINDS:
a. Unauthorized or No sufficient
authority – entered into in the name of
another when:
i. No authority conferred
ii. In excess of authority conferred (ultra
vires)
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b. Curable by Ratification - Both parties
incapable of giving consent -2 minor or 2
insane persons
c. Curable by Acknowledgment - Failure
STATUTE OF FRAUDS:
Agreement to be performed within a year
after making contract
Special promise to answer for debt, default
or miscarriage of another
Agreement made in consideration of promise
to marry
Agreement for sale of goods, chattels or
things in action at price not less than 500;
exception: auction when recorded sale in
sales book
Agreement for lease of property for more
than one year and sale of real property
regardless of price
Representation as to credit of another
TWO WAYS OF CURING UNENFORCEABLE
CONTRACTS:
a. Failure of defendant to object in time,
to the presentation of parole evidence in
court, the defect of unenforceability is cured
b. Acceptance of benefits under the
contract. If there is performance in either
part and there is acceptance of performance,
it takes it out of unenforceable contracts;
also estoppel sets in by accepting
performance, the defect is waived
NOTES:
 The contracts/agreements under the Statute
of Frauds require that the same be
evidenced by some note or memorandum or
writing, subscribed by the party charged or
by his agent, otherwise, the said contracts
shall be unenforceable.
 The Statute of Frauds applies only to
executory contracts, not to those that are
partially or completely fulfilled.
D. VOID OR INEXISTENT
VOID OR INEXISTENT – of no legal effect
CHARACTERISTICS:
a. It produces no effect whatsoever
either against or in favor of anyone
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 b. There is no action for annulment
necessary as such is ipso jure. A
judicial declaration to that effect is
merely a declaration
c. It cannot be confirmed, ratified or
cured
d. If performed, restoration is in order,
except if pari delicto will apply
e. The right to set up the defense of
nullity cannot be waived
f. Imprescriptible
g. Anyone may invoke the nullity of the
contract whenever its juridical effects
are asserted against him
KINDS OF VOID CONTRACT:
a. Those lacking in essential elements:
no consent, no object, no cause
(inexistent ones) – essential formalities
are not complied with ( ex: donation
propter nuptias – should conform to
formalities of a donation to be valid )
i. Those w/c are absolutely simulated
or fictitious – no cause
ii. Those which cause or object did not
exist at the time of the transaction –
no cause/object
iii. Those whose object is outside the
commerce of man – no object
iv. Those w/c contemplate
impossible service – no object
v. Those w/c intention of parties
relative to principal object of the
contract cannot be ascertained
b. Prohibited by law
c. Those expressly prohibited
declared void by law - Contracts w/c
violate any legal provision, whether it
amounts to a crime or not
d. Illegal/Illicit ones – Those whose
cause, object or purpose is contrary to
law, morals, good customs, public order
or public policy ; Ex: Contract to sell
marijuana
OTHER VOID CONTRACTS:
1. PACTUM
COMMISSORIUM (Arts. 2088, 2130, 1390)
ELEMENTS:
1. There should be a property mortgaged by way
of security for the payment of the principal
obligation.
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2. There should be a stipulation for automatic
appropriation by the creditor of the thing
mortgaged in case of non-payment of the
principal obligation within the stipulated period.
2. PACTUM DE NON ALIENANDO (Art.
2130)
 A stipulation forbidding the owner from
alienating the immovable mortgaged shall
be void.
 It is a clause in a mortgage giving the
mortgagee the right to foreclose by
executory process directed solely against the
mortgagor, and giving him or her the right to
seize and sell the mortgaged property,
regardless of any subsequent alienations.
3. PACTUM LEONINA (Art. 1799)
A stipulation which excludes one or more
partners from any share in profit or loss is void.
KINDS OF ILLEGAL CONTRACTS
PARI DELICTO DOCTRINE
Both parties are guilty, no action against each
other; those who come in equity must come with
clean hands; applies only to illegal contracts and
an
not to inexistent contracts; does not apply when
a superior public policy intervene
EXCEPTION TO PARI DELICTO RULE - If
purpose has not yet been accomplished and if
damage has not been caused to any 3rd person
or
OTHER EXCEPTIONS:
a. Payment of Usurious interest
b. payment of money or delivery of
property for an illegal purpose, where
the party who paid or delivered
repudiates the contract before the
purpose has been accomplished, or
before any damage has been caused to a
3rd person
c. payment of money or delivery of
property made by an incapacitated
person
d. agreement or contract which is not
illegal per se and the prohibition is
designed for the protection of the
plaintiff
Page 128 of
 e. payment of any amount in excess of the
maximum price of any article or
commodity fixed by law or regulation by
competent authority
f. contract whereby a laborer undertakes to
work longer than the maximum number
of hours fixed by law
g. One who lost in gambling because of
fraudulent schemes practiced on him is
allowed to recover his losses (Art. 313
RPC) even if gambling is prohibited.
REQUISITES OF ILLEGAL CONTRACTS:
a. Contract is for an illegal purpose
b. Contract must be repudiated by any of
the parties before purpose is
accomplished or damage is caused to 3rd
parties
c. Court believes that public interest will
be served by allowing recovery
(discretionary upon the court) – based on
remorse; illegality is accomplished when
parties entered into contract; before it
takes effect – party w/c is remorseful
prevents it
WHERE LAWS ARE ISSUED TO PROTECT
CERTAIN SECTORS: CONSUMER
PROTECTION, LABOR, AND USURY LAW
a. Consumer protection – if price of
commodity is determined by statute,
any person paying an amount in excess
of the maximum price allowed may
recover such excess
b. Labor – if law sets the minimum wage
for laborers, any laborer who agreed to
receive less may still be entitled to
recover the deficiency; if law set max
working hours and laborer who
undertakes to work longer may
demand additional compensation
c. Interest paid in excess of the interest
allowed by the usury law may be
recovered by debtor with interest from
date of payment
EFFECTS OF ILLEGAL CONTRACTS
a. If one party is incapacitated, courts may
allow recovery of money, property
delivered by incapacitated person in the
interest of justice; pari delicto cannot
apply because an incapacitated person
CIVIL LAW REVIEWER
383
does not know what he is entering into;
unable to understand the consequences
of his own action
b. If agreement is not illegal per se but
merely prohibited and prohibition is
designated for the protection of the
plaintiff – may recover what he has paid
or delivered by virtue of public policy
MUTUAL RESTITUTION IN VOID CONTRACTS
GENERAL RULE: parties should return to each
other what they have given by virtue of the void
contract in case
 Where nullity arose from defect in essential
elements
a. return object of contract
and fruits
b. return price plus interest
EXCEPTION: No recovery can be had in cases
where nullity of contract arose from illegality of
contract where parties are in pari delicto;
except when incapacitated – not obliged to
return what he gave but may recover what he
has given other party is less guilty or not guilty
=========================================
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS
7. Effect of Contracts
=========================================
7. EFFECT OF CONTRACTS
Contracts take effect only between the parties,
their assigns and heirs, except in case where the
rights and obligations arising from the contract
are not transmissible by their nature, or by
stipulation or by provision of law. The heir is not
liable beyond the value of the property he
received from the decedent. (Article 1311)
If a contract should contain some stipulation in
favor of a third person, he may demand its
fulfillment provided he communicated his
acceptance to the obligor before its revocation.
A mere incidental benefit or interest of a person
is not sufficient. The contracting parties must
have clearly and deliberately conferred a favor
upon a third person. (Article 1311)
Page 129 of
SALES =========================================
TOPICS UNDER THE SYLLABUS
A. INTRODUCTION
A. INTRODUCTION 3. Stages of Contract of Sale
================================ =========================================
TOPICS UNDER THE SYLLABUS
3. STAGES IN LIFE OF CONTRACT OF SALE
1. Negotiation
A. Introduction 2. Perfection
1. Definition of sales (Arts. 1458, 3. Consummation
1470)
=========================================
2. Essential requisites of a contract
TOPICS UNDER THE SYLLABUS
of sale (Art. 1505) A. INTRODUCTION
3. Stages of contract of sale 4. Obligations created
4. Obligations created (Art. 1165) =========================================
5. Characteristics of a contract of
sale 4. OBLIGATIONS CREATED
2 sets of real obligations to give
6. Sale is title and not mode
7. Sale distinguished from other Obligation of the Seller:
contracts a. to transfer ownership and
b. to deliver possession
8. Contract of sale/contract to sell
=========================================
========================================= TOPICS UNDER THE SYLLABUS
TOPICS UNDER THE SYLLABUS A. INTRODUCTION
A. INTRODUCTION 5. Characteristics of Contract of Sale
1. Definition of Sales =========================================
=========================================
5. CHARACTERISTICS OF CONTRACT OF
1. DEFINITION OF SALES (Arts. 1458 & SALE:
1470) 1. Nominate
2. Principal
CONTRACT OF SALE – One of the contracting 3. Consensual
parties obligates himself to transfer the 4. Bilateral
ownership of and to deliver a determinate 5. Reciprocal
thing, and the other to pay therefore a price 6. Onerous
certain in money or its equivalent. A contract 7. Commutatitve
of sale may be absolute or conditional. 8. Title and not a mode

=========================================
TOPICS UNDER THE SYLLABUS
A. INTRODUCTION
2. Elements of a Contract of Sale
=========================================
2. ELEMENTS OF A CONTRACT OF SALE
1. Consent
2. Determinate subject matter
3. Price certain in money or its equivalent
=========================================
TOPICS UNDER THE SYLLABUS
A. INTRODUCTION
6. Sale is Title and not Mode
=========================================
6. SALE IS TITLE AND NOT MODE
=========================================
TOPICS UNDER THE SYLLABUS
A. INTRODUCTION

CIVIL LAW REVIEWER Page 130 of

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Lease Sale
If consideration consists partly in money
Use of thing is for a Obligation to
and partly by thing –
specified period only absolutely transfer
look at manifest intention;
with an obligation to ownership of thing
return If intention is not clear: If intention is not
value of thing is clear: value of thing
Consideration is rent Consideration is price
more than amount of is equal or less than
Lessor need not be Seller needs to be
money – barter amount of money –
owner owner of thing to
sale
transfer ownership

7. Sale distinguished from other

contracts
========================================

DATION IN PAYMENT DISTINGUISHED FROM

CONTRACT FOR PIECE OF WORK SALE
DISTINGUISHED FROM SALE Dation in Payment Sale
Pre-existing credit No pre-existing
Contract for piece of Sale credit
work Obligations are Obligations are
Goods are to be Contract for delivery extinguished created
manufactured specially of an article which Debtor’s consideration: Consideration of
for a customer and the vendor in the extinguishment of the seller: price
upon special order and ordinary course of debt Consideration of
not for the general business Creditor’s consideration: buyer: acquisition
market manufactures or acquisition of the object of the object
procures for general offered in lieu of the
market (whether on original credit
hand or not) Less freedom in Greater freedom
Essence is service Essence is object determining the price in determining
Real obligation Personal obligation the price
Tests under Jurisprudence: Payment is received by Buyer still has to
GR: IF YES, Contract for piece of work, IF the debtor before the pay the price
NO, SALE contract is perfected

1. Timing test - Under art 1467: whether the AGENCY TO SELL DISTINGUISHED FROM
thing transferred only existed upon special SALE
order Agency to Sell Sale

2. Habituality test - if manufacturer engages Agent not obliged to Buyer pays for price
in activity with the need to employ pay for price, merely of object
extraordinary skills and equipment (Celestino v obliged to deliver price
CIR) received from buyer.
Preparatory contract Principal contract
3. Nature of the object test - Each product’s Principal remains owner Buyer becomes
nature of execution differs from the others; even if object delivered owner of thing; in
products are not ordinary products of to agent agency
Manufacturer (EEI v CIR)
Agent assumes no Seller warrants
risk/liability as long as
within the authority
BARTER DISTINGUISHED FROM SALE given
Barter Sale May be revoked Not unilaterally
Consideration: giving Consideration: giving unilaterally because revocable
of a thing of money as payment fiduciary and even if
Governed by law on sales: species of the genus revoked w/o ground
sales Agent not allowed to Seller receives profit

CIVIL LAW REVIEWER Page 131 of

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 profit ================================
Personal Contract; Real Contract
Rescission is not
available B. PARTIES TO A CONTRACT
OF SALE
DONATION DISTINGUISED FROM SALE ================================
Donation Sale
TOPICS UNDER THE SYLLABUS
Gratuitous or Onerous
onerous
Formal contract Consensual contract B. Parties to a Contract of Sale
1. Capacity of parties (Arts. 1489-
NOTE: Lease with option to buy: really a 1492)
contract of sale but designated as lease in name
only; it is a sale by installments 2. Absolute incapacity (Arts. 1327,
1397, 1399)
3. Relative incapacity: married
persons
4. Special disqualifications (Arts.
1491-1492)

=========================================
========================================= TOPICS UNDER THE SYLLABUS
TOPICS UNDER THE SYLLABUS B. PARTIES TO A CONTRACT OF SALE
A. INTRODUCTION 1. Capacity of Parties
=========================================
8. Contract of Sale/Contract to Sell
========================================= GENERAL RULE - All persons who are
authorized in this Code to obligate themselves
8. Contract of Sale/Contract to Sell may enter into a contract of sale
Contract of Sale Contract to Sell
Absolute Conditional =========================================
Real obligation – Personal obligation – TOPICS UNDER THE SYLLABUS
obligation to give obligation to do B. PARTIES TO A CONTRACT OF SALE
Title passes to the Ownership is reserved 2. Absolute Incapacity
buyer upon delivery in the seller and will =========================================
pass to the buyer only
upon full payment of
2. ABSOLUTE INCAPACITY
the price
MINORS, INSANE AND DEMENTED
Non-payment of the Full payment is a
PERSONS, AND DEAF-MUTES
price is a negative positive suspensive
resolutory condition condition, the failure
of which is not a  Contracts are voidable, subject to
breach but prevents annulment or ratification
the obligation of the
vendor to convey title  Also includes:
to arise
Remedies available: Remedies available: - State of drunkenness
Specific Resolution
Performance Damages - Hypnotic spell
Rescission
Damages - NECESSARIES: Those sold and delivered
to a minor or other person without
END OF DISCUSSION ON TOPIC
A. INTRODUCTION

CIVIL LAW REVIEWER Page 132 of

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 capacity to act, he must pay a
reasonable price therefore
=========================================
TOPICS UNDER THE SYLLABUS
B. PARTIES TO A CONTRACT OF SALE
3. Relative Incapacity
=========================================
3. RELATIVE INCAPACITY
A. SPOUSES - A spouse may, without the
consent of the other spouse, enter into sales
transactions in the regular pursuit of their
profession, vocation, or trade. These contracts
are void.
GENERAL RULE: The husband and the wife
cannot sell property to each other.
EXCEPTION:
 When a separation of property was agreed
upon in the marriage settlement
 When there has been a judicial separation
of property under Art. 191
property involved in litigation (reason is that the
transfer or assignment of the property takes
effect only after the finality of a favorable
judgment
II. Legal Status of Contract
1. Void (case law) – guardian/ executor/public
officers / officers of the court
2. Voidable (civil code) – agent; VALID if with
consent
=========================================
TOPICS UNDER THE SYLLABUS
B. PARTIES TO A CONTRACT OF SALE
4. Special Disqualifications
=========================================
4. SPECIAL DISQUALIFICATIONS
END OF DISCUSSION ON TOPIC
B. PARTIES TO A CONTRACT OF SALE
================================

NOTE: Prohibition likewise applies to common-

C. SUBJECT MATTER OF SALE
law spouses ================================
TOPICS UNDER THE SYLLABUS
B. OTHERS - TRUST RELATIONSHIPS
I. Art. 1491 - Two groups of parties prohibited C. Subject Matter
from acquiring by purchase certain properties:
1. Requisites of a valid subject
a. Guardian/Agent/Executors and Administrators matter (Arts. 1459-1465)
 Direct or indirect 2. Particular kinds
 May be ratified since only private wrong is =========================================
involved TOPICS UNDER THE SYLLABUS
C. SUBJECT MATTER OF SALE
1. Requisites of a valid subject
b. Public Officers & Employees/Officers of Court
i. Cannot be ratified since public wrong is matter
involved =========================================
ii. Requisites for the prohibition to
apply to attorneys:
1. Existence of attorney client
relationship;
2. Property is the subject matter in
litigation;
3. While in litigation (from filing of
complaint to final judgment)

NOTE: Exception to the prohibition against

attorneys: contingent fee arrangement where
the amount of legal fees is based on a value of

CIVIL LAW REVIEWER Page 133 of

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1. REQUISITES OF A VALID SUBJECT =========================================
MATTER TOPICS UNDER THE SYLLABUS
Emptio rei Emptio spei
speratae
Requisites: Sale of an Sale of a mere hope or
1. Things expected expectancy that the thing
thing will come to existence;
A. “Possible” - existing, future, and sale of the hope itself
contingent Sale is Sale is effective even if
i. Whether the subject subject to the the thing does not come
matter is of a type and nature that condition; into existence, unless it is
exists or could be made to exist to that the thing a vain hope (Art 1461
allow the seller reasonable certainty will exist; if it Sale of a vain hope or
does not, expectancy is void)
of being able to comply with his
there is no
obligations contract
Uncertainty The uncertainty is with
ii. Minimum requirement of is with regard regard to the existence of
potential existence: taking into to the the thing
consideration the state of science quantity and
and technology at the time of quality of the
perfection of the contract thing and not
the existence
B. Licit of the thing
B.1. Not outside the commerce of man Object is a Object is a present thing
B.2. If illicit, contract is void future thing which is the hope or
B.3. Prohibited: expectancy
i. Animals with contagious C. SUBJECT MATTER OF SALE
diseases 2. Particular Kinds
ii. Sale of future inheritance =========================================

C. Determinate or determinable 2. PARTICULAR KINDS

i. Determinate: particularly designated or
physically segregated from all others of
the same class; always specific
ii. Determinable: always generic
GOODS THAT MAY BE THE OBJECTS OF SALE
1. Existing goods – goods owned or
possessed by the seller at the time of
perfection

a) Thing is capable of 2. Future goods – goods to be

being made determinate manufactured, raised or acquired by the
seller after the perfection of the contract
b) Without the
necessity of a new or further contract
between the parties. NOTES:
 Quantity of subject matter is not essential for
perfection; must determine nature and
NOTE: Subject matter CAN NOT be
quality of subject matter
DETERMINED BY a 3rd PARTY.

2. Rights – Must be transmissible, except:  Generic things may be the object of sale, but
the obligation to deliver the subject matter
a. Future inheritance can only be complied with when the subject
matter has been made determinate (either
b. Service by physical segregation or particular
designation)

CIVIL LAW REVIEWER Page 134 of

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 END OF DISCUSSION ON TOPIC
C. SUBJECT MATTER OF SALE
================================
D. OBLIGATIONS OF THE
SELLER TO TRANSFER
OWNERSHIP
================================
TOPICS UNDER THE SYLLABUS
D. Obligations of the Seller to
Transfer Ownership
1. Sale by a person not the owner
at time of delivery (Arts. 1462, 1505,
1459); Exceptions
2. Sale by a person having a
voidable title (Arts. 1506, 559)
=========================================
TOPICS UNDER THE SYLLABUS
D. OBLIGATIONS OF THE SELLER TO
TRANSFER OWNERSHIP
1. Sale by a person not the owner at
the time of delivery
=========================================
1. OBLIGATION OF THE SELLER TO
TRANSFER OWNERSHIP
GENERAL RULE: Seller need not be the owner
of the subject matter at the time of perfection:
sufficient that he is the owner at the time of
delivery.
EXCEPTION: Foreclosure sale (mortgager must
be absolute owner)
RULES ON LEGAL EFFECTS OF SALE BY A
NON-OWNER
GENERAL RULE: Sale by non-owner, buyer
acquires no better title than seller had.
EXCEPTIONS:
1. Owner by his conduct is precluded from
denying seller’s authority (ESTOPPEL)
2. Contrary is provided for in recording laws (PD
1529)
3. Sale is made under statutory power of sale or
under order of a court of competent jurisdiction
4. Sale is made in a merchant’s store in
accordance with code of commerce and special
laws.
CIVIL LAW REVIEWER
383
But subject to ANTI-FENCING LAW
TITLE AS TO MOVABLE PROPERTIES
GENERAL RULE: Possession is equivalent to
title
REQUISITES: Possession of movable and Good
Faith
EXCEPTIONS:
1. Owner lost movable – owner can recover
without reimbursing price
2. Owner is unlawfully deprived – owner can
recover w/o reimbursing price
EXCEPTIONS TO THE EXCEPTIONS:
1. Movable is bought at public sale – owner can
only recover after reimbursing price
2. Acquired in good faith and for value from
auction
=========================================
TOPICS UNDER THE SYLLABUS
D. OBLIGATIONS OF THE SELLER TO
TRANSFER OWNERSHIP
1. Sale by a person having a voidable
title
========================================
END OF DISCUSSION ON TOPIC
D. OBLIGATIONS OF THE SELLER TO
TRANSFER OWNERSHIP
================================
E. PRICE
================================
TOPICS UNDER THE SYLLABUS
E. Price
1. Meaning of price (Arts. 1469-
1474)
2. Requisites for a valid price
3. How price is determined
4. Inadequacy of price (Arts. 1355,
1470)
5. When no price agreed (Art. 1474)
6. Manner of payment must be
agreed upon
7. Earnest money vs. Option money
(Art. 1482)
Page 135 of
=========================================
TOPICS UNDER THE SYLLABUS
E. PRICE
1. Meaning of Price
=========================================
1. MEANING OF PRICE
PRICE – The sum stipulated as the equivalent of
the thing sold and also every incident taken into
consideration for the fixing of the price, put to
the debit of the vendee and agreed to by him.
=========================================
TOPICS UNDER THE SYLLABUS
E. PRICE
2. Requisites for a Valid Price
=========================================
2. REQUISITES FOR A VALID PRICE:
A. Real
When at the perfection of the contract of sale,
there is every intention on the buyer to pay the
price, and every expectation on the part of the
seller to receive such price as the value of the
subject matter he obligates himself to deliver.
(Test of intention)
B. In money or its equivalent
Consideration for a valid contract of sale can be
the price and other valuable consideration; at
the very least, a true contract of sale must have
price as part of its consideration (Test of value
consideration)
C. Certain or ascertainable
i. Certain: expressed and agreed in
terms of specific pesos and/or
centavos
ii. Ascertainable:
a. Set by third persons
b. Set by the courts – in cases where
the third person fixes the price in bad
faith or by mistake
c. Set by reference to a definite day,
particular exchange or market
d. Set by reference to another thing
certain
CIVIL LAW REVIEWER
383
e. But never by one party to the
contract (unless the price is accepted
by the other party)
Note: When the 3rd party is unwilling to set the
price, the parties may not ask the court to fix
the price because the condition imposed on the
contract has not happened yet and thus, no
enforceable contract has arisen.
EFFECT WHERE PRICE IS SIMULATED
 The act may be shown to have been in
reality a donation, or some other act or
contract
 If not and neither party had any intention
whatsoever that the amount will be paid
(absolutely simulated): the sale is void
If there is a real price but what is stated
in the contract is not the one intended to
be paid (only relatively simulated): the
contract of sale is valid but subject to
reformation (false price)
EFFECT OF NON-PAYMENT OF PRICE
NOTE: Non-payment of price does not cancel
sale, as the sale is still considered perfected. But
it is a cause for either:
1. Specific performance or
2. Rescission.
=========================================
TOPICS UNDER THE SYLLABUS
E. PRICE
3. How price is determined
=========================================
3. HOW PRICE IS DETERMINED
=========================================
TOPICS UNDER THE SYLLABUS
E. PRICE
4. Inadequacy of price
=========================================
4. INADEQUACY OF PRICE
Page 136 of
EFFECT OF GROSS INADEQUACY OF PRICE
NOTE: Mere inadequacy of the price does not
affect the validity of the sale, except
(1) When there is fraud, mistake, or undue
influence indicative of a defect in consent is
present,
EARNEST MONEY
1. Money given as part of purchase price
2. Acceptance is the proof that contract of
sale exists
3. Nothing in law prevents parties from
treating earnest money differently

(2)When it shows that the parties really intended 4. Old concept: subject to forfeiture when
a donation or some other act or contract. BUYER backs out

(3)Judicial sale, where the inadequacy is 5. New concept: cannot be forfeited – part
shocking to the conscience of man and there is of purchase price; must be restored
showing that in event of resale, a better price
can be obtained. 6. Qualification: if old concept is stipulated
– VALID
=========================================
TOPICS UNDER THE SYLLABUS 7. Presumption of perfection of contract of
E. PRICE sale and such earnest money as part of
5. When no price agreed purchase price is disputable
=========================================
OPTION MONEY DISTINGUISHED FROM
5. WHEN NO PRICE AGREED EARNEST MONEY
OPTION MONEY EARNEST MONEY
Note: If there was a failure of the contract to
set a price but the BUYER has already Money given as distinct Part of the purchase
APPROPRIATED IT, then the buyer must pay a
consideration for an price
reasonable price (Article 1474)
option contract

========================================= Applies to a sale not Given only when

TOPICS UNDER THE SYLLABUS perfected there is already a
E. PRICE sale
6. Manner of payment must be Not required to buy When given, buyer
agreed upon is bound to pay the
========================================= balance

6. MANNER OF PAYMENT MUST BE

AGREED UPON
END OF DISCUSSION ON TOPIC
Manner of payment must be agreed upon E. PRICE
Marnelego v. Banco Filipino Savings and
Mortgage Bank, [G.R. No. 161524, January
27, 2006
================================
F. FORMATION OF CONTRACT
=========================================
TOPICS UNDER THE SYLLABUS OF SALE
E. PRICE ================================
7. Earnest money vs. Option money TOPICS UNDER THE SYLLABUS
=========================================
F. Formation of Contract of Sale
7. EARNEST VS. OPTION MONEY
1. Preparatory (Art. 1479)

CIVIL LAW REVIEWER Page 137 of

383
 1.1. Offer (Art. 1475) 4. Offer floated Continues to be valid
without depending upon
1.2. Option contract (Arts. 1479,
circumstances of time,
1324) period/without place and person
1.3. Right of first refusal condition
1.4. Mutual promise to buy and 5. Offer is Original offer is destroyed,
sell (Art. 1479) floated and there is a new offer; can
there not go back to original offer
2. Perfection (Arts. 1475, 1319,
1325, 1326) is counter-offer
3. Formalities of the contract (Art. 6. Offer is No authority of offeror to
1403 (d)&(e)) floated modify offer

7. Offer Proceed to perfected stage

=========================================
accepted
TOPICS UNDER THE SYLLABUS
absolutely
F. FORMATION OF CONTRACT OF
SALE
1. Preparatory OPTION CONTRACT - a contract granting an
========================================= exclusive right in one person, for which he has
paid a separate consideration, to buy a certain
object within an agreed period
1. PREPARATORY
3 STAGES IN LIFE OF A CONTRACT OF SALE NOTE: There is no presumption of
A. Policitacion/Negotiation Stage - offer is consideration, it needs to be proven
floated, acceptance is floated but they do not
meet; the time when parties indicate their
OPTION- an unaccepted or unexercised
interest but no concurrence of offer and
contractual offer
acceptance.
B. Perfection - concurrence of all requisites;
meeting of the minds. Characteristics of Option Contract
C. Consummation - parties perform their
respective undertakings a. Not the contract of sale by itself, separate
and distinct

A. PREPARATORY b. Nominate
I. RULES:
c. Principal - but can be attached to other
1. Offer is Prior to acceptance, may principal contracts
floated be withdrawn at will by
offeror d. Onerous

2. Offer floated Without acceptance, e. Commutative

with a period extinguished when period
f. Unilateral – versus contract of sale which is
has ended and maybe
bilateral
withdrawn at will by offeror;
right to withdraw must not g. Preparatory
be arbitrary otherwise,
liable to damage under Art
19, 20, 21 of Civil Code
Consideration in an option contract may be
3. Offer floated Extinguished by anything of value, unlike in sale where it must
w/ condition happening/non-happening be price certain in money. (San Miguel
of condition Philippines v. Cojuangco)

CIVIL LAW REVIEWER Page 138 of

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 a
How EXERCISED: Notice of acceptance should be valid written principal contract (e.g. lease). RFR
communicated to offeror without actual becomes one of the considerations in the
payment as long as there is delivery of payment contract. If RFR is violated, and property sold to
another buyer in bad faith, the sale to the 3 rd
in consummation stage
party buyer is rescissible. The price for the 3rd
party buyer is to be the basis for the price of the
ELEMENTS OF VALID OPTION CONTRACT
sale back to the one with the RFR. Equatorial
Dev’t v. Mayfair Theater, [370 SCRA 56]
a. Consent – meeting of the minds
b. Subject matter – an option right, or accepted
Effect of new doctrine: turned the world of
unilateral offer to buy, or accepted unilateral
policitacion upside down because while valid
offer to sell:
option contract is not subject to specific
i. a determinate object
performance, right of first refusal which does not
ii. for a price certain (including manner of
even have a separate consideration may be
payment)
subject to specific performance
c. Prestation – a consideration separate from
Recognizes recovery of damage based on abuse
purchase price for option given of rights doctrine

SITUATIONS IN AN OPTION CONTRACT: OPTION CONTRACT DISTINGUISHED FROM

RIGHT OF FIRST REFUSAL
a. With separate consideration Option Contract Right of First
Refusal
i. Option contract is valid
Principal contract; Accessory; can not
ii. Offeror cannot withdraw offer until stands on its own stand on its own
after expiry period Needs separate Does not need
consideration separate consideration
iii. Subject to rescission, damages but Subject matter and There must be subject
not to specific performance because price must be valid matter but price not
this is not an obligation to give important
Not conditional Conditional
b. Without separate consideration Not subject to Subject to specific
i. OLD RULE - offer is still valid, but specific performance performance
option contract is void and not
subject to rescission, damages
=========================================
ii. NEW RULE: Right of first refusal TOPICS UNDER THE SYLLABUS
recognized as a valid offer F. FORMATION OF CONTRACT OF
SALE
RIGHT OF FIRST REFUSAL:
1. Creates a promise to enter into a 2. Perfection of Sales
contract of sale and it has no separate =========================================
consideration, not subject to specific
performance because there is no 2. PERFECTION OF SALES
contractual relationship here and it is
not an obligation to give (not a real GENERAL RULE: A contract of sale is perfected
contract) at the moment there is a meeting of the minds
upon the thing which is the object of the
2. New doctrine: May be subject to contract and upon the price; consensual
contract
specific performance.

EXCEPTION: When the sale is subject to a

The right of first refusal is only subject to suspensive condition
specific performance insofar as it is attached to

CIVIL LAW REVIEWER Page 139 of

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REQUIREMENTS:
1. When parties are face to face – when
there is absolute acceptance of an offer
that is certain
2. When thru correspondence or
telegram – when the offeror receives or
had knowledge of the acceptance
3. When the sale is subject to a
suspensive condition – from the
moment the condition is fulfilled
NOTES: Qualified acceptance: mere counter-
offer which needs to be absolutely accepted to
give rise to perfected contract of sale
Business ads are mere invitations to make an
offer except when it appears to be otherwise
Rules governing auction sales:
1. Sales of separate lots by auction are separate
contracts of sale
2. Sale is perfected by the fall of the hammer
3. Seller has the right to bid at the auction
provided such right was reserved and notice was
given to that effect
=========================================
TOPICS UNDER THE SYLLABUS
F. FORMATION OF CONTRACT OF
SALE
3. Formalities of the Contract
=========================================
3. FORMALITIES OF THE CONTRACT
Form not important in validity of sale
A. Sale being consensual, may be oral or
written, perfected by mere consent as to
price and subject matter
B. If particular form is required under the
statute of frauds:
- valid and binding between parties
but not binding to 3rd persons
CIVIL LAW REVIEWER
383
- Reason: purposes of
convenience only and not for validity
and enforceability; cause of action is
granted to sue and compel other
party to execute the document
When form is important for validity;
exception by specific provision of law;
1. Power to sell a piece of land granted to
an agent – otherwise VOID
2. Sale of large cattle; must also be
registered with Municipal treasurer –
otherwise VOID
3. Sale of land by non-Christian if not
approved by Governor– VOID
When form is important for enforceability
[STATUTE OF FRAUDS Article 1403 (2)]
a. Performed 1 Year: A sale agreement
which by its terms is not to be
performed within a year from the
making thereof;
b. 500 and Above: An agreement for the
sale of goods, chattels or things in
action, at a price not less than P500.00;
and
c. Sale Land: A sale of real property or of
an interest therein.
EXCEPTIONS TO COVERAGE OF STATUTE IN
SALES CONTRACTS:
1. WRITTEN: When there is a note or
memorandum in writing and subscribed
to by party or his agent (contains
essential terms of the contract)
2. PARTIAL EXECUTION: When there has
been partial performance/execution
(seller delivers with intent to transfer
title/receives price)
3. FAILURE TO OBJECT: When there has
been failure to object to presentation of
evidence (oral)
Page 140 of
 4. E-COMMERCE: When sales are effected
through electronic commerce
While a sale of land appearing in a private deed
is binding between the parties, it cannot be
considered binding on third persons if not
embodied in a public instrument and recorded in
the Registry of Deeds. Secuya v. Vda. De
Selma, [G.R. No. 136021, February 22,
2000]
END OF DISCUSSION ON TOPIC
E. FORMATION OF CONTRACT OF
SALE
================================
G. TRANSFER OF OWNERSHIP
================================
TOPICS UNDER THE SYLLABUS
G. Transfer of Ownership
1. Manner of Transfer (Arts. 1477,
1496-1501)
2. When delivery does not transfer
title
3. Kinds of delivery
4. Double sales (Art. 1544)
5. Property Registration Decree
5.1. Requisites for registration of
deed of sale in good faith
5.2. Accompanied by vendors
duplicate certificate of title,
payment of capital gains tax, and
documentary tax registration fees
=========================================
TOPICS UNDER THE SYLLABUS
CIVIL LAW REVIEWER
383
G. TRANSFER OF OWNERSHIP
1. Manner of Transfer
=========================================
1. MANNER OF TRANSFER
NOTE: Stage where parties both comply with
their obligation.
OBLIGATIONS OF THE SELLER
1. Preserve subject matter (proper diligence of a
good father of a family unless law or parties
stipulate another standard)
2. Deliver – transfer ownership and deliver
object
3. Deliver fruits and accessories
4. Warrant subject matter against eviction and
hidden defects
A. Delivery of the Thing - Transfer ownership
(tradicion) covers twin obligations of the seller
which are:
1. To transfer the ownership; and
2. To deliver a determinate thing
B. Delivery of the thing together with the
payment of the price, marks the consummation
of the contract of sale. PNB v. Ling, [69 Phil
611, October 5, 1927]
The act of delivery must be coupled with the
intention of delivering the thing and putting the
buyer under control. Norkis Distributor v. CA,
[195 SCRA 694, February 7, 1991]
=========================================
TOPICS UNDER THE SYLLABUS
G. TRANSFER OF OWNERSHIP
2. When Delivery does not transfer
Title
=========================================
2. WHEN DELIVERY DOES NOT TRANSFER
TITLE
=========================================
TOPICS UNDER THE SYLLABUS
G. TRANSFER OF OWNERSHIP
3. Different Kinds of Delivery
=========================================
3. DIFFERENT KINDS OF DELIVERY
Different Kinds of Delivery:
Page 141 of
1. Actual or real - when thing sold is placed in
the control and possession of the buyer
2. Legal or Constructive- can take several forms
and may be any manner signifying an
agreement that the possession is transferred
from the vendor to the vendee.
C. Different forms of Constructive Delivery -
Constructive delivery has same legal effect as
actual or physical delivery
Gives rise only to a prima facie presumption of
delivery which is destroyed when actual delivery
is not effected because of a legal impediment.
Ten Forty Realty v. Cruz
1. Traditio Longa Manu
Delivery of thing by mere agreement; when
SELLER points to the property without need of
actually delivering
2. Traditio Brevi Manu
Before contract of sale, the would be buyer was
already in possession of the would be subject
matter of sale (ex: as lessee)
3. Symbolic delivery
As to movables – ex: delivery of the keys to a
car
4. Constitutum possessarium
When at the time of the perfection of the
contract of sale, seller had possession of the
subject matter in the concept of owner and
pursuant to the contract, seller continues to hold
physical possession no longer in the concept of
an owner but as a lessee or any other form of
possession other than in the concept of owner.
5. Quasi-tradition
Delivery of rights, credits or incorporeal
property, made by:
Placing titles of ownership in the hands of
the buyer
Allowing buyer to make use of rights
6. Tradition by operation of law
The execution of a public instrument is
equivalent to delivery. But to be effective, it is
necessary that the vendor have such control
CIVIL LAW REVIEWER
383
over the thing sold that, at the moment of sale,
its material delivery could have been made.
Addison v. Felix, [38 Phil. 404]
A. WHEN EXECUTION OF PUBLIC
INSTRUMENT DOES NOT PRODUCE THE
EFFECTS OF DELIVERY
1. When there is stipulation to contrary,
execution does not produce effect of
delivery
2. When at the time of execution of
instrument, subject matter was not
subject to control of the seller
3. Subject matter should be within control
of seller; he should have capacity to
deliver at the time of execution of public
instrument when he wants to effect
actual delivery
4. Such capacity should subsist for a
reasonable time after execution of
instrument (reasonable time depends on
circumstances of persons, places and
things)
 The presumption of delivery when the sale is
made through a public instrument can be
rebutted by clear and convincing evidence.
Presumptive delivery through a public
instrument can be negated by the failure of
the vendee to take actual possession of the
land or the continued enjoyment of
possession by the vendor. Santos v.
Santos, [366 SCRA 395]
B. Delivery of Fruits and Accessions/
Accessories
Right to fruits and accessions/accessories accrue
from time sale is perfected but no real right over
it until it is delivered
C. Delivery Through Carrier
GENERAL RULE: Where the seller is authorized
or required to send the goods to the buyer,
delivery to the carrier is delivery to the buyer.
Page 142 of
 EXCEPTIONS: a contrary intention appears or
implied reservation of ownership under pars.
1,2, 3 of Art. 1503
I. FAST – FREE ALONG SIDE - When goods
delivered alongside the ship, there is already
delivery to the buyer (twin effects deemed
fulfilled)
II. FOB - FREE ON BOARD - Shipment – when
goods are delivered at ship at point of
shipment; delivery to carrier by placing
goods on vessel is delivery to buyer
Destination – when goods reach the port
even if not disembarked yet from the vessel,
there is delivery to the buyer
III. CIF – COST, INSURANCE, FREIGHT
 When buyer pays for services of carrier –
delivery to carrier is delivery to buyer;
carrier is agent of the buyer.
 When buyer pays seller the price – from
moment the vessel is at port of
destination, there is already delivery to
buyer.
See Arts. 1522, 1539, 1540, 1541, 1542,
1543.
D. TIME AND PLACE OF
DELIVERY
a. Follow stipulation in contact, or
b. Follow usage in trade, or
c. Seller’s place of business or his
residence
d. Specific goods – place where the
thing is
e. At reasonable hour
E. EFFECTS OF DELIVERY
CIVIL LAW REVIEWER
383
GENERAL RULE: The ownership of the thing
sold shall be transferred to the buyer upon the
actual or constructive delivery thereof.
EXCEPTION: When the contrary is stipulated
such in the cases of:
1. Contract to sell
2. Sale on acceptance/approval –
ownership only passes to the buyer
when:
 The buyer signifies approval to
the seller, or
 The buyer does not signify his
rejection but retains the goods
3. Sale on return – ownership passes to
the buyer but he may re-vest ownership
to the seller by returning the goods
within time fixed. If no time is fixed,
within reasonable time.
NOTE: Who Bears Expenses of Delivery? Seller
F. SALE BY
DESCRIPTION/SAMPLE
1. Sample – goods must correspond with
sample shown
2. Description – goods must correspond
with description or sample
3. Effect if there is no compliance:
RESCISSION may be availed of by the
buyer
G. OBLIGATIONS OF BUYER
1. Pay the price
o Buyer is obligated to pay price
according to terms agreed upon
regarding time, place and amount
o If payment of interest is stipulated –
must pay; if amount of interest not
mentioned – apply legal rate
Page 143 of
 o When buyer defaults – constitutes
breach: subject to specific
performance/rescission and
damages; interest to be paid also
from default
2. Accept delivery of thing sold
a. Where to accept: at time and place
stipulated in the contract; if none
specified – at the time and place of
delivery goods; there is acceptance
when:
i. He intimates to seller that he has
accepted
ii. When delivered and does any act
inconsistent with ownership of seller
iii. Retains without intimating to seller
that he has rejected
3. Sale of Goods on installment
1. Goods must be delivered in full,
except when stipulated
2. When not examined by buyer – not
accepted until examined or at least
had reasonable time to examine
 Acceptance of goods in general, absent
contrary express stipulation, does not
discharge seller from liability in case of
breach of warranties (unless no notice or
failure to give it within reasonable time)
4. When buyer has a right to refuse goods,
no need to return; shall be considered
as depositary; unless there is stipulation
to the contrary
=========================================
TOPICS UNDER THE SYLLABUS
G. TRANSFER OF OWNERSHIP
4. Double Sale
=========================================
4. DOUBLE SALE
CIVIL LAW REVIEWER
383
GENERAL RULE: FIRST IN TIME, PRIORITY IN
RIGHT
When does it apply: when not all requisites
embodied in Art. 1544 concur.
I. REQUISITES FOR DOUBLE SALES TO
EXIST: (VOCS)
1. Two or more sales transactions must
constitute valid sales;
2. Two or more sales transactions must
pertain to the same object or subject
matter;
3. Two or more buyers at odds over the
rightful ownership of the subject
matter must each represent
conflicting interests; and
4. Two or more buyers must each have
bought from the very same seller.
 If not all the elements are present for
Art. 1544 to apply, the priniciple of prior
tempore, potior jure or simply “he who is
first in time is preferred in right” should
apply. Undisputably, he is a purchaser in
good faith because at the time he
bought the real property, there was still
no sale to as a second vendee.
Consolidated Rural Bank v. CA, [Jan.
17, 2005]
II. RULES ACCORDING TO 1544:
1. MOVABLE
First to posses in good faith
2. IMMOVABLE
1. First to register in good faith
2. No inscription, first to possess in good
faith
3. No inscription and no possession in
good faith – Person who presents
oldest title in good faith
4. Good Faith - one who buys property
without notice that another person
has a right or interest in such
Page 144 of
 property; one who has paid price
before notice that another has claim
or interest
III. LIS PENDENS – notice that subject matter is
in litigation
IV. ADVERSE CLAIM – notice that somebody is
claiming better right
V. POSSESSION - Both actual or constructive
VI. REGISTRATION: any entry made in the
books of the registry, including both
registration in its ordinary and strict
sense, and cancellation, annotation, and
even marginal notes. It is the entry made
in the registry which records solemnly and
permanently the right of ownership and
other real rights.
 Registered under Torrens system 1544
applies
 Not registered under the Torrens
system 1544 still applies
If 2nd sale is a judicial sale (by way of levy on
execution), buyer merely steps into the
shoes of the judgment debtor. Outside of
such situation – must apply to conflicting
sales over the same unregistered parcel of
land. If sale 1 occurs when land is not yet
registered and sale 2 is done when land is
already registered – apply FIRST IN TIME,
PRIORITY IN RIGHT.
Good faith must concur with registration. To
be entitled to priority, the second purchaser
must not only establish prior recording of his
deed, but must have acted in good faith.
Gabriel v. Mabanta, [GR 142403, March
26, 2003]
CONDITION
1. Effect of Non-Fulfillment of Condition
The other party may
a. refuse to proceed with the contract
CIVIL LAW REVIEWER
383
b. proceed with the contract, waiving the
performance of the condition
If the condition is in the nature of a promise that
it should happen, the non-performance of such
condition may be treated by the other party as
breach of warranty.
2. Effect if buyer has already sold the
goods
GENERAL RULE: The unpaid seller’s right to
lien or stoppage in transitu remains even if
buyer has sold the goods
EXCEPTION:
 When the seller has given consent
thereto, or
 When the buyer is a purchaser in good
faith for value of a negotiable document
of title.
=========================================
TOPICS UNDER THE SYLLABUS
G. TRANSFER OF OWNERSHIP
4. Property Registration Decree
=========================================
4. PROPERTY REGISTRATION DECREE
END OF DISCUSSION ON TOPIC
G. TRANSFER OF OWNERSHIP
================================
H. RISK OF LOSS
================================
TOPICS UNDER THE SYLLABUS
H. Risk of Loss
1. General Rule (Arts. 1263, 1189)
2. When loss occurred before
perfection
3. When loss occurred at time of
perfection (Arts. 1493 and 1494)
4. When loss occurred after
perfection but before delivery
Page 145 of
 5. When ownership is transferred  Paras: BUYER
(Art. 1504)
 Tolentino: SELLER
=========================================
TOPICS UNDER THE SYLLABUS  Deterioration and fruits - Buyer
H. RISK OF LOSS bears loss;
=========================================

4. AFTER DELIVERY
1. GENERAL RULE
 Legal consequences from point of perfection  Res perit domino
are the same in both legal systems: upon
 Delivery extinguishes ownership vis-
perfection of an unconditional contract of
a-vis the seller and creates a new
sale involving specific or determinate subject
one in favor of the buyer
matter, the risk of loss deterioration and the
benefits of fruits and improvements, were fro
END OF DISCUSSION ON TOPIC
the account of the buyer.
H. RISK OF LOSS

 If Subject matter is GENERIC, Simply replace ================================

item. I. DOCUMENTS OF TITLE
================================
TOPICS UNDER THE SYLLABUS
WHO BEARS RISK OF LOSS/
DETERIORATION/ FRUITS: I. Documents of Title
1. Definition (Art. 1636)
1. BEFORE PERFECTION
2. Purpose of documents of title
 Res perit domino 3. Negotiable documents of title
4. Non-negotiable documents of
 Owner is seller so seller bears risk of title
loss 5. Warranties of seller of
documents of title (Art. 1516)
2. AT PERFECTION 6. Rules on levy/garnishment of
goods (Arts. 1514, 1519, 1520)
 Res perit domino
=========================================
 Contract is merely inefficacious TOPICS UNDER THE SYLLABUS
because loss of the subject matter I. DOCUMENTS OF TITLE
does not affect the validity of the 1. Definition
sale
=========================================
 Seller cannot anymore comply with
obligation so buyer cannot anymore 1. DEFINITION
be compelled.
DOCUMENTS OF TITLE
1. Not creation of law but by merchants to allow
3. AFTER PERFECTION BUT BEFORE them to deal with merchandise without having
DELIVERY to physically carry them around
2. Pertains to specific type of movables only:
 Loss – confused state GOODS

CIVIL LAW REVIEWER Page 146 of

383
 a. Documents of title serve two (2)
functions:
i. Evidence of existence and possession
of goods described therein
ii. Medium by which seller is able to
transfer possession of goods
3. A document of title which states that the
goods referred to therein will be delivered to the
bearer, or to the order of any person named in
such document
4. Negotiable by delivery or indorsement
=========================================
TOPICS UNDER THE SYLLABUS
I. DOCUMENTS OF TITLE
2. Purpose of documents of title
=========================================
2. PURPOSE OF DOCUMENTS
=========================================
TOPICS UNDER THE SYLLABUS
I. DOCUMENTS OF TITLE
3. Negotiable documents of title
=========================================
3. NEGOTIABLE DOCUMENTS OF TITLE
1. Deliver to bearer
(negotiation by mere delivery)
2. Deliver to specific
person or his order (negotiation by
endorsement + delivery)
Even if face of instrument says NON-
NEGOTIABLE, it is still NEGOTIABLE;
limiting words does not destroy
negotiability.
If order instrument and no endorsement
was made – equivalent to assignment
=========================================
TOPICS UNDER THE SYLLABUS
I. DOCUMENTS OF TITLE
4. Non-negotiable documents of title
CIVIL LAW REVIEWER
383
=========================================
4. NON-NEGOTIABLE DOCUMENTS OF
TITLE
Effects of Unauthorized Negotiation
The validity of the negotiation of a negotiable
document is not impaired by the fact that
negotiation was done in breach of duty or that
the owner of the document was deprived of the
same by loss, theft, accident, fraud, mistake if
the person to whom the document is delivered
is in good faith and without notice of the said
irregularities.
Important Considerations
1. Negotiation gives better right than
assignment
2. Assignee takes document with defects of
the assignor
3. Obligation of bailee – bailee is
immediately bound to the document
=========================================
TOPICS UNDER THE SYLLABUS
I. DOCUMENTS OF TITLE
5. Warranties of seller of documents
of title
=========================================
Warranties on Negotiation
1. The document is genuine
2. He has legal right to negotiate or
transfer it
3. He has knowledge of no fact which would
impair the validity or worth of the
document
4. He has right to transfer title to goods and
goods are merchantable/fit
=========================================
TOPICS UNDER THE SYLLABUS
I. DOCUMENTS OF TITLE
6. Rules on Levy or Garnishment of
Goods
=========================================
Page 147 of
6. Rules of Levy/Garnishment of Goods
Covered by Documents of Title
 NON NEGOTIABLE:
o Notification is operative act to transfer
title/possession of goods in favor
assignee
o Before notification – can still be
garnished
2. CONSUMMATION STAGE
d. Law on estoppel further bolsters it:
title passes by operation of law to
grantee when person who is not
owner of the goods sold delivers it
and later on acquires title thereto
e. Since valid, action to annul is
improper; there is already a
perfected contract

 NEGOTIABLE: a. Contract of sale is valid because it

has passed perfected stage, despite
o Cannot be levied or garnished when seller not being the owner or seller
documents are already with purchaser in having no authority to sell
good faith, unless:
b. What is void is the transfer of title/
o Document is first surrendered ownership did not pass

o Document is pounded by court c. Effect: buyer acquired no better right

than transferor
o Negotiation is enjoined
d. Legal effect: CAVEAT EMPTOR –
NEGOTIATION ASSIGNMENT BUYER BEWARE

Transferor/holder Acquires title to e. Sale of co-owner of whole property or

acquires title to goods against definite portion
goods transferor
GENERAL RULE:
Bailee has direct Acquires right to  Co-owner sells whole property prior to
obligation to holder notify bailee so partition – sale of property itself is void but
as if directly dealt that he acquires valid as to his spiritual share
with him obligation of bailee
to hold goods for  Co-owner sells definite portion to partition –
him sale is void as to other co-owner but valid as
to his spiritual share if the buyer would have
still bought such spiritual share had he
known that the definite portion sold would
A. SALE BY NON-OWNER OR BY ONE
not be acquired by him.
HAVINGVOIDABLE TITLE

1. PERFECTION STAGE
a. Sale by owner – VALID
b. Sale by non-owner – VALID;
c. Reason why both sales are valid:
ownership is necessary only at time
when transfer title to goods; at
perfection stage, no obligation on
part of seller to transfer ownership
EXCEPTIONS TO THE RULE ON THE EFFECT
OF SALE OF A DEFINITE PORTION BY A CO-
OWNER
1. Subject matter is indivisible in nature or by
intent;
2. Sale of a particular portion of a property is
with consent of other co-owners;
3. Co-owner sells 1 of 2 commonly-owned lands
and does not turn over ½ of the proceeds, other
co-owner, by law and equity, has exclusive claim
over remaining land.

CIVIL LAW REVIEWER Page 148 of

383
B. SALE BY SELLER WITH VOIDABLE TITLE
IN GOOD FAITH and WITHOUT NOTICE OF
THE DEFECT
1. PERFECTION STAGE
a. Valid sale – buyer acquires title of goods
2. CONSUMMATION STAGE
o Valid sale – if title has not yet been
avoided, buyer buys goods under following
condition:
 in good faith
 SPECIAL REMEDIES
REQUISITES:
1. Subject matter – goods
2. Seller is unpaid – not completely paid or
received negotiable instrument under a
condition and condition has been breached by
reason of dishonor
3. Physical possession is with seller
=========================================
TOPICS UNDER THE SYLLABUS
J. REMEDIES OF UNPAID SELLER
2. Remedies of unpaid seller

=========================================
 for value
2. REMEDIES OF UNPAID SELLER
 without notice of seller’s defect
of title The following are the special remedies of unpaid
seller:
END OF DISCUSSION ON TOPIC 1. Possessory lien
I. DOCUMENTS OF TITLE 2. Stoppage in transitu
3. Special right of re-sale
4. Special right to rescind
================================
NOTE: Hierarchical Application - only when
J. REMEDIES OF UNPAID unpaid seller has exercised possessory lien or
SELLER stoppage in transitu can the seller proceed with
================================ his other special rights of resale or to rescind.
TOPICS UNDER THE SYLLABUS Possessory Lien

J. Remedies of an Unpaid Seller 1. Seller not bound to deliver if buyer has

1. Definition of unpaid seller (Art. not paid him the price
1525) 2. Right to retain; cannot be availed when
2. Remedies of unpaid seller seller does not have custody

========================================= 3. Exercisable only in following

TOPICS UNDER THE SYLLABUS circumstances:
J. REMEDIES OF UNPAID SELLER
1. Definition of unpaid seller a. goods sold without stipulation as to
credit
=========================================
b. goods sold on credit but term of
1. DEFINITION OF UNPAID SELLER credit has expired

GENERAL RULE: Any man may not take law in c. buyer becomes insolvent
his own hands, must seek remedy through
courts. d. When part of goods delivered, may
still exercise right on goods
EXCEPTION: undelivered
 DOCTRINE OF SELF HELP

CIVIL LAW REVIEWER Page 149 of

383
 3. Notice by seller to buyer is not
Instances when possessory lien lost: required; notice to carrier is essential

1. seller delivers goods to carrier for

transmission to buyer without
reserving ownership in goods or right III. Special Right to Resell the Goods
to possess them
1. Goods are perishable
2. buyer or his agent lawfully obtains
possession of goods 2. stipulated the right of resale in case buyer
defaults in payment
3. Waiver
3. Buyer in default for unreasonable time
4. loses lien when he parts with goods
(still has stoppage in transitu) 4. Notice by seller to buyer not essential

5. notice by seller to buyer not essential

Why special? There are things which seller
cannot do in ordinary sale:
Stoppage In Transitu
A. ownership is with buyer but seller
 Goods are in transit can sell goods

 Requisites when goods are in transit B. title accorded to buyer is destroyed

even without court intervention
1. From the time goods are
delivered to carrier for purpose of
transmission to buyer Special Right to Rescind

2. Goods rejected by buyer and 1. Expressly stipulated

carrier continues to possess them
2. Buyer is in default for unreasonable time

When goods no longer in transit 3. Notice needed to be given by seller to buyer

1. Reached point of destination

2. Before reaching destination, buyer obtains
delivery of the goods
3. Goods are supposed to have been delivered to
buyer but carrier refused
Why special – ownership of goods already with
buyer but seller may still rescind; ownership is
destroyed even without court intervention but in
ordinary sale, need to go to court to destroy
transfer of ownership

4. Shown by seller that buyer is insolvent (failure Remedies of Buyer

to pay when debts become due)
How is right exercised
1. Obtain actual possession of goods
2. Give notice of claim to carrier / bailee
in possession thereof
When Seller fails to deliver, buyer may seek
SPECIFIC PERFORMANCE WITHOUT GIVING
SELLER OPTION TO RETAIN GOODS ON PAYMENT
OF DAMAGES
END OF DISCUSSION ON TOPIC
J. REMEDIES OF UNPAID SELLER
================================

CIVIL LAW REVIEWER Page 150 of

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K. PERFORMANCE OF to sell the buyer has the
following options:
CONTRACT
================================ i. Accept per contract and reject
TOPICS UNDER THE SYLLABUS the rest

ii. Accept the whole – pay price

K. Performance of Contract
stipulated
1. Delivery of thing sold
(1) Sale of movables (Arts. 1522, iii. Eject whole if subject matter is
1537, 1480) indivisible
(2) Sale of immovables (Arts.
d. When the seller delivers to
1539, 1543) the buyer the goods he
(3) Inspections and Acceptance contracted to sell, MIXED with
2. Payment of price goods of a different
description not included in
========================================= the contract, buyer has 2
TOPICS UNDER THE SYLLABUS options:
K. PERFORMANCE OF CONTRACT
1. Delivery of thing sold i. Accept good w/c are in
accordance with contract and
========================================= reject the rest

1. DELIVERY OF THING SOLD ii. Reject goods entirely – if

indivisible
A. MOVABLES
Obligations of a Vendor (Art. 1537)
a. Delivery of thing plus accessories
and accessions in the condition in 1. To deliver the subject matter
which they were upon the perfection
of the contract including the fruits 2. To deliver the fruits and accessories

b. When the seller delivers to the buyer  Those which pertains to the vendee
a quantity of goods LESS than he from the day on the perfection of
contracted to sell, buyer has the contract
option to reject or accept it.
3. To preserve the subject matter
a.When accepts with knowledge
that seller is not going to perform  In the condition in which they were
contract in full, he must pay at upon the perfection of the contract.
price stipulated

b. When accepts and Article 1480. Any injury to or benefit from the
consumes before knowledge that thing sold, after the contract has been
buyer will not perform contract in perfected, from the moment of the perfection of
full, liable only for fair value of the contract to the time of delivery, shall be
goods delivered governed by articles 1163 to 1165, and 1262.

c. When seller delivers to the This rule shall apply to the sale of fungible
buyer a quantity of goods things, made independently and for a single
LARGER than he contracted price, or without consideration of their weight,
number, or measure.

CIVIL LAW REVIEWER Page 151 of

383
Should fungible things be sold for a price fixed
according to weight, number, or measure, the
risk shall not be imputed to the vendee until
they have been weighed, counted, or measured
and delivered, unless the latter has incurred in
delay.
B. IMMOVABLES
o Sold per unit or number
i. If the sale should be made with
statement of its area, rate at
certain price, deliver all that may
have been stated in the contract
if impossible, remedies of buyer:
ii. If Less in area:
 Rescission
 Proportional reduction of price:
LACK IN AREA SHLD NOT BE LESS
THAN 1/10 OF AREA AGREED
UPON
iii. If Greater in area:
 Accept per stipulation and
reject the rest
 Accept whole area – pay
at contract rate
 Not applicable to judicial
sales
iv. Sold for lump sum
 When price per unit
indicated
 If area delivered is either
greater or lesser – price will
not be adjusted accordingly
 The actions arising from above in delivery of
immovables shall prescribe in six months,
counted from the day of delivery.
 ================================
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C. INSPECTIONS AND ACCEPTANCE
Accept delivery of thing sold
 Where to accept: at time and
place stipulated in the contract; if
none specified – at the time and
place of delivery goods;
 There is acceptance when: He
intimates to seller that he has
accepted
 When delivered and does any
act inconsistent with ownership
of seller
 Retains without intimating to
seller that he has rejected
=========================================
TOPICS UNDER THE SYLLABUS
K. PERFORMANCE OF CONTRACT
2. Payment of price
=========================================
2. PAYMENT OF PRICE
 Buyer is obligated to pay price according to
terms agreed upon regarding time, place and
amount
 If payment of interest is stipulated – must pay; if
amount of interest not mentioned – apply legal
rate
not
When buyer defaults – constitutes breach:
subject to specific performance/rescission and
damages; interest to be paid also from default
END OF DISCUSSION ON TOPIC
K. PERFORMANCE OF CONTRACT
================================
L. WARRANTIES
Page 152 of
TOPICS UNDER THE SYLLABUS
L. Warranties
1. Express warranties
2. Implied warranties (Art. 1547)
3. Effects of warranties
4. Effects of waivers
5. Buyer’s options in case of breach
of warranty (Art. 1599)
=========================================
TOPICS UNDER THE SYLLABUS
L. WARRANTIES
1. Express warranties
=========================================
1. EXPRESS WARRANTIES
I. Condition
1. When a contract contains a condition, the
non happening of which would not constitute
a breach but extinguishes the obligation
2. However, if party to the sales contract has
promised that the condition should happen
or be performed, the non-performance of
which may be treated by parties as breach
II. Warranties
A statement or representation made by the
seller contemporaneously and as a part of the
contract of sale, having reference to the
character, quality, or title of the goods, and by
which he promises or undertakes to insure that
certain facts are or shall be as he then
represents
Express Warranties
REQUISITES:
1. It must be an affirmation of fact or any
promise by seller relating to the subject
matter of sale
2. Natural tendency of affirmation or
promise is to induce buyer to purchase
subject matter
CIVIL LAW REVIEWER
383
3. Buyer purchases the subject matter
relying thereon
4. When breached, seller is liable for
damages
=========================================
TOPICS UNDER THE SYLLABUS
L. WARRANTIES
2. Implied warranties
=========================================
2. Implied Warranties
Deemed included in all contracts of sale whether
parties are actually aware or not, whether they
were intended or not; by operation of law
1. Warranty that seller has a right to sell
 Refers to consummation stage since
in consummation stage, it is where
ownership is transferred by tradition
 Not applicable to sheriff, auctioneer,
mortgagee, pledge
2. Warranty against eviction
a. Implied, unless contrary provision
appears in contract
b. When ownership is transferred, buyer
shall enjoy the legal and peaceful
possession of the thing
c. Requisites of breach of warranty against
eviction:
 Buyer is evicted in whole or in part
from the subject matter of sale
 There is a final judgment
 Basis of eviction is a right prior to
sale or an act imputable to vendor
 Seller has been summoned in the
suit for eviction at the instance of
buyer; or made 3rd party defendant
Page 153 of
 through 3rd party complaint brought
by buyer
Vendor’s liability shall consists of (Total
Eviction) (VICED)
1. Value of the thing at the time of eviction;
2. Income or fruits if he has been ordered to
deliver the to the party who won the suit
3. Cost of the suit
4. Expenses of the contract; and
5. Damages and interests if the sale was in bad
faith
Partial Eviction
1. To enforce vendor’s liability for eviction
(VICED);
2. To demand rescission of contract.
4. Warranty against hidden defects
a. No appeal needed nor a need for buyer
to resist eviction for right to accrue; it is
enough that the aforementioned
requisites are complied with
b. Warranty cannot be enforced until
aforementioned requisites concur
c. Applies to judicial sale; judgment debtor
responsible for eviction unless otherwise
decreed in judgment
d. Vendor not liable for eviction if adverse
possession had been commenced before
sale but prescriptive period is completed
after transfer
e. Rights of buyer when deprived of only
part of the subject matter but would not
have bought such part if not in relation
for the whole:
1. Rescission
2. Mutual restitution
3. Warranty against encumbrances (non-
apparent)
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REQUISITES:
a. Immovable sold is encumbered with non–
apparent burden or servitude not
mentioned in the agreement
b. Nature of non–apparent servitude or
burden is such that it must be presumed
that the buyer would not have acquired it
had he been aware thereof
c. When breach of warranty exist: buyer may
ask for rescission of indemnity
d. Warranty not applicable when non–
apparent burden or servitude is recorded
in the Registry of Property – unless there is
express warranty that the thing is free
from all burdens and encumbrances
 SELLER does not warrant patent
defect; caveat emptor
 Except when hidden
1. subject matter may be movable or
immovable
2. nature of hidden defect is such that it
should render the subject matter
unfit for the use of which it was
intended or should diminish its
fitness
3. had the buyer been aware, he would
not have acquired it or would have
given a lower price
a. When defect is visible or even if not
visible but buyer is an expert by reason
of his trade or profession, seller is not
liable
b. Obligation of seller for breach depends
on whether he has knowledge of such
defect or not
Page 154 of
 c. Seller is aware – seller should return
price and refund expenses of contract
with damages
d. Seller is not aware - seller should return
price and interest and refund expenses
(no damages)
e. Buyer may elect between withdrawing
from contract or demanding
proportionate reduction of price with
damages in either case
f. Applicable to judicial sale except that
judgment debtor not liable for damages
g. Action to prescribe 6 months from
delivery of subject matter
5. Defects on animals
a. Even in the case of professional
inspection but hidden defect is of such
nature that expert knowledge is not
sufficient to discover it - defect shall be
considered as REDHIBITORY
b. If vet fails to discover through ignorance
or bad faith, he is liable for damages
c. Sale of animals on teams (2 or more)
 When only one is defective, only one
is prohibited and not the others
 Exception: when it appears buyer
would not have purchased the team
without the defective one
 Apply to sale of other things
d. Animals at fair or public auction
 No warranty against hidden defects
e. Sale of animals with contagious disease
is void
f. Sale of unfit animals
 Void if use / service for which they are
acquired has been stated in the
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383
contract and they are found to be
unfit therefor
 Prescription of action: 40 days from
date of delivery to buyer
 If sale is rescinded, animals to be
returned in same condition when
they were acquired; buyer shall
answer for injury / loss due to his
fault
 Buyer may elect between
withdrawing from sale and
demanding proportionate reduction
of price with damages in either case
Specific Implied Warranties in the Sale of
Goods
A. Warranty as to fitness and quality;
requisites:
1. Buyer makes known to seller the
particular purpose for which goods are
acquired and it appears that the buyer
relied on the seller’s skill or judgment
2. Goods are bought by description from
seller who deals in goods of that
description
3. in case of sale of specified article under its
patent or trade name, no warranty unless
there is a stipulation to the contrary
4. measure of damage: difference between
value of goods at time of delivery and
value they would have had if they had
answered to the warranty
SALE OF GOODS BY SAMPLE
If seller is a dealer in goods of that kind, there is
an implied warranty that the goods shall be free
from defect rendering them unmerchantable
which would not be apparent on reasonable
examination of the sample
=========================================
Page 155 of
TOPICS UNDER THE SYLLABUS Buyer’s Option in Case of Breach of
L. WARRANTIES Warranty
3. Effects of warranties 1. Accept goods and set up breach of
warranty by way of recoupment in
========================================= diminution or extinction of the price.

3. EFFECTS OF WARRANTIES 2. Accept goods and maintain action against

=========================================
TOPICS UNDER THE SYLLABUS
L. WARRANTIES
4. Effects of waivers
=========================================
4. EFFECTS OF WAIVER
Waiver in Warranty against eviction -
Parties may increase or diminish implied
warranty against eviction; but effect depends on
good faith or bad faith on the part of the seller.
o Seller in bad faith and there is waiver
against eviction – null and void
o Buyer without knowledge of a particular
risk, made general renunciation of
warranty – not waiver but merely limits
liability of seller in case of eviction (pay
value of subject matter at time of eviction)
o Buyer with knowledge of risk of eviction
assumed its consequences and made a
waiver – vendor not liable (applicable only
to waiver of warranty against eviction)
1. Waiver to a specific case of eviction -
wipes out warranty as to that specific
risk but not as to eviction caused by
other reasons.
Waiver against Hidden Defects
i. If there has been a stipulation exempting
seller from hidden defects
ii. If seller not aware of hidden defects –
loss of the thing due to such defect will
not make seller liable
iii. If seller aware – waiver is in bad faith,
thus seller still liable
seller for damages
3. Refuse to accept goods and maintain
action against seller for damages
4. Rescind contract of sale and refuse to
receive goods/return them when already
received.
When rescission by buyer not allowed:
1. If the buyer accepted the goods knowing
the breach of warranty WITHOUT protest
2. If he fails to notify the seller within a
reasonable time of his election to rescind
3. If he fails to return or offer to return the
goods in substantially as good condition
as they were in at the time of the
transfer of ownership to him
END OF DISCUSSION ON TOPIC
L. WARRANTIES
================================
M. BREACH OF CONTRACT
================================
TOPICS UNDER THE SYLLABUS
M. Breach of Contract
1. Remedies of the seller (Arts.
1636, 1594)
(1) Sale of movables
2. Recto Law: sale of movables on
installment (Arts. 1484-1486)
3. Sale of immovables
(1) PD 957, sec. 23, 24
(2)Maceda Law: sale of
immovables on Installment
4. Remedies of the Buyer
(1) Sale of movable

CIVIL LAW REVIEWER Page 156 of

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 (2) Sale of immovables
=========================================
TOPICS UNDER THE SYLLABUS
M. BREACH OF CONTRACT
1. Remedies of the seller
=========================================
1. REMEDIES OF THE SELLER
Remedies of Unpaid Seller (Art. 1484)
1. Exact fulfillment should the buyer fail to pay.
2. Cancel the sale if buyer fails to pay 2 or
more installments.
3. Foreclose on chattel mortgage if buyer fails
to pay 2 or more installments
=========================================
TOPICS UNDER THE SYLLABUS
M. BREACH OF CONTRACT
2. Recto Law: Sale of Movables on
Installment
=========================================
2. RECTO LAW: SALE OF MOVABLES ON
INSTALLMENT
Incidents:
1. If buyer chooses foreclosure, no further
action against buyer to recover any
unpaid balance of the price
2. When is the law applicable? Sale on
movables by installment
o Sale on installment:
payment by several partial payments
in small amount
Rationale of the law: Buyer is lulled into
thinking that he could afford because of small
amounts per installment and at the same time
remedy abuse of commercial houses
Nature of remedies: alternative and
cumulative
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Coverage: sale and financing transaction and
contracts of lease with option to purchase
GENERAL RULE: If already chose specific
performance, can no longer choose other
remedies
EXCEPTION: After choosing, it has become
impossible, rescission may be pursued
 The fact that the seller did not foreclose
the chattel mortgage constituted on the
movable purchased on credit, but opted
specific performance, with a plea for a
writ of replevin, does not amount to a
foreclosure of the chattel mortgage to be
covered by Art. 1484. Tajanglangit v.
Southern Motors, [101 Phil. 606]
Rescission
1. When chosen, there is correlative obligation
to restitute
2. But stipulations that installments paid are
forfeited are valid if not unconscionable
3. Deemed chosen when:
- Notice of rescission is sent
- Takes possession of subject matter of sale
- Files action for rescission
- Barring effect on recovery of balance
Foreclosure
i. Barring effect on recovery of balance
ii. Extent of barring effect: purchase price
iii. Exception: mortgagor refuses to deliver
property to effect foreclosure, recover also
expenses incurred in attorneys fees, etc.
(Perverse Buyer-Mortgagor)
=========================================
TOPICS UNDER THE SYLLABUS
M. BREACH OF CONTRACT
3. Sale of Immovables
=========================================
3. SALE OF IMMOVABLES
not Remedies of Seller
Page 157 of

Anticipatory breach
uyer paid at least 2 years installment
1. Seller has reasonable grounds to fear loss of
immovable sold and its price, sue for
RESCISSION
2. Non–payment of price, sue for RESCISSION
IMMOVABLES (BY INSTALLMENT)
Art 1592 – Applies only to contract of sale
MACEDA LAW
1. applies to COS and CTS and Financing
2. Coverage: REAL ESTATE – defined space
vs. CONDO – not defined space (w/
common areas)
1. Excluded:
o
B
1. Pay without interest the balance
within grace period of 1 month for
every year of installment payment
2. Grace to be exercised once every 5
years
3. When no payment - cancelled; buyer
entitled to 50% of what he has
paid + if after 5 years of
installments, 5% for every year but
not to exceed 90% of total payments
made
4. Cancellation to be effected 30 days
from notice and upon payment of
cash surrender value

a. Industrial o Buyer paid less than 2 years

installment
b. Commercial
1. 1st Grace period is 60 days from date
c. Sale to tenants under agrarian installment became due
laws
2. 2nd grace period of 30 days from
notice of cancellation/demand for
========================= rescission
================
 buyer can still pay within the 30
TOPICS UNDER THE SYLLABUS
M. BREACH OF CONTRACT day period
3. Remedies of the Buyer  with interest
=========================================
 No payment after 30 day period,
4. REMEDIES OF THE BUYER can cancel.

 In case of subdivision or condo projects,

suspend payment.
Purpose of law - Protect buyers in
installments against oppressive conditions
 If real estate developer fails to comply
with obligation according to approved Notice needed - waiver thereof if
plan: oppressive
- RESCIND Applies to contracts even before law
was enacted
- SUSPEND PAYMENT UNTIL SELLER
COMPLIES
 Stipulation to contrary is void

Rights Granted to Buyers:

CIVIL LAW REVIEWER Page 158 of

383
 Other rights:
o Sell rights to another
o Reinstate contract by updating
during grace period and before
actual cancellation
o Deed of Sale to be done by notarial
act
o To pay in advance any installment or
the full balance of price anytime
without interest
o Have full payment annotated
certificate of title
REMEDY OF RESCISSION IN CONTRACTS
COVERING IMMOVABLES (Articles 1191 &
1592)
================================
N. EXTINGUISHMENT OF SALE
================================
TOPICS UNDER THE SYLLABUS
N. Extinguishment of Sale
1. Causes (Arts. 1600, 1231)
2. Conventional redemption (Art.
1601)
3. Equitable mortgage (Arts. 1602-
1604)
4. Distinguish from option to buy
in (Art. 1602)
5. Period of redemption (Art. 1606)
6. Exercise of the right to redeem
(Art. 1616)
7. Legal redemption (Art. 1619)
8. Age redemption (Art. 1619)

GENERAL RULE: Judicial =========================================

TOPICS UNDER THE SYLLABUS
EXCEPTION: Extra judicial Rescission allowed N. EXTINGUISHMENT OF SALE
but SUBJECT to COURT Confirmation. 1. Causes
=========================================
a. allowed if stipulated; burden to sue
shifts to party who does not like 1. CAUSES
rescission
I. GROUNDS (same grounds whereby
b. court still has final say as to propriety obligations in general are extinguished)
1. Payment or performance
of rescission
2. Loss of the subject matter
c. Forfeiture of amounts valid being in
nature of penal clause 3. Condonation or remission

 Contract of Sale – Rescission is 4. Confusion or merger of rights of creditor

Applicable and debtor

 Contract to Sell – Rescission not 5. Compensation

Applicable
6. Novation
 Non–payment of purchase price
would automatically cancel even 7. Annulment
without further action for rescission
8. Rescission
Exception: If subject matter is residential lots,
9. Fulfillment of a resolutory condition
law on rescission applies when there is
substantial breach. Maceda law applies. 10. Prescription
END OF DISCUSSION ON TOPIC
M. BREACH OF CONTRACT

CIVIL LAW REVIEWER Page 159 of

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=========================
================
TOPICS UNDER THE SYLLABUS
N. EXTINGUISHMENT OF SALE
2. Conventional Redemption
=========================================
2. CONVENTIONAL REDEMPTION
 Only extinguishes obligations pertaining
to contract of sale, not extinguish
contract itself; only applies to contract of
sale
 The right which the vendor reserves to
himself to reacquire the property sold
provided he returns to the vendee:
a. The price of the sale,
b. Expenses of contract,
c. Other legitimate payments,
d. The necessary and useful expenses
made on the thing sold
e. And fulfills other stipulations which may
have been agreed upon
 The right is exercised only be seller in
whom right is recognized in the contract
or by any person to whom right was
transferred; must be in the same
contract
=========================
================
TOPICS UNDER THE SYLLABUS
N. EXTINGUISHMENT OF SALE
3. Equitable Mortgage
=========================================
3. EQUITABLE MORTGAGE
One which lacks the proper formalities, form of
words, or other requisites prescribed by law for a
mortgage, but shows the intention of the parties
to make the property subject of the contract as
security for a debt and contains nothing
CIVIL LAW REVIEWER
383
impossible contrary to law. Cachola v. CA,
[208 SCRA 496]
1.A contract with right to repurchase is
deemed to be an equitable mortgage if
the following requisites concur (IPERTI):
a. Price of sale with right to repurchase is
unusually inadequate
b. Seller remains in possession as lessee or
otherwise
c. Upon or after expiration of right to
repurchase, another instrument
extending the period of redemption or
granting new period is executed
d. Buyer retains for himself a part of the
purchase price
e. Seller binds himself to pay taxes on
thing sold
f. Real intention of parties is to secure the
payment of a debt or performance of
other obligation
NOTE: In case of doubt – in determining
whether it is an equitable mortgage or a sale a
retro, the sale shall be construed as an equitable
mortgage.
2.What to Look for in Determining Nature of
Contract
a. Language of the contract
b. Conduct of parties – to reveal real intent
3.Remedy available to vendor: ask for
reformation of contract
4.Rationale behind provision on Equitable
Mortgage:
a. Circumvention of usury law
b. Circumvention of prohibition against
pactum commissorium – creditor cannot
appropriate the things given by way of
pledge or mortgage; remedy here is
foreclosure. The real intention of parties
is that the pretended purchase price is
Page 160 of
 money loaned and to secure payment of
the loan, sale with pacto de retro is
drawn up
=========================
================
TOPICS UNDER THE SYLLABUS
N. EXTINGUISHMENT OF SALE
4. Distinguish from option to buy
=========================================
4. DISTINGUISH FROM OPTION TO BUY
OPTION TO PURCHASE - Right to repurchase
the thing sold granted to the vendor in a
separate instrument from the deed of sale
=========================
================
TOPICS UNDER THE SYLLABUS
N. EXTINGUISHMENT OF SALE
5. Period of Redemption
=========================================
5. PERIOD OF REDEMPTION
a. No period agreed upon – 4 years from date
of contract
b. Period agreed upon – should not exceed 10
years; if it exceeded, valid only for the first
10 years.
c. When period to redeem has expired and
there has been a previous suit on the
nature of the contract – seller still has 30
days from final judgment on the basis that
contract was a sale with pacto de retro:
d. Rationale: no redemption due to
erroneous belief that it is equitable
mortgage which can be extinguished by
paying the loan.
e. This refers to cases involving a transaction
where one of the parties contests or denies
that the true agreement is one of sale with
the right to repurchase; not to cases where
the transaction is conclusively a pacto de
retro sale.
CIVIL LAW REVIEWER
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f. Example: Where a buyer a retro honestly
believed that he entered merely into an
equitable mortgage, not a pacto de retro
transaction, and because of such belief he
had not redeemed within the proper
period.
NOTE: When period has expired and seller
allowed the period of redemption to expire –
seller is at fault for not having exercised his
rights so should not be granted a new period
Tender of payment is SUFFICIENT to compel
redemption, but is not in itself a payment that
relieves the vendor from his liability to pay the
redemption price. Paez v. Magno, G.R. No. :-
792, April 27, 1949
=========================
================
TOPICS UNDER THE SYLLABUS
N. EXTINGUISHMENT OF SALE
6. Exercise of the Right to Redeem
=========================================
EFFECT WHEN THERE IS NO REDEMPTION
MADE
i. Jurisprudence before the NCC: buyer a
retro automatically acquires full
ownership
ii. Under present art 1607: there must be
judicial order before ownership of real
property is consolidated in the buyer a
retro
HOW IS REDEMPTION EFFECTED
Seller a retro must first pay the following:
o The price of the thing sold
o Expenses of the contract and other
legitimate payments made by reason of
the sale
o Necessary and useful expenses made on
the thing sold
o Valid tender of payment is sufficient
Page 161 of
 o Mere sending of notice without valid
tender is insufficient PRE-EMPTION REDEMPTION
1. Arises before sale Arises after sale
o Failure to pay useful and unnecessary 2. No rescission There can be rescission
because no sale exists of the original sale
expenses entitles vendee to retain land
yet
unless actual reimbursement is made 3. The action is Action is directed
directed against against buyer
prospective seller
IN CASE OF MULTI-PARTIES
1. When an undivided thing is sold because
co-owners cannot agree that it be
allotted to one of them – vendee a retro
may compel the vendor to redeem the
whole thing =========================
2. When an undivided thing is sold by co- ================
owners / co-heirs, vendors a retro may TOPICS UNDER THE SYLLABUS
only exercise his right over his respective N. EXTINGUISHMENT OF SALE
share; vendee a retro may demand that 7. Legal Redemption
they must come to an agreement first =========================================
and may not be compelled to consent to
7. LEGAL REDEMPTION
a partial redemption
LEGAL REDEMPTION
3. When rights of co-owners over an
 Only applies to contracts of sale.
undivided thing is sold as regards to
their own share – vendee retro cannot  The right to be subrogated upon the same
compel one to redeem the whole terms and conditions stipulated in the
property contract, in the place of one who acquires
the thing by (1) purchase OR (2) by dation in
4. Should one of the co-heirs/co-owners
payment OR (3) by other transaction
succeed in redeeming the property –
whereby ownership is transmitted by
such vendor a retro shall be considered
onerous title.
as trustee with respect to the share of
the other co-owners/co-heirs.
 Types of Legal Redemption:

FRUITS
a. Among co-heirs
What controls is the stipulation between parties
as regards the fruits;
i. Any of the heirs sell his hereditary
If none: rights to stranger before partition
a. At time of execution of the sale a retro
there are visible or growing fruits – there ii. Any of the co-heirs may be subrogated
shall be no pro-rating at time of to the rights of the purchaser by
redemption if no indemnity was paid by redeeming said hereditary right:
the vendee a retro reimburse buyer of the price of the
sale
b. At time of execution sale a retro there be
no fruits but there are fruits at time of iii. Co-heirs has 1 month from receipt of
redemption – pro-rated between vendor notice in writing
a retro and vendee a retro giving the
vendee a retro a part corresponding to b. Among co-owners
the time he possessed the land.

CIVIL LAW REVIEWER Page 162 of

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 i. any or all of co-owners sells their
shares to 3rd person
ii. any co-owner may exercise right of
redemption by paying reasonable price
of property to the buyer
iii. if 2 or more co-owners desire to
exercise right of redemption, they may
only do so in proportion to the share
they respectively have in thing owned
in common
c. Among adjoining owners
i. Rural land
o Where piece of rural land has an area not
exceeding 1 hectare, adjoining owner
has right to redeem unless grantee does
not own a rural land
o If two or more adjacent lot owners desire
to exercise right to redeem, owner of
adjoining lot with smaller area shall be
preferred
o If two or more adjacent lit owners desire
to exercise right to redeem and both
have same lot area, one who first
requested shall be granted
ii. Urban land
o when piece of land is small and
cannot be used for any practical
purpose and bought merely for
speculation, owner of adjoining land
can redeem
o 2 or more owners of adjoining lot
desire to exercise right to redeem,
owner whose intended use is best
justified shall be preferred.
d. Sale of credit in litigation
i. when a credit or other incorporeal right
in litigation is sold, debtor shall have a
right to extinguish it by reimbursing
the assignee for the price the latter
CIVIL LAW REVIEWER
383
paid therefor plus judicial costs,
interest
ii. debtor may exercise right within 30
days from the date assignee demands
payment from him
Other Instances When Right of Legal
Redemption is Granted
a. Redemption of homesteads
b. Public Land Act
c. Land acquired under free patent
homestead subject to repurchase by
wife, legal heirs within 5 years from date
of conveyance granted by law, need not
be stipulated
1. Redemption in tax sales
i. in case of tax delinquency/failure to
pay tax assessments, property is
foreclosed
ii. delinquent payer has 1 year from date
of sale to redeem by paying to the
revenue District Officer the amount of
tax delinquencies, and interest or
purchase price.
2. Redemption by judgment debtor - 1 year
from date of registration of certificate of
sale to redeem by paying purchaser at
public auction with interest
3. Redemption in extrajudicial foreclosure -
1 year from date of sale and registration
4. Redemption in judicial foreclosure of
mortgage - no right to redeem is granted
to debtor mortgagor except when
mortgagee is bank of a banking
institution 90 days after finality of
judgment
5. When Period of Redemption Begins to
Run - Right of legal pre-emption of
redemption shall be exercised within 30
days from notice by the seller
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 6. How exercised - tender of payment is not
necessary; offer to redeem is enough.
i. There is no prescribed form for an
offer to redeem to be properly
effected. Hence, it can either be
through a formal tender with
consignation of the redemption price
within the prescribed period. What is
paramount is the availment of the
fixed and definite period within which
to exercise the right of legal
redemption.
ii. Deeds of sale are not to be recorded
in Register of Deeds unless
accompanied by affidavit of seller
that he has given notice to all
possible redemptioners
NOTE: Written notice under Art. 1623 is
mandatory for the right of redemption to
commence (PSC vs. Sps. Valencia, [August
19, 2003].
GENERAL RULE: Actual knowledge
notwithstanding, written notice is still
required
EXCEPTION: When actual knowledge is
acquired by co-heirs living in same land with
purchaser, or co-owner was middleman in sale
to 3rd party.
o Art. 1623 does not prescribe any
distinctive method for notifying the
redemptioner. Etcuban v. CA, [148
SCRA 507]
=========================
================
TOPICS UNDER THE SYLLABUS
N. EXTINGUISHMENT OF SALE
8. Age Redemption
=========================================
9. ASSIGNMENT (See Arts . 1624 – 1634)
I. ASSIGNMENT: The owner of a credit
transfers to another his rights and actions in
CIVIL LAW REVIEWER
383
consideration of a price certain in money or
its equivalent
1. Transfers the right to collect the full
value of the credit, even if he paid a
price less than such value
2. Transfers all the accessory rights (e.g.
guaranty, mortgage, pledge, preference)
3. Debtor can set up against the assignee
all the defenses he could have set up
against the assignor
II. WHAT MAKES ASSIGNMENT
DIFFERENT FROM SPECIES SALE?
1. Technical term but basically a sale
2. Sale of credits and other incorporeal
things
III. EFFECTS OF ASSIGNMENT
1. Lack of knowledge or consent of debtor
not essential for validity but has legal
effects (“meeting of minds” in
assignment contemplates that between
assignor of the credit and his assignee)
2. Assignment of rights made w/o
knowledge of debtor – debtor may set up
against assignee the compensation w/c
would pertain to him against assignor of
all credits prior to assignment and of
later ones until he had knowledge of the
assignment
3. Debtor has consented to assignment –
cannot set up
4. Compensation unless assignor was
notified by debtor that he reserved his
right to the compensation
5. Debtor has knowledge but no consent -
may still set up compensation of debts
previous to assignment but not the
subsequent ones.
IV. TRANSFER OF OWNERSHIP
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 1. By tradition and not by perfection
2. By execution of public instrument
because intangibles cannot be physically
transferred
3. Without necessity of delivering the
document evidencing the credit.
4. This rule does not apply to negotiable
documents and documents of title which
are governed by special laws.
V. EFFECT OF PAYMENT OF DEBTOR
AFTER ASSIGNMENT OF CREDIT
1. Before Notice of the Assignment
Payment to the original creditor is
valid and debtor shall be released
from his obligation
2. After Notice
a. Payment to the original creditor is
not valid as against the assignee
b. He may be made to pay again by the
assignee
VI. WARRANTIES OF THE ASSIGNOR OF
CREDIT
1. NO warranty against hidden defect - N/A
because intangibles has no physical
existence
2. He warrants the existence and legality of
credit - there is warranty except when
expressly sold as a doubtful account
a. NO warranty as to the solvency of
debtor unless it is expressly
stipulated OR unless the
insolvency was already existing
and of public knowledge at the
time of the assignment
b. Warranty shall last for 1 year only
c. One who assigns inheritance
right w/o enumerating rights shall
CIVIL LAW REVIEWER
383
be answerable for his character
as an heir
d. One who sells whole of certain
rights for a lump sum, shall be
answerable for legitimacy of the
whole in general but not for each
of the various parts
VII. BREACH OF WARRANTY: LIABILITIES
OF THE ASSIGNOR OF CREDIT FOR
VIOLATION OF HIS WARRANTIES
1. Assignor in good faith
Liability is limited to price received,
expenses of the contract and other
legitimate payments made by reason of
the assessment
2. Assignor in bad faith
Liable ALSO for (expenses of contract
and other legitimate payments plus
useful and necessary expenses)
damages
VIII. ASSIGNMENT OF CREDIT OR
INCORPOREAL RIGHT IN LITIGATION -
REQUISITES:
1. There must be a sale or assignment of credit
2. There must be a pending litigation
3. The debtor must pay the assignee:
a. Price paid by him AND
b. Judicial costs incurred by him AND
c. Interest on the price from the date of
payment
4. The right must be exercised by the debtor
within 30 days from the date the assignee
demands (judicially or extra-judicially) payment
from him
NOTE:
 Presumption: buyer’s purpose is speculation
and; law would rather benefit the debtor of
Page 165 of
 such credits rather than the one who merely
speculates for profit.
 When credit or incorporeal right in litigation
is assigned or sold, debtor has a right to
extinguish it by reimbursing the assignee for
the price the buyer paid plus interest
IX. Right to redeem by debtor not
available in the following instances
(not considered speculative
1. Assignment of credit / incorporeal right to
co-heir or co-owner; the law does not favor
co-ownership
2. Assignment to creditor in payment for his
credit
 Presumption is that the assignment is
above suspicion; assignment is in the
form of dacion en pago, thus perfectly
legal
3. Assignment to possessor of tenement or
piece of land which is subject to the right in
litigation assigned
 Purpose is to presumably preserve the
tenement
END OF DISCUSSION ON TOPIC
N. EXTINGUISHMENT OF SALE
================================
O. THE SUBDIVISION AND
CONDOMINIUM BUYER’S
PROTECTIVE DECREE
================================
TOPICS UNDER THE SYLLABUS
The Subdivision and Condominium
Buyer’s Protective Decree (P.D. 957)
=========================
================
TOPICS UNDER THE SYLLABUS
CIVIL LAW REVIEWER
383
O. THE SUBDIVISION AND
CONDOMINIUM BUYER’S PROTECTIVE
DECREE
=========================================
P.D. 957: LAW ON SALE OF SUBDIVISION AND
CONDOMINIUM
REMEDIES FOR FAILURE OF THE
DEVELOPER TO DEVELOP THE SUBDIVISION
OR CONDOMINIUM ACCORDING TO THE
APPROVED PLAN AND TO COMPLY WITH
SUCH WITHIN THE TIME LIMIT.
 The buyer may desist from further payment
any installments. Also, there would be no
forfeiture of past payments in favor of the
developer after due notice has been given.
 The buyer may demand reimbursement of
the total amount paid including amortization
interests but excluding delinquency interests,
with interest thereon at the legal rate. (Sec. 23,
P.D. 957)
Otherwise: RA 6552 (Maceda Law) will apply.
REQUISITES OF SEC 3 OF RA 6552:
 Failure to pay installments was due to
reasons, other than failure of the developer to
develop the subdivision or condominium
according to the approved plan and to comply
with such within the time limit, and,
 Only covers residential lots including
condominium units, excluding, sales to tenants.
 The buyer has paid at least two years of
installments
RIGHTS OF THE BUYER UNDER RA 6552
WITH AT LEAST TWO (2) YEARS OF
INSTALLMENT:
 To pay, without additional interest, the
unpaid installments due within the total grace
period earned by him. Said grace period is fixed
at the rate of one month grace period for every
Page 166 of
one year of installments payments made. Thus,
here the buyer has at least two months grace for
he should have paid at least two years of
installments to avail of the rights under this
section.
This rights can only be exercised only
once in every five (5) years of the life of
the contract and its extensions, if any.
 To be refunded of the cash surrender value
of this payments equal to 50% of his total
payments if the contract is cancelled. But if he
has paid five years or more, he is entitled to an
increase of 5% every year and so on but the
cash surrender value shall not exceed 90% of his
total payments. McLaughlin v CA, [G.R. No.
L-57552, Oct 10, 1986]
THE ACTUAL CANCELLATION OF THE
CONTRACT REFERRED TO ABOVE SHALL
TAKE PLACE ONLY:
1. After 30 days from receipt by the buyer of the
notice of cancellation or demand for rescission,
AND
2. Upon full payment to the buyer of the cash
surrender value
In the computation of the total number of
installment payments the following are included:
1. downpayment and
2. deposit or option money
RIGHTS OF THE BUYER UNDER RA 6552
WITH LESS THAN 2 YEARS OF
INSTALLMENTS:
 If he has paid less than two (2) years of
installments, he still has the right to pay
within a grace period of not less than
sixty (60) days from the date the
installment became due.
 If the buyer fails to pay the installment
due at the expiration of the grace period,
i.e. 60 days, the seller may cancel the
contract after 30 days from receipt by
CIVIL LAW REVIEWER
383
the buyer of the notice of cancellation or
demand for rescission of the contract by
a notarial act.
Here the buyer is not entitled to any refund
END OF DISCUSSION ON TOPIC
O. THE SUBDIVISION AND
CONDOMINIUM BUYER’S PROTECTIVE
DECREE
================================
P. THE CONDOMINIUM ACT
================================
TOPICS UNDER THE SYLLABUS
The Condominium Act (R.A. 4726)
=========================
================
TOPICS UNDER THE SYLLABUS
P. THE CONDOMINIUM ACT
=========================================
R.A. 4726: THE CONDOMINIUM ACT
Restrictions and Additional requirements on
transfer of condominiums:
 It shall include the transfer or conveyance of
the undivided interests in the common areas
or membership or shareholdings in the
condominium corporation.
 Membership in a condominium
corporation, regardless whether stock or
non-stock, shall not be transferable
separately from the condominium unit of
which it is an appurtenance.
 No condominium owner’s copy of the
certificate of title shall, subsequent to the
original conveyance, be registered unless
accompanied by a certificate of the
management body of the project that such
conveyance is in accordance with the
provisions of the declaration of restrictions of
such project.
END OF DISCUSSION ON TOPIC
Page 167 of
 P. THE CONDOMINIUM ACT
================================

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383
 H. SUCCESSION
=================================
TOPICS UNDER THE SYLLABUS
I. General Provisions (Arts. 774-780)
A. Definition/what is transmitted
(Arts. 774, 776, 781)
B. When succession occurs (Art.
777)
C. Kinds of successors: heirs,
devisees, legatees (Art. 782)
=================================
I. GENERAL PROVISIONS
SUCCESSION – mode of acquisition by virtue of
which the property, rights and obligations to the
extent of the value of the inheritance, of a
person are transmitted through his death to
another or others either by his will or by
operation of law. (Art. 774)
KINDS OF SUCCESSION (Balane)
1. Compulsory—succession to the legitime
(this prevails over all kinds)
2. Testamentary—succession by will
3. Intestate—succession in default of a will
4. Mixed—not a distinct kind really, but a
combination of any two or all of the first
three
ELEMENTS OF SUCCESSION
I. Subjective Element
A. Decedent — person whose property is
transmitted through succession (Art.
775)
B. Successors
i. Heirs – those who are called to
the whole or to an aliquot portion
CIVIL LAW REVIEWER
383
of the inheritance either by will or
by operation on law (Art. 782)
KINDS OF HEIRS
1. Compulsory – those who succeed by force
of law to some portion of the inheritance,
in an amount predetermined by law, of
which they cannot be deprived by the
testator, except by a valid disinheritance
2. Voluntary or Testamentary – those who
are instituted by the testator in his will, to
succeed to the portion of the inheritance of
which the testator can freely dispose
3. Legal or Intestate – those who succeed
to the estate of the decedent who dies
without a valid will, or to the portion of
such estate not disposed of by will
ii. Devisees or Legatees – persons to
whom gifts of real or personal
property are respectively given by
virtue of a will (Art. 782)
NOTE: The distinction between heirs and
devisees/legatees are important in these cases:
a. Preterition
b. Imperfect disinheritance
c. After-acquired properties
d. Acceptance or non-repudiation of
successional rights
II. Causal Element (Art. 777)
Death of the Person – However, a
person may be presumed dead for the
purpose of opening his succession (see
rules on presumptive death). In this
case, succession is only of provisional
character because there is always the
chance that the absentee may be alive.
III. Objective Element (Art. 776)
Page 169 of
 Inheritance – is the subject matter of it. person who died.
Succession it includes:

i. Property and transmissible rights

and obligations =================================

TOPICS UNDER THE SYLLABUS

II. Testamentary Succession
RIGHTS EXTINGUISHED BY DEATH
(NOT TRANSMISSIBLE) A. Wills
1. Support (1) In General
(a) Definition and
2. Usufruct
characteristics (Arts. 783-787)
3. Those arising from personal (2) Testamentary capacity and
consideration intent (Arts. 796-803)
(a) Age requirement (Art. 797)
4. Personal easements (b) Soundness of mind (Arts.
798-801)
5. Partnership rights
(3) Form
6. Agency (a) Rules governing the formal
validity of wills (Arts. 17, 815-
7. Life Annuity 817, 819)
(b) Common requirements (Art.
ii. Existing at the time of his death 804)
(c) Notarial wills
(d) Holographic wills
iii. AND those which have accrued
thereto since the opening of (e) Joint wills (Arts. 818-819)
succession (Art. 781) (4) Codicils (Arts. 825-826)
(a) Definition and formal
After-Acquired Property (Art. 793) requirements
(5) Incorporate by reference (Art.
GENERAL RULE: Property acquired during the 827)
period between the execution of the will and the
(6) Revocation (Arts. 828-834)
death of the testator is NOT included among the
property disposed of with REGARD to (a) Kinds (Art. 830)
LEGACIES and DEVISEES, not to heirs. (7) Allowance and disallowance of
wills (Arts. 838-839)
EXCEPTION: When a contrary intention
expressly appears in the will (a) Probate requirement (Art.
838)
Succession distinguished from Inheritance (b) Grounds for denying
Succession Inheritance
probate (Art. 839)
=================================
Refers to the legal Refers to the
mode by which universality or
inheritance is entirety of the
transmitted to the property, rights and
persons entitled to obligations of a

CIVIL LAW REVIEWER Page 170 of

383
II. TESTAMENTARY SUCCESSION iii. Determination of
whether or not the testamentary
A. WILLS disposition is to be operative
CONCEPT OF A WILL (Art. 783)
b. Acts which may be entrusted to third
1. It is an act; persons (Article 787);

2. Whereby a person is permitted; i. Distribution of specific

property or sums of money that he
3. With the formalities prescribed by law; may leave in general to specified
classes or causes; and
4. To control to a certain degree;
ii. Designation of the
5. he disposition of his estate; persons, institutions or
establishments to which such
6. To take effect after his death.
property or sums are to be given or
applied.
KINDS OF WILLS:

1. Notarial – an ordinary or attested will

3. FREE AND VOLUNTARY ACT — any vice
2. Holographic – a handwritten will affecting testamentary freedom can cause
the disallowance of the will

COMMON REQUISITES BETWEEN THE TWO

WILLS: 4. FORMAL AND SOLEMN ACT — the formalities
1. Must be in writing and are essential for validity

2. In a language or dialect known to the

testator 5. ACT MORTIS CAUSA (Art. 783)— takes effect
only after the death of the testator

CHARACTERISTICS OF A WILL: 6. AMBULATORY AND REVOCABLE during the

1. UNILATERAL — does not need the approval
of any other person (implied in Art. 783)
2. STRICTLY PERSONAL ACT (Art. 784-785)
a. Acts which may not be left to the
discretion of third persons (Arts. 785 and
787):
i. Duration or efficacy of
the designation of heirs, devisees or
legatees;
testator’s lifetime
7. INDIVIDUAL ACT — two or more persons
cannot make a single joint will, either for
their reciprocal benefit or for another person.
However, separate or individually executed
wills, although containing reciprocal
provisions (mutual wills) are not prohibited,
subject to the rules on disposicion
captatoria.
8. Executed with ANIMUS TESTANDI

ii. Determination of the

portions which they are to take, 9. Executed with TESTAMENTARY CAPACITY
when referred to by name; and

10. DISPOSITIVE OF PROPERTY

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383

11. STATUTORY
INTERPRETATION OF WILLS (Art. 788-794)
Underlying Principle: Testacy is always preferred
to intestacy, because the former is the express
will of the decedent whereas the latter is only
his implied will.
1. Animus Testandi - The testator’s intent
(animus testandi), as well as giving effect to
such intent is primordial.
EXCEPT: when the intention of the
testator is contrary to law, morals or public
policy.
2. In case of doubt, the interpretation by which
the disposition is to be operative or will
sustain and uphold the will in all its parts
shall be adopted, provided that it can be
done consistently with the established rules
of law.
3. Ambiguities in Wills – Intrinsic or extrinsic
evidence may be used to ascertain the
testatorial intent of the testator.
EXCEPT: The oral declarations of the
testator as to his intentions must be
excluded because such testimony would be
hearsay.
KINDS OF AMBIGUITIES (Art. 789)
I. Latent or Intrinsic Ambiguities—
those which do not appear on the face of
the will and is discovered only by
extrinsic evidence
II. Patent or Extrinsic Ambiguities—
those which appear on the face of the
will itself
4. After Acquired Property - Property
acquired during the period between the
execution of the will and the death of the
testator is NOT included among the property
CIVIL LAW REVIEWER
383
disposed of. EXCEPT: When a contrary
intention expressly appears on the will.
NOTE: This rule applies only to legacies and
devisees and not to institution of heirs
NOTE: The validity of a will as to its form
depends upon the observance of the law at the
TIME it was MADE (Art. 795)
TESTAMENTARY CAPACITY—the ability as well
as the power to make a will (must be present at
the TIME of EXECUTION):
1. All persons who are not expressly prohibited
by law (Art. 796)
2. 18 years old and above (Art. 797)
3. Of sound mind, at the time of its execution
(Art. 798); A testator is considered of sound
mind if he knows at the time of making of
the will the following:
a. Nature of the estate to be disposed of
b. Proper objects of his bounty
c. Character of the testamentary act (Art.
799)
LEGAL PRESUMPTION IN FAVOR OF
SOUNDNESS OF MIND (Art. 800):
General Rule: The law presumes that every
person is of sound mind, in the absence of proof
to the contrary.
Exceptions:
1. When the testator, one month or less
before the execution of the will, was
PUBLICLY KNOWN to be INSANE (Art. 800);
2. When the testator executed the will after
being placed under guardianship Torres
and Lopez de Bueno vs. Lopez, [48
Phil. 772] or ordered committed, in either
case, for insanity (under Rules 93 and 101,
Page 172 of
 respectively of the Rules of Court), and
before said order has been lifted.
 Supervening capacity or incapacity does
not invalidate an effective will, nor is the will
of an incapable validated by supervening
capacity (Art. 801).
FORMS OF WILL
COMMON FORMALITIES:
1. Every will must be in WRITING; and
2. Executed in a LANGUAGE or DIALECT
KNOWN to the TESTATOR (Art. 804)
SPECIAL FORMALITIES:
I. NOTARIAL WILL – a valid notarial will:
(Art. 805)
A. Subscribed at the end by the testator
himself or by the testator’s name written
by some other person in his presence,
and by his express direction
Physical end- where the writing
stops
Logical end- where the last
testamentary disposition ends
B. Attested & subscribed by three or more
credible witnesses in the presence of the
testator and of one another
 Mandatory Part: The signing on
every page in the witnesses’
presence
NOTE: Test of presence is not
whether they actually saw each other
sign, but whether they might have
seen each other sign had they
chosen to do so considering their
mental and physical condition and
position with relation to each other at
the moment of inscription of each
signature.
CIVIL LAW REVIEWER
383
 Directory Part: The place of the
signature, i.e. the left margin; the
signature can be affixed anywhere on
the page.
C. Each and every page, except the last, must
be signed by the testator or by the person
requested by him to write his name, and by
the instrumental witnesses of the will, on the
left margin.
Signatures on the left margin on each and
every page NOT REQUIRED:
i. In the last page, when the will
consists of two or more pages;
ii. When the will consists of only one
page;
iii. When the will consists of two pages,
the first consists of all the
testamentary disposition and is
signed at the bottom by the testator
and the witnesses and the second
contains only the attestation clause
duly signed at the bottom by the
witnesses.
NOTE: A statute requiring a will to be signed is
satisfied if the signature is made by the
testator's mark. A thumbmark is sufficient
signature. Payad v. Tolentino, [62 Phil 846]
But a mere sign of the cross cannot be accepted
as it does not have the trustworthiness of a
thumbmark Garcia v. Lacuesta, [90 Phil 489]
D. Each and every page of the will must be
numbered correlatively in letters placed
on the upper part of each page.
 Mandatory Part: Pagination by
means of a conventional system.
 Directory Part: The pagination in
letters on the upper part of each
page
E. It must contain an attestation clause,
stating the following:
Page 173 of
 a. The number of pages used upon
which the will is written

b. The fact that the testator signed

the will and every page, or
caused some other person to
write his name, under his express
direction, in the presence of the
instrumental witnesses

c. All the instrumental witnesses

witnessed and signed the will and
all its pages in the presence of
the testator and of one another

F. It must be acknowledged before a notary

public by the testator and the witnesses
(Art. 806)

 The notary public cannot be counted as

one of the attesting witnesses. Cruz v.
Villasor, [54 SCRA 31]

ATTESTATION v. SUBSCRIPTION

Attestation – An act of witnessing execution of

will by testator in order to see and take note
mentally those things are done which the
statute requires for the execution of a will and
that the signature of the testator exists as a fact

Subscription – manual act of instrumental

witnesses in affixing their signature to the
instrument

ATTESTATION SUBSCRIPTION

1. act of the senses 1. act of the hand

2. mental act 2. mechanical act

3. Purpose is to render 3. Purpose is for

available proof during identification
the probate that such
will had been executed
in accordance with the
formalities prescribed
by law

CIVIL LAW REVIEWER Page 174 of

383
4.
Found after the 4. Found at the left ADDITIONAL REQUISITES FOR VALIDITY
attestation clause at side margin of every
the end or last page of page of the will a. If the Testator be Deaf or Deaf-Mute:
the will
i. Testator must personally read the will,
if able to do so;

 The attestation clause need not be written in ii. Otherwise, he shall designate two
a language or dialect known to the testator persons to read it and communicate to
nor to the witnesses since it does not form him, in some practicable manner, its
part of the testamentary disposition contents (Art 807)

 The attestation clause need only be signed b. If the Testator be Blind: The will shall be
by the witnesses and not by the testator as read to the testator twice –
it is a declaration made by the witnesses.
i. Once by one of the subscribing
witnesses

RULE ON SUBSTANTIAL COMPLIANCE (ART. ii. Once by the notary public before whom
809) the will is acknowledged (Art 808)

1. In the absence of NOTE: Articles 807 and 808 are

mandatory, failure to comply with either
o bad faith would result in nullity and denial of probate.

o forgery  The inadvertent failure of one witness to

affix his signature to one page of the original
o fraud will due to the simultaneous lifting of two
pages in the course of signing is not per se
o undue and improper pressure sufficient to justify denial of probate when
and influence the duplicate will shows such signatures.
Icasiano v. Icasiano, [11 SCRA 422]

2. Defects and imperfections

o in the form of attestation or in II. HOLOGRAPHIC WILL – a holographic

the language used therein will is valid if it is:

3. Shall not render the will invalid
4. If it is proved that the will was in fact
executed and attested in substantial
compliance with all the requirements of
Article 805.
A. Entirely written, dated, and signed by
the hand of the testator himself
B. Dispositions of the testator written
below his signature must be dated and
signed by him in order to validate the
testamentary dispositions. (Art 812)

 Defects and imperfections can be EXCEPT: In case of dispositions

supplied by an examination of the will appearing in a holographic will which
itself. Caneda v. CA [222 SCRA 781] are signed without being dated, where
the last disposition has a signature
and a date, such date validates the

CIVIL LAW REVIEWER Page 175 of

383
 dispositions preceding it, whatever be
the time of prior dispositions
 A holographic will is subject
to no other form, and may be made in
or out of the Philippines, and need not
be witnessed. (Art 810)
ELEMENTS OF A CODICIL (ART. 825)
1. It is a supplementary or addition to a will
2. Made after the execution of the will
3. Annexed to be taken as a part thereof
4. By which any disposition in the original will
may be explained, added to or altered
REQUISITES FOR INCORPORATION BY
REFERENCE (Art. 827)
1. the document or paper referred to in the will
must be in existence at the time of the
execution of the will
2. the will must clearly describe and identify
the same, stating among other things the
number of pages thereof
3. it must be identified by clear and
satisfactory proof as the document or paper
referred to therein
4. it must be signed by the testator and the
witnesses on each and every page, except
in case of voluminous books of account or
inventories
NOTE: The text of Art, 827 suggests that
holographic wills cannot incorporate documents
by reference. Paragraph 4 requires the
signatures of the testator and witnesses on
every page of the incorporated document. It
seems, therefore, that only attested wills can
incorporate documents by reference, since only
these are witnessed (unless the testator has his
holographic will superfluously witnessed)
CIVIL LAW REVIEWER
383
PROBATE OF HOLOGRAPHIC WILL
A. There must be at least one witness.
EXCEPTION: If the will is contested,
at least three of such witnesses shall be
required (merely directory). In the
absence of such competent witness
and if the court deems it necessary,
expert testimony may be resorted to.
B. Who knows the handwriting and
signature of the testator
C. Must explicitly declare that the will
and the signature are in the handwriting
of the testator. (Art 811)
NOTE: This article applies only to post mortem
probates and not to ante mortem probates since
in such cases the testator himself files the
petition and will identify the document himself.
 in the probate of a holographic will, the
document itself must be produced; a lost
holographic will cannot be probated. Gan
v. Yap, [104 Phil 509] Exception: When
copy of the will is produced or survives
Rodelas v. Aranza, [G.R. No. L-58509,
December 7, 1982]
INSERTION, CANCELLATION, ERASURE OR
ALTERATION IN A HOLOGRAPHIC WILL
A. If made after the execution of the will,
but without the consent of the testator,
such insertion is considered as not
written because the validity of the will
cannot be defeated by the malice or
caprice of a third person
B. If the insertion after the execution of the
will was with the consent of the testator,
the will remains valid but the insertion is
void.
C. If the insertion after the execution is
validated by the testator by his signature
thereon then the insertion becomes part
Page 176 of
 of the will, and, the entire will becomes
void, because of failure to comply with
the requirement that it must be wholly 2. SUBSTANTIVE VALIDITY
written by the testator
ASPECTS OF THE WILL GOVERNED BY
NATIONAL LAW OF THE DECEDENT:
D. If the insertion made by a third person is
made contemporaneous to the execution A. Order of succession
of the will, then the will is void because it
B. Capacity to succeed
is not written entirely by the testator
C. Amount of successional rights
WHO MAY BE A WITNESS TO A WILL – Any
D. Intrinsic validity
person may be a witness provided he is:

A. Of sound mind VALIDITY OF JOINT WILLS

B. Of the age of 18 years or more
C. Not blind, deaf or dumb
D. Able to read and write
 Two or more persons cannot make a will
jointly, or in the same instrument, either for
their reciprocal benefit or for the benefit of a
third person.

E. Domiciled in the Philippines NOTE: Joint wills executed by Filipinos in a

foreign country shall not be valid in the
F. Have not been convicted of falsification Philippines, even though authorized by the
of a document, perjury or false testimony laws of the country where they may have
been executed.

LAWS GOVERNING VALIDITY OF A WILL AMENDMENT, REVOCATION AND

REPUBLICATION OF WILLS
1. FORMAL VALIDITY
AMENDMENT OF WILLS
FORMAL FILIPINO ALIEN
VALIDITY 1. Notarial – only through a codicil

EXECUTED IN (a) CC of (a)CC of the 2. Holographic – in three ways

PHILIPPINES Philippines Philippines
A. Dispositions may be added below the
(b)Law of His signature, PROVIDED that said
Country dispositions are also dated and signed,
and everything is written by the hand of
FOREIGN (a) CC of (a) CC of the testator himself
COUNTRY Philippines Philippines
B. Certain dispositions or additional
(b) Law (b) Law of his matter may be suppressed or inserted
where Country PROVIDED that said cancellation is
Made signed by the testator and written by the
(c) Law of
hand of the testator himself
Country where
he resides C. Through a codicil which may either
be notarial or holographic
*CC – Civil Code

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R
E d. Completion of the subjective phase;
VOCATION OF WILLS AND
1. By operation of law – instances of revocation e. Performed by the testator himself or
by operation of law: by some other person in his presence
and express direction
a. decree of legal separation
(The list is NOT exclusive.)
b. preterition

c. legacy or credit against third person or

remission of debt was provided in will
and subsequently, testator brings action
against debtor
d. substantial transformation of specific
thing bequeathed
e. when heir, devisee or legatee commits
any of the acts of unworthiness
DOCTRINE of PRESUMED REVOCATION:
 Where the will cannot
be found following the death of the testator
and it is shown that it was in the testator's
possession when last seen, the presumption
is that he must have destroyed it with
animus revocandi.

 Where the will cannot

2. By the execution of a will, codicil or other
writing executed as provided in case of wills
a. EXPRESS – When there is a
revocatory clause expressly revoking the
previous will or a part thereof
b. IMPLIED – When the provisions
thereof are partially or entirely
inconsistent with those of the previous
wills
3. By burning, tearing, canceling,
obliterating the will with the intention
revoking it, by the testator himself, or
some other person in his presence, and
his express direction.
REQUISITES:
a. Testamentary capacity at the time of
performing the act of destruction;
be found following the death of the testator
and it is shown that the testator had ready
access to it, the presumption is that he must
have destroyed it with animus revocandi.
 Where it is shown that
the will was in the custody of the testator
after its execution, and subsequently, it was
found among the testator's effects after his
death in such a state of mutilation,
cancellation, or obliteration, as represents a
sufficient act of revocation within the
meaning of the applicable statute, it will be
or presumed, in the absence of evidence to the
of contrary, that such act was perfomed by the
by testator with animus revocandi.
by
 Art. 832 A revocation made in a subsequent
will shall take effect, even if the new will
should become inoperative by reason of the
incapacity of the heirs, devisees or legatees
designated therein, or by their renunciation.

b. Intent to revoke (animus revocandi); EXCEPTION: Doctrine of Dependent Relative

Revocation – when the testator provides in the
c. Actual physical act of destruction; subsequent will that the revocation of the prior
one is dependent on the capacity or acceptance
of the heirs, devisees, or legatees instituted in

CIVIL LAW REVIEWER Page 178 of

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the subsequent will. (Molo v, Molo, [90 Phil which can be revived only by another will
37]) or codicil.

LAWS WHICH GOVERN REVOCATION


LAW FOR LAW
REVOCATION FACTS DEMONSTRATING ART 837

IN PHILIPPINES Philippine Law  In 1985, X executed Will 1

Philippine Law  In 1987, X executed Will 2, expressly

OUTSIDE Domicil Philippine Law revoking Will 1
PHILIPPIN e
 In 1990, X executed Will 3, revoking Will
ES
Non (a) Where will was 1
Domicil made
e
(b)Where CONCLUSION ON THE FACTS
DOMICILED at time
 The Revocation of Will 2 by Will 3 does
of revocation
not revive Will 1

 This demonstrates the theory of instant

REVOCATION BASED ON A FALSE OR revocation because the revocatory effect of
ILLEGAL CAUSE the second will is immediate upon the first
will
 Revocation based on a false or illegal
cause is null and void.

 REQUISITES: NOTE: This article only applies where the

revocation of the first will by the second will
a. The cause must be concrete, factual and is express.
not purely subjective

b. It must be false
REPUBLICATION AND REVIVAL OF WILLS
c. The testator must not know of its falsity
 If the testator wishes to republish a will
d. It must appear from the will that the that is void as to form, the only way to
testator is revoking because of the cause republish it is to execute a subsequent will
which is false. and reproduce it

 Art. 834. The recognition of an  The testator need only execute a

illegitimate child does not lose its legal subsequent will or codicil referring to the
effect, even though the will wherein it previous will if the testator wishes to
was made should be revoked. republish a will that is either:

a. Void for reason other than a

 Art. 837. If after making a will, the formal defect
testator makes a second will expressly
revoking the first, the revocation of the b. Previously revoked
second will does not revive the first will,

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 II.
REPUBLICATION REVIVAL II.
DISALLOWANCE OF WILL - grounds for
Takes place by an act of Takes place by disallowance of a will:
the testator operation of law
1. If the formalities required by law have
Corrects extrinsic and Restores a revoked not been complied with;
extrinsic defects will
2. If the testator was insane, or otherwise
ALLOWANCE AND DISALLOWANCE OF mentally incapable of making a will, at
WILLS the time of its execution;
I. PROBATE OF A WILL
3. If it was executed through force or under
1. A special proceeding required for the duress, or the influence of fear, or
purpose of establishing the validity of threats;
the will.
4. If it was procured by undue and improper
2. Probate of a will is mandatory pressure and influence, on the part of
the beneficiary or of some other person;
3. The probate court can only inquire into
the extrinsic validity of testamentary 5. If the signature of the testator was
provisions, which include the following: procured by fraud;

a. That the testator was of sound and 6. If the testator acted by mistake or did
disposing mind not intend that the instrument should be
his will at the time of affixing his
b. That his consent was not vitiated signature thereto.(Art 839)

c. That the will was signed by the REVOCATION DISALLOWANCE

required number of witness
Voluntary act of the Given by judicial
d. That the will is genuine testator decree

EXCEPTION: The probate court may pass upon With or without cause Always for a legal
the intrinsic validity of the will when its probate cause
might become an idle ceremony if on the will’s
face it appears to be intrinsically void. Nuguid May be partial or total Always total EXCEPT
v. Nuguid, [17 SCRA 449] when the ground of
fraud or influence for
KINDS OF PROBATE example affects only
certain portions of the
1. Post-Mortem – after the testator’s will
death

2. Ante-Mortem – during his lifetime

B. INSTITUTION OF HEIRS
FINAL DECREE OF PROBATE
INSTITUTION OF HEIR
 Once a decree of probate becomes final
in accordance with the rules of procedure 1. It is an act by virtue of which a testator
it becomes Res Judicata designates in his will

 It is conclusive as to the due execution of 2. The person or persons who are to succeed
the will (extrinsic validity only) him in his property and transmissible

3. Rights and obligations

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 1.
If
REQUISITES FOR A VALID INSTITUTION OF one has no compulsory heirs:
HEIR
a. He can give his estate to any person
1. Designation in will of person/s to succeed qualified to inherit under him

a. Directory - designation of name and b. However, he must respect restrictions

surname imposed by special laws

b. Mandatory – identity of the heir 2. If one has compulsory heirs:

must be established, otherwise void
disposition, unless his identity becomes a. He can give only the
certain. disposable portion to strangers

NOTE: If there is ambiguity in the designation, b. Legitimes of compulsory

the designation must be resolved by discerning heirs must be respected
the testator’s intent. If the ambiguity cannot be
resolved, intestacy to that portion results.

2. Will specifically assigns to such person an REQUISITES FOR THE ANNULMENT OF

inchoate share in the estate. INSTITUTION OF HEIRS:

3. The person so named has capacity to 1. Cause of institution of the heirs must be
succeed stated in will

4. The will is formally valid 2. Cause must be shown to be false

5. No vice of consent is present 3. It appears from the face of the will that
the testator would not have made the
6. No preterition results from the effect of such institution had he known the falsity of
will the cause.

THREE PRINCIPLES IN THE INSTITUTION OF RULES ON INSTITUTION OF ALIQUOT SHARE

HEIRS LESS THAN OR IN EXCESS OF THE WHOLE
ESTATE:
1. Equality – heirs who are instituted without a
designation of shares inherit in equal parts 1. Intestacy Results if

2. Individuality – heirs collectively instituted are a. the heir institutes an aliquot portion of
deemed individually named unless a the estate
contrary intent is proven
b. to only one heir If the heir institutes
3. Simultaneity – when several heirs are several heirs to an aliquot part of the
instituted, they are instituted simultaneously
and not successively

2. Each heir’s share shall be proportionally

increased:
RULES ON A PERSON’S RIGHT TO DISPOSE a. There are more than one instituted heir
OF HIS ESTATE b. The testator intended the heirs to inherit
the whole estate

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 c. The aliquot parts of each share do not
cover the whole inheritance DISTINGUISH PRETERITION FROM
DISINHERITANCE
3. Each heir’s share shall be proportionally
PRETERITION DISINHERITANCE
decreased:
a. There are more than one instituted heir Deprivation of a Deprivation of the
b. The testator intended the heirs to inherit compulsory heir of his compulsory of his
the whole estate legitime is tacit legitime is express
c. The aliquot parts of each share exceed
the whole inheritance May be voluntary but Always voluntary
the law presumes that
ELEMENTS OF PRETERITION it is involuntary

1. There must be an omission of one, some or Law presumes that Done with a legal cause
all of the heir/s in the will there has been merely
an oversight or
2. The omission must be that of a mistake on the part of
COMPULSORY HEIR the testator
3. Compulsory heir omitted must be of the Omitted heir gets not If disinheritance is
DIRECT LINE only his legitime but unlawful, compulsory
also his share in the heir is merely restored
4. The omitted compulsory heir must be LIVING
free portion not to his legitime
at the time of testator’s death or must at
disposed of by way of
least have been CONCEIVED before the
legacies or devises
testator’s death

5. The omission must be complete and total in

character. : There is no omission if

a. A devise or legacy has been

given to the heir
C. SUBSTITUTION OF HEIRS
b. A donation inter vivos has
CLASSES OF SUBSTITUTION
been previously given to the heir
1. Vulgar or Simple – the testator may
c. Anything is left from the
designate one or more persons to substitute
inheritance which the heir may get by
the heir or heirs instituted in case such heir
way of intestacy
or heirs should:

EFFECTS OF PRETERITION: a. die before him (PREDECEASE)

1. The institution of heir is annulled b. should not wish, (RENOUNCE) or

2. Devises and legacies shall remain valid as c. should be incapacitated to accept

long as they are not inofficious the inheritance (INCAPACITATED)

3. If the omitted compulsory heir should die  Restricted simple substitution- The
before the testator, the institution shall be testator may limit the operation of
effectual, without prejudice to the right of simple substitution by specifying only
representation one or two of the three causes.

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2.
Brief or Compendious – two or more persons
may be substituted for one; and one person
for two or more heirs D. CONDITIONAL TESTAMENTARY
DISPOSITIONS AND DISPOSITIONS WITH
3. Reciprocal – if heirs instituted in unequal
A TERM
shares should be reciprocally substituted,
the substitute shall acquire the share of the TESTAMENTARY DISPOSITIONS
heir who dies, renounces, or incapacitated,
1. Condition – future or uncertain event, or a
unless it clearly appears that the intention of
past event unknown to the parties, upon
the testator was otherwise. If there are more
which the performance of an obligation
than one substitute, they shall have the
depends
same share in the substitution as in the
institution 2. Term – the day or time when an obligation
either becomes demandable or terminates
4. Fideicommissary Substitution - if the
testator institutes an heir with an obligation 3. Modal Institution – the statement of the
to deliver to another the property so institution; application of the property left by
inherited. The heir instituted to such the testator or the charge imposed on him
condition is called the first heir or fiduciary
heir, the one to receive the property is the 4. Disposicion Captatoria/Scriptura
fideicommissary or second heir Captatoria – condition that the heir shall
make some provision in his will of the
testator or of any other person (prohibited
because it will make the making of the will a
REQUISITES FOR A FIDEICOMMISSARY
contractual act)
SUBSTITUTION:
5. Causal Condition – condition us casual if it
1. A fiduciary or first heir instituted entrusted
depends upon chance and/or upon the will of
with the dual obligation to preserve and to
a third person
transmit to a fideicommissary substitute or
second heir the whole or part of the 6. Mixed Condition - It is mixed if it depends
inheritance both partly upon the will of the heir himself
and upon chance and/or the will of a third
2. Such substitution must not go beyond one
person
degree from the heir originally instituted
7. Potestative Condition – one the fulfillment
3. The fiduciary or first heir and the second heir
of which depends purely on heir
are living and qualified to succeed at the
time of the death of the testator 8. Suspensive term – one that merely
suspends the demandability of a right. It is
4. The fideicommissary substitution must be
sure to happen
expressly made
9. Caucion Muciana – bond or security that
5. The fideicommissary substitution is imposed
should be given in favor of those who would
on the free portion of the estate and never
get the property if the condition not be
on the legitime
complied with

NOTE: Pending the transmission of the

property, the fiduciary is entitled to all the
INTERPRETATION
rights of a usufructuary although the
fideicommissary is entitled to all the rights of
a naked owner.

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
When in doubt whether there is a condition or ii. If testator unaware of fact of
merely a mode, consider the same as mode fulfillment- deemed fulfilled

 When in doubt as to whether there is iii. If testator aware thereof –

a mode or merely a suggestion, consider
same only as a suggestion i. If it can no longer be fulfilled again –
deemed fulfilled
 The condition suspends but does not
obligate, the mode obligates but does not ii. If it can be fulfilled again – must be
suspends (for he who inherits with a mode is fulfilled again
already an heir; one who inherits
Constructive Compliance
conditionally is not yet an heir.)
a. if casual – not applicable

b. if mixed –
RULES ON POTESTATIVE, CASUAL AND
MIXED CONDITIONS i. If dependent partly on chance – not
applicable
1. POTESTATIVE
ii. If dependent partly on will of third
Positive Potestative Condition:
party –
General Rule – must be fulfilled as soon as the
1. if 3rd party interested –
heir learns of the testator’s death
applicable
EXCEPTION
2. if 3rd party not interested – not
a. the condition was already applicable
complied with at the time the heir learns
of the testator’s death

b. the condition is of such EFFECTS OF SUSPENSIVE CONDITION OR

nature that it cannot be fulfilled again TERM

The estate shall be placed under administration

Negative Potestative Condition: until
 Heir must give security to guarantee the
1. condition is fulfilled
return of the value of property, fruits, and
interests, in cases of contravention 2. until it becomes certain condition will never
be fulfilled
2. CASUAL OR MIXED
3. until arrival of the term

Positive
 GENERAL RULE – may be fulfilled at any
other time (before testator’s death), unless
testator provides otherwise.
CONDITIONS PROHIBITING MARRIAGE
1. If a first marriage is prohibited – condition
considered always as not imposed

 If ALREADY FULFILLED at the time of 2. If a subsequent marriage is prohibited as

execution of the will imposed by the deceased spouse or by
his/her ascendants or descendants - valid

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3.
if c. Death of either spouse during the
a subsequent marriage is prohibited and pendency of a petition for legal separation
imposed by anyone else- considered not – dismissal of the case
written
 Illegitimate children and descendants
(legitimate or illegitimate)

E. LEGITIMES

 The portion of the decedent’s estate

reserved by law is called the legitime.

 The heirs for whom the law reserves such

Testator is a Testator is an
portion are called compulsory heirs.
Legitimate Person Illegitimate Person
CLASSES OF COMPULSORY HEIRS
Legitimate children Legitimate children and
1. Primary – those who have precedence over and descendant descendants
and exclude other compulsory heirs
In default of the Illegitimate parents
foregoing, legitimate and ascendants
 Legitimate children and descendants
parents and
(legitimate), with respect to their
ascendants
legitimate parents and ascendants
Surviving spouse In default of the
2. Secondary – those who succeed only in the
foregoing, illegitimate
absence of the primary heirs
parents only
 Legitimate parents and ascendants Illegitimate children Surviving spouse
(legitimate), with respect to their and descendant
legitimate children and descendants

3. Concurring – those who succeed together

with the primary or the secondary GENERAL RULES IN ASCERTAINING
compulsory heirs LEGITIMES

 Widow or widower (legitimate) – the 1. Direct descending line

surviving spouse referred to is the
spouse of the decedent. a. Rule of preference between lines

b. Rule of proximity
NOTE:
c. Right of representation ad infinitum in
a. Mere estrangement is not a ground for the
case of predecease, incapacity or
disqualification of the surviving spouse as
disinheritance
heir
b. Effect of decree of legal separation: 2. Direct ascending line
i. On the offending spouse – disqualified
ii.On the innocent spouse – no effect a. Rule of division by line

b. Rule of equal division

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3.
Non-impairment of legitime
a. Any compulsory heir who was given title
less than his legitime may demand that
the same be completed (Art 906)
EXCEPTIONS:
a. If the predecessor gave the compulsory
heir a donation inter vivos and provided
that it was not charged against the
legitime (Art 1062)
b. Testamentary dispositions made by the
predecessor to the compulsory heir,
unless the testator provides that it
should be considered part of the
legitime.
STEPS IN DETERMINING THE LEGITIME OF
COMPULSORY HEIRS:
1. Determination of the gross value of the
estate at the time of the death of the
testator;
2. Determination of all debts and charges
which are chargeable against the estate;
3. Determination of the net value of the estate
by deducting all the debts and charged from
the gross value of the estate;
CIVIL LAW REVIEWER
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4.
C
ollation or addition of the value of all
donations inter vivos to the net value of the
estate;
5. Determination of the amount of the legitime
from the total thus found;
6. Imputation of all the value of all donations
inter vivos made to compulsory heirs against
their legitimes and of the value of all
donations inter vivos made to strangers
against the disposable free portion and
restoration to the hereditary estate if the
donation is inofficious.
7. If legitime is impaired, the following
reductions shall be made:
a. First, reduce pro-rata non-preferred
legacies and devises, and the
testamentary dispositions.
b. Second, reduce pro rata the preferred
legacies and devises
c. Third, reduce the donations inter vivos
according to the inverse order of their
dates
8. Distribution of the residue of the estate in
accordance with the will of the testator.
Page 186 of
 SHARES OF COMPULSORY HEIRS

HEIR LEGITIME FREE PORTION

LEGITIMATE CHILDREN & DESCENDANTS 1/2 1/2

LEGIMITATE PARENTS & ASCENDANTS 1/2 1/2

1 (ONE) LEGITIMATE CHILDREN – 1/2 1/4

CHILDREN/DESCENDANT & SURVIVING
SPOUSE -1/4
SPOUSE

LEGITIMATE CHILDREN (LC) & SPOUSE CHILDREN – 1/2 –

SPOUSE – EQUAL TO SHARE WHAT REMAINS

OF 1 (ONE) LC

LEGITIMATE CHILDREN (LC) & LC -1/2

ILLEGITIMATE CHILDREN (ILC)
ILC – 1/2 OF SHARE OF 1 (ONE) WHAT REMAINS (IF
LC ANY)

LEGITIMATE PARENTS/ASCENDANT & LEGITIMATE

SURVIVING SPOUSE PARENTS/ASCENDANT – 1/2
1/4
SPOUSE – 1/4

LEGIMITATE PARENTS/ASCENDANTS & LEGITIMATE

ILLEGIMTATE CHILDREN PARENTS/ASCENDANTS – 1/2
1/4
ILLEGIMITATE CHILDREN – 1/4

ILLEGITIMATE CHILDREN & SURVIVING

SPOUSE
ILC – 1/3 1/3

SPOUSE – 1/3

LEGIMIATE CHILDREN/DESCENDANTS,
SURVIVING SPOUSE & ILLEGITIMATE
LC –1/2 WHATEVER
CHILDREN
REMAINS
SPOUSE – EQUAL TO 1 (ONE)
LC

ILC – 1/2 OF SHARE OF ONE (1)

LC

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 LEGITIMATE PARENTS/ASCENDANTS, LEGIMIATE
1/8 ESTATE
SURVIVING SPOUSE, & ILLEGITIMATE PARENTS/ASCENDANTS –1/2
CHILDREN
SPOUSE – 1/8

ILC –1/4

SURVIVING SPOUSE GENERALLY 1/2 1/2

ARTICULO 1/3 2/3

MORTIS

ILLEGITIMATE CHILDREN ONLY 1/2 1/2

ILLEGITIMATE PARENTS 1/2 1/2

ILLEGITIMATE PARENTS & SURVIVING ILLEGITIMATE PARENTS – 1/4 1/2

SPOUSE
SPOUSE – 1/4

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 RESERVA TRONCAL
RESERVA TRONCAL: The reservation by virtue
of which an ascendant who inherits from his
descendant any property which the latter may
have acquired by gratuitous title from another
ascendant or a brother or sister, is obliged to
reserve the property for the benefit of relative
within the 3rd degree and who belong from the
same line from which the property came from.
 It constitutes as an exception to both the
system of legitime and the order of intestate
succession.
PURPOSE OF RESERVA TRONCAL:
1. To reserve certain properties in favor of
certain persons;
2. To prevent person outside a family from
acquiring, by some chance or accident,
property which otherwise would have
remained with the said family;
3. To maintain a separation between paternal
and maternal lines.
REQUISITES OF RESERVA TRONCAL
1. The property should have been acquired
by operation of law by an ascendant
(RESERVISTA) from his descendant
(PROPOSITUS) upon the death of the latter.
NOTE: by operation of law is limited to
succession, either by legitime or intestacy
2. The property should have been
previously acquired by gratuitous title by
the propositus from another ascendant or
from a brother or sister (ORIGINATOR).
NOTE: gratuitous encompasses
transmissions by donation, remission, and
testate or intestate succession.
3. The propositus should have died without
any legitimate issue in the direct descending
line who could inherit from him.
 All relationships must be legitimate.
Nieva v. Alcala, [41 Phil 495]
4. That there are relatives within the third
degree belonging to the line from which
said property came.
PERSONAL ELEMENTS
1. ORIGINATOR – the ascendant, brother
or sister from whom the propositus had
acquired the property by gratuitous title
2. PROPOSITUS – The descendant who
died and from whose death the reservistas in
turn had acquired the property by operation
of law. The so-called “ARBITER OF THE FATE
OF THE RESERVA TRONCAL.”
NOTE: Prepositus can terminate the reserva
by:
a. Substituting or alienating the
property
b. By bequeathing or devising it either
to the potential reservista or to other
third person
c. By partitioning it and assigning the
property to parties other than the
reservista
3. RESERVISTA – The ascendant, not
belonging to the line from which the
property came that is the only compulsory
heir and is obliged to reserve the property.
(Justice Vitug’s View)
NOTE: Tolentino is of the view that even if
the reservista and the originator belong to
the same line, there is still an obligation to
reserve.
4. RESERVATARIOS – The relative of the
propositus within the 3rd degree and who
belong to the line from which the property
came and for whose benefit reservation is
constituted. They must be related by blood
not only to the propositus but also to the
originator.
NOTE: The Civil Code did not provide for the
rules on how the reservatarios would
succeed to the reservista. However, the
following rules on intestacy have been
consistently applied:
a. Rule of preference between the
lines
b. Rule of proximity
c. Right of representation –
provided that the representative is a
relative within the 3rd degree, and that
he belongs to the line from which the
reservable property came
 d. “full blood/double share” rule in 2. The right is subject to a suspensive condition
Article 1006 3. The right is alienable, but subject to the
same suspensive condition
 The reservista had no power to appoint, 4. The right is registrable
by will, which reservatarios were to get
the reserved property. Gonzales v. CFI, PROPERTY SUBJECT TO RESERVATION:
[104 Phil 479] GENERAL RULE: It must be the same
property which the reservista had acquired by
2 EVENTS TO BE CONSIDERED TO operation of law from the propositus upon the
DETERMINE THE RIGHT OF THE latter’s death and which the latter, in turn had
RESERVATARIOS OVER THE RESERVABLE acquired by gratuitous title during his lifetime
PROPERTY from another ascendant, brother or sister.
EXCEPTION: Substitution of the reservable
1. Death of Propositus – all qualified property through unavoidable necessity:
reservatario merely acquire an inchoate 1. Property is consumable
right. The reservistas own the property 2. Lost or destroyed through the fault of the
subject to the resolutory condition reservista
2. Death of Reservista – surviving 3. Deteriorated through the same cause
reservatarios acquire a perfect right. 4. It has been alienated

OBLIGATIONS OF A RESERVISTA AND THE Reserva Maxima Reserva Minima

CORRESPONDING RIGHTS OF THE Much of the Every single property
RESERVATARIOS (A-I-S-A) potentially reservable in the Prepositus estate
1. To inventory reserved properties
property as possible must be deemed to
2. To annotate the reservable character (if
must be deemed pass, partly by will and
registered immovables) in the Registry of
included in the part partly by operation of
Property within 90 days from acceptance by
that passes by law, in the same
the reservista
operation of law proportion that the
3. To appraise the movables
part given by will bears
4. To secure by means of mortgage:
to the part not so given
1. The indemnity for any
Maximizes the scope Minima finds wider
deterioration of or damage to the
of reserve acceptance here
property occasioned by the reservista’s
fault or negligence, and EXTINGUISHMENT OF RESERVA TRONCAL
2. The payment of the 1. The death of the Reservista
value of such reserved movables as may 2. The death of the all the Reservatorios
be alienated by the reservista onerously 3. Waiver or renunciation by all
and gratuitously Reservatorios, provided none is born
3. As restitution for subsequently
movables not alienated 4. Total fortuitous loss of the reserved
property
RIGHT OF THE RESERVISTA OVER THE 5. Confusion or merger of rights
RESERVABLE PROPERTY 6. Prescription or adverse possession
1. The right of the reservista over the reserved
property is one of ownership
IMPORTANT NOTES:
2. The ownership is subject to a resolutory  A reservatario may dispose of his
condition
expectancy to the reservable property
3. The right of ownership is alienable
during the pendency of the reserva in its
4. The right of ownership is registrable
uncertain and conditional form. If he dies
before the reservista, he has not transmitted
RIGHT OF THE RESERVASTARIOS OVER THE
anything, but if he survives such reservista,
RESERVABLE PROPERTY
1. The reservatarios have a right of expectancy the transmission shall become effective.
over the property
 A will may prevent the constitution of a
reserva. In testate succession, only the
legitime passes by operation of law. The
propositus may, by will, opt to give the
legitime of his ascendant without giving to
the latter properties he had acquired by
gratuitous title from another ascendant, or
brother or sister. In such case, reserva
troncal is avoided.
 Howerver, if the ascendant was not
disentitled in the will to receive such
properties, the reserva minima rule
(proportional reserva) should be followed.
The rule holds that all properties passing to
the reservista must be considered as passing
partly by operation of law and partly by will
of the propositus. Thus, one-half of the
properties acquired by gratuitous title should
be reservable and the other half should be
free.
PRINCIPLE OF UNIMPAIRMENT OF THE
LEGITIME OF THE COMPULSORY HEIR
1. General Rule: The testator cannot deprive
his compulsory heirs of their legitime.
Exception: valid disinheritance
2. General Rule: He cannot impose upon the
same any burden, encumbrance, condition,
or substitution of any kind whatsoever.
Exception: express prohibition of the
partition of the estate for a period not
exceeding 20 years.
 Renunciation or compromise as regards
future legitime between the person owing it
and his compulsory heir is void.
i. The rights of the heirs
are merely inchoate because it is only
perfected upon the testator’s death.
Hence, there is still nothing to renounce.
ii. No contract may be
entered into with respect to future
inheritance except in cases expressly
authorized by law.
EFFECTS OF INCOMPLETE LEGITIME
Incomplete Legitime Preterition
Heir not entirely Total omission of the
forgotten heir
Less than the portion Total deprivation of
of the legitime legitime
Remedy is to demand Effect is the total
for completion of annulment of the
legitime institution of heirs
STEPS IN DETERMINING THE LEGITIME OF
COMPULSORY HEIRS IF THERE ARE
DONATIONS:
1. Determination of the gross value of the
estate at the time of the death of the
testator;
2. Determination of all debts and charges
which are chargeable against the estate –
this refers to the pre-existing obligations of
the testator during his lifetime, and not to
the charges or burdens which are created by
the testamentary dispositions found in the
will;
3. Determination of the net value of the estate
by deducting all the debts and charges from
the gross value of the estate;
4. Collation or addition of the value of all
donations inter vivos to the net value of the
estate;
5. Determination of the amount of the legitime
from the total thus found;
NOTE: proceeds of an insurance policy
where the beneficiary is a third person or
even a compulsory heir belongs exclusively
to the beneficiary and not to the estate of
the insured. Hence, not subject to collation.
6. Imputation of the value of all donatioins inter
vivos made to compulsory heirs against their
legitime and of the value of all donations
inter vivos made to strangers against the
disposable free portion and restoration to
the hereditary estate if the donation is
inofficious; and
7. Distribution of the residue of the estate in
accordance with the will of the testator.
REDUCTION OF TESTAMENTARY
DISPOSITIONS AND DONATIONS
The order of preference is as follows:
1. Legitime of compulsory heirs
2. Donation inter vivos
3. Preferential legacies or devises
4. All other legacies or devises
If after satisfying the legitime of the compulsory
heirs, the disposable portion is sufficient to
cover donations inter vivos but not the legacies
and devises, the rule is that such legacies and
devises will be reduced pro rate, after satisfying
those preferential ones.
DISINHERITANCE
CAUSES OF VACANCY IN SUCCESSION
1. Disinheritance - The testator creates it
himself NOTE: Therefore, the heir loses his
2. Repudiation - The heir does something legitime. As to the free portion, it passes
3. Incapacity/Predecease - Something happens through Substitution, Accretion, and
to the heir Intestacy.
2. The children or descendants of the person
HOW VACANCIES ARE FILLED disinherited shall take his or her place and
1. Substitution shall preserve the rights of compulsory heirs
2. Representation with respect to the legitime.
3. Accretion
NOTE: The disinherited heir can be
DISINHERITANCE represented in the legitime.
1. Heir is being deprived of his legitime. a. Only in the descending line, never in
2. Only in cases of testate succession. the ascending
NOTE: Counterpart in intestate is b. In collateral line, only with respect to
unworthiness. nephews and nieces.
3. Even if validly disinherited, heir can still be
validly restored in the legitime by 3. The disinherited parents shall not have the
RECONCILIATION. usufruct or administration of the property
4. Reconciliation – when in “speaking terms which constitutes the legitime.
again,” no particular form
5. In unworthiness, there must a pardon in GROUNDS FOR DISINHERITANCE
writing to remove incapacity to inherit. Grounds for Disinheritance Common To All
However, it does not have to be in a will. Compulsory Heirs
6. If grounds for disinheritance and 1. Attempt on the life of testator, spouse,
unworthiness are common, reconciliation ascendant, descendant
does not erase the fact that the heir is a. Conviction necessary
unworthy. b. In case of spouse, giving cause for
7. As long as there is reconciliation, it should legal separation, no conviction needed
be considered to have revoked the c. Include both attempted and
inheritance as well as the unworthiness. frustrated.
8. Ineffective disinheritance v. Preterition d. Attempt on life of relatives, may be
consummated.
REQUIREMENTS FOR VALID 2. Accusation of a crime with penalty of
DISINHERITANCE six years or more.
1. Effected only through a valid will; a. Penalty imposable, not actually
NOTE: Will containing disinheritance must imposed.
be probated. b. Made by the heir in a proceeding as a
2. For a cause expressly stated by law; complainant or witness in a criminal
3. Cause must be expressly state in the will case.
itself; c. Found to be groundless, false.
4. Cause must be certain and true; d. Groundless – court should make a
5. Unconditional; positive finding that the testator has not
6. Total; AND committed the crime. It is then false.
7. The heir disinherited must be designated in e. Chismis – not the one referred here,
such a manner that there can be no doubt as it is outside criminal proceeding.
to his identity. 3. Induce testator to make/change the
will.
EFFECTS OF DISINHERITANCE a. Will – purely personal
1. Total exclusion of the compulsory heir in b. Vices of consent.
from the inheritance, which includes his c. It does not punish the result but the
legitime, his intestate portion, and any interference in the making/changing of
testamentary disposition made in a prior the will.
will. d. Will + disinheritance (will making)
 e. Will + amended will + disinheritance a. Descendant convicted of crime with
(will changing) civil interdiction. Necessarily
4. Support unjustifiably not given. imposable, not actually imposed.
a. Must prove obligation to give support b. Reclusion temporal, reclusion
b. Spouses: mutual obligation to give perpetua.
support
c. Reason must be unjustifiable Ground for Disinheritance Only against
Ascendants (Parents)
Grounds for Disinheritance Common
between Ascendants and Descendants 1. Abandonment by parents
 Adultery and Concubinage – with the a. Willfully left the children to fend for
spouse of the testator themselves
1. It must be the heir who committed such b. Abdication of parental duties.
liaison c. Only refers to abandoned child.
2. With the legal spouse of the testator d. Induced daughters to lead a
3. Not necessarily incestuous disgraceful life – also applicable to sons.
4. Applicable to both legitimate and illegitimate
descendant 2. Attempt on the life of one parent
against another parent.
Grounds for Disinheritance Common
a. Parent v. parent
Ascendant and Spouse
Loss of parental authority b. Even if parents are not married, it is
1. Causes: Arts. 230, 231, 232 of the still a ground.
Family Code c. No need for conviction. As long as
2. Ascendant of testator the heir can prove that there is an
3. Spouse has given cause for loss of attempt.
parental authority. d. They do not need to be spouses.
4. No actual deprivation, but it must However, the testator must be a
exist. It means that the act is committed common child.
which may be a cause for loss of parental
Grounds for Disinheritance Only against
authority over their common children,
spouse – refers to legal spouses only,
EXCEPT for those enumerated in A.
legally married to each other
5. There are no common grounds
1. Giving cause for legal separation
between spouse and descendants.
a. No need for previous conviction
b. Prove infidelity if cause is contested
Grounds for Disinheritance Only against
c. No need to prove grounds unless
Descendant
contested by the heir.
1. Maltreatment of testator
d. Legal separation instituted but not
a. By word – slander, offensive
terminated, OK
language, insult, libel. May be spoken
e. If there is already a decree:
or written.
i. Ground is conclusive
b. By deed – no need for violence,
ii. But, there is a need to
something which caused the testator
disinherit
to be humiliated. Laying hands if not
iii. Effects: Guilty spouse is not
under attempt on life.
entitled to inherit.
2. Leading a disgraceful life (or dishonest) f. See 10 causes under the Family
i.e., daughter living with a married man, Code.
estafadora, prostitutes, drug dealers, 2. Support – refusal to give support to the
drug addict. children
3. Commission of crime which carries with a. Offended the testator
it the penalty of civil interdiction b. Common children of the testator and
the spouse
c. Spouse refuses to give support to the
child
d. Parents share in support of their
common children. Refusal of the other
spouse causes damage to the other.
(testator)
GROUND CHILD/ PARENT/ SPOUSE

DESCEND ASCEND

Attempt against the life of √ √ √

the testator, spouse,
ascendant, descendant

Accusation of a crime with √ √ √

penalty of six years

Induce testator to √ √ √
make/change the will.

Support unjustifiably not √ √ √

given

Adultery and Concubinage √ √ N/A

Loss of parental authority N/A √ √

Grounds Specific to a 1.Maltreatment 1. Abandonment by 1 Giving Cause

Particular Heir of testator parents Legal
Separation
2. Leading a 2. Attempt on the
disgraceful life life of one parent 2. Support
against another
3. Commission
parent.
of crime which
carries with it
the penalty of
civil interdiction
IMPERFECT DISINHERITANCE: Disinheritance  Even if validly disinherited, heir can still be
which does not have one or more of the validly restored in the legitime by
essential requisites for its validity. RECONCILIATION.
EFFECTS OF IMPERFECT DISINHERITANCE
1. If the testator had made  A subsequent reconciliation between the
disposition of the entire estate; offender and the offended person deprives
annulment of the testamentary the latter of the right to disinherit and
disposition only in so far as they renders ineffectual any disinheritance that
prejudice the legitime of the person may have been made. (Art. 922)
disinherited; does not affect the  Reconciliation – when in “speaking terms
dispositions of the testator with respect again,” no particular form required, it may
to the free portion be express or tacit. However, mere civility
2. If the testator did not which may characterize their relationship is
dispose of the free portion; compulsory not enough.
heir given all that he is entitled to  In order for reconciliation to be effective, the
receive as if the disinheritance has not testator must pardon the disinherited heir.
been made, without prejudice to lawful Such pardon must specifically refer to the
dispositions made by the testator in heir and to the acts causing the
favor of others disinheritance. The heir must accept the
3. Devisees, legacies and pardon.
other testamentary dispositions shall be  In unworthiness, there must a pardon in
valid to such extent as will not impair the writing to remove incapacity to inherit.
legitime However, it does not have to be in a will.
 If grounds for disinheritance and
IMPERFECT PRETERITION unworthiness are common, reconciliation
DISINHERITANCE does not erase the fact that the heir is
Person disinherited may The person omitted unworthy. What then is the effect of a
be any compulsory heir must be a compulsory subsequent reconciliation upon the heir’s
heir in the direct line capacity to succeed?
EXPRESS IMPLIED 1. If disinheritance has
INTENTIONAL EITHER intentional or
been made: Rule on reconciliation
unintentional
applies, the disinheritance becomes
partial annulment of Effect: total
ineffective
institution of heirs annulment of
2. If disinheritance has
institution of heirs
not been made: The rule on
reconciliation does not apply, the heir
REVOCATION OF DISINHERITANCE
continues to be incapacitated to succeed
1. Reconciliation
unless the testator pardoned him under
NOTE: This refers to the resumption of
Art. 1033.
genuine cordial relationship between the
testator and the disinherited heir,
LEGACIES AND DEVISES
approximating that which prevailed before
PERSONS CHARGED WITH LEGACIES AND
the testator learned of the cause for
DEVISES:
disinheritance, reciprocally manifested by
their actions subsequent to the act of 1. Compulsory heir;
disinheritance. 2. Voluntary heir;
2. Subsequent institution of 3. Legatee or devisee;
the disinherited heir 4. Estate.
3. Nullity of the will which
contains the disinheritance  If the will is silent as to who
shall pay or deliver the legacy/devise,
NOTES: 1. If there is an
administration proceedings, there is a
presumption that such legacy or devise
 constitutes a charge against the
decedent’s estate
2. If there is no
administration proceedings, it is a charge
upon the heirs (Art. 926, par. 2)
 Since legacies and devises
are to be taken from the disposable free
portion of the estate, the provisions on
institution of heirs are generally applicable
to them
 The legatees/devisees shall
be liable for the charge to the extent of the
value of the legacy/devise received.
 The compulsory heir shall
NOT be liable for the charge beyond the
disposable portion given to him. It should
not affect his legitime.
ORDER OF PAYMENT IN CASE ESTATE IS
INSUFFICIENT TO COVER ALL LEGACIES
AND DEVICES
1. Remuneratory legacies or devises
2. Legacies or devises declared by the testator
to be preferential
3. Legacies for Support
4. Legacies for Education
5. Legacies or devises of a specific,
determinate thing which forms a part of the
6. estate
7. All others, pro-rata
1. Testator transforms the thing bequeathed in
such a manner it does not retain either the
form or the denomination it had.
2. The testator by any title or for any cause
alienates the thing bequeathed, or any part
thereof, it being understood that in the latter
case the legacy or devise shall be without
only with respect to the part alienated
EXCEPT: when the thing should again
belong to the testator after alienation.
3. The thing bequeathed is totally lost during
the lifetime of the testator, or after his death
without the heirs fault;
4. Other Causes: nullity of the will;
noncompliance with suspensive conditions
affecting the bequests; sale of the thing to
pay the debts of the deceased during the
settlement of his estate.

WHEN LEGACY/DEVISE CAN BE REVOKED BY

OPERATION OF LAW
1. If the testator transform the thing
bequeathed or devised in such a manner
that it does not retain its form and
denomination
2. If the testator, by any title or for any cause,
alienates the thing bequeathed or devised or
any part thereof
3. If the thing bequeathed or devised is totally
lost during the lifetime of the testator, or
after his death without the heir’s fault
4. If the legacy is a credit against a third
person or the remission of a debt, and the
testator, subsequent to the making of the
will brings an action against such debtor for
payment

GROUNDS FOR REVOCATION OF LEGACIES

OR DEVISES
 VALIDITY AND EFFECT OF LEGACY

Thing owned in part by testator General Rule: Conveys only interest or part owned by testator
(Art. 929)
Exception: if testator otherwise provides –

1. He may convey more than what he owns - the state should

try to acquire the part or interest owned by other parties.
If other parties are unwilling to alienate, the estate should
give the legatee/devisee the monetary equivalent
(analogy with Article 931)

2. He may convey less than what he owns (Article 794)

Thing owned by another General Rule:

1. If testator ordered acquisition of the thing - the
(Arts. 930-931) order should be complied with. If the owner is unwilling to
part with the thing, the legatee/devisee should be given
the monetary equivalent

2. If testator erroneously believed that the thing

belonged to him - legacy/device is void

Exception: if testator acquire the thing onerously or

gratuitously after making of the disposition, disposition is
validated

3. If testator knew that the thing did not belong to

him but did not order its acquisition - code is silent
but disposition should be considered valid - there is an
implied order to acquire and doubts must be resolved in
favor of intestacy

Thing already owned to the 1. If thing already belonged to legatee/devisee at

legatee/devisee (Arts 932-933) time of execution of will – legacy/devise is void

2. If thing was owned by another person at time of

making the will and thereafter it is acquired by
legatee/devisee:

a. If testator erroneously believed that he owned

the thing – legacy /devise is void

b. If testator was not in error –

i. If thing was acquired onerously by L/D –

L/D entitled to be reimbursed

ii. If thing was acquired gratuitously by

L/D – nothing is due
 3. If thing was owned by testator at time will was made
and L/D acquired the thing from him thereafter – law is
silent

*Balane – L/D deemed revoked

*Tolentino – no intention to revoke (BUT if the testator has

not alienated the thing directly to the L/D, but to a 3rd
person and the former just acquired it from the latter,
there is an intention to revoke)

Legacy/Devise to remove an Valid, if the encumbrance can be removed for a consideration

encumbrance over a thing
belonging to testator (Art 932
par 2)

Legacy/Devise of a thing pledged The encumbrance must be removed by paying the debt unless
or mortgaged (Article 934) the testator intended otherwise
================================= BASIC PRINCIPLES IN INTESTATE
SUCCESSION
TOPICS UNDER THE SYLLABUS
1. Intestate heirs always related by blood.
Except:
III. Legal or Intestate Succession a. Spouse - not related by blood,
(Arts. 960-1014) stranger in the family
A. General provisions (Arts. 960- b. Adoptive relation – adopter/adopted,
969) fiction by law created by adoption,
(1) Relationship (Arts. 963-969) purely personal
c. State – in the event no heir can
(2) Right of representation (Arts. inherit.
970-977)
B. Order of intestate succession 2. Rule of Proximity – The nearer excludes
(Arts. 978-1014, 992) the farther – the relative nearest in degree
================================= exclude the farther one, saving the right of
representation when it properly takes place.
III. GENERAL PROVISIONS ON LEGAL
NOTE: This is subject to rule of preference
OR INTESTATE SUCCESSION between lines. In case of disposition made
LEGAL OR INTESTATE SUCCESSION: That under Art. 959 in general terms in favor or
which is effected by operation of law in the the testator’s relatives, only rule of proximity
absence or default of a will. applies.
CAUSES OF INTESTATE SUCCESSION IN 3. Rule of Preference Between Lines –
GENERAL Direct line is always preferred over
collateral lines. The direct descending line
1. In the absence of applicable shall exclude those in the direct ascending
valid will and collateral lines, and those in the direct
a. Annulment of institution of ascending line shall, in turn, exclude those in
heirs. the collateral line.
b. When will loses its validity.
c. Testator did not make any 4. Rule of equal division – the relatives who
will. are in the same degree shall inherit in equal
d. Will not probated. shares same class
e. Revocation. Exception:
f. Preterition
a. Descending line – difference in class in
2. In the absence of qualified heirs the cases of legitimate or illegitimate
a. Partial institution of heir. In filiation.
such case, intestacy takes place as to i. In case of paternal/maternal
the undisposed portion (mixed lines
succession) ii. Collateral – half or full blood
b. Ineffective disinheritance (a b. Ascending line – the shares are divided
portion) equally between maternal and paternal
c. Predecease lines, which could result to unequal
d. Repudiation (one or all) shares when there is only one
e. Incapacity grandparent in the maternal line while
f. Disinheritance both grandparents survived in the
g. Institution subject to paternal side.
conditions c. Division among brothers and sisters,
i. Suspensive condition did some of whom are of the full and others
not happen of half blood; and
ii. Resolutory condition d. Division in cases where the right of
happens. representation takes place.
iii. Expiration of term or period
of institution 5. Rule of Barrier between the legitimate
iv. Non-compliance or family and the illegitimate family – the
impossibility of compliance with the illegitimate family cannot inherit by intestate
will. succession from the legitimate family and
vice-versa.
 those of the following degree shall inherit in
6. Rule of Double Share for full blood their own right (per capita) and cannot
collaterals – when full and half-blood represent the person repudiating the
brothers or sisters, nephews or nieces, inheritance.
survive, the full blood shall take a portion in
the inheritance doubt that of the half-blood. REPRESENTATION: A right created by fiction of
law, by virtue of which the representative is
NOTE: In all cases where there has been an raised to the place and degree of the person
institution of heirs, follow the [I.S.R.A.I.] order represented, and acquires the rights which the
of Justice Paras. If the Institution fails, latter would have if he were living or if he could
Substitution occurs. If there is no substitute, have inherited.
right of Representation applies in the direct
descending line to the legitime of the vacancy is INSTANCES WHEN REPRESENTATION
caused by predecease, incapacity or OCCURS:
disinheritance. The right of Accretion applies to
the free portion when the requisites in Article 1. Predecease
1016 are present. If there is no substitute, and 2. Incapacity of Unworthiness
the right of representation or accretion does not 3. Disinheritance
apply, the rule of Intestate succession shall take
over. NOTE: In case of repudiation, accretion
takes place.
RULES ON RELATIONSHIP
 Although a renouncer cannot be
1. Number of represented, he can represent the
generations determines proximity person whose inheritance he has
2. Each generation forms renounced. Sayson v. CA, [205 SCRA
a degree 324]
3. A series of degrees
forms a line CHARACTERISTICS OF REPRESENTATION
4. A line may be direct
or collateral. A direct line is that constituted 1. A right of subrogation
by the series of degrees among ascendants 2. Exception to the rule on proximity and
and descendants (ascending and equal division
descending) 3. Called to succession by law
5. A collateral line is that 4. Representative succeeds the decedent
constituted by the series of degrees among and NOT the person represented
persons who are not ascendants or 5. Takes place when there is vacancy in the
descendants, but who come from a common inheritance brought about by
ancestor. predecease, incapacity, or disinheritance
6. Full blood: same 6. As a general rule, exercised only by the
father and mother, half blood: only one of grandchildren of the decedent
either parent is the same.
7. In adoption, the legal
filiation is personal and exists only between TESTAMENTARY INTESTATE
adopter and the adopted. The adopted is When Takes Place
deemed a legitimate child of the adopter. COMPULSORY HEIR: LEGAL HEIR:

EFFECTS OF INCAPACITY OR REPUDIATION dies before the dies before the

testator testator
1. If there are several relatives of the same
degree and on or more of them are is unworthy to is unworthy to
unwilling or incapacitated to succeed, his succeed succeed
portion shall accrue to the others of the
same degree (right of accretion) save the is disinherited
right of representation when it should Effects Upon The Division
take place. Acquires the right Acquires the right
with respect to the with respect to the
2. If the inheritance should be repudiated by legitime entire legal portion
the nearest relative, should there be only Per stirpes Per stirpes
one, or by all the nearest relatives called by
law to succeed, should there be several,
IN WHAT KINDS OF SUCCESSION
REPRESENTATION OPERATES

1. Legitimes

The children and descendants of the person

disinherited shall take his or her place and
shall preserve the rights of compulsory heir
with respect to the legitime (Art 923)
 And only when the heir to be
represented:
a. Predecease, becomes incapacitated, or
was disinherited by the testator.
b. Is a compulsory heir.
c. No right of representation if the heir to
be represented is a voluntary heir.

2. Intestate succession

 Representation occurs in all intestate

estate. All legal heirs may be represented
when proper. (It is not proper only when the
heir to be represented repudiated his share
in the inheritance)
OUTLINE OF RULES:

KIND OF HEIR Predecease Incapacity Renunciation Disinheritance

Compulsory Transmits Transmits Transmits Transmits

nothing; nothing; nothing; nothing;

Representation Representation NO Representation

Representation

Voluntary Transmits Transmits Transmits Not applicable

nothing; nothing; nothing;

NO NO NO
Representation Representation Representation

Legal Transmits Transmits Transmits Not applicable

nothing; nothing; nothing;

Representation Representation NO
Representation

IN WHAT LINES DOES REPRESENTATION 3. An adopted child

OBTAIN can neither represent nor be represented

1. Legitime - in the direct descending line
only.
Representation does not exist in the
ascending line. Hence, the father cannot
represent the son in the inheritance from the
grandfather.
 The rationale why an adopted child can
neither represent or be represented is
because the legal relationship created by
the adoption is strictly between the
adopter and the adopted. Teotica v. Del
Val, [13 SCRA 406]

2. Intestacy:
a. In the direct descending line. QUALIFICATIONS TO REPRESENT

b. In the collateral line, it takes place
only in favor of the children of brother or
sisters (nieces and nephews of the
decedent, not grand-nieces or grand-
nephews), whether of the full or half
blood, and only if they concur with at
least 1 uncle or aunt.
1. The representative himself must have
capacity to succeed the decedent
2. The representative need not be qualified to
succeed the person represented.
HOW REPRESENTATION OPERATES
 Division shall be made PER STIRPES.

NOTE: If all the brothers and sisters are

disqualified, the nephews and nieces shall
Factual Situation Division
inherit per capita.
If all the children are All grandchildren still
REPRESENTATION OF ILLEGITIMATE OR
disqualified inherit per stirpes
ADOPTED CHILDREN

1. If the child to be If all the brothers Nephews and nieces

represented is legitimate – only legitimate /sisters are inherit per capita
children and descendants can represent him. disqualified
2. If the child to be
THE SUCCESSIONAL BARRIER
represented is illegitimate – both legitimate
and illegitimate children/descendants can
represent him.
 An illegitimate child has no right to 5. Brothers, Sisters, Nephews, Nieces
inherit ab intestato from the legitimate
6. State
children and relatives of his father or
mother; nor shall such children or relatives
inherit in the same manner from the
illegitimate child. (Art 992)

 The Barrier rule only applies if there is a

legitimate and illegitimate relation.
Example: A is the legitimate son of B. C is
the illegitimate son of A. C cannot inherit
from B if A predeceases, or becomes
incapacitated or be disinherited by B.

EFFECTS OF REPUDIATION
1. By representative – right of representation is
present

Example: A child who repudiates his

inheritance when his father died may still
represent the latter when his grandfather
dies.
2. By heir – no right of representation

ORDER OF INTESTATE SUCCESSION

INTESTATE HEIRS: Those who are called by law

to the succession either in the absence of a will
or of qualified heirs, and who are deemed called
based on the presumed will of the decedent.

REGULAR ORDER OF SUCCESSION

1. Legitimate Children/Descendants

2. Illegitimate Children/Descendants

3. Legitimate Parents/ Ascendants

4. Illegitimate Parents

5. Surviving Spouse

5. Brothers, Sisters, Nephews, Nieces

6. Other Collaterals – to the 5th degree

7. State

NOTE: Decedent is a legitimate person

ORDER OF SUCCESSION (If descendent is a

legitimate person)

1. Legitimate Children/Descendants

2. Illegitimate Children/Descendants

3. Illegitimate Parents

4. Surviving Spouse
 RULES OF EXCLUSION AND CONCURRENCE

Intestate Heir EXCLUDES CONCURS WITH

EXCLUDED BY
Legitimate children Ascendants, No one Surviving spouse
and Legitimate collaterals
descendants and state Illegitimate
children

Illegitimate children Illegitimate No one Surviving spouse

and Descendants parents,
collaterals Legitimate
and state children and
legitimate parents

Legitimate parents and Collaterals Legitimate Illegitimate

legitimate ascendants and state children children and
surviving spouse

Illegitimate parents Collaterals Legitimate Surviving spouse

and state children and
illegitimate
children

Surviving spouse Collaterals No one Legitimate

other than children
siblings,
nephews and Illegitimate
nieces children

Legitimate parents
and Illegitimate
parents

Siblings, nephews All other Legitimate Surviving spouse

nieces collaterals children,
and state illegitimate
children,

Legitimate
parents and
illegitimate
parents

Other collaterals Collateral Legitimate Collaterals in the

within 5th degree remoter in children same degree
degree and
state Illegitimate
children

Legitimate
parents

Illegitimate
parents and
 Surviving
spouse

State No one Everyone No one

SUMMARY OF INTESTATE SHARES

HEIR LEGITIME FREE PORTION TOTAL

LEGITIMATE CHILDREN & (1/2) (1/2) 100%

DESCENDANTS

LEGIMITATE PARENTS & (1/2) (1/2) 100%

ASCENDANTS

1 (ONE) LEGITIMATE CHILDREN – 1/2 CHILDREN –

CHILDREN/DESCENDANT & 1/2
SURVIVING SPOUSE
SPOUSE -1/4 SPOUSE -1/4 SPOUSE - 1/2

LEGITIMATE CHILDREN (LC) & CHILDREN – 1/2 ENTIRE

SPOUSE ESTATE IS
SPOUSE – EQUAL DIVIDED
TO SHARE OF 1 EQUALLY
(ONE) LC BETWEEN
TOTAL
NUMBER OF
CHILDREN &
SPOUSE

LEGITIMATE CHILDREN (LC) & LC -1/2 WHAT REMAINS (IF WHOLE

ILLEGITIMATE CHILDREN (ILC) ANY) ESTATE
ILC – 1/2 OF DIVIDED BY
SHARE OF 1 THE RATIO OF
(ONE) LC 2:1 FOR EACH
LEGITIMATE
CHILD AS
COMPARED TO
THE
ILLEGITIMATE
CHILD

LEGITIMATE LEGITIMATE PARENT – 1/2

PARENTS/ASCENDANT & PARENTS/ASCEN
SURVIVING SPOUSE DANT – 1/2

SPOUSE – 1/4 SPOUSE -1/4 SPOUSE - 1/2

LEGIMITATE LEGITIMATE PARENTS - 1/2

PARENTS/ASCENDANTS & PARENTS/ASCEN
ILLEGIMTATE CHILDREN DANTS – 1/2

ILLEGIMITATE ILLEGITIMATE ILC - 1/2

CHILDREN – 1/4 CHILDREN - 1/4
 ILLEGITIMATE CHILDREN & ILC – 1/3 ILC - 1/6 ILC - 1/2
SURVIVING SPOUSE

SPOUSE – 1/3 SPOUSE - 1/6 SPOUSE - 1/2

LEGIMIATE WHOLE
CHILDREN/DESCENDANTS, ESTATE
SURVIVING SPOUSE & LC –1/2 DIVIDED BY
ILLEGITIMATE CHILDREN THE RATIO OF
SPOUSE – EQUAL
2:1 FOR EACH
TO 1 (ONE) LC
LEGITIMATE
ILC – 1/2 OF CHILD AS
SHARE OF ONE COMPARED TO
(1) LC THE
ILLEGITIMATE
CHILD

LEGITIMATE LEGIMIATE LEGITIMATE

PARENTS/ASCENDANTS, PARENTS/ASCEN PARENTS - 1/2
SURVIVING SPOUSE, & DANTS –1/2 SPOUSE - 1/4
ILLEGITIMATE CHILDREN ILC - 1/4
SPOUSE – 1/8 SPOUSE - 1/8

ILC –1/4

SURVIVING SPOUSE GENERA (1/2) (1/2) 100%

LLY

ARTICUL (1/3) (2/3) 100%

O
MORTIS

ILLEGITIMATE CHILDREN ONLY (1/2) (1/2) 100%

ILLEGITIMATE PARENTS (1/2) (1/2) 100%

ILLEGITIMATE PARENTS & ILLEGITIMATE ILLEGITIMATE ILLEGIMITATE

SURVIVING SPOUSE PARENTS – 1/4 PARENTS - 1/4 PARENTS - 1/2
SPOUSE - 1/4 SPOUSE - 1/2
SPOUSE – 1/4

SIBLINGS, NEPHEWS &

NIECE (1/2) (1/2) 100%

SPOUSE – 1/2

NEPHEWS/SIB
LINGS 1/2
NEPHEWS/SIBLINGS
SURVIVING SPOUSE, SIBLINGS, SPOUSE (1/2) (1/2)

NEPHEWS & NIECES

WHEN DECEDENT HAS NO HEIRS
1. Assignment and
Disposition of Assets
a. if decedent is a resident of the
Philippines at any time
i. Personal property – to the
municipality of last residence
ii. Real property – where
situated
b. If decedent was never a resident
of the Philippines
- Personal and real property –
where respectfully situated
2. How Property is
to be Used
a. For the benefit of public
educational and charitable institutions in
the respective municipalities/cities
b. Alternatively, at the instance of
an interested party, or motu proprio, the
court may order the permanent trust for
the benefit of the institutions concerned
CARDINAL PRINCIPLES OF INTESTATE
SUCCESSION (By Justice Paras)
1. Even if there is an order of intestate
succession, the compulsory heirs are never
excluded. The Civil Code follows the
concurrence theory, not the exclusion theory.
2. Right of Representation in the collateral line
occurs only in intestate succession, never in
testamentary succession because a
voluntary heir cannot be represented
(collateral relatives are not compulsory
heirs)
3. The intestate shares are either equal to or
greater than the legitime.
4. General Rule: Grand Children always inherit
by Right of Representation, provided
representation is proper.
Exception: Whenever all the children
repudiate, the grandchildren inherit in their
own right because Right of Representation
would not be proper
5. Nephews and nieces inherit either by Right
of Representation or in their Own Right
a. Right of Representation when they
concur with aunts and uncles (provided
that Right of Representation is proper)
b. Own Right: when they do not concur with
aunts and uncles
6. Illegitimate Children and Descendants of
legitimates cannot represent because of the
barrier, but both the Illegitimate and
Legitimate Children and Descendants of
Illegitimates can.
7. There can be reserva troncal in intestate
succession
8. A renouncer can represent, but cannot be
represented
9. A person who cannot represent a near
relative cannot also represent a relative
father in degree.
MIXED SUCCESSION OR PARTIAL INTESTACY
Mixed Succession: Succession that is effected
partly by will and partly by operation of law.
Rules:
1. The law of legitimes must be brought into
operation in partial intestacy because the
testamentary dispositions can affect only the
disposable free portion but never the
legitimes.
2. If among the concurring intestate heirs there
are compulsory heirs, whose legal or
intestate portions exceed their respective
legitmes, then the amount of the
testamentary disposition must be deducted
from the disposable free portion, to be borne
by all the intestate heirs in the proportions
that they are entitled to receive from such
disposable free portion as intestate heirs.
3. If the intestate share of a compulsory heir is
equal to his legitime, then the amount of the
testamentary disposition must be deducted
only from the intestate shares of the others,
in the proportions stated above.
4. If the testamentary dispositions consume
the entire disposable free portion, then the
intestate heirs who are compulsory heirs will
get only their legitime, and those who are
not compulsory heirs will get nothing.
=================================
TOPICS UNDER THE SYLLABUS
IV. Provisions Common to Testate
and Intestate Succession (Arts. 1015-
1105)
A. Right of accretion (Arts. 1015-
1023)
(1) Definition and requisites (Arts.
1015-1016)
B. Capacity to succeed by will or
intestacy (Arts. 1024-1040)
(1) Persons incapable of
succeeding (Arts. 1027, 739,
1032)
(2) Unworthiness vs.
Disinheritance
C. Acceptance and repudiation of
the inheritance (Arts. 1041-1057)
D. Collation (Arts. 908-910, 1061-
1062)
E. Partition and distribution of
estate (Arts. 1078-1105)
(1) Partition (Arts. 1079, 1080)
(2) Partition inter vivos
 (3) Effects of partition (Arts. 1091,
1097, 1100, 1104-1105)
=================================
IV. PROVISIONS COMMON TO
TESTATE AND INTESTATE
SUCCESSION
RIGHT TO ACCRETION: When two or more
persons are called to the same inheritance,
devisee, or legacy, the part assigned to one
who renounce or cannot receive his share or
who died before the testator, is added or
incorporated to that of his co-heirs, co-
devisees, or co-legatees
1. In Testamentary Succession
a. Predecease
b. Incapacity
c. Repudiation
d. Non-fulfillment of suspensive
condition imposed upon instituted heir
e. Ineffective testamentary disposition
2. In Intestate Succession
a. Predecease of a legal heir (only when
representation does not apply)
b. Incapacity of legal heir (only when
representation does not apply)
c. Repudiation by a legal heir
ELEMENTS OF ACCRETION IN
TESTAMENTARY SUCCESSION
1. Two or more persons are called to the same
inheritance, or to the same portion thereof,
pro indiviso (aliquot share)
a. In cases of legacy or devise, as long as
there is no specific designation of the
specific share of each legacy or devise.
b. Not necessarily equal.
c. Once a certain specific part of the free
portion has already been specifically
earmarked, there is no accretion and
there is no express provision on
accretion.
d. But, it is okay to earmark parts of the
free portion as long as no specific
property has been designated.
NOTE: The heir to whom the portion
goes by the right of accretion takes it in
the same proportion that they inherit
2. Renunciation, predecease or incapacity of
one (or more but less than all) of the
instituted heirs that result to a vacancy in
the inheritance, legacy or devise.
FUNDAMENTAL PRINCIPLES IN ACCRETION
1. Accretion in testate succession only takes
place in the free portion. No accretion in
the legitime because when the compulsory
heir repudiates his legitime, the other co-
compulsory heir inherits the repudiated
share in their own right and not through
accretion. If the cause of the vacancy is
PID, representation will occur.
2. Accretion also takes place in cases of
devisees and legatees and usufructuaries
under the same conditions established for
heirs.
3. Accretion is subordinate to substitution,
because substitutes are instituted by the
testator; hence, express will prevails over
presumed will.
NOTE: if there is neither accretion nor
substitution in testamentary succession,
the part left vacant will lapse into testacy
4. The one that the heir gets from accretion
can be renounced separate from the
inheritance attributed to the heir who will
renounced the accrued inheritance.
SUMMARY:
I. In testamentary succession:
1. Legitime:
 In case of predecease of an heir,
there is representation if there are
children or descendants; if none, the
others inherit in their own rights.
 In case of incapacity, results are the
same as in predecease.
 In case of disinheritance, results are
the same as in predecease.
 In case of repudiation by an heir, the
others inherit in their own rights.
2. Disposable free portion:
 Accretion takes place when requisites
are present, but if such requisites are
not present, the others inherit in
their own right.
II. In intestate succession:
 In case of predecease, there is
representation if there are children or
descendants; if none, the others inherit
in their own rights.
 In case of incapacity, results are the
same as in predecease.
 In case of repudiation, there is always
accretion.
CAPACITY TO SUCCEED
The following are capable of succeeding:
1. Natural Persons
a. General Rule – must be (1) living
when succession opens, and (2) not
incapacitated or disqualified by law to
succeed.
 NOTE: It is enough that the heir, devisee
or legatee be already conceived in
accordance with Arts 40 and 41, to be
considered living.
b. If institution subject to a guilty of adultery or concubinage at the
suspensive condition – successor must
be living both when decedent dies and
when the condition happens
c. If institution subject to a consideration thereof;
suspensive term – must be alive only at
the moment of decedent’s death,
successor need not be alive when the
term arrives.
2. Juridical Persons
- Organizations or associations which
possess juridical personality
WHO ARE INCAPABLE OF SUCCEEDING
A. ABSOLUTE INCAPACITY
1. Those not living at the time of death
except Arts. 1026, 1027, and 1030
2. Those who cannot be identified –
uncertain persons (Art. 845)
3. Those who are not permitted by law to
inherit (Art. 1027)
B. RELATIVE INCAPACITY
1. Those Prohibited under Art 1027 due to
Undue Influence or Interest
a. Priest who heard the confession of the
testator during his last illness, or the
minister of the gospel who extended spiritual
aid to him during the same period
b. Relatives of such priest or minister of the
gospel within the 4th degree, the church,
order, chapter, community, organization, or
institution to which such priest or minister
may belong
c. Guardian with respect to testamentary
dispositions given by a ward in his favor
before the final accounts of the guardianship
have been approved, even if the testator
should die after the approval thereof;
EXCEPT if the guardian is his ascendant,
descendant, brother, sister, or spouse
d. Attesting witness to execution of will, their
spouses, parents, children or any one
claiming under such witness, spouse,
parents or children
e. Physician, surgeon, nurse, health officer or
druggist who took care of the testator during
his last illness
f. Individuals, associations, and corporations
not permitted by law to inherit
NOTE: Possible only in testamentary
succession. Therefore, if the one
incapacitated is a compulsory heir, it does
not affect the legitime but only the free
portion.
2. Those prohibited under Art 739 from
giving and receiving donation from each
other based on Morality or Public Policy
a. Those made between persons who were
time of the donation;
b. Those made between persons found
guilty of the same criminal offense, in
c. Those made to a public officer or his
wife, descendants and ascendants, by
reason of his office.
NOTE: Possible only in testamentary
succession. Therefore, if the one
incapacitated is a compulsory heir, it does
not affect the legitime but only the free
portion.
3. The following are incapable of succeeding by
reason of unworthiness:
a. Parents who have abandoned their
children or induced their daughters to
lead a corrupt or immoral life, or
attempted against their virtue;
b. Any person who has been convicted of
an attempt against the life of the
testator, his or her spouse, descendants,
or ascendants;
c. Any person who has accused the testator
of a crime for which the law prescribes
imprisonment for six years or more, if
the accusation has been found
groundless;
d. Any heir of full age who, having
knowledge of the violent death of the
testator, should fail to report it to an
officer of the law within a month, unless
the authorities have already taken
action; this prohibition shall not apply to
cases wherein, according to law, there is
no obligation to make an accusation;
e. Any person convicted of adultery or
concubinage with the spouse of the
testator;
f. Any person who by fraud, violence,
intimidation, or undue influence should
cause the testator to make a will or to
change one already made;
g. Any person who by the same means
prevents another from making a will, or
from revoking one already made, or who
supplants, conceals, or alters the latter's
will;
h. Any person who falsifies or forges a
supposed will of the decedent. (756, 673,
674a)
NOTE: The cause of unworthiness shall be
without effect if the testator had knowledge
thereof at the time he made the will, or if,
having known of them subsequently, he should
condone them in writing.
This is applicable to both testamentary and legal
succession. It is total in the sense that it extends
not only to the free portion but also to the
legitime.
4. By Operation of Law – The moment the
testator uses one of the acts of unworthiness
as a cause for disinheritance, he thereby
submits it to the rules on disinheritance.
Thus, reconciliation renders the
disinheritance ineffective.
PARDON OF ACTS OF UNWORTHINESS
EXPRESS IMPLIED
Made by the execution Effected when testator
of a document or any makes a will instituting
writing in which the the unworthy heir with
descendent condones knowledge of the
the cause of incapacity cause of incapacity
Cannot be revoked Revoked when the
testator revokes the
will or the institution
TIME TO DETERMINE THE CAPACITY
GENERAL RULE: at the moment of the death of
the descedent.
EXCEPTION:
a. Those disqualified under Art. 1032 (2,3,5)
wherein it is necessary to wait until final
judgment is rendered
b. Those disqualified under Art.1032 (4)
wherein it is necessary to wait for the
expiration for the month allowed for report
c. If the institution of the heirs, legacy or
devise is conditional, the time of compliance
with the condition shall be considered.
NOTE: The action for a declaration of
incapacity and recovery of the inheritance,
devise or legacy shall be 5 years from the time
the disqualified person took possession thereof.
ADDITIONAL NOTES
1. The capacity to succeed is governed by the
law of the nation of the decedent.
2. Persons not incapacitated by law may
succeed by will or ab intestato.
3. If the heir excluded from the inheritance by
reason of incapacity is a compulsory heir,
and if such compulsory heir has children or
descendant, the latter shall acquire the
incapacitated heir’s right to the legitime (by
representation.).
4. A testamentary provision in favor of a
disqualified person, even though made
under the guise of an onerous contract, or
made through an intermediary, shall be void.
(Art. 755)
MANNER OF ACCEPTANCE OF INHERITANCE
1. Express
a. Public Document
b. Private Writing
2. Tacit Acceptance – one resulting from acts
by which the intention to accept is
necessarily implied or which one would have
no right to do except in the capacity of an
heir. It can be presumed from certain acts of
the heir such as:
a. When heir sells, donates, or assigns his
right.
b. When heir renounces it for the benefit of
one or more heirs.
c. When renunciation is in favor of all heirs
indiscriminately for consideration
d. Other acts of tacit acceptance:
i. Heir demands partition of the
inheritance
ii. Heir alienates some objects of
the inheritance
iii. Under Article 1057, failure to
signify acceptance or repudiation
within 30 days after an order of
distribution by the probate court.
CHARACTERISTICS OF REPUDIATION
1. Free and Voluntary Act
2. Irrevocable once made and cannot be
impugned, except in cases vitiating consent.
3. Retroactive
REQUISITES FOR A VALID REPUDIATION
Heir repudiating must be certain of two things
before repudiating:
a. Death of the person from whom he is
to inherit;
b. Right to the inheritance.
 Who may accept or repudiate? Any
person having the free disposal of his
property UNLESS he is incapacitated such as
when he is a minor, deaf-mute who cannot
read and write, judicially declared insolvent,
under civil interdiction, in which cases his
guardian or representative shall be the
one to accept or repudiate. However, judicial
authorization is necessary in case of
repudiation.
If the beneficiary happens to be the POOR:
a. Acceptance – person designated by the
testator to determine the beneficiaries and
to distribute the property. In default thereof,
the executor.
b. Repudiation – beneficiaries themselves once
they are determined
If the beneficiary happens to be a
CORPORATION, ASSOCIATION,
INSTITUTION, OR ENTITY:
a. Acceptance – legal representative
b. Repudiation – legal representative with
judicial authorization
If the beneficiary happens to be a MARRIED
WOMAN: she may either accept or repudiate
the inheritance without her husband’s consent
 How is repudiation made? The
repudiation of the inheritance shall be made
in:
a. a public document - acknowledged
before a notary public, or
b. authentic instrument – equivalent to
an indubitable writing or a writing whose
authenticity is admitted or proved, or
c. by a petition presented to the court
having jurisdiction over the testamentary
or intestate proceedings.
RATIO: The law considers that the act of
repudiation is more solemn that the act of
acceptance and that repudiation produces
more violent and disturbing consequences.
 If the heir repudiates the inheritance to the
prejudice of his own creditors, the latter may
petition the court to authorize them to
accept it in the name of the heir.
 If an heir is both a testate and legal heir,
repudiation of the inheritance as a testate
heir, he is understood to have repudiated in
both capacities. However, should he
repudiate as a legal heir, without knowledge
of being a testate heir, he may still accept
the inheritance as a legal heir.
NOTES: If renounced in favor of other heirs,
does it mean acceptance? It depends:
a. If specific heir – whether or not
renouncing heir receives anything,
considered as acceptance on the part of
the heir. There are two transfers.
b. If gratuitous –
i. In favor of all his co heirs
indiscriminately - there is repudiation
because heir deemed to have not
accepted. Hence, accretion takes
place.
ii. In favor of all co-heirs but in
proportion different from those they
would receive by accretion:
considered as tacit acceptance.
iii. If gratuitous in favor of one
or some of his co-heirs – deemed
conveyance in favor of the co-heirs
specified, hence there is acceptance.
c. If onerously:
 There is no
repudiation
 Transfer considered
to be with consideration
 There are also tax
implications because there are two
transfers.
EFFECTS OF ACCEPTANCE AND
REPUDIATION
General Rule: irrevocable
Exception:
1. if made through any of the causes that
vitiates consent (mistake, violence,
intimidation, undue influence and fraud)
2. when an unknown will appears
COLLATION: the act by virtue of which, the
persons who concur in the inheritance bring
back to the common hereditary mass the
property which they have received from him, so
that a division may be effected according to law
and the will of the testator.
To collate is to bring back or to return to the
hereditary mass, in fact or by fiction, property
which came from the estate of the decedent,
during his lifetime, but which the law considers
as an advance from the inheritance
PROPERTIES OR RIGHTS RECEIVED BY
COMPULSORY HEIR NOT SUBJECT TO
COLLATION
1. Property left by will
2. Property which may have been donated by
an ascendant of the compulsory heir
3. Property donated to the spouse of the
compulsory heir
4. Expenses for support, education, medical
attendance even in extraordinary illness,
apprenticeship, ordinary equipment or
customary gifts
5. Expenses incurred by parents in giving their
children a professional, vocational, or other
career
6. Wedding gifts consisting of jewelry, clothing
and outfit, given by parents or ascendants,
so long as they do not exceed 1/10 of the
disposable portion
OPERATIONS RELATED TO COLLATION
1. Collation – adding to the mass of the
hereditary estate the value of the donation
or gratuitous disposition
2. Imputing or Charging – crediting the
donation as an advance on the legitime (if
the donee is a compulsory heir) or on the
free portion (if the donee is a stranger)
3. Reduction – determining to what extent the
donation will remain and to what extent it is
excessive or inofficious
4. Restitution – return or payment of the
excess to the mass of hereditary estate.
PERSONS OBLIGATED TO COLLATE
GENERAL RULE: compulsory heirs
EXCEPTION:
a. When the testator should
have so expressly provided; and
b. When the compulsory heir
should have repudiated his inheritance
 Grandchildren who survive with their uncles,
aunts, or first cousins, and inherit by right of
representation.
NOTE: Grandchildren may inherit from
grandparent in their own right (i.e. heirs next
in degree) and not by right of representation
if their parent repudiates the inheritance of
the grandparent, as no living person can be
represented except in cases of
disinheritance and incapacity. (In such cases,
grandchildren are not obliged to bring to
collation what their parent has received
gratuitously from their grandparent)
WHAT TO COLLATE
1. Any property or right received by gratuitous
title during the testator’s lifetime
2. All that they may have received from the
decedent during his lifetime
3. All that their parents would have brought to
collation if alive.
PROPERTIES NOT SUBJECT TO COLLATION
1. Absolutely no collation – expenses for
support, education (elementary and
secondary only), medical attendance,
even in extraordinary illness,
apprenticeship, ordinary equipment or
customary gifts.
2. Generally not imputable to legitime:
a. Expenses incurred by parents in giving
their children professional, vocational or
other career unless the parents so
provide, or unless they impair the
legitime
b. Wedding gifts by parents and ascendants
consisting of jewelry, clothing, and outfit
except when they exceed 1/10 of the
sum disposable by will.
PARTITION AND DISTRIBUTION
PARTITION AND DISTRIBUTION : The
separation, division and assignment of a thing
held in common among those to whom it may
belong. It includes every act which is intended
to put an end to indivision among co-heirs, and
legatees or devisees, although it should purport
to be a sale, exchange, compromise, or any
other transaction. It is not subject to any form
WHO MAY EFFECT PARTITION
i. Decedent himself
during his lifetime by an act inter vivos or by
will;
ii. Heir themselves;
iii. Competent court; 3rd
person designated by the decedent
WHO CAN DEMAND PARTITION
1. Compulsory heir;
2. Voluntary heir
3. Legatee or devisee;
4. Any person who has acquired interest in
the estate
WHEN PARTITION CANNOT BE DEMANDED
(PAPU)
1. When expressly Prohibited by the testator
himself for a period not exceeding 20 years;
2. When the co-heirs Agreed that the estate
shall not be divided for a period not
exceeding 10 years, renewable for another
10 years;
3. When Prohibited by law;
4. When to partition the estate would render it
Unserviceable for the use for which it is
intended.
NOTE:
 Partition Inter Vivos – it is one that
merely allocates specific items or pieces
of property on the basis of the pro-
indiviso shares fixed by law or given
under the will to heirs or successors.
 Partition is not itself a mode of acquiring
ownership, nor a title therefore, this
partition, being predicated on
succession, necessitates relationship to
the decedent (in case of intestacy) or a
will duly probated (in case of testacy). A
partition inter vivos made in favor or
intestate heirs could be operative.
Dispositions, however, to non-intestate
heirs may suffer an impediment unless
based on a valid will, except perhaps
when such dispositions are intended to
take effect during the life of the testator
and the formalities of donations are
properly complied with.
PROHIBITION TO PARTITION
1. The prohibition to partition for a period not
exceeding 20 years can be imposed on the
legitime.
2. If the prohibition to partition is for more than interested, but the latter shall be
20 years, the excess is void. proportionately obliged to pay the true heir
3. Even if a prohibition is imposed, the heirs by of his share
mutual agreement can still make the
partition. NOTE: Partition with respect to the mistaken
heir is VOID.
LEGAL REDEMPTION IN FAVOR OF CO-HEIRS
 The right of legal redemption predicated A VOID WILL MAY BE A VALID PARITION
upon the fact that the sale made by the co- 1. If the will was in fact a partition; and
heir is effected before the partition of the 2. If the beneficiaries in the void will were legal
estate but after the death of the decedent. heirs

Requisites: IMPORTANT PERIODS TO REMEMBER

1. There must be PERIODS TO REMEMBER ON PARTITION
several co-heirs 1 month or less Testator, if publicly known
2. That one of them before making a to be insane, burden of
sells his right to a stranger will proof is on the one claiming
3. That the sale is validity of the will
made before the partition 20 years Maximum period testator
4. That the right of can prohibit alienation of
redemption must be exercised by one or dispositions
more of the co-heirs within 1 month from 5 years from To claim property escheated
the time they were notified in writing by delivery to the to the State
the co-heir vendor State
5. The vendee is 1 month To report knowledge of
reimbursed for the price of the sale. violent death of decedent
lest he be considered
EFFECTS OF PARTITION unworthy
 Confers upon each heir the exclusive 5 years from the Action for declaration of
ownership of the property adjudicated. time disqualified incapacity & for recovery of
 After the partition, the co-heirs shall be person took the inheritance, devise or
reciprocally bound to warrant the title to possession legacy
(warranty against eviction) and the quality of 30 days from Must signify
(warranty against hidden defects), each issuance of order acceptance/repudiation
property adjudicated. of distribution otherwise, deemed
 The obligation of warranty shall cease in the accepted
following cases: 1 month form Right to repurchase
i. When the testator himself has written notice of hereditary rights sold to a
made the partition unless his intention sale stranger by a co-heir
was otherwise, but the legitime shall 10 years To enforce warranty of
always remain unimpaired. title/quality of property
ii. When it has been expressly adjudicated to co-heir from
stipulated in the agreement of partition, the time right of action
unless there has been bad faith. accrues
iii. When the eviction was due to 5 years from To enforce warranty of
a cause subsequent to the partition, or partition solvency of debtor of the
has been caused by the fault of the estate at the time partition
distributee of the property. is made
4 years form Action for rescission of
EFFECTS OF INCLUSION OF INTRUDER IN partition partition on account of
PARTITION lesion
1. Between a true heir and several mistaken
heirs – Partition is VOID END OF DISCUSSION
2. Between several true heirs and a mistaken =========================
heir – transmission to mistaken heir is VOID
3. Through error or mistake; share of true heir
=================
is allotted to mistaken heir – partition shall
not be rescinded unless there is bad faith or
fraud on the part of the other persons
III. LEASE 2. Lease of work (contract for a piece of
========================= work)
======== - One of the parties binds himself to
TOPIC UNDER THE SYLLABUS: produce a result out of his work or labor
A. Lease of Things - For a price certain
B. Lease of Work or Services
C. Lease of Rural and Urban Lands Duties Of A Contractor Who Furnishes Work
And Material
1. Qualified persons 1. Duty to deliver
2. Registration 2. Duty to transfer ownership
3. Prohibitions 3. Duty to warrant eviction and hidden defects
D. Contract for Piece of Work
E. Rights and Obligations of Lessor
and Lessee Remedies Of Employer In Case Of Defects
=========================  Ask contractor to remove the defect or to
execute another work
========
 If contractor fails or refuses to remove the
CONTRACT OF LEASE is a contract by which
defect, employer can ask another person to
one person binds himself to grant temporarily,
do it at the contractor’s expense.
the use of a thing or the rendering of some
service to another who undertakes to pay some
3. Lease of service
rent, compensation, or price
- One party binds himself to render to the
other some service
Characteristics Of Lease Of Things: (CLONS-
- For a price certain
PEP-TP)
1. Consensual
2. Lessor need not be the owner CONTRACT CONTRACT CONTRACT
3. Onerous FOR A OF LEASE OF OF LEASE
4. Nominate PIECE OF SERVICE OF THING
5. Subject matter must be within the commerce WORK (Locatio
of man (i.e. not belonging to public domain) (Locatio Operarum)
6. Principal contract Operis)
7. Purpose is to allow Enjoyment or use of a The object of The object of The object
thing contract is the contract is the of contract
8. Purpose to which the thing will be devoted result of the service itself is a thing
should not be immoral work without and not the
9. Period is Temporary considering result which it
10. Period may be definite or indefinite the labor that generates
produced it
NOTE: Persons disqualified to buy under Arts. If the result Even if the Lessor has
1490 and 1491 of the Civil Code are also promised is result to deliver
disqualified to become lessees of the things not intended is the thing
mentioned therein. (Art. 1646, NCC) accomplished, not attained, leased.
the lessor is the services of In case of
Kinds Of Lease not entitled to the lessor breach,
1. Lease of things (whether immovable or compensation must still be there can be
movable property) paid. an action for
 One of the parties binds himself to give to In case of specific
breach, no performance
another the enjoyment or use of a thing
action for
 For a price certain and
specific
 For a period which may be definite or performance
indefinite
NOTE: However, no lease for more than 99 years Elements Of A Tenancy Agreement
shall be valid. (PACAPS)
1. Parties are the landowner and the tenant or
General Rule: The contract of lease may be agricultural lessee
made orally 2. Subject matter of the relationship is an
Exception: Lease of real property for more than agricultural land
1 year (must be in writing to comply with Statute
of Frauds)
3. There is consent between the parties to the It is limited to the It includes all possible
relationship. use specified in the uses and enjoyment of
4. Purpose of the relationship is to bring about contract the thing
agricultural production Lessor places and Owner allows the
5. There is personal cultivation on the part of maintains the lessee usufructuary to use and
the tenant or agricultural lessee and in the peaceful enjoy the property
6. Harvest is shared between the landowner enjoyment of the
and the tenant or agricultural lessee. thing
Its term is generally Its term may be for an
NOTE: Absence of any of the elements will not for a definite period indefinite period
make the alleged tenant a de facto tenant. It may be created by It may be created by
contract as a general law, contract, last will
RENT is the compensation either in money, rule or prescription
provisions, chattels, or labor, received by the Lessee has no duty Usufructuary has duty
lessor from the lessee. to make repairs to make repairs
Lessee has no duty Usufructuary has a duty
REQUISITES: to pay taxes to pay taxes
1. Must not be fictitious or nominal, Lessee cannot Usufructuary may
otherwise the contract is considered constitute a usufruct constitute a sublease
essentially gratuitous of the property
2. Must be capable of determination leased
3. May be in the form of products, fruits,
or construction, as long as it has value LEASE DISTINGUISHED FROM SALE
LEASE SALE
 Owner has the right to fix the rent because Only the use or Ownership is transferred
the contract is consensual and not imposed enjoyment is
by law. transferred
 Increasing the rent is NOT an absolute right Transfer is Transfer is permanent
of the lessor. temporary
 If the rent is fixed for the first time, courts Lessor need not be Seller must be the
cannot interfere, but if it is a renewal, the the owner owner at the time the
courts can settle the disagreements. property is delivered
 There being no agreement on the reasonable The price of the Usually, the selling price
compensation that a lessee must pay for its object (distinguished is mentioned
continuing use and occupation of the from the rent) is
premises after the termination of the lease, it usually not
was proper for the lower courts to determine mentioned
the same. MATERCCO v. First Landlink
Asia Development Corporation, [G.R. No. LEASE OF SERVICE DISTINGUISHED FROM
175678 (2007)] AGENCY
 In lease of rural lands, lessee has no right to LEASE OF AGENCY
a reduction of the rent on account of the SERVICES
sterility of land leased, or by reason of the It is based on It is based on
loss of fruits due to ordinary fortuitous employment representation
events, except when the loss more than ½ of – the lessor of – agent represents his
the fruits is through extraordinary and services does not principal and enter into
unforeseen fortuitous events unless there be represent his juridical acts
stipulation to the contrary. employer nor does
he execute juridical
LEASE DISTINGUISHED FROM USUFRUCT acts
LEASE USUFRUCT Principal contract Preparatory contract
Ownership on the Ownership of the thing
part of the lessor is on the part of the General Rule: A lease of real property is a
not necessary to grantor is necessary to personal right
constitute a contract constitute a usufruct Exceptions:
of lease 1. If it is for more than one year and to be
It is generally a It is always a real right enforceable it must be in writing
personal right and is 2. If it is registered with Registry of Property,
a real right only by regardless of its period
exception
Effects If Lease Of Real Property Is Not
Registered:
1. The lease is not binding on third persons
2. Such third person is allowed to terminate the
lease in case he buys the property from the
owner-lessor
3. Actual knowledge of existence and duration
of lease is equivalent to registration
4. Stranger knows of the existence of the lease,
but was led to believe that the lease would
expire soon or before the new lease in favor
of him begins, the stranger can still be
considered innocent
Persons Disqualified To Become Lessees:
1. Husband and wife cannot lease to each
other their separate properties (Exception:
separation of property)
2. Those disqualified due to fiduciary
relationship
 Guardian: ward
 Agent: principal
 Executor and administrators
 Public officer: state property
 Justices/judges: property under litigation
 Others disqualified by law
Lease By Filipinos
 May lease lands of public domain with an
area of 500 hectares and may acquire not
more than 12 hectares
Lease By Corporations
 At least 60% Filipino-owned, may lease lands
of public domain for a period of 25 years,
renewable for not more than 25 years; the
area not to exceed more than 1,000 hectares
Rules On Lease Of Things When Lessee Is
An Alien
1. 99-year limit applies to aliens as long as it is
a lease of personal property
2. Aliens CANNOT lease public lands, and
cannot acquire private lands except through
succession
3. If lease of real property (private lands),
maximum of 25 years renewable for another
25 years (P.D. 713)
4. Under the Investor’s Lease Act of 1995, the
25-year period was extended to 50 years
renewable for another 25 years provided the
following conditions are met:
a. Lessee must make investments
b. Lease is approved by DTI
c. If terms are violated, DTI can terminate it
NOTE: the ILA did not do away with P.D. 713.
Under ILA the consent of DTI is required, while in
P.D. 713 it is not.
E. Rights and Obligations of Lessor
and Lessee
Obligations Of The Lessor (Art 1654) (DNM)
1. To DELIVER THE THING which is the
object of the contract in such condition as to
render it fit for the use intended
2. To make on the same during the lease all
the NECESSARY REPAIRS in order to keep it
suitable for the use to which it has been
devoted, unless there is a stipulation to the
contrary
3. To MAINTAIN THE LESSEE IN THE
PEACEFUL AND ADEQUATE ENJOYMENT
OF THE LEASE for the entire duration of the
contract
- This is true only if the contract is valid.
Where the contract is void, for having an
existent contract of lease, the lessor has
no right to lease the same property.
Bercero v. Capitol Development
Corporation,[ G.R. No. 154765
(2007)]
Nature Of The Duty Of The Lessor To
Maintain Peaceful Possession Of The
Premises By The Lessor
- This is merely a warranty that the lessee shall
not be disturbed in his legal, and not
physical, possession. Chua Tee Dee v.
Court of Appeals, 429 SCRA 418
Obligations Of The Lessee (Art. 1657) (PUP)
1. PAY THE PRICE of the lease according to
the terms stipulated
2. USE THE THING leased as a diligent
father of a family devoting it to the use
stipulated, and in the absence of stipulation,
to that which may be inferred from the nature
of the thing leased, according to the custom
of the place
3. PAY THE EXPENSES for the deed of
lease
Rights Of The Lessee
1. Right to be respected in his possession
2. Right to be restored to said possession by the
means established by law or by the Rules of
Court, should he be disturbed therein
Remedies When Lessor Or Lessee Does Not
Comply With Their Obligations
1. Rescission and damages or
2. Damages while allowing the contract to
remain in force
Remedy Of Lessee Is Lessor Refuses To
Accept The Rentals
- To make a proper tender of payment and
consignation in order to extinguish the debt

Rules On Changing The Form Of The Lease
- The lessor can alter the thing leased provided
there is no impairment of the use to which
the thing is devoted under the terms of the
lease
- Alteration can also be made by the lessee so
long as the value of the property is not
substantially impaired
Rules In Case Of Urgent Repairs
- The lessee is obliged to tolerate the work,
although it may be very annoying to him and
although during the same time he may be
deprived of a part of the premises, if repairs
last for not more than 40 days
- If repairs last for 40 days or more, lessee can
ask for reduction of the rent in proportion to
the time – including the 1 st 40 days – and the
part of the property of which he is deprived.
NOTE: In either case, rescission may be availed
of if the main purpose of the lease is to provide a
dwelling place and the property becomes
uninhabitable.
Effects If Lessor Fails To Make Urgent
Repairs
The lessee may:
1. Order repairs at the lessor’s cost
2. Sue for damages
3. Suspend the payment of the rent
4. Ask for rescission, in case of substantial
damage to him
EFFECT OF DESTRUCTION OF THE SUBJECT
MATTER WITH RESPECT TO THE LEASE
IF TOTALLY IF ONLY PARTIALLY
DESTROYED DESTROYED
Lease is extinguished Lessee can choose
between reduction of
the rent and rescission
Rules Upon Termination Of Lease Governing
Useful Improvements Caused By The Lessee
If made in good faith and suitable to the use for
which the lease is intended, without altering the
form or substance of the property:
1. Lessor may appropriate the improvements
provided he pays the lessee ½ of its value at
that time
2. If lessor does not appropriate, lessee may
remove the improvements even if the
principal thing may suffer damage,
3. If improvement is ornamental, no right of
reimbursement, but lessee may remove them
provided no damage is caused to the
principal thing
NOTE: Lessee has no right of retention of the
premises if the lessor does not pay. His only right
is right of removal if lessor does opt not to pay
and appropriate.
Kinds Of Trespass In Lease:
1. Trespass in fact (perturbacion de mere
hecho):
- Lessor is not liable for the mere fact of a
trespass or trespass in fact made by a
third person of a leased property.
- Mere fact or mere act of trespass is when
the third person claims no right whatever
- Physical enjoyment is reduced
2. Trespass in law (perturbacion de derecho):
- A third person claims legal right to enjoy
the premises
- Lessor will be held liable
Duration Of Lease
1. Lease may be for a determinate time or fixed
period
- Lease will be for the said period and it
ends on the day fixed without need of a
demand
2. Lease may be without a fixed period
a. For rural lands (Art. 1682)
- It shall be for all time necessary for
the gathering of fruits which the
whole estate may yield in 1 year, or
which it may yield once
b. For urban lands (Art. 1687)
- If rent is paid daily, lease is from day
to day
- If rent is paid weekly, lease is from
week to week
- If rent is paid monthly, lease is from
month to month
- If rent is paid yearly, lease is from
year to year
Rules On Extension Of The Lease Period
1. If a lease contract for a definite term allows
lessee to extend the term, there is no
necessity for lessee to duly notify lessor of
his desire to so extend the term, unless the
contrary is stipulated.
2. “may be extended” as stipulation: lessee can
extend without lessor’s consent but lessee
must notify lessor.
3. “may be extended for 6 years, agreed upon
by both parties” as stipulation: this must be
interpreted in favor of the lessee. Hence,
ordinarily the lessee, at the end of the
original period, may either:
a. leave the premises
b. remain in possession
4. In co-ownership, assent of co-owner is
needed; otherwise, it is void or ineffective as
against non-consenting co-owners.
5. Where according to the terms of the contract, and for as long as he can pay the rentals and
the lease can be extended only by the written its increases.
consent of the parties thereto, no right of - This is not permissible; it is a purely
extension can rise without such written potestative condition because it leaves the
consent. effectivity and enjoyment of leasehold rights
to the sole and exclusive will of the lessee.
IMPLIED NEW LEASE (Tacita Reconducion)
- Lease that arises if at the end of the SUBLEASE
contract the lessee should continue enjoying - A lessee may sublease the thing leased
the thing leased for 15 days with the unless there is an express prohibition to do so
acquiescence of the lessor, unless a notice to - Remedy of lessor if lessee violates
the contrary had previously been given by prohibition: action for rescission of the lease
either party. and damages
- Period of the implied new lease is not that - If the prohibition to sublease is not express
of the original contract but the time but only implied, the sublease will still be
established in Arts 1682 and 1687 (see allowed
Duration of Lease above) - Duration of sublease cannot be longer than
- Other terms of the original contract are that of the lease to which it is dependent
revived except option to purchase in case - The prohibition against subleasing may not
such was in the original contract embrace the taking in of boarders. Mallarte
v. Court of Appeals, G.R. No. 85108
NOTE: Terms that are revived are only those (1989)
which are germane to the enjoyment of - In a sublease arrangement, there are two
possession, but not those with respect to special distinct leases: the principal lease and the
agreements which are by nature foreign to the sublease.
right of occupancy or enjoyment inherent in a
contract of lease – such as an option to purchase SUBLEASE DISTINGUISHED FROM AN
the leased premises. Dizon v. Magsaysay, ASSIGNMENT OF A LEASE
[G.R. No. 23399 (1974)] SUBLEASE ASSIGNMENT
Lessee remains a Lessee is disassociated
Requisites For Implied New Lease: party in the contract from the original
1. The term of the original contract has contract of lease
EXPIRED Two leases and two Only one (lessor-
2. The lessor HAS NOT GIVEN THE LESSEE a distinct juridical assignee who becomes
notice to vacate relationship (lessor- the lessee) because
3. The lessee CONTINUED ENJOYING THE lessee and sublessor- lessee transmits
THING LEASED FOR AT LEAST 15 DAYS sublessee) absolutely his rights and
with the acquiescence of the lessor his personality
disappears
When There Is No Implied New Lease: Sublessee does not Assignee has a direct
1. When before or after the expiration of the have any direct action against the lessor,
term, THERE IS A NOTICE TO VACATE action against the there being novation
given by either party lessor
2. When there is NO DEFINITE FIXED PERIOD Subleasing is allowed Assignment is not
IN THE ORIGINAL LEASE CONTRACT as in unless there is an allowed unless the lessor
the case of successive renewals express prohibition gives his consent

EXTENSION DISTINGUISHED FROM NOTE: The sub-lessee is primarily liable to his

RENEWAL sub-lessor and only a court can extinguish
EXTENSION OF RENEWAL OF LEASE or modify this primary liability if the sub-
LEASE CONTRACT CONTRACT lessor contests the pre-termination of the
Original contract Original contract ceases principal lease by the lessor. Tamio v.
subsists to exist Ticson, G.R. No. 154895 (2004)]
Creates additional Creates a new contract
term Circumstances When A Sublessee Is Made
Liable To The Lessor:
PERPETUAL LEASE 1. For all acts which affect the use and
- A lease contract providing that the lessee can preservation of the thing leased in the
stay in the premises for as long as he wants manner stipulated between the lessor and
the lessee
2. For any rent due to the lessor from the lessee
which the latter failed to pay
 Sublessee is subsidiarily liable
 Sublessee shall not be responsible
beyond amount of rent due from him, in
accordance with the terms of the
sublease, at the time of the extrajudicial
demand by the lessor
Grounds For Ejectment
1. When the period agreed upon or that
which is fixed for the duration of leases (Arts.
1682 and 1687) has expired (see Duration of
Lease)
2. Lack of payment of the price stipulated
- In case lessor refuses to accept rentals,
lessee should make tender of payment,
and consignation otherwise there is no
payment
- Willingness to pay is not payment
3. Violation of any of the conditions agreed
upon in the contract
4. When the lessee devotes thing leased to
any use or service not stipulated which
causes the deterioration thereof, or if he does
not observe the requirement in Art 1657.
R.A. 9341 - AN ACT ESTABLISHING
REFORMS IN THE REGULATION OF RENT OF
CERTAIN RESIDENTIAL UNITS, PROVIDING
THE MECHANISMS THEREFOR AND FOR
OTHER PURPOSES (APPROVED LAST DEC.
21, 2005)
Limitations Imposed Upon The Lessor For
The Protection Of The Lessee (SECS. 3, 5
AND 8)
1. The rent of any residential unit covered
by this Act shall not be increased by more
than 10% annually as long as the unit is
occupied by the same lessee. When the
residential unit becomes vacant, the lessor
may set the initial rent for the next lessee.
2. No lessor may demand more than 1
month advance rent. Neither can he demand
more than 2 months deposit which shall be
kept in a bank under the lessor’s account
name during the entire duration of the lease
agreement. Any and all interest that shall
accrue therein shall be returned to the lessee
at the expiration of the lease contract.
3. No lessor or his successor-in-interest shall
be entitled to eject the lessee upon the
ground that the leased premises have been
sold or mortgaged to a third person
regardless of whether the lease or mortgage
is registered or not.
Grounds For Judicial Ejectment (SEC. 7)
1. Assignment of lease or subleasing of
residential units in whole or part, including
the acceptance of boarders or bedspacers,
without the written consent of the
onwer/lessor.
2. Arrears in payment of rent for a total of 3
months; Provided, That in the case of refusal
by the lessor to accept payment of the rental
agreed upon, the lessee may either deposit
by way of consignation, the amount in court,
or with the city or municipal treasurer, as the
case may be, or in a bank in the name of the
lessor and with notice to the latter, within 1
month after the refusal of the latter to accept
payment.
 The lessee shall thereafter deposit the
rental within 10 days of every current
month. Failure to deposit the rental or 3
months shall constitute a ground for
ejectment.
 The lessor, upon authority of the court in
case of consignation or upon joint
affidavit by him and the lessee to be
submitted to the city or municipal
treasurer and to the bank where the
deposit was made, shall be allowed to
withdraw the deposit.
3. Legitimate need of the owner/lessor to
repossess his /her property for his/her own
use or of any immediate member of his/her
family as a residential unit.
4. Need of the lessor to make necessary
repairs of the leased premises which is the
subject of an existing order of condemnation
by appropriate authorities concerned in order
to make the said premises safe and
habitable.
5. Expiration of the period of the lease
contract.
IV. PARTNERSHIP b. "kept secret among
members" - secrecy directed not to third
the
========================= persons but to some of the partners
======== c. This does not mean that there
TOPICS UNDER THE SYLLABUS could be no contractual relations amongst
A. CONTRACT OF PARTNERSHIP the parties; there is only no partnership or
B. RIGHTS AND OBLIGATIONS OF association with distinct legal personality
PARTNERSHIP
CHARACTERISTICS:
C. RIGHTS AND OBLIGATIONS OF 1. Essentially contractual in nature (Art. 1767,
PARTNERS AMONG THEMSELVES 1784)
D. OBLIGATIONS OF 2. Separate juridical personality (Art. 1768)
PARTNERSHIP/PARTNERSHIP TO 3. Delectus personae
THIRD PERSONS 4. Mutual Agency (Art. 1803)
E. DISSOLUTION 5. Personal liability of partners for partnership
debts
F. LIMITED PARTNERSHIP
========================= 3. RULES TO DETERMINE EXISTENCE
========

CHAPTER 1: GENERAL PROVISIONS
A. CONTRACT OF PARTNERSHIP
1. DEFINITION
PARTNERSHIP - a contract wherein two or more
persons bind themselves to contribute money,
property, or industry to a common fund, with the
intention of dividing the profits among
themselves.
2. ELEMENTS
ELEMENTS OF A PARTNERSHIP:
There shall be a partnership whenever:
1. There is a meeting of the minds;
2. To form a common fund;
3. With intention that profits (and losses) will be
divided among the contracting parties.
ESSENTIAL FEATURES:
1. There must be a VALID CONTRACT.
2. The parties must have legal capacity to
enter into the contract.
3. There must be a mutual contribution of
money, property, or industry to a
common fund.
4. There must be a lawful OBJECT.
5. The purpose or primary purpose must be to
obtain profits and divide the same among
the parties.
ADDITIONAL REQUIREMENT FOR JURICICAL
PERSONALITY
a. It is also required that the
articles of partnership must NOT be kept
SECRET among the members; otherwise,
the association shall have no legal
personality and shall be governed by the
provisions on CO-OWNERSHIP (Art. 1775).
GENERAL RULE: Persons who are NOT partners
as between themselves, CANNOT be partners as
to third persons. (Art. 1769(1))
EXCEPTION: Partnership by Estoppel under Art.
1825
Other Rules to Determine whether a
partnership exists: (Art. 1769)
The following, alone, do not establish partnership
1. Co-ownership or co-possession
2. Sharing of gross returns, whether or not the
persons sharing them have a joint or
common right or interest in any property
from which the returns are derived;
Receipt by a person of a share of the profits of a
business is prima facie evidence that he is a
partner in the business, UNLESS such were
received in payment:
1. Debt by installments or otherwise;
2. Wages or rent;
3. Annuity;
4. Interest on loan;
5. Consideration for sale of goodwill of
business/other property by installments
A partnership must have a lawful object or
purpose, and must be established for the
common benefit or interest of the partners.
When an unlawful partnership is dissolved by a
judicial decree, the profits shall be confiscated in
favor of the State, without prejudice to the
provisions of the Penal Code governing the
confiscation of the instruments and effects of a
crime.
EFFECTS OF AN UNLAWFUL PARTNERSHIP:
1. Void ab initio - never existed in the eyes of
the law. (Art. 1409(1))
2. Profits shall be confiscated in favor of the 6. UNIVERSAL VS. PARTICULAR; GENERAL
government. (Art. 1770) VS. LIMITED
3. Instruments or tools and proceeds of the
crime shall also be forfeited in favor of the
UNIVERSAL VS. PARTICULAR
government. (Art. 1770, Art. 45-RPC)
4. The contributions of the partners shall not be
UNIVERSAL PARTNERSHIP OF ALL PRESENT
confiscated unless they fall under no. 3. (See
PROPERTY —comprises the following:
Arts. 1411 and 1412)
1. Property which belonged to each of the
partners at the time of the constitution of the
Judicial decree is not necessary to dissolve an
partnership
unlawful partnership.
2. Profits which they may acquire from all
property contributed
That there is no legally constituted partnership
UNIVERSAL PARTNERSHIP OF PROFITS —
DOES NOT mean that there are no contractual or
comprises all that the partners may acquire by
legal relations among the parties.
their industry or work during the existence of the
partnership
EFFECT OF PARTIAL ILLEGALITY:
Where a part of the business of a partnership is
Note: Persons who are prohibited from giving
legal and a part illegal, an account of that which
donations or advantage to each other cannot
is legal may be had.
enter into a universal partnership. (Art. 1782)
Where, without the knowledge or participation of
PARTICULAR PARTNERSHIP—has for its
the partners, the firm's profits in a lawful
objects:
business have been increased by wrongful acts,
1. Determinate things
the innocent partners are not precluded as
2. Their use or fruits
against the guilty partners from recovering their
3. Specific undertaking
share of the profits.
4. Exercise of profession or vocation
4. HOW PARTNERSHIP FORMED
GENERAL VS. LIMITED
GENERAL PARTNERSHIP—consists of general
GENERAL RULE: No special form is required for
partners who are liable pro rata and subsidiarily
the validity of a contract. (Art. 1356)
and sometimes solidarily with their separate
property for partnership debts.
BURDEN OF PROOF AND PRESUMPTION
1. Must be proven, not presumed.
LIMITED PARTNERSHIP—one formed by 2 or
2. Persons acting as partners presumed to have
more persons having as members one or more
entered into contract of partnership. Burden
general partners and one or more limited
of proof shifted to party denying its
partners, the latter not being personally liable for
existence.
the obligations of the partnership
3. Extant Parntership presumed to exist until
proven terminated.
7. PARTNERSHIP BY ESTOPPEL
4. Use of the term “partner” does not
necessarily show existence of partnership.
PARTNER BY ESTOPPEL—by words or conduct,
Non-use of the terms “parntership” or
he does any of the ff.:
“partners” not conclusive as to non-existence
Directly represents himself to anyone as a
or partnership, but entitled to weight.
partner in an existing partnership or in a non-
existing partnership
5. PARTNERSHIP TERM
Indirectly represents himself by consenting to
another representing him as a partner in an
PARTNERSHIP AT WILL — one in which no fixed
existing partnership or in a non-existing
term is specified and is not formed for a
partnership
particular undertaking or venture which may be
terminated anytime by mutual agreement
Elements to establish liability as a partner on
ground of estoppel:
PARTNERSHIP WITH A FIXED TERM — the
Defendant represented himself as
term for which the partnership is to exist is fixed
partner/represented by others as such and
or agreed upon or one formed for a particular
not denied/refuted by defendant
undertaking
Plaintiff relied on such representation
Statement of defendant not refuted
 LIABILITIES IN ESTOPPEL form a partnership for the exercise of a
All partners Partnership is liable profession.
consented to
representation The Architecture Act of 2004 (R.A. 9266)
No existing Person who represented grants that a firm, company, partnership,
partnership & all himself & all those who corporation or association may be registered or
those represented made representation liable licensed as such for the practice of architecture
consented; pro-rata/jointly under the following conditions:
Not all partners of a. Only Filipino citizens properly registered
existing partnership and licensed as architects under this Act
consents to may, among themselves, or together with
representation allied technical professionals, form and
No existing Person who represented obtain registration as a firm, company,
partnership & not himself liable & those who partnership, association or corporation for
all represented made/consented to the practice of architecture;
consented; representation separately b. Registered and licensed architects shall
None of partners in liable compose at least seventy-five percent
existing partnership (75%) of the owners, shareholders,
consented members incorporators, directors,
executive officers, as the case may be;
8. PARTNERSHIP VS. JOINT VENTURE c. Individual members of such firm,
partnership association or corporation
Particular partnership distinguished from shall be responsible for their individual
joint venture: Heirs of Tan Eng Kee v. CA, G.R. and collective acts as an entity and as
No. 126881, October 3, 2000 provided by law;
d. Such firm, partnership, association or
A particular partnership is distinguished from corporation shall be registered with the
joint venture, to wit: Securities and Exchange Commission and
1. A joint venture (an American concept similar Board.
to our joint account) is a sort of informal
partnership, with no firm name and no legal 10. MANAGEMENT
personality. In a joint account, the See Rights and Obligations of Partners
participating merchants can transact Among Themselves
business under their own name, and can be
individually liable therefore; and B. RIGHTS AND OBLIGATIONS OF
2. Usually, but not necessarily a joint venture is PARTNERSHIP
limited to a single transaction, although the
business of pursuing to a successful General Rule – A partnership begins from the
termination may continue for a number of moment of the execution of the contract, unless
years; a partnership generally relates to a it is otherwise stipulated.
continuing business of various transactions of
a certain kind. Exception –
1. Where immovable property/real rights
It would seem that under Philippine law, a joint are contributed (Art. 1771)
venture is a FORM of PARTNERSHIP, Public instrument is necessary
specifically a particular partnership which has for Inventory of the property contributed must
its object specific undertaking. be made, signed by the parties and attached
to the public instrument otherwise it is VOID
The Supreme Court has, however, recognized 2. When the contract falls under the
a distinction between these two business coverage of the Statute of Frauds (Art.
forms and has held that although a 1409)
corporation cannot enter into a partnership, it 3. Where capital is P3,000 or more, in
may, however, engage in a joint venture with money or property (Art. 1772)
others. Aurbach v. Sanitary Wares, 180 Public instrument is necessary
SCRA 130 (1989) Must be registered with SEC
But failure to comply shall not affect the
9. PROFESSIONAL PARTNERSHIP liability of the partnership and the members
thereof to third persons
General Professional Partnership (Art.
A “void” partnership under Article 1773, in
1767, Par. 2): Two or more persons may also
relation to Article 1771, may still be considered
a partnership de facto or by estoppel vis-à-vis
third persons; and may be considered by the
courts as an ordinary contract (though not
exactly an “Art. 1767” partnership) from which
rights and obligations may legally stem. Torres
v. CA, 320 SCRA 428 (1999)
SEC Opinion, 1 June 1960: For purposes of
convenience in dealing with government offices
and financial institutions, registration of
partnership having a capital of less than Php
3,000 is recommended.
SEPARATE JURIDICAL PERSONALITY
The partnership has a juridical personality
separate and distinct from that of each of the
partners, even in case of failure to comply with
the requirements of Article 1772, first paragraph
(Registration with SEC).
As a JURIDICAL PERSON, a partnership may:
1. Acquire and possess property of all kinds;
2. Incur obligations; and
3. Bring suit, in conformity with the laws and
regulations of their organization. (See Art.
46)
DELECTUS PERSONAE - The selection or choice
of the person.
Implications: (Dean Villanueva)
The assignment of a partner of his share does
not make assignee a partner (Art. 1804 and
1813)
The existence of the partnership is closely
tied-up to the particular contractual
relationship of the partners (see instances of
dissolution of the partnership upon change of
contractual relationship.)
PARTNERSHIP RELATIONSHIP IS FIDUCIARY
IN NATURE
1. Right to choose co-partners – No one can
become member of partnership without the
consent of all other partners
2. Power to dissolve partnership – Allowed the
power, not necessarily the right, to dissolve
partnership. Dissolution must be in good
faith. Bad faith will not prevent dissolution
but may result in liability for damages.
Doctrine of Delectus Personae: Partnership at
will is predicated on the mutual desire and
consent of the partners. The right to choose with
whom to associate himself is the very foundation
and essence of that partnership. Ortega v. CA,
G.R. No. 109248, July 3, 1995
Delectus personarum; does not apply to a limited
partner who merely contributes his interest and
is not barred from engaging in competitive
business or from transacting business with the
partnership as if he were a stranger (Art. 1866,
in relation to Arts. 1789, 1808, and 1854).
MUTUAL AGENCY
(According to Dean Villanueva)
Unless otherwise stated, all partners are
considered agents and whatever any one of them
may do alone shall bind the partnership (Arts.
1803(1), 1818)
Partners can dispose of partnership property
even when in partnership name (Art. 1819)
Admission or representation made by any partner
concerning partnership affairs is evidence
against the partnership (Art. 1820)
Notice to any partner of any matter relating to
partnership affairs is notice to the partnership
(Art. 1821)
Wrongful act or omission of any partner acting
for partnership affairs makes the partnership
liable (Art. 1822)
Partnership bound to make good losses for acts
or misapplications of partners (Art. 1823)
UNLIMITED LIABILITY
(According to Dean Villanueva)
All partners are liable pro rata with all their
properties and after partnership assets have
been exhausted, for all partnership debts
(Art. 1816)
Any stipulation against personal liability of
partners for partnership debts is void, except
as among them (Art. 1817)
Partners are liable solidarily with the
partnership for everything chargeable to the
partnership when caused by the wrongful act
or omission of any partner acting in the
ordinary course of business of the
partnership or with authority from the other
partners and for partner's act or
misapplication of properties (Art. 1824)
A newly admitted partner into an existing
partnership is liable for all the obligations of
the partnership arising before his admission
but out of partnership property shares (Art.
1826)
Partnership creditors are preferred to those of
each of the partners as regards the
partnership property (Art. 1827)
 Upon dissolution of the partnership, the act with of cannot nt is
partners shall contribute the amounts 3rd stipulation represent vested
necessary to satisfy the partnership liabilities persons to contrary, the co- with the
(Art. 1839(4), (7)) a partner ownershi Board of
may bind p Directors
partnership
(each
partner is
agent of
partnership
)
Effect of Death of Death of Death of
d partner co-owner stockholde
e results in does not r does not
PARTNERSHIP DISTINGUISHED FROM CO- a dissolution necessari dissolve
OWNERSHIP AND CORPORATION t of ly corporatio
h partnership dissolve n
PARTNERS CO-
BASIS CORP co-
HIP OWNER
ownershi
SHIP
p
Creation Created by Created Created by
Dissoluti May be May be Can only
a contract, by law law
o dissolved dissolved be
by mere
n at any time anytime dissolved
agreement
by the will by the with the
of the
of any or all will of consent of
parties
of the any or all the state
Juridical Has a None Has a
partners of the co-
personali juridical juridical
owners
ty personality personality
# of Minimum of Minimum Minimum
separate separate
incorpora 2 persons of 2 of 5
and distinct and
tors persons incorporat
from that of distinct
ors
each from that
Commen From the None From date
partner of each
cement moment of of
stockholde
of execution issuance
r
juridical of contract of
Purpose Realization Common Depends
personali of certificate
of profits enjoymen on AOI
ty partnership of
t of a
incorporati
thing or
on by the
right
SEC
Duration/ No 10 years 50 years
Term of limitation maximu maximum,
existence m extendible
WHO MAY BE PARTNERS
to not
more than GENERAL RULE: Any person capacitated to
50 years in contract may enter into a contract of partnership.
any one EXCEPTIONS
instance Persons who are prohibited from giving each
Disposal/ Partner Co-owner Stockholde other any donation or advantage cannot
Transfera may not may r has a enter into a universal partnership. (Art.
bility of dispose of freely do right to 1782)
interest his so transfer Persons suffering from civil interdiction.
individual shares Persons who cannot give consent to a
interest without contract:
unless prior Minors
agreed consent of insane persons
upon by all other deaf-mutes who do not know how to write
partners stockholde
rs De Leon: There is no prohibition for partnerships
Power to In absence Co-owner Manageme to be partners, BUT THIS IS DOUBTFUL AND
IMPRACTICAL on account of Art. 1768 (that a
partnership has a juridical personality separate
from that of each of the partners) and of the
essential attribute called delectus personae.
MAY CORPORATIONS ENTER INTO
PARTNERSHIP?
Philippine Corporate Law (2001) by Dean
Villanueva (p. 902) citing various SEC
Opinions:
Corporations may enter into partnership
agreements on the following conditions:
Authority to enter into a partnership relation
is expressly conferred by the charter or the
articles of incorporation (AoI), and the nature
of the business venture to be undertaken by
the partnership is in line with the business
authorized by the charter or AoI.
If it is a foreign corporation, it must obtain a
license to transact business in the country in
accordance with the Corporation Code of the
Philippines.
NOTE: How tax law treats the matter:
Notion of partnership no matter how created or
organized: a pool of insurance companies was
considered a partnership under applicable tax
law. Afisco v. CA, G.R. No. 112675, January
25, 1999
Without prejudice to the formation of a joint
venture. J.M. Tuazon v. Bolanos, 95 Phil. 106
(1954); Aurbach v. Sanitary Wares
Manufacturing, 180 SCRA 130 (1989)
WHAT MAY BE CONTRIBUTED
Must be in equal shares unless otherwise
stipulated (Art. 1790).
Money – failure to contribute promised money
makes the promissory-partner liable for
the amount promised, and also for
interest due and damages arising from
the time the former should have
complied with his or her undertaking
(Art. 1786, ¶ 1) (upon perfection of
contract, unless contrary stipulation)
If there is fraud or misrepresentation,
action for rescission may be filed and the
party entitled to rescind, without
prejudice to any other right, has the
right to:
 lien on, or right of retention over, the
surplus of partnership property after
satisfying partnership liabilities to third
persons (for any sum paid by the injured
partner for the purchase of an interest in
the partnership and for any capital or
advances contributed by the latter)
 stand in place of creditors of the
partnership for any payments made by
the injured partner in respect of
partnership liabilities, after all liabilities to
third persons have been satisfied
 indemnity by the guilty partner against all
partnership debts and liabilities (Art.
1838); relate to Art. 1831: with or
without fraud or misrepresentation,
injured partner may seek judicial
dissolution
Property – may include intangible or
incorporeal, e.g. credit Lim Tong
Lim v. Phil. Fishing Gear, 316
SCRA 728 (1999)
Art. 1786, ¶¶ 1 and 2 applies: liable for
fruits from the time property should have
been delivered without need of demand; also
include obligation to preserve the promised
property with the diligence of a good father
of a family pending delivery.
Industry – may concur with any or both of the
first two or in the absence of any one or
both of them; manual and/or
intellectual in consideration of share in
the profits; hence, as generally,
partners are not entitled to charge each
other. Marsh’s Appeal, 69 Pa. St. 30
“Every partner is bound to work to the extent
of his ability for the benefit of the whole,
without regard to the services of his co-
partners, and without comparison of value;
for services to the firm cannot, from their
very nature, be estimated and equalized by
compensation of differences.” Beatty v.
Wray, 7 Harris 519
BUT: a partner who has agreed to render
special service to the partnership, for the
performance of which he is qualified, and
which is one of the inducements for the other
members to enter the partnership, was found
liable civilly to account for the value of such
service upon a finding that he wrongfully
refused to perform such service.
BUT THEN AGAIN, specific performance not
available due to constitutional prohibition vs.
involuntary servitude
A limited partner is not allowed to contribute
services, only “cash or other property” (Art.
1845); otherwise, he is considered an
“industrial and general partner” and thus, not
exempted from personal liability.
 WHEN IMMOVABLES OR REAL RIGHTS
CONTRIBUTED
GENERAL RULE: Failure to comply with the
requirement of appearance in public
instrument and SEC Registration will not
affect the liability of the partnership and the
members thereof to third persons. (Art.
1772, ¶ 2)
EXCEPTION: When IMMOVABLE PROPERTY/
REAL RIGHTS are contributed,
*public instrument + inventory*
made and signed by the parties and attached
to the public instrument (Arts. 1771 and
1773) is required for the benefit of third
persons.
Inventory
(Source: Bar Review Notes for Partnership
Law by Atty. Villareal)
Atty. Villareal: The safer view is De Leon’s due
to his simplified view of statute.
NOTE:
Partnerships void under Art.1773, in relation
Art. 1771 may still be considered either de
facto or estoppel partnerships vis-à-vis third
persons; may even be treated as an ordinary
contract from which rights and obligations
may validly arise, although not exactly a
partnership under the Civil Code. Torres v.
CA, 320 SCRA 428 (1999)
Failure to prepare an inventory of the immovable
property contributed, in spite of article 1773
declaring the partnership void would not render
the partnership void when:
NO THIRD PARTY INVOLVED (since Art. 1773
was intended for the protection of 3rd
parties;
Partners have MADE A CLAIM ON THE
PARTNERSHIP AGREEMENT.

EFFECT OF ABSENCE OF REQUIREMENTS

UNDER ARTICLES 1771 AND 1773
OTHER CLASSIFICATIONS OF PARTNERSHIP
Condition of
Partnership As to legality of existence
where Real Bautista, E. De Leon
Property is DE JURE PARTNERSHIP—one which has
Contributed complied with all the legal requirements for its
establishment
No public DE FACTO—one which has failed to comply with
Instrument, No VOID VOID all the legal requirements for its establishment
Inventory
As to purpose
With Public
Instrument, No VOID VOID COMMERCIAL OR TRADING PARTNERSHIP
Inventory —one formed for the transaction of business
PROFESSIONAL OR NON TRADING
VALID PARTNERSHIP—one formed for the exercise
But either party of a profession
may compel
execution of KINDS OF PARTNERS
public
instrument so it CAPITALIST—contributes money or property
No Public may be INDUSTRIAL—contributes only industry or
Instrument, With registered in the VOID personal service
Inventory registry of GENERAL—liability to 3rd persons extends to
property; separate property
nonetheless, LIMITED—liability to 3rd persons limited to
partnership capital contribution
agreement may MANAGING—manages the affairs/business of
be enforced (cf. the partnership
Arts. 1356 to LIQUIDATING—takes charge of the winding up
1358) of partnership affairs upon dissolution
With Public VALID VALID
Instrument, With
PARTNERS BY ESTOPPEL—not really a partner
but liable as a partner for the protection of
innocent 3rd persons
CONTINUING PARTNER—continues the
business of a partnership after dissolution by
reason of the admission of a new partner,
retirement, death or expulsion of one of the
partners
SURVIVING PARTNER—after a partnership has
been dissolved by death of any partner
SUBPARTNER—not a member of the partnership
who contracts with a partner with reference to
the latter's share in the partnership
OSTENSIBLE—takes active part and known to
the public as partner in the business
SECRET—takes active part in the business but is
not known to be a partner by outside parties
SILENT—does not take any active part in the
business although he may be known to be a
partner
DORMANT—does not take active part in the
business and is not known or held out as a
partner
C. RIGHTS AND OBLIGATIONS OF PARTNERS
AMONG THEMSELVES
1) OBLIGATIONS OF THE PARTNERS AMONG
THEMSELVES
PROMISED CONTRIBUTION
Obligations with respect to contribution of
property:
1. to contribute at the beginning of the
partnership or at the stipulated time the
money, property or industry which he may
have promised to contribute (Art. 1786)
To answer for eviction in case the partnership
is deprived of the determinate property
contributed (Art. 1786)
2. To answer to the partnership for the fruits of
the property the contribution of which he
delayed, from the date they should have
been contributed up to the time of actual
delivery (Art. 1786)
3. To preserve said property with the diligence
of a good father of a family pending delivery
to partnership (Art. 1163)
4. To indemnify partnership for any damage
caused to it by the retention of the same or
by the delay in its contribution (Arts. 1788,
1170)
Effect of failure to contribute property
promised:
Partners becomes ipso jure a debtor of the
partnership even in the absence of any demand
(See Art. 1169[1])
Remedy of the other partner is not rescission but
specific performance with damages from
defaulting partner (Art. 1788)
Obligations with respect to contribution of
money and money converted to personal
use:
1. To contribute on the date fixed the amount he
has undertaken to contribute to the
partnership
2. To reimburse any amount he may have taken
from the partnership coffers and converted to
his own use
3. To pay for the agreed or legal interest, if he
fails to pay his contribution on time or in case
he takes any amount from the common fund
and converts it to his own use
4. To indemnify the partnership for the damages
caused to it by delay in the contribution or
conversion of any sum for his personal
benefits
(See Art. 1788)
FIDUCIARY DUTY
A partnership is a fiduciary relation—one entered
into and to be maintained on the basis of trust
and confidence. With that, a partner must
observe the utmost good faith, fairness, and
integrity in his dealings with the others:
He cannot directly or indirectly use partnership
assets for his own benefit;
He cannot carry on a business of the partnership
for his private advantage;
He cannot, in conducting the business of the
partnership, take any profit clandestinely;
He cannot obtain for himself that he should have
obtained for the partnership (e.g. business
opportunity)
He cannot carry on another business in
competition with the partnership;
He cannot avail himself of knowledge or
information which may be properly regarded as
the property of the partnership;
PROHIBITION AGAINST ENGAGING IN
COMPETITIVE BUSINESS
INDUSTRIAL PARTNER CAPITALIST
PARTNER
- cannot engage in - cannot engage in
business (w/n same line business (with same
of business with the kind of business
partnership) unless with the
 partnership expressly partnership) for his 1. There exist at least 2 debts, one where the
permits him to do so. own account, unless collecting partner is creditor and the other,
(Art. 1789) there is a stipulation where the partnership is the creditor
to the contrary. 2. Both debts are demandable
( Art. 1808)
The partner who collects is authorized to manage
CONSEQUENCES IF AN INDUSTRIAL and actually manages the partnership
PARTNER ENGAGES IN ANY BUSINESS: (Art.
1789) Obligation of partner who receives share of
he can be excluded from the partnership; or partnership credit
the capitalist partners can avail of the benefit Obliged to bring to the partnership capital what
he obtained from the business, or he has received even though he may have given
the capitalist partners have the right to file receipt for his share only (Art. 1793)
an action for damages against the industrial
partner, in either case. Requisites:
1. A partner has received in whole or in part, his
CONSEQUENCES IF THE CAPITALIST share of the partnership credit
PARTNER ENGAGES IN A BUSINESS (which 2. The other partners have not collected their
competes with the business of the partnership): shares
1. he may be required to bring to the common 3. The partnership debtor has become insolvent
fund the profits he derived from the other
business; (Art. 1808)
2. he shall personally bear the losses; (Art.
1808)
3. he may be ousted form the partnership,
especially if there was a warning.

Obligations with respect to contribution to

partnership capital:
1. Partners must contribute equal shares to the
capital of the partnership unless there is
stipulation to contrary (Art. 1790)
2. Partners (capitalist) must contribute
additional capital in case of imminent loss to
the business of the partnership and there is
no stipulation otherwise; refusal to do so shall
create an obligation on his part to sell his
interest to the other partners (Art. 1790)

Requisites:
1. There is an imminent loss of the business of
the partnership
2. The majority of the capitalist partners are of
the opinion that an additional contribution to
the common fund would save the business
3. The capitalist partner refuses deliberately to
contribute (not due to financial inability)
4. There is no agreement to the contrary

Obligation of managing partners who

collects debt from person who also owed
the partnership (Art. 1792)
1. Apply sum collected to 2 credits in proportion
to their amounts
2. If he received it for the account of
partnership, the whole sum shall be applied
to partnership credit

Requisites:
 TO MANAGEMENT
BEARING THE RISK OF LOSS OF THINGS Partner is Power of Vote of
CONTRIBUTED (Art. 1795) appointed managing partners
manager in the partner is representing
Specific and determinate things Risk is borne articles of irrevocable controlling
which are not fungible where by partner partnership without interest
only the use is contributed just/lawful necessary to
Specific and determinate things Risk is borne cause; revoke power
the ownership of which is by Revocable
transferred to the partnership partnership only when in
Fungible things (consumable) Risk is borne bad faith
by Partner is Power is
partnership appointed revocable any
Things contributed to be sold Risk is borne manager after time for any
by constitution of cause
partnership partnership
Things brought and appraised in Risk is borne 2 or more Each may In case of
the inventory by persons execute all opposition,
partnership entrusted with acts of decision of
Specific and determinate things Risk is borne management of administratio majority
which are not fungible where by partner partnership n shall prevail;
only the use is contributed without In case of tie,
specification of decision of
RULES FOR DISTRIBUTION OF PROFITS AND duties/stipulation partners
LOSSES that each shall owning
PROFITS LOSSES not act w/o the controlling
With According to According to other's consent interest shall
agreem agreement agreement prevail
ent Stipulated that Concurrence Absence or
Without Share of capitalist If sharing of none of the of all disability of
agreeme partner is in profits is managing necessary for any one
nt proportion to his stipulated - partners shall act the validity of cannot be
capital apply to sharing w/o the consent acts alleged
contribution of losses of others unless there
Share of industrial If no profit is imminent
partner is not sharing danger of
fixed - as may be stipulated - grave or
just and equitable losses shall be irreparable
under the borne according injury to
circumstances to capital partnership
contribution Manner of All partners If refusal of
Purely industrial management not are agents of partner is
partner not agreed upon the manifestly
liable for losses partnership prejudicial to
Unanimous interest of
A stipulation which excludes one or more consent partnership,
partners from any share in the profits and losses required for court's
is void. alteration of intervention
immovable may be
NOTE: Stipulation exempting a partner from property sought
losses should be allowed. If a person can make a
gift to another, there is no sound reason why a Other rights and obligations of partners:
person cannot also agree to bear all the losses. 1. Right to associate another person with him in
Of course, as far as THIRD PERSONS are his share without consent of other partners
concerned, any such stipulation may be properly (subpartnership)
declared void. (De Leon, pp. 124-125, citing 2. Right to inspect and copy partnership books
Espiritu and Sibal) at any reasonable hour
3. Right to a formal account as to partnership
RIGHTS AND OBLIGATIONS WITH RESPECT affairs (even during existence of partnership):
4. If he is wrongfully excluded from partnership Partners and the partnership are solidary
business or possession of its property by his liable to 3rd persons for the partner's
copartners tort or breach of trust
5. If right exists under the terms of any Liability of incoming partner is limited to:
agreement His share in the partnership
As provided by art. 1807 property for existing
Whenever other circumstances render it just and obligations
reasonable His separate property for
Duty to render on demand true and full subsequent obligations
information affecting partnership to any partner Creditors of partnership preferred in
or legal representative of any deceased partner partnership property & may attach
or of any partner under legal disability partner's share in partnership assets
Duty to account to the partnership as fiduciary Every partner is an agent of the
partnership
2) PROPERTY RIGHTS OF A PARTNER
His rights in specific partnership POWER OF PARTNER AS AGENT OF
property PARTNERSHIP
His interest in the partnership
His right to participate in the Acts for carrying on in Every partner is an
management the usual way the agent and may
(Art. 1810) business of the execute acts with
partnership binding effect even if
Nature of partner's right in specific he has no authority
partnership property—a partner has an equal Except: when 3rd
right to possession which is not assignable and person has
such right is limited to the share of what remains knowledge of lack of
after partnership debts have been paid authority
Act w/c is not Does not bind
Nature of partner's right in the partnership apparently for the partnership unless
—a share in the profits and surplus carrying of business in authorized by other
the usual way partners
3. OBLIGATION OF PARTNERS WITH REGARD Acts of strict dominion
TO THIRD PERSONS or ownership:
Every partnership shall operate under a firm Assign partnership
name. Persons who include their names in property in trust
the partnership name even if they are not for creditors
members shall be liable as a partner Dispose of good-
All partners shall be liable for contractual will of business
obligations of the partnership with their Do an act w/c
property, after all partnership assets have would make it
been exhausted: impossible to carry
Pro rata on ordinary
Subsidiary business of
Admission or representation made by any partnership
partner concerning partnership affairs Confess a
within scope of his authority is evidence judgment
against the partnership Enter into
Notice to partner of any matter relating to compromise
partnership affairs operates as notice to concerning a
partnership, except in case of fraud: partnership claim
Knowledge, of partner acting in or liability
the particular matter, acquired Submit partnership
while a partner claim or liability to
Knowledge of the partner acting arbitration
in the particular matter then Renounce claim of
present to his mind partnership
Knowledge of any other partner Acts in contravention of Partnership not liable
who reasonably could and a restriction on to 3rd persons having
should have communicated it authority actual or
to the acting partner presumptive
knowledge of the
 restrictions Ask for annulment of contract of assignment if he
was induced to join through any of the vices of
EFFECTS OF CONVEYANCE OF REAL consent
PROPERTY BELONGING TO PARTNERSHIP Demand an accounting (only in case of
dissolution)
Title in partnership name, Conveyance passes
Conveyance in title but 4) RESPONSIBILITY OF PARTNERSHIP TO
partnership name partnership can PARTNERS
recover if: To refund the amounts disbursed by partner in
Conveyance was behalf of the partnership + corresponding
not in the usual interest from the time the expenses are made
way of business, or (loans and advances made by a partner to the
Buyer had partnership aside from capital contribution)
knowledge of lack To answer for obligations partner may have
of authority contracted in good faith in the interest of the
Title in partnership name, Conveyance does partnership business
Conveyance in partner's not pass title but To answer for risks in consequence of its
name only equitable management
interest, unless:
Conveyance was E. DISSOLUTION AND WINDING UP
not in the usual
way of business, or DISSOLUTION—change in the relation of the
2. Buyer had partners caused by any partner ceasing to be
knowledge of lack associated in the carrying on of the business;
of authority partnership is not terminated but continues until
Title in name of 1/ more Conveyance passes the winding up of partnership affairs is
partners, Conveyance in title but completed
name if partner/partners partnership can
in whose name title recover if: WINDING UP—process of settling the business
stands Conveyance was or partnership affairs after dissolution
not in the usual
way of business, or TERMINATION—that point when all partnership
Buyer had affairs are completely wound up and finally
knowledge of lack settled. It signifies the end of the partnership
of authority life.
Title in name of 1/more/all Conveyance will
partners or 3rd person in only pass equitable CAUSES OF DISSOLUTION:
trust for partnership, interest 1) Without violation of the agreement between
Conveyance executed in the partners
partnership name if in  By termination of the definite term/
name of partners particular undertaking specified in the
Title in name of all Conveyance will agreement
partners, Conveyance in pass title  By the express will of any partner, who
name of all partners must act in good faith, when no definite
term or particular undertaking is specified
ASSIGNMENT OF INTEREST IN PARTNERSHIP  By the express will of all the partners who
Assignment is subject to three (3) have not assigned their interest/ charged
conditions: them for their separate debts, either
made in good faith before or after the termination of any
for fair consideration specified term or particular undertaking
after a fair and complete disclosure of all  By the bona fide expulsion of any partner
important information as to its value from the business in accordance with
power conferred by the agreement
RIGHTS OF AN ASSIGNEE: B) In contravention of the agreement between
Get whatever assignor-partner would have the partners, where the circumstances do not
obtained permit a dissolution under any other provision of
Avail usual remedies in case of fraud in the this article, by the express will of any partner at
management any time
C) By any event which makes it unlawful for
business to be carried on/for the members to
carry it on for the partnership
Loss of specific thing promised by partner before
its delivery
D) Death of any partner
E) Insolvency of a partner/partnership
F) Civil interdiction of any partner
G) Decree of court under art. 1831
GROUNDS FOR DISSOLUTION BY DECREE OF
COURT (Art. 1831)
 Partner declared insane in any judicial
proceeding or shown to be of unsound
mind
 Incapacity of partner to perform his part
of the partnership contract
 Partner guilty of conduct prejudicial to
business of partnership
 Willful or persistent breach of partnership
agreement or conduct which makes it
reasonably impracticable to carry on
partnership with him
 Business can only be carried on at a loss
 Other circumstances which render
dissolution equitable
 Upon application by purchaser of
partner's interest:
o After termination of specified
term/particular undertaking
o Anytime if partnership at will
when interest was
assigned/charging order issued
1) EFFECTS OF DISSOLUTION
AUTHORITY OF PARTNER TO BIND
PARTNERSHIP
GENERAL RULE: Authority of partners to bind
partnership is terminated
EXCEPTIONS
1. To wind up partnership affairs
2. Complete transactions not finished
Qualifications:
With respect to partners—
Authority of partners to bind partnership by new
contract is immediately terminated when
dissolution is not due to ACT, DEATH or
INSOLVENCY (ADI) of a partner (art 1833);
If due to ADI, partners are liable as if partnership
not dissolved, when the ff. concur:
If cause is ACT of partner, acting
partner must have knowledge of
such dissolution
If cause is DEATH or INSOLVENCY,
acting partner must have
knowledge/ notice
With respect to persons not partners (Art.
1834)—
Partner continues to bind partnership even after
dissolution in ff. cases:
Transactions in connection to winding up
partnership affairs/completing transactions
unfinished
Transactions which would bind partnership if not
dissolved, when the other party/obligee:
Situation 1 -
Had extended credit to partnership prior to
dissolution &
Had no knowledge/notice of dissolution, or
Situation 2 -
i. Did not extend credit to partnership
Had known partnership prior to dissolution
Had no knowledge/notice of dissolution/fact of
dissolution not advertised in a newspaper of
general circulation in the place where partnership
is regularly carried on
Partner cannot bind the partnership anymore
after dissolution:
Where dissolution is due to unlawfulness to carry
on with business (except: winding up of
partnership affairs)
Where partner has become insolvent
Where partner unauthorized to wind up
partnership affairs, except by transaction with
one who:
Situation 1 -
i. Had extended credit to partnership prior to
dissolution &
ii. Had no knowledge/notice of dissolution, or
Situation 2 -
Did not extend credit to partnership prior to
dissolution
Had known partnership prior to dissolution
Had no knowledge/notice of dissolution/fact of
dissolution not advertised in a newspaper of
general circulation in the place where partnership
is regularly carried on
2) DISCHARGE OF LIABILITY
Dissolution does not discharge existing liability of
partner, except by agreement between:
Partner and himself
person/partnership continuing the business
partnership creditors
Rights of partner where dissolution not in
contravention of agreement:
Apply partnership property to discharge
liabilities of partnership
 Apply surplus, if any to pay in cash the net
amount owed to partners
Rights of partner where dissolution in
contravention of agreement:
Partner who did not cause dissolution wrongfully:
Apply partnership property to discharge liabilities
of partnership
Apply surplus, if any to pay in cash the net
amount owed to partners
Indemnity for damages caused by partner guilty
of wrongful dissolution
Continue business in same name during agreed
term
Posses partnership property if business is
continued
Partner who wrongly caused dissolution:
If business not continued by others - apply
partnership property to discharge liabilities of
partnership & receive in cash his share of surplus
less damages caused by his wrongful dissolution
If business continued by others - have the value
of his interest at time of dissolution ascertained
and paid in cash/secured by bond & be released
from all existing/future partnership liabilities
Rights of injured partner where partnership
contract is rescinded on ground of
fraud/misrepresentation by 1 party:
1. Right to lien on surplus of partnership
property after satisfying partnership liabilities
2. Right to subrogation in place of creditors
after payment of partnership liabilities
3. Right of indemnification by guilty partner
against all partnership debts & liabilities
3) SETTLEMENT OF ACCOUNTS BETWEEN
PARTNERS
Assets of the partnership:
Partnership property (including goodwill)
Contributions of the partners
Order of Application of Assets:
Partnership creditors
Partners as creditors
Partners as investors—return of capital
contribution
Partners as investors—share of profits if
any
4) WHEN BUSINESS OF DISSOLVED
PARTNERSHIP IS CONTINUED
Creditors of old partnership are also
creditors of the new partnership which
continues the business of the old one w/o
liquidation of the partnership affairs
Creditors have an equitable lien on the
consideration paid to the retiring
/deceased partner by the purchaser when
retiring/deceased partner sold his interest
w/o final settlement with creditors
Rights if retiring/estate of deceased
partner:
To have the value of his interest
ascertained as of the date of
dissolution
To receive as ordinary creditor the
value of his share in the dissolved
partnership with interest or profits
attributable to use of his right, at his
option
Persons Authorized to Wind Up
Partners designated by the agreement
In absence of agreement, all partners who have
not wrongfully dissolved the partnership
Legal representative of last surviving partner
A partner’s share cannot be returned without
first dissolving and liquidating the business
for the partnership’s outside creditors have
preference over the enterprise’s assets. The
firm’s property cannot be diminished to their
prejudice. Magdusa v. Albaran, 115 Phil.
511 (1962)
Due to its separate juridical personality from
the individual partners, it is thus the
partnership – having been the recipient of the
capital contributions – which must refund the
equity of retiring partners. Such duty does
not pertain to partners who managed the
business. The amount to be refunded, supra,
consistent with the partnership being a
separate and distinct entity, must necessarily
be limited to what to the firm’s total
resources. It can only pay out what it has for
its total assets. But this is subject to the
priority enjoyed by outside creditors. “After
all the (said) creditors have been paid,
whatever is left of the partnership assets
becomes available for the payment of
partners’ shares. Villareal v. Ramirez, 406
SCRA 145
F. LIMITED PARTNERSHIP
Characteristics:
1. Formed by compliance with statutory
requirements
2. One or more general partners control the
business
3. One or more general partners contribute to
the capital and share in the profits but do not
participate in the management of the
business and are not personally liable for
partnership obligations beyond their capital
contributions
4. May ask for the return of their capital Right of remaining gen partners (if given) or
contributions under conditions prescribed by continue business in case of death, insanity,
law retirement, civil interdiction, insolvency
5. Partnership debts are paid out of common Right of limited partner (if given) to
fund and the individual properties of general demand/receive property/cash in return for
partners contribution

Certificate must be filed with the SEC

DIFFERENCES BETWEEN GENERAL AND
LIMITED PARTNER/PARTNERSHIP To validly form a limited partnership, all that is
required is SUBSTANTIAL COMPLIANCE IN GOOD
GENERAL LIMITED FAITH with all the requirements under Art. 1844
Personally liable for Liability extends (i.e. signing and swearing to a certificate, affixing
partnership obligations only to his capital the word “Limited” to the partnership name,
contributions etc.). If no substantial compliance, then the firm
When manner of mgt. No participation in becomes a general partnership to third persons
not agreed upon, all management (but as amongst the partners, still limited).
general partners have
an equal right in the WHEN GENERAL PARTNER NEEDS
mgt. of the business CONSENT/RATIFICATION OF ALL LIMITED
Contribute cash, Contribute cash or PARTNERS:
property or industry property only, not 1. Do any act in contravention of the certificate
industry 2. Do any act which would make it impossible to
Proper party to Not proper party to carry on the ordinary business of the
proceedings by/against proceedings partnership
partnership by/against 3. Confess judgment against partnership
partnership 4. Possess partnership property/assign rights in
Interest not assignable Interest is freely specific partnership property other than for
w/o consent of other assignable partnership purposes
partners 5. Admit person as general partner
Name may appear in Name must appear 6. Admit person as limited partner - unless
firm name in firm name authorized in certificate
Prohibition against No prohibition 7. Continue business with partnership property
engaging in business against engaging in on death, retirement, civil interdiction,
business insanity or insolvency of gen partner unless
Retirement, death, Does not have authorized in certificate
insolvency, insanity of same effect; rights
general partner transferred to legal SPECIFIC RIGHTS OF LIMITED PARTNERS:
dissolves partnership representative 1. Right to have partnership books kept at
principal place of business
2. Right to inspect/copy books at reasonable
REQUIREMENTS FOR FORMATION OF
hour
LIMITED PARTNERSHIP:
3. Right to have on demand true and full info of
Certificate of articles of the limited
all things affecting partnership
partnership must state the ff. matters:
4. Right to have formal account of partnership
1. Name of partnership + word "ltd."
affairs whenever circumstances render it just
2. Character of business
and reasonable
3. Location of principal place of business
5. Right to ask for dissolution and winding up by
4. Name/place of residence of members
decree of court
5. Term for partnership is to exist
6. Right to receive share of profits/other
6. Amount of cash/value of property contributed
compensation by way of income
7. Additional contributions
7. Right to receive return of contributions
8. Time agreed upon to return contribution of
provided the partnership assets are in excess
limited partner
of all its liabilities
9. Sharing of profits/other compensation
Right of limited partner (if given) to substitute an
REQUISITES FOR RETURN OF
assignee
CONTRIBUTION OF LIMITED PARTNER:
Right to admit additional partners
1. All liabilities of partnership have been paid/if
Right of limited partners (if given) to priority for
not yet paid, at least sufficient to cover them
contributions
2. Consent of all members has been obtained
3. Certificate is cancelled/amended as to set
forth withdrawal /reduction of contribution
LIABILITIES OF A LIMITED PARTNER
To the partnership
For the difference between his contribution as
actually made and that stated in the
certificate as having been made, and
For any unpaid contribution which he agreed
in the certificate to make in the future time
As a trustee for the partnership
For the specific property stated in the
certificate as contributed by him but which
he had not contributed;
For the specific property of the partnership
which had been wrongfully returned to him;
and
Money or other property wrongfully paid or
conveyed to him on account of his
contribution.
DISSOLUTION OF LIMITED PARTNERSHIP
(Priority in Distribution of Assets):
Those due to creditors, including limited partners
Those due to limited partners in respect of their
share in profits/compensation
Those due to limited partners of return of capital
contributed
Those due to general partner other than capital
& profits
Those due to general partner in respect to profits
Those due to general partner for return of capital
contributed
AMENDMENT OF CERTIFICATE OF
PARTNERSHIP
1. In case any of the ten enumerated changes
and circumstances in Art. 1864, par. 2 are
present.
2. It must be signed and sworn to by all the
members including the new members if some
are added; in case of substitution, the
assigning limited partner must also sign.
3. The cancellation or amendment must be
recorded in the SEC.
Any person who suffers loss by reliance on
false statement in certificate may hold liable
for damages any party to the certificate who
knew the statement to be false at the time
the latter signed the certificate or came to
know such falsity subsequently but within
sufficient time before reliance to enable such
party to cancel or amend the certificate or
file the proper petition for such purpose
(under Art. 1865). (Art. 1847; Walraven
v. Ramsay, 55 N.W.d 853).
A general partner’s DIIC (death, insolvency,
insanity, or civil interdiction) dissolves the
partnership unless the business is continued
by the surviving general partners under a
right stated in the certificate or with their
common (i.e. all) consent (Art. 1860). Still,
even if allowed under the certificate or
consented to by all, there must be an
amendment further to Arts. 1864 and 1865
(cf. Bautista). Otherwise, limited partners
will not be able to avail of the protection of
the law as regards liability. The partnership
will be considered general Lowe v. Arizona
Power & Light Co., 427 P. d. 366
A limited partner shall not become liable as a
general partner, unless in addition to the
exercise of his rights and powers as a limited
one, he takes part in the control (and
management) of the business (Art.
1848; Holzman v. Escamilla, 195 P. d.
833). Actually, a person may be general and
limited at the same time provided this is
stated in the certificate. He shall have all the
powers, rights, and restrictions of a general
partner; but with respect to his capital
contribution, his right against the other
members of the firm would be that of a
limited partner (Art. 1853).
A limited partner may also loan money to
and transact other business with the firm.
BUT, he cannot: (1) receive or hold as
collateral any partnership property; or (2)
receive from a general partner or from
the firm any payment, conveyance,
release if at that time assets of the firm
are not sufficient to discharge liabilities to
outside creditors; Art. 1854: any
violation would be fraud on such
creditors.
The remedy of a general partner who suffers
from or faces interference from his limited
partners is dissolution. Weil v. Diversified
Properties, 319 F. Supp
V. AGENCY
=========================
========
TOPICS UNDER THE SYLLABUS
A. DEFINITION OF AGENCY
B. POWERS (ARTS. 1877-1878
C. EXPRESS V. IMPLIED AGENCY
D. AGENCY BY ESTOPPEL
E. GENERAL VS. SPECIAL AGENCY
F. AGENCY COUCHED IN GENERAL
TERMS
G. AGENCY REQUIRING SPECIAL
POWER OF ATTORNEY
H. AGENCY BY OPERATION OF LAW
I. RIGHTS AND OBLIGATIONS OF
PRINCIPAL
J. MODES OF EXTINGUISHMENT
=========================
========
A. DEFINITION OF AGENCY
CONTRACT OF AGENCY is a contract whereby a
person binds himself to render some service or to
do something in representation or on behalf of
another, with the consent or authority of the
latter.
Characteristics:
Consensual: perfected by mere consent;
Nominate: it has its own name;
Preparatory: entered into as means to enter into
other contracts
Principal: does not depend on another contract
for its existence and validity;
Unilateral/Bilaterial:
Unilateral: if contract is gratuitous or it creates
obligations for only one party (i.e. the agent)
Bilateral: if contract is for compensation or gives
rise to reciprocal rights and obligations
Nature: Since it is a contract, there must be a
meeting of the minds as to consent, object, and
cause.
Exception to contractual nature:
When the agency is created by operation of
law
Ex: Agency by Estoppel
Basis: Representation
The acts of the agent on behalf of the principal
within the scope of his authority produce the
same legal and binding effects as if they were
personally done by the principal.
Hence, the distinguishing features of agency are
its representative character & its derivative
authority.
Purpose: Extend the personality of the principal
through the facility of the agent
Capacity of the Parties:
Principal
He may be a natural or a juridical person
He must be capacitated. General RULE: If a
person is capacitated to act for himself or his
own right, he can act through an agent.
The agent is not liable where he was ignorant of
the principal’s incapacity
Agent
Insofar as third persons are concerned, it is
enough that the principal is capacitated.
Insofar as his obligations to his principal are
concerned, the agent must be able to bind
himself.
As an agent, some mental capacity is necessary,
therefore, those who are absolutely incapacitated
(ex. Insane persons) cannot be agents.
ESSENTIAL ELEMENTS
Consent of the parties to establish the
relationship;
Object of the contract is the execution of a
juridical act in relation to third persons;
Agent acts as a representative and not for
himself; and
Agent acts within the scope of his authority.
An illegal termination of agency does not justify
reinstatement of the agent as such. The agency
cannot be compelled by the courts to be
reinstated because such relationship can only be
given effect with the consent of the principal.
Orient Air Services v. CA, G.R. No. 76931,
May 29, 1991
Acts That Cannot Be Done By Agent:
Personal Acts – ex. making of a will
Criminal or Illegal Acts
Nature of Relationship between Principal
and Agent:
Fiduciary  based on trust & confidence
Agent is estopped from asserting interest
adverse to his principal’s
Agent must not act as an adverse party
Agent must not act for an adverse party
Agent must not use or disclose secret information
Agent must give notice of material facts
GENERAL RULE: Knowledge of the agent is
imputed to the principal even though the
agent never communicated it to his principal

EXCEPTIONS:
Where the interests of the agent are adverse to
those of the principal;
Agent Acts in Bad Faith or Where the person
claiming the benefit of the rule colludes with the
agent to defraud the principal.
B. POWERS (ARTS. 1877-1878)
Special powers of attorney are necessary in
the following cases: (PECWAM-LLB-
BOCARO)
To make such payments as are not usually
considered as acts of administration;
To effect novations which put an end to
obligations already in existence at the time
the agency was constituted;
To compromise, to submit questions to
arbitration, to renounce the right to appeal
from a judgment, to waive objections to the
venue of an action or to abandon a
prescription already acquired;
To waive any obligation gratuitously;
To enter into any contract by which the
ownership of an immovable is transmitted or
acquired either gratuitously or for a valuable
consideration;
To make gifts, except customary ones for charity
or those made to employees in the business
managed by the agent;
To loan or borrow money, unless the latter act be
urgent and indispensable for the preservation
of the things which are under administration;
To lease any real property to another person for
more than one year;
To bind the principal to render some service
without compensation;
To bind the principal in a contract of partnership;
To obligate the principal as a guarantor or surety;
To create or convey real rights over immovable
property;
To accept or repudiate an inheritance;
To ratify or recognize obligations contracted
before the agency;
Any other act of strict dominion.
A special power to sell excludes the power to
mortgage; and a special power to mortgage
does not include the power to sell.
Special Power of Attorney - an instrument in
writing by which one person, as principal,
appoints another as his agent and confers upon
him the authority to perform certain specified
acts or kinds of acts on behalf of the principal.
The special power of attorney can be included in
the general power when it specifies therein the
act or transaction for which the special power is
required.
Powers Not Included in the Power to
Mortgage
To sell
To execute a second mortgage
To mortgage for the agent’s or any 3rd
persons’ benefit, UNLESS clearly
indicated
Powers Not Included in the Power to
Compromise
- Submission to Arbitration
Rationale:
A principal may authorize his agent to
compromise because of absolute confidence
in the latter’s judgment and discretion to
protect the former’s rights and obtain for him
the best bargain in the transaction.
If the transaction would be left in the hands
of an arbitrator, said arbitrator may not enjoy
the trust of the principal.
The agent must act within the scope of his
authority. He may do such acts as may be
conducive to the accomplishment of the purpose
of the agency.
Requisites for Principal to be Bound by Act
of Agent:
The agent must act in behalf of the principal
The agent must act within the scope of his
authority
When a principal NOT BOUND by act of
agent:
The latter acts without or beyond the scope
of his authority in the former’s name
Exceptions:
Where the acts of the principal have
contributed to deceive a 3rd person in
good faith;
Where the limitations upon the power
created by the principal could not have
been known by the 3rd person;
Where the principal has placed in the
hands of the agent instruments signed by
him in blank;
Where the principal has ratified the acts
of the agent
The latter acts within the scope of his
authority but in his own name, EXCEPT when
the transaction involves things belonging to
the principal
NOTE: The agent is not deemed to have
exceeded the limits of his authority should he
perform the agency in a manner more
advantageous to the principal than that indicated
by him, since he is authorized to do such acts as
may be conducive to the accomplishment of the Agent can make the Guardian has no power
purpose of the agency. principal personally to impose personal
liable. liability on the ward.
The powers of an agent are particularly broad
in the case of one acting as a general agent Distinction between Agency & Lease of
or manager; such a position presupposes a Property
degree of confidence reposed and investiture
with liberal powers for the exercise of
judgment and discretion in transactions and AGENCY LEASE OF PROPERTY
concerns which are incidental or appurtenant
to the business entrusted to his care and Agent is controlled by Lessee is not controlled
management. In the absence of an the principal. by the lessor.
agreement to the contrary, a managing agent
may enter into contracts that he deems Agency may involve Lease of property
reasonably necessary or requisite for the things other than involves property.
protection of the interests of his principal property.
entrusted to his management. Eurotech v.
Cuizon, G.R. No. 167552, April 23, 2007
Agent can bind the Lessee cannot bind the
Distinction between Agency & Lease of principal. lessor.
Work/Service
AGENCY LEASE OF Distinction between Agency to Sell & Sale
WORK/SERVICE
Representation Employment AGENCY TO SELL SALE

Agent exercises Lessor ordinarily Agent receives the Buyer receives the
discretionary powers performs only goods as the principal’s goods as owner
ministerial functions goods

3 persons are involved: 2 persons are involved: Agent delivers the Buyer pays the price
principal, agent and lessor and lessee proceeds of the sale
the 3rd person with
whom the agent Agent can return the Buyer, as a general
contracts object in case he is rule, cannot return the
unable to sell the same object sold
Relates to commercial Relates more to the to a third person
or business matters of mere
transactions manual or Agent in dealing with Buyer can deal with the
mechanical the thing received is thing as he pleases,
execution bound to act according being the owner
to the instructions of
Distinction between Agency & Guardianship his principal
AGENCY GUARDIANSHIP Distinction between Agent & Contractor

Agent represents a A guardian represents AGENT INDEPENDENT

capacitated person an incapacitated CONTRACTOR
person.
Represents his Employed by the
Agent is appointed by Guardian is appointed principal employer
the principal and can by the court and
be removed by the stands in loco parentis.
Acts under the Acts according to his own
latter.
principal’s control method
and instruction
Agent is subject to the Guardian is not subject
directions of the to the directions of the
Principal is liable for Employer not liable for
principal. ward but must act for
torts committed by torts committed by the
the benefit of the latter
the agent within the independent contractor.
 own name but for the account of the
scope of his principal.
authority
Distinction between Agency and Forms of Agency
Partnership GENERAL RULE: Appointment of an agent may
AGENCY PARTNERSHIP be oral or written; no formal requirements
EXCEPTION: When the law requires a specific
form (ex. agent’s sale of real
An agent must submit A co-partner is not property or any interest therein)
to the principal’s right subject to co-partner’s
to control right to control, unless Agency is presumed to be for compensation,
there is an agreement unless there is proof to the contrary.
to that effect The agent does not have to prove that the
agency is for compensation.
The agent assumes no The partner binds not But the prima facie presumption that the
personal liability where only the firm members agency is for a compensation may be
he acts within the but himself as well contradicted by contrary evidence
scope of his authority
Broker - negotiate contracts relative to property
The agent takes his The profits belong to all in behalf of others and for a compensation/fee
agreed share of profits the partners as When Broker Entitled to Compensation:
not as owner but as an common proprietors in Whenever he brings to his principal a party
agreed measure of agreed proportions who is able and willing to take the property,
compensation for his and enter into a valid contract upon the
services terms named by the principal, although the
particulars may be arranged and the matter
C. EXPRESS VS. IMPLIED AGENCY negotiated and completed between the
principal and the purchaser directly
Express – agent has been actually authorized However, a broker is never entitled to
by the principal, either orally or in writing commission for unsuccessful efforts.
Implied – agency is implied from the acts of The broker should be paid his commission
the principal, from his silence, or lack of where he is the efficient procuring cause
action, or his failure to repudiate the in bringing the sale.
agency knowing that another person is
acting on his behalf without authority, or Efficient procuring cause: when there is a
from the acts of the agent which carry out close proximate and causal connection
the agency, between the efforts and labor of the agent
and the principal’s sale of property. Manotoc
OTHER CLASSIFICATIONS OF AGENCY Brothers v. CA, 221 SCRA 224 (1993)
As to character
Gratuitous – agent receives no compensation LAW ON DOUBLE AGENCY
for his services Disapproved by law for being against public
Onerous – agent receives compensation for policy and sound morality EXCEPT where the
his services agent acted with full knowledge and
As to extent of business of the principal consent of the principals
General – agency comprises all the business of
the principal Right of agent to compensation in case of
Special – agency comprises one or more double agency:
specific transactions With knowledge of both principals - recovery
As to authority conferred can be had from both principals
Couched in general terms – only acts of Without the knowledge of both principals -
administration the agent can recover from neither
Couched in specific terms – only the With knowledge of one principal - as to the
performance of a specific act/s principal who knew of that fact and as to the
agent, they are in pari delicto and the courts
As to nature and effects shall leave them as they were, the contract
Ostensible or Representative – agent acts between them being void as against public policy
in the name and representation of the and good morals
principal
Simple or Commission – agent acts in his ACCEPTANCE BY AGENT
Forms of Acceptance by Agent: D. AGENCY BY ESTOPPEL
Express - when it is oral or written There is really no agency at all, but the alleged
Implied -when it can be inferred from the agent seemed to have apparent or ostensible,
acts of the agent which carry out the although not real, authority to represent another.
agency, or from his silence or inaction
according to the circumstances Distinction between Agency by Estoppel &
Between persons who are present – implied Implied Agency
acceptance if the principal delivers his power of
attorney to the agent and the latter receives it BASIS AGENCY BY IMPLIED
without any objection ESTOPPEL AGENCY
Between persons who are absent –
acceptance not deemed implied from the silence
of the agent. Existence
There is an
of actual No agency at all
actual agency
EXCEPTIONS: agency
When the principal transmits his power of
attorney to the agent who receives it without Can be invoked
any objection Reliance only by a 3rd
When the principal entrusts to him by letter or by 3rd person who in
Such reliance is
telegram a power of attorney with respect to persons good faith relied
not needed,
the business in which he is habitually on the conduct
since the agent
engaged as an agent, and he did not reply to of the principal
is a real agent
the letter or telegram in holding the
agent out as
What is meant by “present”? being authorized
Generally, “face to face”, but includes people
conversing directly through technology (ex. over An agent by
the telephone). estoppel has
none of the An agent by
Power of Attorney - Instrument in writing by rights of an implied
which one person, as principal, appoints another agent, except appointment
as his agent and confers upon him the authority where the has all the
to perform certain specified acts or kinds of acts Nature of
principal’s rights and
on behalf of the principal; primary purpose is to Authority
conduct are such liabilities of an
evidence agent’s authority to third parties within that the agent agent, i.e. has
whom the agent deals reasonably actual authority
believed that the to act on behalf
Construction of Power of Attorney: principal of the principal
GENERAL RULE: Strictly construed and strictly intended him to
pursued; held to grant only those specified act as an agent
powers
EXCEPTION: when strict construction will An agency couched in general terms comprises
destroy the very purpose of the power only acts of administration, even if the principal
should state that he withholds no power or that
Ways of Giving Notice of Agency & Its the agent may execute such acts as he may
Effect: consider appropriate, or even though the agency
By special information - the person appointed should authorize a general and unlimited
as agent is considered as such with respect to management.
the person to whom it was given.
By public advertisement - the agent is Will an authority embodied in a letter be
considered as such with regard to any person sufficient?
Yes. Jimenez v. Rabot, 38 Phil 387 (1918)

Attorney-In-Fact
How do you revoke an agency? One who is given authority by his principal to
In the same manner as it was constituted. do a particular act not of a legal character
However, constitution by Special Information The term is, in loose language, used to
may be revoked by notice in a daily newspaper, include agents of all kinds, but in its strict
provided it can be proven that 3rd persons in sense, it means an agent having a special
question read the revocation authority created by a deed.
 How are contracts of agency construed?
V. GENERAL VS. SPECIAL AGENCY Contracts of agency, as well as general powers of
attorney, must be interpreted in accordance with
GENERAL SPECIAL the language used by the parties.
BASIS AGENCT AGENT
All acts Specific acts in The real intention of the parties is primarily
Scope of connected with pursuance of determined from the language used and
Authority the business or particular gathered from the whole instrument.
employment in instructions or
which he is with restrictions In case of doubt, resort must be had to the
engaged necessarily situation, surroundings and relations of the
implied from the parties. The intention of the parties must be
act to be done sustained rather than defeated.
Nature of Involves No continuity of
Service continuity of service If the contract is open to 2 constructions, one of
Authorized service which would uphold the intention while the other
May bind his Can not bind his would overthrow it, the former is to be chosen.
principal by an principal in a
Extent to act within the manner beyond F. AGENCY REQUIRING SPECIAL POWER OF
Which scope of his or outside the ATTORNEY
Agent May authority specific acts
Bind the although it may which he is Special powers of attorney are necessary in
Principal be contrary to authorized to the following cases: (PECWAM-LLB-
the latter’s perform BOCARO)
special
instructions
To make such payments as are not usually
Apparent Duty imposed
considered as acts of administration;
authority does upon the third
To effect novations which put an end to
not terminate party to inquire
obligations already in existence at the time
Terminatio by the mere makes
the agency was constituted;
n of revocation of his termination of
To compromise, to submit questions to
Authority authority the relationship
arbitration, to renounce the right to appeal
without notice as between the
from a judgment, to waive objections to the
to the third principal and
venue of an action or to abandon a
party agent effective
prescription already acquired;
as to such third
To waive any obligation gratuitously;
party unless the
To enter into any contract by which the
agency has been
ownership of an immovable is transmitted or
entrusted for the
acquired either gratuitously or for a valuable
purpose of
consideration;
contracting with
To make gifts, except customary ones for charity
such third party
or those made to employees in the business
managed by the agent;
Constructi Merely advisory Strictly
To loan or borrow money, unless the latter act be
on of in nature construed as
urgent and indispensable for the preservation
Principal’s they limit the
of the things which are under administration;
Instruction agent’s authority
To lease any real property to another person for
s
more than one year;
To bind the principal to render some service
E. AGENCY COUCHED IN GENERAL TERMS without compensation;
To bind the principal in a contract of partnership;
Agency Couched in General Terms: Covers To obligate the principal as a guarantor or surety;
only MERE ACTS OF ADMINISTRATION even if: To create or convey real rights over immovable
The principal should state that he withholds no property;
power To accept or repudiate an inheritance;
The agent may execute such acts as he may To ratify or recognize obligations contracted
consider appropriate before the agency;
The agency should authorize a general and Any other act of strict dominion.
unlimited management
A special power to sell excludes the power to
 mortgage; and a special power to mortgage
does not include the power to sell.
Special Power of Attorney - an instrument in
writing by which one person, as principal,
appoints another as his agent and confers upon
him the authority to perform certain specified
acts or kinds of acts on behalf of the principal.
The special power of attorney can be included in
the general power when it specifies therein the
act or transaction for which the special power is
required.
Powers Not Included in the Power to
Mortgage
To sell
To execute a second mortgage
To mortgage for the agent’s or any 3rd
persons’ benefit, UNLESS clearly
indicated
Powers Not Included in the Power to
Compromise
- Submission to Arbitration
Rationale:
A principal may authorize his agent to
compromise because of absolute confidence
in the latter’s judgment and discretion to
protect the former’s rights and obtain for him
the best bargain in the transaction.
If the transaction would be left in the hands
of an arbitrator, said arbitrator may not enjoy
the trust of the principal.
The agent must act within the scope of his
authority. He may do such acts as may be
conducive to the accomplishment of the purpose
of the agency.
Requisites for Principal to be Bound by Act
of Agent:
The agent must act in behalf of the principal
The agent must act within the scope of his
authority
When a principal NOT BOUND by act of
agent:
The latter acts without or beyond the scope
of his authority in the former’s name
Exceptions:
Where the acts of the principal have
contributed to deceive a 3rd person in
good faith;
Where the limitations upon the power
created by the principal could not have
been known by the 3rd person;
Where the principal has placed in the
hands of the agent instruments signed by
him in blank;
Where the principal has ratified the acts
of the agent
The latter acts within the scope of his
authority but in his own name, EXCEPT when
the transaction involves things belonging to
the principal
NOTE: The agent is not deemed to have
exceeded the limits of his authority should he
perform the agency in a manner more
advantageous to the principal than that indicated
by him, since he is authorized to do such acts as
may be conducive to the accomplishment of the
purpose of the agency.
The powers of an agent are particularly broad
in the case of one acting as a general agent
or manager; such a position presupposes a
degree of confidence reposed and investiture
with liberal powers for the exercise of
judgment and discretion in transactions and
concerns which are incidental or appurtenant
to the business entrusted to his care and
management. In the absence of an
agreement to the contrary, a managing agent
may enter into contracts that he deems
reasonably necessary or requisite for the
protection of the interests of his principal
entrusted to his management. Eurotech v.
Cuizon, G.R. No. 167552, April 23, 2007
G. RIGHTS AND OBLIGATIONS OF PRINCIPAL
OBLIGATIONS OF THE PRINCIPAL
Obligations of the Principal to the Agent:
(CARIP)
Comply with all the obligations agent contracted
in representation of the principal
Advance sums necessary for the execution of the
agency, when agent so requests; liable for
reimbursement regardless of the
undertaking’s success whenever agent had
advanced & has no fault; includes interest
Reimburse the agent for all advances made by
him provided the agent is free from fault
Indemnify the agent for all the damages which
the execution of the agency may have
caused the latter without fault or negligence
on his part
Pay the agent the compensation agreed upon or
the reasonable value of the latter’s services
Liability of 3rd persons to the Principal
In Contract – a 3rd person is liable to the
principal upon contracts entered into by his
agent, as if the contract has been entered
into by the principal.
In Tort – the 3rd person’s tort liability to the
principal, insofar as the agent is involved in
the tort, arises in 3 situations:
 Where the 3rd person damages or injures
property or interest of the principal in the
possession of the agent
Where the 3rd person colludes with the agent
to injure/defraud the principal
Where the 3rd person induces the agent to
violate his contract with the principal to
betray the trust reposed upon him by the
principal.
Requisites for solidary liability of principals
There are 2 or more principals
The principals have all concurred in the
appointment of the same agent
The agent is appointed for a common transaction
or undertaking
NOTE: The rule in Art. 1915 applies even when
the appointments were made by the principals in
separate acts, provided that they are for the
same transaction. The solidarity arises from the
common interest of the principals and not from
the act of constituting the agency.
Rule where 2 persons contract separately
with agent and principal
Two persons may contract separately with the
agent and the principal with regard to the same
thing. If the two contracts are incompatible with
each other, the one of prior date shall be
preferred. This is subject, however, to the rules
on Double Sales under Article 1544 of the Civil
Code (i.e. for movables: first in possession, first
in right; for immovables: first to register in good
faith, first in right; absent any inscription: first in
possession or party who presents oldest title
acquires ownership).
Agent’s Right of Retention:
Specific (only for those goods connected with
the agency) and
Until the principal effects the reimbursement
and pays the indemnity
PRINCIPAL’S LIABILITIES FOR EXPENSES
GENERAL RULE: Principal is liable for the
expenses incurred by the agent
EXCEPTIONS: (AFUS)
If the agent acted in contravention of the
principal's instructions, unless the latter
should wish to avail himself of the
benefits derived from the contract
When the expenses were due to the fault of
the agent
When the agent incurred them with
knowledge that an unfavorable result
would ensue, if the principal was not
aware thereof
When it was stipulated that the expenses
would be borne by the agent, or that the
latter would be allowed only a certain
sum
Who can be estopped to deny agency?
Estoppel of Agent- one professing to act as
agent is estopped to deny his agency
both as against his asserted principal and
the third persons interested in the
transaction in which he is engaged
Estoppel by the Principal
As to agent – one knowing another is acting
as his agent and fails to repudiate his
acts, or accept the benefits of them, will
be estopped to deny the agency as
against such other
As to sub-agent – for the principal to be
estopped from denying his liability to a
third person, he must have known or be
charged with knowledge of the
transaction and the terms of the
agreement between the agent and sub-
agent
As to third persons – one who knows that
another is acting as his agent or
permitted another to appear as his agent,
to the injury of third persons who have
dealt with the apparent agent as such in
good faith and in the exercise of
reasonable prudence, is estopped to deny
the agency
Estoppel of Third Persons – a third person,
having dealt with one as an agent may be
estopped to deny the agency as against
the principal, agent or 3rd persons in
interest
Estoppel of the Government - government
neither estopped by the mistake/error of
its agents; may be estopped through
affirmative acts of its officers acting
within the scope of their authority
Distinction between Ratification and
Estoppel
RATIFICATION ESTOPPEL
Rests on intention Rests on prejudice
Affects the entire Affects only relevant
transaction from the parts of the transaction
beginning
Substance of Substance of estoppel
ratification is is the principal’s
confirmation of an inducement to another
authorized act or to act to his prejudice
conduct after it has
been done
Distinction between Apparent Authority &
 Authority by Estoppel Render an account of his transactions and
deliver to the principal whatever he may
APPARENT AUTHORITY BY have received by virtue of the agency (If the
AUTHORITY ESTOPPEL agent fails to deliver and instead converts or
Though not actually Where the principal, by appropriates for his own use the money or
granted, principal his negligence, permits property belonging to his principal, he may
knowingly his agent to exercise be charged with ESTAFA.)
permits/holds out the powers not granted to Be responsible in certain cases for the act of
agent as possessing him, even though the the substitute appointed by him
the necessary powers principal may have no Pay interest on funds he has applied to his own
to act in a certain way notice or knowledge of use
the conduct of the
agent Distinctions between Authority and the
Principal’s Instructions
OBLIGATIONS OF THE AGENT AUTHORITY INSTRUCTIONS
Sum total of the Contemplates only a
OBLIGATIONS OF THE AGENT TO THE PRINCIPAL powers committed to private rule of guidance
the agent by the to the agent;
General: (GOC) principal independent and
Act with utmost good faith & loyalty for the distinct in character
furtherance of principal’s interests Refers to the manner or
Obey principal’s instructions Relates to the mode of agent’s action
Exercise reasonable care subject/business with
which the agent is
Specific: (FADI – CALAMARI) empowered to deal or
Carry out the agency act
Answer for damages which through his non- Limitations of authority Without significance as
performance the principal may suffer are operative as against those with
Finish the business already begun on the against those who neither knowledge nor
death of the principal should delay entail have/charged with notice of them
any danger (exception to the rule that knowledge of them
death extinguishes agency) Contemplated to be Not expected to be
Observe the diligence of a good father of a made known to third made known to those
family in the custody and preservation of persons dealing with with whom the agent
the goods forwarded to him by the owner in the agent deals
case he declines an agency, until an agent
is appointed When agent has a right to disobey the
Advance necessary funds if there be a principal’s instructions:
stipulation to do so (except when the When the instruction calls for the performance of
principal is insolvent) illegal acts
Act in accordance with the instructions of the Where he is privileged to do so to protect his
principal, and in default thereof, to do all security in the subject matter of the agency
that a good father of a family would do
Exceptions (to the rule that the agent must When obligation to account not applicable:
not depart from the instructions of If the agent acted only as a middleman with
principal): (SAI) the task of merely bringing together the
There’s a sudden emergency vendor and the vendees.
If the instructions are ambiguous If the agent had informed the principal of the
If the departure is so insubstantial that gift/bonus/profit he received from the
it does not affect the result and the purchaser and his principal did not object
principal suffers no damage thereby thereto.
Where a right of lien exists in favor of the
Not to carry out the agency if it would agent.
manifestly result in loss or damage to the
principal When agent may incur personal liability
Answer for damages if there being a conflict When the agent expressly binds himself
between his & his principal’s interests, he When the agent exceeds his authority
prefers his own When an agent by his act prevents
Not to loan to himself if he has been authorized performance on the part of the principal
to loan money at interest When a person acts as an agent without
 authority or without a principal
A person who purports to act as agent of an
incapacitated principal
Appointment of Sub-agent:
If the principal has not prohibited the agent from
appointing a substitute, he will be liable to
3rd persons for the acts of the sub-agent
within the scope of his authority
If there is a prohibition but nevertheless the
agent appoints a sub-agent, all the sub-
agent’s acts are void as to the principal.
If there is authority to appoint and sub-agent is
not designated by the principal, the agent will
be liable for all the acts of the sub-agent if
the sub-agent is notoriously incompetent or
insolvent.
If there is authority to appoint and sub-agent is
designated by the principal, the agent is
released from any liability from the acts of
the sub-agent.
If the appointment of a sub-agent is not
authorized but not prohibited, it shall be valid
if it is beneficial to the principal. But, should
the principal incur damage due to such
appointment, the agent shall be primarily
responsible for the acts of the sub-agent.
Responsibility of 2 or More Agents
Appointed Simultaneously:
GENERAL RULE: Liable jointly
EXCEPTION: When solidarity has been expressly
stipulated, in which case, each of the agents
becomes solidarily liable for (1) the non-
fulfillment of the agency; and for (2) the fault or
negligence of his fellow agent(s)
EXCEPTION TO THE EXCEPTION: when one of
the other agent/s acts beyond the scope of his
authority – innocent agent is NOT liable
Effect where 3rd person aware of limits of
agent’s power: If the agent exceeds his
authority, it shall be VOID unless the principal
ratifies it.
DOCTRINE OF AGENCY BY NECESSITY
An agency can never be created by necessity;
what is actually created is additional authority in
an agent appointed and authorized before the
emergency arose.
The existence of emergency or other unusual
conditions may operate to invest in an agent
authority to meet the emergency, provided:
(PURE)
The agent’s enlarged authority is exercised
for the principal’s protection
The agent is unable to communicate with
principal;
The means adopted are reasonable under the
circumstances;
The emergency really exists;
When 3rd persons can repudiate the
contract
Before actual ratification by the principal, or
before the principal has signified his willingness
to ratify the agent’s acts.
Effect of the principal receiving the benefits
of the transaction
He is deemed to have ratified it. A principal may
not accept the benefits of a transaction and at
the same time repudiate its burdens
Conditions for Ratification:
The principal must have capacity and power to
ratify
He must have had knowledge of material facts
He must ratify the acts in its entirety
The act must be capable of ratification
The act must be done in behalf of the principal
To be effective, ratification need not be
communicated or made known to the agent or
the third party. The act or conduct of the
principal rather than his communication is the
key. But before ratification, the third party is free
to revoke the unauthorized contract.
Effects of Ratification
With respect to agent - relieves the agent
from liability to the third party for the
unauthorized transaction, and to his principal
for acting without authority; may recover
compensation
With respect to principal - assumes
responsibility for the unauthorized act, as if
the agent had acted under original authority
but not liable for acts outside the authority
approved by his ratification
With respect to 3rd persons - bound by
ratification to the same extent as if the
ratified act had been authorized; cannot raise
the question of the agent’s authority to do
the ratified act
Ratification is spelled out when the principal
brings legal proceedings to enforce the
contract entered into by the unauthorized
agent, subject to qualification, however, that
the bringing of legal proceedings is not
deemed ratification where the principal’s
action is undertaken to avert a greater loss
rather than to assert a gain. Robinson v.
Borse
 NOTE: Agent always liable for fraud but not for
negligence, which shall be judged with more or
less rigor by the courts, according to whether the
agency was or was not for compensation.
Authorize
d -
princi
Principal still responsible for the
pal
Mismanageme acts contracted by the agent with
still
nt of the respect to 3rd persons;
liable
business by the Principal, however, may seek
Beyond
agent recourse from the agent
the
Principalscope
civilly liable so long as
Tort committed the tort of isthecommitted by the
by the agent agent’
agent while performing his duties
s
in furtherance of the principal’s
business author
Agent in good Principalityis liable for damages
faith but GR:
ACTS OF THE AGENT EFFECT prejudices 3rd Principal not
parties liable
Binds principal; Agent in bad Only the Excep agent is liable for
In behalf of the principal, Agent not personally liable
faith and tion:
damages
within the scope of prejudices 3rd principal
authority persons takes
advantag
e of a
contract
Contract is unenforceable as
Without or beyond scope or
against the principal but
of authority receives
the agent to the third person
benefits
made
under
Within the scope of Not binding on the principal;
false
authority but in the agent’s Principal has no cause of action
represent
name against the 3 parties and
rd
ation of
vice versa
his agent
3. For the
agent’s own
benefit –
principal still
liable; agent’s
motive
immaterial

Within the scope of the Insofar as 3rd persons are

written power of attorney
but agent has actually
exceeded his authority
according to an
understanding between
him & the principal
With improper motives
concerned (not required
to inquire further than the
terms of the written
power, agent acted within
Commission Agent - one whose business is to
scope of his authority;
receive and sell goods for a commission and who
Principal estopped
is entrusted by the principal with the possession
Motive is immaterial; as longofas
goods to be sold, and usually selling in his own
within the scope of authority,
name.
valid
Distinction between Commission Agent &
Broker
COMMISSION AGENT BROKER
Engaged in the No custody or insolvency of the principal or of the agent;
purchase and sale for a possession of the thing By the withdrawal of the agent;
principal of personal he disposes; merely a By the accomplishment of the object or purpose
property which has to go-between, an of the agency;
be placed in his intermediary between By its revocation;
possession and the seller and the By the dissolution of the firm or corporation
disposal buyer which entrusted or accepted the agency
(Art. 1919)
Has a relation with Maintains no relation
principal, buyer or with the thing which he The list not exclusive; causes particular only to
seller, and property purchases or sells agency; may be extinguished by the modes of
which is the object of extinguishment of obligations in general
the transaction whenever they are applicable, like loss of the
thing and novation
Distinction between Ordinary Agent & Agency is TERMINATED, as a matter of law, upon
Commission Agent the outbreak of war.
ORDINARY AGENT COMMISSION AGENT
Acts for and in behalf May act in his own Presumption of Continuance of Agency -
of his principal name or in that of the when once shown to have existed, an agency
principal relation will be presumed to have continued, in
Need not have Must be in possession the absence of anything to show its termination.
possession of the of the thing he
principal’s goods disposes Continuance of Agency
Parties must be
Present,
Obligations of a Commission Agent: (RMCB) Capacitated and
Responsible for the goods received by him, as Solvent
described in the consignment, UNLESS upon
receiving them he should make a written Modes of extinguishing an agency,
statement of the damage and deterioration generally: (ASO)
suffered by the same Agreement
If goods are of the same kind and mark but Subsequent acts of the parties which may be
belonging to different owners, make a either:
distinction by counter marks and designate By the act of both parties or by mutual
the merchandise respectively belonging to consent
each principal By the unilateral act of one of them
He cannot, without consent of the principal, sell NOTE: Even if the reason for extinguishing the
on credit; should he do, principal may agency is not true, the agent cannot insist on
demand payment in cash, but the reinstatement. The agent can only demand
commission agent entitled to any damages.
interest/benefit which may result from such
sale What happens if the subject matter of the
agency is lost or destroyed?
If an agent receives guarantee commission (a del In the absence of any agreement by the parties
credere agent), he shall bear the risk of to the contrary, the loss or destruction of the
collection and shall pay the principal the subject matter of the agency terminates the
proceeds of the sale on the same terms agent‘s authority to deal with reference to it
agreed upon with the purchaser. The agent
shall be liable for damages if he does not EXCEPTIONS:
collect the credits of his principal at the time If it is possible to substitute other material for
when they become due and demandable, that which was destroyed without substantial
UNLESS he proves, that he exercised due detriment to either party
diligence for that purpose. If the destroyed subject matter was not in fact
essential to the contract
J. MODES OF EXTINGUISHMENT A partial loss or destruction
Agency is Extinguished: (EDWARD)
By the expiration of the period for which the Form of renunciation
agency was constituted.
By the death, civil interdiction, insanity or
It is not always necessary for the agent to
renounce the agency expressly. He can do so
impliedly, such as:
Where he has conducted himself in a manner
incompatible with his duties as agent
When he abandons the object of his agency and
acts for himself in committing a fraud upon
his principals
When he files a complaint against the principal
and adopts an antagonistic attitude towards
him
Exceptions to Extinguishment by Death
(CKID)
If the agency is coupled with an interest
If the act of the agent was executed without the
knowledge of the death of the principal and
the third person who contracted with the
agent acted in good faith
To avoid damage
If it has been constituted in the common interest
of the principal and of the agent, or in the
interest of a third person who has accepted
the stipulation in his favor
Can the heirs continue the agency?
GENERAL RULE: agency calls for personal
services on the part of the agent; rights &
obligations are not transmissible
EXCEPTIONS:
Agency by operation of law, or a presumed or
tacit agency
Agency is coupled with an interest in the subject
matter of the agency (ex. power of sale in a
mortgage).
Exceptions to Extinguishment Upon Loss or
Destruction of Subject Matter
If it is possible to substitute other material for
that which was destroyed without substantial
detriment to either party or if the destroyed
subject matter was not in fact essential to the
contract;
A partial loss or destruction does not always
result in a complete termination of the agency,
and under such circumstances, while the agency
may be ended in so far as the destroyed property
is concerned, it may continue in existence as to
other property not affected
If the loss brought about by the principal
(ex.. principal sells subject matter to
another party even if an agent has been
constituted in reference to it), principal
liable for damages for his wrongful
terminating act; if subject matter is lost
without principal’s fault, no liability
assumed by him
Change of Circumstance:
GENERAL RULE: when there is a basic change
in the circumstances surrounding the transaction,
which was not contemplated by the parties and
which would reasonably lead the agent to believe
that the principal would not desire him to act, the
authority of the agent is terminated
EXCEPTIONS:
If the original circumstances are restored within a
reasonable period of time, the agent's
authority may be revived
Where the agent has reasonable doubts as to
whether the principal would desire him to act,
his authority will not be terminated if he acts
reasonably
Where the principal and agent are in close daily
contact, the agent's authority to act will not
terminate upon a change of circumstances if
the agent knows the principal is aware of the
change and does not give him new
instructions
Revocation - termination of the agency by the
subsequent act of the principal
Renunciation/Withdrawal - termination of the
agency by the subsequent act of the agent
May the agency be extinguished at will?
AGENT may do so but subject to the contractual
obligations owing to the principal (i.e. fixed
period of time for the agency or purpose not
yet accomplished);
Expressly or impliedly
conducted himself in a manner incompatible
with his duties;
abandons the object of agency and acts for
himself in committing a fraud upon his
principal;
he files a complaint against the principal and
adopts an antagonistic attitude towards
him
with just cause - give due notice
without just cause - liable for damages if
the principal suffers damages thereby
UNLESS the agent should base his
withdrawal upon the impossibility of
continuing the performance of the agency
without grave detriment to himself
The mere fact that the agent violates his
instructions does not amount to renunciation,
and although he may thus render himself
liable to the principal, he does not cease to
become an agent.
PRINCIPAL may also revoke the agency at will
EXCEPTION: agency coupled with interest
When a bilateral contract depends upon the
agency
When the agency is the means of fulfilling an
obligation already contracted
When a partner is appointed as manager of a
partnership in the contract of partnership
 and his removal from the management is
unjustifiable.
Exception to the exception: when the
agent acts to defraud the principal

Implied Revocation of Agency

Principal appoints a new agent for the same
business or transaction (only if there is
incompatibility); effective as between the
principal and the agent only if communicated
to the agent; does not prejudice rights of
third persons acting in good faith without
knowledge of the revocation
Principal directly manages the business
entrusted to the agent, or deals directly with
3rd persons

Effect of Issuance of a Special Power of

Attorney:
The general power is impliedly revoked as to
matters covered by the special power because a
special power naturally prevails over a general
power.

Principal’s Liability for Damages despite

Revocation
If the agency was constituted for a fixed period,
the principal shall be liable for damages
occasioned by the wrongful discharge of the
agent before the expiration of the period
fixed
Even if there was no time fixed for the
continuance of the agency, but the agent can
prove that the principal acted in bad faith by
revoking the agency in order to avoid the
payment of commission about to be earned,
the principal can be held liable for damages

Necessity of Notice of Revocation

As to the agent - express notice always
necessary; sufficient notice if the party to be
notified actually knows, or has reason to
know, a fact indicating that his authority has
been terminated/suspended; revocation
without notice to the agent will not render
invalid an act done in pursuance of the
authority
As to 3rd persons – express notice necessary
As to former customers - actual notice must
be given to them because they always
assume the continuance of the agency
relationship
As to other persons - notice by publication is
enough

Effect of Extinguishment without Notice

Act of agent deemed valid insofar as 3rd parties
acting in good faith and without knowledge of
revocation
VI. CREDIT TRANSACTIONS CHARACTERISTICS
1. Real Contract – delivery is essential for
============================
perfection of the loan (BUT a promise to lend,
===== being consensual, is binding upon the
TOPIC UNDER THE SYLLABUS: parties)
A. Loan 2. Unilateral Contract - only the borrower has
1. Commodatum vs. Mutuum the obligation
2. Obligations of bailor and bailee
3. Interest and the suspension of 1. COMMODATUM VS. MUTUUM
usury law KINDS
1. COMMODATUM – bailor delivers to bailee a
===========================
non-consumable thing so that the latter may
===========
use it for a certain time and return the
identical thing
CREDIT TRANSACTIONS include all
Kinds of commodatum:
transactions involving the purchase or loan of
a. Ordinary commodatum –
goods, services or money in the present with a
bailee uses the thing for a certain period
promise to pay or deliver in the future (contract
of time
of security)
b. Precarium – bailor may
demand the thing loaned at will; exists in
2 Types of Credit Transactions:
cases where:
1. Secured transactions – those supported by
i. There is no stipulation as to the
a collateral or an encumbrance of property
duration of the contract or use of the
2. Unsecured transactions – those supported
thing loaned
only by a promise to pay or the personal
ii. Use of the thing is merely tolerated by
commitment of another such as a guarantor
the owner
or surety
2. MUTUUM OR SIMPLE LOAN - lender
delivers to the borrower money or other
SECURITY is something given, deposited or
consumable thing upon the condition that the
serving as a means to ensure the fulfillment or
latter will pay the same amount of the same
enforcement of an obligation or of protecting
kind and quality
some interest in the property
LOAN CREDIT
2 Types of Security:
1. Delivery by one Ability of an individual
1. Personal – when an individual becomes a
party and the to borrow money or
surety or a guarantor
receipt by the other things by virtue of the
2. Real or Property – when an encumbrance is
party of a given confidence or trust
made on property (e.g. mortgage or pledge)
sum of money or reposed by a lender
other consumable that he will pay what
BAILMENT - is the delivery of property of one
thing upon an he may promise w/in a
person to another in trust for a specific purpose,
agreement, express specified period
with a contract, express or implied, that the trust
or implied
shall be faithfully executed and the property
2. To repay the same
returned or duly accounted for when a special
amount of the
purpose is accomplished or kept until the bailor
same kind and
reclaims it. Generally, it is contractual, but may
quality, w/ or w/o
also be created by operation of law.
interest
PARTIES IN BAILMENT
1. BAILOR – The lender/giver; the party who COMMODATUM
delivers possession/custody of the (Articles 1935-1952)
thing bailed
2. BAILEE – The recipient; the party who CHARACTERISTICS AND CERTAIN RULES TO
receives the possession/custody of REMEMBER:
the thing delivered 1. Gratuitous: If there is compensation, then
it’s not commodatum. It may be a lease.
LOAN 2. Personal: Death of lender/borrower
EXTINGUISHES the contract
 a. Borrower can’t lend or lease the
thing to third persons
i. EXCEPTION: when stipulated
that he can
ii. EXCEPTION: the members of
the borrower’s household
may make use of the thing
iii. EXCEPTION TO EXCEPTION:
when stipulated that
members of the househould
cannot use or if the nature
of the thing forbids such use
3. Subject Matter:
a. Generally non-consumables (can be
real or personal property)
b. If consumable, it must be for
exhibition (1936)
4. Ownership
a. Lender does not have to be the
owner of the thing loaned in
commodatum
5. Right of retention:
a. Borrower can’t retain the thing
loaned just because he has claims
against lender
b. Borrow can retain if he suffers
damages by reason of hidden flaws
in the thing lent (1951)
6. Presumption of solidary liability of
borrowers
a. If there are two or more borrowers,
the presumption is that they are
solidarily liable
7. Fruits: a stipulation to make use of fruits is
valid, but it is never presumed. The
enjoyment of the fruits must only be
incidental to the use of the thing itself - if
enjoyment of fruits is primary reason, it is a
usufruct.
When borrower is liable for loss of the thing
(ADLIB)
a. BAD FAITH – if the
bailee devotes the thing to any purpose
different from that for which it has been
loaned
b. DELAY - he keeps it
longer than the period stipulated or after
the accomplishment of the use for which
the commodatum has been constituted
c. HAS BEEN
DELIVERED W/ APPRAISAL - the thing
loaned has been delivered with appraisal
of its value, UNLESS there is a stipulation
exempting the bailee from responsibility
in case of a fortuitous event
d. LENDS THE SUBJECT
MATTER TO A 3RD PERSON - he lends or
leases the thing to a third person who is
not a member of his household
e. INGRATITUDE - being
able to save the thing borrowed or his
own thing, he chose to save the latter
2. OBLIGATIONS OF BAILOR AND BAILEE
OBLIGATIONS OF BAILEE (borrower)
1. To take care of the thing with ordinary
diligence
2. To pay for ordinary expenses
3. To be liable for loss due to fortuitous
event if stipulated that he is such
OBLIGATIONS OF THE BAILOR (lender) (AD-
READ-HA)
1. Primary obligation of the bailor:
General Rule: To allow the bailee the use of the
thing loaned for the duration of the period
stipulated or until the accomplishment of the
purpose for w/c the commodatum was
constituted.
Exceptions: Bailor may demand the return of
the thing or its temporary use when:
a. Bailor has an urgent need for the thing
(Art. 1946) – the contract is suspended
b. Bailee commits an act of ingratitude (Art.
1948)
 If the bailee should commit an offense
against the person, the honor or the
property of the bailor, or of the wife or
children under his parental authority
 If the bailee imputes to the bailor any
criminal offense, or any act involving
moral turpitude, even though he should
prove it, UNLESS the crime or the act has
been committed against the bailee
himself, his wife, or children under his
authority
 If the bailee unduly refuses the bailor
support when the bailee is legally or
morally bound to give support to the
bailor
2. May demand the thing at will when the
contract is a precarium

PRECARIUM – a kind of commodatum where the
bailor may demand the thing at will. It is a
contract by which the owner of a thing, at the
request of another person, gives the latter the
thing for use as long as the owner shall tolerate
3. To refund the extraordinary expenses (Art.
1949)
General Rule – Notice should be given by the
bailee to the bailor regarding such extraordinary
expenses and consent should be obtained
Exception – Where the extraordinary expenses
are so urgent that the reply to the notification
cannot be awaited w/o danger
4. If the extraordinary expenses arise from the
actual use of the thing and even though
bailee acted w/o fault, the expenses will be
borne equally by both the bailor and the
bailee (50-50) (Art. 1949, par. 2)
REASONS:
a. Bailee pays ½ because of the benefit
derived from the use of the thing
b. Bailor pays the other ½ because he is the
owner and the thing will be returned to him
Exception – Stipulation to the contrary (e.g.
different apportionment or sole burden by bailee
or bailor)
5. All other expenses which are not necessary
for the use and preservation of the thing
must be shouldered by the borrower (bailee)
6. The depreciation caused by the reasonable
and natural use of the thing is borne by the bailor
(Art. 1943)
REASON: parties to the contract know that the
thing borrowed cannot be used without
deterioration due to ordinary wear and tear.
Exceptions:
a. When there is a stipulation to the contrary
b. When the bailee is guilty of fault or
negligence
c. If he devotes the thing to any purpose
different from that for which has been
loaned
7. To pay damages for known hidden flaws (Art.
1951)
Requisites: (the following must concur)
a. There is a flaw or defect in the thing loaned
b. The flaw or defect is hidden
c.
c.
c.
c.
The bailor is aware thereof
d. Bailor does not advise the bailee of the same
e. The bailee suffers damages by reason of the
flaw or defect
8. The bailor has no right of abandonment for
expenses and damages (Art. 1952)
REASON: expenses and/or damages may exceed
the value of the thing loaned
SIMPLE LOAN OR MUTUUM
(Arts. 1933-1961)
SIMPLE LOAN OR MUTUUM is a contract
whereby one of the parties delivers to another
money or other fungible thing w/ the
understanding that the same amount of the
same kind and quality shall be paid.
Nature of Mutuum
a. Bilateral – borrower’s promise to pay is the
consideration for the lender’s
obligation to furnish the loan
b. No criminal liability upon failure to pay
Subject Matter
a. Fungible or consumable - depending on
the intent of the parties; that the return of
the thing is equivalent only and not the
identical thing
Fungible things – those which are usually
dealt with by number, weight, or measure so
that any given portion is treated as the
equivalent of any other unit or portion.
– depends upon the intention of
the parties (as opposed to consumable or
non- consumable which depends upon its
nature)
- A fungible from the viewpoint of
the parties is easily replaceable
b. Money
 If the transfer of ownership is on a non-
fungible thing, with the obligation of the
other to give things of the same kind,
quantity and quality, it is a barter
FORM OF PAYMENT
1. If the thing loaned is money – currency
stipulated, otherwise that which is legal
tender in the Philippines. In case of
extraordinary inflation or deflation, payment
 shall be in the value of the currency at the
time of the creation of the obligation.
2. If other than money – another thing of the
same kind, quality and quantity. If impossible
to do so, payment must be its value at the
time of perfection of the loan.
3. INTEREST AND THE SUSPENSION OF
USURY LAW
INTEREST
General Rule – Interest must be expressly
stipulated in writing, and it must be lawful
(Art. 1956)
1. When an obligation, regardless of its source,
is breached, the contravenor can be held
liable for damages.
2. If obligation consists in the payment of a sum
of money (loan, forbearance of money,
judgment money)
a. Interest due is what has been
stipulated by the parties
b. The interest shall earn legal interest
from the time of judicial demand
c. If there’s no stipulation, the rate is
12% from default (judicial or
extrajudicial demand)
2. If obligation is not a loan or forbearance of
money
a. Interest on the amount of damages
awarded may be imposed at the
discretion of the court at 6%
b. No interest shall be adjudged on
unliquidated claims or damages,
except when or until the amount can
be established with reasonable
certainty
c. Where the amount is established with
reasonable certainty, the interest
shall begin from the time the claim is
made judicially or extrajudicially
d. But when such certainty cannot be so
reasonably established the time the
demand is made, the interest shall
begin to run only from the date the
judgment of the court is made
e. The actual base (principal) for the
computation of the legal interest
shall, in any case, be on the amount
finally adjudged.
3. When judgment of court awarding a sum of
money becomes final and executory, 12%
interest from such until its payment
Eastern Assurance and Surety Corporation
v. CA [322 SCRA 73, Jan. 18, 2000]
Exceptions:
1. Indemnity for damages – the debtor in
delay is liable to pay legal interest
(6%/12%) as indemnity for damages even
in the absence of a stipulation for the
payment of interest. Interest as indemnity
for damages is payable only in case of
default or non-performance of contract.
 Basis for computation for indemnity:
a. Central Bank Circular 416 – 12% p.a. in
cases of:
 Loans
 Forbearance of money, goods or
credits
 Judgments involving such loans
or forbearance, in the absence of
the express agreement as to such
rate of interest
 During the interim period from
the date judgment until actual
payment
b. Art. 2209 of the Civil Code – 6% p.a. in
cases of:
 Other sources (e.g. sale)
 Damages arising from injury to
persons
 Loss of property which does not
involve a loan
2. Interest accruing from unpaid interest -
interest due shall earn interest from the time
it is judicially demanded although the
obligation may be silent upon this point.
Determination of interest payable in kind:
Its value shall be appraised at the current price
of the products or goods at the time and place of
payment. (Art. 1958)
NOTE: In case of an unstipulated interest paid
by mistake, the debtor may recover as in the
case of solutio indebiti or undue payment. If such
was voluntarily paid, there can be no
recovery as in the case of natural obligations.
COMPOUNDING INTEREST (Art. 1959)
May be availed of only when there is a written
stipulation in the contract for the payment of
interest.
General Rule – Accrued interest (interest due
and unpaid) shall not earn interest
Exceptions: 2. Necessary Deposit
 When judicially demanded(e.g. when 3. Judicial Deposit
case is filed to collect) ========================
 When there is an express stipulation ==============
made by the parties: that the interest due
and unpaid shall be added to the principal
obligation and the resulting total amount DEPOSIT
shall earn interest (Arts. 1962-2009)
DEPOSIT is constituted from the moment a
USURY person receives a thing belonging to another,
with the obligation of safely keeping it and of
USURY – is the contracting for or receiving returning the same. Safekeeping must be the
something in excess of the amount allowed by
principal purpose of the contract.
law for the loan or forbearance of money, goods
or chattels.
Characteristics
ELEMENTS OF USURY: (LUIT) 1. Real - because it is perfected only by the
1. Loan or forbearance delivery of the subject matter
2. Understanding between the parties that he  BUT an agreement to constitute a deposit
loan shall be paid. is binding and enforceable, since it is
3. Unlawful intent to take more than the legal merely consensual
rate. 2. Unilateral - if gratuitous
4. Taking or agreeing to take for the use of the 3. Bilateral - if with compensation
loan of something in excess of what is
allowed by law. Creation of deposit (Art. 1964)
1. By virtue of a court order or
NOTE: Usury now is legally inexistent. In Art. 2. By law
1306 of NCC, contracting parties may establish 3. Not by the will of the parties
such stipulations, clauses, terms and conditions 4. Depositary must not be the owner of the
as they may deem convenient, provided they are property deposited (Art. 1962)
not contrary to law, morals, good customs, public
order, or public policy. This may be invoked to Kinds of Deposit
annul the excessive stipulated interest.  1. Judicial - when an attachment or seizure of
However, Usury law has NOT been repealed property in litigation is ordered
2. Extrajudicial (Art. 1967)
 Since the mortgage contract derives its a. Voluntary - delivery is made by
the will of the depositor or by two or more
vitality from the validity of the principal
persons each of whom believes himself
obligation, the invalid stipulation on interest
entitled to the thing deposited
rate is similarly insufficient to render void the
b. Necessary - made in compliance
ancillary mortgage contract. Sps. Carpo v.
with a legal obligation, or on the occasion
Chua, [G.R. No. 150773 & 153599,
of any calamity, or by travelers in hotels
September 20, 2005]
and inns or by travelers with common
carriers. There is lack of free choice in the
BARTER – A contract whereby one person
depositor.
transfers the ownership of non-fungible things
to another with the obligation on the part of BASIS JUDICIAL EXTRAJUDICIAL
the latter to give things of the same kind, Creati Will of the court Will of the
quantity and quality, shall be considered a on contracting
barter. parties
Purpos Security or to Custody and
======================== e ensure the right of safekeeping
a party to the
============== property or to
TOPIC UNDER THE SYLLABUS: recover in case of
B. Deposit favorable
1. Voluntary Deposit judgment
Subjec Generally Movables only DEPOSITARY DEPOSITARY
t immovables CAPACITATED / INCAPACITATED /
Matter DEPOSITOR DEPOSITOR
Cause Always onerous May be INCAPACITATED CAPACITATED
compensated but Depositary is subject Depositary does not
generally to ALL the obligations incur the obligations of
gratuitious of a depositary a depositary
Return Upon order of the Upon demand of
of court / end of depositor
thing litigation Depositary must return Depositary, however,
In Person who has a Depositor or / 3rd the property either to: is liable to:
whose right person designated a) Return the thing
behalf deposited while still
it is a) The legal in his possession;
held representative of the AND
incapacitated, OR b) Pay the depositor
Deposit is generally gratuitous: (Art. 1965) b) The depositor the amount by w/c
General Rule – A deposit is generally gratuitous. himself if he should he may have
Exceptions: (SBSJ) acquire capacity benefited himself w/
a. When there is a the thing or its price
contrary stipulation subject to the right
b. Where depositary is of any 3rd person
engaged in the business of storing goods who acquires the
c. Where property is thing in good faith
saved without knowledge of the owner
d. Judicial deposit BASIS IRREGUL MUTUUM
AR
DEPOSIT
Subject Matter of Deposit (Art. 1966) Demandable Lender is bound
General Rule: Only movable or personal at will of the by the provisions
property may be the object of deposit (whether irregular of the contract
voluntary or necessary) Demandabi depositor for and cannot seek
Exception: In judicial deposit, it may cover both lity whose benefit restitution until
movable and immovable property the deposit the time of
has been payment as
Depositor need not be the owner of the constituted provided in the
thing contract has
General Rule: The depositor must be the owner arisen
of the thing deposited
Benefit Benefit Necessity of the
Exceptions: It may belong to another person
accrues to the borrower
than the depositor
depositor
a. When two or more persons claiming to be
Depositor has Enjoy no
entitled to a thing may deposit the same
Preference preference preference in
with a third person. In such case, the third
of credit over other the distribution
person assumes the obligation to deliver
creditors with of the debtor’s
to the one to whom it belongs.
respect to property
b. Interpleader – the action to compel the
thing
depositors to settle their conflicting
deposited
claims. Here one of the depositors is not
the owner.
OBLIGATIONS OF THE DEPOSITARY
(SRT-CCC-ULC-RITT-RPPT-TL-HR)
Form of contract of deposit
1. Two primary obligations (Art. 1972)
General Rule: A contract of deposit may be
a. Safekeeping of the object
entered into (but not perfected) orally or in
writing (Art. 1969) Degree of Care – same diligence as he
Exception: Delivery of the thing deposited is would exercise over his property
needed for perfection.  REASONS:
 i. Essential requisite of judicial
relation which involves the
depositor’s confidence in his good
faith and trustworthiness
ii. The presumption that the
depositor took into account the
diligence which the depositary is
accustomed with respect to his
own property
b. Return of the thing when required
– Even though a specified term or time for
such may have been stipulated in the
contract
The depositary cannot excuse himself from
liability, in the event of loss, by claiming that he
exercised the same amount of care toward the
thing deposited as he would towards his own if
such care is less than that required by the
circumstances
2. Obligation not to Transfer deposit (Art.
1973)
General Rule: The depositary is not allowed to
deposit the thing with a third person
REASON: A deposit is founded on trust and
confidence and it can be supposed that the
depositor, in choosing the depositary, has taken
into consideration the latter’s qualification
Exception: The depositary is authorized by
express stipulation
LIABILITIES: Depositary is liable for loss of the
thing deposited when:
a. He transfers the deposit with a third
person without authority although there is
no negligence on his part and the third
person;
b. He deposits the thing with a third person
who is manifestly careless or unfit
although authorized, even in the absence
of negligence; or
c. The thing is lost through the negligence
of his employees whether the latter are
manifestly careless or not.
 Exemption from liability: The thing is lost
without the negligence of the third person
with whom he was allowed to deposit the
thing if such third person is not “manifestly
careless or unfit.” (i.e., minor)
3. Obligation not to Change the way of
deposit (Art. 1974)
General Rule: Depositary may not change the
way of the deposit
Exception: If there are circumstances indicating
that the depositor would consent to the change.
This is a situation wherein the depositary would
reasonably presume that the depositor would
agree to the change if he knows of the facts of
the situation.
Requisites:
a. The depositary must notify the depositor
of such change; and
b. Must wait for the reply of the depositor to
such change.
 These requisites may not be dispensed
with unless delay would cause danger.
4. Obligation to Collect on the choses in
action deposited (Art. 1975)
 If the thing deposited should earn
interest, the depositary is under the
obligation to:
a. Collect the interest as it becomes due
b. Take such steps as may be necessary
to preserve its value and the right
corresponding to it
 The depositary is bound to collect the
capital, as well as the interest, when due
Contract of rent of safety deposit boxes
(Art. 1975)
- A contract for the rent of safety deposit
boxes is not an ordinary contract of lease
of things, but a special kind of deposit;
hence, it is not to be strictly governed by
the provisions on deposit.
- The prevailing rule in the US is that the
relation between a bank renting out
safety deposit boxes and its customer
with respect to the contents of the box is
that of bailor and bailee.
5. Obligation not to Commingle things if so
stipulated (Art. 1976)
General Rule: The depositary is permitted to
commingle grain or other articles of the same
kind and quality
Effects:
a. The various depositors of the mingled
goods shall own the entire mass in
common
b. Each depositor shall be entitled to such
portion of the entire mass as the amount
deposited by him bears the whole
Exception: When there is a stipulation to the
contrary
6. Obligation not to make Use of the things
deposited (Art. 1977)
General Rule: Deposit is for safekeeping of the
subject matter and not for its use
Exceptions:
a. Expressly authorized by the depositor
b. Such use is necessary for its preservation but
limited for the purpose only
 Effect of unauthorized use: Liability for
damages
 Effects of authorized use: (Art. 1978)
a. If the thing deposited is non-
consumable:
General Rule: The contract loses the
character of a deposit and acquires that
of a commodatum, despite the fact that
the parties may have denominated it as a
deposit
Exception: Safekeeping is still the
principal purpose of the contract
b. If the thing deposited is money or
other consumable thing:
General Rule: Converts the contract into
a simple loan or mutuum
Exception: Safekeeping is still the
principal purpose of the contract, but it
becomes an irregular deposit. Bank
deposits are in the nature of irregular
deposits but they are really loans
governed by the law on loans.
7. Liability for Loss through fortuitous
event (Art. 1979)
General Rule: Depositary is not liable for loss
through fortuitous event without his fault
Exceptions: (SUDA)
a. If it is so stipulated
b. If he uses the thing without the depositor’s
permission
c. If he delays in its return
d. If he allows others to use it, even though he
himself may have been authorized to use
the same
NOTE: Liability for loss without fortuitous event:
Depositary presumed at fault since he is in
possession
(Art. 1265)
Relation between bank and depositor
(Art. 1980)
 Fixed, savings, and current deposits of
money in banks and similar institutions
shall be governed by the provisions
concerning simple loan
a. Contract of loan – deposits in banks
are really loans because the bank can
use the same for its ordinary
transactions
b. Relation of creditor and debtor –
the relation between a depositor and
a bank is that of a creditor and a
debtor.
8. Obligation when the thing deposited is
Closed and Sealed (Art. 1981)
 The depositary has the obligation to:
a. Return the thing deposited when
delivered closed and sealed in the
same condition
b. Pay for damages should the seal or
lock be broken through his fault,
which is presumed unless proven
otherwise
c. Keep the secret of the deposit when
the seal or lock is broken, with or
without his fault
When depositary justified in opening
closed and sealed subject matter (Art.
1982):
a. The depositary is presumed
authorized to do so if the key has
been delivered to him
b. When the instructions of the depositor
as regards the deposit cannot be
executed without opening the box or
receptacle (Necessity)
9. Obligation to Return products,
accessories and accessions (Art. 1983)
10. Obligation to pay Interest on sums
converted for personal use (Art. 1983)
11. The depositary who receives the thing in
deposit cannot require that the
depositor Prove his ownership over the
thing (Art. 1984)
12. Where Third person appears to be the
owner (Art. 1984)
  The depositary may be relieved from
liability when:
a. He advised the true owner of the
thing of the deposit
b. If the owner, in spite of such
information, does not claim it within
the period of one month (30 days)
13. Obligation of the depositary when there
are Two or more depositors (Art. 1985)
a. Divisible thing and joint depositors –
each one of the depositors can
demand only his share proportionate
thereto
b. Indivisible thing or solidary depositors
– rules on active solidarity
General Rule: Each one of the
depositors may do whatever may be
useful to the others (Art. 1212)
Exception: Anything w/c may be
prejudicial to the other depositors
General Rule: The depositary may
return the thing to any one of the
solidary depositors
Exception: When a demand, judicial
or extrajudicial, for its return has been
made by one of them in which case
delivery should be made to him
c. Return to one of the depositors
stipulated
• If by stipulation, the thing should
be returned to one of the
depositors, the depositary is
bound to return it only to the
person designated, although he
has not made any demand for its
return
14. Obligation to Return to the person to
whom return must be made (Art. 1986)
a. The depositary is obliged to return the
thing deposited, when required, to:
 The depositor;
 To his heirs or successors; or
 To the person who may have been
designated in the contract.
b. If the depositor was incapacitated at
the time of making the deposit, the
property must be returned to:
 His guardian or administrator
 To the person who made the
deposit
 To the depositor himself should he
acquire capacity
c. Even if the depositor had capacity at
the time of making the deposit, but
he subsequently loses his capacity
during the deposit, the thing must be
returned to his legal representative
15. Obligation to return at the Place of
return (Art. 1987)
– same as the general rule of law regarding
the place of payment (Art. 1251)
GENERAL RULE: At the place agreed upon by
the parties, transportation expenses shall be
borne by the depositor
EXCEPTION: In the absence of stipulation, at the
place where the thing deposited might be even if
it should not be the same place where the
original deposit was made
16. Obligation to return upon the Time of
return (Art. 1988)
General Rule: The thing deposited must be
returned to the depositor upon demand, even
though a specified period or time for such return
may have been fixed
Exceptions:
a. When the thing is judicially attached while
in the depositary’s possession
b. When notified of the opposition of a third
person to the return or the removal of the
thing deposited
17. Right of the depositary to return the
Thing deposited (Art. 1989)
NOTE: In this case, it is the depositary who is
returning the deposit WITH OR WITHOUT THE
DEMAND of the depositor.
General Rule: The depositary may return the
thing deposited, notwithstanding that a period
has been fixed for the deposit, if:
a. The deposit is gratuitous
b. The reason is justifiable
 Remedy if depositor refuses to receive
the thing: The depositary may deposit
the thing at the disposal of the judicial
authority
Exception: When the deposit is for a valuable
consideration, the depositary has no right to
return the thing before the expiration of the time
designated even if he should suffer
inconvenience as a consequence
18.

Depositary’s liability in case of Loss by

force majeure or government order (Art. 2. Obligation to pay losses incurred due to
1990) character of thing deposited (Art. 1993)

 Depositary is not liable in cases of loss by General Rule: The depositary must be
force majeure or by government order. reimbursed for loss suffered by him because
However, he has the duty to deliver to of the character of the thing deposited.
the depositor money or another thing he Exceptions:
receives in place of the thing. a. Depositor was not aware of the danger
b. Depositor was not expected to know the
19. Liability in case of alienation by the dangerous character of the thing
depositary’s Heir (Art. 1991) c. Depositor notified the depositary of such
dangerous character
 When alienation is done in GOOD FAITH: d. Depositary was aware of the danger
a. Return the value of the thing without advice from the depositor
deposited
b. Assign the right to collect from the 3. Effect of death of depositor or
buyer depositary (Art. 1995)
 The heir does not need to pay the a. Deposit gratuitous – death of either of the
actual price of the thing deposited depositor or depositary extinguishes the
deposit (personal in nature). By the word
 When alienation is done in BAD FAITH:
“extinguished,” the law really means that
a. Liable for damages
the depositary is not obliged to continue
b. Pay the actual price of the thing
with the contract of deposit.
deposited
b. Deposit for compensation – not
extinguished by the death of either party
20. Depositary may Retain the thing in
pledge until the full payment of what
Extinguishment of Deposit
may be due him by reason of the
a. Upon the loss or deterioration of the thing
deposit (Art. 1994)
deposited;
b. Upon the death of the depositary, ONLY in
 The thing retained serves as security for
gratuitous deposits;
the payment of what may be due to the c. Other provisions in the Civil Code
depositary by reason of the deposit (see (novation, merger, etc.)
Arts. 1965, 1992 & 1993)
NOTE: The debt must be prior to the NECESSARY DEPOSIT
deposit
A deposit is necessary when: (LCCT)
IRREGULAR MUTUUM 1. It is made in compliance with a legal
DEPOSIT obligation
May be demanded at Lender is bound by the
will by the irregular provision of the 2. It takes place on the occasion of any
depositor for whose contract and cannot calamity, such as fire, storm, flood, pillage,
benefit the deposit seek restitution until shipwreck, or other similar events
has been constituted the time for payment,  There must be a causal relation between
as provided in the the calamity and the constitution of the
contract, has arisen deposit
Only benefit is that If with interest, benefit
which accrues to the if both parties 3. Made by passengers with common carriers
depositor
 As to baggages the passengers or their
Depositor has No preference
agents carry
preference over other
creditors
4. Made by travelers in hotels or inns (Art.
1998)
Obligations of the Depositor: (PLD)
1. Obligation to pay expenses of
preservation (Art. 1992)
- Applies only when the deposit is gratuitous
 Before keepers of hotels or inns may be
held responsible as depositaries with
regard to the effects of their guests, the
following must concur:
Elements:
a. They have been previously informed
about the effects brought by the
guests; and
b. The latter have taken the precautions
prescribed regarding their
safekeeping.
Extent of liability:
a. Liability in hotel rooms which come
under the term “baggage” or articles
such as clothing as are ordinarily used
by travelers
b. Include those lost or damages in hotel
annexes such as vehicles in the
hotel’s garage.
 When hotel-keeper liable: (Art. 2000
– 2002)
NOTE: In the following cases, the hotel-
keeper is liable REGARDLESS of the
amount of care exercised:
a. The loss or injury to personal property
is caused by his servants or
employees as well as by strangers
(Art. 2000)
b. The loss is caused by the act of a thief
or robber done without the use of
arms and irresistible force (Art.
2001)
Reason: Hotel-keeper is apparently
negligent
 When hotel-keeper not liable:
a. The loss or injury is caused by force
majeure, like flood, fire, theft or
robbery by a stranger (not the hotel-
keeper’s servant or employee) with
the use of firearms or irresistible force
EXCEPTION: Unless the hotel-keeper
is guilty of fault or negligence in
failing to provide against the loss or
injury from his cause
b. The loss is due to the acts of the
guests, his family, servants, visitors
c. The loss arises from the character of
the things brought into the hotel
 Exemption or diminution of liability:
The hotel-keeper cannot free himself from
responsibility by posting notices to the
effect that he is not liable for the articles
brought by the guest (Art. 2003)
Effect: Any stipulation between the hotel-
keeper and the guest whereby the
responsibility of the former (as set forth in Art.
1998-2001) is suppressed or diminished shall
be VOID.
 Hotel-keeper’s right to retain
The hotel-keeper has a right to retain the
things brought into the hotel by the
guest, as a security for credits on account
of:
a. Lodging
b. Supplies usually furnished to hotel
guests
Reason: It is given to hotel-keepers to
compensate them for the liabilities
imposed upon them by law. The right of
retention recognized in this article is in
the nature of a pledge created by
operation of law.
 In compliance with a
legal obligation (governed by the law
establishing it, and in case of deficiency,
the rules on voluntary deposit e.g. Arts.
538, 586 and 2104)
 Made on the occasion of
any calamity (governed by the rules on
voluntary deposit and Art. 2168)
SEQUESTRATION OR JUDICIAL DEPOSIT
When judicial deposit takes place: When an
attachment or seizure of property in litigation is
ordered by a court. (Art. 2005)
Nature: Auxiliary to a case pending in court
Purpose: To maintain the status quo during the
pendency of the litigation or to insure the right of
the parties to the property in case of a favorable
judgment
Depositary of sequestered property: person
appointed by the court. (Art. 2007)
Obligations:
a. To take care of the property with the diligence
of a good father of the family. (Art. 2008)
b.

He may not be relieved of his responsibility until CHARACTERISTICS OF THE CONTRACT

the litigation is ended or the court so orders.
(Art. 2007) 1. Accessory – dependent for its existence
upon the principal obligation guaranteed by it
Applicable law: The law on judicial deposit is hence if principal contract is void, then
remedial or procedural in nature. Hence, the guaranty is also void
Rules of Court are applicable. (Art. 2009)
2. Subsidiary and Conditional – takes effect
BASIS JUDICIAL EXTRAJUDIC only when the principal debtor fails in his
DEPOSIT IAL DEPOSIT obligation subject to limitation
Cause or By will of the By will of the
origin courts parties. 3. Unilateral –
Hence, there a. It gives rise only to a duty on the part of
is a contract the guarantor in relation to the creditor
Purpose Security; Custody; and not vice versa
Secure the right Safekeeping b. It may be entered into even without the
of a party to of the thing intervention of the principal debtor.
recover in case of
favorable 4. Distinct Person – a person cannot be the
judgment. personal guarantor of himself
Subject Either movable or Only movable
Matter immovable property Cause of contract of guaranty
property but 1. Presence of cause which supports
generally, principal obligation: Cause of the contract
immovable is the same cause which supports the
Remunerati Always Generally obligation as to the principal debtor. The
on remunerated gratuitous, consideration which supports the obligation
(onerous) but may be as to the principal debtor is a sufficient
compensated consideration to support the obligation of a
guarantor or surety.
In whose In behalf of the In behalf of
behalf it is person who, by the depositor 2. Absence of direct consideration or
held the judgment, or third benefit to guarantor: Guaranty or surety
has a right person agreement is regarded valid despite the
designated absence of any direct consideration received
by the guarantor or surety, such
======================== consideration need not pass directly to the
============== guarantor or surety; a consideration moving
TOPIC UNDER THE SYLLABUS: to the principal will suffice.
C. Guaranty and Suretyship
MARRIED WOMAN AS GUARANTOR (Art.
1. Nature and extent of guaranty 2049)
2. Effects of guaranty General Rule: Married woman binds only her
3. Extinguishment of guaranty separate property
4. Legal and judicial bonds Exceptions:
======================== 1. With her husband’s consent, binds the
============== community or conjugal partnership property
2. Without husband’s consent, in cases
GUARANTY AND SURETYSHIP provided by law, such as when the
(Arts. 2047-2084) guaranty has redounded to the benefit of the
family
GUARANTY – By guaranty, a person called the
guarantor, binds himself to the creditor, to fulfill GUARANTY UNDERTAKEN WITHOUT
the obligation of the principal debtor in case the KNOWLEDGE OF DEBTOR (Art. 2050)
latter should fail to do so. It is a contract between
the guarantor and the creditor.

Rights of third persons who pay:
1. Payment without the knowledge or
against the will of the debtor:
a. Guarantor can recover only insofar as the
payment has been beneficial to the
debtor (Art. 1236)
b. Guarantor cannot compel the creditor to
subrogate him in his rights (Art. 1237)
2. Payment with knowledge or consent of
the debtor: Subrogated to all the rights
which the creditor had against the debtor
(Art. 2067)
Double or sub-guaranty (Art. 2051(2))
One constituted to guarantee the obligation of a
guarantor. It should not be confounded with
guaranty wherein several guarantors concur.
GUARANTY OF VOIDABLE, UNENFORCEABLE,
AND NATURAL OBLIGATIONS (Art. 2052(2))
A guaranty may secure the performance of a:
1. Voidable contract – such contract is
binding, unless it is annulled by a proper
court action
2. Unenforceable contract – because such
contract is not void
3. Natural obligation – the creditor may
proceed against the guarantor although he
has no right of action against the principal
debtor for the reason that the latter’s
obligation is not civilly enforceable.
 When the debtor himself offers a
guaranty for his natural obligation, he
impliedly recognizes his liability, thereby
transforming the obligation from a
natural into a civil one.
GUARANTY OF FUTURE DEBTS (Art. 2053)
Continuing Guaranty or Suretyship:
1. Not limited to a single transaction but which
contemplates a future course of dealings,
covering a series of transactions generally for
an indefinite time or until revoked.
2. It is prospective in its operation and is
generally intended to provide security with
respect to future transactions.
3. Future debts, even if the amount is not yet
known, may be guaranteed but there can be
no claim against the guarantor until the
amount of the debt is ascertained or fixed
and demandable.
Examples:
a.
To
secure the payment of a loan at
maturity –guarantee of the punctual
payment of a loan at maturity and all other
obligations of indebtedness
b. To secure payment if any debt to be
subsequently incurred –construed as
continuing when it is evident from the terms
that the object is to give a standing credit to
the principal debtor to be used from time to
time either indefinitely or until a certain
period, especially if the right to recall the
guaranty is expressly reserved.
Guaranty of conditional obligations: A
guaranty may secure all kinds of obligations, be
they pure or subject to a suspensive or resolutory
condition.
1. Principal obligation subject to a
suspensive condition – the guarantor is
liable only after the fulfillment of the
condition.
2. Principal obligation subject to a
resolutory condition – the happening of
the condition extinguishes both the principal
obligation and the guaranty
GUARANTOR’S LIABILITY CANNOT EXCEED
PRINCIPAL OBLIGATION (Art. 2054)
General Rule: Guaranty is a subsidiary and
accessory contract – guarantor cannot bind
himself for more than the principal debtor
 If he does, his liability shall be reduced to
the limits of that of the debtor.
 But the guarantor may bind himself for
less than that of the principal.
Exceptions:
1. Interest, judicial costs, and attorney’s
fees as part of damages may be
recovered – creditors may recover from the
surety as part of their damages the
abovementioned fees even without
stipulation and even if the surety would
thereby become liable to pay more than the
total amount stipulated in the bond.
REASON: Surety is made to pay, not by
reason of the contract, but by reason of his
failure to pay when demanded and for
having compelled the creditor to resort to
the courts to obtain payment.
Interest runs from: (demand)
a. Filing of the complaint (upon
judicial demand); or
 b. The time demand was made upon nullifies the nature of the undertaking it had
the surety until the principal obligation is assumed.
fully paid (upon extra-judicial demand)
Remedy of surety: Foreclose the counterbond
2. Penalty may be provided –surety may be put up by the principal debtor (if there is any)
held liable for the penalty provided for in a
bond for violation of the condition therein. GUARANTY DISTINGUISHED FROM
SURETYSHIP
Principal’s liability may exceed guarantor’s GUARANTY SURETYSHIP
obligations Liability depends upon Assumes liability as a
The amount specified in a surety bond as the an independent regular party to the
surety’s obligation does not limit the extent of agreement to pay the undertaking
the damages that may be recovered from the obligation if the
principal, the latter’s liability being governed by primary debtor fails
the obligations he assumed under his contract. to do so
Engagement is a Charged as an original
GUARANTY NOT PRESUMED (Art. 2055) collateral undertaking promisor
Guaranty requires the expression of consent on Secondarily liable – Primarily liable –
the part of the guarantor to be bound. It cannot he contracts to pay if, undertakes directly for
be presumed because of the existence of a by the use of due the payment without
contract or principal obligation. diligence, the debt reference to the
cannot be paid solvency of the principal,
Guaranty Covered by the Statute of Frauds and is so responsible at
 Guaranty must not only be expressed but once the latter makes
must so be reduced into writing. default, without any
demand by the creditor
 Hence, it shall be unenforceable by action, upon the principal
unless the same or some note or whatsoever or any
memorandum thereof be in writing, and notice of default
subscribed by the party charged, or by his Only binds himself to Undertakes to pay if the
agent; evidence, therefore, of the agreement pay if the principal principal does not pay,
cannot be received without the writing, or a cannot or is unable to without regard to his
secondary evidence of its contents. pay ability to do so
 It need not appear in a public document. Insurer of the Insurer of the debt
solvency of the
Guaranty Strictly Construed debtor
Strictly construed against the creditor in favor of Does not contract Pay the creditor without
the guarantor and is not be extended beyond its that the principal qualification if the
terms or specified limits. Doubt in the terms and will pay, but simply principal debtor does not
conditions of the guaranty or suretyship that he is able to do pay. Hence, the
agreement should be resolved in favor of the so responsibility or
guarantor or surety. obligation assumed by
the surety is greater or
1. Liability for obligation stipulated – more onerous than that
guarantor is not liable to obligations assumed of a guarantor
previous to the execution of the guaranty
unless an intent to be so liable is clearly QUALIFICATIONS OF GUARANTOR (Arts.
indicated 2056-2057) (SIC)
2. Liability of surety limited to a fixed 1. He possesses integrity
period – the surety must only be bound in 2. He has the capacity to bind himself
the manner and to the extent, and under the 3. He has sufficient property to answer for
circumstances which are set forth or which the obligation which he guarantees
may be inferred from the contract of Exception: The creditor waives the
guaranty or suretyship, and no further. requirements
3. Liability of surety to expire on maturity
of principal obligation – such stipulation is Effect of Subsequent Loss of Required
unfair and unreasonable for it practically Qualifications: The qualifications need only be
present at the time of the perfection of the
contract. The subsequent loss of the
qualifications would not extinguish the liability of
the guarantor, nor will it extinguish the contract
of guaranty.
Remedy of creditor: Demand another
guarantor with the proper qualifications
Exception: Creditor may waive it if he chooses
and hold the guarantor to his bargain.
Article 2057:
1. Requires conviction in the first instance of a
crime involving dishonesty to have the right
to demand another.
2. Judicial declaration of insolvency is not
necessary in order for the creditor to have a
right to demand another guarantor.
Estate of Hemady v. Luzon Surety; The
supervening incapacity of a guarantor
DOES NOT terminate the guaranty for it
merely gives the creditor the OPTION to
demand another guarantor. He is not bound
to substitute the guarantor.
Selection of Guarantor:
1. Specified person stipulated as
guarantor: Substitution of guarantor may
not be demanded
REASON: The selection of the guarantor is:
a. A term of the agreement;
b. As a party, the creditor is, therefore,
bound thereby.
2. Guarantor selected by the principal
debtor: Debtor answers for the integrity,
capacity, and solvency of the guarantor.
3. Guarantor personally designated by the
creditor: Responsibility of the selection
should fall upon the creditor because he
considered the guarantor to have the
qualifications for the purpose.
RIGHT OF GUARANTOR TO BENEFIT OF
EXCUSSION OR EXHAUSTION (Art. 2058)
1. Guarantor only secondarily liable –
guarantor binds himself only in case the
principal debtor should fail to do so. If the
principal debtor fulfills the obligation
guaranteed, the guarantor is discharged from
any responsibility.
2. All legal remedies against the debtor to
be first exhausted – to warrant recourse
against the guarantor for payment, it may
not be sufficient that the debtor appears
insolvent. Such insolvency may be simulated.
NOTE: Art. 2058 is not applicable to a contract of
suretyship.
Right of Creditor to Secure Judgment
against Guarantor prior to Exhaustion
General Rule: An ordinary personal guarantor
(NOT a pledgor or mortgagor), may demand
exhaustion of all the property of the debtor
before he can be compelled to pay.
Exception: The creditor may, prior thereto,
secure a judgment against the guarantor, who
shall be entitled, however, to a deferment of the
execution of said judgment against him, until
after the properties of the principal debtor shall
have been exhausted, to satisfy the latter’s
obligation.
EXCEPTIONS TO THE BENEFIT OF
EXCUSSION (Art. 2059)
The guarantor is not entitled to the benefit
of excussion:
1. As provided in Art. 2059: (I-SAW-U)
a. If the guarantor has expressly waived it –
Waiver
 Waiver is valid but it must be made in
express terms.
b. If he has bound himself solidarily with the
debtor – liability assumed that of a surety
 Guarantor becomes primarily liable as
a solidary co-debtor. In effect, he
renounces in the contract itself the
benefit of exhaustion.
c. In case of insolvency of the debtor –
guarantor guarantees the solvency of the
debtor
 If the debtor becomes insolvent, the
liability of the guarantor as the debtor
cannot fulfill his obligation
d. When he (debtor) has absconded, or
cannot be sued within the Philippines – the
creditor is not required to go after a debtor
who is hiding or cannot be sued in our
courts
Exception: Debtor has left a manager or
representative
e. If it may be presumed that a judicial action
including execution on the property of the
principal debtor would not result in the
satisfaction of the obligation – if such is
 the case, the guarantor can no longer
require the creditor to resort to all such
remedies against the debtor as the same
would be but a useless formality. It is not
necessary that the debtor be judicially
declared insolvent.
2. If he does not comply with Art. 2060: In
order that the guarantor may make use of
the benefit of excussion, he must:
a. Set it up against the creditor upon the
latter’s demand for payment from him;
b. Point out to the creditor:
i. Available property of the debtor – the
guarantor should facilitate the
realization of the excussion since he is
the most interested in its benefit.
ii. Within the Philippine territory –
excussion of property located abroad
would be a lengthy and extremely
difficult proceeding and would not
conform with the purpose of the
guaranty to provide the creditor with
the means of obtaining the fulfillment
of the obligation.
iii. Sufficient to cover the amount of the
debt.
3. If he is a judicial bondsman and sub-
surety (Art. 2084) –because he is solidarily
liable
4. Where a pledge or mortgage has been
given by him as a special security
5. If he fails to interpose it as a defense
before judgment is rendered against him
DUTY OF CREDITOR TO MAKE PRIOR
DEMAND FOR PAYMENT FROM GUARANTOR
(Art. 2060)
1. When demand to be made – only after
judgment on the debt for obviously the
exhaustion of the principal’s property cannot
even begin to take place before judgment
has been obtained.
2. Actual demand to be made – joining the
guarantor in the suit against the principal
debtor is not the demand intended by law.
There must be an actual demand and not
judicial demand.
DUTY OF THE GUARANTOR TO SET UP
BENEFIT OF EXCUSSION (Art. 2060)
As soon as he is required to pay, guarantor must
also point out to the creditor available property
(not in litigation or encumbered) of the debtor
within the Philippines.
DUTY OF THE CREDITOR TO RESORT TO ALL
LEGAL REMEDIES (Art. 2061)
After the guarantor has fulfilled the conditions
required for making use of the benefit of
exhaustion, it becomes the duty of the creditor
to: Exhaust all the property of the debtor pointed
out by the guarantor
If he fails to do so, he shall suffer the loss but
only to the extent of the value of the said
property, for the insolvency of the debtor.
Resort to all legal remedies includes accion
pauliana, among others.
Joinder of Guarantor and Principal as
Parties Defendant
General Rule: The guarantor, not being a joint
contractor with his principal, cannot be sued with
his principal.
Exception: Where it would serve merely to
delay the ultimate accounting of the guarantor or
if no different result would be attained if the
plaintiff were forced to institute separate actions
against the principal and the guarantors.
PROCEDURE WHEN CREDITOR SUES (Art.
2062)
1. Sent against the principal – The guarantor
cannot be sued with his principal, much less
alone, except in the cases mentioned in Art.
2059 where the guarantor is not entitled to
the benefit of excussion.
 As a rule, the creditor may hold the
guarantor only after judgment has been
obtained against the principal debtor and
the latter is unable to pay.
2. Notice to guarantor of the action –
guarantor must be notified so that he may
appear, if he so desires, and set up defenses
he may want to offer
a. Guaranty appears – voluntary
appearance does not constitute a
renunciation of his right to excussion.
b. Guaranty does not appear –
i. He cannot set up the defenses which,
by appearing are allowed to him by
law; and
 ii. It may no longer be possible for him
to question the validity of the
judgment rendered against the debtor
3. Hearing before execution can be issued
against the guarantor – a guarantor is
entitled to be heard before an execution can
be issued against him where he is not a party
in the case involving his principal.
EFFECTS OF COMPROMISE (Art. 2063)
Compromise – a contract whereby the parties,
by making reciprocal concessions, avoid a
litigation or put an end to one already
commenced.
1. Compromise between creditor and principal
debtor benefits the guarantor but does not
prejudice him.
2. Compromise between guarantor and the
creditor benefits but does not prejudice the
principal debtor.
REASON: A compromise binds only the parties
thereto and not third persons. Thus, it cannot
prejudice the guarantor or debtor who was not
party to the compromise. But if it benefits a third
person, then the compromise may bind that third
person.
SUB-GUARANTOR’S RIGHT TO EXCUSSION
(Art. 2064)
Sub-guarantor enjoys the benefit of excussion
with respect to:
1. Principal debtor; and
2. Guarantor
REASON: He stands with respect to the guarantor
on the same footing as the latter does with
respect to the principal debtor.
BENEFIT OF DIVISION AMONG SEVERAL
GUARANTORS (Art. 2065)
1. In whose favor applicable - should there be
several guarantors of only one debtor and for the
same debt, the obligation to answer for the same
is divided among all.
2. Cannot be availed of if there are:
a. Two or more debtors of one debt, even if
they be bound solidarily, each with
different guarantors; or
b. Two or more guarantors of the same
debtor but for different debts
c. If any of the circumstances enumerated in
Art. 2059 should take place, as would the
benefit of exhaustion of the debtor’s
property.
3. Extent of liability of several guarantors –
joint obligation: the obligation to answer for
the debt is divided among all of them. The
guarantors are not liable to the creditor beyond
the shares which they are respectively bound to
pay.
Exception: Solidarity has been expressly
stipulated
Benefit of Excussion among Several
Guarantors:
In order that the guarantor may be entitled to the
benefit of division, it is not required that he point
out the property of his co-guarantors.
REASON: Obligation of the guarantor with respect
to his co-guarantors is not subsidiary but direct
and does not depend as to its origin on the
solvency or insolvency of the latter.
RIGHT TO INDEMNITY OR REIMBURSEMENT
(Art. 2066) (DELT)
1. Total amount of the debt - The guarantor
has no right to demand reimbursement until
he has actually paid the debt, unless by the
terms of the contract, he is given the right
before making payment.
2. Legal interest - It is immaterial that the
debt did not earn interest for the creditor,
because the guarantor’s right to legal
interest is granted by law by virtue of the
payment he has made, and is independent of
the creditor’s right to claim interest which
was necessarily regulated by the stipulations
between him and the debtor.
3. Expenses incurred by the guarantor -
The expenses referred to are only those that
the guarantor has to satisfy in accordance
with law as a consequence of the guaranty.
These expenses are limited to those incurred
by the guarantor after having notified the
debtor that payment has been demanded of
him by the creditor.
Exception: The guarantor cannot demand
for reimbursement for litigation expenses,
when such expenses are due to its failure to
fulfill its obligation to pay upon demand.
(Tuason vs. Machuca, GR No. L-22177,
December 2, 1924)
4. Damages, if they are due.
Exceptions to Right to Indemnity or
Reimbursement
1.
Where the guaranty is constituted without the
knowledge or against the will of the principal
debtor, the guarantor can recover only
insofar as the payment had been beneficial to
the debtor
2. Payment by a third person who does not
intend to be reimbursed by the debtor is
deemed to be a donation, which, however,
requires the debtor’s consent. But the
payment is in any case valid as to the
creditor who has accepted it (Art. 1238)
3. Waiver
GUARANTOR’S RIGHT TO SUBROGATION
(Art. 2067)
SUBROGATION transfers to the person
subrogated, the credit with all the rights thereto
appertaining either against the debtor or against
third persons, be they guarantors or possessors
of mortgages, subject to stipulation in
conventional subrogation.
1. Accrual, basis, and nature of right – right
of subrogation is necessary to enable the
guarantor to enforce the indemnity given in
Art. 2066
a. Arises by operation of law upon payment
by the guarantor
b. It is not a contractual right
c. The guarantor is subrogated, by virtue of
the payment, to the right of the creditor,
not those of the debtor.
2. When right not available – since
subrogation is the means of effectuating the
right of the guarantor to be reimbursed, it
cannot therefore be invoked in those cases
where the guarantor has no right to be
reimbursed.
EFFECT OF PAYMENT BY GUARANTOR
WITHOUT NOTICE TO DEBTOR (Art. 2068)
When the guarantor pays the creditor, but the
debtor has already paid the latter, then the
debtor can set up against the guarantor the
defense of previous extinguishments of the
obligation by payment.
Hence, guarantor must notify the debtor before
making payment.
REASON: The guarantor cannot be allowed,
through his own fault or negligence to prejudice
or impair the rights or interests of the debtor.
NOTE: In case of an unenforceable contract, if
the debtor consents to the guarantor paying, the
guarantor can seek reimbursement from the
debtor. If the debtor did not consent to the
guarantor paying, the guarantor cannot seek
reimbursement from the guarantor.
EFFECT OF PAYMENT BY GUARANTOR
BEFORE MATURITY (Art. 2069)
Debtor’s obligation with a period –
demandable only when the day fixed comes.
1. The guarantor who pays before maturity is
not entitled to reimbursement since there is
no necessity for accelerating payment.
2. A contract of guaranty being subsidiary in
character, the guarantor is not liable for the
debt before it becomes due.
Exception: The debtor will be liable if the
payment was made:
a. With his consent; or
b. Subsequently ratified (express or
implied) by him
EFFECT OF REPEAT PAYMENT BY THE
DEBTOR (Art. 2070)
General Rule: Before the guarantor pays the
creditor, he must first notify the debtor.
 If he fails to give notice and the debtor
repeats payment:
Guarantor’s Remedy: collect from the
creditor
 No cause of action against the debtor for the
return of the amount paid by him.
 In a gratuitous guaranty – if guarantor was
prevented to notify because of a fortuitous
event, and creditor becomes insolvent,
debtor shall reimburse guarantor.
Exception: The guarantor may still claim
reimbursement from the debtor in spite of lack of
notice if the following conditions are present:
a. The creditor becomes insolvent
b. That guarantor was prevented by
a fortuitous event to advise the debtor of
the payment
c. The guaranty is gratuitous
RIGHT OF GUARANTOR TO PROCEED
AGAINST DEBTOR BEFORE PAYMENT (Art.
2071)
General Rule: Guarantor has no cause of action
against the debtor until after the former has paid
the obligation.
Exceptions: Art. 2071 enumerates instances
when the guarantor may proceed against the
debtor even before the payment. (PAID-SIT)
 1. When he is sued for the payment; Provides for the Provides for the
2. In case of insolvency of the principal enforcement of the protection before he
debtor; rights of the guarantor has paid but after he
3. When the debtor has bound himself to against the debtor has become liable –
relieve him from the guaranty within a after he has paid the gives a protective
specified period, and this period has debt – gives a right of remedy before payment
expired; action after payment
4. When the debt has become demandable, Substantive right Preliminary remedy
by reason of the expiration of the period Gives a right of action,
Remedy given seeks to
for payment; which, without the
obtain from the
5. After the lapse of ten years, when the provisions of the other
guarantor “release from
principal obligation has no fixed period for might be worthless the guaranty or to
its maturity, unless it be of such nature demand a security that
that it cannot be extinguished except shall protect him from
within a period longer than ten years; any proceedings by the
6. If there are reasonable grounds to fear creditor and from the
that the principal debtor intends to danger of insolvency of
abscond; the debtor.”
7. If the principal debtor is in imminent Recovery of Surety against Indemnitor even
danger of becoming insolvent. before Payment

Purpose: To enable the guarantor to take
measures for the protection of his interest in view
of the probability that he would be called upon to
pay the debt.
Remedy to which the Guarantor Entitled
The guarantor cannot demand reimbursement for
indemnity when he has not paid the obligation.
REMEDIES AVAILABLE:
1. To obtain release from the guaranty; or
2. To demand security that shall protect him
from:
a. Any proceedings by the creditor; and
b. Against the insolvency of the debtor.
Guarantor’s remedies are alternative. He has the
right to choose the action to bring.
Suit by Guarantor against Creditor before
Payment
The guarantor’s or surety’s action for release can
only be exercised against the principal debtor
and not against the creditor.
REASON: The creditor cannot be compelled to
release the guarantor before payment of his
credit. Release of the guarantor imports an
extinction of his obligation to the creditor,
connoting remission or a novation by subrogation
which requires the creditor’s assent.
1. Indemnity agreement for the benefit of
surety –not for the benefit of the creditor
2. Indemnity agreement may be against
actual loss as well as liability – such
agreement is enforceable and not violative of
any public policy
a. Indemnity against loss – indemnitor
will not be liable until the person to be
indemnified makes payment or sustains
loss
b. Indemnity against liability –
indemnitor’s liability arises as soon as the
liability of the person to be indemnified
has arisen without regard to whether or
not he has suffered actual loss
c. Such agreement valid - A stipulation in
an indemnity agreement providing that
the indemnitor shall pay the surety as
soon as the latter becomes liable to make
payment to the creditor under the terms
of the bond, regardless of whether the
surety has made payment actually or not,
is valid and enforceable, and in
accordance therewith, the surety may
demand from the indemnitor even before
the creditor has paid.

ARTS. 2066 and 2071 Distinguished Where the principal debtors are
ART. 2066 ART. 2071 simultaneously the same persons who
(RIGHT OF (RIGHT OF executed the indemnity agreement, the
GUARANTOR TO GUARANTOR TO position occupied by them is that of a
REIMBURSEMENT PROCEED AGAINST principal debtor and indemnitor at the
AFTER PAYMENT) DEBTOR EVEN same, and their liability being joint and
BEFORE PAYMENT) several.
GUARANTOR OF A THIRD PERSON AT
REQUEST OF ANOTHER (Art. 2072)
The guarantor who guarantees the debt of an
absentee at the request of another has a right to
claim reimbursement, after satisfying the debt
from:
1. The person who requested him to be a
guarantor;
2. The debtor
DEFENSES AVAILABLE TO CO-GUARANTORS
(Art. 2074)
General Rule: All defenses which the debtor
would have interposed against the creditor (i.e.
fraud, prescription, remission, illegality, etc.).
Exception: Those which cannot be transmitted
for being purely personal to the debtor.

RIGHTS OF THE GUARANTOR AGAINST THE LIABILITY OF SUB-GUARANTOR IN CASE OF

DEBTOR (BRIB) INSOLVENCY OF GUARANTOR (Art. 2075)
1. Indemnification
2. Benefit of Subrogation Sub-guarantor is liable to the co-guarantors in
3. Benefit of Compromise the same manner as the guarantor whom he
4. Right to obtain or demand a security under guaranteed in case of the insolvency of the
Art. 2071 guarantor for whom he bound himself as sub-
guarantor.
BETWEEN CO-GUARANTORS
RIGHT TO CONTRIBUTION OF GUARANTOR CAUSES OF EXTINGUISHMENT OF
WHO PAYS GUARANTY (Art. 2076) (PL3CN-ARFP)
(Art. 2073)
General Rule: Guaranty being accessory, it is
Presumption of joint liability of several extinguished when principal obligation is
guarantors when there are: extinguished, the causes of which are:
1. Two or more guarantors 1. Payment or performance;
2. Same debtor 2. Loss of the thing due;
3. Same debt 3. Condonation or remission of the debt;
4. Confusion or merger of the rights of the
Effect: Each is bound to pay only his creditor and debtor;
proportionate share. 5. Compensation; and
6. Novation
When Art. 2073 Applicable: 7. Other causes:
1. When one guarantor has paid the debt to a. Annulment;
the creditor; b. Rescission;
2. Payment by such guarantor must have c. Fulfillment of a resolutory condition;
been made: d. Prescription
a. By virtue of a judicial demand (benefit
of division must have ceased); or Exception: The guaranty itself may be directly
b. Because the principal debtor is extinguished although the principal obligation
insolvent; still remains such as in the case of the release
3. Guarantor who paid is seeking of the guarantor made by the creditor.
reimbursement from each of his co-
guarantors the share which is Material Alteration of Principal Contract –
proportionately owing him. any agreement between the creditor and the
principal debtor which essentially varies the
Effect of Insolvency of Any Guarantor: terms of the principal contract without the
Follows the rule on solidary obligations: The consent of the surety, will release the surety from
share of the insolvent guarantor shall be borne liability.
by the others including the paying guarantor in
the same joint proportion. Such material alteration would constitute a
novation or change of the principal contract,
Accrual and Basis of Right: which is consequently extinguished. Upon such
The right of reimbursement is acquired ipso jure extinguishments, the accessory contract to
without need of any prior cession from the guaranty is also terminated and the guarantor
creditor by the guarantor. cannot be held liable on the new contract to
which he has not given his consent.

When Alteration Material – where such
change will have the effect of making the
obligation more onerous.
1. Imposes a new obligation or added burden on
the party promising; or
2. Takes away some obligation already imposed,
changing the legal effect of the original
contract and not merely the form thereof.
RELEASE BY CONVEYANCE OF PROPERTY
(Art. 2077)
General Rule: Payment is made in money.
Exception: Any substitute paid in lieu of money
which is accepted by the creditor extinguishes
the obligation and in consequence, the guaranty.
 If the creditor accepts property in payment
of a debt from the debtor, the guarantor is
relieved from responsibility. This is also true
even in case the creditor is subsequently
evicted from the property.
In case of eviction: Eviction revives the
principal obligation but not the guaranty.
REASON: The creditor’s action against the debtor
is for eviction and this is different from what the
guarantor guaranteed.
RELEASE OF GUARANTOR WITHOUT
CONSENT OF OTHERS (Art. 2078)
EFFECT: The release benefits all to the extent of
the share of the guarantor released.
REASON: A release made by the creditor in favor
of one of the guarantors without the consent of
the others may prejudice the others should a
guarantor become insolvent.
RELEASE BY EXTENSION OF TERM GRANTED
BY CREDITOR TO DEBTOR (Art. 2079)
Release Without Consent of Guarantor:
Creditor grants an extension of time to the
debtor without the consent of the guarantor.
EFFECT: Guarantor is discharged from his
undertaking.
REASON: To avoid prejudice to the guarantor
The debtor may become insolvent during the
extension, thus depriving the guarantor of his
right to reimbursement.
It doesn’t matter if the extension is:
a.
a.
a.
a.
Prejudicial or not or
b. For a long or short period of time
Consent of the guarantor is a must!
Extension must be based on some new
agreement between the creditor and the
principal debtor by virtue of which the creditor
deprives him of his claim.
1. Where obligation payable in
installments: where a guarantor is liable for
different payments:
General Rule: An extension of time to one
or more will not affect the liability of the
surety for the others.
Exception: When the unpaid balance has
become automatically due by virtue of an
acceleration clause for failure to pay an
installment.
Effect of exception: The act of the creditor
extending the payment of said installment,
without the guarantor’s consent, discharges the
guarantor.
REASON: The extension constitutes an extension
of the payment of the whole amount of the
indebtedness
2. Where consent to an extension is
waived in advance by the guarantor:
Such waiver is not contrary to law, nor to
public policy
Effect: Amounts to the surety’s consent to all
the extensions granted.
NOTE: The mere failure or neglect on the part of
the creditor to enforce payment or to bring an
action upon a credit, as soon as the same or any
part of it matures, does not constitute an
extension of the term of the obligation, and
therefore, the liability of the guarantor is not
extinguished.
In order to constitute an extension
discharging a surety, it should appear that
the extension was: (DEW)
1. For a Definite period
2. Pursuant to an Enforceable agreement
between the principal and the creditor
3. Made Without the consent of the surety or
with a reservation of rights with respect to
him.

 The contract must be one which precludes
the creditor from, or at least hinders him in,
enforcing the principal contract within the
period during which he could otherwise have
enforced it, and precludes the surety from
paying the debt.
 The law does not even grant the surety the
right to sue the creditor for delay, as
protection against the risks of possible
insolvency of the debtor; but in view of the
efficacy of the action on the contract against
the surety, beginning with the date the
obligation becomes due, his vigilance must
be exercised rather against the principal
debtor.
RELEASE WHEN GUARANTOR CANNOT BE
SUBROGATED (Art. 2080)
 If there can be no subrogation because of the
fault of the creditor, the guarantors are
thereby released, even if the guarantors are
solidary.
 If the creditor has acquired a lien upon the
property of a principal, the creditor at once
becomes charged with the duty of retaining
such security, or maintaining such lien in the
interest of the surety, and any release or
impairment of this security as a primary
resource of payment of a debt, will discharge
the surety to the extent of the value of the
property or lien released for there
immediately arises a trust relation between
the parties, and the creditor as trustee is
bound to account to the surety for the value
of the security in his hands.
REASON: The act of one cannot prejudice
another. It also avoids collusion between the
creditor and the debtor or a third person.
DEFENSES AVAILABLE TO GUARANTOR
AGAINST CREDITOR (Art. 2081)
General Rule: All defenses, which pertain to the
principal debtor and are inherent in the debt.
Exception: Those which are purely personal to
the debtor.
NOTE: Art 2081 does not cover a surety.
SURETYSHIP
SURETYSHIP is a relation which exists where
one person (principal) has undertaken an
obligation and another person (surety) is also
under a direct and primary obligation or other
duty to the obligee, who is entitled to but one
performance, and as between the two who are
bound, the second, rather than the first should
perform.
 If a person binds himself solidarily with the
principal debtor, the contract is called
suretyship and the guarantor is called a
surety.
NATURE OF SURETY’S UNDERTAKING
1. Liability is contractual and accessory but
direct:
2. Liability is limited by terms of contract
3. Liability arises only if principal debtor is
held liable
a. In the absence of collusion, the surety is
bound by a judgment against the
principal event though he was not a party
to the proceedings;
b. The creditor may sue, separately or
together, the principal debtor and the
surety;
c. A demand or notice of default is not
required to fix the surety’s liability
EXCEPTION: Where required by the
provisions of the contract of suretyship
d. A surety bond is void where there is no
principal debtor because such an
undertaking presupposes that the
obligation is to be enforceable against
someone else besides the surety, and the
latter can always claim that it was never
his intention to be the sole person
obligated thereby.
NOTE: Surety is not entitled to
exhaustion
4. Undertaking is to creditor, not to debtor:
The surety’s undertaking is that the principal
shall fulfill his obligation and that the surety
shall be relieved of liability when the
obligation secured is performed.
EXCEPTION: Unless otherwise expressly
provided.
NOTE: Surety is not entitled to notice of
principal’s default
5. Prior demand by the creditor upon
principal not required: Surety is not
exonerated by neglect of creditor to sue
principal
Strictissimi Juris Rule Applicable Only to
Accommodation Surety
REASON: An accommodation surety acts
without motive of pecuniary gain and hence,
--should be protected against unjust pecuniary
impoverishment by imposing on the principal,
duties akin to those of a fiduciary.
This rule will apply only after it has been
definitely ascertained that the contract is one of
suretyship or guaranty.
Strictissimi Juris Rule Not Applicable to
Compensated Sureties
REASONS:
1. Compensated corporate sureties are business
association organized for the purpose of
assuming classified risks in large numbers,
for profit and on an impersonal basis.
2. They are secured from all possible loss by
adequate counter-bonds or indemnity
agreements.
3. Such corporations are in fact insurers and in
determining their rights and liabilities, the
rules peculiar to suretyship do not apply.
LEGAL AND JUDICIAL BONDS
MEANING AND FORM OF BOND (Art. 2082)
Bond – an undertaking that is sufficiently
secured, and not cash or currency
Bondsman – a surety offered in virtue of a
provision of law or a judicial order.
Qualifications of personal bondsman: (SIC)
1. He possesses integrity;
2. He has the capacity to bind himself;
3. He has sufficient property to answer for the
obligation which he guarantees.
PLEDGE OR MORTGAGE IN LIEU OF BOND
(Art. 2083)
Guaranty or suretyship is a personal security.
Pledge or mortgage is a property or real security.
If the person required to give a legal or judicial
bond should not be able to do so, a pledge or
mortgage sufficient to cover the obligation shall
be admitted in lieu thereof.
BONDSMAN NOT ENTITLED TO EXCUSSION
(Art. 2084)
A judicial bondsman and the sub-surety are not
entitled to the benefit of excussion.
REASON: They are not mere guarantors, but
sureties whose liability is primary and solidary.
Effect of negligence of creditor: Mere
negligence on the part of the creditor in
collecting from the debtor will not relieve the
surety from liability.
========================
==============
TOPIC UNDER THE SYLLABUS:
D. Pledge
1. Definition
2. Kinds
3. Essential requirements
4. Obligation of pledge
5. Rights of pledgor
6. Perfection (Arts. 2093, 2096)
7. Foreclosure (Arts. 2112, 2115)
8. Pledge by operation of law (Art.
2121-2122)
9. Distinguished from chattel
mortgage (Arts. 2140, 1484)
========================
==============
PROVISIONS COMMON TO PLEDGE AND
MORTGAGE (Arts. 2085-2123)
Essential Requisites to Contracts of
Pledge and Mortgage: (FARCAS)
1. Constituted to secure the fulfillment of a
principal obligation
2. Pledgor or mortgagor be the absolute
owner of the thing pledged or mortgaged
3. The persons constituting the pledge or
mortgage have the free disposal of their
property, and in the absence thereof, that
they be legally authorized for the purpose
4. Cannot exist without a valid obligation
5. Debtor retains the ownership of the thing
given as a security
6. When the principal obligation becomes due,
the thing in which the pledge or mortgage
consists may be alienated for the
payment to the creditor.
Important Points
1. Future property cannot be pledged or
mortgaged
2. Pledge/mortgage executed by one who is not
the owner of the property pledged or
mortgaged is without legal existence and
registration cannot validate it.
3. Mortgage of a conjugal property by one of the
spouses is valid only as to ½ of the entire
property
4.
In

case of property covered by Torrens title, a Important Points

mortgagee has the right to rely upon what 1. Debtor -owner bears the risk of loss of the
appears in the certificate of title and does not property
have to inquire further. 2. Pledge or mortgage is indivisible
5. Pledgor or mortgagor has free disposal of Exceptions to the rule of indivisibility:
property a. Where each one of several things
6. Thing pledged or mortgaged may be guarantees determinate portion of credit
alienated. b. Where only portion of loan was
7. Creditor not required to sue to enforce his released
credit Example: X borrowed 80k from the bank
8. Pledgor or mortgagor may be third person and he mortgaged his 100 ha. property.
9. The liability of an accommodation pledgor or Lender was only able to release 40k due
mortgagor extends only to the property to CB restrictions. The Court held that the
pledged or mortgaged. bank can only foreclose on 50% of the
mortgaged land (50 ha.) Central Bank v.
PLEDGE MORTGAGE CA, [139 SCRA 46]
Constituted on Constituted on c. Where there was failure of
movables immovables consideration
Property is delivered Delivery not necessary
to the pledgee, or by 3. The rule that real property, consisting of
common consent to a several lots should be sold separately,
3rd person applies to sales in execution, and not to
foreclosure of mortgages
Not valid against 3rd Not valid against 3rd
4. The mere embodiment of a real estate
persons unless a persons if not
mortgage and a chattel mortgage in one
description of the registered
document does not have the effect of fusing
thing pledged and
both securities into an indivisible whole
the date of the
5. Contract of pledge or mortgage may secure
pledge appear in a
all kinds of obligation, be they pure or subject
public instrument
to a suspensive or resolutory condition
6. A promise to constitute pledge or mortgage
Right of Creditor where Debtor fails to
gives rise only to a personal right binding
Comply with his Obligation
upon the parties and creates no real right in
1. Creditor is merely entitled to move for the
the property. What exists is only a right of
sale of the thing pledged or mortgaged with
action to compel the fulfillment of the
the formalities required by law in order to
promise, but there is no pledge or mortgage
collect
yet.
2. Creditor cannot appropriate to himself the
7. Under RPC, estafa is committed by a person
thing nor can he dispose of the same as
who, pretending to be the owner of any real
owner.
property, shall convey, sell, encumber or
mortgage the same knowing that the real
Prohibition against pactum commissorium
property is encumbered shall dispose of the
 Stipulation is null and void - stipulation
same as unencumbered. It is essential that
where thing pledged or mortgaged shall fraud or deceit be practiced upon the vendee
automatically become the property of the at the time of the sale.
creditor in the event of nonpayment of the
debt within the term fixed PLEDGE (Arts. 2093-2123)
 Requisites of pactum commissorium: PLEDGE is a contract by virtue of which the
a. There should be a pledge or mortgage debtor delivers to the creditor or to a third
b. There should be a stipulation for an person a movable or document evidencing
automatic appropriation by the creditor of incorporeal rights for the purpose of securing the
the property in the event of nonpayment fulfillment of a principal obligation with the
 Effect on Security Contract understanding that when the obligation is
Nullity of the stipulation does not affect fulfilled, the thing delivered shall be returned
validity and efficacy of the principal contract with all its fruits and accessions.

Kinds of Pledge:
1. Voluntary or conventional - created by
agreement of the parties
2. Legal - created by operation of law
Characteristics of Pledge:
1. Real - perfected by delivery
2. Accessory - has no independent existence of
its own
3. Unilateral - creates obligation solely on the
part of the creditor to return the thing subject
upon the fulfillment of the principal obligation
4. Subsidiary - obligation incurred does not
arise until the fulfillment of the principal
obligation
Cause or Consideration in Pledge
1. Principal obligation – in so far as the
pledgor is concerned
2. Compensation stipulated for the pledge
or mere liberality of the pledgor- if
pledgor is not the debtor
PROVISIONS APPLICABLE ONLY TO PLEDGE
1. Transfer of possession to the creditor or to
third person by common agreement is
essential in pledge
a. ACTUAL DELIVERY is important
b. CONSTRUCTIVE delivery or symbolic
delivery of the key to the warehouse is
sufficient to show that the depositary
appointed by common consent of the
parties was legally placed in possession.
2. All movables within commerce of men may
be pledged as long as susceptible of
possession
3. Incorporeal right may be pledged. The
instruments pledged shall be delivered to the
creditor and if negotiable, must be indorsed.
4. Pledge shall take effect against 3rd persons
only if the ff appears in a public instrument:
a. Description of the thing pledged
b. Date of the pledge
5. Thing pledged may be alienated by the
pledgor or owner only if with the consent of
the pledgee. Ownership of the thing pledged
is transmitted to the vendee or transferee as
soon as the pledgee consents to the
alienation, but the latter shall continue in
possession
6.
Contract of pledge gives the creditor the right to
retain the thing in his possession or in that of
a third person to whom it has been delivered,
until the debt is paid
7. Creditor :
a. Shall take care of the thing pledged with
the diligence of a good father of a family
b. Has the right to the reimbursement of the
expenses made for its preservation and is
liable for its loss or deterioration by
reason of fraud, negligence, delay or
violation of the terms of the contract, and
not due to fortuitous event
c. May bring the actions which pertain to
the owner of the thing in order to recover
it from, or defend it against a 3rd person
d. Cannot use the thing without the
authority of the owner, and if he should
do so, or misuse the thing, the owner
may ask that it be judicially or
extrajudicially deposited
e. May use the thing if it is necessary for the
preservation of the thing (e.g. car has to
be driven once in a while)
f. May either claim another thing in pledge
or demand immediate payment of the
principal obligation if he is deceived on
the substance or quality of the thing
8. Pledgee:
a. Take care of the thing with diligence of a
good father of a family.
b. Cannot deposit the thing pledged with a
third person, unless there is a stipulation
authorizing him to do so
c. Is responsible for the acts of his agents or
employees with respect to the thing
pledged
d. Has no right to use the thing or to
appropriate the fruits without the
authority of the owner
e. May cause public sale of the thing
pledged if, without fault on his part, there
is danger of destruction, impairment or
diminution in value of the thing. The
proceeds of the auction shall be a
security for the principal obligation.
9.
Pledgor:
a. Has the responsibility for flaws of the
thing pledged.
b. Cannot ask for the return of the thing
against the will of the creditor, unless and
until he has paid the debt and its interest,
with expenses in a proper case
c. Is allowed to substitute the thing which is
in danger of destruction or impairment
without any fault on the part of the
pledgee, with another thing of the same
kind and quality
d. May require that the thing be deposited
with a 3rd person if through the
negligence or willful act of the pledgee
the thing is in danger of being lost or
impaired
EXTINGUISHMENT OF PLEDGE (R2P23A)
1. If the thing pledged is returned by the
pledgee to the pledgor or owner, pledge is
extinguished.
2. A statement in writing by the pledgee that he
renounces or abandons the pledge is
sufficient to extinguish it. For this purpose,
neither the acceptance by the pledgor or
owner, nor the return of the thing pledged is
necessary, the pledgee becoming a effects the reimbursement and pays the
depositary.
3. If subsequent to the perfection of the pledge,
the thing is in the possession of the pledgor
or owner, there is prima facie presumption
that the thing has been returned by the
pledgee.
4. If the thing is in the possession of 3rd person
who has received it from the pledgor or
owner after the constitution of the pledge,
there is prima facie presumption that the
thing has been returned by the pledgee
5. Payment of the debt
6. Sale of the thing pledged at public auction
Formalities required in sale by a creditor if
credit not paid in due time:
1. The debt is due and unpaid
2. The sale must be at a public auction
3. There must be notice to the pledgor and
owner, stating the amount due, and
4. The sale must be made with the intervention
of a notary public
EFFECT OF THE SALE OF THE THING
PLEDGED
1.
Extinguishes the principal obligation whether
the price of the sale is more or less than the
amount due
2. If the price is more than amount due, the
debtor is not entitled to the excess unless
the contrary is provided
3. If the price of the sale is less, neither is the
creditor entitled to recover the deficiency.
Contrary stipulation is void.
Legal Pledges
1. Necessary expenses shall be refunded to
every possessor, but only possessor in good
faith may retain the thing until he has been
reimbursed
Useful expenses shall be refunded only to the
possessor in good faith with the same right of
retention, the person who has defeated him in
the possession having the option of refunding
the amount of the expenses or of paying the
increase in value which the thing may have
acquired and by reason thereof. (Art. 546)
2. He who has executed work upon a movable
has a right to retain it by way of pledge until
he is paid. (Art. 1731)
3. The agent may retain the things which are
the objects of agency until the principal
indemnity. (Art. 1914)
4. The laborer’s wages shall be a lien on the
goods manufactured or the work done. (Art.
1707)
Special Laws apply to pawnshops and
establishments which are engaged in making
loans secured by pledges. Provisions of the Civil
Code shall apply subsidiarily.
========================
==============
TOPIC UNDER THE SYLLABUS:
E. Real Mortgage
1. Definition and characteristics
2. Essential requisites
3. Foreclosure
========================
==============
MORTGAGE
REAL MORTGAGE (Arts. 2124-2131) is a
contract whereby the debtor secures to the
creditor the fulfillment of a principal obligation,
specially subjecting to such security immovable
property or real rights over immovable property
in case the principal obligation is not complied
with at the time stipulated.
OBJECTS OF REAL MORTGAGE:
1. Immovables
2. Alienable real rights in accordance with the
laws, imposed upon immovables.
General Rule: Future property cannot be
object of mortgage
Exception: (AFTER-ACQUIRED
PROPERTIES) A stipulation subjecting to the
mortgage lien, improvements which the
mortgagor may subsequently acquire, install,
or use in connection with the real property
already mortgaged belonging to the
mortgagor is valid People’s Bank and Trust
Co. v. Dahican Lumber Co., [20 SCRA 84
(1967)]
Example: X owns a factory. In that factory, he
installed a machine and subsequently
mortgaged it. The parties may validly
stipulate that if the original machine is
replaced, the replacement shall be subject to
the mortgage. The reason for this is that
after-acquired properties are understood to
be replacements, as the original machine
may be subject to wear and tear.
Important Points
1. As a general rule, the mortgagor retains
possession of the property. He may deliver
said property to the mortgagee without
altering the nature of the contract of
mortgage.
2. It is not an essential requisite that the
principal of the mortgage credit bears
interest, or that the interest as compensation
for the use of the principal and the enjoyment
of its fruits be in the form of a certain percent
thereof.
Kinds of Mortgage:
1. Voluntary
2. Legal
3. Equitable – one which, although it lacks the
proper formalities of a mortgage shows the
intention of the parties to make the property as a
security for a debt (governed by Arts. 1365,
1450, 1454, 1602, 1603, 1604 and 1607)
ESSENTIAL REQUISITES OF MORTGAGE:
(FADVAP)
1. Constituted to secure the fulfillment of a
principal obligation
2. Mortgagor be the absolute owner of the thing
pledged or mortgaged
3. Mortgagor has free disposal of the property,
and in the absence thereof, that he be legally
authorized for the purpose
4. Cannot exist without a valid obligation
5. When the principal obligation becomes due,
the thing in which the mortgage consists may
be alienated for the payment to the creditor.
6. Appears in a public document duly recorded
in the Registry of Property to be validly
constituted
 If the instrument is not recorded, the
mortgage is nevertheless binding
between the parties.
LEGAL MORTGAGE: the persons in whose favor
the law establishes a mortgage have no other
right than to demand the execution and the
recording of the document in which the mortgage
is formalized.
INCIDENTS OF REGISTRATION OF
MORTGAGE
1. Mortgagee entitled to registration of
mortgage as a matter of right
2. Proceedings for registration do not determine
validity of mortgage or its effect
3. Registration is without prejudice to better
right of third parties
4. Mortgage deed once duly registered forms
part of the records for the registration of the
property mortgaged
5. Mortgage by surviving spouse of his/her
undivided share of conjugal property can be
registered
Effect of Invalidity of Mortgage on principal
obligation
1. Principal obligation remains valid
2. Mortgage deed remains as evidence of a
personal obligation
Effect of Mortgage
1. Creates right in rem or real rights. A lien
inseparable from the property mortgaged,
enforceable against the whole world as long
as it is registered. If not registered the
third party must know of the mortgage.
2. Creates merely an encumbrance. The law
considers void any stipulation forbidding the
owner from alienating the immovable
mortgaged (Art. 2130).
  The mortgagor’s default does not operate
to vest in the mortgagee the ownership of
the encumbered property.
 His failure to redeem the property does
not automatically vest ownership of the
property to the mortgagee.
EXTENT OF MORTGAGE (AIGRiPE)
A real estate mortgage constituted on immovable
property is not limited to the property itself but
also extends to its:
1. Accessions
2. Improvements
3. Growing fruits
4. Rents or income
5. Proceeds of insurance should the property be
destroyed
6.Expropriation value of the property should it be
expropriated.
To exclude them, it is necessary that there be
an express stipulation to that effect.
But if the mortgaged estate passes into the
hands of a third person, the mortgage does not
extend to any machinery, object, chattel or
construction which he may have brought or
placed there and which such third person may
remove whenever it is convenient for him to do
so.
MORTGAGE TO SECURE FUTURE
ADVANCEMENTS (BLANKET OR DRAGNET
CLAUSE)
Blanket/Dragnet Clause - one which is specifically
phrased to subsume all debts of past or future
origin.
General Rule: There must be a stipulation for
the inclusion of future advancements.
Mortgage with a dragnet clause enable the
parties to provide continuous dealings, the
nature or extent of which may not be known or
anticipated at the time, and they avoid the
expense and inconvenience of executing a new
security on each new transaction.
A mortgage given to secure future advancements
is a continuing security and is not discharged
by the repayment of the amount named in the
mortgage, until the full amount of the
advancements is paid.
ALIENATION OR ASSIGNMENT OF
MORTGAGE CREDIT
The mortgage credit is a real right which may be
alienated by the mortgagee without need to
obtain the consent of the debtor. Alienation of
the mortgage credit is valid even if it is not
registered. Registration is necessary only to
affect third persons.
Laws Governing Mortgage
1. New Civil Code
2. P.D. 1952
3. Revised Administrative Code
4. R.A. 4882, as regards aliens becoming
mortgages
Foreclosure of Mortgage is the remedy
available to the mortgagee by which he subjects
the mortgaged property to the satisfaction of the
obligation to secure which the mortgage was
given.
 A foreclosure sale retroacts to the date of
registration of the mortgage and that a
person who takes a mortgage in good faith
and for valuable consideration, the record
showing clear title to the mortgagor, will be
protected against equitable claims on the
title in favor of third persons of which he had
no actual or constructive notice St. Dominic
Corporation v. IAC, 151 SCRA 577 (1987)
 Mere inadequacy of the price obtained at the
sheriff’s sale will not be sufficient to set aside
the sale unless “the price is so inadequate as
to shock the conscience of the court” taking
into consideration the peculiar circumstances
attendant thereto. Sulit v. CA, 268 SCRA
441 (1997)
 The action to recover a deficiency after
foreclosure prescribes after 10 years from the
time the right of action accrues (Arts. 1142 &
1144)
JUDICIAL FORECLOSURE (governed by Rule 68
of Rules of Court): (J-PACE-PC)
1. Judicial action for the purpose in the proper
court which has jurisdiction over the area
wherein the real property involved or a
portion thereof is situated
2. Court order to mortgagor to pay mortgage
debt with interest and other charges within a
period of not less than 90 days nor more than
120 days from the entry of judgment
3. Sale to the highest bidder at public auction,
should the mortgagor fail to pay at the time
directed.
Confirmation of sale, which operates to divest
the rights of all parties in the action and to vest
their rights to the purchase, subject to the right
of
redemption allowed by law
4. Execution of judgment
5. Application of proceeds of sale to:
a. Costs of the sale;
b. Amount due the mortgagee;
c. Claims of junior encumbrancers or
persons holding subsequent mortgages in
the order of their priority; and
d. The balance, if any shall be paid to the
mortgagor
6. Sheriff’s certificate is executed,
acknowledged and recorded to complete the
foreclosure
Nature of Judicial Foreclosure Proceedings
1. Quasi in rem action
2. Foreclosure is only the result or incident of
the failure to pay debt
3. Survives death of mortgagor
EXTRAJUDICIAL FORECLOSURE (governed by
Act No. 3135, as amended)
1. Express authority to sell is given to the
mortgagee
2. Authority is not extinguished by death of
mortgagor or mortgagee
3. Public sale should be made after proper
notice (posting and publication)
4. Surplus proceeds of foreclosure sale belong
to the mortgagor or his assigns
5. Debtor has the right to redeem the property
sold within 1 year from and after the date of
sale
6. Remedy of party aggrieved by foreclosure is
a petition to set aside sale and cancellation of
writ of possession
7. Republication is necessary for the validity of
a postponed foreclosure sale (parties have no
right to waive the publication requirement)
Procedure for Extrajudicial Foreclosure of
Real Estate Mortgage (Act No. 3135 )
& is referred to as deficiency judgment
Chattel Mortgage
(Act No. 1508, A.M. N0. 99-10-05-0; January
15, 2000)
(ARC-DIN-REA)
1. Filing of application before the Executive
Judge through the Clerk of Court
2. Clerk of Court will examine whether the
requirements of the law have been complied
with, that is, whether the notice of sale has
been posted for not less than 20 days in at
least 3 public places of the municipality or
city where the property is situated, and if the
same is worth more than P400.00, that such
notice has been published once a week for at
least 3 consecutive weeks in a newspaper of
general circulation in the city or municipality
3. The certificate of sale must be approved by
the Executive Judge
4. In extrajudicial foreclosure of real mortgages
in different locations covering one
indebtedness, only one filing fee
corresponding to such debt shall be collected
5. The Clerk of Court shall issue certificate of
payment indicating the amount of
indebtedness, the filing fees collected, the
mortgages sought to be foreclosed, the
description of the real estates and their
respective locations
6. The notice of sale shall be published in a
newspaper of general circulation
7. The application shall be raffled among all
sheriffs
8. After the redemption period has expired, the
Clerk of Court shall archive the records
9. No auction sale shall be held unless there are
at least 2 participating bidders, otherwise the
sale shall be postponed to another date. If on
the new date there shall not be at least 2
bidders, the sale shall then proceed. The
names of the bidders shall be reported by the
Sheriff or the Notary Public who conducted
the sale to the Clerk of Court before the
issuance of the certificate of sale
Right of mortgagee to recover deficiency
1. Mortgagee is entitled to recover deficiency
2. If the deficiency is embodied in a judgment, it
3. Action for recovery of deficiency may be filed
even during redemption period
4. Action to recover prescribes after 10 years
from the time the right of action accrues
Nature of power of foreclosure by
extrajudicial sale
1. Conferred for mortgagee’s protection
2. An ancillary stipulation supported by the
same cause or consideration for the
mortgage
3.
A
prerogative of the mortgagee
Stipulation of Upset Price or “tipo”
A stipulation of minimum price at which the
property shall be sold to become operative in the
event of a foreclosure sale at public auction is
NULL and VOID
Effect of inadequacy of price in foreclosure
sale
1. Where there is right to redeem
General Rule: Inadequacy of price is
immaterial because the judgment debtor
may redeem the property
Exception: The price is so inadequate as to
shock the conscience of the court taking into
consideration the peculiar circumstances
2. Property may be sold for less than its fair
market value upon the theory that the lesser
the price the easier for the owner to redeem
3. The value of the mortgaged property has no
bearing on the bid price at the public auction,
provided that the public auction was regularly
and honestly conducted
Waiver of security by creditor
1. Mortgagee may waive right to foreclose his
mortgage and maintain a personal action for
recovery of the indebtedness
2. Remedies are alternative, not cumulative.
3. Options in case the debtor dies:
a. To waive mortgage and claim
entire debt from the mortgagor’s estate
as an ordinary claim
b. To judicially foreclose mortgage and prove
any deficiency
c. To rely on the mortgage exclusively
without filing a claim for deficiency
NOTE: Foreclosure retroacts to the date of
registration of mortgage
REDEMPTION is a transaction by which the
mortgagor reacquires or buys back the property
which may have passed under the mortgage or
divests the property of the lien which the
mortgage may have created.
KINDS OF REDEMPTION
1. Equity of redemption: right of the
mortgagor to redeem the mortgaged
property after his default in the performance
of the conditions of the mortgage but before
confirmation of the sale.
a. Applies to judicial foreclosure of
real mortgage and chattel mortgage
foreclosure
b. A second mortgagee acquires only
the equity of redemption vested in the
mortgagor, and his rights are strictly
subordinate to the superior lien of the
first mortgagee.
NOTE: Redemption of the banking
institutions is allowed within 1 year from
confirmation of sale
2. Right of redemption: right of the
mortgagor to redeem the property within a
certain period after it was sold for the
satisfaction of the debt
a. Applies only to extrajudicial
foreclosure of real mortgage
NOTE: The right of redemption, as long as within
the period prescribed, may be exercised
irrespective of whether or not the mortgagee has
subsequently conveyed the property to some
other party Sta. Ignacia Rural Bank, Inc. v.
CA, 230 SCRA 513 (1994)
A sale by the mortgagor to a third party of the
mortgaged property during the period of
redemption transfers only the right to redeem
the property and the right to possess, use, and
enjoy the same during the period. The judgment
debtor remains in possession of the property
foreclosed and sold during the period of
redemption, but he cannot make a conveyance of
the ownership of the property, since it belongs to
the purchaser at the foreclosure sale Dizon v.
Gaborro, 83 SCRA 688 (1978)
PERIOD OF REDEMPTION
Extra-judicial (Act No. 3135)
a. Natural person – 1 year from registration
of the certificate of sale with Registry of
Deeds
b. Juridical person – same rule as natural
person
c. Juridical person (mortgagee is bank) – 3
months after foreclosure or before
registration of certificate of foreclosure
whichever is earlier (Sec. 117 of General
Banking Law)
Judicial – before confirmation of the sale by the
court
Periods of Judicial Extrajudicial
redemption Foreclosure Foreclosure
Mortgage: BANKS NON- BANKS NON-
BANK BANKS
 S mortgage cannot be enforced beyond the
Individual 1 year 1 year 1 year total value of the mortgaged property.
debtors/mortga from X from from
gors registrati registrati registrati
on of on of on of Mortgagee in Possession – one who has
sale sale sale lawfully acquired actual or constructive
possession of the premises mortgaged to him,
Juridical persons 1 year X Until 1 year standing upon his rights as mortgagee and not
as from registrati from
debtors/mortga registrati on of registrati
claiming under another title, for the purpose of
gors on of certificat on of enforcing his security upon such property or
sale e of sale sale making its income help to pay his debt
or 3
months RIGHTS AND OBLIGATIONS OF MORTGAGEE
from sale
IN POSSESSION
whichev
er is 1. Similar to an antichresis creditor – entitled to
earlier retain such possession until the indebtedness
is satisfied and the property redeemed.
NOTE: Allowing redemption after the lapse of the 2. Without right to reimbursement for useful
statutory period when the buyer at the expenses
foreclosure sale does not object but even
consents to the redemption, will uphold the RIGHT OF PURCHASER TO WRIT OF
policy of the law which is to aid rather than POSSESSION
defeat the right of redemption Ramirez v. CA, Writ of Possession – order whereby the sheriff
219 SCRA 598 (1993) is commanded to place in possession of real or
personal property the person entitled thereto
AMOUNT OF THE REDEMPTION PRICE: such as when a property is extrajudicially
1. Mortgagee is not a bank (Act No. 3135 in foreclosed.
relation to Sec. 28, Rule 39 of Rules of Court)
a. Purchase price of the property The issuance of the writ of possession in an
b. 1% interest per month on the purchase extrajudicial foreclosure is merely a ministerial
price function.
c. Taxes paid and amount of purchaser’s The purchaser at the foreclosure sale is entitled
prior lien, if any, with the same rate of as of right to a writ of possession.
interest computed from the date of Before lapse of redemption period – file an
registration of sale, up to the time of ex parte application and file a bond
redemption
2. Mortgagee is a bank (GBL 2000) After lapse of redemption period – file an ex
a. Amount due under the mortgage deed parte application and no need for a bond
b. Interest
c. Cost and expenses ========================
==============
NOTE: Redemption price in this case is TOPIC UNDER THE SYLLABUS:
reduced by the income received from the
F. Antichresis
property
1. Definition and Characteristics
Junior Mortgagees 2. Obligations of Antichretic
1. After the Creditor
foreclosure sale, there remains in the second ========================
mortgagee a mere right of redemption. His ==============
remedy is limited to the right to redeem by
paying off the debt secured by the first ANTICHRESIS
mortgage. (Arts. 2132-2139)
2. He is entitled to the payment of his credit the
excess of the proceeds of the auction sale. ANTICHRESIS is a contract whereby the creditor
3. In case the credit of the first mortgagee has acquires the right to receive the fruits of an
absorbed the entire proceeds of the sale, the immovable of the debtor, with the obligation to
second mortgage is extinguished, since the apply them to the payment of the interest, if
owing, and thereafter to the principal of the pledge. Tavera v. El Hogar Filipino, Inc. [68
credit. Phil 712]

CHARACTERISTICS A stipulation authorizing the antichretic creditor

1. Accessory contract – it secures the to appropriate the property upon the non-
performance of a principal obligation payment of the debt within the agreed period is
Formal contract – it must be in a specified form void (Art. 2088)
to be valid (Art. 2134)
========================
SPECIAL REQUISITES: ==============
1. Only the fruits of an immovable property
TOPIC UNDER THE SYLLABUS:
2. Delivery of the immovable is necessary for
the creditor to receive the fruits and not that G. Chattel Mortgage
the contract shall be binding 1. Definition and characteristics
3. Amount of principal and interest must be 2. Registration
specified in writing (otherwise, void) ========================
4. Express agreement that debtor will give ==============
possession of the property to creditor and
that the latter will apply the fruits to the CHATTEL MORTGAGE
interest, if any, then to the principal of his CHATTEL MORTGAGE (Arts. 2140-2141) is a
credit contract by virtue of which a personal property is
recorded in the Chattel Mortgage Register as
NOTE: The obligation to pay interest is not security for the performance of an obligation.
essential in a contract of antichresis, there being NOTE: If the movable, instead of being recorded
nothing in the Code to show that antichresis is is delivered to the creditor, it is a pledge and not
only applicable to securing the payment of a chattel mortgage.
interest-bearing loans. On the contrary,
antichresis is susceptible of guaranteeing all CHATTEL MORTGAGE PLEDGE
kinds of obligations, pure or conditional Involves movable Involves movable
property property
OBLIGATIONS OF ANTICHRETIC CREDITOR: Delivery of the Delivery of the
(FAT-P) personal property is personal property is
1. To pay taxes and charges on the estate, NOT necessary necessary
including necessary expenses Registration is Registration is NOT
NOTE: Creditor may avoid said obligation by: necessary for validity necessary for validity
a. Compelling debtor to reacquire Procedure: Sec 14 of Procedure: Art 2112 of
enjoyment of the property Act no 1508, as Civil Code
b. By stipulation to the contrary amended
2. To apply all the fruits, after receiving them, to If the property is If the property is sold,
the payment of interest, if owing, and foreclosed, the excess the debtor is not
thereafter to the principal over the amount due entitled to the to the
3. To render an account of the fruits to the goes to the debtor excess UNLESS it is
debtor otherwise agreed or in
4. To bear the expenses necessary for its case of legal pledge
preservation and repair Creditor is entitled to Creditor is not entitled
recover deficiency from to recover deficiency
REMEDIES OF CREDITOR IN CASE OF NON- the debtor EXCEPT if it notwithstanding any
PAYMENT OF DEBT is a security for the stipulation to the
1. Action for specific performance purchase of personal contrary
2. Petition for the sale of the real property as in property in
a foreclosure of mortgages under Rule 68 of installments
the Rules of Court
Laws Governing Chattel Mortgage
NOTE: The parties, however, may agree on an 1. Chattel Mortgage Law, Act No. 1508, as
extrajudicial foreclosure in the same manner as amended
they are allowed in contracts of mortgage and 2. Civil Code
3. Revised Administrative Code
4.
Revised Penal Code
5. Ship Mortgage Decree of 1978 (P.D. 1521)
governs mortgage of vessels of domestic
ownership
Affidavit of Good Faith - An oath in a contract
of chattel mortgage wherein the parties
"severally swear that the mortgage is made for
the purpose of securing the obligation specified
in the conditions thereof and for no other
purposes and that the same is a just and valid
obligation and one not entered into for the
purpose of fraud.”
 Not essential to the validity of the
mortgage but only transforms a valid one
into a preferred one
 Absence vitiates a mortgage only as
against third persons without notice
NOTE: A chattel mortgage can only cover
obligations existing at the time the mortgage is
constituted. A mortgage that contains a
stipulation in regard to future advances in the
credit will take effect only from the date the
same are made and not from the date of the
mortgage Jaca v. Davao Lumber Co., 113
SCRA 107 (1982)
EFFECT OF REGISTRATION
1. Creates real rights – binding notice and
symbolical possession
2. Adds nothing to mortgage
NOTE: Registration of assignment of mortgage is
not required
RIGHT OF REDEMPTION
 When the condition of a chattel mortgage is
broken, the ff may redeem:
a. Mortgagor;
b. Person holding a subsequent mortgage;
c. Subsequent attaching creditor.
Redemption can be done within 30 days from the
time the condition is broken.
 An attaching creditor who so redeems shall
be subrogated to the rights of the mortgagee
and entitled to foreclose the mortgage in the
same manner that the mortgagee could
foreclose it
 The redemption is made by paying or
delivering o the mortgagee the amount due
on such mortgage and the costs and
expenses incurred by such breach of
condition before the sale
Right of Mortgagee to Possession
1.
Be
fore default, mortgagee is not entitled to the
possession of the property (otherwise, it will
become a pledge)
2. When default occurs and the creditor desires
to foreclose, he has the right to take the
property.
3. If the debtor refuses to surrender the
property, the creditor’s remedy is to institute
an action to effect judicial foreclosure or to
secure possession preliminary to sale.
 The creditor cannot take the property by
force nor can the sheriff seize the property.
FORECLOSURE OF CHATTEL MORTGAGE
1. Public sale
2. Private sale – there is nothing illegal, immoral
or against public order in an agreement for
the private sale of the personal properties
covered by chattel mortgage
Period to Foreclose
1. After 30 days from the time the condition was
broken
2. The 30-day period is the minimum period
after violation of the mortgage condition for
the creditor to cause the sale at public
auction with at least 10 days notice to the
mortgagor and posting of public notice of
time, place, and purpose of such sale, and is
a period of grace for the mortgagor, to
discharge the obligation.
3. After the sale at public auction, the right of
redemption is no longer available to the
mortgagor.
Civil Action to Recover Credit
1. Independent action not required
2. Mortgage lien deemed abandoned by
obtaining a personal judgment (civil action to
recover amount of loan)
Right of Mortgagee to Recover Deficiency
1. Where mortgage foreclosed: creditor may
maintain action for deficiency although
Chattel Mortgage Law is silent on this point.
Reason is chattel mortgage is only given as a
security and not as payment of the debt.
2. Where mortgage constituted as security
for purchase of personal property
payable in installments: no deficiency
judgment can be asked and any contrary
agreement shall be void
3. Where mortgaged property
subsequently attached and sold:
mortgagee is entitle to deficiency judgment
in an action for specific performance
Application of Proceeds of Sale
1. Costs and expenses of keeping and sale
2. Payment of the obligation
3. Claims of persons holding subsequent
mortgages in their order
4. Balance, if any, shall be paid to the
mortgagor, or person holding under him
=========================
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TOPIC UNDER THE SYLLABUS:
H. Concurrence and Preference of
Credits
1. Solutio Indebiti
2. Negotiorum Gestio
=========================
=============
Solutio Indebiti and Negotiorium Gestio
Solutio Indebiti (Art 2154)
 The principle of solution indebiti provides
that if something is received when there
is no right to demand it, and it was
unduly delivered through mistake, the
obligation to return it arises.
 In such a case, a creditor-debtor
relationship is created under a quasi-
contract whereby the payor becomes the
creditor who then has the right to
demand the return of payment made by
mistake, and the person who has no right
to receive such payment becomes
obligated to return the same
 The principle ofsolutio indebiti applies
where
(1) a payment is made when there exists
no binding relation between the payor,
who has no duty to pay, and the person
who received the payment; and
(2) the payment is made through
mistake, and not through liberality or
some other cause
(Siga-An v. Villanueva, GR 173227
January 2009)
Negotiorium Gestio (Art 2144)
 One who voluntarily takes charge of the
agency/management of the business or
property of another (without any power
from the latter), is obliged to continue
such agency or management until:
o The termination of the affair or its
incidents or
o He has required the person
concerned to substitute him (if the
owner is in a position to do so)
 However, this juridical relation does not
arise in the following:
o When the property or business is
NOT neglected or abandoned
o If the manager has been impliedly
authorized by the owner
=========================
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TOPIC UNDER THE SYLLABUS:
I. Concurrence and Preference of
Credits
1. Meaning of Concurrence and
Preference
2. Preferred Credits on Specific
Movables
3. Exempt Property
4. Classification of Credits
=========================
=============
CONCURRENCE AND PREFERENCE OF
CREDITS
(Arts. 2236-2251)
CONCURRENCE OF CREDIT implies possession
by two or more creditors of equal rights or
privileges over the same property or all of the
property of a debtor.
PREFERENCE OF CREDIT is the right held by a
creditor to be preferred in the payment of his
claim above others out of the debtor’s assets.
 Preference creates no interest or lien on
the property, but merely a preference to
the application of the proceeds.
 The right of preference can be made
effective only by being asserted and
maintained. Otherwise, it is lost.
General Provisions:
1. The debtor is liable with all his property,
present and future, for the fulfillment of
his obligations, subjects to exemptions
provided by law
- Exempt property:
a. Present property
1. Family home (Arts
152, 153 and 155, NCC)
 2. Right to receive
support as well as money or
property obtained by such support
shall not be levied upon on
attachment or execution (Art 205,
NCC)
3. Sec 13, Rule 39,
Rules of Court (Ordinary tools,
lettered gravestones, necessary
clothing, etc.)
4. Sec 118, the Public
Land Act,( CA No. 141, as
amended)
b. Future property
 A debtor who obtains a discharge
from his debts on account of
insolvency, is not liable for the
unsatisfied claims of his creditors
with said property (Secs. 68 and 69,
Insolvency Law, Act No. 1956)
c. Property in custodia legis
and of public domain
2. Insolvency shall be governed by the
Insolvency Law (Act No. 1956, as
amended)
3. Exemption of conjugal property or
absolute community or property provided
that:
a. Partnership or community subsists
b. Obligations of the insolvent
spouse have not redounded to the
benefit of the family
4. If there is co-ownership, and one of the
co-owners is the insolvent debtor, his
undivided share or interest in the
property shall be possessed by the
assignee in insolvency proceedings
because it is part of his assets
5. Property held by the insolvent debtor as a
trustee of an express or implied trust,
shall be excluded from the insolvency
proceedings
CLASSIFICATION OF CREDITS
1. Special preferred credits (Arts 2241 and
2242 of NCC)
a. Considered as mortgages or pledges of
real or personal property or liens within
the purview of legal provisions
governing insolvency
b. Taxes due to the State shall first be
satisfied
2. Ordinary preferred credits (Art 2244) -
preferred in the order given by law
3. Common credits (Art 2245) - credits of
any other kind or class, or by any other
right or title not comprised in Arts 2241-
2244 shall enjoy no preference
Order of Preference of Credit
1. Credits which enjoy preference with respect
to specific movables, exclude all others to the
extent of the value of the personal property
to which the preference refers.
2. If there are 2 or more credits with respect to
the same specific movable property, they
shall be satisfied pro rata, after the payment
of duties, taxes and fees due the State or any
subdivision thereof
3. Those credits which enjoy preference in
relation to specific real property or real rights,
exclude all others to the extent of the value
of the immovable or real right to which the
preference refers.
4. If there are 2 or more
credits with respect to the same specific real
property or real rights, they shall be satisfied
pro rata, after the payment of the taxes and
assessment of the taxes and assessments
upon the immovable property or real right.
5. The excess, if any, after
the payment of the credits which enjoy
preference with respect to specific property,
real or personal, shall be added to the free
property which the debtor may have, for the
payment of other credits.
6. Those credits which do
not enjoy any preference with respect to
specific property, and those which enjoy
preference, as to the amount not paid, shall
be satisfied according to the following rules:
 Order established by Art. 2244
 Common credits referred to in Art. 2245
shall be paid pro rata regardless of dates.
NOTE: Preference of mortgage credits is
determined by the priority of registration,
following the maxim “prior tempore potior jure”
(He who is first in time is preferred in right.)

=========================
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TOPIC UNDER THE SYLLABUS:
J. Insolvency Law
1. Definition of insolvency
2. Suspension of payments
3. Voluntary insolvency
4. Involuntary insolvency
=========================
=============
INSOLVENCY LAW – FRIA
FRIA DEFINITION OF “INSOLVENCY”
Financial condition of a debtor that is generally
unable to pay its or his liabilities as they gall due
in the ordinary course of business or has
liabilities that are greater than its or his assets
For FRIA to be applicable, there must be
insolvency proceedings in the courts designated
by the Supreme Court to hear and resolve cases
brought under this act
PURPOSES OF FRIA
1. To effect equitable distribution of the
insolvent’s property among its or his
creditors
2. To benefit the debtor in discharging him
from his liabilities and enabling him to
start afresh with the property set apart to
him as exempt
3. To ensure or maintain certainty and
predictability of commercial affairs
FRIA DEFINTION OF “DEBTOR”
 Sole proprietorship (juridical debtor)
 Partnership (juridical debtor)
 Corporation (juridical debtor)
 Individual debtor who has become
insolvent (natural debtor)
NATURE OF PROCEEDINGS
Insolvency proceedings in FRIA are proceedings
in rem
HOW JURISDICTION IS ACQUIRED
Jurisdiction is acquired upon publication of notice
of the commencement of proceedings in any
newspaper of general circulation
MODES OF REHABILITATION
 Court-supervised rehabilitation
 Pre-negotiated rehabilitation
 Out of court or informal restructuring
agreements or rehabilitation plans
1.
COURT-SUPERVISED REHABILITATION
 Owner, partnership or corporation may
initiate proceedings for rehabilitation,
which the proper court oversees and
deliver a final judgment regarding the
rehabilitation plan
 REHABILITATION
o Restoration of the debtor to a
condition of successful operation
and solvency
o The debtor is economically
feasible and its creditors can
recover by way of present value of
payments projected in the plan
 REHABILITATION PLAN
o Plan by which the financial well-
being and viability of the insolvent
debtor can be restored using
various means
 REHABILITATION RECEIVER
o Persons or persons, natural or
juridical, appointed as such by the
court entrusted with powers and
duties set forth in the FRIA
 KINDS
 Voluntary proceedings
o Filing a petition for rehabilitation
with the court done by the
insolvent debtor
 Involuntary proceedings
o Filed by a creditor or group of
creditors
o Claim or aggregate claim is at
least P1M or at least 25% of
capital stock or partner’s
contribution, whichever is higher
 TYPES OF PROCEEDINGS
Initiation proceedings
o Attachments in the petition for
rehabilitation: Voluntary
Proceedings
1. Identification of debtor, principal
activities and addresses
2. State fact of and cause of debtor’s
insolvency or inability to pay debt
3. Specific relief sought pursuant to
the Act
4. Grounds which petition is based
5. Other information required by the
act, depending on the kind of
relief requested
6. List of debtors, liabilities and
creditors with addresses, amounts
of claims and collaterals
 7. Inventory of assets, includes
receivables and claims against 3rd
parties
8. Rehabilitation plan
9. Names of at least 3 nominees for
rehabilitation receiver position
10. Other documents required by the
Act or rules promulgated by the
SC
o Attachments in the petition for
rehabilitation: Involuntary
Proceedings
1. Identification of debtor, principal
activities and addresses
2. Circumstances sufficient for a
petition to initiate rehabilitation
proceedings
3. Specific relief sought
4. Rehabilitation plan
5. Names of at least 3 nominees for
rehabilitation receiver position
6. Other information required
depending on relief requested
7. Other documents required by the
act or rules promulgated by the
SC
GROUNDS TO INITIATE INVOLUNTARY
PROCEEDINGS
 No genuine issue of fact on law on the
claim/s of the petitioner/s (creditors) and
demandable payments due have not
been made for at least 60 days or debtor
failed in meeting obligations
 A third-person creditor other than
petitioner/s has initiated foreclosure
against debtor, preventing debtor to pay
debts due or will render him insolvent
 Action on the Petition and
Commencement of Proceedings
 If court finds the petition for rehabilitation
to be sufficient in form and substance, it
shall within 5 working days from filing,
issue a Commencement Order.
 If in the same period the court finds the
petition deficient, court may give
petitioner time to amend or supplement
petition, or to submit documents
necessary to fix said petition.
- 5 working days provided for
issuing the order will be reckoned
from date of filing the amended
petition or submission of
additional documents
 Commencement order:
- Identifies the debtor
- Summarizes the grounds for
initiating the proceedings
- States the relief
- States the legal effects of the CO
- Declares that the debtor is under
rehab
- Directs publication in newspaper
of general circulation in the
Philippines
- Appoints a rehabilitation receiver
- Summarizes the requirements and
deadlines for creditors to establish
their claims against the debtor (5)
days before the initial hearing
- Sets the case for initial hearing
 Suspension/Stay Order (effects)
 Suspend all actions or
proceedings for enforcement of
claims against the debtor
 Suspend all actions to enforce any
judgment, attachment or other
provisional remedies against the
debtor
 Prohibit the debtor from selling,
encumbering, transferring or
disposing in any manner any of its
properties except in the ordinary
course of business
 Prohibit the debtor from making
any payment of its outstanding
liabilities as of the
commencement date
 Note: Stay order applies to
government financial institutions
(Sec 20)
 Exceptions to the Stay and Suspension
Order
 Cases already pending appeal in
the SC as of the commencement
date. Provided that any final
judgment on the appeal be
referred to the court for
appropriate action
o Cases pending in specialized court
or quasi-judicial agency, on the
court’s discretion
o Enforcement of claims against
sureties and other persons
solidarily liable with debtor and 3rd
party accommodation mortgagors
even issuers of letters of credit
UNLESS the property subject of
the 3rd party/accommodation
mortgage is necessary for the
rehabilitation of the debtor as
determined by the court (in other
 words, secured creditors can
enforce their claims/foreclose if
the security they’re holding is not
necessary for rehabilitation)
o To any form of action of
customers of a security
market participant to recover
or claim securities entrusted
to the latter in the ordinary course
of the latter’s business
o To the actions of a licensed broker
or dealer to sell pledged securities
of a debtor pursuant to a
securities pledge or margin
agreement
o To the clearing and settlement of
financial transactions through the
facilities of a clearing agency
o To any criminal action against the
debtor/owner
o Effectivity and Duration of
Commencement Order
o Unless lifted by the court, CO shall
be effective for the duration of the
rehabilitation proceedings.
o Minimum requirements must be
met:
 Rehabilitation plan complies with
minimum contents prescribed by
the act
 Sufficient monitoring by
rehabilitation receiver
 Debtor has met with creditors in
attempts for consensus proposed
by rehabilitation plan
 Rehabilitation receiver submits a
report, a preliminary evaluation of
how realistic the goals of
rehabilitation plan are and how
reasonable and realistic success is
based on
 Sufficient assets to rehabilitate
debtor
 Sufficient cash flow to maintain
operations of debtor
 Petition is not a filing intended to
defraud creditors and delay claims
 Debtors, partners, stockholders,
directors and officers acting in
good faith and due diligence
 Debtor likely to be able to pursue
viable rehabilitation plan
 Attachments on petition for rehabilitation
are not materially false
 If petitioner is the debtor, he has met
with creditors representing ¾ of total
obligation made in good faith. If petitioner
is a creditor, he has met with the debtor,
made a good faith effort to reach
consensus
 Effect of Failure to File Notice of Claim
o Instead of filing a notice of claim, the
creditor files a subsequent belated claim
o Such claim shall not be entitled to
participate in rehabilitation proceedings
o Creditor is still entitled to receive
distributions arising from rehabilitation
 Rehabilitation Receiver
o Within 40 days from initial hearing, the
rehabilitation receiver shall submit a
report to court stating preliminary
findings and recommendations on
whether:
 Debtor is insolvent, causes of
insolvency including any unlawful
acts done by oweners which may
have contributed to the
insolvency
 If the rehab plan is indeed feasible
and reasonable in relation to goals
and underlying assumptions
 Substantial likelihood exists or not
 Petition should be dismissed or
not
 Debtor should be liquidated
and/or dissolved or not
 Giving due course to or dimissal of
petition or conversion of
proceedings
o Within 10 days from receipt of
rehabilitation receiver report mentioned
in section2 24, court may
 Give due course to petition upon
finding
 Debtor is insolvent
 Substantial likelihood for success
exists
 Debtor shall comply with
provisions of the Rehab Plan and
take action to carry out the plan
 Payments made to creditors
according to the Rehab Plan
 Contracts with creditors
interpreted as continuing to the
extent that they do not conflict
with the Rehab Plan
 Compromises on amounts or
rescheduling of timing of
payments by debtor shall be
binding to creditor regardless
whether plan ins a success or not
  Claims after approval of plan not  Allow debtor to submit
treated by the plan are not amendments to plan subject to
subject to suspension order approval under same
o Period for confirmation of requirements for approval under
rehabilitation plan provisions
 Court has a maximum period of 1  Issue any other order to remedy
year from date of filing of petition breach consistent with present
to confirm rehabilitation plan. If no regulation
plan is confirmed within said  Enforce applicable provision of
period proceedings may upon a rehabilitation plan through writ of
motion or motu proprio be execution
converted to one for liquidation of  Effects of termination
the debtor  The discharge of the rehabilitation
o Accounting discharge of receiver subject to his submission
Rehabilitation Receiver of a final accounting
 Upon confirmation of  The lifting of the Stay Order and
rehabilitation plan, rehabilitation any other court order holding in
receiver shall provide a final abeyance any action for the
report and accounting to the enforcement of a claim against
court. Unless the plan requires or the debtor
describes the role of the  PROVIDED, that if the termination
rehabilitation receiver after is due to failure of rehabilitation or
approval of the plan, curt shall dismissal of petition for reasons
discharge rehabilitation receiver other than technical grounds,
of duties. proceedings will automatically be
o Termination Proceedings converted to LIQUIDATION
 Upon motion of any stakeholder or
rehabilitation receiver, the
rehabilitation plan may be 2. PRE-NEGOTIATED REHABILITATION
terminated by order of court.
 Failure of rehabilitation: Parties to file a petition for a pre-
 Dismissal of petition by court negotiated rehabilitation plan
 Debtor fails to submit a  Insolvent debtor by itself; or
rehabilitation plan  Jointly with any of its creditors
 Under rehabilitation plan
submitted by debtor, there is no Requisites for a petition for a pre-
substantial likelihood for negotiated rehabilitation plan
rehabilitation  Petition must be filed by
 Though amended and approved, o An insolvent debtor by itself or
debtor fails to implement the jointly with any of its creditors
rehabilitation plan, failure to o With the court
realize objectives  The pre-negotiated rehabilitation plan
 Commission of fraud in securing must be endorsed or approved by
the approval for the plan creditors holding at least 2/3 of the total
 Analogous circumstances as may liabilities of the debtor, including secured
be defined by rules of procedure claims of the debtor and unsecured
 Court action upon break of or failure creditors holding more than 50% of the
of rehabilitation plan (upon motion total unsecured claims of the debtor
of an affected party)
 Issue an order directing breach be Documents that must accompany the
cured within specified period, petition as a minimum
failing which, proceeding may be  Schedule of debtor’s debts and liabilities
converted to liquidation  Inventory of debtor’s assets
 Issue and order converting  The pre-negotiated Rehabilitation Plan,
proceedings to liquidation including the names of at least 3 qualified
nominees for rehabilitation receiver
  Summary of disputed claims against
debtor, and report on provisioning of
refunds to account for appropriate
payments
Procedure for pre-negotiated rehabilitation
 Filing of the petition
 Issuance of Court Order
 Publication of the order in a
newspaper of general circulation in
the Philippines once a week for at
least two consecutive weeks
 Objection to the petition or
rehabilitation plan if any
 Hearing on the objections if necessary
 Approval of the plan
Cause for which objection may be made to
petition or plan
 The allegation in the petition or the
Rehabilitation Plan or the attachments
thereto are materially false or misleading
 The majority of any class of creditors do
not in fact support the Rehabilitation Plan
 The Rehabilitation Plan fails to accurately
account for a claim against the debtor
and the claim is not categorically
declared as contested claim; or
 The support of the creditors, or any of
them was induced by fraud
 Note: if objection is meritorious, the
debtor is directed to cure the defect
within a reasonable period
 Note: if the debtors/creditors supporting
the plan acted in bad faith or the
objection is non-curable, the Court may
order conversion of proceedings into
liquidation
 Note: if the objection is not meritorious or
the objection is cured, the rehabilitation
plan is deemed approved
Effect of Approval of Plan
Same effect as confirmation of Plan under
Court=Supervised Rehabilitation
3. OUT-OF-COURT OR INFORMAL
RESTRUCTING AGREEMENTS OR
REHABILITATION PLANS
Informal restructuring/workout agreement
or rehabilitation plan defined
Done outside or without the intervention of court
provided it meets the minimum requirements set
for the in the Act
Requisites for an Out-of-court or informal
restructuring/workout agreement or
rehabilitation plan
 The debtor must agree to the out-of-court
or informal restructuring/workout
agreement or Rehabilitation Plan
 It must be approved by creditors
representing at least 67% of the
SECURED obligations of the debtor
 It must be approved by creditors
representing at least 75% of the
UNSECURED obligations of the debtor
 It must be approved by creditors holding
at least 85% of the TOTAL LIABILITIES,
SECURED and UNSECURED, of the debtor
Standstill Period
It is a period that may be agreed upon by the
parties pending negotiation/finalization of the
out-of-court agreement or Rehab Plan (similar to
a stay order)
Requirements for the standstill period to be
enforceable against 3rd parties
 Agreement is approved by creditors
representing 50% of the total liabilities of
the debtor
 Notice is published
o Must invite creditors to participate
in the negotiation
o All creditors must be given due
notice
 Period does not exceed 120 days
Effect of Standstill Period
Any court action shall not stay the plan’s
implementation UNLESS the relevant party is
able to secure a TRO or injunctive relieve from
the Court of Appeals to stay the implementation
of proceedings
The effect of the approval of the plan is the same
to that of confirmation of Plan under Court
Supervised Rehabilitation
Notice of Out-of-Court rehabilitation plan is
required
Published once a week for at least 3 consecutive
weeks in a newspaper of general circulation in
the Philippines. It shall take effect after 15 days
from the date of the last publication of the notice
thereof
Amendments or modification to the plan
 Amendments or modification must be made in
accordance with the terms of the agreement and
with due notice on all creditors
LIQUIDATION OF INSOLVENT JURIDICAL
DEBTORS
I. Voluntary Liquidation:
a. An insolvent debtor may apply for
liquidation by filing a verified petition
for liquidation with the court
i. Contents:
1. Schedule of debtor’s liabilities
with a list of creditors
2. An inventory of all its assets
3. Names of at least 3 nominees to
the position of liquidator
b. Procedure:
i. Filing of Petition (Sec 90)
ii. If court finds petition sufficient in
form and substance, it shall issue
the Liquidation Order (Sec 104)
iii. Publication of the petition or
motion in a newspaper of general
circulation once a week for 2
consecutive weeks [Sec 112 (d)]
iv. Hearing for election and
appointment of liquidator [Sec
112 (j)]
v. Direct payments of any claims and
conveyance of any property due
the debtor to the liquidator [Sec
112 (e)]
vi. Liquidation of the debtor’s assets
and payment of his debts by the
Liquidator (Sec 119)
vii. Discharge of Liquidator (Sec 122)
viii. Appeal if proper
II. Involuntary Liquidation:
a. A verified petition may be filed in
court by 3 or more creditors with the
aggregate claims of at least 1M or at
least 25% of the subscribed capital
stock or partner’s contributions of the
debtor, whichever is higher.
i. Contents:
1. Must show that there’s
no genuine issue of
fact or law on the
claim/s of the
petitioner/s, and that
the due and
demandable payments
thereon have not been
made for at least 180
days or the debtor has
failed generally to
meet its liabilities as
they fall due
2. Must show that no
substantial likelihood
that the debtor may be
rehabilitated
b. Procedure:
i. Filing of the petition of 3 or
more creditors (Sec 91)
ii. Issuance of order:
1. Directing publication of
petition or motion in a
newspaper of general
circulation once a
week for 2 consecutive
weeks
2. Directing the debtor
and all creditors to file
their comment on the
petition
iii. Filing of comments
iv. Consideration of comments
filed by the court
v. Issuance of the liquidation
order
vi. Publication of the petition or
motion in a newspaper of
general circulation once a
week for 2 consecutive weeks
[Sec 112 (d)]
vii. Hearing for election and
appointment of the liquidator
[Sec 112 (j)]
viii. Direct payments of any claims
and conveyance of any
property due the debtor to the
liquidator [Sec 112 (e)]
ix. Liquidation of the debtor’s
assets and payment his debts
by the Liquidator (Sec 119)
x. Discharge of Liquidator (Sec
122)
xi. Appeal if proper
Note: Under both voluntary and involuntary
liquidation, the debtor or the 3 or more creditors
may initiate liquidation proceedings by filing a
motion in court at any time during the pendency
of the court-supervised or pre-negotiated
rehabilitation proceedings.
 Ching vs. Landbank of the Philippines [201
SCRA 190 (1991)]: SC held that the SEC has
jurisdiction only with regard to petitions of
juridical debtors to be declared in the state of
suspension of payments. PD. 902-A cannot be
stretched to include petitions for insolvency.
Petitions for declaration of insolvency of private
corporations are within the original and exclusive
jurisdiction of regular courts. SEC may entertain
such petitions only as an incident of and in
continuation of its already acquired jurisdiction
over petitions to be declared in the state of
suspension payments.
INSOLVENCY OF INDIVIDUAL DEBTORS
I. Suspension of Payments: postponement,
by court order, of the payment of debts of
one who possesses sufficient property to
cover all his debts but foresees the
impossibility of meeting them when they
respectively fall due (Sec 94)
d. Effect of filing a petition for
a. Purpose: to suspend or delay the
payment of debts; debtor’s inability to
meet his obligations when they
respectively fall due, despite the fact
that he has sufficient assets to cover
his liabilities (De Leon)
b. A debtor may file a verified petition
for suspension of payments if:
i. Individual debtor possesses
sufficient property to cover all
his debts
ii. But he foresees the
impossibility of meeting them
when they respectively fall
due
iii. Contents:
1. He has to state his
residence 6 months
before filing of his
petition (and file in the
court where he resided
6 months prior to the
filing)
2. Schedule of
debts/liabilities
3. Inventory of assets
4. Proposed agreement
with creditors
c. Procedure:
i. Filing of petition by debtor
(Sec 94)
ii. Issuance by the court of an
order calling a meeting of
creditor (Sec 95)
iii. Publication of said order and
service of summons
iv. Meeting of the creditors for
the consideration of the
debtor’s proposition (Sec 97)
v. Approval of the creditors of
the debtor’s proposition
vi. Objections, if any, to the
decision which must be made
within 10 days from the date
of the last creditors’ meeting
(Sec 100)
vii. Issuance of order by the court
directing that the agreement
be carried out in case the
decision is declared valid or
when no objection to said
decision has been presented
(Sec 101)
suspension of payments:
i. No disposition in any manner
of his property may be made
by the individual debtor,
except those used in the
ordinary operation of
commerce or of industry in
which he is engaged [Sec 95
(e)].
ii. No payments may be made by
the individual debtor outside
of the necessary and
legitimate expenses of his
business or industry [Sec 95
(f)].
iii. Suspension Order: Upon
motion by the debtor, the
court may issue an order
suspending any pending
execution against the
individual debtor provided that
properties held as security by
secured creditors shall not be
subject of such suspension
order (Sec 96, par. 1).
iv. No creditor shall sue or
institute proceedings to collect
his claim from the debtor from
the time of filing of petition as
long as proceedings remain
pending, except:
1. Those creditors with
claims for personal
 labor, maintenance, 2. Fraudulent connivance
expenses of last illness between one or more
and funeral of wife or creditors and the
children of the debtor, individual debtor ot
incurred 60 days vote in favor of the
before petition is filed. proposed agreement;
2. Secured debtors. 3. Fraudulent connivance
of claims for the
e. Creditor’s meeting (Only creditor purpose of obtaining a
included in the schedules filed by the majority.
debtor shall be cited to appear and vi. Effect of failure or individual
take part in the meeting) debtor to perform agreement:
i. To form a majority (Rule of If the debtor fails, wholly or in
Double Majority): part, to perform the
1. 2/3 of the creditors agreement decided upon the
voting unite on the meeting of the creditors, all
same proposition, and rights which the creditors had
2. That the claims against the debtor before the
represented by said agreement shall revest in
majority vote amount them (Sec 102).
to at least 3/5 of the Distinctions between Suspension of
total liabilities of the Payments and Insolvency:
debtor [Sec 97 (d)]
ii. If the majority agrees, the SUSPENSION INSOVENCY
court will approve on the OF
agreement of the PAYMENTS
creditors/debtors as regards Purpose Suspend or Discharge the
the payment delay the debtor from
iii. But petition is deemed payment of the payment
rejected when: debts of debts
1. the number of Property Debtor has Debtor does
creditors representing sufficient not have
at least 3/5 of the property sufficient
liabilities of the property
individual debtor do Amount of Amount of Creditors
not attend, or Indebtedness indebtedness receive less
2. if the double majority is not affected than their
rule are not in favor of credits, and in
the proposed case there are
agreement (Sec 99) preferences,
iv. Effect of disapproval of some
petition: Court shall declare creditors may
the proceedings terminated not receive
and the creditors shall be at any amount at
liberty to exercise the rights all
which may correspond to
them (Sec 100, par. 2)
v. Causes for which objection LIQUIDATION OF INDIVIDUAL INSOLVENT
may be made to the decision DEBTORS
of the meeting:
1. Defects in the call for
the meeting, in the I. Voluntary Liquidation
holding thereof and in
the deliberations, a. A verified petition may be filed by an
which prejudice the insolvent debtor (owing debts
right of the creditors; exceeding the amount of P500,000) in
the court of the province or city in
 which he has resided 6 months prior
to filing the petition.
i. Contents:
1. Schedule of debts and
liabilities
2. Inventory of Assets
3. Proposed Agreement
with creditors
b. Procedure:
i. Filing of the petition by the
debtor praying for the
declaration of insolvency (Sec
103)
ii. If the court finds the petition
sufficient in form and
substance, it shall issue the
Liquidation Order (Sec 104)
iii. Publication of the petition or
motion in a newspaper of
general circulation once a
week for 2 consecutive weeks
[Sec 112 (d)]
iv. Hearing for election and
appointment of the liquidator
[Sec 112 (j)]
v. Direct payments of any claims
and conveyance of any
property due the debtor to the
liquidator [Sec 112 (e)]
vi. Liquidation of the debtor’s
assets and payment of his
debts by the Liquidator (Sec
119)
vii. Discharge of Liquidator (Sec
122)
viii. Appeal if proper
c. Effect of filing of petition: The filing of
the petition shall be an act of
insolvency (Sec 103). Once the
petition is filed, it ipso facto takes
away and deprives the debtor of the
right to do or commit any act of
preference as to creditors, pending
the final adjudication.
d. Effects of errors in description or
omission of property in inventory:
i. The erroneous or ambiguous
description of the insolvent’s
property in inventory does not
affect the title of purchasers in
the insolvency proceedings.
Legal title of the property of
the insolvent passes to the
liquidator and is administered
in the insolvency proceedings
regardless of errors in the
inventory.
ii. If the insolvent omits property
from his inventory, it is the
duty of the liquidator to
recover any property or its
value, fraudulently conveyed
by the debtor [Sec 119 (f)].
iii. Even property exempt from
execution must be included in
order to preclude possible
fraudulent omission under the
pretext that such property is
exempt.
e. If the debt exceeds the secured
property:
i. To the extent of the unsecured
portion, the creditor can join
the proceedings.
ii. If the creditor wants to
participate as an ordinary
creditor, he has to let go of
the mortgage.
II. Involuntary Liquidation
a. Purpose: It is not a mere personal
action against the insolvent for the
collection of debts, but its purpose is
to impound all of his non-exempt
property, to distribute it equitably
among his creditors, and release him
from further liability.
b. Any creditor or group of creditors,
with a claim of or with claims
aggregating at least P500,000, may
file a verified petition in the court of
the province or city in which the
individual debtor resides.
i. Petitioning creditor must post
a bond.
ii. Petition must allege at least
one act of insolvency.
1. Any debtor who
commits an act of
insolvency may
adjudged insolvent.
The date of
adjudication of
insolvency retroacts to
the date of the filing of
the petition for
insolvency.
c. Acts of Insolvency:
i. That such person is about to
depart or has departed from
the Republic of the Philippines,
with intent to defraud his
creditors;
ii. That being absent from the
Republic of the Philippines,
with intent to defraud his
creditors, he remains absent;
iii. That he conceals himself to
avoid the service of legal
process for the purpose of
hindering or delaying the
liquidation or of defrauding his
creditors;
iv. That he conceals, or is
removing, any of his property
to avoid its being attached or
taken on legal process;
v. That he has suffered his
property to remain under
attachment or legal process
for three (3) days for the
purpose of hindering or
delaying the liquidation or of
defrauding his creditors;
vi. That he has confessed or
offered to allow judgment in
favor of any creditor or
claimant for the purpose of
hindering or delaying the
liquidation or of defrauding
any creditors or claimant;
vii. That he has willfully suffered
judgment to be taken against
him by default for the purpose
of hindering or delaying the
liquidation or of defrauding his
creditors;
viii. That he has suffered or
procured his property to be
taken on legal process with
intent to give a preference to
one or more of his creditors
and thereby hinder or delay
the liquidation or defraud any
one of his creditors;
ix. That he has made any
assignment, gift, sale,
conveyance or transfer of his
estate, property, rights or
credits with intent to hinder or
delay the liquidation or
defraud his creditors;
x. That he has, in contemplation
of insolvency, made any
payment, gift, grant, sale,
conveyance or transfer of his
estate, property, rights or
credits;
xi. That being a merchant or
tradesman, he has generally
defaulted in the payment of
his current obligations for a
period of thirty (30) days;
xii. That for a period of thirty (30)
days, he has failed, after
demand, to pay any moneys
deposited with him or received
by him in a fiduciary; and
xiii. That an execution having been
issued against him on final
judgment for money, he shall
have been found to be without
sufficient property subject to
execution to satisfy the
judgment.
d. Procedure:
i. Filing of the petition by any
creditor or group of creditors
and posting of required bond
(Sec 105)
ii. Issuance of Order to Show
Cause (Sec 106): court will
order the individual debtor to
defend himself and state why
he is not an insolvent.
1. Nothing in the order
shall impair the rights
of a secured creditor to
enforce his lien in
accordance with its
terms (secured
creditor may foreclose
notwithstanding an
order forbidding the
debtor to
alienate/encumber any
of his property)
2. If the debtor cannot be
found, the creditors
may ask the court to
issue an order
directing the sheriff to
take possession of the
debtor’s property in
order for it to be sold
at a public sale (sale
under execution)
iii. Service of order to show cause
iv. Filing of answer or motion to
dismiss by individual debtor
v. Hearing of the case (Sec 107)
 vi. Issuance of the Liquidation 2. Prepare a complete
Order inventory of the
vii. Publication of the petition or property within 3 days
motion in a newspaper of from said taking and
general circulation once a may be extended for
week for 2 consecutive weeks good cause;
[Sec 112 (d)] 3. Give such to the court
viii. Hearing for election and as soon as completed;
appointment of liquidator [Sec 4. Prepare a schedule of
112 (j)] the names and
ix. Direct payments of any claims residences of the
and conveyance of any creditors and the
property due the debtor to the amounts due to them.
liquidator [Sec 112 (e)]
x. Liquidation of the debtor’s Distinction between Voluntary and
assets and payment of his Involuntary Liquidation:
debts by the Liquidator (Sec
119) VOLUNTARY INVOLUNTARY
xi. Discharge of Liquidator (Sec Number of One Any creditor or
122) creditors group of
xii. Appeal if proper creditors
Filed by: Insolvent 3 or more
e. The petitioners shall pay the debtor
debtor creditors with
all costs, expenses, damages due to
qualifications
the proceedings if the case is
set by laws
dismissed, withdrawn by them or if
Acts of Must not be Must have
the debtor is not insolvent.
insolvency guilty committed one
or more
f. Absent Individual debtor:
Amounts of Must exceed Not less than
i. Resides outside the
indebtedness P500,000 P500,000
Philippines;
ii. Departed from the Philippines; Bond Not Required Required
iii. Cannot be found with due Order of May be Granted only
diligence; or Adjudication granted ex after hearing
iv. Hides to avoid service of the parte
order to show cause (Sec 108) Length of Province or Immaterial
residence (for city in which
g. Liquidation Process if the individual RTC) debtor has
debtor is absent: resided for 6
i. Creditors must file the petition months prior
ii. Petitioning creditors must: to petition
1. Submit the required When does Upon filing of Only until after
affidavits for the Order the court the voluntary hearing the
of publication order the petition case
2. Present the bonds adjudication?
equivalent to twice the
amount of their claims PROVISIONS COMMON TO LIQUIDATION IN
against the debtor INSOLVENCY OF INDIVIDUAL AND JURIDICAL
iii. Court shall issue and Order DEBTORS
directing the sheriff to take a
sufficient amount of the What is a liquidation order? The liquidation
debtor’s property not exempt order shall:
from execution to satisfy the a) declare the debtor insolvent
claim; b) Order the liquidation of the debtor, or in
iv. The sheriff shall then: case of a juridical debtor, declare it as
1. Take said property dissolved
c) Order the sheriff to take the property of
the debtor
 d) Order the publication of the petition in a
newspaper of general circulation
e) Direct payments of any claims and
conveyance of any property due to the
debtor to the liquidator
f) Prohibit the transfer of property and
payment by the debtor
g) Direct all creditors to file their claims with
the liquidator within the period set by the
rules
h) Authorize the payment of admin
expenses ad they become due
Effects of the Liquidation Order
a) The juridical debtor is dissolved and its
juridical existence terminated
b) Legal title of all the assets of the debtor
shall be vested in the liquidator/court
c) All contracts of the debtor shall be
deemed terminated unless the liquidator,
w/in 90 days from the date of his
assumption of office, declares otherwise
and the contracting party agree
d) No separate action for the collection of an
unsecured claim shall be allowed (direct
claims to liquidator)
e) No foreclosure proceeding shall be
allowed for 180 days
Rights of Secured Creditors: The Liquidation
Order shall NOT affect the right of a secured
creditor to enforce his lien. He may:
a) Waive his right under the security, prove
his claim in the liquidation proceedings
and share in the distribution of assets
b) Maintain his rights under the security
a. If he chooses to maintain:
i. If the value of the property
used as security is LESS
than the claim it secures,
the liquidator may convey
the property to the
secured creditor and the
creditor will be admitted in
the liquidation
proceedings as a creditor
for the balance (basically,
he can recover deficiency)
ii. If it is MORE, the liquidator
may convey the property
to the creditor and waive
the debtor’s right of
redemption upon receiving
the excess from the
creditor
b. The liquidator may sell the
property and satisfy the secured
creditor’s entire claim from the
proceeds
c. The secured creditor may
foreclose/enforce his lien
Functions of Liquidator
The liquidator shall be deemed an officer of the
court with the principal duly of preserving and
maximizing the value and recovering the
assets of the debtor, with the end of
liquidating them and discharging to the
extent possible all the claims against the
debtor.
The powers, duties and responsibilities of the
liquidator shall include, but not limited to:
a. to sue and recover all the assets,
debts and claims, belonging or due to the
debtor;
b. to take possession of all the property of
the debtor except property exempt by law
from execution;
c. to sell, with the approval of the
court, any property of the debtor
which has come into his possession
or control;
d. to redeem all mortgages and pledges,
and so satisfy any judgment which may
be an encumbrance on any property sold
by him;
e. to settle all accounts between the debtor
and his creditors, subject to the approval
of the court;
f. to recover any property or its value,
fraudulently conveyed by the debtor;
g. to recommend to the court the creation of
a creditors' committee which will assist
him in the discharge of the functions and
which shall have powers as the court
deems just, reasonable and necessary
NOTE: In sum, the liquidator shall have the
right and duty to take all reasonable steps to
manage and dispose of the debtor's assets
with a view towards maximizing the
proceedings therefrom, to pay creditors and
stockholders, and to terminate the debtor's
legal existence.
When can a secured creditor be allowed to
vote for a liquidator?
a) he waives his security or lien; or
b) has the value of the property subject of
his security or lien fixed by agreement
with the liquidator, and is admitted for
the balance of his claim.
NOTE: The creditors entitled to vote will elect the
liquidator in open court. The nominee receiving
the highest number of votes cast in terms of
amount of claims and who is qualified shall be
appointed as the liquidator.
When can the court appoint the liquidator?
a) on the date set for the election of the
liquidator, the creditors do not attend;
b) the creditors who attend, fail or refuse to
elect a liquidator;
c) after being elected, the liquidator fails to
qualify; or
d) a vacancy occurs for any reason
whatsoever, In any of the cases provided
herein, the court may instead set another
hearing of the election of the liquidator.
What are the qualifications of the
Liquidator?
a) A citizen of the Philippines or a resident of
the Philippines in the six (6) months
immediately preceding his nomination;
b) Of good moral character and with
acknowledged integrity, impartiality and
independence;
c) Has the requisite knowledge of insolvency
and other relevant commercial laws, rules
and procedures, as well as the relevant
training and/or experience that may be
necessary to enable him to properly
discharge the duties and obligations of a
rehabilitation receiver; and
d) Has no conflict of interest: Provided, That
such conflict of interest may be waived,
expressly or impliedly, by a party who
may be prejudiced thereby.
Preliminary Registry of Secured and
Unsecured Creditors:
The liquidator shall prepare a preliminary registry
of claims within twenty (20) days from his
assumption into office.
Unsecured Creditors defined
They are Secured Creditors who have:
a) Waived their security or lien; or
b) Who has fixed the value of the property
subject of their security or lien by
agreement with the liquidator and is
admitted as a creditor for the balance,
shall be considered as unsecured
creditors.
The liquidator shall make the registry available
for public inspection and provide publication
notice (on where and when they may inspect it)
to:
a) Creditors,
b) Individual debtors owner/s of the sole
proprietorship-debtor,
c) Partners of the partnership debtor; and
d) Shareholders or members of the
corporation-debtor.
Right of Set-off
Debtor and Creditor are MUTUALLY Debtor and
Creditor of each other: One Debt shall be SET
OFF against the other, The Balance, if any shall
be allowed in the liquidation proceedings.
Opposition or Challenge to Claims
A Challenge to Claim or Claims may be
submitted to the court by serving a certified copy
on the liquidator and the creditor holding the
challenged claim; within thirty (30) days from the
expiration of the period for filing of applications
for recognition of claims, creditors, individual
debtors, owner/s of the sole proprietorship-
debtor.
Who may submit a Challenge to Claim or
Claims:
a) Partners of the partnership-debtor;
b) Shareholders or members of the
corporation-debtor; and
c) Other interested parties
Transactions that may be rescinded or
nullified
The Following Transactions may be Rescinded or
Nullified:
a) Any transaction occurring prior to the
issuance of the Liquidation Order; or
b) A transaction entered into by the debtor
or involving its assets; in case of the
conversion of the rehabilitation
proceedings prior to the commencement
date.
Grounds for rescission or nullification:
a) It was executed with intent to defraud a
creditor or creditors; or
b) It constitutes undue preference of
creditors.
The Liquidation Plan.
The Liquidator shall submit a Liquidation Plan to
the court within three (3) months from his
assumption into office,
The Liquidation Plan shall, as a minimum
enumerate:
 a) All the assets of the debtor; and insolvent such real and personal property
b) A schedule of liquidation of the assets as is by law exempt from execution.
and payment of the claims.
NOTE: Duty of the Court to exempt and set
apart for the use and benefit of the said
 LIQUIDATION

REHABILITATION
COURT SUPERVISED INSOLVENT JURIDICAL INDIVIDUAL INSOLVENT DEBTORS
INFORMAL DEBTORS
PRE- RESTRUCTU
NEGOTIATED RING
Voluntary Involuntar AGREEMENT Voluntary Involunta Suspensi
Proceeding y Voluntary Involunta Liquidati ry on of
s Proceeding ry on Liquidati Payments
s on
How - verified - verified -verified Done without 1) verified 1) verified Verified Verified Verified
Made petition petition petition court petition for petition petition petition in petition
intervention liquidation in for court of the court before
court liquidation the of the city/provin
provided that
2) verified in court city/provin province ce where
it meets the motion to 2) verified ce where or city in debtor has
minimum convert motion to debtor has which the resided 6
requirement pending convert resided 6 individual months
of FRIA rehabilitation pending months debtor prior to
proceeding rehabilitati prior to resides filing
into a on filing
liquidation proceedin
proceeding g into a *filing of
liquidation such
proceedin petition=a
g ct of
insolvency
Purpose Establish Establish the approval of To negotiate To establish To to apply to to be
insolvency insolvency the terms of the the establish for impound declared in
and the and the Rehabilitation rehabilitation insolvency of the discharge all of a state of
viability of viability of plan in court plan without debtor for insolvency of debts debtor’s suspension
rehabilitatio rehabilitatio court purposes of of debtor and non- of
n in court n in court intervention liquidation for liabilities exempt payment
purposes property,
of to
liquidation distribute
it
equitably
among his
creditors
and to
release
 him
from
further
liability

Parties Filed by Filed by Filed by Rehabilitation Filed by the 3 or more Individual Creditor or Individual
Insolvent Creditor or Insolvent Plan must be Insolvent creditors debtor group of debtor
Debtor group of debtor by approved by: debtor with the creditors
-sole creditors itself or jointly 1) debtor aggregate with a
proprietorshi with with other 2) creditors claims of claim or
p: owner aggregate creditors representing at least aggregate
- claim of at at least 67% 1M or at claim of at
partnership: least 1M or of the least 25% least 500K
partners at least 24% SECURED of the
- of obligations of subscribed
corporation: subscribed the debtor capital
majority capital stock 3) creditors stock or
vote of BoD or partner’s representing partner’s
or trustees contribution at least 75% contributio
+ 2/3 vote s, whichever of the ns of the
of SH is higher UNSECURED debtor,
representing obligations of whichever
outstanding the debtor is higher
capital stock 4) creditors
or 2/3 vote holding at
of members least 85% of
the TOTAL
LIABILITIES,
SECURED and
UNSECURED,
of the debtor

Grounds Debtor’s 1) no Pre-negotiated Consent of the Rehabilitation 1) no Debtor Acts of Debtor has
insolvency genuine Rehabilitation parties is no longer genuine doesn’t Insolvency sufficient
or inability issue of fact plan which involved to possible issue of have which property to
to pay its or law on must approved the informal fact or law sufficient tends to cover all
obligations the claim/s by creditors re-structuring on the properties delay the his debts
as they of the holding at agreement claim/s of to cover liquidation BUT
become due petitioner/s least 2/3 of the his or to foresees
and that the total liabilities petitioner/ liabilities defraud the
due and including: s, and that and the any impossibili
demandable a) secured the due debts creditors ty of
payments creditors and which he like: meeting
have not holding more demandab owes 1)debtor debts
been made than 50% of le exceeds has when they
for at least the total payments 500k departed become
 from the due

60 days or secured claims thereon Philippines

that the of the debtor have not , with
debtor has and been intent to
generally b) unsecured made for defraud
failed to creditors at least his
meet its holding more 180 days creditors;
liabilities as than 50% of or the 2) he
they fall due the total debtor has conceals
unsecured failed himself to
2)creditor, claims of the generally avoid the
other than debtor to meet its service of
the liabilities legal
petitioner/s as they process
has initiated fall due for the
foreclosure purpose of
proceedings 2) no hindering
against the substantia or
debtor that l likelihood delaying
will prevent that the the
the debtor debtor liquidation
from paying may be
its debts as rehabilitat
they ed
become due
or will
render it
insolvent
Minimu 1) schedule 1) 1) schedule of N/A 1) schedule none 1)schedul Posting of 1)schedule
m of debtor’s circumstanc debtor’s of debtor’s e of debts bond in of debts
require liabilities es sufficient liabilities with liabilities with and the and
ments of with list of to support list of creditors list of liabilities amount liabilities
the creditors petition 2)an inventory creditors 2) determine 2)inventor
petition 2)an 2)specific of all its assets 2)an inventory d by the y of assets
inventory of relief sought 3) pre- inventory of of assets court 3)propose
all its assets 3)Rehabilitat negotiated all its assets d
3)Rehabilitat ion Plan Rehabilitation 3) names of agreement
ion Plan 4) names of plan and at least 3 with
4) names of at least 3 names of at nominees to creditors
at least 3 nominees to least 3 the position
nominees to the position nominees to of liquidator
the position of receiver the position of
of receiver receiver
 4) summary of
disputed
claims against
debtor and
report on the
provisioning of
funds
Court COMMENCEMENT ORDER Court order Insolvent Liquidation Court Liquidatio 1) show Court
Action -shall appoint a -shall appoint a debtor or Order Order: n order cause Order:
(if rehabilitation receiver rehabilitation creditor may 1)publicati order 1) calling
sufficien -summarize requirements receiver, if seek court on 2) of
t in form and deadlines for creditors provided in the assistance for 2)directing liquidation creditor’s
and to establish their claim plan the execution debtors order meeting
substanc -include a STAY or - service of or and 2)publicati
e) SUSPENSION ORDER petition to implementatio creditors on of said
each creditor n of the to file order and
who is not a agreed comment service of
petitioner Rehabilitation such order
holding at least Plan Liquidatio to all
10% of total n order creditors
liabilities of 3)suspend
debtor any
- pending
execution
against
debtor
upon
motion
Publicati none Once a week Notice of Petition or Petition or none none Order:
on for 2 Rehabilitation motion: Once motion: Once a
consecutive plan: a week for 2 Once a week for 2
weeks in a published consecutive week for 2 consecutiv
newspaper of once a week weeks in a consecutiv e weeks in
general for 3 newspaper of e weeks in a
circulation; consecutive general a newspaper
with first weeks in a circulation newspape of general
publication newspaper of r of circulation;
made within 7 general general with first
days from circulation circulation publication
issuance of made
Order within 7
days from
 issuance of
Order
Hearing 1) for For the
the election
determination of the For the N/A For the For the For the and
creditors determination election and election election appointme
2) determine any of the appointment and and nt of
objections to the objections to of liquidator appointme appointme liquidator
appointment of receiver the nt of nt of
3) direct creditors to Rehabilitation liquidator liquidator
comment on the plan
Rehabilitation Plan
4) direct the rehabilitation
receiver to evaluate the
financial condition of the
debtor and submit report
within 40 days
Effect -there shall be a waiver of Approval of the CRAM DOWN LIQUIDATION ORDER: SUSPENSI
taxes and fees due to the Rehabilitation EFFECT: the 1)The juridical debtor is dissolved and its juridical ON
National Government and plan shall have Rehabilitation existence terminated ORDER:
to LGUs from the issuance the legal effect Plan shall 2)Legal title of all the assets of the debtor shall be No
of the commencement as have the vested in the liquidator/court creditor
order until approval of the Confirmation same legal 3)All contracts of the debtor shall be deemed shall sue
Rehabilitation plan or the of Plan effect as terminated unless the liquidator, w/in 90 days from or institute
dismissal of petition, Confirmation the date of his assumption of office, declares proceedin
whichever is earlier *court has 120 of a Plan otherwise and the contracting party agree gs to
days from date 4)No separate action for the collection of an collect his
CONFIRMATION OF of filing to unsecured claim shall be allowed (direct claims to claim from
REHABILITATION PLAN approve the liquidator) the debtor
1) Rehabilitation plan and Plan. Failing to 5) No foreclosure proceeding shall be allowed for 180 from the
its provisions shall be do so, the days time of
binding upon the debtor Rehab Plan filing of
and all creditors whether or shall be the
not such persons have deemed petition
participated in the approved. and for so
proceeding long as
2) debtor shall comply with the
the provisions proceedin
3)payments shall be made gs remain
to creditors in accordance pending
with the plan Except:
4)contracts bet. Debtor and a)those
creditors shall be creditors
interpreted as continuing to having
apply to the extent that claims for
they don’t conflict with the personal
plan labor,
5) any maintenan
ce,
expense of
compromises/reschedule of last illness
timing of payments by of debtor
debtor shall be binding on 60 days
the creditor regardless prior filing
whether the plan is b) secured
successfully implemented creditors
6) claims arising after the
approval of the plan that
are otherwise not treated
by the Plan are NOT subject
to Suspension Order
 COMMODATUM MUTUUM DEPOSIT BARTER WAREHOUSE
RECEIPTS ACT
Object Non- Fungible/ Movable/person Non- Goods (chattels,
consumable consumable al property consumable merchandise)
(i.e. money)
Except:
consumable if
used for
exhibition
purposes only
Purpose Temporary Consumption Safekeeping Use or Store for profit
use of the consumption
thing
Exchange
(sale)
Obligation Take care of Return a thing Take care of the Exchange a Take care of the
the thing with of the same thing thing of the goods
due diligence kind and same kind,
quality Do not use the quality and Do not commingle
Return the thing deposited quantity with other goods
thing upon unless
expiration of authorized or is Issue a receipt for
period or required for its the goods
purpose preservation
Status of Retained by Passes to Retained by the Passes to the Retained by the
Ownership bailor bailee depositor other party depositor
(mutual
exchange)
Ability to Anytime, if no Only after the Anytime Cannot Anytime up to:
demand period or expiration of demand a. Surrender of
return purpose has the period return warehouse
been agreed because receipt
upon or if by contract is b. Offer to pay
mere already warehouse
tolerance only extinguished man’s lien
(precarium) c. Sign the
Rescission acknowledg
If there is an only if ement
urgent grounds exist
necessity

Acts of
ingratitude by
the bailee
Compensatio Essentially Gratuitous or Gratuitous or onerous Onerous
n gratuitous onerous onerous
Object Immovables Movables Movables Immovables
Real Rights over Incorporeal rights
immovables (leasehold Except: can CM evidenced by
rights) buildings by negotiable
agreement and no instruments, bills
innocent third party of lading, shares of
prejudiced stock, bonds,
warehouse receipts
Requisit 1. Constituted to secure fulfillment of principal obligation 1. Must be in
es 2. Mortgagor/Pledgor absolute owner writing
3. Mortgagor/Pledgor has free disposal/legal authority 2. Express
agreement
*RM, CM and Pledge is VALID as between the parties even if between debtor-
registration requirements are not complied with BUT is not binding to creditor that the
3rd persons fruits will be
applied to
payment of
interest if any,
and then to the
principal
To bind Must be registered in Must be registered in Must be in a public Must be registered in
3rd the RD the CM Registry instrument with a the RD
persons description of thing
*If vehicle, must also pledged and the
be registered in the date
LTO
Delivery Generally not required Generally not required Delivery essential
Delivery essential
? to constitute
only so that the
pledge antichretic creditor
can enjoy the fruits
Effect of Ownership does not pass to the creditor upon default. Principle of pactum comissorium
default applies

Except: In pledge, after two sales and the thing remains unsold, the pledgee can appropriate
(in this case, he has to waive his claim)

Foreclos Extrajudicial/Judicial Sale through a notary Extrajudicial Extrajudicial/Judicial

ure public Private sale
Deficien Creditor can sue for No express right No deficiency Creditor can sue for
cy deficiency in either EJ/J granted by law, BUT deficiency in either
allowed by EJ/J
jurisprudence

Except: No deficiency
in sale on movables in
installment (Recto
Law)
VIII. LAND TITLES AND DEEDS PURPOSES: (QUIP-CC)
1. To quiet title to the land and to stop forever
========================= any question as to the legality of said title
======== 2. To relieve the land of unknown claims
TOPIC UNDER THE SYLLABUS: 3. To guarantee the integrity of land titles and to
A. Torrens System protect their indefeasibility once the claim of
1. Concept and background ownership is established and recognized
2. Certificate of title 4. To give every registered owner complete peace
of mind
B. Regalian Doctrine 5. To issue a certificate of title to the owner which
1. Concept shall be the best evidence of his ownership of
2. Effects the land
3. Concept of native title, time 6. To avoid conflicts of title in and to real estate
immemorial possession and to facilitate transactions. Lagarda v.
C. Citizen Requirements Saleeby [31 Phil 590, 1915]
D. Non-Registrable Properties The registration of property is to: (1) avoid possible
E. Original Registration conflicts of title, and (2) facilitate transactions
1. Registration relative to real property by giving the public the
process and requirements right to rely upon the face of the Torrens certificate
2. Who may apply of title and to dispense with the need of inquiring
a. Under P.D. 1529 further, EXCEPT when the party concerned has
actual knowledge of facts and circumstances that
b. Under C.A. 141
should impel a reasonably cautious man to make
3. Remedies such further inquiry. Capitol Subdivision v.
4. Cadastral registration Province of Negros, [7 SCRA 60 ,1963)
F. Subsequent Registration
1. Voluntary Dealings NATURE OF TORRENS SYSTEM
2. Involuntary Dealings
G. Dealings With Unregistered Land  Judicial in character and not merely
administrative
=========================
 Proceeding is in rem (binding upon the
========
whole world)
1. CONCEPT AND BACKGROUND
In a registration proceeding, the judgment of the
LAND TITLE is evidence of the owner’s right or court confirming the title, and ordering its
extent of interest, by which he can maintain registration in one’s name constitutes, when final,
control and as a rule assert right to exclusive res judicata against the whole world. Ronald Ting
possession and enjoyment of property v. Heirs of Lirio, [G.R. No. 168913, March 14,
2007]
DEED is an instrument in writing by which any
real estate or interest therein is created, TORRENS TITLE is a certificate of ownership
alienated, mortgaged, or assigned, or by which issued under the Torrens System, through the
title to any real estate may be affected in law or Register of Deeds, naming and declaring the owner
equity of the real property described therein, free from all
liens and encumbrances except such as may be
LAND REGISTRATION is a judicial or expressly noted there or otherwise reserved by
administrative proceeding whereby a person’s law. (See Section 44, PD 1529)
claim over a particular land is determined and
confirmed or recognized so that such land and General Rule – A title once registered cannot be
the ownership thereof may be recorded in a impugned, altered, changed, modified, enlarged,
public registry or diminished

TORRENS SYSTEM is a system for registration
of land under which, upon the landowner’s
application, the court may, after appropriate
proceedings, direct the issuance of a certificate
of title
Exception – Direct proceeding permitted by law,
usually for the protection of innocent third
persons
2. CERTIFICATE OF TITLE
PROBATIVE VALUE OF THE TORRENS TITLE only against the registered
Torrens Title may be received in evidence in owner, but also against his
all Philippine courts , and shall be conclusive as hereditary successors
to all matters contained therein, principally as to 3. Accretion Requisites: G-C-A
the identity of the land owner except so far as 1. The deposit of soil or
provided in the Land Registration Act. sediment be gradual and
imperceptible,
 As opposed to an unregistered deed of sale, 2. It is the result of the
the certificate of title certainly deserves more current of the waters
probative value. Indeed, a Torrens Certificate (river/sea), and
is evidence of indefeasible title of property in 3. The land where accretion
favor of the person in whose name appears takes place is adjacent to
therein—such holder is entitled to the the banks of rivers or the
possession of the property until his title is sea coast
nullified. Pascual v. Coronel, [527 SCRA
474, 2007] Accretion to registered lands
needs new registration
TYPES OF TORRENS CERTIFICATES OF TITLE
There must be No human
1. ORIGINAL CERTIFICATE OF TITLE - the first intervention,
title issued in the name of the registered  The current causing the
owner by the Register of Deeds (ROD) alluvial deposit must be
covering a parcel of land which had been from a river. If it is from
registered by virtue of a judicial or the sea, the deposit will
administrative proceeding. pertain to the state.
2. TRANSFER CERTIFICATE OF TITLE - the title (Government of the
issued by the ROD in favor of the transferee Phils. v. Cabangis 53
to whom the ownership of the already Phil. 112 (1929))
registered land had been transferred by 4. Reclamation Filling of submerged land by
virtue of a sale or other modes of deliberate act and reclaiming
conveyance. title thereto
 Must be initially owned
by the government
MODES OF ACQUIRING TITLE
 May be subsequently
1. Public Grant A conveyance of public land
transferred to private
by government to a private
owners
individual
5. Voluntary 1. Private grant
2. Acquisitive Requisites: ONCE
Transfer 2. Voluntary execution of
Prescription Open,
deed of conveyance
Continuous,
Exclusive, and  Contractual relationship
Notorious possession between the parties
 Consensual
If in good faith & with just 6. Involuntary  No consent from the
title: 10 yrs. uninterrupted Alienation owner of land
possession is required  Forcible acquisition by
If in bad faith & without just the State
title: 30 yrs. continuous 7. Descent or Hereditary succession to the
possession is required Devise estate of deceased owner
8. Emancipation To ameliorate the sad plight
Only available if the land Patent/Grant of tenant-farmers (to answer
possessed is public, alienable (Certificate of their problems)
and disposable Land Ownership
Award) Such grant is not
A property registered under transferable except by
the Torrens System is not hereditary succession
subject to prescription
LAWS IMPLEMENTING LAND REGISTRATION
Prescription is unavailing not 1. Property Registration Decree (P.D. 1529, as

amended)
2. Cadastral Act (Act 2259, as amended)
3. Public Land Act (Commonwealth Act 141, as
amended)
4. Emancipation Decree (P.D. 27, as amended)
5. Comprehensive Agrarian Reform Law of 1988
(R.A. 6657, as amended)
ADMINISTRATION OF THE TORRENS SYSTEM
1. Land Registration Authority
(LRA)
Agency charged with the efficient execution of
the laws relative to the registration of lands,
under the executive supervision of the DOJ
Composition:
a. Administrator
b. 2 Deputy Administrators (as assistants)
The Functions of the LRA are: (SAC)
2. Extend speedy and effective assistance
to the Dept. of Agrarian Reform, the Land
Bank, and other agencies in the
implementation of the land reform program
of the government
2. Extend assistance to
courts in ordinary and cadastral land
registration proceedings
3. Be the central
repository of records relative to original
registration of lands titled under the Torrens
system, including the subdivision and
consolidation plans of titled lands
2. Register Of Deeds (ROD)
It is the public repository of records and
instruments affecting registered or unregistered
lands and chattel mortgages in the province or
city wherein such office is situated
Composition:
a. Register of Deeds
b. Deputy (as assistant)
The functions of the ROD: (PIDI)
1. Immediately register an instrument
presented for registration dealing with real or
personal property which complies with the
requisites for registration
2. Shall see to it that said instrument bears
the proper documentary and science stamps
and that the same are properly cancelled
3. If the instrument is not registerable, he
shall deny the registration thereof and inform
the presentor of such denial in writing,
stating the ground or reason therefore, and
advising him of his right to appeal by
consulta in accordance with Sec. 117 of PD
1529
4.
Pr
epare and keep an index system which
contains the names of all registered owners
and lands registered
The function of the ROD with reference to
registration of deeds, encumbrances, instruments,
and the like is ministerial in nature, provided the
applicant complies with all the requisites. Baranda
v. Gustilo, [165 SCRA 757, 1988]
It is enough that in the ROD’s opinion an
instrument is registrable for him to register it. The
act being an administrative act does not
contemplate notice to and hearing of interested
parties. Ledesma v. Villasenor, [13 SCRA 494,
1965]
The determination of whether a document is valid
or not is a function that belongs to a court of
competent jurisdiction, and not to the ROD.
Almirol v. ROD of Agusan, [G.R. No. L-22486,
March 20, 1968]
Instances when the ROD may validly deny
registration of a voluntary instrument:
1. Where there are more than 1 copy of the
owner’s duplicate certificate of title and not all
such copies are presented to the ROD
2. Where the voluntary instrument bears on its
face an infirmity
3. Where the validity of the instrument sought to
be registered is in issue in a pending court suit,
notice of which must be given to parties
4. Registration may be suspended Balbin v.
ROD, [28 SCRA 12,1969]
The ROD may also refuse to register a private
document since Section 112 of PD 152 provided
that deeds of conveyances affecting lands should
be verified and acknowledged before a notary
public or other public officer authorized by law to
take acknowledgement. Gallardo v. IAC, [155
SCRA 248, 1987]
NOTE: When the ROD is in doubt as to the proper
action to take on an instrument or deed presented
to him for registration, he should submit the
question to the Administrator of the LRA en
consulta (Section 117, PD 1529).
B. REGALIAN DOCTRINE
1. CONCEPT
Under the Regalian doctrine which is embodied in
Section 2, Article XII of the 1987 Constitution, all
lands of the public domain belong to the State,
which is the source of any asserted right to
ownership of land. ll lands of the public domain, D. NON-REGISTRABLE PROPERTIES
waters, minerals, coal, petroleum and other
mineral oils, all forces of potential energy, NON-REGISTRABLE PROPERTIES
fisheries, forests, or timber, wildlife, flora and Article 420 1. Those intended for public
fauna, and natural resources belong to the state. NCC use, such as roads, rivers,
With the exception of agricultural lands, all other torrents, ports and bridges
natural resources shall not be alienated constructed by the State,
banks, shores, roadsteads,
2. EFFECTS and others of similar
character
All lands not appearing to be clearly within 2. Those which belong to the
private ownership are presumed to belong to the State, without being for
State. Unless public land is shown to have been public use, and are intended
reclassified or alienated to a private person by for some public service or for
the State, it remains part of the inalienable public the development of the
domain. To overcome this presumption, national wealth.
incontrovertible evidence must be established
that the land subject of the application is Arts. 5 & 6, 1. Rivers and their natural
alienable or disposable. Water Code beds;
(PD 1067 ) 2. Continuous or intermittent
To prove that the land subject of an waters of springs and brooks
application for registration is alienable, an running in their natural beds
applicant must establish the existence of a and the beds themselves;
positive act of the government such as a 3. Natural lakes and lagoons;
presidential proclamation or an executive order; 4. All other categories of
an administrative action; investigation reports of surface waters such as water
Bureau of Lands investigators; and a legislative flowing over lands, water
act or a statute. The applicant may also secure a from rainfall whether natural
certification from the Government that the lands or artificial, and water from
applied for are alienable and disposable. agriculture runoff, seepage
and drainage;
3. CONCEPT OF NATIVE TITLE, 5. Atmospheric water;
TIME IMMEMORIAL 6. Subterranean or ground
water;
NATIVE TITLE - refers to pre-conquest rights to 7. Seawater;
lands and domains which, as far back as memory
reaches, have been held under a claim of private Found in private lands:
ownership by ICCs/IPs, havenever been public 8. Continuous or intermittent
lands and are thus indisputably presumed to waters rising on such lands;
have been held that way sincebefore the Spanish 9. Lakes and lagoons naturally
Conques occuring on such lands;
10. Rain water and falling on
such lands;
C. CITIZEN REQUIREMENTS 11. Subterranean or ground
waters; and
1. INDIVIDUALS AND 12. Waters in swamps and
CORPORATIONS marshes
Regalian Forest or timberland, public
Alienable lands of the public domain: Doctrine forest, forest reserves lands,
under the mineral lands
Only Filipino citizens may acquire not more than 1935, 1973,
12 hectares by purchase, homestead or grant, or and 1987
lease not more than 500 hectares. Constitution

It is not the court which determines the

Private corporations may lease not more than classification of lands of the public domain into
1,000 hectares for 25 years renewable for agricultural, forest or mineral but the Executive
another 25 years Branch of the government, through the Office of
the President. Bureau of Forestry v. CA, [153
SCRA 351, 1987]
The State has an imprescriptible right to cause
the reversion of a piece of property belonging to
the public domain if title has been acquired
through fraudulent means. Republic v. Heirs of
Alejaga, [393 SCRA 361, 2002]
A land classified as a military reservation zone,
until reclassified or released from the said
classification remains inalienable public land.
Republic v. Southside, [G.R. No. 156951,
Sept. 22, 2006]
E. ORIGINAL REGISTRATION
Types Of Registration:
1. Original Registration
2. Subsequent Registration
ORIGINAL REGISTRATION UNDER P.D. 1529
is a proceeding brought before the RTC (as a land
registration court) to determine title or ownership
of land on the basis of an application for
registration or answer by a claimant in a
cadastral registration.
1. REGISTRATION PROCESS AND
REQUIREMENTS
Kinds Of Judicial Registration:
1. Judicial/Voluntary/Ordinary – by filing
with the proper court; application by the
private individual himself
2. Administrative/Involuntary/Cadastral –
compulsory registration initiated by the
government
Procedure In Ordinary Land Registration
(SurF-D-TraPS-AHJ-DECT)
1. SURvey of land by the Bureau of Lands or a
duly licensed private surveyor
- Survey plan must be duly approved by
the Director of Lands.
2. Filing of application for registration by the
applicant
a. With all muniments of titles and copies
thereof with survey plan approved by
Bureau of Lands
MUNIMENTS OF TITLE are instruments or
written evidence which applicant hold or possess
to enable him to substantiate and prove title to
his estate.
Tax declarations or realty tax payment of
property are not conclusive evidence of
ownership. At most, they serve as a good
indicium of possession in the concept of an owner.
Such an act strengthens one’s bona fide claim of
acquisition of ownership. Republic v. Sta. Ana-
Burgos, [523 SCRA 309, 2007]
b. Always filed with the RTC of the place
where land is situated
c. Indorsed to the MTC if there is no
controversy over the land or if its value is
less than 100,000
d. In cases of delegated jurisdiction to the
MTC, appeal is directed to the CA
e. If land is situated between boundaries of
2 provinces, application must be filed:
 When boundaries are not defined:
with the RTC of the place where it is
declared for taxation purposes;
 When boundaries are defined: a
separate plan for each portion must
be made by a surveyor and a
separate application for each lot must
be filed with the appropriate RTC
3. Setting of the Date of initial hearing of
application by the RTC
- Within 5 days, set hearing 45-90 days from
date of order
4. Transmittal of the application and the date of
the initial hearing, with all the documents or
other evidence attached thereto, by the Clerk
of Court to the LRA
5. Publication of notice of the filing of the
application and the date and place of the
hearing in the Official Gazette. The notices
required are mandatory.
a. Publication of notice of initial hearing
i. Once in the Official Gazette (this
confers jurisdiction upon the court)
ii. Once in a newspaper of general
circulation
Purpose of publication:
1. To confer jurisdiction
over the land applied for upon the court
2. To charge the whole
world with knowledge of the application of
the land involved, and invite them to take
part in the case and assert and prove their
rights over the subject land
b. Mailing
 Within 7 days after publication of said
notice in the OG, mailing of notice to:
i. Persons named in the notice
ii. Sec. of Public Highways, Provincial
Governor, and Mayor, if the applicant
requests to have the line of a public
way or road determined
iii. Sec. of Agrarian Reform, Solicitor
 General, Director of Lands, Director
of Fisheries, and Director of Mines, if
the land borders on a river,
navigable stream, or shore, or on an
arm of the sea where a river or
harbor lies
iv. Other persons as the court may
deem proper
c. Posting
Posting in conspicuous place on subject
land and on bulletin board of municipal
building at least 14 days before initial
hearing
6. Service of notice by the sheriff upon
contiguous owners, occupants and those
known to have interests in the property
7. Filing of answer to the application by any
person whether named in the notice or not
8. Hearing by the court
9. Promulgation of judgment by the Court
10. Issuance of the decree declaring the
decision final and instructing the LRA to
issue a decree of confirmation and
registration
Decree– issued by LRA after finality of judgment;
contains technical description of land.
i. Decrees dismissing application
ii. Decrees of confirmation and
registration
*0. Subject only to appeal
11. Entry of the decree of registration in the
LRA
1 year after the date of entry, it becomes
incontrovertible and amendments will not be
allowed except clerical errors. It is deemed
conclusive as to the whole world.
- Puts an end to litigation
- Purpose of Torrens system is protected
12. Sending a copy of the decree of registration
to the corresponding ROD
13. Transcription of the decree of registration
in the registration book and issuance of the
owner’s duplicate original certificate of title
to the applicant by the ROD upon payment
of the prescribed fees
NOTE: Noncompliance with the requisites will
make the Certificate of Title (CT) issued invalid
and cancellable by the courts.
2 .WHO MAY APPLY
a. UNDER PD 1529 (OPAL)
1.
Those who by themselves or through their
predecessors-in-interest have been in open,
continuous, exclusive, notorious possession
and occupation of alienable and disposable
lands of the public domain under a bona fide
claim of ownership since June 12, 1945 or
earlier
2. Those who acquired ownership of private
land by prescription under the provisions of
existing laws
3. Those who acquired ownership of private
lands or abandoned river beds by right of
accession or accretion under the existing
laws
4. Those who have acquired ownership of land
in any manner provided for by law
NOTE: All these persons must be natural-born
Filipino citizens. By way of exception juridical
persons may apply for registration of leased
agricultural and disposable lands not exceeding
1,000 hectares in area for a period of 25 years and
renewable for not more than 25 years (Sec. 3,
Article XII, 1987 Constitution), and except
when the land has been previously acquired by
prescription by a natural person and subsequently
transferred to a juridical entity. In this case, a
corporation may apply for judicial confirmation of
title. Dir. of Lands v. IAC and ACME, [146 SCRA
159 (1986]
Limitation To Ownership Of Land By
Corporation:
1. Private Lands
a. At least 60% Filipino (Sec. 7, Article XII,
1987 Constitution)
b. Restricted as to extent reasonably
necessary to enable it to carry out
purpose for which it was created
c. If engaged in agriculture, it is restricted to
1,024 hectares
2. Patrimonial Property of the State (Sec. 3,
Article XII, 1987 Constitution)
a. May only Lease (CANNOT own land of the
public domain) for 25 years renewable
b. Limited to 1,000 hectares
c. Apply to both Filipinos & foreign
corporations
Determinative of this issue is the character of the
parcels of land – whether they were still public or
already private – when the registration proceedings
were commenced. If they are already private
lands, the constitutional prohibition against
acquisitions by a private corporation would not
apply. Natividad v. CA, [202 SCRA 439, 1991]
FORM OF THE APPLICATION
(Sec. 15, PD 1529): (WSS)
1. Written
2. Signed by
the applicant or person duly authorized in his
behalf
- If there is more than 1 applicant, the
application shall be signed and sworn to
by and in behalf of each.
2. Sworn to before an officer authorized to
administer oath for the province or city where
the application was actually signed
CONTENTS OF APPLICATION
(Sec. 15, P.D. 1529): (MADFARCE)
1. Manner of acquisition of land
2. Assessed value of the land and the buildings
and other improvements based on the last
assessment for taxation purposes
3. Description of the land applied for together
with the buildings and improvements; the
plan approved by Director of Lands and the
technical descriptions must be attached
4. The court may require Facts to be stated in
the application in addition to those prescribed
by the Decree not inconsistent therewith and
may require the filing of additional papers
5. Full names and addresses of All occupants of
the land and those of the Adjoining owners, if
known; and if not known, the applicant shall
state the extent of the search made to find
them
6. If the application describes the land as
bounded by a public or private way or Road,
it shall state whether or not the applicant
claims any portion of the land within the
limits of the way or road, and whether the
applicant desires to have the line of way or
road determined (Sec. 20, PD 1529)
7. Citizenship and Civil status of the applicant
 if married, name of spouse, and
 if the marriage has been legally
dissolved, when and how the
marriage relation was terminated
8. Mortgage or Encumbrance affecting the land
or names of other persons who may have an
interest therein, legal or equitable
9. If the applicant is a non-resident of the
Philippines, he shall file an instrument
appointing an agent residing in the Phils. and
shall agree that service of any legal process
shall be of the same legal effect as if made
upon the applicant within the Philippines
(Sec. 16, PD 1529)
Where To File Application
General Rule – RTC of the province or city
where the land is situated
File together with application all original
muniments of titles or copies thereof and a survey
plan of the land as approved by the Bureau of
Lands
P.D. 1529 has eliminated the distinction between
the general jurisdiction vested in the RTC and the
limited jurisdiction conferred upon it by the former
law when acting merely as land registration court.
Aimed at avoiding multiplicity of suits, the change
has simplified registration proceedings by
conferring upon the RTCs the authority to act not
only on original applications but also those filed
after original registration, with power to hear and
determine all questions arising upon such
applications or petitions. Averia v. Caguioa, [146
SCRA 459, 1986]
If there are several parcels of land situated in
different provinces/cities but belong to one owner,
he must file in RTC of each province/city where the
different parcels of land are located for registration
purposes
Exception – Delegated jurisdiction of the MTC to
hear and determine cadastral or land registration
cases covering lots where:
− there is no controversy or opposition, or
− contested lots, the value of which does not
exceed 100,000
AMENDMENTS IN ORDINARY REGISTRATION
PROCEEDINGS
1. Striking out one or The court may strike
more of the parcels of out at any time
land applied for or by a
severance of the
application
2. Substantial change in New technical
boundaries, increase in description and new
area, inclusion of publication and notice
additional land are necessary
3. Joinder, substitution, File motion with court
or discontinuance of any
of the parties
4. Decrease in area File motion with court;
no need for new
publication or notice
If the amendment consists in the inclusion in the
application for registration an area or parcel of land
not previously included in the original application,
as published, a new publication of the amended
application must be made. The purpose of the new
publication is to give notice to all persons
concerned regarding the amended application.
Without a new publication, the registration court
cannot acquire jurisdiction over the area or parcel
of land that is added to the area covered by the
original application, and the decision of the
registration court would be a nullity insofar as
the decision concerns the newly included land.
But if the amendment consists in the exclusion of
a portion of the area covered by the original
application and the original plan as previously
published, a new publication is not necessary. In
the latter case, the jurisdiction of the court is not
affected by the failure of a new application.
Benin v. Tuason, [57 SCRA 531, 1974]
Requisites of Opposition: an opposition may
be filed by any person claiming an interest
1. Set forth objections to the application
2. State interest claimed by oppositor
3. Apply for the remedy desired
4. Signed and sworn to by him or by some
other duly authorized person
5. Filed on or before the date of initial hearing
6. If only a portion of the land applied for is
contested and such portion is not properly
delimited, court may require submission of
a division plan approved by the Director of
Lands
GENERAL DEFAULT SPECIAL DEFAULT
Those persons who When a party appears at
did not appear and initial hearing without
answer within the having filed an answer
time prescribed and asks court for time to
file answer but failed to
do so within period
allowed
b. UNDER C.A. 141
Judicial Confirmation of Imperfect or
Incomplete Title under the Public Land Act
 In rem, judicial proceedings
 The decree of registration issued is
conclusive and final
 Governed by court procedure and law of
evidence
When To File
Extended up to December 31, 2020, as provided
in Sec. 2 of RA 9176
Limitation To Area Applied For
Maximum of 12 hectares (Sec. 3, RA 6940)
What Applicant Must Prove
 The land is alienable and disposable land of
the public domain, and
 His possession was for the length of time and
in the manner and concept required by law
NOTE: Form, Contents, Notice, Mailing, Posting
Requirements are the same as those required in
original registration under PD 1529.
A judicial declaration that a parcel of land is public,
does not preclude even the same applicant from
subsequently seeking a judicial confirmation of his
title to the same land, provided he thereafter
complies with the provisions of Sec. 48 of C.A. 141,
as amended and as long as said public land
remains alienable and disposable. Director of
Lands v. CA, [106 SCRA 426, 1981]
Proof of Private Ownership (STOP)
1. Spanish title (inadmissible and ineffective
proof of ownership in land registration
proceedings filed after Aug. 16, 1976)
2. Tax declarations and tax payments (not
conclusive evidence of ownership, must be
coupled with proof of actual possession for
the period required by law)
3. Other kinds of proof (ex. testimonial
evidence to prove accretion, deeds of sale)
4. Presidential issuances and legislative acts
(constitutive of a fee simple title or absolute
title in favor of the grantee, a law ceding full
ownership to a government institution)
The holder of a Spanish title may still lose his
ownership of the real property to the occupant who
actually possesses the same for the required
prescriptive period. Taking the law as a whole, it
has clearly set a deadline for the filing of
applications for registration of ALL Spanish titles
under the Torrens system (i.e., 6 months from its
effectivity or on 14 August 1976), after which, the
Spanish titles may no longer be presented to prove
ownership. Spanish titles can no longer be
countenanced as indubitable evidence of land
ownership. Santiago v. SBMA, [G.R. No.
156888, November 20, 2006]
JUDGMENT is a decision of court constituting its
opinion after taking into consideration the
evidence submitted.
It becomes final upon the lapse of 15 days counted
from the receipt of notice of the judgment.
However, notwithstanding the lapse of the 15-day
period from receipt of judgment by the parties, the
court continues to retain control over the case until
the expiration of 1 year after the entry of decree of
registration by the LRA. Republic v. Assosacion
Benevola de Cebu [178 SCRA 692, 1989]
In special proceedings the purpose of execution of
judgment is to establish a status, condition or fact;
in land registration proceedings, the ownership by
a
person of a parcel of land is sought to be
established. After the ownership has been
proved and confirmed by judicial declaration, no
further proceeding to enforce said ownership is
necessary, except when the adverse or losing
party had been in possession of the land and the
winning party desires to oust him therefrom.
Ronald Ting v. Liro, [G.R. No. 168913,
March 14, 2007]
Post-Judgment Incidents
1. Writ of Possession: order to sheriff to
deliver the land to the successful party
litigant; no prescription against: (1) the
loser and (2) anyone unlawfully and
adversely occupying
When writ may not issue: When a party
entered into property after issuance of final
decree, is not an oppositor in registration
proceeding, and is in possession of land for at
least 10 years
2. Writ of Demolition: the complement of
writ of possession; to demolish
improvements introduced by oppositor or
his successor in interest
Means to Recover Possession
1. Forcible entry
2. Unlawful detainer
3. Accion publiciana
4. Accion reivindicatoria
Decree of Registration
 The decree issued by the LRA pursuant to
the order of the court.
 Binds the land, quiets title thereto, subject
only to such exceptions or liens as may be
provided by law
 Conclusive upon all persons including the
government
Contents of The Decree (DMD-DO)
1. Date, hour and minute of its entry
2. Whether the owner is married or
unmarried, and if married, the name of the
spouse; provided that if the land is conjugal
property, the decree shall be issued in the
name of both spouses
3. If the owner is under disability, the nature
of such disability, and if a minor, his age
4. Description of the land and shall set forth
the estate of the owner, and also show their
relative easements, liens, attachments, and
other encumbrances
5. Other matters to be determined in
pursuance of the law
Process of Issuing The OCT
1. Within 15 days from finality of order of
judgment directing registration of title – court
orders the LRA to issue decree of registration
and certificate of title
2. Clerk of court will send order of court and
copies of judgment
3. Writ of Demolition may be issued. The court
has authority to order, as a consequence of
the writ of possession issued by it, the
demolition of improvements introduced by
the defeated oppositor or his successor-in-
interest
4. Administrator will issue a decree of
registration and original and duplicate of OCT
that is signed by the Administrator, enter and
file decree of registration in LRA
5. Send to ROD the original and duplicate of
title and certificate for entry in his
registration book
6. Enter in record book, dated, signed,
numbered and sealed to take effect upon
date of entry
7. ROD to send notice to registered owner ready
for delivery after payment of fees
8. ROD shall send duplicate and note on each
certificate of title to whom it is issued
9. Original copy to be filed in ROD
10. Bound in consecutive order
Attributes and Limitations on Certificates of
Title and Registered Lands
1. Free from liens and encumbrances
General Rule – Claims and liens of whatever
character existing against the land prior to the
issuance of the certificate of title are cut off by
such certificate and the certificate so issued binds
the whole world, including the government.
Exceptions: (CNT-PD)
i. Those noted on the certificate
ii. Liens, claims, or rights arising or
existing under the laws and the
Constitution, which are not by law required
to appear on record in the Register of
Deeds in order to be valid
iii. Unpaid real estate taxes levied and
assessed within 2 years immediately
preceding the acquisition of any right over
the land by an innocent purchaser for value
iv. Any public highway, or private way
established or recognized by law, or any
government irrigation, canal or lateral
thereof, if the certificate of title does not
state the boundaries of such highway or
irrigation canal or lateral thereof have been
determined
v. Any disposition of the property or limitation
on the issue thereof pursuant to PD 27 or

any other law or regulations on agrarian
reform
2. Incontrovertible and indefeasible
General Rule – Upon expiration of 1 year
from and after the entry of the decree of
registration in the LRA, the decree and the
corresponding certificate of title becomes
incontrovertible and indefeasible.
Exceptions: (PNF)
a. If previous
valid title of the same land exists
b. When land
covered is not capable of registration
c. When
acquisition of certificate is attended
by fraud
The rule on the incontrovertible nature of a
certificate of title applies when what is
involved is the validity of the OCT, not when
it concerns that of the TCT. Arguelles v.
Timbancaya, [72 SCRA 193, 1976]
2. Registered land not subject to
prescription
a. Even adverse, notorious and continuous
possession under claim of ownership for
the period fixed by law is ineffective
against a Torrens title. JM Tuason and
Co. Inc. v. CA, [93 SCRA 146, 1979]
b. The fact that the title to the land was
lost does not mean that the land ceased
to be registered land before the
reconstitution of its title. It cannot
perforce be acquired by prescription.
Ruiz v. CA, [79 SCRA 525 , 1977]
c. Laches may be invoked to bar
reconveyance of land to the registered
owner only if there are intervening
rights of third persons which may be
affected or prejudiced if such land is
returned to the registered owner. De
Lucas v. Gamponia, [100 Phil 277 ,
1956]
With respect to a claim of acquisitive
prescription, it is baseless when the land
involved is a registered land since no title to
registered land in derogation of that of the
registered owner shall be acquired by adverse
possession. Feliciano v. Zaldivar, [G.R. No.
162593, Sept. 26, 2006]
3. Certificate of title not subject to
collateral attack
Sec. 48 of P.D. 1529 provides that “a certificate
of
title shall not be subject to collateral attack. It
cannot be altered, modified, or cancelled except in
a direct proceeding in accordance with the law.”
Torrens title cannot be collaterally attacked. The
question on the validity of a Torrens title, whether
fraudulently issued or not, can be raised only
in an action expressly instituted for that purpose.
The action for the declaration of nullity of deed of
sale commenced by the petitioners in the RTC is
not the direct proceeding required by law to attack
a Torrens certificate of title. Tapuroc v.
Loquellano de Mende, 512 SCRA 97 (2007
4. Torrens Certificate presumed valid and
devoid of flaws
General Rule – Torrens Certificate of Title is
presumed to have been regularly issued,
valid, and without defects. The buyer has the
right to rely upon the face of the Torrens title
and dispense with the trouble of inquiring
further.
Exception – When he has actual knowledge
of facts and circumstances that would impel
a reasonably cautious man to make inquiry.
While, it is a familiar doctrine that a forged or
fraudulent document may become the root of a
valid title, if title to the property has been
transferred from the forger to an innocent
purchaser in good faith, the same does not apply in
case of banking institutions or those engaged in
real estate for they are expected expected to
exercise more care and prudence than private
individuals in their dealing with registered lands. In
the absence of inquiry, the respondent Bank
cannot and should not be regarded as a
mortgagee/purchaser in good faith. Erasusta v.
CA, [G.R. No. 149231, July 17, 2006]
5. General incidents of registered land
Registered land or the owners thereof are not
relieved from the following:
a. From any rights incident to the relation of
husband and wife, landlord and tenant
b. From liability to attachment or levy on
execution
c. From liability to any lien of any
description established by law on the land
and buildings thereon, or in the interest of
the owner in such land or buildings
d. From any right or liability that may arise
due to change of the law on descent
e. From the rights of partition between co-
owners
f. From the right of the government to take
the land by eminent domain
 g. From liability to be recovered by an adjudicate lands already covered by a Certificate of
assignee in insolvency or trustee in Title, it is nonetheless true that this rule only
bankruptcy under the laws relative to applies where there exists no serious controversy
preferences as to the certificate’s authenticity vis-à-vis the land
h. From any other rights or liabilities covered therein. Republic v. Vera, 120 SCRA
created by law and applicable to 210 (1983)
unregistered land
BASIS PD 1529 CADASTRAL
6. Where certificate of title is obtained Nature Voluntary Compulsory
by a trustee Applicant Landowner Director of
a. Trustee who obtains a Torrens title in his Lands
name, over property held in trust by Lands usually all classes of
him for another cannot repudiate the covered involves lands are
trust relying on the registrations, such private land included
being one of the limitations upon the
finality of title it may also
b. Trustee could not perforce legally refer to public
convey ownership of the registered agricultural
property in her will for she is not the lands if the
absolute owner thereof object of the
action is
confirmation of
3. CADASTRAL REGISTRATION an imperfect
title
CADASTRAL REGISTRATION is a proceeding in Parties Applicant and Government,
rem initiated by the filing of a petition for opponent Landowners
registration by the government, not by the must come to
persons claiming ownership of the land subject court as
thereof, and the latter are, on the pain of losing claimants of
their claim thereto, in effect, compelled to go to their own lands
court to make known their claim or interest Purpose Petitioner Government
therein and to substantiate such claim or interest comes to court asks the court
to confirm his to settle and
Procedure: (NN-CP-PAHD-DI) title and seeks adjudicate the
1. Notice of cadastral survey published once the registration title of the land
in OG and posted in conspicuous place with of the land in
a copy furnished to the mayor and his name
barangay captain Person who Landowner Government
2. Notice of date of survey by the Bureau of requests
Land Management and posting in bulletin the survey
board of the municipal building of the Effect of • no adverse • if none of the
municipality or barrio, and he shall mark judgment claim applicants can
the boundaries of the lands by monuments • if the prove that he
set-up in proper places thereon applicant fails is entitled to
3. Cadastral survey to prove his the land, the
4. Filing of petition title, his same shall be
5. Publication (twice in successive issues of application declared public
OG), mailing, posting may be (res judicata)
6. Filing of answer dismissed
7. Hearing of the case without
8. Decision prejudice (no
9. Issuance of the decree and certificate of res judicata)
title
PATENTS
NOTE: The cadastral court is not limited to a Classification of Land of Public Domain:
mere adjudication of ownership in favor of one or The classification is the exclusive prerogative of
more claimants. If there are no successful executive and not of the judiciary
claimants, the property is declared public land.
Additionally, while the court has no jurisdiction to Anyone who applies for confirmation of imperfect
title has the burden of proof to overcome the Title Issued Pursuant to Registration of
presumption that the land sought to be Patent:
registered forms part of public domain (Regalian 1. Indefeasible when registered, and deemed
doctrine) incorporated with Torrens system 1 year
after the issuance of patent
Under the Constitution: 2. GR: May not be opened 1 year after entry
1. Agricultural – the only classification by LRA (otherwise, confusion and
subject to alienation uncertainty on the government system of
2. Forest or timber the distribution of public lands may arise
3. Mineral lands and this must be avoided)
4. National park Exception: if it is annullable on ground of
fraud, then it may be reopened even after 1
Under the Public Land Act: year because registration does not shield
1. Alienable/disposable: bad faith
a. Agricultural  The court, in the exercise of its equity
b. Residential, commercial, industrial jurisdiction, may direct reconveyance
c. Educational, charitable even without ordering cancellation of
d. Town sites and for public and quasi- title
public uses
2. Timber lands: inalienable Homestead Restrictions:
3. Mineral lands: inalienable 1. Land cannot be alienated within 5 years after
 If patent or title is issued, it is void ab approval of application for patent
initio for lack of jurisdiction 2. It cannot be liable for satisfaction of debt
General Rule – It is not subject to within 5 years after approval of patent
acquisitive prescription even if in application
possession for long time, it will not ripen 3. Subject to repurchase of heirs within 5 years
into ownership after alienation when allowed already
4. No private corporation, partnership,
Exception – Mineral lands and forest association may lease land unless it is solely
lands acquired before inauguration of for commercial, industrial, educational,
Commonwealth in November 15, 1935 religious or charitable purpose, or right of
because there are vested rights which are way (subject to consent of grantee and
protected approval of Secretary of Environment &
Natural Resources)
FISHPONDS
Before: It was included in the definition of Exceptions:
agriculture, therefore the conversion of 1. Action for partition because it is not a
agricultural land to fishponds did not change conveyance
character of land 2. Alienations or encumbrances made in favor
of the government
Now: It has a restricted meaning; Fishponds are
of a distinct category and cannot be alienated Erring Homesteader not Barred by Pari Delicto
but may be leased from government - Pari delicto rule does not apply in void
contracts
When Government Grant Deemed Acquired - Violation of prohibition results in void contract
by Operation of Law: - Action to recover does not prescribe
1. Deed of conveyance issued by government
patent/grant KIND TO OTHER REQUIREMENTS
2. Registration with the ROD: mandatory, it is S WHOM
the operative act to convey and transfer GRANTE
title D
3. Actual physical possession, open and • Grantee does not own more
continuous To any than 12 hectares of land in the
 Land ceased to be part of public domain Home Filipino Philippines or has not had the
- citizen benefit of any gratuitous
& now ownership vests to the grantee
stead over the allotment of more than 12
 Any further grant by Government on Paten age of 18 hectares
same land is null and void t years or • must have resided
 Upon registration, title is indefeasible head of a continuously for at least 1 year
family in the municipality where the
 land is situated Procedure for Registration of Public Lands:
• must have cultivated at least (IFEFI)
1/5 of the land applied for 1. Official issues an instrument of conveyance
• Grantee does not own more 2. File the instrument with ROD
than 12 hectares of land 3. Instrument is to be entered in books and
To any • has continuously occupied owner’s duplicate to be issued
natural and cultivated, either by  Instrument is only a contract between
Free born himself or his predecessors-in-
Government and private person and
Paten citizen of interest, tracts of disposable
t the agricultural public land for at
does not take effect as conveyance if
Philippine least 30 years prior to March unregistered, it is registration which is
s 28,1990 operative act of conveying land;
(filing • has paid real property taxes evidence of authority for ROD to
ended on the property while the same register
Dec. 31, has not been occupied by any 4. Fees to be paid by grantee
2000) person 5. After issuance of certificate of title, land is
• grant will be limited to 12 deemed registered land within the purview of
hectares only the Torrens system
• to have at least 1/5 of the
land broken and cultivated RESTRICTION ON ALIENATION/ ENCUMBRANCE
Citizens of within 5 years from the date of OF LANDS TITLED PURSUANT TO PATENTS:
the the award (public auction) 1. Lands under free patent or
Philippine • shall have established actual homestead patent is prohibited from being
s of lawful occupancy, cultivation, and alienated/encumbered, except if in favor of
age or improvement of at least 1/5 of the government, within 5 years from and
head of the land until the date of such after the issuance of the patent or grant.
the family final payment When lands are conveyed within that period,
may • for agricultural lands suitable
the owner-vendor, his widow or heirs, may
purchase for residential, commercial or
repurchase the same within five years from
Sales public industrial purposes, patent is
Paten agricultur issued only after:
conveyance, such right cannot be waived.
t al land of 1.) full payment of purchase Republic v. Heirs of Felipe Alejaga, Sr.,
not more price, and 393 SCRA 361 (2002)
than 12 2.) completion of the 2. Transfer or conveyance of any
hectares construction of permanent homestead after 5 years but before 25 years
improvements appropriate for after the issuance of the title without the
purpose for which the land is approval of the DENR Secretary
purchased (must be completed 3. Lands acquired under emancipation
within 18 months from date of patents issued to landless tenants and
award) farmers must not be alienated or
To any • does not own a home lot in encumbered within 10 years from issuance of
citizen of the municipality in which he the title
legal age resides 4. Conveyances and encumbrances
for • in good faith, established his made by persons belonging to the “non-
residential residence on a parcel of land of Christian tribes” may be made only when the
purposes public domain not needed for person making the conveyance or
public service encumbrance is able to read and understand
• not more than 1000 sq. m. the language in which the instrument or deed
• occupant must have is written. If illiterate, must be approved by
constructed his house on the the then Commissioner of Mindanao and Sulu
land and actually resided
therein
NATURE OF TITLE TO PUBLIC LANDS
• no public auction required
• not subject to any restriction
CONVEYED:
against encumbrance or
alienation 1. Indefeasible And Conclusive
Speci To Non- • Secretary of the DILG shall The certificate of title becomes indefeasible and
al Christian certify that the majority of the incontrovertible upon the expiration of one year
Paten Filipinos non-Christian inhabitants of from the date of the issuance of the order for the
t under the any given reservation have issuance of the patent. As such, the land cannot be
Public advanced sufficiently in the subject of a cadastral proceeding nor decreed
Land Act civilization to another person
 b.
In b.
absence of registration, title to public land is Newly discovered evidence:
not perfected and therefore not indefeasible Discovered after trial
In case of 2 titles obtained on same date, the not discovered earlier even with exercise of
one procured through a decree of registration is diligence
superior than patent issued by director of lands will probably alter judgment
c. Award of excessive damages, or insufficiency
2 titles procured by one person: one from of evidence to justify decision, or that the
homestead patent, and one from judicial decree decision is against the law
and sold to 2 different persons, the one who Appeal
bought it for value and in good faith and who by aggrieved party
registered first shall have preference Within 15 days from notice of judgment
To the CA by ordinary appeal; thence to SC by
A free patent obtained through fraud or petition for review
misrepresentation is void. Furthermore, the Relief from Judgment
one-year prescriptive period provided in the (Rule 38 § 2)
Public Land Act does not bar the State from By aggrieved party
asking for the reversion of property acquired Within 60 days from knowledge of, and 6 months
through such means. Once a patent is registered from, judgment
and the corresponding certificate of title issued, no new trial
the land covered by them ceases to be part of upon finality of judgment
the public domain and becomes private property.
indefeasibility of a title does not attach to titles Requisites:
secured by fraud and misrepresentation. Well- a. FAME, with affidavit of merit; in case of
settled is the doctrine that the registration of a extrinsic fraud, state that deprived of hearing
patent under the Torrens System does not by or prevented from appealing
itself vest title; it merely confirms the registrant’s b. After judgment
already existing one. Verily, registration under c. Person deprived of right is party to case
the Torrens System is not a mode of acquiring (applicant or oppositor)
ownership. Therefore, under Section 101 of Petition for Review of Registration Decree
Commonwealth Act No. 141, the State -- even (§ 32 PD1529)
after the lapse of one year -- may still bring an By aggrieved party, including person deprived of
action for the reversion to the public domain of opportunity to be heard
land that has been fraudulently granted to To be filed in same registration case
private individuals. Further, this indefeasibility Within 1 year after entry of decree of
cannot be a bar to an investigation by the State registration
as to how the title has been acquired, if the it will not prosper if transferred to innocent
purpose of the investigation is to determine purchaser for value
whether fraud has in fact been committed in
securing the title. Republic v. Heirs of Grounds:
Alejaga, [393 SCRA 361, 2002] a. actual or extrinsic fraud, committed outside
trial, preventing petitioner from presenting
4. REMEDIES his side
b. fatal infirmity in the decision for want of due
REMEDIES AVAILABLE TO AGGRIEVED PARTY process
IN REGISTRATION PROCEEDINGS c. lack of jurisdiction of the court
Motion to Lift/Set Aside order of default Requisites:
(Rule 9 § 3) a. Petitioner has a real and dominical right
By defaulted oppositor b. He has been deprived of such right
Before judgment c. Through actual or extrinsic fraud
Fraud, accident, mistake, excusable negligence d. The petition is filed within 1 year from the
(FAME) and with valid defense, under oath issuance of the decree
Motion for New Trial e. The property has not been passed on to an
(Rule 37) innocent purchaser for value (IPV)
By aggrieved party Action for
Within 15 days from receipt of judgment Reconveyance
(§96 PD 1529/ §102 Act 496)
Grounds (FAMINE): By aggrieved party, whose land was registered
a. FAME wrongly to another person
Before issuance of decree, or within/after 1 year
from entry
Available so long as property not yet passed to
IPV
action in personam
if based on fraud, it must be instituted within 4
years from the discovery of the fraud
if based on implied trust: it must be filed within
10 years from issuance of OCT,
if action brought by registered owner or his
children, co-heir, or plaintiff in possession:
imprescriptible
if based on expressed trust: imprescriptible
if based on void contract: imprescriptible
Action for Damages
By aggrieved party
After 1 year from decree and no reconveyance
possible due to IPV
Within 4 years from discovery of fraud (actual or
constructive)
Against person responsible for fraud
Requisites:
a. Person is wrongfully deprived of his land by
registration in name of another
b. No negligence on his part
c. Barred/ precluded from bringing an action
(after 1 year from decree)
d. Action for compensation has not prescribed
Action for Compensation from the
Assurance Fund
By person deprived of his land by reason of
operation of Torrens System, provided: no
negligence on his part and barred from
recovering land
Against person responsible for fraud, and ROD
and National Treasurer
Compensation: fair market value of land at
time of loss. Amount to be recovered not
limited to 500,000 which is maintained as
standing fund. If fund is not sufficient, National
Treasurer is authorized to make up for
deficiency from other funds available to
Treasury even if not appropriated.
Execution first against person responsible for
fraud; if insolvent, against national treasury.
Thereafter, the Government shall be
subrogated to the rights of plaintiff to go
against other parties or securities
Any court of competent jurisdiction: RTC in city
where property lies or resident of plaintiff
Requisites:
a. The aggrieved party sustained loss or
damage, or is deprived land or any estate or
interest therein
b. Such loss, damage or deprivation was
occasioned by the bringing of the land under
the operation of the Torrens system or arose
after the original registration of the land
c. The loss, damage or deprivation was due
to: fraud, or any error, omission, mistake, or
misdescription in any certificate of title or in
any entry or memorandum in the registration
book. (Loss or damage should not be due to
breach of trust or mistake in resurvey
resulting in expansion of area in certificate of
title.)
d. The aggrieved party was not negligent.
e. He is barred under the provisions of PD
1529 or under the provisions of any law from
recovering such land;
f. The action has not prescribed: must be
instituted within 6 years from the issuance of
the certificate of title (If plaintiff is minor,
insane or imprisoned, he has additional 2
years after disability is removed to file the
action.)
Cancellation Suits
By aggrieved party or the government
In case of double title: earlier title prevails,
unless procured by fraud or is jurisdictionally
flawed. The later title is void even if IPV derives
title therefrom
In case of non-registered land: to be filed by
the Sol-Gen for cancellation of title or reversion
to State)
Voiding or cancellation of OCT does not affect
derivative TCTs if their holders not given
opportunity to be heard and defend their title
Annulment of Judgment
May only be availed of when the ordinary
remedies of new trial, petition for relief, or
other appropriate remedies are no longer
available through no fault of the petitioner.
Linzag v. CA, [291 SCRA 304 , 1998]
Reversion Suit
The objective is the cancellation of the title and
the consequential reversion of the land to the
State
Grounds:
a. Violation of Sections 118, 120, 121 and
122 of the Public Land Act (ex. alienation
or sale of homestead executed within the
5 year prohibitory period)
b. When the land patented and titled is not
capable of registration
c. Failure of the grantee to comply with
conditions imposed by law to entitle him
to a patent or grant
d. When area is an expanded area
e. When the land is acquired in violation of
the Constitution (e.g. land acquired by an
 alien)
Indefeasibility of title, prescription, laches, and
estoppel do not bar reversion suits
Quieting of Title
(Article 476 of the new civil code)
By registered owner or person with an equitable
right or interest in the property. Mamadsul v.
Moson, [190 SCRA 82, 1990]
An ordinary civil case brought to remove clouds
on the title to real property or any interest
therein, by reason of any contract, record,
claim, encumbrance, or proceeding that is void,
voidable or unenforceable, and may be
prejudicial to said title
Quasi-in rem
If plaintiff is in possession, imprescriptible;
if not in possession, must be brought within 10
years from loss of possession
Criminal Action
(§ 116 Act 496)
The State may criminally prosecute for perjury
the party who obtains registration through
fraud, such as by stating false assertions in the
sworn answer required of applicants in
cadastral proceedings. People v. Cainglet, 16
SCRA 749 (1966)
MORE ON THE ASSURANCE FUND
Upon entry of certificate in name of owner or
TCT, ¼ of 1% based on assessed value of land
shall be paid to the ROD as a contribution to the
assurance fund. In case there is no assessment
yet, a sworn declaration of 2 disinterested
persons on the value of the land, subject to court
approval, is required.
This shall be in the custody of the National
Treasurer. It shall be invested until the principal
plus interest aggregates to 500,000. The excess
shall be paid to the Assurance Fund and be
included in the annual report of Treasurer to
Secretary of Budget.
PETITIONS AND MOTIONS AFTER ORIGINAL
REGISTRATION:
1. Lost Duplicate Certificate
a. Person in interest makes a
sworn statement regarding the loss or
destruction of the owner’s duplicate
certificate of title to be filed with ROD. If
statement is false, he can be charged with
the complex crime of estafa through
falsification of public document
b. File a petition for replacement of
lost or destroyed owner’s duplicate of OCT/
TCT in court for the issuance of new title
c. After notice and hearing, the
court is to order issuance of new title with a
memorandum that it is issued in place of lost
certificate (duplicate)
2. Adverse claim in registered land
Different from lis pendens:
Lis pendens has no expiration period but
adverse claim is only for 30 days.
Lis pendens is a notice that property is in
litigation while adverse claim signifies that
somebody is claiming better right
Recent Ruling: adverse claim can only be
removed upon court order, therefore, it is
considered to be the more permanent and
stable one as compared to lis pendens
3. Petition Seeking Surrender of Duplicate
Title
When a person in possession of the owner’s
duplicate certificate fails to surrender the same to
the ROD, a party in interest may file a petition in
the RTC to compel the surrender of such duplicate
title.
Grounds: registration pursuant to voluntary and
involuntary conveyances and issuance of a new
certificate and for purposes of amendment or
alteration
After hearing, the court may order issuance of a
new certificate and annul the old certificate
The new certificate shall contain an annotation
regarding the annulment of the old certificate
4. Amendment and Alteration of Certificate
of Title
A certificate of title entered in a registration book
cannot be altered, amended except in direct
proceeding in court (summary proceeding). A
court order is necessary to alter entries of such
registration books.
A petition for such purpose may be filed by the (a)
registered owner, or (b) other person having an
interest in the registered property, or (c) in proper
cases, the ROD with the approval of the LRA
Administrator
Grounds (CRIMENN):
1. New interest that does not appear on the
instrument have been created
2. Interest have been terminated or ceased
3. Omission or error was made in entering
certificate
4. Name of person on certificate has been
changed
5. Registered owner has married or
 registered as married and the marriage
has terminated
6. Corporation, which owned registered
land, has dissolved and has not conveyed
the property within 3 years after its
dissolution
7. When there is reasonable ground for
the amendment or alteration. What
corrections are permitted in title (which
does not include lands included in
original; technical description as long as
original decree of registration will not be
reopened and rights or interest of persons
not impaired; old survey was incorrect;
substitution of name of registered owner)
a. Alterations which do not impair
rights and
b. Alterations which impair rights:
with consent of all parties
c. Alterations to correct obvious
mistakes
5. Reconstitution of Original Certificate
of Title
The restoration of the instrument which is
supposed to have been lost or destroyed in its
original form and condition, under the custody of
ROD
Purpose: to have the same reproduced, after
proper proceedings, in the same form they were
when the loss or destruction occurred. Heirs of
Pedro Pinote v. Dulay, [187 SCRA 12, 1990]
The applicant should prove :
1. The loss or the destruction of the
title sought to be reconstituted
and
2. At the time the said title was lost
or destroyed, he was the
registered owner thereof
a. When reconstituted, the new title has
the same validity as old one
b. Kinds of Reconstitution:
a. Judicial
b. Administrative
JUDICIAL RECONSTITUTION
Process:
1. File a petition with the RTC (In rem
proceeding)
2. The court shall cause a NOTICE to
be PUBLISHED, POSTED and MAILED. Non-
compliance voids the proceeding as such
requirements are jurisdictional
3. When the court grants the
petition, it shall issue a corresponding
order to ROD.
Sources:
1. FOR OCT (in this order):
a. Owner’s duplicate of the
certificate of title
b. Co-owner’s, mortgagee’s
or lessee’s duplicate of said certificate
c. Certified copy of such
certificate, previously issued by the
ROD
d. Authenticated copy of the
decree of registration or patent, as the
case may be, which was the basis of the
certificate of title,
e. Deed of mortgage, lease,
or encumbrance containing description
of property covered by the certificate of
title and on file with the ROD, or an
authenticated copy thereof indicating
that its original had been registered
f. Any other document
which, in the judgment of the court, is
sufficient and proper basis for
reconstitution.
2. FOR TCT
a. Same as sources (a), (b),
and (c) for reconstitution of OCT
b. Deed of transfer or other
document containing description of
property covered by TCT and on file
with the ROD, or an authenticated copy
thereof indicating its original had been
registered and pursuant to which the
lost or destroyed certificate of title was
issued
c. Same as sources (e) and
(f) for reconstitution of OCT
ADMINISTRATIVE RECONSTITUTION
May be availed of only in case of:
1. Substantial loss or destruction
of the original land titles due to fire, flood,
or other force majeure as determined by
the Administrator of the LRA
2. The number of certificates of
title lost or damaged should be at least
10% of the total number in the possession
of the Office of the ROD
3. These lost or damaged titles
should not be less than 500, and
4. Petitioner must have the
duplicate copy of the certificate of title
(RA 6732)
Sources:
1. Owner’s duplicate of the certificate of
title
2. Co-owner’s, mortgagee’s, or lessee’s
duplicate of said certificate

Contents
a. That the owner’s duplicate
of the certificate of title had been lost
or destroyed
b. That no co-owner’s,
mortgagor’s, or lessee’s duplicate had
been issued
c. The location, area and
boundaries of the property
d. The nature and description
of the buildings or improvements, if
any, which do not belong to the owner
of the land, and the names and
addresses of the owners of such
buildings or improvements
e. The names and addresses of
the (a) occupants or persons in
possession of the property, (b) of the
owners of the adjoining properties
and (c) of all persons who may have
any interest in the property
f. A detailed description of the
encumbrance, if any, affecting the
property
g. A statement that no deeds
or other instruments affecting the
property have been presented for
registration, or, if there be any, the
registration thereof has not been
accomplished, as yet
NOTE:
The law provides for retroactive application
thereof to cases 15 years immediately preceding
1989
When the duplicate title of the landowner is lost,
the proper petition is not reconstitution of title,
but one filed with the court for issuance of new
title in lieu of the lost copy
PUBLICATION, MAILING AND POSTING IN
PETITIONS FOR RECONSTITUTION OF TITLE:
Notice shall be PUBLISHED twice in successive
issues of the Official Gazette,
Must be POSTED on the main entrance of the
provincial building and of the municipal building
of the municipality or city where the land is
situated, and
Must be SENT BY REGISTERED MAIL or
otherwise, at the expense of the petitioner, to
every person named in said notice (actual
occupants and adjacent owners).
PUBLICATION, POSTING AND SENDING BY MAIL
should be done at least 30 days prior to date of
hearing. These notice requirements are mandatory
and jurisdictional. Non-compliance voids the
proceeding.
The publication of the petition ,the service of the
notice of hearing to the adjoining owners and
actual occupants of the land, as well as posting of
the notices are mandatory and jurisdictional
requisites… If an order of reconstitution is issued
without any previous publication, such order of
reconstitution is null and void. Even the publication
of the notice of hearing in a newspaper of general
circulation like the Manila Daily Bulletin, is not a
substantial compliance with the law because
Section 13 specifies publication in the OG and does
not provide for any alternative medium or manner
of publication. MWSS v. Sison, [124 SCRA 394,
1983]
Notice must be actually sent or delivered to parties
affected by the petition for reconstitution. The
order of reconstitution issued without compliance
with the said requirement never becomes final - it
was null and void. Manila Railroad v. Moya,
[215 Phil 593, 1984]
Service of notice of the petition for reconstitution
filed under RA 26 to the occupants of the property,
owners of the adjoining properties, and all persons
who may have any interest in the property is NOT
REQUIRED if the petition is based on the owner’s
duplicate certificate of title or on that of the co-
owner’s, mortgagee’s, or lessee’s. Sections 9 and
10 requires that 30 days before the hearing (1) a
notice be published in 2 successive issues of the
OG at the expense of the petitioner, and (2) such
notice be posted at the main entrances of the
provincial building and of the municipal hall where
the property is located. The notice shall state the
following: (1) the number of the certificate of title,
(2) the name of the registered owner, (3) the
names of the interested parties appearing in the
reconstituted certificate of title, (4) the location of
the property, and (5) the date on which all persons
having an interest in the property must appear and
file such claims as they may have. Puzon v. Sta.
Lucia, [353 SCRA 699, 2001]
The failure to meet any of the necessary
publication, notice of hearing and mailing
requirements did not vest jurisdiction of the case to
the court. Thus, the judgment rendered by the RTC
regarding the reconstitution of title is void.
Republic v. Sanchez [G.R. No. 146081, July
17, 2006]
When the owner’s duplicate certificate of title has
not been lost, but is in fact in the possession of
another person, then the reconstituted certificate
is
void, because the court that rendered the to register such documents
decision had no jurisdiction. Consequently, the 2. It is only the act of registering the
issuance of TCT No. T-17993 is also void, as it instrument in the ROD of the province or
emanated from the void in Zaldivar’s name. The city where the land lies which is the
indefeasibility of a Torrens title does not apply operative act that conveys ownership or
where fraud attended the issuance of the title, affects the land insofar as third persons
such as when it was based on void documents. are concerned.
Feliciano v. Zaldivar, [G.R. No. 162593, 3. The act of registration creates a
September 26, 2006] constructive notice to the whole world of
such voluntary or involuntary instrument
6. Registration of Transaction evidenced or court writ or process.
by lost document
ROD is forbidden to effect registration of lost or VOLUNTARY INVOLUNTARY
destroyed documents DEALINGS DEALINGS
Refer to deeds, Refer to such writ or
Steps by interested parties: instruments, or order or process issued
1. Procure an authenticated copy of lost or documents which are by a court of record
destroyed instrument results of the free and affecting registered land
2. Secure an order from court voluntary acts of the which by law should be
parties thereto registered to be
OFFENSES IN LAND REGISTRATION: effective, and also to
1. Larceny such instruments which
2. Perjury: false statement under oath are not the willful acts of
3. Fraudulent procurement of certificate the registered owner and
4. Forgery which may have been
a. Forging of seal in ROD, name, signature executed even without
or handwriting of any officer of court of his knowledge or against
ROD his consent
b. Fraudulent stamping or assistance in • Sale • Attachment
stamping • Real property • Injunction
c. Forging of handwriting, signature of mortgage • Mandamus
persons authorized to sign • Lease • Sale on execution of
d. Use of any document which an • Pacto de retro sale judgment or sales for
impression of the seal of the ROD is • Extra-judicial taxes
forged settlement • Adverse claims
5. Fraudulent sale: sale of mortgaged property • Free • Notice of lis pendens
under the misrepresentation that it is not patent/homestead
encumbered; deceitful disposition of • Powers of attorney
property as free from encumbrance • Trusts
An innocent Entry thereof in the day
F. SUBSEQUENT REGISTRATION purchaser for value of book of the ROD is
registered land sufficient notice to all
SUBSEQUENT REGISTRATION becomes the persons even if the
Where incidental matters after original registered owner the owner’s duplicate
registration may be brought before the land moment he presents certificate of title is not
registration court by way of motion or petition and files a duly presented to the ROD
filed by the registered owner or a party in notarized and valid
interest. deed of sale and the
same is entered in the
Rules as to the necessity and effects of day book and at the
registration in general same time he
1. Except a will that purports to convey or surrenders or
affect a registered land, the mere presents the owner’s
execution of the deeds of sale, duplicate certificate
mortgage, or lease or other voluntary of title covering the
documents serve only 2 purposes: land sold and pays
a. as a contract between the parties the registration fees
thereto, and Need to present title No presentation
b. as evidence of authority to the ROD to record the deed in required; annotation in
registry & to make entry book is sufficient
memorandum on title
1. VOLUNTARY DEALINGS
Operative Act: registration by owner, if deed is
not registered, is binding only between parties
General Rule – MIRROR DOCTRINE: Where
there is nothing on the certificate of title to
indicate any cloud or vice in the ownership of the
property, or any encumbrance thereon, the
purchaser is not required to explore further than
what the Torrens title upon its face indicates in
quest for any hidden defect or inchoate right that
may defeat his right thereto. Fule v. Legare,[ 7
SCRA 351, 1963]
Every person dealing with registered land may
safely rely on the correctness of the certificate of
title issued therefore Even if a decree in a
registration proceeding is infected with nullity,
still, an innocent purchaser for value relying on a
Torrens title issued in pursuance thereof is
protected. Cruz v. CA & Suzara, [281 SCRA
491, 1997]
Although generally a forged or fraudulent deed is
a nullity and conveys no title, however, there are
instances where such a fraudulent document
may become the root of a valid title. One such
instance is where the certificate of title was
already transferred from the name of the true
owner to the forger, and while it remained that
way, the land was subsequently sold to an
innocent purchaser. Fule v. Legare, [7 SCRA
351, 1963]
Exceptions – (BOB-MILK)
1. Where the purchaser or mortgagee is a
bank/financing institution, the general rule
that a purchaser or mortgagee of the land
is not required to look further than what
appears on the face of the title does not
apply. Dela Merced v. GSIS, [365 SCRA
1, 2001]
2. The ruling in Fule v. Legare cannot be
applied where the owner still holds a valid
and existing certificate of title covering the
same property because the law protects
the lawful holder of a registered title over
the transfer of a vendor bereft of any
transmissible right. Tomas v. Tomas, [98
SCRA 280, 1980]
3. Purchaser in bad faith. Egeo v. CA, [174
SCRA 484, 1989]
4. Where a person buys land not from the
registered owner but from one whose rights
to the land has been merely annotated on
the certificate of title. Quiniano v. CA, [39
SCRA 221, 1971]
5. Sufficiently strong indications to impel closer
inquiry into the location, boundaries, and
condition of the lot. Francisco v. CA, [153
SCRA 330, 1987]
Person’s legal interest cannot raise this exception
Principle of caveat emptor simply requires the
purchaser of real property to be aware of the
alleged title of the vendor such that one who buys
without checking the vendor's title takes all the
risks and losses consequent to such failure. While a
buyer of registered land need not go beyond its
certificate of title, the buyer is obliged to
investigate or inspect the property sold to him
when there are circumstances that would put him
on guard, such as the presence of occupants other
than the registered owner. This does not apply in
this case. D’Oro Land v. Claunan,[ 516 SCRA
681, 2007]
6. Purchases land with a certificate of title
containing a notice of lis pendens
7. Purchaser had full knowledge of flaws and
defects of the title. Bernales v. IAC, [166
SCRA 519, 1988]
Process of Registration: (Generally)
1. File the instrument creating or transferring
the interest and the certificate of title with
ROD, including:
a. Owner’s duplicate
b. Payment of fees and documentary stamp
tax
c. Evidence of full payment of real estate
tax
d. Document of transfer: 1 additional copy
for city/provincial assessor
2. ROD shall make a memorandum on the
certificate of title, signed by him
3. Issuance of the TCT
Registration of Real Property Mortgage
1. Execution of deed in a form sufficient in law
(public instrument)
2. Registration with ROD where the land lies
a. Present deed of mortgage together with
b. Owner’s Duplicate and affidavit of good
faith
c. Payment of fees
d. ROD shall enter upon original certificate of
title and upon duplicate a memorandum
(date, time of filing, signature, file number
assigned to deed)
e. ROD to note on the deed the date and time
 of filing, and reference to volume and
page of the registration book in which it
was registered
3. No duplicate need be issued
Registration of Chattel Mortgage
1. Execution of document
2. Present the document together with affidavit
of good faith
3. Payment of fees
4. ROD enters in Day Book in strict order of their
presentation chattel mortgages and other
instruments relating thereto (primary
process)
5. ROD thereafter enters in a more detailed
form the essential contents of the instrument
in the Chattel Mortgage Register
(complementary process)
Effects of Registration
1. Creates a lien that attaches to the property in
favor of the mortgagee
2. Constructive notice of his interest in the
property to the whole world
Effects of Failure to Register
*1. Valid between parties but void against 3rd
persons
*2. If instead of registration, it is delivered, it
shall be a pledge and not a chattel mortgage
(if no chattel mortgage deed executed)
*3. Actual knowledge is same effect as
registration
An Affidavit of Good Faith states that:
1. Mortgage is made to secure obligation
specified
2. That it is a valid and just obligation
3. That it is not entered into for purposes of
fraud
Effect of Absence of Affidavit of Good Faith
*4. Vitiates mortgage as against creditors and
subsequent encumbrancers
*5. Mortgage is not valid as between parties
*6. No need to be in public document
Registration of Lease
It is the lessee, not the lessor, who is required to
initiate the registration.
1. File with ROD the instrument creating
lease together with owner’s duplicate of
certificate of title
2. ROD to register by way of memorandum
upon certificate of title
3. No new certificate shall be issued
NOTE: When there is prohibition in mortgaged
property as regards subsequent conveyances, etc.,
leasehold cannot be registered in the title thereof
Effects of Registration
1. Creates a real right but without prejudice to
rights of 3rd persons
2. If it is not registered, it is valid as between
parties but not to 3rd persons without notice
May Aliens Register Lease? Yes
1. May be granted temporary rights for residential
purposes
2. Limit: 25 years, renewable for another 25 years
Who Else May Register? Builder in Good Faith
Registration of Trust
1. Implied Trust: present a sworn statement
claiming interest by reason of an implied trust
with description of land, the name of the
registered owner and a reference to the
number of the certificate of title shall be
registered in ROD
2. Express Trust: instrument creating the trust
does not prohibit registration
Registration of Appointed Trustee by Court
*7. Certified copy of decree shall be presented to
ROD and surrender duplicate certificate
*8. Cancel duplicate & new certificate shall be
entered by ROD
2. INVOLUNTARY DEALINGS
Transactions affecting land in which cooperation of
registered owner is not needed, or even against his
will
1. Attachment
A writ issued at the institution or during progress of
an action commanding the sheriff to attach the
property, rights, credits, or effects of the defendant
to satisfy demands of the plaintiff
Kinds:
b. Preliminary
c. Garnishment
d. Levy on execution
Registration of Attachment/Other Liens
1. Copy of writ in order to preserve any lien,
right, or attachment upon registered land
may be filed with ROD where land lies,
containing number of certificate of title of
land to be affected or description of land
2. ROD to index attachment in names of both
plaintiff and defendant or name of person for
whom property is held or in whose name
stands in the records
 3.
If duplicate of certificate of title is not
presented:
a. ROD shall, within 36 hours, send notice
to registered owner by mail stating that
there has been registration and request
him to produce duplicate so that
memorandum may be made
b. If the owner neglects or refuses to
comply, the ROD shall report the matter
to the court
c. The court, after notice, shall enter an
order to owner to surrender certificate
at the time and place named therein
4. Although notice of attachment is not
noted in duplicate, notation in book of
entry of ROD produces the effect of
registration already.
Effects of Registration of Attachment
(REEA)
1. Creates real right
2. Has priority over execution sale
3. But between 2 attachments, one that is
registered earlier is preferred
4. If it is not registered, actual knowledge is the
same as registration
2. Execution Sale
To enforce a lien of any description on registered
land, any execution or affidavit to enforce such
lien shall be filed with ROD where land lies
Register in registration book & memorandum
upon proper certificate of title as adverse claim
or as an encumbrance
To determine preferential rights between 2 liens:
priority of registration of attachment
3. Tax Sale
Sale of land for collection of delinquent taxes and
penalties due the government
a. In personam (all persons
interested shall be notified so that they may
be given an opportunity to be heard)
b. Notice to be given to
delinquent tax payer at his last known
address
c. Publication of notice must
also be made in English, Spanish, and local
dialect, posted in a public and conspicuous
place in the place where the property is
situated and at the main entrance of the
provincial building
d. Sale cannot affect rights of
other lien holders unless given the right to
defend their rights: due process must be
strictly observed
e. Tax lien is superior to an
attachment
f. There is no need to register a
tax lien because it is automatically registered
once the tax accrues
g. But the sale of registered land
to foreclose a tax lien needs to be registered
Procedure of Registration of Tax Sale
1. Officer’s return shall be submitted to the
ROD together with the owner’s duplicate title
2. Register in the registration book
3. Memorandum shall be entered in the
certificate as an adverse claim or
encumbrance
4. After the period of redemption has expired
and no redemption was made (2 years from
registration of auction sale), title must be
cancelled and a new title will be issued
5. Before the cancellation, notice shall be sent
to registered owner, with the directive that he
surrender title and show cause why it should
not be cancelled
4. Adverse Claim
A notice to third persons that someone is claiming
an interest on the property or has a better right
than the registered owner thereof. The disputed
land is subject to the outcome of the dispute.
Sajonas v. CA, [258 SCRA 79, 1996]
Claim is adverse when:
1. A claimant’s right or interest in the
registered land is adverse to the
registered owner;
2. Such right arose subsequent to date of
original registration
3. No other provision is made in the
Decree for the registration of such right
or claim (Sec. 70, PD 1529)
A mere money claim cannot be registered as an
adverse claim. Sanchez v. CA, [69 SCRA 327,
1976]
Actual knowledge is equivalent to registration of
adverse claim.
No 2nd adverse claim based on the same ground
may be registered by the same claimant.
Formal Requisites of an Adverse Claim for
Purposes of Registration (WNR)
a. Adverse claimant must state
the following in writing:
1. His alleged right or interest
2. How and under whom such alleged right
or interest is acquired
3. The description of the land in which the
right or interest is claimed
4. The certificate of title number
b. Such statement must be signed
 and sworn to before a notary public
c. Claimant shall state his
residence or place to which all notices may
be served upon him
NOTE: Noncompliance with said formal requisites
renders such adverse claim non-registrable and
ineffective.
PERIOD OF EFFECTIVITY; WHEN CANCELLED
The adverse claim shall be effective for a period
of 30 days from the date of registration and it
may be cancelled:
a. After the lapse of 30 days,
upon the filing by the party-in-interest
of a verified petition for such purpose
b. Before the lapse of said 30 days, upon
the filing by the claimant of a sworn
petition withdrawing his adverse claim
c. Before the lapse of the 30-day period,
when a party-in-interest files a petition
in the proper RTC for the cancellation of
the adverse claim and, after notice and
hearing, the court finds that the claim is
invalid. If the court also finds the claim
to be frivolous, it may fine the claimant
the amount of not less than 1,000
pesos nor more than 5,000 pesos, in its
discretion
For this purpose, the interested party must file
with the proper court a petition for cancellation
of adverse claim, and a hearing must also first be
conducted. The Register of Deeds cannot on its
own automatically cancel the adverse claim.
Diaz-Duarte v. Ong, [298 SCRA 388, 1998]
An adverse claim may exist concurrently with a
subsequent annotation of a notice of lis pendens.
Ty Sin Tei v. Dy Piao, [103 Phil 858, 1958]
When an adverse claim exists concurrently with a
notice of lis pendens, the notice of adverse claim
may be validly cancelled after the registration of
such notice, since the notice of lis pendens also
serves the purpose of the adverse claim.
Villaflor v. Juezan, [184 SCRA 315, 1990]
NOTICE OF LIS PENDENS
It merely creates a contingency and not a lien
The purpose of the notice of lis pendens is to
constructively advise, or warn all people who
deal with the property that they so deal with it at
their own risk, and whatever rights they may
acquire in the property in any voluntary
transaction are subject to the results of the
action, and may well be inferior and subordinate
to those which may be finally determined and
laid down therein. Heirs of Marasigan v. IAC,
[152 SCRA 253, 1987]
When Notice of Lis Pendeds is Proper:
(RQCPO)
1. To recover possession of real estate
2. To quiet title thereto
3. To remove clouds upon the title thereof
4. For partition, and
5. Any other proceeding of any kind in court
directly affecting the title to the land or the
use of occupation thereof or the building
thereon.
Effect of Registration:
1. Impossibility of alienating the property in
dispute during the pendency of the suit
2. It may still be alienated but the purchaser
is subject to the final outcome of pending suit
3. ROD is duty-bound to carry over notice of
lis pendens on all new titles to be issued
Cancellation of Lis Pendens: (M-NUVD)
 Before final judgment, the court may order
the cancellation:
1. After showing that notice is only for
purpose of molesting an adverse party
2. When it is shown that it is not necessary to
protect the right of the party who caused the
registration thereof
3. When the consequences of the trial are
unnecessarily delaying the determination of
the case to the prejudice of the other party
4. ROD may also cancel by verified petition of
party who caused such registration
5. Deemed cancelled when certificate issued
by clerk of court stating manner of disposal
of proceeding is registered
When Lis Pendedns has no Application:
(P2LAR)
1. Preliminary attachment
2. Proceedings for the probate of wills
3. Levies on execution
4. Proceedings for administration of
estate of deceased persons and
5. Proceedings in which the only object
is the recovery of a money judgment
Other Parties Required to Register:
1. Assignee in Involuntary Proceeding for
Insolvency
It is the duty of the officer serving the notice to file
a copy of such notice to ROD where the property of
the debtor is located
Assignee elected or appointed by court shall be
entitled to entry of a new certificate of registered
land upon presentment of copy of assignment with
the bankrupt’s duplicate certificate of title

New certificate shall not state that it is entered

into by him as assignee or trustee in insolvency
proceedings

Judgment/Order Vacating Insolvency

Proceedings
a. order shall also be registered
b. Surrender title issued in name of assignee &
debtor shall be entitled to entry of new certificate

2. Government in Eminent Domain

a. Copy of judgment filed in ROD
which states description of property,
certificate number, interest expropriated,
nature of public use
b. Memorandum shall be made or
new certificate of title shall be issued
c. The government does not seek
registration of the land in its own name
d. The objective of the proceeding is
the adjudication of title to the lands
involved in the proceeding

G. DEALINGS WITH UNREGISTERED

LAND

SYSTEM OF REGISTRATION FOR

UNREGISTERED LANDS
a. System of registration for
unregistered land under the Torrens System
(Act 3344)
b. Before, it only covered voluntary dealings.
Now, it includes involuntary dealings
c. Effect: if prospective, it binds 3rd persons
after registration but yields to better rights
of 3rd person prior to registration (limited
effect to 3rd parties)
d. Reason: no strict investigation involved
e. Subsequent dealings are also valid if
recorded
f. ROD keeps day book and a register, and an
index system is also kept
g. Procedure:
1. Presentment of instrument dealing
in unregistered land
2. If found in order, register
3. If found defective, then registration is
refused writing his reason for refusal

FILING of APPLICATION
Survey plan approved by
Bureau of Lands
Muniments of title
ANNEX A: ORDINARY LAND REGISTRATION
SETTING OF DATE of
Initial Hearing by court
order
Set 45-90 days from order
Transmittal of documents
and evidence to LRA
PROCEEDINGS
NOTICE of Initial Hearing
Publication - 1x in OG
1x in newspaper
Mailing - to named parties
w/in (7) days from OG
Posting - (14) days at least
before initial hearing

INITIAL HEARING Filing of

JUDGMENT TRIAL OPPOSITION
same order as ordinary Order of Default vs. By any party
civil proceedings all who did not oppose claiming interest
On/ before
hearing OR time
Appeal
(15) days allowed by court

FINALITY OF JUDGMENT
Decree of finality
Instruction to LRA to issue
decree of registration
Entry of DECREE OF OCT
REGISTRATION in LRA Transcription of the
Copy sent to Registrar of decree and issuance of
Deeds the OCT
 CADASTRAL STATE FILES
HEARING JUDGMENT DECREE
SURVEY PETITION

President Geodetic Instituted by Dir. ANSWER to Same as ordinary land reg.

orders Dir. Of Engineer/ of Lands Petition proceedings
Lands to cause employees of (represented by Any claimant
cadastral survey Bureau of Sol-Gen) files answer
Lands inform Containing: (partakes of an
occupants/ technical action to
persons description recover) on/ Appeal
NOTICE of claiming survey plan before hearing
Survey to interest OR time allowed Court may
by court issue writ of
persons
appearing to Persons NOTICE of possession
claim interest claiming Initial Hearing or order
interest to parties demolition
Publication – cooperate w/ appearing to have
1x in OG Engineer re: interest and
Mailing boundaries adjoining owners
Posting MOTION TO
Publication – 2x
in OG
DISMISS ANNEX B:
If land covered CADASTRAL
(successive
prior OCT REGISTRATION
issues)
pursuant to land
Mailing
patent
PROCEEDINGS
Posting
if barred by res
judicata
 O. TORTS
=================================
TOPICS UNDER THE SYLLABUS
I. Principles
A. Abuse of right; elements
B. Unjust enrichment
C. Liability without fault
D. Acts contrary to law
E. Acts contrary to morals
II. Classification of Torts
A. According to manner of
commission: intentional, negligent
and strict liability
B. According to scope: general or
specific
=================================
I. PRINCIPLES
Art. 2176. Whoever by act or omission causes
damage to another, there being fault or
negligence, is obliged to pay for the damage
done. Such fault or negligence, if there is no pre-
existing contractual relation between the
parties, is called a quasi-delict and is governed
by the provisions of this Chapter. (1902a)
ELEMENTS OF QUASI DELICT/TORTS:
1. Act or omission
2. Damage or injury is caused to another
3. Fault or negligence is present
4. There is no pre-existing contractual
relations between the parties
5. Causal connection between damage
done and act/omission
NEGLIGENCE
The omission of that degree of diligence which is
required by the nature of the obligation and
corresponding to the circumstances of the
persons, time and place. (Art. 1173, NCC)
KINDS OF NEGLIGENCE
1. Quasi delict (Art. 2176 NCC)
2. Criminal negligence (Art. 356 RPC)
3. Contractual negligence (NCC provisions on
contracts particularly Arts. 1170 to 1174)
ABUSE OF RIGHTS (ART 19)
1. There is a legal right or duty
2. The right or duty is exercised in bad faith
3. For the sole intent of prejudicing or injuring
another
 Common element under Articles 19 and
21: the act must be intentional
CIVIL LAW REVIEWER
 An action can only prosper when
damage, material or otherwise, was
suffered by the plaintiff. An action based
on Articles 19-21 will be dismissed if the
plaintiff merely seeks “recognition”
 A defendant may likewise be guilty of
tort under Articles 19-21 even if he acted
in good faith. Here, liability to pay moral
damages may not be imposed on the
defendant who acted in good faith.
GENERAL SANCTION (ART. 20)
 For all other provisions of law which do
not especially provide their own sanction
 In the exercise of his legal right or duty
 Willfully or negligently causes damage to
another
 Article 20 does not distinguish, the act
may be done either willfully or
negligently
CONTRA BONUS MORES (ART 21)
1. There is an act which is legal
2. But which is contrary to morals, good
custom, public order or public policy
3. And it is done with intent to injure
Damages are recoverable even if no
positive law has been violated
UNJUST ENRICHMENT
ELEMENTS:
a. That a person is benefited
without a valid basis or justification, and
b. That such benefit is derived at
another’s expense or damage.
CONCEPT OF VICARIOUS LIABILITY
A person who himself is not guilty of negligence
is made liable for the conduct of another
II. CLASSIFICATION OF TORTS
COMISSION OF TORTS
1. INTENTIONAL (DELICT): Every person
criminally liable for a felony is also civilly liable.
NOTE: QUASI DELICT includes acts done
through FAULT.
2. NEGLIGENT (QIUASI DELICT): Whoever by
act or omission causes damage to another,
there being fault or negligence, is obliged to pay
for the damage done. Such fault or negligence,
if there is no pre-existing contractual relation
between the parties.
Page 52 of 383
3.
STRICT LIABILITY: Persons Expressly Made speaking, the rules governing the liability of a
Liable By Law Even without Fault principal or master for a tort committed by an
agent or servant are the same whether the
ACCORDING TO SCOPE principal or master be a natural person or a
GENERAL TORTS: Covered by Art. 2176 on corporation, and whether the servant or agent
Quasi-Delict be a natural or artificial person. All of the
authorities agree that a principal or master is
SPECIFIC TORTS: These are those found in liable for every tort which he expressly directs or
specific provisions of law, including the Chapter authorizes, and this is just as true of a
on Human Relations, Common Carriers, etc. corporation as of a natural person, A corporation
================================= is liable, therefore, whenever a tortious act is
TOPICS UNDER THE SYLLABUS committed by an officer or agent under express
direction or authority from the stockholders or
members acting as a body, or, generally, from
III. The Tortfeasor the directors as the governing body.
A. The direct tortfeasor
(1) Natural persons PERSONS VICARIOUSLY LIABLE – the
(2) Juridical persons obligation imposed in 2176 is demandable not
B. Persons made responsible for only for one’s own act or omission but also for
others those persons for whom one is responsible (art
2180).
(1) In General VICARIOUS LIABILITY
(a) Quasi-delicts under Article – A person who himself is not guilty of
2180, how interpreted – negligence is made liable for the conduct of
Family Code, Arts. 218-219, another
221
(b) Indirect liability for NOTE: Vicarious liability is not governed by the
doctrine of respondeat superior. Employers or
intentional acts
parents are made liable not only because of the
(c) Presumption of negligence on negligent or wrongful act of the person for whom
persons indirectly responsible they are responsible but also because of their
(d) Nature of liability; joint or own negligence (i.e. liability is imposed on the
solidary? employer because he failed to exercise due
(2) In Particular diligence in the selection and supervision of his
employees)
(a) Parents
Whenever an employee’s negligence causes
(b) Guardian damage or injury to another, there instantly
(c) Owners and managers of arises a presumption juris tantum that the
establishments and employer failed to exercise diligentissimi patris
enterprises families in the selection (culpa in eligiendo) or
(d) Employers supervision (culpa in vigilando) of its employees.
(e) State To avoid liability for a quasi-delict committed by
its employee, an employer must overcome the
(f) Teachers and heads of presumption by presenting convincing proof that
establishments of arts and he exercised the care and diligence of a good
trades father of a family in the selection and
C. Joint tortfeasors (Art. 2194, Civil supervision of his employee
Code)
EXCEPTION: The doctrine of respondeat
=================================
superior is applicable in:
a. Liability of employers under Article 103
III. TORTFEASOR of the RPC
TORTFEASOR - Whoever by act or omission b. Liability of a partnership for the tort
causes damage to another, there being no fault committed by a partner
or negligence is obliged to pay for the damage
done (art 2176). WHO ARE THE PERSONS VICARIOUSLY
LIABLE:
CORPORATE TORTFEASOR
A corporation is civilly liable in the same manner
as natural persons for torts, because "generally

CIVIL LAW REVIEWER Page 53 of 383

 1. PARENTS - The
father, and in case of his death or incapacity,
the mother are responsible for damage
caused by minor children who live in their
company.
Father and Mother shall jointly exercise
parental authority over common children. In
case of disagreement, father's decision shall
prevail (Art. 211).
NOTE: Persons liable for the act of minors
other than parents:
a. Those exercising substitute parental
authority
b. Surviving grandparents
c. Oldest sibling, over 21 years old
unless unfit or unqualified
d. Child’s actual custodian, over 21
years old unless unfit or disqualified
2. GUARDIANS - principle of loco parentis (stand in place of
Guardians are liable for damages caused by
the minor or incapacitated persons who are
under their authority and who live in their
company.
3. OWNERS & teachers so that there can be custody over
MANAGERS OF ESTABLISHMENT/
ENTERPRISE - Owners & managers of
establishment or enterprise are responsible
for damages caused by their employees who
are:
o in the service of the branches in which
the latter are employed OR
o in occasion of their function
4. EMPLOYERS - case where the tortfeasor is a teacher, an
Employers shall be liable for damages
caused by their:
o employees and
o household helpers
who are acting w/in the scope of their
assigned task even though the former are
not engaged in any business or industry
(unlike in RPC – subsidiary liability of
employer attaches in case of insolvency of
employer for as long as the employer is
engaged in business/industry)
DEFENSES AVAILABLE TO EMPLOYERS:
o exercise of due diligence ins election
and supervision of employees
o act/omission was made outside
working hours and in violation of
company rules
5. STATE - The state is
responsible when it acts through a special
agent, but not when the same is caused by
CIVIL LAW REVIEWER
an official to whom task done properly
pertains in which case Art 2176 is applicable
6. SCHOOL
ADMINISTRATOR, TEACHER - Teachers or
heads of establishments of arts & trades
shall be liable for damages caused by their
pupils, students & apprentices as long as
they remain in their custody even if they are
beyond the age of majority
NOTE: Art. 2180 applies to all including
academic institution per weight of
jurisprudence based on obiter of Justice JBL
Reyes in the Exconde case. Exconde v.
Capuno, [G.R. No. L-10134, June 29,
1957]
TEACHER’S LIABILITY:
The basis of the teacher’s liability is the
parents). So long as the students remain in
the protective and supervisory capacity of
teachers, the latter shall be deemed to have
custody over the students. It’s not necessary
for the students to board and live with the
them.
SCHOOL’S LIABILITY:
GENERAL RULE: The School itself is NOT
liable as party defendants
EXCEPTIONS: Art. 218 of Family Code –
schools are expressly made liable
 School is liable as an employer, as in the
employee of the school. St. Francis High
vs. CA, [194 SCRA 341]
 School has a contract with the student,
and thus, if the tortfeasor is a stranger, the
school is liable for the breach of the
contract. PSBA cs. CA, [205 SCRA 729]
FAMILY CODE PROVISIONS:
a. Family Code, Art 218 - The school,
its administration & teachers or the
individual, entity or institution engaged in
child care shall have special parental
authority & responsibility over the minor
child under their supervision, instruction or
custody (authority & responsibility shall
apply to all authorized activities whether
inside or outside the premises or the
school, entity or institution).
b. Family Code, Art 219 - Those given the
authority & responsibility shall be solidarily
Page 54 of 383
 & principally liable for damages caused by
act/omission of the unemancipated minor;
parents, judicial guardian or person
exercising substitute parental authority
over said minor shall be subsidiarily liable.
JOINT TORTFEASORS
Joint tortfeasors are all the persons who
command, instigate, promote, encourage,
advise, countenance, cooperate in, aid or abet
the commission of a tort, or who approve of it
after it is done, if done for their benefit.
The responsibility of two or more persons who
are liable for quasi-delict is solidary
SPECIAL RULES
1. CHILDREN
The action of the child will not necessarily be
judged according to the standard of an adult.
But if the minor is mature enough to understand
and appreciate the nature and consequences of
his actions, he will be considered negligent if he
fails to exercise due care and precaution in the
commission of such acts.
NOTE: Applying the provisions of the RPC,
Judge Sangco takes the view that a child
who is 9 or below is conclusively presumed
to be incapable of negligence. On the other
hand, if the child is above 9 years but below
15, there is a disputable presumption of
absence or negligence.
 Absence of negligence does not
necessarily mean absence of liability. A child
under 9 years can still be subsidiarily liable
with his property (Art. 100 RPC)
 Absence of negligence of the child may
not excuse the parents from their vicarious
liability under Art. 2180 NCC or Art. 221 FC.
2. PHYSICAL DISABILITY
GENERAL RULE: a weak or accident prone
person must come up to the standard of a
reasonable man, otherwise, he will be
considered as negligent
EXCEPTION: If the defect amounts to a real
disability, the standard of conduct is that of a
reasonable person under like disability.
3. EXPERTS AND PROFESSIONALS
They should exhibit the case and skill of one
who is ordinarily skilled in the particular field
that he is in; the rule regarding experts is
applicable not only to professionals who have
undergone formal education. (Fernando v. CA)
CIVIL LAW REVIEWER
4. NATURE OF ACTIVITY
There are activities which by nature impose
duties to exercise a higher degree of
diligence (ex. Banks, Common Carriers)
5. INTOXICATION
GENERAL RULE: Mere intoxication is not
negligence nor establishes want of ordinary
care. But it may be considered to prove
negligence.
EXCEPTION: Under Art. 2185 of the NCC it is
presumed that a person driving a motor vehicle
has been negligent if at the time of the mishap,
he was violating any traffic regulation
6. INSANITY
An insane person is exempt from liability.
However, by express provision of law, there may
be civil liability even when the perpetrator is
held to be exempt from criminal liability. The
insanity of a person does not excuse him or his
guardian from liability based on quasi delict (Art.
2180 and 2182 NCC)
=================================
TOPICS UNDER THE SYLLABUS
V. Proximate Cause
A. Concept
(1) Definition
(2) Test
(3) Distinguished from immediate
cause
(4) Distinguished from intervening
cause
(5) Distinguished from remote and
concurrent
B. Cause in fact
(1) Substantial factor test
(2) Concurrent causes
C. Legal cause
(1) Natural and probable
consequences
(2) Foreseeability
D. Efficient intervening cause
E. Cause vs. Condition
F. Last clear chance
=================================
V. PROXIMATE CAUSE
A. CONCEPT OF PROXIMATE CAUSE
PROXIMATE CAUSE is defined as that cause
which, in natural and continuous sequence,
unbroken by any efficient intervening cause,
Page 55 of 383
produces the injury, and without which the result Vda. de Bataclan v. Medina, [G.R. No. L-
would not have occurred. 10126, October 22, 1957]
More comprehensively, proximate cause is It may be that ordinarily, when a passenger
that cause acting first and producing the injury, bus overturns, and pins down a passenger,
either immediately or by setting other events in merely causing him physical injuries, if
motion, all constituting a natural and continuous through some event, unexpected and
chain of events, each having a close causal extraordinary, the overturned bus is set on
connection with its immediate predecessor, the fire, say, by lightning, or if some highwaymen
final event in the chain immediately effecting after looting the vehicle sets it on fire, and the
the injury as natural and probable result of the passenger is burned to death, one might still
cause which first acted, under such contend that the proximate cause of his death
circumstances that the person responsible for was the fire and not the overturning of the
the first event should, as an ordinarily prudent vehicle. But in the present case and under the
and intelligent person, have reasonable ground circumstances obtaining in the same, we do
to expect at the moment of his act or default not hesitate to hold that the proximate cause
that an injury to some person might probably of the death of Bataclan was the overturning
result therefrom. of the bus, this for the reason that when the
vehicle turned not only on its side but
completely on its back, the leaking of the
gasoline from the tank was not unnatural or
unexpected; that the coming of the men with
aBrinas
lightedv.torch
People wasofinthe
response to the call
Philippines, G.R.for L-
help,
30309, made not only25,
November by 1983.
the passengers, but
most probably, cause
The proximate by the of thedriver and is the
injury not
conductor
necessarilythemselves,
the immediate and cause
that because
of, or the it
was
causevery dark (about
nearest in time2:30
to, in theinjury.
the morning),
It is the
only
rescuers
when the had to carry
causes area independent
light with them; of and
each
coming
other thatas the
they did from
nearest is toaberural area with
charged wherethe
lanterns
disaster. and
So long flashlights
as therewere is a not available,
natural, direct
they
and had to use a torch,
continuous sequencethe most handy and
between the
available;
negligent and act what was more
the injury (sic) natural
that itthan can
that said rescuers
reasonably be said should
that innocently
but for the approach
act the
the overturned
injury could notvehicle to extendsuch
have occurred, the negligent
aid and
NECESSARY LINK effect rescue requested
act is the proximate cause of from them. and
the injury, In
other
whoeverwords, the coming therefore
is responsible of the men is with
liablethe for
torch
damages was to be expected
resulting and was
therefrom. One natural
who
sequence
negligentlyof creates
the overturning
a dangerousof the bus, the
condition
trapping of someliability
cannot escape of its passengers’
for the natural bus, theand
trapping
probable of some of its thereof,
consequences passengers and the
although the
call
act for
of aoutside help or an act of God for which
third person,
he is not responsible intervenes to precipitate
the loss.

NOTE: If plaintiff's negligence is only

contributory, he is considered partly
responsible only. Plaintiff may still recover from
defendant but the award may be reduced by the
courts in proportion to his own negligence

IMMEDIATE CAUSE
The cause nearest in time to, the injury.

INTERVENING CAUSE

CIVIL LAW REVIEWER Page 56 of 383

Phoenix Construction v. IAC, [G.R. L-
65295, March 10, 1987]
If the intervening cause is one which in
ordinary human experience is reasonably to be
anticipated or one which the defendant has
reason to anticipate under the particular
circumstances, the defendant may
negligence among other reasons, because of
failure to guard against it; or the defendant
may be negligent only for that reason. Thus
one who sets a fire may be required to foresee
that an ordinary, usual and customary wind
arising later wig spread it beyond the
defendant's own property, and therefore to
take precautions to prevent that event. The
person who leaves the combustible or
explosive material exposed in a public place
may foresee the risk of fire from some
independent source. ... In all of these cases
there is an intervening cause combining with
the defendant's conduct to produce the result
and in each case the defendant's negligence
consists in failure to protect the plaintiff against
that very risk.
REMOTE CAUSE
Manila Electric Co. v. Remoquillo, [G.R. No.
L-8828, May 18, 1956]
A prior and remote cause cannot be made the
be of an action if such remote cause did nothing
more than furnish the condition or give rise to
the occasion by which the injury was made
possible, if there intervened between such prior
or remote cause and the injury a distinct,
successive, unrelated, and efficient cause of the
injury, even though such injury would not have
happened but for such condition or occasion. If
no danger existed in the condition except
because of the independent cause, such
condition was not the proximate cause. And if
an independent negligent act or defective
condition sets into operation the instances,
which result in injury because of the prior
defective condition, such subsequent act or
condition is the proximate cause.
CONCURRENT CAUSE
Where several causes producing an injury are
concurrent and each is an efficient cause
without which the injury would not have
happened, the injury may be attributed to all or
any of the causes and recovery may be had
against any or all of the responsible persons
although under the circumstances of the case, it
may appear that one of them was more
culpable, and that the duty owed by them to the
injured person was not the same. No actor's
negligence ceases to be a proximate cause
merely because it does not exceed the
CIVIL LAW REVIEWER
negligence of other actors. Each wrongdoer is
responsible for the entire result and is liable as
though his acts were the sole cause of the injury.
B. CAUSE IN FACT
be ‘BUT FOR’ TEST
The (but for) test requires a plaintiff to establish
that the act complained of probably caused the
subsequent disability. NELSON V.
FIBREBOARD CORPORATION, [912 F.2d 469]
The test applied to determine whether negligent
conduct was the efficient, or proximate cause of
the injury or loss suffered by the claimant is
whether such conduct is a cause without which
the injury would not have taken place (which
test is frequently referred to as the "sine qua
non rule"), or is the efficient cause which set in
motion the chain of circumstances leading to the
injury. {Sangco, Philippine Law on Torts
and Damages, 1994)
SUBSTANTIAL FACTOR
It is the rule under the substantial factor test
that if the actor's conduct is a substantial
factor in bringing about harm to another, the
fact that the actor neither foresaw nor should
have foreseen the extent of the harm or the
manner in which it occurred does not prevent
him from being liable. Philippine Rabbit Bus
Lines v. IAC, [G.R. 66102, August 30, 1990]
CONCURRENT CAUSES
If one suffers damage as the proximate result of
the negligence of two others, and the damage
would not have occurred but for the negligence
of each of such parties, both are liable to the
person so injured. MENNE v. CELOTEX
CORPORATION, [861 F.2d 1453]
C. LEGAL CAUSE
TEST OF FORSEEABILITY
Where the particular harm was reasonably
foreseeable at the time of the defendant’s
misconduct, his act or omission is the legal
cause thereof. Foreseeability is the fundamental
test of the law of negligence. To be negligent,
the defendant must have acted or failed to act
in such a way that an ordinary reasonable man
would have realized that certain interests of
certain persons were unreasonably subjected to
a general but definite class of risk which made
the actor’s conduct negligent, it is obviously the
consequence for the actor must be held legally
responsible. Otherwise, the legal duty is entirely
defeated. Accordingly, the generalization may
Page 57 of 383
be formulated that all particular consequences,
that is, consequences which occur in a manner
which was reasonably foreseeable by the
defendant at the time of his misconduct are
legally caused by his breach of duty.
TEST OF NATURAL AND PROBABLE CAUSES
A natural consequence of an act is the
consequence which ordinarily follows it. A
probable consequence is one that is more likely
to follow than fail to follow its supposed cause
but it is need one be one which necessarily
follow such cause. (Sangco, Philippine Law
on Torts and Damages, 1994)
HINDSIGHT TEST
A party guilty of negligence or omission is
responsible for all the consequences which a
prudent and experienced party, fully acquainted
with all the circumstances which in fact exist,
whether they could have been ascertained by
reasonable diligence, or not, would have thought
at the time of the negligent act as reasonably
possible to follow, if they had been suggested to
his mind.
ORBIT TEST
If the foreseeable risk to plaintiff created a duty
which the defendant breached, liability is
imposed for any resulting injury within the orbit
or scope of such injury, it is not the unusual
nature of the act resulting in injury that is the
test of foreseeability, but whether the result of
the act is within the ambit of the hazards
covered by the duty imposed upon defendant.
D. EFFICIENT INTERVENING CAUSE
An independent intervening cause as one which
is so distinct as to sever the connection of cause
and effect between the negligent act and the
injury BARTELS v. CITY of WILLISTON, [629
F.2d 509]
If an independent cause intervenes, which is of
itself sufficient to produce the result, it is
regarded as proximate cause, and the originator
of the first cause is relieved from liability
MICHAEL v. U.S., [338 F.2d 219]
E. CAUSE/CONDITION
CIVIL LAW REVIEWER
Phoenix Construction v. IAC, G.R. L-65295,
[March 10, 1987]
Many courts have sought to distinguish
between the active "cause" of the harm and
the existing "conditions" upon which that cause
operated. If the defendant has created only a
passive static condition, which made the
damage possible, the defendant is said not to
be liable. But so far as the fact of causation is
concerned, in the sense of necessary
antecedents which have played an important
part in producing the result it is quite
impossible to distinguish between active forces
and passive situations, particularly since, as is
invariably the case, the latter are the result of
other active forces which have gone before.
The defendant who spills gasoline about the
premises creates a "condition," but the act may
be culpable because of the danger of fire.
When a spark ignites the gasoline, the
condition has done quite as much to bring
about the fire as the spark; and since that is
the very risk, which the defendant has created,
the defendant will not escape responsibility.
Even the lapse of a considerable time during
which the "condition" remains static will not
necessarily affect liability; one who digs a
trench in the highway may still be liable to
another who fans into it a month afterward.
"Cause" and "condition" still find occasional
mention in the decisions; but the distinction is
now almost entirely discredited. So far as it has
any validity at all, it must refer to the type of
case where the forces set in operation by the
defendant have come to rest in a position of
apparent safety, and some new force
intervenes. But even in such cases, it is not the
distinction between "cause" and "condition"
which is important but the nature of the risk
and the character of the intervening cause.
E. LAST CLEAR CHANCE
Canlas v. Court of Appeals, [G.R. 112160,
February 28, 2000]
In essence, the doctrine of last clear chance is
to the effect that where both parties are
negligent but the negligent act of one is
appreciably later in point of time than that of
the other, or where it is impossible to
determine whose fault or negligence brought
about the occurrence of the incident, the one
who had the last clear opportunity to avoid
the impending harm but failed to do so, is
chargeable with the consequences arising
therefrom.
Page 58 of 383
 Stated differently, the rule is that the (b) Interference with relations
antecedent negligence of a person does not B. Interference with rights to
preclude recovery of damages caused by the
persons and property
supervening negligence of the latter, who had
the last fair chance to prevent the impending (1) Intentional physical harms
harm by the exercise of due diligence. (a) General
(b) Violation of persons security,
================================= physical injuries (Art. 33, Civil Code)
TOPICS UNDER THE SYLLABUS (c) False imprisonment (illegal
VI. Legal Injury detention)
A. Concept (d) Trespass to land
B. Elements of right (e) Interference with personal
C. Violation of right or legal injury property
D. Classes of injury (2) Intentional non-physical harms
(1) Injury to persons (a) General
(2) Injury to property (b) Violation of personal dignity
(3) Injury to relations (c) Infliction of emotional
================================= distress
(d) Violation of privacy
VI. LEGAL INJURY (e) Disturbance of peace of mind
DAMAGE – the detriment, injury or loss which is (f) Malicious prosecution
occasioned by reason of fault of another in the
(g) Defamation
property or person
DAMAGES – the pecuniary compensation, (h) Fraud or misrepresentation
recompense or satisfaction for an injury (formerly deceit)
sustained, or as otherwise expressed, the (i) Seduction
pecuniary consequences which the law imposes (j) Unjust dismissal
for the breach of some duty or the violation of C. Interference with relations
some rights (1) General
DAMNUM ABSQUE INJURIA or Damage
without Injury – a person may have suffered
(a) Concept
physical hurt or injury, but for as long as no (b) Kinds
legal injury or wrong has been done, there is no (2) Family relations
liability (a) Alienation of affection
INJURY DAMAGE DAMAGES (b) Loss of consortium
Legal Loss, hurt or The (c) Criminal conversation
invasion of a harm which recompense (adultery)
legal right results from or
the injury compensatio
(3) Social relations
n awarded (a) Meddling with or disturbing
for the family relations
damage (b) Intriguing to cause another
suffered to be alienated from his friends
(4) Economic relations
(a) Interference with contractual
relations
(b) Unfair competition
================================= (5) Political relations
TOPICS UNDER THE SYLLABUS (a) Violation of right to suffrage
VII. Intentional Torts (NCC, Art. 32)
A. General (b) Violation of other political
(1) Concept rights (freedom of speech,
(2) Classes press, assembly and petition,
(a) Interference with persons etc.)
and property (6) Defenses

CIVIL LAW REVIEWER Page 59 of 383

 (a) Absence of element
(b) Privilege
(c) Prescription
(d) Waiver
(e) Force majeure
=================================
VI. INTERNATIONAL TORTS
1. BREACH OF A PROMISE TO MARRY
GENERAL RULE: Breach of a promise to marry
by itself is not actionable.
EXCEPTION: In cases where there is another act
independent of the breach of a promise to marry
which gives rise to liability
a. Cases where there was financial
damage
b. Social humiliation caused to one of
the parties
c. Where there was moral seduction
d. If the breach was done in a manner
that is clearly contrary to good
morals
 Moral seduction connotes the idea of
deceit, enticement, superior power or
abuse of confidence on the part of the
seducer to which the woman has yielded
for which the seducer can be held liable
for damages. Gashem Shookat Baksh
v. CA, [G.R. No. 97336, February 19,
1993]
 Sexual intercourse is not by itself a basis
for recovery but damages could be
awarded if the sexual intercourse is not a
product of voluntariness or mutual
desire. Constantino v. Mendez, [G.R.
NO. 57227, May 14, 1992]
2. SEDUCTION WITHOUT BREACH OF
PROMISE TO MARRY
 Seduction by itself, is also an act
contrary to morals, good customs and
public policy
 The defendant is liable if he employed
deceit, enticement, superior power or
abuse of confidence in successfully
having sexual intercourse with another
even if he satisfied his lust without
promising to marry the offended party
 It may not even matter that the plaintiff
and the defendant are of the same
gender
3. SEXUAL ASSAULT
 Defendant is liable for all forms of sexual
assault
CIVIL LAW REVIEWER
4. DESERTION BY A SPOUSE
 A spouse has the legal obligation to live
with his/her spouse. If a spouse does not
perform his/her duty to the other, he
may be liable for damages for such
omission because the same is contrary
to law, morals, good customs and public
policy.
5. TRESPASSES AND DEPRIVATION OF
PROPERTY
2 KINDS:
A. TRESPASS TO AND/OR
DEPRIVATION OF REAL PROPERTY
 Liability for damages under the RPC
and Art. 451 of the Civil Code
requires intent or bad faith
 A builder in good faith who acted
negligently may be held liable under
Art. 2176 NCC
 Art. 448 of the Civil Code in relation
to Art. 456 does not permit action for
damages where the builder, planter
or sower acted in good faith. The
landowner is limited to the options
given to him under article 448
B. TRESPASS TO AND/OR DEPRIVATION
OF PRIVATE PROPERTY
 In tort, trespass extends to all cases
where a person is deprived of his
personal property even in the
absence of criminal liability
 Examples: theft, robbery
 It may cover cases where the
defendant was deprived of personal
property for the purpose of obtaining
possession of real property. The
defendant who was landlord, was
held liable because he deprived the
plaintiffs, his tenants of water in
order to force them to vacate the lot
they were cultivating. Magbanua v.
IAC, [137 SCRA 352]
 The right to disconnect and deprive
the customer, who unreasonably fails
to pay his bills of electricity should
be exercised in accordance with the
law and rules. Example: If a company
disconnects the electricity service
without prior notice as required by
the rules, the company commits a
tort under Art. 21 NCC, Manila
Electric Co. v. CA, [G.R. No.
132539, July 11, 2001]
6. ABORTION AND WRONGFUL DEATH
Page 60 of 383
  Damages may be recovered by both
spouses if:
a.The abortion was cause through the
physician’s negligence or
b. Done intentionally without their
consent
NOTE: A doctor who performs an illegal
abortion is criminally liable under Art.
259 RPC
 Husband of a woman who voluntarily
procured her abortion may recover
damages from the physician who cause
the same on account of distress and
mental anguish attendant to the loss of
the unborn child and the disappointment
of his parental expectation. [Geluz v.
CA, 2 SCRA 80]
7. ILLEGAL DISMISSAL
 The right of the employer to dismiss an
employee should not be confused with
the manner in which the right is
exercised and its effects.
 If the dismissal was done anti-socially
and oppressively, the employer should
be deemed to have violated Art. 1701 of
the NCC (which prohibits acts of
oppression by either capital or labor
against the other) and Art. 21
 An employer may be held liable for
damages if the manner of dismissing is
contrary to morals good customs and
public policy.
8. MALICIOUS PROSECUTION
 An action for damages brought by one
against another whom a criminal
prosecution, civil suit, or other legal
proceeding has been instituted
maliciously and without probable cause,
after termination of such prosecution,
suit or proceeding in favor of the
defendant therein.
 The action which is terminated should be
one begun in malice, without probable
cause to believe that the charges can be
sustained
 STATUTORY BASIS: Art. 19-21, 2, 32,
33, 35, 2217, 2219(8) NCC
ELEMENTS:
a. The fact of the prosecution and the
further fact that the defendant was
himself the prosecutor; and that the
action was finally terminated with an
acquittal
CIVIL LAW REVIEWER
b. That in bringing the action, the
prosecutor acted without probable cause
c. The prosecutor was actuated or impelled
by legal malice
NOTE: Presence of probable cause signifies
absence of malice.
 Absence of malice signifies good faith on
the part of the defendant. Good faith
may even be based on mistake of law.
Acquittal presupposes that criminal
information is filed in court and final
judgment rendering dismissing the case.
Nevertheless, prior acquittal may include
dismissal by the prosecutor after
preliminary investigation. Globe
Mackay and Radio Corp v. CA, [G.R.
No. 81262, August 25, 1989]
9. PUBLIC HUMILIATION
 Such acts also constitute an offense
under Art. 359, RPC (Slander by Deed)
 A person can be held liable for damages
for slapping another in public. Patricio
v. Hon. Oscar Leviste, [G.R. No. L-
51832, April 26, 1989]
 A defendant may likewise be guilty of a
tort even if he acted in good faith if the
action has caused humiliation to another.
Grand Union Supermarket v. Espino,
[G.R. No. L-48250, December 28,
1979]
10. UNJUST ENRICHMENT
ELEMENTS:
a. That a person is benefited without a
valid basis or justification, and
b. That such benefit is derived at another’s
expense or damage.
11. OSTENTATIOUS DISPLAY OF WEALTH
 Thoughtless extravagance for pleasure
or display during a period of public want
or emergency
12. VIOLATION OF RIGHT OF PRIVACY AND
FAMILY RELATIONS
 The following acts though they may not
constitute a criminal offense, shall
produce a cause of action for damages,
prevention and other relief:
a. Prying into the privacy of
another's residence
b. Meddling with or disturbing the
private life or family relations of
another
c. Intriguing to cause another to
be alienated from his friends
d. Vexing or humiliating another
on account of his religious beliefs,
Page 61 of 383
 lowly station in life. Place of birth,
physical defect, or other personal
condition
13. DERELICTION OF OFFICIAL DUTY OF
PUBLIC OFFICERS
 May be brought by any person suffering from
material or moral loss because a public
servant refuses or neglects, without just
cause to perform his official duty (art 27).
REQUISITES:
a. Defendant is a public officer
charged with the performance of a
duty in favor of the plaintiff
b. 3perform such duty (ministerial)
c. Plaintiff sustained material or
moral loss as consequence of such
non-performance
d. The amount of such damages, if
material
14. ECONOMIC RELATIONS
A. UNFAIR COMPETITION
Unfair competition in agricultural,
commercial or industrial enterprises or in
labor through the use of force,
intimidation, deceit. Machination or other
unjust, oppressive or highhanded
method (Art 28)
B. INTERFERENCE
One becomes liable in an action for
damages for a nontrespassory invasion
of another's interest in the private use
and enjoyment of asset if
(a) the other has property rights and
privileges with respect to the use or
enjoyment interfered with,
(b) the invasion is substantial,
(c) the defendant's conduct is a legal
cause of the invasion, and
(d) the invasion is either intentional and
unreasonable or unintentional and
actionable under general negligence
rules. 7
ELEMENTS OF TORT INTERFERENCE :
(1) existence of a valid contract;
(2) knowledge on the part of the third
person of the existence of contract; and
(3) interference of the third person is
without legal justification or excuse. So
Ping Bun v. CA, [G.R. 120554,
September 21, 1999]
15. MALICIOUS PROSECUTION
ELEMENTS
CIVIL LAW REVIEWER
a. That the defendant was himself the
prosecutor/ he instigated its
commencement
b. That it finally terminates in his
acquittal
c. That in bringing it the prosecutor
acted without probable cause, and
d. That he was actuated by legal
malice, that is, by improper and
sinister motive
16. VIOLATION OF RIGHTS AND LIBERTIES
OF ANOTHER PERSON
 Any public officer or employee, or any
private individual, who directly or indirectly
obstructs, defeats, violates or in any manner
impedes or impairs any of the rights and
liberties (under Article 32 of the NCC) of
another person shall be liable to the latter
for damages.
17. NUISANCE
ELEMENTS
a. Any act, omission, establishment,
condition of property, or anything
else
b. Which:
 Injures or endangers the health or
safety to others, or
 Annoys or offends the senses, or
 Shocks, defies, or disregards
decency or morality, or
 Obstructs or interferes with the
free passage of any public highway
or streets, or any body of water, or
 Hinders or impairs use of property
KINDS
 Nuisance Per Se - denounced as
nuisance by common law or by statute
 Nuisance Per Accidens - those which are
in their nature not nuisances, but may
become so by reason of their locality,
surroundings, or the manner in which they
may be conducted, managed, etc.
 Public - affects a community or
neighborhood or any considerable number
of persons
 Private - one that is not included in the
foregoing definition; affect an individual or
a limited number of individuals only
REMEDIES AGAINST PUBLIC NUISANCES
 Prosecution under the RPC or any
local ordinance
 Civil action
 Abatement, without judicial
proceeding
Page 62 of 383
 REMEDIES AGAINST PRIVATE
NUISANCES
1. Civil Action
2. Abatement, without judicial
proceedings

WHO MAY AVAIL OF REMEDIES

 Public officers
 Private persons - if nuisance is
specially injurious to himself; the
ff. must be made:
a. Demand be first made upon owner or
possessor of the property to abate
nuisance
b. That such demand has been rejected
c. That the abatement be approved by
the district health officer and
executed with the assistance of local
police
d. That the value of destruction does
not exceed P3,000

DOCTRINE OF ATTRACTIVE NUISANCE –

Cases within the general rule that one is liable
for the injury resulting to another from
failure to exercise the degree of care
commensurate with the circumstances the
attractiveness of the premises or of the
dangerous instrumentality to children of
tender years is to be considered as an implied
invitation, which takes the children who
accepted it out of the category of a trespasser
and puts them in the category of invitees,
towards whom the owner of the premises or
instrumentality owes the duty of ordinary..

CIVIL LAW REVIEWER Page 63 of 383

================================= 3. Contractual negligence (NCC provisions
TOPICS UNDER THE SYLLABUS on contracts particularly Arts. 1170 to
VII. Negligence 1174)
A. Concept
B. Good father of a family or
NOTE:
reasonably prudent man  Failure of the court to make any
C. Standard of care pronouncement, favorable or unfavorable, as
(1) Civil Code, Art. 1173 to the civil liability of the accused amounts
(2) Emergency Rule to a reservation of the right to have the civil
D. Unreasonable risk of harm liability litigated and determined in a
E. Evidence separate action. The rules nowhere provide
F. Presumption of negligence that if the court fails to determine the civil
(1) Legal provisions liability it becomes no longer enforceable.
(2) Res ipsa loquitur Jarantilla v. CA, [171 SCRA 42]
G. Defenses  A quasi-delict is a separate legal
(1) Complete
institution under the Civil Code and is
(a) Absence of element entirely apart and independent from a delict
(b) Accident or fortuitous event or crime – a distinction exists between the
(c) Damnum absque injuria civil liability arising from a crime and the
(d) Authority of law responsibility for quasi-delicts or culpa extra-
(e) Assumption of risk contractual. Castillo v. CA, [176 SCRA
(f) Last clear chance 591]
(g) Prescription (Civil Code, Arts.
1144, 1146, and 1150) TESTS OF NEGLIGENCE
(h) Waiver  Did the defendant in doing the alleged
(i) Double recovery (Civil Code,
negligent act use the reasonable care and
Art. 2177)
caution which an ordinary prudent person
=================================
would have used in the same situation?
 If not, then he is guilty of
VII. NEGLIGENCE
negligence
ELEMENTS OF QUASI DELICT/TORTS:
1. Act or omission  Could a prudent man, in the case under
2. Damage or injury is caused to another consideration, foresee harm as a result of
3. Fault or negligence is present the course pursued?
4. There is no pre-existing contractual  If so, it as the duty of the actor to
relations between the parties take precautions to guard against harm
5. Causal connection between damage
done and act/omission

NEGLIGENCE - The omission of that degree of

diligence which is required by the nature of the
obligation and corresponding to the
circumstances of the persons, time and place

KINDS OF NEGLIGENCE
1. Quasi delict (Art. 2176 NCC)
2. Criminal negligence (Art. 356 RPC)

CIVIL LAW REVIEWER Page 64 of 383

DISTINGUISHED FROM OTHER SOURCES OF OBLIGATION:

CONTRACT QUASI DELICT

Vinculum Juris Contract Negligent act/ omission (culpa,
imprudence)
Proof Needed Preponderance of evidence Preponderance of evidence
Defense available Exercise of extraordinary diligence Exercise of diligence of a good father of a
(in contract of carriage), Force family in the selection and supervision of
Majeure employees
Pre-existing contract There is a pre-existing contract No pre-existing contract
Burden of proof Contractual party. Victim.
Prove the ff.: Prove the ff.:
1. existence of a contract 1.damage
2. breach 2. negligence
3.causal connection between negligence
and damage done

CONTRACT DELICT

Vinculum Juris Contract Act / omission committed by means of dolo

(deliberate, malicious, in bad faith)
Proof Needed Preponderance of Proof beyond reasonable doubt
evidence
Defense available Exercise of
extraordinary
diligence (in contract
of carriage), Force
Majeure
Pre-existing contract There is a pre-existing No pre-existing contract
contract
Burden of proof Contractual party. Prosecution. Accused is presumed innocent until
Prove the ff.: the contrary is proved.
1. existence of a
contract
2. breach
Liability of Employer Solidary Subsidiary

Reservation Requirement Civil aspect of the Civil aspect is Impliedly instituted with criminal
quasi-delict is action
impliedly instituted
with criminal action,
but under 2000
Crimpro Rules it is
independent and
separate
Effect of judgment of Not a bar to recover Not a bar to recover civil damages
acquittal in a criminal case civil damages EXCEPT
involving same when judgment
act/omission pronounces that the
negligence from
which damage arise is

CIVIL LAW REVIEWER Page 65 of 383

 non-existent

CIVIL LAW REVIEWER Page 66 of 383

CIRCUMSTANCES TO CONSIDER
1. Time
2. Place
3. Personal circumstances of the Actors
GOOD FATHER OF A FAMILY (pater familias)
 The only standard of conduct used in the
Philippines (Art. 1173 NCC)
 A reasonable man is deemed to have
knowledge of the facts that a man should be
expected to know based on ordinary human
experience.
 The law presumes or requires a man to possess
ordinary capacity to avoid harming his
neighbors unless a clear and manifest
incapacity is shown and the law does not hold
him liable for unintentional injury unless,
possessing such capacity, he might and ought
to have foreseen the danger. Corliss v. Manila
Railroad
 The law fixes no arbitrary age at which a minor
can be said to have the necessary capacity to
understand and appreciate the nature and
consequences of his acts. Taylor v. Meralco,
[16 Phil 8]
EMERGENCY RULE
Under this rule, one who suddenly finds himself in
a place of danger, and is required to act without
time to consider the best means that may be
adopted to avoid the impending danger, is not
guilty of negligence, if he fails to adopt what
subsequently and upon reflection may appear to
have been a better method, unless the danger in
which he finds himself is brought about by his own
negligence DELSAN Transport v. C&A
Construction, [G.R. 156034, October 1, 2003]
UNREASONABLE RISK OF HARM
Indeed, a higher degree of care is required of
someone who has in his possession or under his
control an instrumentality extremely dangerous in
character, such as dangerous weapons or
substances. Such person in possession or control of
dangerous instrumentalities has the duty to take
exceptional precautions to prevent any injury being
done thereby. Unlike the ordinary affairs of life or
business which involve little or no risk, a business
dealing with dangerous weapons requires the
exercise of a higher degree of care. Pacis v.
Morales, [G.R. 169467, February 25, 2010]
EVIDENCE
1. NEGLIGENCE - plaintiff must prove negligence
of defendant
Exceptions:
a. In cases where negligence is presumed or
imputed by law - this is only
rebuttable/presumption juris tantum
b. Principle of res ipsa loquitur (the thing
speaks for itself) - grounded on the difficulty in
proving thru competent evidence, public policy
considerations
2. DAMAGE / INJURY
3. CAUSAL CONNECTION BETWEEN
NEGLIGENCE AND DAMAGE – Defendant’s
negligence must be the proximate cause of the
injury sustained by the plaintiff to enable plaintiff
to recover. Thus, if plaintiff’s own conduct is the
cause of the injury there can be no recovery.
NOTE: If plaintiff's negligence is only
contributory, he is considered partly responsible
only. Plaintiff may still recover from defendant but
the award may be reduced by the courts in
proportion to his own negligence
Proximate Cause - the adequate and efficient
cause which in the natural order of events and
under the particular circumstances surrounding
the case, would naturally produce the event
A person claiming damages for the negligence of
another has the burden of proving the existence of
such fault or negligence causative thereof. The
facts constitutive of negligence must be
affirmatively established by competent evidence.
Whosoever relies on negligence for his cause of
action has the burden in the first instance of
proving the existence of the same if contested,
otherwise his action must fail. PLDT v. CA, G.R.
L-57079, [September 29, 1989]
PRESUMPTION OF NEGLIGENCE
1. DRIVER PRESUMED NEGLIGENT BY LAW IF:
a. He had been found guilty or reckless
driving or violating traffic regulations at
least twice within the next preceding two
months.
b. at the time of the mishap, he was violating
any traffic regulation.
2. COMMON CARRIERS
Article 1733 of the New Civil Code mandates that
common carriers, by reason of the nature of their
business, should observe extraordinary diligence in
the vigilance over the goods they carry.
In case of loss of the goods, the common carrier is
presumed to have been at fault or to have acted
negligently.
In case of death of or injuries to passengers,
common carriers are presumed to have been at
fault or to have acted negligently
3. DEFENDANT IN POSSESSION OF
DANGEROUS WEAPONS OR SUBSTANCES,
SUCH AS FIREARMS AND POISON
There is prima facie presumption of negligence
on the part of defendant if death or injury
results from such possession
EXCEPTION: The possession or use thereof is
indispensable in his occupation or business
4. RES IPSA LOQUITOR
(The thing speaks for itself) - Grounded on the
difficulty in proving thru competent evidence,
public policy considerations.
Where the thing which causes injury is shown to be
under the management of the defendant, and the
accident is such as in the ordinary course of things
does not happen if those who have the
management use proper care, it affords reasonable
evidence, in the absence of an explanation by the
defendant, that the accident arose from want of
care. Layugan v. IAC, [G.R. 73998, November
14, 1998]
G. DEFENSES TO QUASI DELICT
1. CONTRIBUTORY NEGLIGENCE - the plaintiff
was also negligent together with the
defendant; to constitute a defense, proximate
cause of injury/damage must be the
negligence of defendant
2. CONCURRENT NEGLIGENCE – if both
parties are equally negligent the courts will
leave them as they are; there can be no
recovery
3. DOCTRINE OF LAST CLEAR CHANCE -
even though a person’s own acts may have
placed him in a position of peril and an injury
results, the injured is entitled to recover if the
defendant thru the exercise of reasonable
care and prudence might have avoided
injurious consequences to the plaintiff. This
defense is available only in an action by the
driver or owner of one vehicle against the
driver or owner of the other vehicle involved.
REQUISITES:
a. Plaintiff was in a position of
danger by his own negligence
b. Defendant knew of such position
of the plaintiff
c. Defendant had the last clear
chance to avoid the accident by exercise
of ordinary care but failed to exercise such
last clear chance and
d. Accident occurred as proximate
cause of such failure
 Who may invoke: Plaintiff
NOTE: The doctrine is inapplicable to
o Joint tortfeasors
o Defendants concurrently negligent
o As against 3rd persons
4. EMERGENCY RULE - "one who suddenly
finds himself in a place of danger, and
is required to act without time to consider
the best means that may be adopted to
avoid the impending danger, is not guilty of
negligence, if he fails to adopt what
subsequently and upon reflection may
appear to have been a better method,
unless the emergency in which he finds
himself is brought about by his own
negligence."
 An individual will nevertheless be subject to
liability if the emergency was brought
about by his own negligence. Valenzuela
v. CA, [253 SCRA 303]
NOTE: Applicable only to situations that are
sudden and unexpected such as to deprive
actor of all opportunity for deliberation
(absence of foreseeability); the action shall still
be judged by the standard of the ordinary
prudent man
FACTORS TO CONSIDER:
a. Gravity of the Harm to be avoided
b. Alternative courses of action - If the
alternative presented to the actor is too
costly, the harm that may result may still
 be considered unforeseeable to
reasonable man
c. Social Value and Utility of the Action -
The act which subjects an innocent person
to an unnecessary risk is a negligent act if
the risk outweighs the advantage accruing
to the actor and even to the innocent
person himself.
d. Person exposed to the risk - A higher
degree of diligence is required if the person
involved is a child.
5. DOCTRINE OF ASSUMPTION OF RISK –
Volenti non fit injuria / That to which a
person assents is not deemed in law an
injury.
REQUISITES:
a. Intentional exposure to a known
danger
b. One who voluntarily assumed the risk
of an injury from a known danger
cannot recover in an action for
negligence or an injury is incurred
c. Plaintiff’s acceptance of risk (by
law/contract/nature of obligation) has
erased defendant’s duty so that his
negligence is not a legal wrong
d. Applies to all known danger
6. DUE DILIGENCE - diligence required by
law/contract/ depends on circumstances of
persons, places, things
7. FORTUITOUS EVENT - no person shall be
responsible for those events which cannot
be foreseen, or which though foreseen were
inevitable
REQUISITES:
a. The cause of the unforeseen and
unexpected occurrence, or of the failure
of the debtor to comply with his obligation,
must be independent of the human will;
b. It must be impossible to foresee the
event which constitutes caso fortuito or if
it can be foreseen it must be impossible to
avoid
c. The occurrence must be such as to
render it impossible for the debtor to
fulfill his obligation in a normal manner
d. The obligor must be free from any
participation in the aggravation of the
injury resulting to the creditor.
a
GENERAL RULE: Fortuitous Event is a
complete defense and a person is not
liable if the cause of the damage is a
fortuitous event.
EXCEPTION: It is merely a partial
defense and the courts may mitigate the
damages if the loss would have resulted in
any event [Art. 2215(4) NCC]
NOTE: A person may still be liable for a
fortuitous event if such person made an
ASSUMPTION OF RISK.
8. DAMNUM ABSQUE INJURIA – a principle
that involves damage without injury,
therefore no liability is incurred; there is no
legal injury
9. LAW – specific provision of law
EXAMPLES
 The owner or lawful possessor of a thing
has the right to exclude any person from
the enjoyment and disposal thereof. For this
purpose, he may use such force as may be
reasonably necessary to repel or prevent an
actual or threatened unlawful physical
invasion or usurpation of his property (Art.
429 NCC)
 Article 11 of the Revised Penal Code (Act
3815):
i. Self-Defense
ii. Defense of Property
iii. Obedience to Lawful Order
iv. Lawful Exercise of a right or
duty
10. EXERCISE OF THE DILIGENCE OF A
GOOD FATHER OF A FAMILY IN THE
SELECTION AND SUPERVISION OF
EMPLOYEES
11. PRESCRIPTION
a. Injury to right of plaintiff/quasi delict
- 4 years
b. Defamation - 1 year
c. When no specific provision, must be
counted from the day they may be
brought
 12. PROSCRIPTION AGAINST DOUBLE
RECOVERY - Responsibility for fault or
negligence under quasi-delict is entirely
separate and distinct from civil action
arising from the RPC but plaintiff cannot
recover damages twice for same act or
omission of the defendant
13. WAIVER/ CONSENT
14. ACT OR OMISSION IS NOT THE
PROXIMATE CAUSE OF THE DAMAGE
15. OTHER GROUNDS – Motion To Dismiss:
a. Lack of jurisdiction over person of
defendant
b. Lack of jurisdiction over subject
matter
c. Venue improperly laid
d. Plaintiff has no legal capacity to sue
e. There is another action pending
between same parties for same cause
f. Cause of action is barred by prior
judgment /statute of limitations
g. Pleading asserting claim states no
cause of action
h. Claim set forth in pleading has been
paid, waived, abandoned, extinguished
i. Claim is unenforceable under the
provision of statute of fraud
j. Condition precedent for filing claim
has not been complied with
===============================
TOPICS UNDER THE SYLLABUS
IX. Special Liability in Particular
Activities
A. General
(1) Concept
B. Products Liability
(1) Manufacturers or processors
a. Elements
b. Consumer Act [RA 7394, Sec.
92-107, (Ch. 1)]
C. Nuisance (Civil Code, Arts. 694-
707)
(1) Nuisance per se and nuisance
per accidence
(2) Public nuisance and private
nuisance
(3) Attractive nuisance
D. Violation of constitutional rights
(1) Violation of civil liberties
E. Violation of rights committed by
public officers
F. Provinces, cities and municipalities
G. Owner of motor vehicle
H. Proprietor of building or structure
or thing
I. Head of family
X. Strict Liability
a. Animals
(1) Possessor and user of an animal
b. Nuisance (supra)
(1) Classes: Per se or per accidents;
Public or Private
(2) Easement against nuisance
c. Products Liability (supra)
(1) Consumer Act
===============================
IX. SPECIAL LIABILITY
STRICT LIABILITY: PERSONS EXPRESSLY MADE
LIABLE BY LAW EVEN WITHOUT FAULT
1. POSSESSOR OF AN ANIMAL
GENERAL RULE: The possessor of an animal or
whoever may make use of the same is
responsible for the damage which it may cause
EXCEPTIONS:
a. Force majeure
b. Fault of the injured/damaged person
2. OWNER OF MOTOR VEHICLE
 In motor vehicle mishap, the owner is
solidarily liable with the driver if:
a. he was in the vehicle, and
b. could have, through due diligence,
prevented the misfortune
 A Driver is Presumed Negligent by law If:
c. He had been found guilty or reckless
driving or violating traffic regulations at
least twice within the next preceding
two months.
d. at the time of the mishap, he was
violating any traffic regulation.
NOTE: Every owner of a motor vehicle shall file
with the proper government office a bond executed
by a government-controlled corporation or office,
to answer for damages to third persons.
3. MANUFACTURERS & PROCESSORS OF
FOODSTUFFS, DRINKS, TOILET ARTICLES
& SIMILAR GOODS
  They are liable for death and
injuries caused by any harmful substances
used although no contractual relation exists
between them and the consumers
CONSUMER ACT R.A. 7394
NOTE ON STIPULATIONS: The stipulation in a
contract of a clause preventing, exonerating or
reducing the obligation to indemnify for damages
effected, as provided for in this and in the
preceding Articles, is hereby prohibited, if there is
more than one person responsible for the cause of
the damage, they shall be jointly liable for the
redress established in the pertinent provisions of
this Act. However, if the damage is caused by a
component or part incorporated in the product or
service, its manufacturer, builder or importer and
the person who incorporated the component or
part are jointly liable.
SUMMARY OF LIABILITIES:
1. Any Filipino or foreign manufacturer, producer,
and any importer, shall be liable for redress,
independently of fault, design, manufacture,
construction, assembly and erection, formulas and
handling and making up, presentation or packing
of their products, as well as for the insufficient or
inadequate information on the use and hazards
thereof.
NOTE: The manufacturer, builder, producer or
importer shall not be held liable when it evidences:
a) that it did not place the product on the
market;
b) that although it did place the product on the
market such product has no defect;
c) that the consumer or a third party is solely at
fault.
NOTE: This liability applies to tradesman/seller
when the persons named above cannot be, or are
not identified, or when the tradesman did not
preserve the goods adequately.
2. The service supplier is liable for redress,
independently of fault, for damages caused to
consumers by defects relating to the rendering of
the services, as well as for insufficient or
inadequate information on the fruition and hazards
thereof.
3. The suppliers of durable or nondurable
consumer products are jointly liable for
imperfections in quality that render the products
unfit or inadequate for consumption for which they
are designed or decrease their value, and for those
resulting from inconsistency with the information
provided on the container, packaging, labels or
publicity messages/advertisement, with due regard
to the variations resulting from their nature, the
consumer being able to demand replacement to
the imperfect parts.
4. Suppliers are jointly liable for imperfections in
the quantity of the product when, in due regard for
variations inherent thereto, their net content is less
than that indicated on the container, packaging,
labeling or advertisement.
5. The service supplier is liable for any quality
imperfections that render the services improper for
consumption or decrease their value, and for those
resulting from inconsistency with the information
contained in the offer or advertisement.
6. When services are provided for the repair of
any product, the supplier shall be considered
implicitly bound to use adequate, new, original
replacement parts, or those that maintain the
manufacturer's technical specifications unless,
otherwise authorized, as regards to the latter by
the consumer.
NOTE: The supplier's ignorance of the quality
imperfections due to inadequacy of the products
and services does not exempt him from any
liability.
4. PROVINCES, CITIES & MUNICIPALITIES
 Shall be liable for damages for the death or
injuries suffered by any person by reason of the
defective condition of roads, streets, bridges,
public buildings, and other public works under
their control or supervision
5. PROPRIETOR OF BUILDING OR STRUCTURE
 Responsible for the damages resulting from any
of the ff.:
1. Total or partial collapse of building or
structure if due to lack of necessary
repairs
2. Explosion of machinery which has not
been taken cared of with due diligence, and
the inflammation of explosive substances
which have not been kept in a safe and
adequate place
3. By excessive smoke, which may be
harmful to persons or property
 4. By falling of trees situated at or near
highways or lanes, if not caused by force
majeure
5. By emanations from tubes, canals,
sewers or deposits of infectious matter,
constructed without precautions suitable to
the place
6. ENGINEER, ARCHITECT OR CONTRACTOR
 If damage of building or structure is caused
by defect in construction which happens
within 15 years from construction; action
must be brought within 10 years from
collapse
7. HEAD OF FAMILY THAT LIVES IN A BUILDING
OR PART THEREOF
 Liable for damages caused by things
thrown or falling from the same
8. NUISANCES
ELEMENTS
a. Any act, omission, establishment, condition
of property, or anything else
b. Which:
 Injures or endangers the health or safety
to others, or
 Annoys or offends the senses, or
 Shocks, defies, or disregards decency or
morality, or
 Obstructs or interferes with the free
passage of any public highway or streets,
or any body of water, or
 Hinders or impairs use of property
KINDS
 Nuisance Per Se - denounced as nuisance
by common law or by statute
 Nuisance Per Accidens - those which are in
their nature not nuisances, but may become
so by reason of their locality, surroundings, or
the manner in which they may be conducted,
managed, etc.
 Public - affects a community or
neighborhood or any considerable number of
persons
 Private - one that is not included in the
foregoing definition; affect an individual or a
limited number of individuals only
REMEDIES AGAINST PUBLIC NUISANCES
 Prosecution under the RPC or any local
ordinance
 Civil action
 Abatement, without judicial proceeding
REMEDIES AGAINST PRIVATE NUISANCES
 Civil Action
 Abatement, without judicial proceedings
WHO MAY AVAIL OF REMEDIES
 Public officers
 Private persons - if nuisance is
specially injurious to himself; the ff.
must be made:
a. Demand be first made upon owner or
possessor of the property to abate
nuisance
b. That such demand has been rejected
c. That the abatement be approved by
the district health officer and
executed with the assistance of local
police
d. That the value of destruction does
not exceed P3,000
DOCTRINE OF ATTRACTIVE NUISANCE – Cases
within the general rule that one is liable for the
injury resulting to another from failure to
exercise the degree of care commensurate with the
circumstances the attractiveness of the
premises or of the dangerous instrumentality to
children of tender years is to be considered as
an implied invitation, which takes the children who
accepted it out of the category of a trespasser and
puts them in the category of invitees, towards
whom the owner of the premises or instrumentality
owes the duty of ordinary.
9. PUBLIC OFFICERS
Art. 32 Any public officer or employee, or any
private individual, who directly or indirectly
obstructs, defeats, violates or in any manner
impedes or impairs any of the following rights and
liberties of another person shall be liable to the
latter for damages:
(1) Freedom of religion;
(2) Freedom of speech;
(3) Freedom to write for the press or to
maintain a periodical publication;
(4) Freedom from arbitrary or illegal detention;
(5) Freedom of suffrage;
(6) The right against deprivation of property
without due process of law;
 (7) The right to a just compensation when I. General Considerations
private property is taken for public use; A. Classification
(8) The right to the equal protection of the (1) Under Art. 2197 of the Civil Code
laws; (2) According to purpose
(9) The right to be secure in one's person, (3) According to manner of
house, papers, and effects against determination
unreasonable searches and seizures; (4) Special and ordinary
(10) The liberty of abode and of changing the II. Actual and Compensatory Damages
same; A. Concept
(11) The privacy of communication and B. Requisites
correspondence; (1) Alleged and proved with
(12) The right to become a member of certainty
associations or societies for purposes not (2) Not speculative
contrary to law; C. Component Elements
(13) The right to take part in a peaceable (1) Value of loss; unrealized profit
assembly to petition the Government for (2) Attorney’s fees and expenses of
redress of grievances; litigation
(14) The right to be a free from involuntary (3) Interest
servitude in any form; D. Extent or scope of actual damages
(15) The right of the accused against (1) In contracts and quasi-contracts
excessive bail; (2) In crimes and quasi-delicts
(16) The right of the accused to be heard by ===============================
himself and counsel, to be informed of the
X. DAMAGES
nature and cause of the accusation against A. GENERALLY
him, to have a speedy and public trial, to meet
the witnesses face to face, and to have DAMAGES MAY BE: (MENTAL)
compulsory process to secure the attendance 1. Actual or compensatory;
of witness in his behalf; 2. Moral;
(17) Freedom from being compelled to be a 3. Nominal;
witness against one's self, or from being 4. Temperate or moderate;
forced to confess guilt, or from being induced 5. Liquidated; or
by a promise of immunity or reward to make 6. Exemplary or corrective.
such confession, except when the person
confessing becomes a State witness; NOTE:
(18) Freedom from excessive fines, or cruel  A complaint for damages is a personal action
and unusual punishment, unless the same is  Proof of pecuniary loss is necessary to
imposed or inflicted in accordance with a successfully recover actual damages from the
statute which has not been judicially declared defendant. No proof of pecuniary loss is
unconstitutional; and necessary in case of moral, nominal,
(19) Freedom of access to the courts. temperate, liquidated or exemplary damages.
Art. 34 When a member of a city or municipal  The assessment of damages, except liquidated
police force refuses or fails to render aid or ones, is left to the discretion of the court
protection to any person in case of danger to life or according to the circumstances of each case.
property, such peace officer shall be primarily
liable for damages, and the city or municipality B. ACTUAL
shall be subsidiarily responsible therefor. The civil  Adequate compensation for the value of
action herein recognized shall be independent of loss suffered or profits which obligee failed to
any criminal proceedings, and a preponderance of obtain
evidence shall suffice to support such action.
=============================== EXCEPTIONS:
TOPICS UNDER THE SYLLABUS 1. Law
2. Stipulation
DAMAGES-BOOK II
KINDS OF ACTUAL OR COMPENSATORY
DAMAGES
a. General Damage - natural,
necessary and logical consequences of a
particular wrongful act which result in
injury; need not be specifically pleaded
because the law itself implies or presumes
that they resulted from the wrongful act
b. Special Damages - damages
which are the natural, but not the necessary
and inevitable result of the wrongful act.
(i.e., attorney’s fees)
REQUIREMENTS:
i. Need to be pleaded
ii. Pray for the relief that claim for loss be
granted
iii. Prove the loss
WHEN LOSS NEED NOT BE PROVED:
a. Liquidated damages previously
agreed upon; liquidated damages take the
place of actual damages except when
additional damages incurred
b. If damages other than actual are
sought
c. Loss is presumed (ex: loss if a child
or spouse)
d. Forfeiture of bonds in favor of the
government for the purpose of promoting
public interest or policy (ex: bond for
temporary stay of alien)
CONTRACTS AND QUASI-CONTRACTS
a. Damages in case of Good Faith
i. Natural and probable consequences
of breach of obligations
ii. Parties have foreseen or could have
reasonably foreseen at the time the
obligation was created
b. Damages in case of Bad Faith
i. It is sufficient that damages may be
reasonably attributed to the non-
performance of the obligation.
CRIMES AND QUASI-CRIMES
a. Defendant is liable for all damages
that are natural and probable
consequences of the act complained of;
b. Not necessary that damages have
been foreseen or could have been
reasonably foreseen.
VALUE OF LOSS SUFFERED
 Destruction of things, fines or penalties,
medical & hospital bills, attorney's fees,
interests, cost of litigation
LOSS OF EARNING CAPACITY:
 Variables to consider are:
a. life expectancy
b. net income/earnings – total of the earnings
less expenses necessary for the creation of
such earnings and less living or other
incidental expenses
Formula: American Expectancy Table of Mortality
or the Actuarial of Combined Experience Table of
Mortality
[2/3 x 80 – (age at the time of death)] x monthly
earnings x 12 = GROSS EARNINGS
GE - Approximate Expenses (50% of GE) = Net
Earnings
LOSS OF PROFITS (Lucrum Cessans)
 May be determined by considering the average
profit for the preceding years multiplied by the
number of years during which the business was
affected by the wrongful act or breach
ATTORNEY’S FEES
 They are actual damages. It is due to the
plaintiff and not to counsel
 Plaintiff must allege the basis of his claim for
attorney’s fees in the complaint; the basis
should by one of the cases under Art. 2208
WHEN ARE ATTORNEY’S FEES RECOVERABLE:
 In the absence of stipulation, attorney's fees
and expenses of litigation, other than judicial
costs, cannot be recovered, except:
a. When exemplary damages are
awarded;
b. When the defendant's act or
omission has compelled the plaintiff
to litigate with third persons or to
incur expenses to protect his
interest;
c. In criminal cases of malicious
prosecution against the plaintiff;
d. In case of a clearly unfounded civil
action or proceeding against the
plaintiff;
e. Where the defendant acted in gross
and evident bad faith in refusing to
 satisfy the plaintiff's plainly valid,
just and demandable claim;
f. In actions for legal support;
g. In actions for the recovery of wages
of household helpers, laborers and
skilled workers;
h. In actions for indemnity under
workmen's compensation and
employer's liability laws;
i. In a separate civil action to recover
civil liability arising from a crime;
j. When at least double judicial costs
are awarded;
WHEN IS ACTUAL DAMAGES MITIGATED:
a. Contributory negligence
b. In contracts. Quasi-contracts and quasi-
delict
i. Plaintiff has contravened the terms
of contract
ii. Plaintiff derived some benefit as
result of contract
iii. In case where exemplary damages
are to be awarded, that the defendant
acted upon the advice of counsel
iv. That the loss would have resulted in
any event
v. That since the filing of the action,
the defendant has done his best to
lessen the plaintiff's loss or injury
===============================
TOPICS UNDER THE SYLLABUS
III. Moral Damages
A. Concept (Arts. 2217-2218)
B. When recoverable (Arts. 2219-
2220)
(1) In seduction, abduction, rape
and other lascivious acts
(2) In acts referred to in Arts. 21,
26, 27, 28, 29, 32, 34 & 35, Civil
Code
(3) In cases of malicious prosecution
IV. Nominal Damages
A. Concept
B. When awarded
V. Temperate or Moderate Damages
A. Concept
B. When awarded
VI. Liquidated Damages
A. Concept (Civil Code, Art. 2226)
B. Rules governing in case of breach
of contract
VII. Exemplary or Corrective Damages
A. Concept (Civil Code, Art. 2229)
B. When recovered
(1) In criminal offenses (Civil Code,
Art. 2230)
(2) In quasi-delicts (Civil Code, Art.
2231)
(3) In contracts and quasi-contracts
(Civil Code, Art. 2232)
C. Requisites
(1) Arts. 2233, 2234
===============================
C. MORAL
MORAL DAMAGES Include: (PBMF-MWSS)
a. Physical suffering
b. Besmirched reputation
c. Mental anguish
d. Fright
e. Moral shock
f. Wounded feelings
g. Social humiliation
h. Serious anxiety
i. Sentimental value of real or personal
property may be considered in adjudicating
moral damages
j. The social and economic/financial standing
of the offender and the offended party
should be taken into consideration in the
computation of moral damages
k. Moral damages is awarded only to enable
the injured party to obtain means,
diversions or amusements that will serve to
alleviate the moral suffering he has
undergone, by reason of defendant's
culpable action and not intended to enrich
a complainant at the expense of defendant
IN WHAT CASES MAY MORAL DAMAGES BE
RECOVERED (Enumeration Not Exclusive):
a. Criminal offense resulting in physical
injuries
b. Quasi-delicts causing physical injuries
c. Seduction, abduction, rape or other acts of
lasciviousness
d. Adultery and concubinage
e. Illegal or arbitrary detention or arrest
f. Illegal search
g. Libel, slander or other form of defamation
h. Malicious prosecution
 i. Acts mentioned in art 309 of the RPC
relating to disrespect of the dead and
interference with funeral
j. Acts and actions referred to in arts 21, 26,
27, 28, 29, 30, 32, 34 and 35
k. The parents of the female seduced,
abducted, raped, or abused
l. Spouse, descendants, ascendants and
brother and sisters for acts mentioned in
art 309
m. Art 2220 - in cases of willful injury to
property or breaches of contract where
defendant acted fraudulently or in bad faith
GENERAL RULE: The plaintiff must allege and
prove the factual basis for moral damages and its
causal relation to the defendant’s act
EXCEPTION: Moral damages may be awarded to
the victim in criminal proceedings without the need
for pleading proof of the basis hereof.
D. NOMINAL DAMAGES
 Adjudicated in order that a right of the
plaintiff, which has been violated or invaded
by the defendant, may be vindicated or
recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered
by him
ELEMENTS:
a. Plaintiff has a right
b. Right of plaintiff is violated
c. Purpose is not to identify but vindicate or
recognize right violated
NOTE:
 The Law presumes damage although actual
or compensatory damages are not proven
 They are damages in the name only and
are allowed simply in recognition of a technical
injury based on a violation of a legal right
 Nominal damages cannot coexist with
actual or compensatory damages
E. TEMPERATE OR MODERATE DAMAGES
 More than nominal but less than compensatory
where some pecuniary loss has been suffered
but its amount can't be proved with certainty
due to the nature of the case
 In cases where the resulting injury might be
continuing and possible future complications
directly arising from the injury, while certain to
occur are difficult to predict, temperate
damages can and should be awarded on top of
actual or compensatory damages; in such
cases there is no incompatibility between
actual and temperate damages.
REQUISITES:
a. Some pecuniary loss
b. Loss is incapable of pecuniary estimation
c. Must be reasonable
F. LIQUIDATED DAMAGES
 Those agreed upon by the parties to a contract,
to be paid in case of breach thereof
WHEN LIQUIDATED DAMAGES MAY BE
EQUITABLY REDUCED:
a. Iniquitous or unconscionable
b. Partial or irregular performance
G. EXEMPLARY
EXEMPLARY OR CORRECTIVE DAMAGE
 Imposed by way example or correction for
the public good, in addition to the moral,
temperate, liquidated to compensatory
damages
NOTE: Exemplary damages cannot be
recovered as a matter of right; the court will
decide whether or not they should be
adjudicated.
WHEN IMPOSABLE:
Criminal offenses – exemplary damages as a part
of the civil liability may be imposed when the crime
was committed with one or more aggravating
circumstances. Such damages are separate from
fines and shall be paid to the offended party.
Quasi-delicts – exemplary damages may be
granted if the defendant acted with gross
negligence.
Contracts and quasi-contracts – the court may
award exemplary damages if the defendant acted
in a wanton, fraudulent, reckless, oppressive, or
malevolent manner.
WHAT MUST BE PROVED:
a. While the amount of exemplary damages
need not be proved, the plaintiff must show
that he is entitled to moral, temperate or
compensatory damages before the court
 may consider the question of whether or
not exemplary damages should be
awarded.
b. In case liquidated damages have been
agreed upon, although no proof of loss is
necessary in order that such liquidated
damages may be recovered, nevertheless,
before the court may consider the question
of granting exemplary in addition to the
liquidated damages, the plaintiff must show
that he would be entitled to moral,
temperate or compensatory damages were
it not for the stipulation for liquidated
damages.
===============================
TOPICS UNDER THE SYLLABUS
XIII. Damages in Case of Death
A. In crimes and quasi-delicts causing
death
(1) In death caused by breach of
conduct by a common crime
IX. Graduation of Damages
A. Duty of injured party
(1) Art. 2203
B. Rules
(1) In crimes
(2) In quasi-delict (Civil Code, Art.
2214)
(3) In contracts, quasi-contracts and
quasi-delicts (Civil Code, Art. 2215)
(4) Liquidated damages (Civil Code,
Art. 2227)
(5) Compromise
X. Miscellaneous Rules
A. Damages that cannot co-exists
(1) Nominal with other damages
(Art. 2223)
(2) Actual and Liquidated (Art.
2226)
B. Damages that must co-exist
(1) Exemplary with moral,
temperate, liquidated or
compensatory
C. Damages that must stand alone
(1) Nominal Damages (Art. 2223)
===============================
H. DAMAGES IN CASE OF DEATH
BY CRIMES AND QUASI-DELICT
1. Medical & Hospital Bills
2. Damages for death
i. Minimum amount: P50,000
ii. Loss of earning capacity unless
deceased had permanent physical
disability not caused by defendant so
that deceased had no earning capacity
at time of death
iii. Support, if deceased was obliged to
give support (for period not more than 5
years)
iv. Moral damages
IN CASES OF COMMON CARRIER
Article 2206 shall also apply to the death of a
passenger caused by the breach of contract by a
common carrier. (See Preceding heading)
I .GRADUATION
DUTY OF INJURED PARTY.
The party suffering loss or injury must exercise the
diligence of a good father of a family to minimize
the damages resulting from the act or omission in
question.
RULES
1. Responsibility for fault or negligence
under the preceding article is entirely
separate and distinct from the civil liability
arising from negligence under the Penal
Code. But the plaintiff cannot recover
damages twice for the same act or omission
of the defendant.
2. In quasi-delicts, the contributory
negligence of the plaintiff shall reduce the
damages that he may recover.
3. In contracts, quasi-contracts, and
quasi-delicts, the court may equitably
mitigate the damages under circumstances
other than the case referred to in the
preceding article, as in the following
instances:
(1) That the plaintiff himself has
contravened the terms of the contract;
(2) That the plaintiff has derived some
benefit as a result of the contract;
(3) In cases where exemplary damages are
to be awarded, that the defendant acted
upon the advice of counsel;
(4) That the loss would have resulted in any
event;
(5) That since the filing of the action, the
defendant has done his best to lessen the
plaintiff's loss or injury.
 4. Liquidated damages, whether
intended as an indemnity or a penalty, shall
be equitably reduced if they are iniquitous or
unconscionable.
5. There may be a compromise upon
the civil liability arising from an offense; but
such compromise shall not extinguish the
public action for the imposition of the legal
penalty.

J. MISCELLANEOUS RULES
Damages that cannot co-exists
1. Actual and Liquidated damages
2. Nominal with Actual, Moral or Temperate
damages

Damages that must co-exist

1. Exemplary with moral, temperate, liquidated or
compensatory damages
a. One must prove that he is entitled to moral,
temperate or compensatory damages before the
court may consider if the award for exemplary
damages.
b. No proof of loss is necessary in order that
liquidated damages may be recovered. However,
before the court may consider the question of
granting exemplary in addition to the liquidated
damages, the plaintiff must show that he would be
entitled to moral, temperate or compensatory
damages were if not for the stipulation for
liquidated damages