No. The phrase “unless otherwise provided” only refers to the
number of days, not fact of publication.
What is required to be published?
o The entire text of the law.
What is the interpretation of the term “law”?
o It can be executive issuances, regulations, et. al., and not just
republic acts, as long as it affects the public in general and it
requires public interest.
Can a law affect just one person?
o Yes, for instance, declarations of citizenship. It still has to be
published. Same rule applies, even if only one locality is
affected
Read Tanada v. Tuvera.
o It is not whether you read the publication or not. It not whether
you understand the law or not. As long as there is opportunity
to read it, there is compliance with publication requirements.
Garcillano v. House:
o The rules of procedure for legislative inquiries of Senate must
be published in accordance to Art. 2 of the Civil Code, as
mandated by the constitution (“duly published”).
SEC v. GMA Network:
o A memorandum circular regulating filing fees for submission of
articles of incorporation or extension of corporate life must be
published because it regulates public rights at large.
o
Civil Law
Bar 2011 Notes
Roland Glenn T. Tuazon
Ateneo de Manila University
TABLE OF CONTENTS:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
PRELIMINARY TITLE
PERSONS AND FAMILY RELATIONS
PROPERTY
SUCCESSION
OBLIGATIONS AND CONTRACTS
LAND TITLES
PRESCRIPTION
CREDIT TRANSACTIONS
SALES
PARTNERSHIP
AGENCY
COMPROMISE
LEASE
TORTS AND DAMAGES
Mistake of fact v. mistake of law
PRELIMINARY TITLE
Mistake of fact can be a ground for vitiation of consent. But mistake of
law is not a defense for vitiated consent.
Specific instances where a mistake of law can have some effect?
o 1. Good faith defense – must show that it is a difficult provision
of law to interpret, and this gave rise to mistake (Art. 526).
BUT this only gives rise to mitigation of liability, not complete
excuse there from.
o 2. Mistake of payment or solutio indebiti
Publication
When do laws become effective?
o 15 days after publication in OG or newspaper of general
circulation (EO 200), unless otherwise provided
Is 15 days mandatory?
o No. It can be some other time period, less or more. What is
mandatory is fact of publication.
Can the law provide that there is no need for publication?
Prospectivity of laws
1
o
If law number 2 is a case of implied repeal, then law number 1
is revived unless law number 3 is likewise incompatible or law
number 3 repeals law 1.
(2) When does a law lapse?
o When the law itself provides for its own lifespan. There is no
need for a further statute to give effect to its lapse.
(3) Unconstitutionality declared by courts. How does this differ?
o When the court declares that a law is unconstitutional, it is null
and void from the beginning. Exception: operative fact, which
is based on equity.
General rule: laws are prospective in nature.
When did the Family Code take effect?
o August 3, 1988
When did the Civil Code take effect?
o August 30, 1950
Exceptions to non-retroactivity?
o Regardless of what kind of law, it MUST have a retroactivity
clause. (IMPT)
o 1. Procedural laws
o 2. Curative laws
o 3. Tax laws
o 4. Penal laws which benefit the accused (who is not a habitual
offender)
o 5. Substantive laws that do not impair vested rights
o 6. Interpretative laws
Liam Law v. Olympic Sawmill:
o Ineffectivity of usury law should retroact as to change the
Rules of Court as to this matter.
Judicial decisions
Considered as part of the law of the land. Stare decisis, however, only
applies to SC decisions.
It does not, however, become a “law” per se – no need to publish.
De Roy v. CA:
o Judicial decisions need not be published first in the OG before
becoming effective and binding jurisprudence. A lawyer must
keep abreast with judicial decisions.
Waiver of rights
Computation of period of laws
What is the general rule?
o Rights may be waived
What are the exceptions?
o 1. Waiver against public policy, public order, good customs,
morals, or law
o 2. Prejudicial to third persons with right recognized by law
Ordinary contracts: you can define your terms any way you want
(example, a year can be 300 days) For laws, however, a year is 365
days.
o UNLESS, one specifically names the year
First day excluded, last day included.
For contracts, it does not matter if the last day falls on a weekend.
Contrast with Rules of Court, where it adjusts to the next business day.
Three types of termination of laws
Effectivity of laws is a shared legislative and judicial function.
(1) Repeal: Requires another law passed by Congress declaring that
the law is repealed, or a new law that is irreconcilable with the old law.
Implied repeal is not favored.
What happens if the repealing law is itself repealed?
o It depends on law number 2. If law number 2 is a case of
express repeal, then law number 1 is not revived. There must
be a specific provision reviving it.
Principle of nationality
What are the things covered by the principle of nationality?
o Family rights and duties,
o status and condition, (ex. legitimacy, whether marriage is valid)
o Legal capacity
2
property in the Philippines, where British law is
unclear, it is presumed it is the same as Philippine
law. Philippine law governs because the property is
found here. Our law says that he can only dispose ½
of his share in the property.
o Exceptions:
1) successional rights are governed by the national
law of the decedent
Order of succession, amount of successional
rights, intrinsic validity of testamentary
provisions, capacity to succeed
2) property relations between spouses governed by
the marriage settlement entered into prior to marriage
When does renvoi usually apply?
o This usually applies when an alien dies in the Philippines.
Basing this on general principle, basing it on the law of
nationality of decedent. If based on national law of decedent, it
refers back to the law of the domicile (which is the Philippines),
then we accept the renvoi and apply Philippine law
Llorente v. CA:
o A married Filipino man joined the US army and became a US
citizen. He divorced his wife after his wife cheated on him.
The divorce was valid because under American national laws,
he could initiate divorce.
What does Article 17 say about prohibitive laws?
o Prohibitive laws here concerning persons, acts, property, or
laws which have for their object public order, public policy, or
good customs are not rendered ineffective by laws, judgments,
or conventions abroad.
o EXCEPTION?
Art. 26(2), where an alien obtains divorce abroad
allowing him to remarry, his Filipino spouse gains
capacity to remarry as well.
Wherever a Filipino citizen is, Philippine law governs the three realms
above.
When there is an alien within our country, we still apply their national
laws as regards family rights and duties, status and condition, and legal
capacity.
Nationality also governs successional rights of the decedent
For purposes of legal capacity, when will the principle of
nationality not apply?
o Marriages – lex loci celebrationis but only as to authority of
solemnizing officer, marriage license, marriage ceremony
General rule: still governed by nationality (IMPT)
o Contracts involving real or personal properties – lex situs
Exception: when reason of acquisition of the thing is
succession: nationality of the decedent governs
o For the formal validity of wills – lex loci celebrationis
3 things to determine:
o What law governs legal capacity
o What law governs extrinsic validity
o What law governs intrinsic validity
CONTRACTS
o Legal capacity – nationality
Except: contracts referring to properties, which is
governed by lex situs
o Extrinsic validity – lex loci celebrationis
o Intrinsic validity – there is freedom to stipulate governing law
WILLS
o Legal capacity – national law of decedent, not successor
o Extrinsic validity – lex loci celebrationis
Aliens‟ choices – national law, domicile, Philippine
law, lex loci celebrationis
NOTE: for aliens‟ wills, these refer to wills presented
for probate in the Philippines; we don‟t care otherwise
o Intrinsic validity – national law of the decedent
PROPERTIES –
o Lex rei sitae (where found)
Ex. so controversy between whether a British
decedent spouse can dispose of the entirety of
Human relations
Pardo de Tavera – When do the provisions on human relations
apply?
3
o
Ex. of Art. 21: Wife left her husband, went abroad,
got a divorce, and remarried. It is against morals,
good customs, or public policy.
o N.B. Articles 20 and 21 are implementing provisions of Art. 19.
So Art. 19 is the general principle, and 20 (general sanction)
and 21 (acts contra bonus mores) are the specifics.
Article 21 – Breach of promise to marry. Is there any law that says
you have to comply with the promise to marry?
o No. You cannot demand for specific performance that the
other marry you.
o But you can recover actual damages for expenses, such as
down-payment for venue, dress, food, etc. But not moral
damages, in general.
o Exception: moral damages when there is deceit or fraud.
(Baksh)
There was breach of promise to marry. The teacher became
pregnant, and was dismissed from her job because she got
pregnant without a husband. Can she recover from the man loss
of income?
o Yes (old case).
o But now, you cannot be dismissed for this anymore, so it‟s
moot.
Who is liable for hospital expenses?
o Shared expenses, since it takes two to get pregnant.
When are moral damages allowed?
o Criminal or moral seduction.
Human relations chapter are just general concepts guiding
particular human conduct. In the absence of any specific law
or contract, then you use these provisions. You cannot
immediately use these provisions, if there is a specific
governing law or contract.
Chato v. Fortune Tobacco Corp:
o In order for Art. 32 to apply, where a private individual can hold
a public officer personally liable for an act or omission, there
must be a particular injury to that person.
Duty to act with justice, observe honesty, and good faith:
o Every person in the exercise of his rights and in the
performance of his duties must act with justice, give everyone
his due, and observe honesty and good faith.
o Lorente v. Sandiganbayan: An official who cleared three
other terminated employees for unpaid liabilities (which is
offset by gratuities later) and then suddenly “went legal” on
another employee for no apparent reason was not acting with
justice, honesty, good faith.
o Leads to civil liability even if perfectly legal.
Requisites for Art. 19?
o 1. There is legal right or duty
o 2. Exercised in BF
o 3. With intent to prejudice another
Requisites of Art. 20?
o 1. Act contrary to law
o 2. Whether done willfully or negligently
Requisites of Art. 21?
o 1. Legal act
o 2. But contrary to morals, GC, PP, PO, or law
o 3. With intent to prejudice another
What is the difference between Art 20 and 21?
o Article 20 has to be contrary to law. Article 21 is legal, but
contrary to morals, public policy, or customs.
o Article 20, the act is either done willfully or negligently – as
long as contrary to law. Article 21, intentional.
Provisions Dean Del just breezed through:
1.
4
Unjust enrichment
a. Garcia v. PAL: If a dismissed employee is reinstated, and then
the reinstatement is reversed, the employee is not bound to
return salaries received. This is a case where social justice
outweighs unjust enrichment provisions.
b. Accion in rem verso – Art. 22. Requisites?
i. 1. Defendant enriched
ii. 2. Plaintiff suffered loss
2.
3.
4.
o
iii. 3. Unjust enrichment of defendant without just/legal
ground
iv. 4. Plaintiff has no other action based on K, quasi-K,
crime, or quasi-delict
c. What is the difference between Art. 22 and solutio
indebiti?
i. In solutio, mistake is an essential element. In accion
in rem verso, it is not.
Less in life = more in law
Thoughtless extravagance
Violation of privacy
When a civil case is filed ahead, it proceeds independently and
need not wait for resolution of the criminal case.
o Assuming the criminal case is instituted ahead, the civil case
can still be prosecuted separately.
Prejudicial questions:
o Opposite – suspend criminal case, and wait for civil case to be
resolved first, which is determinative of guilt or innocence of
accused in the criminal case.
o Questions on annulment or nullity of marriage are NOT
prejudicial questions for bigamy. Before you get married, you
need a judicial declaration of nullity for the prior marriage.
o Classic case: ownership of property v. crime of theft.
o Ching – civil case was for annulment of contract, and criminal
case is for violation of trust receipts law. HELD: not
considered as prejudicial question because the criminal case
can still proceed, because the act can be considered as
ordinary estafa.
Public officers
Articles 19-21 bind even public officers. Take note. Though there are
specific provisions.
Can a public officer invoke acting in public capacity as a defense?
o Aberca v. Ver
o No. “Your official function does not include acting with injustice
and being unfair”
What actions can you file against public officers?
o 1. Action for nonfeasance
But this action cannot be brought against those
officers exercising ministerial functions, ex. Register
of Deeds
o 2. Violation of basic rights
o 3. Policemen – failure to come to the aid of persons in danger
Persons
Natural persons
Juridical capacity:
o Passive subject – the ability to be the subject of legal relations
o UPON BIRTH
o Exceptions: unborn fetus, if:
1. Beneficial to it
Ex. donation
2. Subsequent birth
So aborted fetus is not counted because it
wasn‟t born alive
o When is birth complete?
7 months or more in the womb: just born alive
Less than 7 months: survive for 24 hours
Capacity to act:
o 18 years old, in general
o Although you cannot marry without consent of parents
End of judicial capacity AND capacity to act = upon death of person
Civil liability in criminal prosecutions
Civil liability is always included
There is a distinction between being acquitted –
o For reasonable doubt: there is still civil liability
o Because one did not commit the crime: no civil liability
General rule: civil case is simultaneously filed along with criminal case.
Criminal case suspends separate civil action.
Independent civil actions:
o NOT suspended upon filing criminal case.
5
Doubt as to who between two or more persons called to succeed
each other, as to who died first:
o Presumption: they died at the same time, so no transmission of
rights
o Whoever alleges the prior death of one must prove it.
Contra rule in Remedial Law/Evidence: Survivorship for those who
died due to calamity, wreck, battle, or conflagration:
o Follow what rule?
Strength and age of the sexes
o For what purpose can this be used?
ANY purpose except succession
o Allowed for:
Insurance
Survivorship agreements
N.B. Very little relevance in civil law now, but usually just for elections,
etc.
Distinguish domicile from residence:
o Domicile –
Place of habitual residence; based on intention and
actual connection
One never loses a domicile under a new one is
acquired.
o Residency –
Based on actual facts of presence
It is possible to be without residence, but one always
has a domicile
Domicile is acquired from moment of birth:
o Legitimate child – domicile of parents (correct the reviewer)
o Illegitimate – of mother
o Legitimated – of parents
o Foundling – wherever found
Domicile of juridical person:
o Provided in charter
o If none, place of business or place of legal representation
Juridical persons
Birth and death: from when created by law or for ordinary corporations,
upon registration/dissolution
Restrictions and limitations
Mere restrictions, which do not exempt the person from certain
obligations:
o Minority,
o insanity and imbecility,
o deaf-mutism,
o prodigality,
o civil interdiction
o [For juridical persons – this is the issue of ultra vires acts]
Modifications, which affect a person depending on the type of
transaction, who one is dealing with:
o Age (because it is not minority per se), etc. (See Art. 39)
o Ex. foreigners‟ ownership of land
PERSONS AND FAMILY RELATIONS
MARRIAGE
Took effect 3 August 1988
o Does not change the regime of property relations of those who
got married prior to the FC
o But those who selected CPG are affected by the new
provisions as to this property relation, post 3 Aug 1988
Definition of marriage (elements)
o 1. Special contract
Compare and contrast marriage from ordinary
contracts:
Domicile
6
o
o
o
o
provision on legal guardians here,
because upon turning 18, then he
already has legal capacity.
21 to under 25: need parental advice
o Without: issuance of ML is delayed
for three months
As a general rule, ordinary contracts are
subject to parties‟ stipulations, as long as not
against law, PP, morals.
But marriage contract is governed by law,
and is only subject to stipulation for regime
of property relations – at the moment of
marriage.
2. Permanent union
Only terminated by death
Grounds for voiding or avoiding a marriage: because
the marriage was never deemed to have existed
3. Between man and woman
Note: P v. Silverio and other spec pro cases on
change of sex in registry
4. In accordance with law
5. Purpose: establish conjugal and family rights
B) Sex
C) Absence of legal impediments: (see full discussion
below)
37. Incestuous relationships
38. Relationships against PP
35. Prior existing marriage
36. Psychological incapacity
52, 53. Failed to comply with distribution of
properties and presumptive legitimes
Is there such a thing as defective legal capacity?
No, it‟s either you have it or not.
o 2. Consent freely given
Before a solemnizing officer, at the time of the
celebration of marriage
Do you have to speak out your consent? No need
to verbally explicate it; as long as you can
communicate your consent effectively to the
solemnizing officer
Is there such a thing as defective consent? Yes,
when it is vitiated. Ex. when one is of unsound mind.
A person actually said yes, but there was problem in
the voluntariness.
Is it possible for a party not to give consent at all?
No. Ex. mistake in identity – there is total absence of
consent.
Formal requirements:
o 1. Authority of solemnizing officer
When does the good faith exemption apply, and
when does it not? Will NOT apply for mistakes of
law, such as if you thought one designation of people
(ex. president or senator) can solemnize a marriage,
Effect of lack/defect of essential and formal requirements of marriage:
Essential:
o Lack/absence – void
o Defect – voidable
Formal:
o Lack/absence – void
o Irregularity – still valid, but the person responsible is liable
What are the essential and formal requisites of marriage?
Essential requirements:
o 1. Legal capacity
A) Age
Under 18: void
18 to under 21: need parental consent
o Without: voidable
o Whose consent is required?
Ideally, both. But one is allowed to
decide, if one is absent, has passed
away, lost capacity, etc. Ignore the
7
What is this? The document signed after marriage
ceremony. It is the evidence of the celebration of
marriage. This is neither a formal or essential
requisite. It is merely evidentiary, although the best
evidence.
What is the difference between a ML and a MC?
The absence of a ML results in a void marriage. The
absence of a MC will not affect the marriage.
o 2. Place of celebration
What about article 8? It is merely directory. If the
solemnizing officer agrees to marry the couple in
another place, then it is perfectly fine.
Is there any instance where the place of the
celebration of marriage affects the marriage?
Yes, for those marriages celebrated by persons with
limited jurisdiction. For instance, the ship captain or
airplane captain can only solemnize the marriage in
the vessel or during a stopover. For instance, for
military commanders, it must be within the zone of
military operations.
What about members of the judiciary? Within their
judicial region. If it is SC, CA, or Sandiganbayan, it is
nationwide.
What is the effect of marriages celebrated by
judges outside judicial regions? As of now, it is a
mere irregularity, according to the SC. This rule is
different as opposed to ship captains, etc. (Navarro
v. Domagtoy)
Can this decision apply to mayors? For instance,
the mayor of Makati solemnized a marriage in QC.
According to Dean Del, the SC rule on judges must
not extend to mayors – they must strictly comply with
their territorial jurisdiction.
Legal impediments (in depth)
o A) Incestuous relationships:
1. Ascendants and descendants, regardless of degree
How many degrees does this rule cover?
Unlimited.
when in fact it cannot. It applies to mistakes of fact.
(ex. you thought the janitor posing as a priest was the
parish priest.) Also, even if only one party believed in
good faith that the solemnizing officer had authority,
the marriage is valid.
If the solemnizing officer committed fraud or an
irregularity in obtaining authority, it has no validity for
the marriage to be solemnized.
o 2. Valid marriage license
A party thinks that the marriage license is valid,
when it is not. Can the rule on good faith apply?
No. There is no good faith exemption for marriage
license. The exceptions provided by the FC are not
based on GF, but on law.
Aranes v. Occiano: A ML gotten after a marriage
without an ML does not cure the lack thereof. It is still
void.
Examples of defects in marriage license:
1. Not applied for in the proper place
2. Just signed by the employee of the LCR,
although acting with authority of the LCR (if
no authority, void ML)
3. 10 day posting of ML not complied with
o 3. Marriage ceremony
There is no particular requirement for the ceremony,
except for:
1. Both must personally appear before the
solemnizing officer
2. Must openly declare that they take each other as
husband and wife
3. Two witnesses of legal age
If there is just one witness, is it an
absence or an irregularity? No resolution
yet.
Other requirements:
o 1. Marriage certificate
8
o
2. Brothers and sisters, whether full or half blood
B) Marriages against public policy
By blood:
1. Between collateral blood relative, up to fourth civil
degree (whether legitimate or illegitimate)
NOTE: no prohibition for collateral relatives
by half-blood
Created by marriage:
2. Between step-parents and step-children
NOTE: no prohibition for step-brother and
step-sister
3. Between parent-in-law and children-in-law
If your wife dies, can you now marry your
parent in law? No. Not even death
terminates this relationship. Not unless you
terminate your marriage first through court
declaration that the marriage was not valid in
the first place.
Created by adoptive relationship:
4. Adopter and adopted
5. SS of the adopter and adopted
6. Adopter and SS of adopted
7. Legitimate child of adopter and adopted
NOTE: the reason is because legitimate
children are asked to give their consent to
the adoption. Illegitimate children are not
asked.
Hence the illegitimate children and adopted
children may marry.
8. Between adopted children of same adopter
Created by criminal intent
9. When one party kills his own spouse or the other
party‟s spouse, with the intention of marrying the
other
If the killing was to obtain insurance
benefits, but there was subsequent
o
marriage, is the latter valid? Yes, because
the killing was not with intent to marry.
No need to be convicted
Who can marry each other?
1. Brother-in-law and sister-in-law
2. Stepbrother and stepsister
3. Guardian and ward
4. Adopted child and illegitimate child of the
same person
5. Parties convicted of adultery or
concubinage
6. Adopted child of husband, adopted child
of wife
C) Prior existing marriage
What if the prior marriage has a problem? There
must still be a judicial declaration that the prior
marriage is a nullity or is annulled. You have to wait
for this.
Wiegel v. Sempio-Diy: Need to have prior judicial
declaration of nullity or annulment first, or else the
second marriage is bigamous.
If the purpose is some other thing, like succession
issues, then there is no need for prior judicial
declaration prior to questioning the marriage.
Authority of solemnizing officer:
Who can solemnize:
o 1) Any member of the judiciary, as long as:
Incumbent
When does incumbency start? From
when one has taken his oath of office.
What if the judge was on leave or is on
vacation? Still incumbent.
Is there a need for further authority or
license? None; it is an inherent function of
office.
9
o
o
Within territorial jurisdiction
Who in particular? RTC, MTC, CA, CTA, SC,
Sandiganbayan, etc. Even if their jurisdiction is
limited, like the CTA. Contrast this to executive
branch, where only the mayor can.
2) Member of religious group, authorized by religious group.
Does the religion officer per se possess the
authority to solemnize marriage? No. The
authority does not come from the office itself. He
needs special authority from the group or sect first.
What is the requirement for the group or sect?
The church, sect or group must be recognized.
Either or both of the parties must be part of that
religion or church.
What if both are not members of that
religion? Strictly, invalid. But a lot of
people are invoking that this is a gray area,
where the good faith defense can apply, or
one can treat this as a mere irregularity.
3) Ship captain or airplane chief
Who is the captain or chief? The head of the ship,
or the chief pilot.
When can they solemnize marriages? In articulo
mortis, where one or both are at the point of death.
A person is diagnosed as terminally ill,
and given two weeks to live. Is he in
articulo mortis? No, the person is not yet
at the point of death. Terminal illness is still
uncertain.
Who can they solemnize?
Members of crew or passenger
What about stowaways?
Can still marry them, as long as on board the
vessel.
When and where can they solemnize?
o
o
o
10
During the voyage, from the point of
embarkation, until one reaches the final
destination, including a stop-over.
The stop-over must be in a continuous flight.
This is different from a break where one
disembarked and put down all the luggage
and went around already.
For purposes of marriage, do we adopt
transportation laws?
No decision yet.
4) Military commander
Who is a military commander?
Commissioned officer, at least second
lieutenant up, must be the head of a
battalion
There is a person who is preferred, before the
military commander is allowed. Who is this?
There has to be a chaplain assigned to the
battalion in the zone of operations, and he
has to be absent.
If he is present, then the chaplain must be
the one to solemnize.
What if there is no chaplain assigned?
Dean Del prefers the liberal interpretation:
when there is no chaplain assigned, then the
military commander can solemnize.
What is military operation?
Involves State action. This is different from
mere police operations for petty crimes.
Who?
No need to be a member of the military or a
combatant. As long as someone is within
the zone of military operation.
5) Consuls
No need to be dying
As long as abroad and both Filipinos
6) Mayors
Reinstated in the LGC of 1991
decides to marry someone else, he or she
cannot use that same consent.
21-25: parental advice
o 3. Certificate of marriage counseling.
When does this apply?
Parties below 25 years old
What if one party is 80 years old, but the other is
23? BOTH must attend, even if the other party is
older than 25.
Lack thereof results in 3 month suspension of
issuance of Marriage License
2. What do you need to present for a SUBSEQUENT MARRIAGE?
o Proof of termination of marriage:
Death certificate
Judicial declaration of nullity
Judicial declaration of annulment
o If one is previously married but is still 18-21 years old, do
you still need parental consent? Not anymore, because the
prior marriage has fully emancipated the person.
Jurado says otherwise
o What about those between 21-25, and this is the second
marriage, do you still need parental advice? Yes, because
there is no stated exception of emancipation for prior marriage,
unlike for parental consent. This is not anymore based on
parental authority, but is based on filial love and respect from
parents.
3. What about alien applicants?
o The diplomatic or consular officials will issue a certificate of
legal capacity. This is usually taken by face value.
4. What about Stateless persons?
o For these people without citizenship and if they can prove that
they are political refugees, all one needs is an affidavit
declaring oneself as having legal capacity. Again, this is taken
by face value.
What is the nature of a marriage license?
Marriage license
Valid marriage license
o What is the consequence of lying about one’s place of
residence?
It is a public document, so one can be charged for
falsification of a public document.
BUT this is a mere irregularity, and should not affect
validity
o If you lie about your age, and you are not yet 18?
VOID marriage, not because of the irregularity in the
ML, but because of lack of capacity.
Procedure to obtain a Marriage License
1. What do you need to present when you get married (FIRST
MARRIAGE)?
o 1. Birth certificate, but just for the purpose of verifying legal
capacity based on age. Absent this, you can submit a
baptismal certificate.
If none, either:
Residence certificate
Instrument containing sworn declaration of
two witnesses of lawful age testifying on this
o 2. Additional requirements:
18-21: consent of parents; order –
Father
Mother
Surviving parent
Legal guardian (but ignore this provision,
since when they turn 18, there is no more
need for a legal guardian since he is of full
capacity.)
What is the nature of the consent given
by the parents? The consent is with
respect to a specific person. If the child
11
o
o
Another issue in Ninal: do the children have standing to
ask for the nullification of the parents’ marriage based on
lack of ML? The court held that the children have standing.
BUT this has been changed when the administrative rules
came out. Ninal was decided before these rules came out.
o What are the requisites:
rd
1. Exclusivity – absence of 3 parties
2. Continuity – cohabitation as husband and wife 5
years immediately preceding marriage
3. No impediments during the 5 year period
3. Parties who live in a remote place
o Ratio: no means of transportation to get to LCR
o Not based on distance: it doesn‟t matter how many kilometers
there are. What matters is lack of means of transportation.
o Means of transportation need not be public.
4. Muslims and cultural minorities
o Look into customs, rites, practices
5. Marriage celebrated abroad and there is no ML requirement in the
country where it was celebrated
For marriages in articulo mortis and where a party lives in a remote
place, the law requires that the solemnizing officer state the
circumstances of the marriage in an affidavit. What is the effect of
the lack of such?
o No effect. It is merely evidentiary. It is not a replacement to
the ML requirement.
It is a license to marry a specific person. You cannot use it to
marry another person. The impediments and capacities of
people are different.
o There is no good faith exemption for a ML. A fake marriage
license is no good.
What is the validity of the ML?
o For 120 days, then automatically cancelled after
o In any part of the Philippines
o An expired license is NOT a mere irregularity but an absence
of a requirement.
Marriages exempt from requirement of ML
What are the marriages exempt from the ML requirement?
1. Marriages in articulo mortis.
o Because there is no time.
o The only exemption is the ML. There is no exception as to
other essential and formal requisites.
o The solemnizing authority determines whether there is legal
capacity between the parties to be married.
o Can the solemnizing officer refuse to solemnize the
marriage? Yes, the solemnizing officer has discretion to
refuse. There is no law compelling solemnizing officers to
marry.
o Are marriages in articulo mortis exempt from requirement
of ML limited to those in an airplane, military operation,
etc? No. It can occur anywhere, and the ML requirement is
still waived.
o If the person miraculously survives, is the marriage valid?
Yes.
2. People who have been living together as husband and wife for at
least five years.
o Purpose: to save face, because they have already presented
themselves as husband and wife.
o When must there be an absence of impediment? The
entire five-year period of cohabitation. (Ninal v. CA)
Marriages celebrated outside the Philippines
What is the general rule?
o Art 26: Lex loci celebrationis. When the marriage is valid in
that country, it is valid in the Philippines.
Does this provision apply to marriages of aliens outside the
country?
o No. It doesn‟t matter, our law doesn‟t care. Their own national
laws determine whether the marriage is valid.
Two Filipinos get married outside the country. Do we apply Art
26?
o Yes.
12
o
Art 26 only applies ONLY when at least one of the parties is a
Filipino.
What are the exceptions to this rule?
o Art 35 (1, 4, 5, 6), Art 36, Art 37, Art 38
(1) – under 18
(4) – bigamous
(5) – mistaken identity
(6) – void under Art 53
o All of these exceptions deal with the essential requisites of
marriage. But as to the formal requisites, then that is
determined by the law of the place where the marriage is
celebrated.
What if two male people get married abroad?
o No settled rule yet.
What is the rule on divorces obtained abroad?
o If the alien obtained a divorce decree abroad allowing him to
subsequently remarry, then the Filipino may remarry as well.
o Van Dorn v. Romillo and Pilapil v. Ibay-Somera
In Van Dorn, alien husband got a divorce abroad, but
sought to administer community property in the
Philippines. The basis of the court was estoppel
Pilapil: “she is married to you but you are not married
to her”
NOTE: both cases were decided before the Family
Code
Requisites?
o 1. Marriage between Alien and Filipino
o 2. Alien files for divorce
o 3. Divorce decree capacitated the alien to remarry
What if the Filipino obtains the divorce?
o Not allowed. The article only applies if the alien was the one
who obtained the divorce.
The requirement that one is an alien and one is Filipino: must it
occur during the time of marriage, during the time of divorce, or
both?
Time of marriage
2 Fil
Time of divorce
2 Fil
2 Fil
1 Alien, 1 Fil
2 Fil
2 Aliens
1 Alien 1 Fil
1 Alien 1 Fil
1 Alien 1 Fil
2 Aliens
Old view: not allowed to
circumvent the law through this
NOW: the Alien is not anymore
under our jurisdiction, so he can
obtain divorce. Then Art. 26
applies.
Amor-Catalan case: recognize as
being a divorce entered into by 2
aliens. Art. 26 does not apply
because there is no Filipino to
equalize.
Art. 26
Valid as well
Difference between void and voidable marriages:
VOID
Inexistent from the beginning
Does not prescribe
No ratification
No community property. Only coownership.
Directly or collaterally attacked
[but subject to recent rules: check
discussion below]
VOIDABLE
Valid until annulled
Generally, 5 years prescription
May be ratified by free cohabitation
or prescription
ACP – unless provided otherwise
Must be directly attacked
The common statement is that void marriages can be collaterally
attacked. But what does Art. 40 say?
o Art. 40 – For purposes of remarriage, one has to obtain a
judicial declaration of nullity.
o So there has to be a direct proceeding. You cannot do this by
collateral attack.
RULES ON STANDING re: nullity –
o SC 02-11-10 – only husband and wife have standing in a
direct action
EXCEPT: a) for those commenced before 15 March
2003, b) marriages under CC
Effect
X
13
o
o
o
EXCEPT: for intestate and testate proceedings, allow
collateral attack
So the rule in Ninal was technically not changed
BUT the main determinant is whether the person has standing
(as in an heir)
In Carlos v. Sandoval, since the one questioning was the
brother of the deceased, it doesn‟t matter if the marriage was
valid or not because he only inherits in default of descendants
or ascendants.
o
o
What are the grounds for nullity?
o Arts. 35, 36, 37, 38
o Art. 35:
A. party below 18 years old
B. solemnized by unauthorized solemnizing officer
EXCEPT if either or both parties believed in
GF that the officer had authority
C. no marriage license
EXCEPT when license is not required
D. bigamous or polygamous
EXCEPT: see below (presumptive death)
E. Mistake in identity
F. subsequent marriage void under Art. 53
Failure to partition and distribute properties
and deliver presumptive legitimes of
children, and recorded in the ROP and LCR
o Art. 36: Psychological incapacity
o Art. 37: Incestuous marriage (see above)
o Art. 38: Void due to public policy
A. by blood
B. by adoptive relationship
C. by marriage
D. by criminal intent
When is a marriage entered into without termination of a previous
marriage valid?
o
o
When there is a declaration of presumptive death. Article 41 is
the only article which provides for a situation where there can
be 2 valid subsisting marriages.
Four years for ordinary situations
Two years for extraordinary situations
The declaration is not of DEATH but of PRESUMPTIVE
DEATH.
This takes the place of the usual requirement of death
certificate to allow the other spouse to remarry.
The declaration of presumptive death obviously only
empowers the present spouse to remarry.
For other grounds, any subsequent marriage is automatically
null and void.
What if both spouses in the subsequent marriage acted in
BF?
The marriage is void ab initio.
Art. 41
What if the spouse who was declared presumptively dead
reappears?
o If no one does anything, we have a situation where there are
two valid subsisting marriages
o Reappearing spouse files an affidavit of reappearance to the
LCR
But other people may file an objection to the affidavit
If there is no objection: then the subsequent marriage
is deemed terminated upon filing of the affidavit
Who can file – reappearing spouse or persons
interested (ex. children in first marriage)
Legal effect: not void ab initio, just terminated
o If there are objections, then a court of law must rule on the
objections. The LCR cannot rule upon the objections.
o What is the basis for objection or opposition?
The only basis: “this is an impostor.”
o Is there a prescriptive period for filing an objection for the
affidavit of reappearance?
These questions have not been settled yet.
14
What is required to be proved in declaration of presumptive death?
o Proof that there is reasonable ground to believe that the
spouse has died.
o Republic v. Nolasco: Not enough to just ask people around and
say that the people haven‟t seen her to prove that a person is
presumptively dead. Need more than that.
There is no case yet where the court says that psychological incapacity
is such that he will never be able to perform marital obligations. So after
declaration of nullity, both parties can still marry again. So
psychological incapacity is relative.
Molina: Eight point test. This is the first case where the court actually
set down, point by point, what one should look for to establish Art. 36:
o 1) plaintiff has burden of proof to show P.I.
o 2) Root cause must be something medically proven and
clinically identified and clearly explained in the decision
This has received so much flip-flopping from other
decisions
o 3) it must exist at the time of the celebration of the marriage
o 4) the PI is incurable [from Santos case]
o 5) it is grave and it prevents him from performing essential
marital obligations
Molina included obligations to family and children too,
not just to the spouse
o 6) Essential marital obligations are Arts. 68-71 of FC, and Arts.
220, 221, 225 of FC
o 7) Interpretation of the National Marital Tribunal must be given
weight
But its decision is not public in character; so its effect
is really just to the parties, and is not jurisprudence
o 8) The trial court must order the public prosecutor and the Sol
Gen to act as counsel for the state
Paras: This should be the case to read if you want to know what DOES
NOT amount to psychological incapacity. In this case the manifestation
relied upon is infidelity of the spouse, going out having drinks with
friends, falsifying signature – all these were struck down by Paras
Marcos v. Marcos: You don‟t need to have a psychiatrist or
psychologist to examine the party. Absence of such is not fatal. What
you need is the totality of evidence. (Totality of evidence approach)
You can use whatever evidence to prove PI.
Te v. Te: Courts must be allowed to make a decision on a case-by-case
basis without being tied down by the Molina requirements. This came
out strong. “Molina gave us a straitjacket and we don‟t want this.”
Mistake in identity as ground for nullity
Spirit of provision – consent to marriage is for a SPECIFIC person. If
there is mistaken identity, there is no consent.
This is NOT mistake in particulars of a person (ex. you thought he was
rich, but he was actually a pauper)
Psychological incapacity
One that has a lot of cases. Members of the committee who drafted the
FC did not define what psychological incapacity. They wanted
jurisprudence to develop the concept.
What is the distinction between physical and psychological
incapacity?
o Psychological incapacity is NOT physical incapacity, which is
impotence. The latter is a ground for voidable marriage only.
o It is NOT mental incapacity, which is also for voidable
marriage.
What is psychological incapacity?
o He is normal under any other circumstance, but he cannot
carry out the essential obligations of marriage
o Ex. “Narcissistic complex”
o Inability to perform obligations to the spouse and obligations to
the family (220, 221, 225)
Santos: It was a cut and paste case from different sources. In the end,
it did not say how we should define it in the Philippines. Only value is
that it gave the 3 requirements:
o 1) gravity
o 2) juridical antecedence
o 3) incurability
15
Suazo v. Suazo: You don‟t have to be strictly bound by cases (open
case policy). “We are not throwing away Molina” but the court must be
open to situational differences.
o The SC is not bound to accept with finality the findings of fact
by the TC.
What is the end result of all this jurisprudence?
o It is still case-to-case. There is no set doctrine.
o
The question of nullity of a previous marriage not judicially
declared void is NOT a prejudicial question to a charge of
bigamy. The marriage lawfully subsists.
Mercado v. Tan
o Subsequently getting a declaration of nullity will not invalidate a
conviction for bigamy.
Morigo v. People
o The parties merely signed a marriage contract on their own,
without any ceremony – there is no semblance of any valid
marriage. No need for prior declaration of nullity. Bigamy
dismissed.
Tenebro v. CA
o The subsequent declaration of nullity of the second marriage
under Art. 36 does not negate the criminal action for bigamy.
(The mere act of contracting a second marriage during the
first‟s subsistence is punishable.) Article 36 marriages are not
completely without effect (ex. legitimacy of children). So this
means that there can be prosecution for bigamy.
Declaration of nullity
Domingo v. CA:
o Judicial declaration of nullity only needed for remarriage.
o Otherwise, no need for judicial declaration to establish nullity of
the marriage.
Tamano v. Ortiz:
o RTC has jurisdiction over all actions relating to marriage and
marital relations.
o Jurisdiction based on allegations of the plaintiff in the
complaint; not dependent on the defenses set up. The
complaint said that the parties were married under the civil
code.
Ninal v. Bayadog:
o There must be no impediment or interruption in the five-year
cohabitation period in the marriage license exemption.
o Declaration of nullity may be collaterally attacked after the
death of either party. (Ex. heirs, in succession.)
De Castro v. De Castro
o As in Ninal, the nullity of a void marriage may be established
even collaterally in an action not for that purpose. (ex.
support). Here, the affidavit stating circumstances establishing
5-year cohabitation contained false statements; hence, there
was no ground to exempt from ML requirement. No ML = void.
Voidable marriages
Grounds
1. Lack of parental consent
o Who has standing?
1. Parent/guardian who did not give consent
2. Party whose parent/guardian did not give consent
o What if both parties didn’t get parental consent?
Both can file, separate or joint
Pari delicto doesn‟t apply
o When can the party who didn’t get consent file?
Upon reaching 21 years old
o When can the action be filed?
BEFORE reaching 21 – parent or guardian who didn‟t
consent
UPON reaching 21, until 26 – party whose parent or
guardian didn‟t consent
o How is marriage ratified?
Declaration of nullity v. bigamy
Marbella-Bobis v. Bobis
16
Can‟t apply because there must be
previous conviction by final
judgment.
2. Concealment by wife that at the time of marriage,
she was pregnant with another man
3. Concealment of STD, regardless of nature, at time
of marriage
4. Concealment of drug addiction, habitual
alcoholism, homosexuality, lesbianism at time of
marriage
o N.B. No other misrepresentation is ground for fraud.
o Ratification?
Free cohabitation upon knowledge of fraud
5. Force, intimidation, undue influence
o Intimidation must be evil and imminent and based on a wellgrounded fear
o What if intimidation has a legal basis?
It does not count.
Ex. “I will prosecute you for rape if you don‟t marry my
daughter,” and the guy really committed rape anyway.
o Prescriptive period?
5 years from cessation of cause
o Standing?
Injured party
o Ratification?
Free cohabitation after cause ceases.
6. Impotency
o Potency must be at the point of marriage. Becoming impotent
after is not a ground for annulment.
o What if both are impotent?
Sempio-Diy: there is no “injured party”
Dean Del: both are injured parties and can file
o Period?
5 years after marriage
o Cannot be ratified by cohabitation.
o NOTE: the other party must not have known it at the time of
marriage
o What is the doctrine of triennial cohabitation?
o
Free cohabitation by the parties upon reaching 21.
Specific rules on form of consent:
Mere attendance in wedding is not automatically
consent. Must be in ML application.
Consent must be before wedding.
2. Insanity
o When should insanity exist?
Time of marriage
o When is there a presumption of insanity?
If the party was insane right before and after the
precise moment of giving consent.
o Who may file?
1. Sane spouse – if no knowledge of insanity
2. Relative, guardian, etc. – even with knowledge of
insanity
3. Insane spouse
o What are the periods?
Sane spouse – 5 years from discovery of insanity of
the other spouse [because no period was provided]
N.B. Sempio-Dy pegs the period at anytime
before death of either party
Relative, guardian, etc.
Anytime before death of either party
Insane spouse – 5 years from regaining sanity
[because no period was provided]
o How is the marriage ratified?
Free cohabitation by the parties upon regaining of
sanity by the insane spouse
3. Fraud
o Grounds:
1. Non-disclosure of a previous conviction by FJ of
the other party for crime involving moral turpitude
If the conviction is pending appeal, is the
non-disclosure fraudulent?
o No. It must be by FINAL judgment.
What if the crime was alleged in the same
annulment case?
o
17
If the wife is still a virgin after three years of living
together, it is presumed the husband is impotent
o What is relative impotency?
You are only impotent as to one person but not
another. It is still voidable.
7. Serious and incurable STD
o Differentiate: Here, it is serious and incurable. If it is a ground
for fraud, it was concealed but no need to be serious and
incurable.
o Who can file?
Injured party
o Cannot be ratified by cohabitation
Ground
Lack of parental
consent
Insanity
Who can file
Underaged party
When
Within 5 years
upon turning 21
Parent, guardian
who did not
consent
Sane party
Until child or
ward turns 21
Insane party
Fraud
Parent or
guardian,
relative of insane
party
Injured party
Force,
intimidation,
undue influence
Impotence
Injured party
Serious and
incurable STD
Healthy party
Potent party
Within 5 years of
discovery of
insanity
Within 5 years of
lucid interval
Before death of
either party
5 years from
cessation of
cause
5 years from
cessation of
cause
5 years from
marriage
5 years from
marriage
Procedure and effects of termination of marriage
Procedure
For all cases of nullity or annulment:
o Court orders prosecutor or fiscal to appear on behalf of the
State
o Take steps to:
1. Prevent collusion between parties
2. Make sure evidence is not fabricated or
suppressed
No judgment based on stipulation of facts or confession of judgment
Pendency of action:
o Follow written agreement between spouses
o 1. Court provides for support of spouses
o 2. Custody and support of common children
Consider mutual written agreement first
Consider best interest of children
And Tender Years Doctrine
And choice of parent
Visitation rights for other parent
Ratification
Yes, but only
upon reaching
21
No ratification by
subsequent
consent
Effects
Yes, but only in
a lucid interval
What are the effects of nullity/annulment of marriage?
o 1) share of party in BF over net profits forfeited in favor of:
Common children
If none, children of guilty spouse in previous marriage
If none, innocent spouse
o 2) donations propter nuptias: valid, except:
Donations in favor of guilty spouse revoked by
operation of law
o 3) designation of guilty spouse as beneficiary in life insurance:
may be revoked
Even if deemed irrevocable
Yes
Yes
No
No
18
3. Born of subsequent marriage which didn‟t comply with
Article 53 (registration)
o 4. Born before reappearance of presumptively dead spouse
When do you not have to deliver presumptive legitime?
o 1. Legal separation (because marriage not dissolved)
o 2. Death (failure to liquidate, etc., will only make dispositions
post-one-year void and mandate separation of properties for
marriage #2)
o 3. Presumptive death (which has the same effects of death)
o
o
4) spouse in BF cannot inherit from innocent spouse by testate
or intestate succession
o 5) if both spouses guilty, revoke by operation of law:
Donations propter nuptias to each other
Testamentary dispositions to each other
[N.B. these two provisions were just included because
Art. 43 mentions an innocent and guilty spouse; in Art.
44, both are guilty]
What does final judgment provide?
o 1) liquidation, partition, distribution of properties of spouses
Includes adjudication of common lot
o 2) custody and support of common children
o 3) delivery of presumptive legitime
Computed as of date of final judgment
Delivered through cash, property, or sound securities
Unless there was a judicially approved
mutual agreement
Who may ask for enforcement of judgment:
1. Children
2. Guardian
3. Trustee of property
Will not prejudice ultimate successional rights –
delivered presumptive legitimes are deemed
advances
What must be done with judgment, partition and distribution of
properties, and delivery of presumptive legitime?
o This must be recorded in the appropriate civil registry and
registry of properties in places where the properties are
located.
What is the effect of non-recording?
o It will not affect third persons
What is the effect of non-compliance with partition, distribution,
delivery of presumptive legitime?
o Any subsequent marriage is null and void
Which children are legitimate?
o 1. Born before annulment
o 2. Born before Art. 36 nullity
LEGAL SEPARATION
Grounds:
Violent stuff
o 1. Repeated physical violence or grossly abusive behavior v.
spouse, common child, or child of spouse
o 2. Physical violence or moral pressure to change
religious/political affiliation
o 3. Attempt to corrupt or induce to engage in prostitution:
spouse, common child, child of spouse
Or connivance in such
o 4. Attempt against the life of spouse
Character stuff
o 5. Final judgment of more than 6 years in prison
Even if pardoned
o 6. Drug addiction or habitual alcoholism
o 7. Abandonment of spouse without justified cause for more
than a year
N.B.: after 3 months from initial abandonment, there
can already be judicial separation of property (JSP).
When a year passes, there is a ground for LS.
Sex stuff
o 8. Lesbianism or homosexuality
o 9. Contracting bigamous marriage
o 10. Sexual infidelity or perversion
Defenses:
19
1. Collusion
o Agreement between the spouses
o Covered by proscription of legal separation based on
stipulation of facts
2. Connivance
o “Luring” (not entrapment)
3. Consent
o Express or implied
o Prior to the act
o Agreement between spouses against law and morals may be
null and void, but it may be considered consent that would bar
litigation.
4. Condonation
o Forgiveness/pardon
o May be express or implied
o Sexual intercourse is implied condonation
But not when it was just to save the marriage, and it
was unsuccessful
o Each sexual intercourse with another person is a separate act
of adultery. Forgiveness for the first does not extend to
subsequent acts
5. Mutual guilt
o May be on different grounds
o Even when one party has pardoned the other and the other
has not
6. Prescription
o Even if not alleged, court can take judicial notice
o If there are multiple acts, count from the last separate act
o From knowledge of the ground, not just from mere hearsay
Prescription for all: within 5 years of occurrence of cause
Court must take steps towards reconciliation of the spouses, and satisfy
itself that despite such efforts, reconciliation is highly improbable
No decree of LS based on:
o Stipulation of facts
o Confession of judgment
Prosecutor or fiscal assigned to take steps to prevent collusion between
parties and ensure evidence is not fabricated or suppressed
Effects pendente lite, of death, and after finality
What are the effects of pendency after filing of petition?
o 1. Spouses entitled to live separately from each other
o 2. Administration of properties:
Based on written agreement
If none, court designates either or a third person
Same powers and duties as those of a
guardian
o 3. Support of spouses
Lerma v. CA: The court may make a preliminary
ruling of the case during its pendency, to determine
whether support is justified. In this case, where one
spouse was adulterous, the court deemed it proper to
deny him support pendente lite.
Sabalones v. CA: A decree of LS was issued, where
the husband was denied share in the profits and
denying him support from the wife. The husband
appealed. Pendente lite of the appeal, the wife filed a
petition for preliminary injunction against the husband
alienating conjugal properties. The court said this
was valid to preserve the wife‟s rights in the pendency
of the appeal
o 4. Support and custody of children
What is the effect of death of a party?
o The action is dismissed, since it is purely personal between the
spouses
o Macadangdang v. CA: Spouse died after the decree of LS
was issued but before liquidation. The LS was deemed final
Procedure
What is the mandatory “Cooling off period” after filing of the
petition?
o Only try an action for LS after 6 months have elapsed since
filing of petition
20
o
However, now Rules say that if this happens, the decision in
the LS case, where there has been entry of judgment is final
and binding, will be accorded such finality in the settlement of
the estate proceedings.
Dean Del‟s interpretation: Because the finding in LS
case is final, even in the settlement of estate, one
may invoke forfeiture provisions.
o You don‟t do liquidation and partition in the same LS case
anymore when one party dies after entry of judgment. But the
decision of the LS case is already final and binding in the
settlement of estate proceedings of the deceased person.
(IMPT!!)
What are the effects after issuance of the decree?
o 1. Spouses entitled to live separately
o 2. Dissolve ACP or CPG
Offending spouse not entitled to net profits
Siochi v. Gozon: what is forfeited are net profits and
not the undivided share in the community property
o 3. Custody of minor children to innocent spouse
o 4. Disqualify offending spouse from inheriting by intestate
succession AND revoke testamentary provisions by operation
of law
But if the spouse makes another will with
testamentary provisions in favor of the guilty spouse,
then the latter can inherit, obviously
What are the optional effects?
o 1. Innocent spouse may revoke his or her donations to
offending spouse
FIVE YEAR period
Record revocations in the registries of property where
located
Alienations, liens, encumbrances prior to recording
the revocation are respected
o 2. May also revoke designation of spouse as beneficiary in life
insurance policy
No prescription, as long as the policy exists
Takes effect upon written notification to the insured
o [N.B. so while life insurances are still optionally revocable (the
rule didn‟t change from Art. 43/44, the difference between Art.
43/44 and this provision
donations are just revocable here]
Reconciliation
What is the procedure for reconciliation?
o Execute joint manifestation under oath
o Signed by both
o Filed with court in same proceeding
What are the effects of reconciliation?
o 1. If proceedings pending, terminate in whatever stage
o 2. If final, set aside final decree
o 3. What shall persist:
Separation of property
Forfeiture of shares
UNLESS spouses agree to revive former property
regime
What do the spouses revive former property regime?
o Execute joint manifestation under oath
o Filed in the same proceeding for legal separation
Copies furnished to creditors
Creditors protected by court
o What must be specified?
1. Properties contributed anew to restored regime
2. What are retained as separate properties of each
spouse
3. Names of all known creditors (addresses, amounts)
o How does the order bind third persons?
Record order in registries of property. It will not
prejudice a creditor not listed or notified.
Unless debtor-spouse has sufficient separate
properties to satisfy debtor‟s claim
RIGHTS AND OBLIGATIONS BETWEEN HUSBAND AND WIFE
Became important due to Molina doctrine (if you cannot perform these,
it can indicate psychological incapacity)
What are the obligations?
o 1. Live together
o 2. Mutual love, respect, fidelity
o 3. Render mutual help and support
21
Administration of community properties
Who fixes the family residence?
o Jointly fixed by husband and wife
o Otherwise, court decides
If you don’t want to live in the same dwelling, what is the
consequence?
o General rule: they must live together.
o If they cannot, they go to court, and ask for an exemption only
for valid and compelling reasons.
o What are the consequences of refusal to live in the same
dwelling without valid and compelling reasons?
1. Not entitled to support
2. Charged with abandonment.
3. Transfer of administration to the other spouse
What does “Respect” imply?
o Lack thereof can lead to criminal and civil consequences
o Includes the woman being allowed to work and exercise her
profession
o When can a spouse object to profession?
Valid, serious, moral grounds
What happens when you incur liability pursuant to this profession
objected to? Who bears the liability and charges?
o General rule: no prior consent necessary to exercise
profession
o This should be the rule:
Before any objection
absolute community
After objection
liabilities towards separate property
o BUT this is what was erroneously printed:
Before any objection
separate property
After objection
absolute community
o Nancy Go: obligation was charged against separate property.
Principle: because this is a separate endeavor by the liable
spouse and the contract cannot bind both spouses. (This is
the fall back analysis)
Support of the family comes from:
o 1. Community or conjugal property
o 2. Income from separate property
o 3. Separate property
Who administers the community properties?
o Spouses, jointly (whether ACP or CPG)
When it is possible for one spouse to have administration of the
community property?
o A. Before the marriage –
Place in the marriage settlement that the H or W
alone will administer the property.
o B. During the marriage –
In case of disagreement, decision of H prevails. No
need to go to court for this.
What is the relief the wife can ask for in court?
Must establish in court that it amounts to
mismanagement and it prejudices the
community property
Can ask for receivership, transfer of admin,
or in extreme cases, separation of property
NOTE: NOT to overturn the husband, but to
get certain reliefs (stated above)
o C. Need approval of court –
When the other spouse became incapable to jointly
administer (ex. one spouse became guardian of the
other)
N.B. only ground where there is no need for court
approval
What is the rule for acts of ownership?
o Both spouses MUST give consent before it becomes valid.
o Either:
1. The other spouse must give written consent, or
2. There must be court order
o What are examples of acts of ownership?
Ex. selling the house.
Ex. making donation, except for small donations
o What is the effect if one of the spouses does not give
consent to these acts?
1. It‟s void, but
22
o
2. It is a continuing offer from the spouse who gave
consent and the third party. It can be validated by the
objecting spouse‟s consent.
o How much time does the non-consenting spouse have?
The law does not provide.
But the parties (consenting spouse or third party) may
withdraw the offer any time.
What are the rules on donations?
o A. To each other –
General rule: void
o B. To third party –
Must be a joint act
Except: moderate donations for charity or family
rejoicing
o C. To the children –
Valid as long as it is for education, etc. But it would
need consent of the other spouse, because it‟s still an
act of ownership.
Otherwise, still valid, but charged to the separate
property of the other spouse.
Who manages the household?
o It is a joint role between both spouses.
No, it must be the parties themselves who enter into the
contract.
o If a party is 18 to below 21 years old, the parents must be part
of the marriage settlement.
When can there be a change of property regime?
o 1, Separation of property
o 2. Legal separation
o 3. Ordinary dissolution
What are the formal requisites for MS?
o 1. In writing
What kind of document is needed?
Private/public document, but it must be
public document for it to be registered
What if it’s not in writing?
Unenforceable
Can compel to be reduced to writing
o 2. Signed by the parties
N.B. General rule is ONLY the future spouses are
parties to the MS
o 3. Executed before the marriage
o 4. Those who need parental consent must make parents party
to the MS
Otherwise, MS is void (for lack of consent)
o 5. If under civil interdiction or disability, must make guardian
party to the MS
Otherwise, MS is void
o Is there need for judicial approval for a marriage
settlement?
No. Only need to register with the civil registrar to
bind third persons
How can a MS affect third parties?
o 1. All above requirements
o 2. MS registered in LCR where marriage contract is recorded
and in the property registries of property
o N.B. or else, as to these third persons, ACP will be presumed
to govern
Rule if marriage does not take place:
PROPERTY RELATIONS BETWEEN HUSBAND AND WIFE
What governs the property relations between the spouses?
o 1. Marriage settlement (MS) executed before the marriage
o 2. FC provisions
o 3. Local customs
When can you enter into marriage settlement?
o Anytime before you celebrate marriage.
o What are the additional requirements?
Legal capacity to enter into contracts
The marriage must take place after
Can the parents enter into a marriage settlement on behalf of
minor children?
23
o
o
o
Everything stipulated in MS in consideration of future marriage
is void
Including donations between respective spouses
contained therein
Does NOT invalidate stipulations that do not depend on
celebration of the marriage.
Any modification in marriage settlements must be made before
the celebration of marriage.
o Exception: judicial separation of property
In any case, the only change is from ACP/CPG
CSP, with court approval
There can be no situation where CSP changes to
ACP or CPG because what is only allowed is revival
of the old property regime
o What is the status of an extrajudicial agreement between
spouses to separate their properties?
Void
What governs property relations between the spouses?
o Philippine laws, regardless of place of celebration of marriage
and regardless of residence
o In absence of contrary stipulation in MS
o Exceptions:
1. Both spouses are aliens
2. Extrinsic validity of contracts affecting property
located abroad, executed there
3. Extrinsic validity of contracts affecting property
located abroad, executed here
What are the Choices for property regime?
o 1. ACP
o 2. CPG
o 3. CSP
o 4. Other regime
When does ACP govern?
o 1. When it is expressly chosen
o 2. When none is chosen
o 3. When regime chosen is void.
o Examples of void provisions:
Prohibited one party from marrying another, or a
second marriage for surviving spouse
Spouses live separately
Imposing fine on infidelity
Depriving parties from asking for LS when there is
sufficient ground to do so
Third person will manage conjugal properties
All properties of the wife belong to the husband
N.B. Invalidity of some provisions will not nullify valid
ones.
What properties are covered by the regime?
o When a regime is chosen, all properties are governed by that
regime. Cannot exclude particular properties from the regime.
What if the parties expressly rejected ACP but did not agree on any
system to govern?
o Determine intent of the parties. If it cannot be ascertained,
then apply local custom. When there is no local custom, apply
co-ownership.
When can modifications in MS be done?
Donations by reason of marriage
Requisites of a valid donation propter nuptias?
o 1. Made before marriage
o 2. In consideration of the marriage
o 3. To one or both of future spouses
Donations propter nuptias (DPN)
Does not require express
acceptance
May be made by minors
May include future property (if done
by either of the spouses); if done by
other persons, just present property
If present property donated by a
spouse and regime is not ACP,
limited to 1/5. If future property
24
Ordinary donations
Requires express acceptance
Cannot be made by minors
Just present property
Only limit: non-impairment of
legitimes
donated by a spouse, limit is on nonimpairment of legitimes.
Grounds for revocation in FC
Grounds for revocation in CC
What are the grounds for which a donor may revoke a DPN?
o 1. Marriage not celebrated, or declaration of nullity
o 2. No consent of parents or guardians to the marriage
o 3. Marriage annulled and donee is in bad faith
o 4. Legal separation and donee is guilty
o 5. Resolutory condition
o 6. Acts of ingratitude
Prescriptive periods to revoke:
What is the limit on donations made by a spouse to the other in an
MS?
o If future spouses agree upon regime other than ACP, cannot
donate to each other in MS more than 1/5 of present property.
Excess: considered void
o Why “other than ACP”?
In ACP, their properties will become part of AC
anyway (except for some)
What governs donations of future property in the MS?
o Governed by law on wills
o Therefore, these are revocable, unlike donation of present
properties in MS
What is the rule on property subject to encumbrances?
o Property subject to encumbrances can be donated.
o If foreclosed to secure an obligation:
In case of deficiency, donee not liable for difference
In case of excess, donee entitled to difference
When will a DPN be revoked by operation of law (Arts. 43, 81) and
when will it be by option (Art. 86)?
Marriage not
celebrated
Marriage
celebrated, but
terminated after
Article 43
N/A
Revoked by
operation of law
if donee is in bad
faith, and donor
is the other
spouse
Article 81
DPN made in an
MS: void if there
is no resulting
marriage
N/A
Ground
Marriage not
celebrated; declaration
of nullity
No consent of parents
or guardians
Annulment, donee in
BF
Article 86
DPN not in an
SM: revocable
Legal separation,
donee is guilty
Resolutory condition
Revocable;
everything else
is covered here.
Even if you‟re
the spouse in
GF, some
donations are
revocable under
Art. 86 (ex. void
ab initio
marriage)
Acts of ingratitude
Period
DPN in MS, no
marriage takes place:
operation of law
Nullity, donor is
spouse, donee in BF:
operation of law
Written donation: 10
years
Oral donation: 6 years
4 years
Donor is other spouse:
operation of law
Otherwise: 4 years
5 years
Written donation: 10
years
Oral donation: 6 years
1 year from knowledge of
the fact
Remarks
The written and oral
donations that
aren‟t revoked by
operation of law just
follow the general
civil code rules on
prescription
(because there‟s no
marriage under law)
Expressly provided
period
Expressly provided
period
Almost everything
related to legal
separation has a 5year period
Contract law
What are the acts of ingratitude covered?
o 1. Offense against person, honor, or property of donor, spouse,
children under parental authority
25
o
2. Donee imputes to donor criminal offense or any act involving
moral turpitude, even if proven
Except if act is against donee, spouse, children under
authority
o 3. Donee unduly refuses to support donor when legally or
morally bound to do so
What is the status of donations during marriage between the
spouses?
o Void.
o Except: moderate gifts on family rejoicing
Determined by social position of the family, and
customs
o What about those who are merely living together as
husband and wife without valid marriage?
Same prohibition
Examples:
Common law marriage
Adulterous relationship
o What does the prohibition cover?
Grants of gratuitous advantage, direct or indirect
Ex. donation to a child of the other spouse by another
marriage (since if the child dies, the other spouse
inherits)
Who has standing to question the validity of the donation between
spouses?
o ONLY persons prejudiced, like the donor or his heirs
Case: Husband donated a car to his wife. The wife
insured it. It was destroyed and the wife sought to
collect insurance. The insurance company
challenged the validity of the donation. HELD: The
insurance company has no standing to question,
since it has no rights or interests over the car in
question.
o Donor has standing since there can be a case where a
stronger spouse takes advantage of the weaker one
When does ACP commence?
o Precise moment of celebration of marriage
o Any stipulation which makes the commencement at any other
time is VOID
Basic concept:
o Upon marriage, all properties brought into marriage and
acquired during marriage are included in ACP
o Upon dissolution, the entire common mass is divided between
the spouses
Contra: in CPG, only the net profits are divided
between them
Waiver of rights, interests, shares, and effects of ACP:
o Disallowed by law.
o Except during:
1. Judicial separation of property
2. Dissolution of marriage (ex. death) or annulment
thereof
o How is this done?
1. In a public instrument
2. Recorded in LCR
o What is the recourse of prejudiced creditors of the waiving
spouse?
May petition to the court to rescind the waiver to
extent of amount sufficient to cover credits
What is included in the AC?
o All properties belonging to spouses before marriage and during
marriage
o Cannot exclude specific properties from the community
What are excluded?
o 1. Property acquired during marriage by gratuitous title
(donation, succession)
As well as its fruits and income
Except: if the donor expressly provides that the
property is included in the AC
o 2. Property for personal and exclusive use by either spouse
Except jewelry
Absolute Community of Property (ACP)
26
o
3. Property acquired before marriage of spouse with legitimate
descendants from prior marriage
Exclude fruits and income as well
What is the presumption?
o Property acquired during marriage are presumed to be
included in the AC, unless proven otherwise
o There must be strong, clear, and convincing evidence
Apply rules on co-ownership, suppletorily
Includes installment-basis property, if
ownership vested before marriage (but
reimburse CP for payments on installments)
Includes property alienated before marriage
but reacquired through rescission,
annulment, or revocation of contract
2. Acquired during marriage through gratuitous title
Includes unearned increments
Includes moral damages (but not
hospitalization expenses, medical
assistance, or loss of salary)
o Property by substitution:
3. Acquired by right of redemption, barter, or
exchange of exclusive property
If money used for redemption was CP, just
reimburse CP
4. Purchased with exclusive money of wife or
husband
What about exclusive property that is alienated under pacto de
retro and then subsequently repurchased?
o Still exclusive. If the other spouse paid for the redemption, he
can be reimbursed.
Who manages exclusive or separate properties?
o 1. The spouses retain ownership, possession, administration,
enjoyment of exclusive properties
o 2. May mortgage, encumber, alienate, or dispose separate
property without consent of other spouse.
o 3. May appear in court alone to litigate it.
o What is the exception?
May transfer administration to other spouse (or even
another person) by public instrument recorded in
ROP, where located
Alienation of the property terminates administration by
the other spouse. Obviously, proceeds go to the
owner-spouse
For joint donations of property to the spouses, who owns the
property?
Conjugal Property of Gains (CPG)
When does CPG apply?
o 1. Chosen by the spouses in the MS
o 2. Marriages under NCC by default
What is included in COMMON FUND?
o 1. Fruits, income, proceeds, products of separate property
o 2. Acquired through their efforts
o 3. Acquired through chance
What is the rule upon dissolution of CPG?
o Divide net gains equally, unless they agreed to a different
division in the MS
What is the nature of the spouses’ right over conjugal property?
o Each spouse has a mere inchoate right over conjugal property:
Cannot alienate ½ of the interest.
Cannot be attached by creditors.
o Only ripens into actual title upon dissolution and liquidation of
partnership.
Apply same rules on:
o 1. Commencement: upon precise moment of marriage
o 2. No waiver of rights, shares, interest unless in JSP or
dissolution, and only in public instrument recorded in LCR
Apply rules on contract of partnership, suppletorily
o If the CP is not enough, use separate properties
o But unlike ordinary partnership (pro rata), liability is solidary
What are exclusive properties in CPG?
o Property by direct acquisition as exclusive:
1. Brought into marriage as his or her own
27
o
If shares therein are designated, those shares are their
exclusive property
N.B. Because the disposition is gratuitous
o If no designation of shares, it is 50-50
o When does right of accretion exist?
1. when one spouse refuses to accept
2. incapacity to accept
3. predecease or death before perfection of donation
What about onerous donations?
o Still exclusive property of donee-spouse
o But reimburse CP for advances made
What is the presumption?
o All property acquired during marriage is presumed to be
conjugal.
o Regardless of registration.
Specific enumeration of conjugal property:
o Acquired by efforts
1. Those acquired by onerous title through common
fund, even if placed in the name of one spouse
2. Obtained from labor, industry, work of either
spouse
3. Acquired through occupation such as hunting or
fishing
o Fruits of property
1. Fruits (natural, industrial, civil) of common property
2. Net fruits of exclusive property of each spouse
“Net fruits” only because use the income first
to pay for administration, preservation, etc.
3. Livestock in excess of number of each kind brought
into the marriage of each spouse
Only matters upon dissolution
o Chance
1. Share of either spouse in hidden treasure
Even if it belongs to the exclusive property of
either spouse, because effort was involved
2. Acquired by chance
But losses borne exclusively by the loser
spouse
o
By presumption
1. All property acquired during the marriage is
presumed to be conjugal unless contrary is proved
Rules on life insurance:
o General rule:
The right to annuity itself is considered the exclusive
property of the purchasing spouse.
The monthly pensions are conjugal.
o If the beneficiary is the insured himself or his estate:
If paid out of conjugal funds, proceeds are conjugal
If paid out of separate funds, proceeds are separate
If part conjugal, part separate, proceeds are part
conjugal and part separate
o If the beneficiary is the other spouse
Proceeds belong to the beneficiary spouse, even if
paid out of conjugal funds
Deemed a donee of the premiums paid.
(Must return ½ of premiums to conjugal
partnership)
If both spouses are jointly insured in a single policy,
proceeds belong to the surviving spouse (obviously),
even if paid from conjugal funds
No obligation to return ½ of the premiums,
because it is deemed a reciprocal donation
If the insured is a third person, then the beneficiary
spouse owns it as separate property (deemed a
donation)
On benefits, pensions, annuities, usufructs, etc.:
o General rule applies.
Gratuitous = exclusive;
Onerous = conjugal.
o Annuities:
The annuity itself (ex. purchased for P100K) is
exclusive property
28
o
Pensions from that annuity (ex. P5K a month) is
conjugal
o Usufruct:
The harvests or fruits of the land given as usufruct is
conjugal
o What is the determining factor?
If it was given out of pure liberality, then consider it
gratuitous (exclusive)
If it is a pension, which is given for services rendered,
then it is onerous (conjugal)
Special cases:
o For SSS, the beneficiary is the exclusive owner of the
proceeds
o Intellectual property like copyright and patent is the exclusive
property of the creator-spouse (since it is part of one‟s person
and is just external manifestation of his genius)
For loans and credit:
o Principal is exclusive property of lending spouse, if from own
money
o Interests falling during marriage is conjugal property
On tips received by waiters, etc.:
o Service charge – entitled to it, so conjugal (onerous)
o Beyond the service charge – it is separate (gratuitous)
On damages:
o If actual damages
conjugal
But can be separate if losses are based on losses
from separate/exclusive funds
o If moral, etc.
separate because these are paid for suffering,
etc. and not actual loss
Rule on fruits?
o Fruits from conjugal property
gross fruits belong to conjugal
property
o Fruits from separate property
net fruits (total fruits minus
expenses incurred) are conjugal
Compare with ACP? There, fruits from separate
properties are always separate
Rule on improvements?
o
o
o
o
o
Goes against usual rules on accession (“accessory follows the
principal”), which doesn‟t care about value
If the land is separate property, in CPG, whichever is more
valuable becomes the principal
So if the conjugal house is more valuable than the
separate land, then the land becomes conjugal upon
reimbursement during dissolution
When should reimbursement be made?
Not required UNTIL there is liquidation of the CP
property.
But there is no prohibition against early
reimbursement.
BUT change in ownership only vests upon respective
reimbursements, which only happens during liquidation of the
partnership
Determine whether there is a change in ownership
upon the time the improvement was made
If the land is conjugal, the usual rule on property applies (the
land is always the principal)
What if the house gets destroyed prior to liquidation of the
partnership?
There is no conversion because conversion only
happens upon reimbursement during liquidation.
Charges upon the ACP/CPG
ACP
Support of: a) spouses, b) common
children, c) LC of either spouse
Debts and obligations: a) contracted
by both spouses, or b) by one
spouse for benefit of community
Expenses, taxes, repairs: a) major or
minor upon CP; b) for mere
preservation during marriage of
separate property used by the family
Expenses for: a) either spouse‟s
self-improvement b) what both
29
CPG
Same
Same
Same, except for: b) for mere
preservation during marriage of
separate property (no qualification
because the family already benefits
from the fruits of these)
Same
spouses donated or promised to
common LC‟s self-improvement
Ante-nuptial debts of either spouse
that redounded to the benefit of the
family
Expenses of litigation between
spouses, unless found to be
groundless
If exclusive property is insufficient,
but subject to deduction of share of
debtor-spouse upon liquidation: 1)
ante-nuptial debts not redounding to
benefit of family; 2) support for
illegitimate children; 3) liabilities due
to crime or quasi-delict
No need to prove first that
the other obligations of the
AC have been covered
(unlike in CPG where the
other charges must first be
covered), because usually
there are no separate
properties in ACP
o
Same
It is deemed as not redounding to the benefit of the AC/CP
because while there can be incidental benefits (e.g. increase in
goodwill) the benefit is not directly redounding to the AC/CP.
Administration of property
Same
CONJUGAL PROPERTY
N/A
Who administers conjugal property?
o The spouses, jointly
What if there is disagreement?
o Husband‟s decision prevails
o But wife may file for proper remedy within 5 years of contract
implementing the decision
What is one spouse is unable to participate or is incapacitated?
o The other spouse may assume sole powers of administration
(with no need for judicial declaration)
What is not within the scope of powers of the sole-administratorspouse?
o Does not automatically include power to encumber or dispose,
unless:
1. With consent of other spouse
in writing
2. With judicial authorization
o Without this, deemed void. But it is a continuing offer on the
part of the offering spouse and the third person. Perfected by
other spouse‟s consent or judicial authorization.
What is the nature of the other spouse’s consent
that is needed?
It must be written consent because mere
participation or awareness in the negotiation
is not enough.
o What if the other spouse is not incapacitated or is not
unable to participate in administration, can the other
spouse obtain judicial authorization to dispose?
No. The judicial recourse is available only when the
other spouse is incapacitated or cannot participate.
Can a spouse make donations alone?
What is the rule when community property is insufficient to cover
for expenses (except for the last one, which has a special rule)?
o The spouses are solidarily liable with separate properties for
unpaid portion
o Reimbursement from AC due upon liquidation.
What is the difference in rules for debts not redounding to the
benefit of the family, support of IC, and liabilities for quasi-delicts
and delicts?
o For ACP: No need to prove first that the other obligations of the
AC have been covered
o For CPG: Will only be covered by CP after covering other
charges
What is the nature of one spouse acting as surety or guarantor to
another obligation?
30
o
No. He or she cannot make donations from
community/conjugal property unless with other spouse‟s
consent
o Exception:
MODERATE donations for charity or family
rejoicing/distress
What may be disposed by will?
o Interest in community property, but not specific properties
therein
4. LS
5. Judicial separation of property
What is Voluntary dissolution of regime?
o May be jointly filed in a verified petition by the parties
o What is specially required for a voluntary dissolution?
Notify all creditors. Court takes measures to protect
them.
Compare abandonment to separation in fact?
o Separation in fact is physical separation. It can be with or
without just cause (if without just cause, no right to be
supported). It doesn‟t follow that when there is de facto
separation that the spouse is not complying with marital
obligations. Abandonment implies failure to comply with
familial obligations too.
o What is abandonment?
Left conjugal dwelling without intention of returning
Prima facie assumed if one left conjugal dwelling for 3
months or failed to give any information about his
whereabouts for same period
How does separation in fact affect the property regime?
o 1. Spouse who leaves conjugal home without just cause loses
right to demand support
o 2. When consent is needed from that spouse by law, judicial
authorization is in summary procedure
o 3. In absence of sufficient community property, separate
properties of spouses are solidarily liable for support.
The present spouse, in summary proceedings, may
be given judicial authority to administer or encumber
specific separate property of the other spouse and
use fruits/proceeds to cover absent spouse‟s share.
Contra: Abandonment by one spouse, or failure to comply with familial
obligations (marital, parental, property)
o Aggrieved spouse may petition court for:
1. Receivership
2. Judicial separation of property
3. Sole administration of the AC/CP
EXCLUSIVE PROPERTY OF SPOUSES
What is the general rule?
o Spouses administer their exclusive properties
When can the courts transfer administration of exclusive property
of one spouse to the other?
o 1. One becomes the other‟s guardian
o 2. Spouse judicially declared an absentee
o 3. Spouse sentenced to penalty carrying with it civil interdiction
o 4. Spouse becomes fugitive from justice or in hiding as
accused in criminal case
o N.B. Distinguish this from administration of conjugal property
where there is no need for court approval to assume
administration
What if the other spouse is incompetent, has conflict of interest, or
there is similar other just cause?
o The court can appoint some other person as administrator
N.B. Administrating spouse cannot dispose of other spouse‟s separate
properties
Dissolution of ACP/CPG
same rules
What are the grounds to dissolve the regime?
o Where marriage is dissolved:
1. Death of one party
2. Nullity
3. Annulment
o Where marriage is not dissolved:
Liquidation of ACP/CPG and liabilities
31
1
ACP
Inventory of assets (community,
exclusive)
2
3
4
5
Pay community debts from assets
Deliver remaining exclusive
property
6
7
8
9
Deliver net assets of community,
considering, if present:
1. Agreement (equal by
default)
2. Waiver of share
3. Forfeiture by spouse in
BF
Deliver presumptive legitimes
Deliver conjugal dwelling and lot to
spouse with majority of children
CPG
Inventory of assets (community,
exclusive)
Credit CP with amounts advanced
to spouses‟ personal obligations
Reimburse spouses for:
1. Exclusive funds used for
acquiring conjugal
property
2. Value of exclusive
property converted to
conjugal property
Pay community debts from assets
Deliver remaining exclusive
property
CP pays spouse for deteriorated
movables that benefited family
(unless indemnified elsewhere)
Deliver net assets of community,
considering, if present:
1. Agreement (equal by
default)
2. Waiver of share
3. Forfeiture by spouse in
BF
Deliver presumptive legitimes
Deliver conjugal dwelling and lot to
spouse with majority of children
Simultaneous liquidation of two marriages contracted before
Family Code of 1988:
o Default: divide property depending on agreement
o If none: Determine the capital, fruits, income of each
community
prove by evidence
o If there is doubt: Divide between two communities in proportion
to capital and duration of each
o When does this apply?
In a situation as in where H and W got married, W
died, but H did not liquidate. H gets married to W2,
and then their marriage is dissolved. Liquidation
would be simultaneous.
NOTE, however, that this will not happen under the
FC because if there is no liquidation of the first
marriage, the second marriage is under mandatory
regime of CSP.
For CPG
support during liquidation:
o Taken from fruits and income pertaining to their shares in
properties under liquidation
o If the support exceeds fruits and income pertaining to them
excess is considered advances on shares
o If the liabilities of the CP exceed the assets, SS is not entitled
to any support during liquidation
Separation of properties during marriage
What is the general rule?
o Separation of property can only take place by judicial order
(even voluntary separation)
o Either: voluntary or for sufficient cause
1. List of sufficient causes (see below)
2. Voluntary dissolution
3. Mandatory regime of CSP
Grounds for judicial separation of property:
o [Judicially declared grounds]
o 1. Civil interdiction
o 2. Judicially declared an absentee
o 3. Judicial declaration of loss of parental authority
Rule on dissolution by death (ACP and CPG):
o Liquidate in judicial estate settlement proceedings
What if there is no judicial estate settlement proceeding?
o Within one year, must:
1. Judicially liquidate AC/CP, or
2. Extra-judicially liquidate AC/CP
o What if there is no liquidation within the one year period?
Any disposition or encumbrance of the
community/conjugal property is VOID
o What if there is subsequent marriage without liquidation?
Mandatory regime of CSP for the subsequent
marriage
32
o
o
[Those that have to be proved]
4. Abandonment by spouse or failure to comply with familial
obligations
o 5. Administrator-spouse has abused privilege
o 6. At time of petition, spouses are sep-in-fact for at least 1 year
and reconciliation is highly improbable
o N.B. For grounds 1, 2, and 3
enough to present judicial
declaration
Procedure for voluntary separation:
o 1. Spouses file verified joint petition to court
o 2. Petition lists all creditors
o 3. Creditors personally notified
No need for publication
o 4. Pendency: AC or CP supports spouses or children
o 5. Court enters decree to convert regime to CSP
o 6. Record in LCRs and registries of property
What are the effects of separation of property?
o 1. Liquidate old property regime and apply CSP
o 2. Creditors not prejudiced
Spouses still solidarily liable with separate properties
to creditors
o 3. Mutual obligation to support still continues unless there was
legal separation
How can there be revival of prior property regime?
o File motion in court for decree of revival
o When can there be a revival:
1. Civil interdiction terminates
2. Absentee returns
3. Court satisfied that abusive admin will not abuse
again
4. Parental authority restored
5. Abandoner returns
6. Separated-in-fact spouses resume common life
7. Agreement, after voluntarily dissolving regime
NO voluntary separation may be granted
again
When does CSP apply?
o Chosen through MS
What are the kinds of separation of property?
o Extent:
1. Total
2. Partial: those not agreed upon as separate shall be
AC property
o As to kinds of property:
1. Present property
2. Future property
3. Both
What are the rules in administration and ownership?
o Each spouse administers and owns, disposes, encumbers, etc.
own property without other‟s consent
o Each spouse gets his earnings from profession, business, and
all fruits from property
How are family expenses borne?
o Borne by both spouses, in proportion to income
o In case of insufficiency or default: in proportion to market value
of separate properties
What is the rule on liability to creditors?
o Liability is solidary [note!]
PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE
Parties capacitated to marry and living together exclusively (147)
Requisites for 147?
o 1. Man and woman capacitated to marry each other
o 2. Live exclusively with each other as husband and wife
o 3. Without marriage or under void marriage
o 4. Both have no existing valid marriage with someone else
Who owns wages and salaries?
o Owned in equal shares
Who owns property acquired jointly through work or industry?
o Governed by co-ownership (proportionate ownership)
Thus, according to shares actually put in
o What is the presumption?
CSP Regime
33
o
Party who did not participate in acquisition of property
contributed jointly, through care and maintenance of
family and household
o Where does this rule not apply?
1. Gratuitous title
2. Acquired in exchange for exclusive properties
When can there be disposition of properties owned in common?
o Cannot dispose unless with consent of the other (this is
different from normal co-ownership)
o Until termination of cohabitation
What is the rule on termination of cohabitation if marriage is void,
and only one party is in GF?
o Share of party in BF in co-ownership forfeited in favor of:
1. Common children
2. In case of predecease of common child, to
descendants of that child
Repudiation
leads to representation for
descendants
3. If none, to innocent party
o Forfeiture upon termination of cohabitation
o
o
Share in co-owned properties accrue to AC or CP of prior
marriage
If party in BF, forfeit shares to:
1. Common children
2. Descendants of that child in case of predecease
3. Innocent party
If both are in BF
rules on forfeiture still apply. [Dean Del:
“so magpapalitan lang sila ng property.”]
THE FAMILY AND FAMILY HOME
Which relations fall under the family?
o 1. H and W
o 2. Parents and children
o 3. Ascendants and descendants
o 4. Brothers and sisters, whether full or half-blood
What is the special pre-requisite for suits between family
members?
o Prior earnest efforts to compromise
What are exceptional cases, because they cannot be
compromised?
o 1. Civil status of persons
o 2. Validity of marriage/LS
o 3. Ground for LS
o 4. Future support
o 5. Future legitime
o 6. Jurisdiction of courts
Who may constitute a FH?
o Jointly by spouses
o Unmarried head of family
Can FH be on rented land?
o No. The implication is a FH must be permanent, and hence
must include the land.
What is the exemption of a FH?
o It is exempt from execution, forced sale, or attachment to the
value allowed by law
o Except:
1. Non-payment of taxes
Parties not capacitated to marry or not living together exclusively (148)
To which does this apply to?
o 1. Bigamous marriages
o 2. Adultery or concubinage
o 3. Both man and woman are married to other persons
o 4. Multiple alliances of same married man
What properties are owned in common?
o ONLY properties actually acquired by joint contribution are
owned in common, proportionate to contributions. So:
Wages and salaries are EXCLUSIVE
Care by other party to home, children, etc. or moral
inspiration is not included
o What is the presumption for actual contributions?
Actual contributions deemed to be equal
If one party is married to another:
34
2. Debts prior to constitution of FH
3. Debts secured by mortgage on the premises before
or after construction
4. Debts due to laborers who constructed or rendered
materials for the building
How is a FH constituted?
o Automatic, by operation of law
But this provision of the FC does not retroact to FHs
constructed prior to 3 August 1988
o Only one FH allowed
o Value must be:
300K for urban areas
200K for rural areas
Who are the beneficiaries of a FH?
o 1. H and W or the unmarried head of family
o 2. Ascendants, descendants, brother and sisters (whether
legitimate or illegitimate) who are actually living in the FH and
dependent on the head for support
How is a FH sold?
o By the owner, with written consent of person constituting it, the
latter‟s spouse, and majority of beneficiaries of legal age
What if one of the spouses (or both) or the unmarried head die?
o The FH continues for 10 years or as long as there is still a
minor beneficiary
o Heirs cannot partition it unless there is compelling reason for it
What if the FH increases in value beyond that allowed by law?
o If it is due to voluntary improvements introduced by the owners
or beneficiaries, then the FH can be executed.
Children by nature
A. Legitimate:
o 1. Conceived OR born during marriage of parents:
o 2. Children conceived through artificial insemination of wife
Either with sperm of husband, of a donor, or both
o What is the special requirement for artificially inseminated
children?
Husband and wife must both authorize or ratify
procedure in a written instrument
Record it in the civil registry, with birth certificate
before the birth of the child
B. Illegitimate:
o Those conceived AND born outside valid marriage
o Exceptions?
1. Void marriages where solemnizing officer had no
authority, but at least one spouse in GF
2. Art. 36 nullity
3. Art. 53 nullity
C. Legitimated
o Who can be legitimated?
Children conceived and born outside of wedlock of
parents NOT disqualified by any impediment to marry
each other
2009 amendment: if the only impediment is age, then
the child can be legitimated
o How are they legitimated?
Through subsequent valid marriage between the
parents
N.B. Annulment of voidable marriage does not affect
o What is the effect?
1. Effects retroact to time of child‟s birth
2. Legitimation of children who died before the
marriage benefits descendants
So it can benefit a dead child with his own
descendants
o Who can file an action to impugn legitimation?
Only by those prejudiced in their rights
PATERNITY AND FILIATION
Kinds of filiation
1. By nature
o Legitimate
o illegitimate
2. Adoption
35
o
B. Private handwritten instrument
and signed by parent concerned
Secondary methods:
1. Open and continuous possession of status
of legitimate child
2. Other means in ROC and special laws
o When must action to claim legitimate filiation be filed?
1. By child, during his or her lifetime
2. Transmitted to heirs (for up to 5 years), if:
Child dies during minority
Or in state of insanity
N.B. Action filed by child survives even if either party
dies
o What are the methods to claim illegitimate filiation?
Same way, and with the same evidence as legitimate
filiation
o When must action to claim illegitimate filiation be filed?
1. PRIMARY methods: up to child‟s lifetime
2. SECONDARY methods: up to alleged parent‟s
lifetime
o H and W were married and during their marriage, children
A and B were born. X, in a notarized instrument,
acknowledged A and B as his illegitimate children. X died.
On the strength of this declaration, A and B sought to
participate in the settlement of X’s estate, which the heirs
of X contested. Does the acknowledgement of illegitimacy
hold water?
No. Both A and B were conceived/born under a valid
marriage and are thus legitimate. Recognition of
illegitimacy, even through proper means, cannot
defeat presumption of legitimacy of children, which
was not impugned by H in this case.
B. To impugn filiation
o How may the legitimacy of a child be attacked?
ONLY in a direct action or proceeding. (Sayson v. CA)
o Who may impugn a child’s legitimacy?
1. Husband ONLY, by default
Ex. testamentary and intestate heirs
Creditors excluded – because they only step
into the picture when there is repudiation of
inheritance by heirs
From five years from time their cause of action arises
Cause of action accrues from death of
putative parent (From minutes of committee
meeting)
B and G are college sweethearts in Manila. When they graduated,
G was 7 months pregnant. Unknown to G, B promised to marry his
childhood friend C in Cebu after graduation. 2 months before B
and C married, G gave birth to W. During B and C’s marriage, C
gave birth to X. Unbeknownst to C, whenever B has a business
trip in Manila, he still sees G and because of this, G gave birth to Y.
Unbeknownst to B, when he’s away, C has relations with the
plumber, P. C gave birth to Z. C died. Afterwards, B and G got
married. What is the status of the children?
o 1. W is legitimated, because W was born when B and C were
not yet married, so there was no impediment. The subsequent
marriage of B and G legitimated W.
o 2. X is the legitimate child of B and C. G is X‟s step mother.
o 3. Y is the illegitimate child of B and G because Y was
conceived and born outside of valid marriage.
o 4. Z is the legitimate child of B and C. Even if P was the real
father, Z was conceived and born within a valid marriage and
will remain that way until or unless B impugns his legitimacy.
NOTE: the rule is different from Y, because in Y‟s
case, it‟s obvious that C was not the mother. It‟s
more difficult in the case of fathers.
Actions regarding filiation
A. To claim filiation
o What are the methods to claim legitimate filiation?
Primary methods:
1. Record of birth in civil registrar
2. Admission of legitimate filiation in:
o A. Public document or
36
o
o
2. Heirs of husband, if:
A. Husband dies before expiration of period
fixed to bring action
B. Husband dies after filing complaint, and
did not desist
C. Child born after death of husband
What are the only grounds to impugn a child’s legitimacy?
1. Physically impossible for H to have sexual
intercourse with W within first 120 days of 300 days
(first 4 months of the 10 months) which immediately
preceded birth of the child; due to:
Physical incapacity of H to have sexual
intercourse with W
H and W living separately, and sexual
intercourse not possible
Serious illness of H preventing sexual
intercourse with W
2. Proved through biological or scientific reasons, that
the child could not have been that of the H
Human Leukocyte Antigen (HLA) test
conclusive determination
Blood tests can disestablish paternity
DNA tests
A.M. No. 06-11-5-SC
o CONCLUSIVE of non-paternity
o If probability of paternity value is
less than 99.9% = corroborative
o If probability of paternity value =
99.9% or higher, then it creates a
disputable presumption of paternity
3. Artificial insemination with no written authorization
or ratification
Or gotten through mistake, fraud, violence,
intimidation, undue influence
What is the period to impugn?
A. Within 1 year from knowledge of birth or recording
in civil register: if husband (or heirs) resides in city
where birth took place or was recorded
B. 2 years, if residing in Philippines but not in place of
birth or recording
C. 3 years, if abroad
If birth concealed or unknown, when do you start
counting the period?
From knowledge of birth or recording,
whichever came first
o Considered legitimate even if:
Mother declared against its legitimacy
Or mother has been sentenced as adulteress
Mother contracting a second marriage within 300 days (10 months)
after termination of first marriage:
o Child belongs to the first marriage if:
Child born within first 180 days (6 months) after
second marriage is solemnized
AND MUST BE within 300 days after first marriage
terminated
o Child belongs to the second marriage if:
Child born after 180 days after second marriage
solemnized
(Even if within 300 days after first marriage
terminated)
So the rule is: BOTH periods must concur for the first
marriage to have the child. Else, second marriage
wins.
o N.B. these are mere presumptions. And regardless, the child
will be legitimate
o What about children born after 300 days (10 months) of
termination of the first marriage?
No default status. Up to the one alleging legitimacy or
illegitimacy.
ADOPTION
RA 8552
Who may adopt:
37
Filipino adopter
Alien
18+ years old
At least 16 years older
than adoptee (subject
to exceptions)
Full civil capacity
GMC, not convicted of
crime involving moral
turpitude
27+ years old
At least 16 years older
than adoptee (subject
to exceptions)
Legal capacity to adopt
certified by diplomatic
or consular office
Country has diplomatic
relations with the
Philippines
GMC, not convicted of
crime involving moral
turpitude
Emotional and
psychological capability
Emotional and
psychological capability
Can give care/support
Can give care/support
3 year residence before
adoption and until
decree has been
entered (subject to
exceptions)
Alien under Intercountry adoption act
27+ years old
At least 16 years older
than adoptee (subject
to exceptions)
Legal capacity to adopt
certified by diplomatic
or consular office
Country has diplomatic
relations with the
Philippines
GMC, not convicted of
crime involving moral
turpitude
Agrees to uphold
relevant UNCRC,
Philippine law, R&R of
inter-country adoption
Emotional and
psychological capability
(has undergone
counseling)
Can give care/support
Alien: (same, capacity, residence, age, no abuse)
o 1. SAME as above
o 2. Certified by diplomatic/consular office that he has legal
capacity to adopt under his laws and that the country allows
the adoptee to become his son/daughter
o 3. Country has diplomatic relations with Philippines
o 4. Living in Philippines at least 3 years before adoption
application, and maintains residence until adoption decree
entered, except:
1. Former Filipino who seeks to adopt relative by
th
consanguinity within 4 degree
2. Adopting legitimate son/daughter of Filipino spouse
3. Married to Filipino spouse and seeks to jointly
th
adopt a relative by consanguinity within 4 degree of
Filipino spouse
o 5. At least 27 years old and 16 years older than adoptee at
time of application
Guardians, with respect to their wards:
o 1. After termination of guardianship
o 2. Clearance of liabilities
Who must adopt?
o By default, the husband and wife must jointly adopt
o Exceptions to this?
1. Spouse adopted legitimate child of the other
2. Spouse seeking to adopt own child
Other spouse must consent
3. Spouses legally separated
o N.B.: This rule is important. BOTH the H and W must jointly
adopt. If one spouse is qualified but the other is not, then there
can be no adoption.
Ex., a former Filipina who became American wanted
to adopt her younger minor brother. This is fine. But
if her American husband is not qualified (ex. there is
no residency requirement yet), then he cannot adopt.
The petition will fail.
When can a Filipino adopt: (capacity, character, age)
o 1. Legal age
o 2. Full civil capacity and legal rights
o 3. GMC, and not convicted of crime involving moral turpitude
o 4. Emotionally and psychologically capable of caring for
children
o 5. Can provide care/support
o 6. At least 16 years older than adoptee, except if:
Adopter is biological parent
Spouse of adoptee‟s parent
38
o
Note: in the case above, the waiver of residency
period does not apply to the alien husband because
the brother is not the legitimate child of the wife yet.
Who may be adopted?
o 1. Person below 18 judicially or administratively declared
available for adoption
o 2. Legitimate child of one spouse by the other spouse
o 3. Illegitimate child of adopter, to improve status
o 4. Person of legal age, if prior to adoption and since minority,
consistently treated and considered as own child by adopter
o 5. Child whose adoption has been previously rescinded
o 6. Child whose biological/adoptive parents died
But not within 6 months of death of parents
Whose consent is needed for the adoption?
o 1. Adoptee, if 10 years old or above
o 2. Biological parents of child if known or government
instrumentality caring for the child
o 3. Legitimate and adopted children of adopter and adoptee, if
over 10 years old
o 4. Illegitimate children, if over 10 years old and living with
adopter and spouse
o 5. Spouse of adopter or adopted, if any
What are the effects of adoption?
o 1. All legal ties between the biological parents and the adoptee
are severed
Except when it is the biological parent that is the
adopter
o 2. The adoptee becomes the LC of the adopter
o 3. Adopter and adoptee obtain reciprocal successional rights
(just them)
What is the effect on succession rights under FC, Articles 189-90?
N.B. There is controversy whether these still apply,
but these were included in the Bar syllabus, so take
note.
o 1. The adoptee remains an intestate heir of his biological
parents and blood relatives
2. If adopters concur with parents/legitimate ascendants of the
adoptee, they divide the estate ½ to the parents, ½ to the
adopters
o 3. If adopters concur with SS or ICs of the adoptee, then divide
the estate ½ to adopters and ½ SS or ICs
o 4. If adopters concur with SS and ICs of the adoptee, then
divide the estate 1/3 to adopters, 1/3 to SS, 1/3 to ICs
o 5. If only adopters, they get everything
o 6. If only biological relatives, follow ordinary succession rules
o N.B. if the adoptee has legitimate children/descendants, then
just like ordinary succession, the adopters are excluded.
Who can rescind adoption?
o JUST the adopted child. Never the adopter.
Grounds to rescind?
o 1. Repeated physical or verbal abuse by adopter
o 2. Attempt on life of adoptee
o 3. Sexual assault or violence
o 4. Abandonment/failure to comply with obligations
Effects of rescission:
o 1. Restores parental authority of biological parents, if adoptee
is still a minor/incapacitated
o 2. The amended birth certificate is cancelled
o 3. Rights to succession are restored, but not as far as there are
already vested rights
Who may adopt under the Inter-country Adoption Act (RA 8043)?
o 1. At least 27 years old and at least 16 years older than the
prospective adoptee
Except:
1. Adopter is biological parent
2. Adopter is spouse of biological parent
o 2. If married, the spouse must jointly file for adoption
o 3. Has capacity to act under national laws and undergone
counseling in his country
o 4. Not convicted for crime involving moral turpitude
o 5. Eligible to adopt under national law
o 6. Can give proper care and support to the child
39
o
o
7. Agrees to uphold UNCRC, Philippine Law, and the R&R of
the Inter-country adoption act
o 8. Country has diplomatic relations with the Philippines
o 9. Possesses all qualifications and none of the disqualifications
under Philippine law
Where is a petition under RA 8043 filed?
o 1. RTC with jurisdiction over the child
o 2. With the Inter-country Adoption Board through a
governmental or accredited private intermediate agency in the
country of the prospective adopters
What supporting documents must be filed?
o 1. Birth certificate of parents
o 2. Marriage contract if married or divorce decree
o 3. Written consent of their biological children above 10 years of
age (sworn statement)
o 4. Physical, medical, and psychological evaluation by licensed
physician and psychologist
o 5. ITRs or other documents showing financial capability
o 6. Police clearance
o 7. Character reference of local church or minister, employer,
and member of immediate community knowing the applicant
for at least 5 years
o 8. Recent postcard-size pictures of applicant and immediate
family
What applies for judicial proceedings?
o Rules of Court
This is valuable if there is not much resources to provide
support with
o System of priority found in FC
Who are the persons required to support each other?
o 1. Ascendants and descendants
No matter how far removed
In the case of illegitimate ascendants or descendants
in the direct line:
Seems to stop at parents, and their
children, whether legitimate or illegitimate,
and their descendants, whether legitimate or
illegitimate
But the effect is really just the same. The
code just wants to make it clear that there
are no illegitimate parents or illegitimate
ascendants. But basically it is the same. So
illegitimate children can claim from their
“illegitimate grandparents.”
o 2. Collateral relatives: limited to brothers and sisters
No other collateral relatives
Half-brothers and sisters are considered legitimate
and are entitled to support
If the illegitimate brother or sister is a minor, you are
required to support him or her
If he or she is no longer a minor, you ask for the
reason why he needs support
E.g. he is indolent, then you are not required
E.g. he is a paraplegic, sick, and has no job
opportunities, then you are required to
o 3. Spouses
The only thing that binds them together is the
marriage contract. If you remove the validity of the
marriage, then there is no obligation to give support.
This is why the guilty spouse may still be required to
provide support to the innocent spouse.
Can you refuse to give support to a philandering
spouse?
SUPPORT
What is covered by support?
o Everything necessary for sustenance
o Food, clothing, medicine, education, transportation
How long does support last?
o Support doesn‟t end at age of majority
o It is still the parents‟ obligation
What is the order of support?
o There is a system of priority in support
40
No. Unless there is actual LS, there is no
legal defense to deny support.
However, an unjustifiable refusal to live with
one‟s spouse is a ground to refuse to give
support.
PARENTAL AUTHORITY
How does the rule on parental authority differ from support?
o Parental Authority is time-bound: it only lasts until the children
reach age of majority
o Thus, the only “freak” situation is the giving of consent for
marriage, even until 21 years old. This is the outlier.
What does Parental authority cover?
o 1. Custody
o 2. Discipline (proportionate to offense)
What are the concomitant obligations?
o Support
o Moral and spiritual guidance
o Provide good environment, etc. (PD 603)
Two types of PA:
o 1. Parental authority over the person
Parents
ARE ALWAYS FIRST
Parents only lose if shown to be unfit
Having more resources has never been the
criteria
Take note of tender years doctrine (in
custody cases, a child under 7 goes to the
mother‟s custody unless there are
compelling reasons otherwise)
If parents are gone, substitute parental authority
(BOTH parents must be gone)
1. Grandparents – no preference, whether
parental or maternal line. If there is clash,
they go to court
2. Eldest B/S over 21
3. Anyone with custody over the child
And concomitantly, special parental authority
Teacher, in the classroom or outside the
classroom, for recognized school activity
Priority of support:
o 1. Spouse
Different from succession, where spouse is only #4
o 2. Nearest descendant
o 3. Nearest ascendant
o 4. Brothers/sisters
o Order:
Spouse
Children
Parents
Grandchildren
Grandparents
Etc.
N.B. Thus the rule is you do not exhaust going down
before going up. It alternates
Rule on plurality:
o When you have enough, you do not have to worry about the
priority of support. Just give enough to everyone.
o It will be prorated based on the ability of the provider to give.
So a child who earns more must support the parent more than
the child who earns less.
o The court can demand one person to advance, and then the
person demands from the rest.
Can the right to receive support be levied upon by attachment or
execution?
o No. Legal support is exempt from attachment and execution.
But contractual and testamentary support is NOT exempt from
attachment and execution.
o The latter are in excess of what one is required to give
Can judgment for support be considered final and res judicata?
o No. It‟s always subject to modification, depending on need and
capacity to support.
41
o
o
If there is excess, it can be used for
collective needs of the family
3. Properties owned by parents
o There can be minor children tasked
to administer certain parents‟
properties
o OWNED by parents
o Fruits and income
go to:
Parents (but parents must
pay the children, which
should be the same
amount they would‟ve paid
rd
a 3 person administrator)
Children (as earnings, not
treated as advance on
legitime)
When is parental authority terminated?
o 1. Death of parents or death of child
o 2. Emancipation of child
o 3. Adoption of child
o 4. Appointment of general guardian
o 5. Judicial declaration of abandonment
o 6. Final judgment by court divesting parental authority
o 7. Judicial declaration of absence or incapacity
Grounds for suspension and deprivation of parental authority?
o 1. Conviction of parent that has civil interdiction
Automatically reinstated upon service of penalty,
pardon, or amenesty
o 2. Court, in action, finds that the parent:
A. compels child to beg
B. Treats child with excessive harshness or cruelty
C. Gives child corrupting orders, counsel, example
D. subjects child or allows him to be subjected to acts
of lasciviousness
o 3. Subjected child or allowed him to be subjected to sexual
abuse.
What is the special rule under this ground?
Implication: responsible for injury or death
over child
o Defense: due diligence
The teacher exercising special parental
authority is SOLIDARILY AND PRIMARILY
liable. The parents and those with substitute
parental authority: subsidiarily liable
2. Parental authority over property of the children
Legal guardianship
Automatic if value of child‟s assets are less
than P50,000
If more than P50,000: required to file a bond
and must be appointed by the court in a
summary proceeding
Even if you are granted authority by the
court, legal guardianship authorizes only
acts of administration; NOT acts of
ownership
There is separate approval if you want to sell the
child‟s properties
Rules on property of minor children:
1. Properties of children (regardless of how
acquired)
o OWNED by the children. Even
minors can own property.
o Parents only have legal
guardianship. They can administer
it, and must account in a fiduciary
capacity.
o If LC – joint admin by father and
mother; if disagreement, father
wins, but mother can seek court
redress
2. Fruits and income of the property
o Can be used by the parents
o Not for their own; ONLY to support
the child
42
o What appears in the birth certificate
To change: Rule 103 of ROC
Deprivation of PA is permanent
Funerals
What can you use as surname?
Who has the duty and right to make funeral arrangements?
o 1. Spouse
o 2. Descendants of nearest degree
o 3. Ascendants of nearest degree
o 4. Brothers and sisters
o What if there are descendants of same degree or several
siblings?
Older is preferred
o Who has preference for ascendants?
Paternal side
Against what property are funeral expenses chargeable?
o Property of deceased
o If married, charge to conjugal property
Legitimate and legitimated children:
o MUST use father‟s surname
Illegitimate children:
o Only mother‟s surname
o Revilla law: allows use of father‟s surname even if illegitimate,
if recognized in a private handwritten instrument or public
document
This is not mandatory
Adopted children:
o If adopted by both H and W, use husband‟s surname
o If solely adopted, use sole adopter‟s surname
o If solely adopted by married woman, use married woman‟s
surname
Married women:
o Not required to use surname of the husband. Can retain
maiden name
If you change your surname to your husband‟s,
there‟s no turning back
o Options:
1. Keep maiden name
Ms. Gloria Macapagal
2. Use maiden name plus husband‟s surname
Ms. Gloria Macapagal-Arroyo
3. Use Mrs., then husband‟s surname
Mrs. Jose Miguel Arroyo
Remo v. DFA
o Woman adopted legally her husband‟s surname. Her passport
was under that name. In renewal, she asked the DFA if she
can return to her maiden surname. But there is no annulment,
or whatever ground to revert. She claimed that she had the
option.
o HELD: Cannot do this.
Rules:
Emancipation
When is someone emancipated?
o Just by reaching 18
Still pegged at 21:
o 1. Parental consent for marriage
o 2. Art. 2180 of NCC (respondeat superior)
Retroactivity of the FC
Does the FC retroact?
o Yes, as long as it does not affect vested rights (ex. Illegitimate
children)
SURNAMES
Purpose:
o 1. Interest of the State: because it seeks to prevent confusion
of identity
o 2. To prevent escaping from criminal liability
What is the legal name of a person?
43
ANNULMENT –
If guilty spouse, MANDATED to return to maiden
surname
If innocent spouse, may retain husband‟s surname or
revert, unless she or the husband has remarried
o NULLITY – same
o LEGAL SEPARATION
Whether guilty or not, retain since they are still
married
o DEATH of husband
Can still use the husband‟s surname
May revert to maiden name
Or add “Vda. de Surname”
What is the rule on junior?
o You can only give junior to the son.
o There is no rule on giving daughters “junior”
What entries in the Civil Registry may be changed or corrected
without judicial order?
o ONLY clerical or typographical errors and first/nicknames may
be changed under the Clerical Error Law (RA 9408)
o Cannot change:
Nationality
Sex
Age
Status
o NOTE: name can only be changed once
When can there be change of name under Rule 103?
o N.B. you can change surnames through Rule 103
o 1. Name is ridiculous, tainted with dishonor, extremely difficult
to write or pronounce
o 2. Consequence of change of status, such as when child is
legitimated
o 3. Change is necessary to avoid confusion
o 4. To improve social standing, as long as in doing so, there is
no injury to the State or third persons (Caledron v. Republic)
o
Stages:
1. Provisional absence
o An ad hoc stage, since there are certain things that have to be
done (ex. Signing contracts, withdrawing from bank)
o Legal representation: spouse is preferred
Only exception: when there is legal separation
But court can appoint someone else if there is
reasonable ground
2. Declaration of absence
o Two years from time of disappearance, unless administration
of power of attorney was left with someone else, then five
years
o Procedure; prove that he has been missing/absent for a certain
period of time
Administrator of absentee is appointed
o If he reappears, he takes back his properties
3. Presumptive death
o Here, transfer to administrator of presumptively dead person
o If proven to be dead, then transfer to administrator or executor
of estate
Then proceed to settlement of estate
o Periods?
7 years of absence
presume dead
10 years
for purposes of succession
If over 75 years of age
down to 5 years
o Periods for purposes of declaration of presumptive death
for remarriage?
4 years for ordinary absence
2 years for extraordinary absence
What is the difference?
4 years – there is no danger of death
2 years – there is danger of death
o If the person reappears, return his assets to him
If the spouse remarried, then follow Arts. 42 and 43 of
FC
ABSENCE
44
o
PROPERTY
Does incorporation always have to be to the soil?
No. Incorporation can be to another immovable; need
not be to the soil per se.
Another consideration is if it cannot be separated
without breaking the material or the obect (this refers
to the attached object, obviously, because even if
land breaks, it still has value.)
o X constructs a building on a piece of land he is merely
leasing from Y. Is it real or personal?
Real. It doesn‟t matter that who owns the land if by
incorporation. It only matters if by destination.
o If a painting is embedded into the cement wall of a house,
thus becoming part of the wall, what happens to it?
The painting becomes immovable by incorporation.
Because the painting will be destroyed when you try
to remove it.
It doesn‟t matter what the intent is; the fact of
incorporation is the controlling factor.
Does ownership of the painting and the wall
matter?
No. The fact of incorporation is what matters
What is the controlling factor for immovable by destination?
o Intention of the owner of the property in question.
o Give examples of immovable properties by destination.
Statues, etc, used for embellishment.
o If I hang the painting on the wall of Justitia (and I don’t
own Justitia)?
It does not become immovable by destination
because it has to be placed by the owner of the place
where the painting is found, and he intends that it be
an embellishment.
o Ateneo owns a St. Thomas More painting and hangs it in
the walls of Justitia. What happens?
It is immovable property by destination, because there
is intent to make it an ornament and to keep it there
indefinitely.
When do machines or equipment become immovable by
destination?
CLASSIFICATION OF PROPERTY
How does the code define property?
o Those subject to appropriation by man.
o “Things” would thus be a broader concept since it covers even
those not subject to appropriation.
o The code weirdly interchanges the use of these two words.
What are the classifications?
o Real/immovable or personal/movable properties
o Public dominion or private ownership
What are real properties?
o 1. Immovable by nature
Land
o 2. Immovable by incorporation
Buildings, constructions adhered to the soil
Trees, plants and growing fruits, while attached to the
land
Those that cannot be separated without damage
o 3. Immovable by destination
Ornaments
Machines
Animal houses
Loading docks
Fertilizer actually used
o 4. Immovable by analogy
Contracts for public works
Servitudes and other real rights over immovable
property
What is the only real property which is immovable by nature?
o Land
Why do we consider buildings immovable?
o Because they are incorporated/adhered to the soil.
o If the bahay kubo can easily be moved and transported, then it
is personal property, not real property.
45
o
lease agreement stated that they are considered personal property.
What are they?
o Personal property, based on stipulation between the two
parties.
o As to third persons in GF, they are real property, consistent
with the code.
But if X and Y enter into a contract that deems the building as
chattel, can it be treated as such?
o Yes (Navarro v. Pineda). So while constructing the building on
leased property does not per se affect the building‟s status,
coupled with the declaration, it can. (Tumalad v. Vicencio)
o But as to third persons, it‟s considered real property. So if it‟s
publicly sold, one must compl with conditions precedent for the
sale of real property. Else, it is void. (Manarang v. Ofilada)
o When there is a chattel mortgage between two persons over a
building and a real estate mortgage over the same property
towards another, the latter wins out because the CM is void as
regards third persons. (Associated Insurance v. Isabel Iya)
What about a CM over machinery?
o It can be valid even as to third persons, since the machine is
only real property by destination if it directly meets the needs of
the business. If it‟s just stored in the factory, then it‟s personal
property.
What are the tests to determine personal property?
o 1. Exclusion test
If not included in the list of immovable property, it is
personal property
o 2. Description test
Can move from one place to another without
impairment to the real property to which they are fixed
o 3. Considered movable properties by law
Ex. Growing fruits and plants – because under Chattel
Mortgage Law, they are movables
Even if they are listed as immovable property in 415.
How to resolve: only considered as chattels under
Chattel Mortgage Law. Otherwise, immovable under
415
o 4. Considered as personal property by analogy
If they are placed in building or tenement where work or
industry is done, they are immobilized by intent of the owner.
o Ex. Computers used in a computer shop, and owned by the
owner of the building.
N.B. Does not apply to rented spaces in malls,
because you do not own the place; it is just for lease.
o Ex. Sewing machines in a clothing manufacturing warehouse,
if the machines and the warehouse are both owned by the
person.
o Animal houses:
If you intend to keep it there forever, then it and the
animals become immovable property.
Ex. Dog house in one‟s house and the dog itself
becomes immovable property.
o Loading docks:
This covers, for instance, a floating platform made
of wood and metal where machinery of a
petroleum corporation are attached. The platform
was tethered to a ship, which was anchored on
the seabed. Real or personal?
If intended to remain at a fixed place, real.
If it can be moved around and towed to other
vessels, personal.
o Fertilizers:
Also immovable by destination
What are those by analogy?
o Contracts for public works, and real rights over immovable
properties.
o Is a mortgage on land movable or immovable?
Immovable if registered in ROP
Movable if just between parties
o What about shares of stock for real estate property?
PERSONAL property. Shares of stock are always
personal property.
Machines placed in a chocolate-making factory were subjected to a
writ of seizure, which can only apply to personal property. The
46
o
Contracts, choses of action (right to sue or be sued)
Radio frequencies
Shares of stock of ANY corporation, even if the
corporation owns immovable property
Classification in fungible or non-fungible/consumable or nonconsumable:
o Only applies to personal or movable properties
o Fungible/non-fungible: based on intent of the parties
Fungible: can be substituted by others of same kind
or quality
o Consumable/non-consumable: based on nature
Cannot be used in manner appropriate to their nature
without being consumed
o Money is ALWAYS fungible
Although “Arrovo” bills are not fungible
Other classifications?
o Constitution:
Public domain
Private land
o Civil Code: - for purposes of ownership
A. Properties of public dominion
1. Properties intended for public use
2. Properties intended for public service
o Being used by the government to
render some service to the people,
but not open to everybody
o Ex. Police car
3. Patrimonial property
o “Private property” of the State; used
for entering into some business or
utility
o Also includes those from first two
classifications that are not anymore
for public use/service
B. Privately-owned property
What are the characteristics of property of public dominion?
o 1. Cannot be appropriated
o
o
o
2. Cannot be subject matter of contracts (no alienation or
encumbrance)
3. Cannot be acquired by prescription
4. Cannot be subject to attachment or execution
5. Cannot be burdened by voluntary easement
OWNERSHIP
What are the rights of the owner?
o 1. Right to enjoy the property
Jus possidendi
Jus fruendi
Jus utendi
Jus abutendi
o 2. Right to dispose of the property (Jus disponendi)
Sell, encumber, dispose, etc.
o 3. Right of action to recover (Jus vindicandi )
Note: there is no such thing as absolute ownership. What are these
restrictions?
o 1. Those in the Constitution
Eminent domain
Police power
National economy/patrimony powers
o 2. Contractual restrictions
o 3. Provisions in the NCC
Nuisance
Right of way
Art 431: use property the way you want it, but not in
manner injurious to others
Art 432: doctrine of incomplete privilege – the greater
right of more people can prevail
Ex. Destroying one‟s fence to prevent
flooding
What are means to protect one’s rights?
o Doctrine of self-help Art 429: can use reasonable force to repel
actual or imminent aggression
Elements?
47
o
1. Force employed by owner or lawful
possessor
2. Actual or threatened physical invasion
3. Invasion/usurpation is unlawful
4. Force employed is necessary to repel
When does this not apply?
When the property has already been stolen.
The provision only applies to repel the
aggressor.
o What are your actions when you lose your property?
Accion publiciana
Accion reivindicatoria
Physical boundaries of property
o Horizontal aspect
o Vertical aspect
Until Rules of Aerial Navigation
Ex. If your property is near an airport, you have
special requirements to comply with
What are the rules on hidden treasure?
o If you own the building, it is yours
o Unless it is deemed to have been part of national treasure
o If of interest to the science or arts, the State may acquire it at
their just price – divided 50-50 as well
o Ownership must not be indicated
Ex. Golden spoon engraved: Imelda Marcos
o Only manufactured products
Because if it is gold in raw state
belongs to State
To whom does the property belong to, and what are the rules on
finder’s fee?
o Finder owns property – 100%
o Finder and owner – split 50/50
As long as the finder is NOT a trespasser
X owned a piece of land where treasure was believed to have been
buried. He knew Y had a metal detector that could be used to find
treasure. Y agreed and he found treasure. To whom does it
belong?
o To X.
o
o
For there to be 50-50 split, the other person must have found
the treasure by mere chance. Here, X already knew there was
treasure buried in his land.
N.B. some commentator believe “by mere chance”
can cover even mere tips, because there is no reason
to distinguish between one who finds treasure by pure
stroke of luck and one with an unsure tip.
Remember, the requisites are:
1. Treasure is money, jewelry, precious objects
2. Hidden and unknown
3. Lawful ownership does not appear
4. Discovery is by chance
5. Discover is not a trespasser
If the thing is of interest to science or the arts, the State may
acquire it by paying just price.
Accession
It‟s an incident of ownership. Not a means of acquiring originally.
Two things:
o 1. Those produced from property (fruits) whether real or
personal (Accession discreta)
“internally generated accession”
Natural fruits
Industrial fruits
Civil fruits
o 2. Those attached or incorporated into one‟s property and
cannot be separated without damage (Accession continua)
External forces or additions to the property
Accessory follows the principal
Accession discreta
What are the kinds of fruits (accession discreta)?
o 1. Natural
o 2. Industrial
48
When someone plants something in one‟s property, there is a
situation where you can compel the person to buy your
property.
o In contrast, there is NEVER a situation where a sower can be
compelled to buy the property. You can only require him to
pay rents.
What is the rule as to expenses for planting and sowing? Who
pays for cost of the seeds, labor, gathering, preservation, etc.?
o In general, these are charged to the person who receives the
fruits.
o And as a general rule, it is the owner who gets these. But
there are instances when the law gives these fruits away to
some other person apart from the owner.
o What is the exception?
Antichretic creditor (antichresis) – the fruits are given
to the creditor, and the creditor deducts it from the
amount of the obligation, first to interest then the
principal
1
2
Know difference of Art. 443 and 449
o If fruits have not yet been harvested:
Apply Art. 449.
BPS in BF doesn‟t get indemnified.
o If fruits have already been harvested:
Apply Art. 443.
Even a BPS in BF will get compensated for necessary
expenses
o Contra: What if the BPS is in GF?
He gets compensated for what was built, planted, or
sown, regardless of whether fruits have been
harvested or not
o 3. Civil
What are civil fruits?
o Income from use of property, ex. Lease, rent of buildings
o These are synthetic because it is based on income of property.
o Who gets dividends?
For corporate law – whoever is the registered owner
as far as dividends are concerned,
For civil law – if you only bought the shares the day
before, you don‟t get all the dividends. You have to
split it proportionately.
What is the difference between natural and industrial fruits?
o Natural fruits – spontaneous products of the soil; products and
the young of animals
“Spontaneous” – they just grow, without planting,
effort, cultivation
“Spontaneous” only qualifies soil products. No need
to qualify animal products and young.
For young of animals, what is the rule?
If one person owns both father and mother,
then it doesn‟t matter.
If there are different owners, the owner of the
mother gets the young.
o Industrial fruits – products of the land through cultivation or
labor
These are mostly products of the soil. Does not cover
animals.
One must cultivate, process, plant, etc.
But the difference between natural and industrial fruits is mostly
academic, unlike planting and sowing. What is the difference
between planting and sowing?
o Planting – produces something relatively long-term or
permanent, like trees
o Sowing – a one-crop harvest like rice, corn, etc.
o N.B. the rules that apply to planting differ from rules applicable
to sowing.
How does the rule differ?
o
1
Art. 443. He who receives the fruits has the obligation to pay the
expenses made by a third person in their production, gathering, and
preservation.
2
Art. 449. He who builds, plants or sows in bad faith on the land of
another, loses what is built, planted or sown without right to indemnity.
49
Accession continua
Third person is the owner of the materials (OM)
LO/BPS/OM scenarios
General rules in accession continua:
o 1. Owner receives the extension/increase
o 2. Accessory follows the principal
o 3. The things must be so united that they cannot be separated
without injuring or destroying the property
o 4. Punitive liability attaches to the party in BF; party in GF is
not punished
Accession continua – those external in character, forming one single
object
o Apply the “accessory follows the principal” rule
o There are different accessions for movable and immovable
o Immovable property:
Accession industrial – “BPS” rules (involves industry)
Accession natural – brought about by forces of
nature; no industry involved
Alluvium
Avulsion
Change in river course
Formation of islands
o Movable property:
-ions (discussed below)
Accession industrial
o Building, planting, or sowing
o What is building?
Constructions, improvements using unnatural
materials
o Does it matter whether the building construction is
permanent or transient (ex. Slums, kubo)?
For purposes of accession, yes. Because for there to
be accession, the joining together must have some
degree of permanence.
o How many persons are involved in the B/P/S problems?
2 or 3
There is always a land owner (LO)
Second personality is B/P/S (BPS)
1. The ideal scenario is the LO, BPS, and OM is just one person. There
is no problem here. Accessory follows the principal. The presumption
is that the LO is also the BPS and OM.
2. LO and BPS is the same person; OM is a second person
o When is the LO in GF here?
When he does not know the materials do not belong
to him.
o When is the OM in GF here?
When he does not know someone else is using it, or
he thinks the materials used by the LO+BPS belongs
to the LO+BPS.
o FIRST THING TO DO: determine whether accession exists. If
the materials can be removed, then there is no problem. (Ex.
Light bulbs – take them out and return them)
o Note the basic rule: when two persons are involved and both
are in GF, give preference to the LO.
o If both are in GF, what are the rights of the LO?
Can acquire materials by paying indemnity to the
owner of the materials. Measure of expenses: cost of
the materials at the time of payment.
o If the LO was in GF and the OM was in BF, what happens?
Anyone who is in BF loses everything. He loses the
value of the materials and the owner can acquire the
materials without need for payment.
o If the LO was in BF and the OM was in GF, what happens?
1. OM can remove the materials (whether or not this
causes damage) + damages
Measure: cost of materials.
2. If OM doesn‟t want to remove the materials, the LO
has to pay the OM cost of materials + damages.
o If both are in BF, what happens?
Both are deemed in GF.
3. LO is one person; BPS+OM is another person
o When is the LO in GF here?
50
o
o
o
He is not aware that someone has B/P/S in his
property.
When is the BPS in GF here?
He doesn‟t know he is not the owner of the land. (So
he has to own land in the same area also, to think the
LO‟s land was his.) This is why most cases involving
this involves only portions or property and boundary
disputes.
In all likelihood, there is going to be accession here, unlike in
scenario 2 since here, he builds, plants, or sows. But if it can
be removed without damage, just allow removal.
If both are in GF, what happens?
1. LO can acquire what was built, planted, or sown,
but pay indemnity.
This option is always present.
Building
o If necessary improvement –
Measure of indemnity:
actual costs.
o If useful improvement –
Measure of indemnity:
actual costs or plus value
(amount of increase of
value in land).
o If luxurious improvement –
Measure of indemnity:
value at the time you enter
into possession.
(Strange rule because it
gives the LO option to
acquire the property or
not. But it would have to
stay in the property
regardless, because there
is accession.)
2. LO can compel the BPS to purchase the land.
NOTE: you can only exercise this option
when the value of the land is not
o
51
considerably [key word] higher than what is
planted or built. (Depra v. Dumlao)
3. Alternative: Can ask for rentals instead.
Value – agree on a lease contract, or if they
cannot, court decides.
When the lease period is done, cannot
compel to renew.
If he cannot pay the rentals, then you can
eject him.
BPS‟s rights:
1. Receive indemnity
2. If there has been no indemnity given yet,
there is right of retention and no need to pay
rents.
o N.B. there is right of retention if
there is GF
When is there right of removal by the LO against a
BPS, if both are in GF?
Note that this is NOT a principal remedy. It is
subsidiary: you have to choose option #2,
and then the BPS is unable to pay the
purchase value of the land.
If the LO is in GF, and the BPS is in BF?
NOTE: EVEN IF what was built, planted, or sown can
be removed without damage, BPS cannot remove
what he built, planed, or sown.
1. LO can acquire what was built, planted, or sown,
BUT with different rules.
The only time he must pay indemnity is for
NECESSARY improvements.
MWSS case: for USEFUL expense – can
acquire without indemnity.
LUXURIOUS improvements – LO will pay, if
he wants it. If LO doesn‟t want it, he doesn‟t
have to take it. Problem is, of course, it‟s
going to be attached so LO really gets it free
of charge.
o
2. LO can always compel the BPS to purchase the
land, regardless of valuation.
For sower in BF – cannot be compelled to
purchase the land, whether in GF or in BF.
Sower only pays rent. If in GF, just rentals.
If in BF, rentals and payment of damages.
3. LO can demolish/remove what was built or planted.
This is now a principal remedy in this case.
Recall: this is just subsidiary if both are in
GF, after BPS cannot pay purchase price of
land.
BPS:
If LO takes first option:
o Is entitled to indemnification ONLY
for necessary expenses.
o BPS also has no right of retention,
even if not paid.
If LO takes second option:
o BPS must purchase it. If he doesn‟t
pay, LO may sue.
Sulo ng Nayon v. Nayong Filipino: rights of parties in
this case not governed by these NCC rules. Instead,
the rights are governed by the lease agreement
existing between the two entities. The lease is an
acknowledgement of the rights of the parties; thus, a
lessee neither a builder in GF or BF. He is just a
lessee, governed by the laws on lease.
If the LO is in BF, and the BPS is in GF?
First, ask the BPS in GF what he wants to do. He has
first dibs.
BPS can:
1. Ask for removal. It doesn‟t matter whether
it causes damage or not.
2. If he doesn‟t want to remove it, the ball
passes to the LO, who has the following
choice [just one valid] –
LO‟s choice:
1. LO must acquire it, with indemnity plus
damages.
2. N/A. NOTE: cannot compel the BPS to
purchase the land
3. N/A. NOTE: cannot compel the BPS to
remove what was built or planted.
BPS here cannot compel the LO to sell him the land.
It is just an option available to the LO.
o If they are both BF?
Then both are in GF.
4. Three persons: LO, BPS, and OM
o When is the LO in GF?
If he did not know that some BPS‟ed in his land.
o When is the BPS in GF?
He thought he owned the land.
o When is the OM in GF?
He did not know someone used his materials.
o As a general rule, the claims are:
OM, as against the BPS
BPS, as against the LO
o First thing to consider: Is there accession? The BPS can
remove if there is no damage to materials AND the LO did not
choose to buy what was built, planted, or sown.
o What if they are all in GF?
Primary option belongs to the LO.
1. LO can acquire was has been built, planted, or
sown with payment of indemnity including for
materials (to the OM).
2. LO can sell the land, as long as not considerably
more valuable. Etc.
NOTE: These are the same rules as scenario 3.
BPS:
IF LO chooses to acquire the thing, BPS has
no right to remove the thing.
OM
LO chooses OPTION #1:
52
o
o
Principal remedy is against the
BPS, since he took your materials.
o Subsidiary remedy is against the
LO if the BPS is insolvent. (Basis:
“material rent lien” because in this
case, the LO received what was
built or planted)
LO chooses OPTION #2:
o OM can choose to remove the thing
if there is no damage suffered.
o If there is damage suffered –
Remedy is against the
BPS.
There is no subsidiary
remedy against LO.
For the scenarios in BF,
Just apply the rules in scenarios #2 and #3.
Can sell land (if not
considerably more
expensive)
No subsidiary liability of
LO.
Illustration of LO, BPS, OM; OM in BF:
LO
BPS
OM (in BF)
Can acquire BPS (pay
indemnity for materials
+ labor)
Until payment, has right
of retention;
Loses everything. Not
even subsidiary action
against LO.
Illustration of LO, BPS, OM all in GF:
LO
BPS
Can acquire BPS (pay
indemnity for materials
+ labor)
Until payment, has right
of retention;
Pays OM for cost of
materials
BPS pays for land.
Becomes new owner of
the land and what was
built or planted
No right of
retention in case of
non-payment
Right of removal comes
in (if it wouldn‟t cause
any damage only, since
both in GF).
Pays OM for cost of
materials
OM
Can sell land (if not
considerably more
expensive)
Cannot remove
what was
built/planted,
regardless of
whether there
would be damage
of not.
Right to receive
payment from
BPS. If BPS is
insolvent, can
subsidiarily go
after LO. [In latter
scenario, LO in
effect pays twice
for the same
materials]
BPS pays for land.
Becomes new owner of
the land and what was
built or planted
Loses everything
Illustration of LO, BPS, OM; BPS and OM both in BF:
53
LO
BPS (in BF)
OM (in BF)
Can acquire BPS. No
indemnity, except for
necessary
improvements.
Receive payment only
for necessary
improvements. No
right of retention.
Entitled to receive
indemnity from BPS,
who used his materials.
[Since both in BF –
becomes in GF as
There is LO-gf, and BPS-gf. LO-gf filed an action to recover the lot,
including the portion upon which the BPS-gf built his house. The
Trial Court ordered the BPS-gf to vacate and pay monthly rental
until the time they vacate. Correct?
o NO. First since, both are in GF, look at the options of the LO.
Since the LO doesn‟t want to buy the house, it looks as if the
LO chose option 2.
o The TC mistakenly ordered the BPS to pay monthly rental,
because being in GF, he has the right of retention until the LO
pays for the value of the expenses incurred by the BPS.
regards BPS]
But no right to
subsidiarily go against
LO [since LO in GF]
Can sell land
regardless.
Pays for land.
Can exercise right of
removal only when it
does not cause
damage. [Since both
OM and BPS in BF –
becomes in GF]
Alluvium
Alluvium is gradual deposit.
Four things to remember:
o 1. Gradual deposit of SOIL
o 2. Must deposit in banks of rivers (and maybe lakes and
creeks, since they empty into a larger body of water too)
Not applicable to seas, etc. since these are public
property
For banks of inland waters (like lagoons), do not apply
alluvium
o 3. Deposit must be done on basis of natural current of the river
Meaning, not man-made
o 4. Right of ownership belongs to the riparian owner
No need to report, ask permission, etc. By provision of law, the gradual
deposit becomes yours, automatically.
Does this mean you are protected in this additional area?
o No. Any land in the additional area is unprotected.
o So better if you subject it to the Torrens system, or else you
can lose it through acquisitive prescription.
o Even if the land receiving the alluvion is registered, the new
land is not yet. So it can be acquired by prescription by other
people. (Grande v. CA)
When does subsidiary liability of LO occur?
o Three requisites:
1) LO chose to acquire what was built or planted
2) BPS is insolvent [not mere refusal to pay]
3) OM is in good faith
What is the basic rule on BPS liability in favor of LO?
o BPS is always liable in favor of the LO, if the LO is in GF.
o [Or both BPS and LO are in BF – becomes GF]
When is there right of removal?
o Only enforceable against BPS, by the OM. So the LO has to
always choose option 1.
o The only modification: whether BPS is in GF or BF
If in GF – must not cause damage
If in BF – regardless
What are the remedies of the LO-gf if the chooses to compel the
BPS-gf to buy the land, and the BPS-gf fails to pay?
o 1. Leave things as they are and assume lessor-lessee relation
(Miranda v. Fadullan)
o 2. LO entitled to have improvement removed when the BPS-gf
fails to pay (Ignacio v. Hilario)
o 3. Sale of land and improvement in public auction, applying
proceeds to payment of value of land first to LO-gf, and the
excess delivered to BPS-gf
Avulsion
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If the new area is smaller or bigger than the land lost, it doesn‟t make a
difference. The law doesn‟t qualify.
This is abrupt. The transfer of a perceptible piece of land caused by the
current of the river, but involving a VIOLENT and SUDDEN action of the
water.
Prescription: two years to remove
o Or for uprooted trees carried by the current to another land: six
months to remove
What happens if you don’t take it out after two years?
o Dean Del thinks if you don‟t remove it after two years, it‟s gone.
It‟s not yours anymore.
o It belongs to the person to whom that property is incorporated
into
o BUT some commentators don‟t think it will belong to the
person
What about trees?
o If trees were uprooted and transferred to the other side, they
do not become trees. They are just logs.
o Six months to remove
Formation of islands
How are islands formed?
o When the water goes to a lower level
What is the rule?
o If in the seas or navigable rivers, they become part of public
property.
o If not in seas or navigable rivers, then the island belongs to the
nearest riparian owner near the island.
Ex. A and B on opposite river banks, are riparian
owners. If the island appears on the left side, it goes
to A. If on the right, to B. If in the middle, split
equidistantly
Accession in movable properties
Change of river course
N.B. Just one set of rules
Anything beneath the river is public property. So by default, when a
river bed dries up, it‟s public land. The “change in river course
provision” is an exception.
Example, a river goes through A‟s property. But it changed course to
B‟s and C‟s properties.
What happens?
o B and C, the ones who lost property, own the new dry land due
to the change of course.
o In proportion to the land lost (ex. 2 meters of water for B, 4
meters for C, so 1:2 ratio for B and C on the new dry land)
What is A’s right?
o He can choose to acquire the new dry land. Pay B and C what
is due, in proper proportion.
The government may choose to redirect the water.
Under the Water Code: the owners of the affected lands may undertake
to return the river/stream to its old bed at their own expense; but they
have to secure a permit from DPWH, and they must commence works
within 2 years of the change in course
1. Adjunction
Ex. The table and the varnish
Form one single object – cannot distinguish one from the other.
The two objects must belong to different owners
Who owns the single object?
o If you can separate them without injury (close to impossible) –
then just return
o If it cannot be separated without damage – the accessory
follows the principal
How do you know why is the principal, which is the accessory?
o First test: What property is attached to what?
o Second test: What is more valuable?
Only apply this if you cannot determine which is
attached to what
o Third test: Based on volume
55
Only apply this if values are the same or you cannot
determine what is more valuable.
In a diamond ring, which is the accessory and which is the
principal?
o The band is the principal, the diamond is the accessory. This
is notwithstanding relative values.
But if the accessory is worth much more than the principal, owner of the
accessory can ask for separation, but he has to pay for the value of the
principal since there would be damage caused.
o Ex. Diamond ring
For art, and similar materials which employ skill:
o DIFFERENT rule.
o The work of art or intellect is the principal. The canvass or
medium is the accessory.
If one of the parties is in bad faith, how do the rules change?
o If the owner of the accessory is in BF, the owner of the
accessory simply loses his accessory without remuneration,
and he is liable for damages.
o If the owner of the principal is in BF, the owner of the A has
two choices:
1. Demand return of the accessory whether there is
damage or not
2. Demand value of accessory, plus damages
Measure of indemnity:
o Of same kind and quality, or give cash equivalent based on
valuation.
2.
o
o
3.
Mixture
The two properties must lose their respective identities, so you cannot
determine which is which.
Ex. Two piles of rice get mixed together. You cannot determine who
owns which grain.
Two types of mixture:
o 1. Commixtion – If solids are mixed
o 2. Confusion – if liquids are mixed
What is the rule on mixture?
o 1. If the mixture occurred with the will of each owner:
There is a co-ownership on the basis of the
agreement.
They agree on the sharing. If there is none,
determine by proportion of contribution.
2. If not by the will of parties, but by chance:
Pro-rata sharing by both
Determine proportionate share – based on VALUE,
and not anything else
3. If only one owner was the cause of the mixture – determine
if in GF or BF:
In GF (thought other sack of rice was his): apply same
rule on co-ownership by chance
In BF: he loses whatever is his share in the mixture,
and he can be required to pay damages
Specification
There is a thing, and it is turned into a finished product through the labor
of another
(“Labor of one + material of another”)
The labor is ALWAYS the principal, and the material, the accessory –
regardless of value
What is the rule?
o Determine whether the worker is in GF or BF.
o If in GF, he gets the appropriate the thing, but indemnify the
other guy for the cost of the materials
o If the worker is in BF, the owner of the materials can simply get
his stuff, and charge the worker with damages
Exception: work of art or scientific work – the worker
can appropriate the whole thing:
But if with BF – pay damages + value of
materials
But if with GF – no damages
Quieting of title
Requisites for quieting?
o 1. Plaintiff has legal or equitable title, or interest in the real
property
56
o
o
o
2. There is cloud on such title
3. Cloud is due some instrument, record, claim, encumbrance,
or proceeding which is apparently valid or effective but is
actually invalid, ineffective, voidable, unenforceable, and
prejudicial to plaintiff‟s title
o 4. Plaintiff must return to defendant all benefits he received
from latter or reimburse defendant for expenses that benefited
plaintiff
Are tax declarations conclusive evidence of ownership?
o No. It‟s just an indicia of possession in concept of an owner at
best, but it‟s not considered as title to property per se.
What is the prescriptive period?
o If one possesses the property, there is no prescription.
Can it be filed against physical intruders?
o No. It must be against an instrument, record, claim,
encumbrance, proceeding
You cannot register a co-ownership as having separate
juridical personality.
o Co-ownership can be created by various ways (above), while
partnership must be based on agreement (since it is based on
fiduciary relationship, trust, confidence)
What is the right of a co-owner over the entire property?
o A co-owner has “borderless” rights; one can use the entire
thing. So an owner of one third of a table can use the whole
table.
What are the limitations on the right to use the thing owned in
common?
o 1. It must be according to the purpose for which it was
intended
o 2. It must not injure the interest of the co-ownership
o 3. It must not prevent other co-owners from using it according
to their rights
Does he have right to possession?
o Yes, over the whole thing.
o You cannot prevent other co-owners from using the thing.
o One co-owner can file for a suit for ejectment, no need to bring
in the others.
If he wins the ejectment suit, it will benefit the other
co-owners.
If he loses the ejectment suit, what happens?
This is a point of contention among authors.
Can a co-owner sell the entire property?
o No, not without the consent of other co-owners.
o But if one does, the sale is only over the undivided share of the
co-owner
What is one’s right over one’s aliquot share?
o As far as one‟s share is concerned, this is aliquot – so there is
no specific possession. One talks about RIGHTS. You are an
absolute owner of that right; you can sell or transfer it without
the others‟ consent.
o The buyer will stand in the same shoes as you did before the
disposition.
Do the co-owners have a right of first refusal?
Co-ownership
What are the elements of co-ownership?
o 1. Two or more owners
o 2. Unity of object
o 3. Recognition that there is a co-ownership
If I say “this part is yours, this part is mine, etc.” – is it a coownership?
o No. Because there has to be undivided, aliquot shares.
How is co-ownership created?
o 1. By law
Ex. Party walls, etc.
o 2. By succession
Ex. Co-heirs before there is actual partition
o 3. By agreement of the parties
o 4. By chance
Ex. Mixture by chance
o 5. By occupation
Ex. Getting a wild pig together
Distinguish partnership from co-ownership.
57
Cabales case – was a minor at time of sale. He became of age, the
court told him he had 30 days to exercise right of redemption.
How do you determine one’s pro rata share in the co-ownership?
o Respective interest in the property – how much the person
actually contributed
o Can you agree over the proportionate interest of each? Or
should you fix it to the amount of contribution?
Yes, you can agree over the proportionate interest; it
need not correspond to amount of contribution.
Ex. A gave 1M, B gave 2M, C gave 3M. They can all
own the thing by 1/3.
If there is no agreement, it is pro rata (1/6, 1/3, 1/2)
o But with respect to income and expenses, can the parties
stipulate?
Nope. The law renders it void.
o So you can agree on the proportionate interest, but you cannot
stipulate on the share on income and expenses, which must
follow the proportionate interest.
Property must be used for the purpose that it is intended for.
For an act of alteration, what is the rule?
o To change the purpose of the thing, there must be unanimous
consent of the co-owners.
o Same with sale, mortgage, or another act tantamount to
alteration
o What is the rule on lease?
If it is either recorded in the ROP or is more than one
year: it is an act of ownership and requires unanimous
consent.
If neither: it is an act of administration and just
requires a majority.
A, B, C co-own a house and lot in equal shares. What is the status
of the following acts?
o A repaired the foundation of the house, which was tilting
to one side – Binding upon B and C. They must contribute 2/3
of the expense, since it is for preservation.
o
No. They do not have right of first refusal or preemptive right
to purchase one‟s share, under law.
o N.B. Of course if there is an agreement otherwise, respect that.
What is the right of redemption?
o Co-owners have right to redeem.
o Upon receipt of notice of sale.
o Ratio: the law does not like co-ownership. As long as there is
a means to constrict co-ownership, the law favors that.
Redemption brings the thing back to the original co-owners;
thus there will be fewer co-owners.
How do you exercise this right?
o Provided the buyer is a third person (not one of the original coowners)
o Within 30 days from notice of sale
o Can repurchase the thing from the buyer – pay amount that
was paid by the purchaser
o But if one paid a value grossly excessive, pay reasonable price
– as determined by courts
Is there any preference among the remaining co-owners as to who
can exercise of redemption?
o Ex. There are 5 of us, 1 sold his 1/5 share. How do you divide
this?
o Take the proportion among the remaining co-owners. So if the
other four have equal shares, each can purchase 1/20 of the
th
1/5 share.
o If one does not exercise – example, only 3 want to exercise his
right, what happens the other 1/20?
The 1/20 is divided into 3. It becomes 1/60.
What if one of the co-owners advances the share of the others to
the purchaser – does he gain interest over the whole redeemed
thing?
o No. He acquires only his own share, and he has right to get
reimbursement from the others.
o If the others don‟t pay their share, the shares still do not go to
the one person – he can attach over their properties:
Properties
And even the pro rata share over the co-ownership
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B and C mortgaged the house and lot to secure a loan –
Will only bind B‟s and C‟s interest, so A‟s 1/3 is not covered by
the mortgage.
o A built a concrete fence around the lot – Not binding upon B
and C since expenses to improve the thing must be decided by
majority of the controlling interest.
o C built a grotto in the garden – Does not bind A and B, since
it is for mere embellishment, and it was not decided by majority
of the controlling interest.
o A and C sold the land to X – The sale does not bind B‟s 1/3
share of the property. B can redeem the 2/3 share sold by A
and C to X, since X is a third person.
Distinguish:
o Preservation: may be at the will of any one co-owner; but he
must notify other co-owners first as far as practicable
o Administration: only with concurrence of majority of coowners
But they may designate one co-owner as
administrator; the latter becomes an agent
o Alteration: only with unanimous concurrence of the other coowners
If you perform an act of ownership or administration, and you do
not get the required number of votes, what happens?
o Your act is considered not authorized, and the other co-owners
can require you to undo what you have done.
o The other co-owners can ask you to destroy what you have
built, and you have to restore it in its original condition.
What if a co-owner wants to make an improvement on the property
but he cannot secure the majority’s consent, or if the majority
resolution is seriously prejudicial?
o At the instance of an interested co-owner, may petition the
court to order measures it deems proper – ex. Appointing an
administrator
If you want to get out of the co-ownership, what is the remedy?
o 1. Sell your undivided share.
o 2. Partition – absolute right of any co-owner
No need to give a reason
o
It is a RIGHT by any co-owner
The other co-owners can remain to be co-owners as
to the remaining shares, after there was distribution to
the “outing” co-owner of his share.
Is there a way to prevent a co-owner from asking for partition?
o A provision preventing partition until a certain time is valid.
o Any prohibition for division including transfer – good only for
TEN YEARS
o Can extend again, but for another 10 year period. In the
intervals, those who want out can get out again.
o N.B. For testators – can stipulate a longer period (20 years) but
this is not extendable
o What is the exception provided in the FC?
For family homes, there can be no partition of FH as
long as there are still minor beneficiaries.
What is the rule on party walls?
o You cannot partition party-walls, and it will continue forever.
Partitioning it would injure the building. So as long as
someone is using it, it will persist.
If partition would render the thing chop-chopped, what should one
do?
o Sell the entire thing, and then divide the proceeds among the
co-owners.
How does a co-ownership terminate?
o 1. Consolidation of ownership in one co-owner
o 2. Destruction of the thing
o 3. Prescription in favor of a third person or a co-owner
o 4. Partition
How do you terminate the co-ownership?
o Main way: by partition.
As to the process of partition, see the ROC. There is
judicial and extra-judicial partition.
No need for a reason. You can ask anytime.
o What happens about total partition?
There is obligation of mutual accounting for the coowners. This is for the benefits and profits earned by
the co-ownership.
59
E.g. If one lot is divided into three equal parts (30
sqm. Each) – A, B, and C, then A loses his part to a
real owner with title, because it wasn‟t actually part of
the co-ownership, he can receive 10 sqm. each from
B and C. Same if A ends up with a ravine, as
opposed to B‟s and C‟s flatlands. Same rule for
proceeds (150K for B, 150K for C, 0K for A, but they
agreed to equal sharing – 50K each from the
proceeds of B‟s and C‟s lands.)
o Another way: prescription
Requisites:
1. Repudiates the rights of other co-owners
2. Repudiation is brought to the knowledge
of the other co-owners
3. Evidence is clear and conclusive that he
may acquire exclusive ownership
4. After lapse of period fixed by law
One co-owner sets up prescription against the other
co-owners, claiming the property to be entirely his.
You must have an act considered adverse to the coowners; you repudiate the co-ownership through overt
acts or express communication to the other coowners.
From the time of repudiation, count the period
necessary provided for by law for acquisitive
prescription. If completed without protest by the
others, a co-owner can acquire the entire property.
If you expressly start in co-ownership and you
repudiate it after, then you are surely in BF, so you
have to follow the 30 year period.
Spouses H and W mortgaged their house to a bank. They failed to
pay, so the bank foreclosed the property. They died and left
behind 3 heirs. One of the heirs redeemed the property within the
one year period for redemption. Is she the sole owner or a coowner?
o Co-owner with her co-heirs. Redemption by one would benefit
the others.
What should the heir do to receive sole ownership?
o Wait for redemption period to expire, and then wait for the
mortgagee/purchaser to consolidate his title, and a new title is
issued in the mortgagee/purchaser‟s name. Then the heir can
offer to purchase the property from the mortgagee.
Condominium Act
There is an aspect of co-ownership in the Condo Act.
Art. 490 is the predecessor of the Condo Act:
o Building with several stories, and with different owners. There
are common areas, too.
o You only share on the expenses of the stairs that you actually
nd
use. So GF person spends nothing on stairs. 2 F person
and up spend on the first floor stairs. And so on.
Two things in condominium system:
o 1. Interest in separate and independent unit (inside inner wall)
– you get a CCT (Condominium Certificate of Title)
o 2. Interest in the common areas (elevator, lobby, gym, etc.)
N.B. there is constitutional restriction on ownership of land (not the
building). But the land is always part of the common area, since it is
constructed on the land.
Two options in so far as ownership of common areas:
o 1. Direct ownership – unit owners own the common area in
common (1 unit, and there are 20, you own 1/20 of the
common areas, including the lot)
o 2. Indirect ownership – Condominium corporation, and the unit
owner owns shares in proportion to the number of units owned
(see below)
How do you get around the restriction on land?
o “Condominium Corporation”: it is a corporate entity. As long as
60% of the ownership is for Filipinos, then the condominium
corporation can own land.
o Transfer of this land to the Condominium Corporation is not
subject to transfer taxes (tax incentive)
Can you build a condominium on leased land?
o Not many are built on leased land, but actually, in this case,
there are no ownership restrictions unlike if the land is owned.
60
o
o
But this is not marketable; some people think that when the
lease expires, there would be no security.
How do you register a condominium project?
o 1. Master deed
Indicates how many units, how big each is, etc.
Because in the Condo Act, 1 unit = 1 share/vote
regardless of the size of unit
The master deed changes this, usually: a studio gets
1 vote, two bedroom condominiums get 2 votes,
penthouses get 3 votes, etc.
o 2. Deed of restrictions
o Most of these documents are drawn up by the developers
before the building has been constructed.
It‟s hard to physical partition for common areas. So the only way you
can partition is to sell the entire project (the whole building, including
your units), because there is no one who will just buy the common
areas.
How do you partition if there is direct co-ownership?
o If DIRECT co-ownership: It is not like ordinary co-ownership
where a partition can be for no reason. There has to be a
ground under Sec. 8 of the Condominium Act. (ex. Destruction
or damage for period of three years; 50% damage or injury and
more than 30% are opposed to repairing the building, etc.)
o If owned by a CONDOMINIUM CORP: Unlike Corp. Code
where 2/3 vote would lead to dissolution regardless. But here,
you need any of the grounds in Sec. 13 (similar to grounds in
Sec. 8). So it‟s vote + reason for partition.
Another difference with other corporations, where
there is a 50 year maximum life span; condominium
corporations have no life span and will exist as long
as the project exists
What are these grounds under Sec. 8?
o 1. 3 years after damage or destruction to projects which makes
a material part unfit for use, and not repaired
o 2. Damage to at least 50% of units and more than 30% interest
ownership of common areas are opposed to repair
o
o
3. Existing more than 50 years, or obsolete/uneconomic and
more than 50% interest in the common areas are opposed to
renovation
4. Material part of the condominium was expropriated and the
project is no longer viable
Or more than 70% of the interest are opposed to
continuation of the project after expropriation
5. Conditions for partition by sale in the deed of restrictions
have been met
Water Code
Waters are owned by the State (waters in their natural state – not
commodity water)
Right to appropriate water – based on beneficial use
o You have to ask for a water permit before you can draw water
from these natural sources of water (if commercial), not small
drawings of water
For those who want to bathe/swim in the waters
POSSESSION
Requisites of possession:
o 1) modes of possession
o 2) intention to possess
o 3) own rights
How do you determine GF/BF?
o GF:
1. Possessor acquired thing through title or mode of
acquisition
2. There is a flaw or defect in the title or mode,
3. He is not aware of it
o BF:
1. Same
2. Same
3. He is aware of it
61
o
When does possession cease to be in GF?
When facts exist which show that the possessor is
aware that he possesses the thing wrongly
Else, from the moment possessor receives judicial
summons to appear in trial
What are the modes of possession?
o 1) Actual possession
o 2) Symbolic delivery
Ex. Giving someone a key to a car – it‟s symbolic
possession of the thing the key pertains to
Ex. Pointing to a property and saying “that is yours”
o 3) Constructive delivery
On the basis of execution of legal formalities
What does intention to possess mean?
o Subjective element
What does “own rights” mean?
o Excludes those who possess something on behalf of other
people (so the principal is actually the one in possession of the
thing possessed). Example:
Agent
Guardian
Attorney-in-fact
Etc.
o An agent‟s possession could never ripen into ownership,
unless ratified by the principal
What are the kinds of possession?
o 1) Possession with no title
Has no legal right at all.
Ex. Squatter
Ex. Your phone was stolen by a thief. You took
efforts to get it back. After a week you gave up.
Does the thief gain legal possession of the
property?
The property becomes res nullius, because it
has been abandoned. Thus, occupation is
the mode of acquiring ownership.
Contrast: this cannot ripen into ownership
through acquisitive prescription because he
is not considered to be in legal possession of
a property, because the law does not
consider him as such.
Possession acquired through violence can never
ripen into ownership.
o 2) Possession with juridical title
You recognize that ownership belongs to another
person, but has turned over possession to you
Ex. A lessee
Generally, this does not and cannot ripen into
ownership.
Exception: repudiation of juridical title – may
lead into acquisition of the property
Can fall under #3 under extraordinary
acquisitive prescription (always BF)
o 3) Possession with a just title
Titulo colorado
Possession acquired through just title but there a flaw
in the title
Ex. The transferor has no right to transfer
Basis of just title: there is a mode of acquisition
Ex. Tradition (through sale), donation,
succession
Can ripen into full ownership through acquisitive
prescription
o 4) possession with just title and there is no flaw
Titulo verdadero y valido
In the concept of an owner, just like #3, but in this
case, he really is the owner
In case of conflict between 2 persons regarding possession of a
certain property, who shall be preferred?
o As a general rule, there can be no simultaneous possession of
more than 2 distinct personalities, except for co-possession
(see below)
o Rules:
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1. Present possessor prevails
2. If both are present, longer possession
3. If same length, one with a title
4. If all are equal, place the thing in judicial deposit
pending determination by court
What kind of possession can serve as title for acquiring dominion?
o ONLY possession acquired and enjoyed in the concept of an
owner. Must be Titulo verdadero y valido.
o BUT it‟s possible that one acquires possession by some
recognized mode, but from a person who could not transfer
right of ownership
Tet he can still become an absolute owner, if he
proves acquisitive prescription, whether ordinary or
extraordinary. The title here can be Titulo Colorado.
Acquisitive prescription – must it be only your own possession
that could lead to this?
o No. There is principle of “tacking.” – Those that came before
the person claiming possession.
o You have to trace your title directly to those preceding you.
There must be someone before you and you can
point at the relationship of the predecessor with you
(there must be privity of title)
o If all the possessors are in possession of such character (ex.
BF), just add all of the years together to figure out how many
years are left
Ex. A = 3 years, B = 3 years, C = 3 years
21 years
left
o Once the line is broken, you have to start counting again.
o On issue of ratio: you cannot take credit for BF possession
preceding yours. No credit, no tacking, no ratio.
While Paras says you can use ratio (ex. Credit 1 year
of possession for 3 years of BF possession), Dean
Del Castillo disagrees. If the preceding possession is
in BF, your possession is already tainted.
Transfer of possession, once accepted, is seamless. You are deemed
to have possessed it since death of decedent.
Rights of Legal Possessor:
Peaceful and uninterrupted possession
Is there such a thing as co-possession?
o Yes. But in co-possession, you don‟t have rights of ownership.
Can be no valid transfer of title, since there is a flaw. The
difference with co-ownership is that in there, there is right of
ownership.
Can co-possession ripen to co-ownership?
o YES. Same rules on acquisitive prescription will apply.
How is co-possession credited?
o If there is partition, before ownership is acquired, the copossessors can take credit for the years of possession before
partition, in counting acquisitive prescription,
o It is possible that one co-possessor is possessor in BF, and
one co-possessor is possessor in GF. Each of you will have to
take your own character of possession. If you have 3 years of
co-possession, and you are in BF, and other is GF, then the
BF doesn‟t affect period or number of years of GF copossessors.
When is there interruption of possession?
o Two kinds: natural interruption and legal interruption
o How long should natural interruption be before you say
that acquisitive prescription is lost?
1 year. If gone for 6 months, but you came back and
redeemed possession, you are deemed never to have
lost possession. 6 months will be counted in favor of
acquisitive period.
o In legal interruption, there are judicial summons against you.
How do you lose possession of property, aside from interruption?
o 1. Absolute loss or destruction
o 2. Assignment
o 3. Abandonment
o 4. Possession by another
Actions in case of deprivation of possession of immovable
property:
o 1. Forcible entry/unlawful detainer – within 1 year from cause
of action
Inheritance
If repudiated, deemed to have never possessed it in the first place.
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Within 10 days from filing this complaint, may secure
preliminary mandatory injunction to restore
possession
o 2. Accion publiciana – within 10 years after possession was
lost
Plenary action to recover possession of property
o 3. Accion reivindicatoria – within 10 or 30 years, as the case
may be
Action to recover possession based on ownership of
the property
Action in case of deprivation of possession of movable property:
o Action for replevin
o
Right of a dispossessed possessor over fruits
A. Civil fruits
o What are civil fruits?
Rents, profits, and other forms of compensation for
use of property during time when you were in
possession
o When can you keep the civil fruits of the property you
possess?
As long as you are in good faith, you can keep the
fruits and there is no need to pay rentals for
possession
o What happens when GF is lost?
Once good faith is lost, you have to give the fruits
after that to the owner, and you have to pay rent.
o What is the effect of a legal interruption?
If legal interruption, you have to allocate time when
you received summons and were still in GF. After
summons, you have to turn over fruits and pay rent.
B. Natural and Industrial Fruits
o A. Pending fruits
What about pending fruits?
Pending fruits are those that have not been
gathered, and are still standing in the
property.
What if the possessor is in good faith?
Either:
o 1. Allow prior possessor to cultivate
the fruits. If the prior possessor
refuses this concession, he loses all
indemnity
o 2. Share the fruits based on period
of possession (possession of
cultivator is not from the time he
actually took possession, but from
time of pending fruits).
What if the possessor is in bad faith?
Only entitled to be reimbursed for necessary
expenses.
B. Gathered fruits
What if the possessor is in good faith?
Entitled to gathered fruits during possession.
What if the possessor is in bad faith?
Either:
o 1. Deliver gathered fruits from time
he lost good faith
o 2. Reimburse the true owner for
their value + interest
He shall also reimburse the true owner for
fruits the true owner could have received
with exercise of due diligence.
But he can deduct expenses he incurred in
production, gathering, harvesting (necessary
expenses)
Indemnity for expenses of a dispossessed possessor from the new
possessor
A. Necessary improvements
o Rights of possessor in GF:
1. Right of reimbursement
2. Right of retention
o Rights of possessor in BF:
1. Right of reimbursement only
B. Useful improvements
o Rights of possessor in GF:
1. Right of reimbursement
Either actual amount of expenses, or
Increase in value of the property
2. Right of retention
3. Limited right of removal
There must be no damage caused
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And the new possessor must not have
chosen to reimburse the prior possessor
o Rights of the possessor in BF:
None.
C. Luxurious improvements
o Rights of possessor in GF:
Limited right of removal.
o Rights of possessor in BF:
Limited right of removal as well.
D. For deterioration or loss
o Rights of possessor in GF:
No liability
Unless due to fault or negligence after he had
become a possessor in BF.
o Rights of possessor in BF:
Always liable, even if due to his fault or negligence, or
fortuitous event
1. True owner lost the movable
2. True owner unlawfully deprived thereof
Exception to the exceptions:
When the present possessor acquired the
movable in GF in a public sale.
What is the remedy of the true owner in
this situation?
o Reimburse the possessor for the
price paid for it
What if the good was sold in a merchant’s store?
Then the buyer acquires better rights than
the true owner
G lost his ring. After a few days, he found it in the possession of H
who had loaned money to Z and received the ring as security, in
GF. What are the relative rights of G and H?
o Default rule: possession of movable in GF is already equivalent
to title.
o BUT in this case, G lost the ring. So he can still recover from
H without obligation (first exception).
o The exception to the exception does not apply because H
received it as pledge, and not from purchase in a public sale.
Besides, only the lawful owner can pledge a movable, so the
pledge is void.
A agreed to sell his car to B, and they registered it in the name of
B. While waiting to get paid money in B’s sala, A never saw B or
the papers again. B sold the car to C, who sold it to D, both in GF.
Can A recover the car from D?
o Yes, since A was unjustly deprived of his car. The usual
common law rule that where two people (A and D here) would
suffer from a fraud, the one whose acts enabled the fraud to be
committed should suffer does not apply by mandate of Art.
559.
o What if the car was bought in a public sale?
The possessor is entitled to reimbursement
o What if the car was bought from a merchant’s store?
The possessor wins. As between a purchaser at a
mechant‟s store and a legitimate owner of the thing
who lost it, the former wins (Art. 1505, NCC)
When can the owner of a movable who has lost it or who has been
unlawfully deprived thereof no longer recover the property?
o 1. Prescription
o 2. Possessor acquired thing from a person whose authority the
owner is estopped from denying
Special Rule re: movables
Rules on acquisitive prescription:
o Period for movable property is shorter
What is the legal interruption for possession of movables?
o Replevin suit
What is the rule in natural interruption?
o Even if you lose actual physical possession over it, you still
possess it as long as it remains under your control.
o As long as you haven‟t abandoned the property, it is still
subject to your control.
What if it was misplaced?
o You still have possession
What if you were unlawfully deprived of the movable?
o You still have possession but you have to recover the property
o As long as you haven‟t abandoned the property
What is the rule on recovery of movables?
o A. Possessor is in BF:
The owner can recover it from him without any
obligation whatsoever
o B. Possessor is in GF:
The owner cannot recover it because possession in
GF is equivalent to title.
Exceptions (where the true owner can still recover
without obligation):
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3. Possessor acquired the thing from a merchant‟s store, fairs,
markets, etc.
o 4. Thing is a negotiable instrument and possessor is purchaser
in GF and for value
o 5. Possessor is owner of thing in accordance with finderskeepers principle (Art 719)
What is the finders-keepers principle?
o Where one finds a lost item, he must turn it over to the mayor.
o After publication for 2 weeks of announcement of finding, and
lapse of 6 months thereafter, the finder becomes the owner.
N.B. If the real owner comes forward, the finder gets
a reward of 1/10 the value of the thing
o
Substance: no operation, except with consent of
owner, that would prejudice the thing given
Cannot appropriate the thing subject of usufruct
o But can appropriate the fruits
What are the exceptions?
o 1. Can appropriate the thing
“Abnormal usufruct”
o 2. Can alter the form of the thing, leading to a slightly
deteriorated form
“Quasi usufruct”
What is a abnormal usufruct?
o For consumable things. So when returned, there is some or all
of it consumed.
o Instead, you have to pay the property‟s value based on
appraisal (for movable properties)
If there was appraisal at the beginning, pay that.
If there was no appraisal, replace with another object
of same quality and quantity
What is quasi usufruct?
o For properties that easily depreciate
Ex. Cars
o You cannot really return the thing in the same form and
substance.
o Instead, you return the object itself. As long as it‟s normal
wear and tear, you have no other obligation to the owner.
If a property has been encumbered, can it still be subject to
usufruct?
o Yes. The usufructuary does not compete with the mortgagee
as far as fruits. There is no inconsistency.
o If the mortgagor defaults in the principal obligation, what
happens?
The mortgagee can foreclose the property. This is his
right.
o If you are the usufructuary, how do you stop the
foreclosure? Should you pay the obligation?
No need; there is no legal obligation to pay for the
principal obligation.
Usufruct
What is the nature of usufruct?
o A person was given the right to use the property owned by
another.
o It is a real right.
What is the most important aspect of usufruct?
o The right of possession over property held in usufruct is not
matter of legal necessity. What will make it usufruct, where you
are entitled to, is the right to receive fruits.
How is usufruct created?
o 1. Voluntary act of owner not possessor. Possessor can lease,
but not usufruct.
o 2. Legal usufruct. But this is no more.
If children, mere act of administration by parents.
Husband now no longer owns properties of wife.
What is the right of the one enjoying usufruct?
o Usufruct has ABSOLUTE right over fruits of property.
o Preservation of substance and form of thing: only if you have
been granted possession of property in the first place. If not,
you only really get the fruits.
o Owner cannot control how usufruct uses the fruits.
What can be the subject of usufruct?
o There can be usufruct over movable, immovable properties, or
even rights, but not personal rights
o Differentiate usufruct and easement:
Easement is only for immovable properties.
What is the usufructuary’s obligation?
o Preserve the form and substance of the thing lent in usufruct.
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His right to usufruct continues. It is a real right and
can be enforced against any mortgagee.
Can there be usufruct over pledged properties?
o No. There is a conflict.
o The pledgee is entitled to the fruits of a pledged property. The
fruits stand as security as well for the obligation.
o So you cannot give the fruits to a usufructuary.
o N.B. I assume, same goes with antichresis
What about a leased property? Can it be given in usufruct? (Ex. A
leased to B, A gave usufructuary rights to C)
o Yes.
o Use and possession goes to the lessee.
o The usufructuary need not have use and possession; all he
needs to get are fruits. The usufructuary gets the rentals from
that property.
Requirements for usufruct?
o Form is not a matter of validity, just a matter of convenience.
o It is valid between the parties.
o You want it to be in a public instrument, so that you can
register it.
o NOTE: a usufruct is always a real right, and will follow the
property. A lease is only a real right if registered.
Modes of extinguishing a usufruct?
o 1. Death of usufructuary, unless contrary intent appears
o 2. Expiration of period or fulfillment of resolutory condition
o 3. Merger of usufruct and ownership in one person
o 4. Renunciation of usufruct
o 5. Total loss of the thing
o 6. Termination of the right of the person constituting usufruct
o 7. Prescription
A sold a parcel of land to B. There were two buildings on the land.
There was a condition that 1/3 of the rents of the two buildings
should go to A. Subsequently, without B’s fault, the buildings
were totally destroyed. Did this extinguish the obligation?
o No. What was constituted was a usufruct. Rentals are not
only due from buildings, but also the land. There can be no
building without land. So the loss was not a total loss that
would extinguish the usufruct.
o A is thus entitled to 1/3 of the land + materials thereon, as a
temporary measure until the buildings are reconstituted.
A owned a parcel of land and gave B usufructuary rights. The land
was still empty then. After, A constructed commercial buildings
on the lot. Is B entitled to the fruits from rentals of the buildings?
o No. The usufruct was constituted on the land, not the
buildings.
o But since the construction diminished the rights of the usufruct
over the land, he must be indemnified for the loss. In a case
(Gaboya v. Cui), the owner was made to pay monthly rentals to
the usufructuary.
Default provisions of usufruct
The other provisions in the Code: are those that apply by default, in the
absence of specific stipulations of the parties.
If the property has pending fruits, when the contract of usufruct
was entered into, to whom do these belong?
o Growing fruits at the time usufructuary enters into the property:
belong to the usufructuary
o No indemnification
At the time the usufruct terminates, what happens to the pending
fruits?
o Belongs to the owner
o Owner pays indemnification for expenses to plant, cultivate,
and other expenses for the fruits
Gathered fruits?
o Belong to the usufructuary.
What is the nature of the usufructuary’s possession?
o Possession with juridical title
Can the usufructuary grant possession to another person (ex.
Lease)?
o Yes. Here, it is mere possession that is transferred, the right of
which the usufructuary possesses
o What is the exception to this right?
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o
o
Caution juratoria - Giving possession to a person who
has nothing
What happens if the period of the lease is longer than the period of
the usufruct?
o Rentals after termination of the usufruct belong to the owner.
o If the lease has become a real right, then the owner must
respect
1. Leases longer than 1 year
2. Leases of property registered in the ROD
Obligations of the usufructuary?
o 1. Make an inventory of the property
o 2. Give necessary security
Exceptions to bond requirement?
1. No one will be injured by lack thereof
2. Donor has reserved usufruct of the
property donated
3. Parents, who are usufructuaries of
unemancipated children‟s property, except
when the parents contract a second
marriage
4. Caucion juratoria
Obligations of the usufructary during the usufruct?
o 1. Take care of the property as a GFF
o 2. Make ordinary repairs
o 3. Inform owner for extraordinary repairs
o 4. Pay annual charges, taxes, and liens over fruits
N.B. if the taxes, charges, or liens are over the
property itself, the owner is liable
o 5. Notify owner of any act of a third person that may be
prejudicial to right of ownership
o 6. Pay expenses, costs, liabilities in suits with regard to
usufruct
Obligations upon termination of the usufruct?
o 1. Deliver the thing to the owner
o 2. Right to retention for taxes over property and extraordinary
expenses, which must be reimbursed
Rights over necessary, useful, and luxurious expenses?
o
Necessary expenses: right to demand reimbursement
Useful and luxurious:
No reimbursement
But may remove these if there is no damage to
property caused
N.B. TAKE NOTE! For BPS and for dispossessed
possessor, useful expenses are usually reimbursed.
Here they are not.
May set-off these improvements against damage on the
property
Easements
What is the nature of an easement?
o Also a real right. The right attaches to a specific property until
the right is extinguished. Only difference from usufruct: it is
something that attaches to personal property, while easement
only applies to real property
Further qualify: easement is applicable to land,
buildings, tenements, and not other kinds of
immovables
o No easement over another easement, for instance, even if the
easement is also a real property. Likewise, those by analogy:
cannot receive easements.
What is an easement?
o It is an encumbrance over an immovable property, for the
benefit of:
o Another immovable property belonging to someone else (Real
easement)
o Or a person or community (Personal easement)
Dominant estate is the one benefited.
Is there any difference between easement and servitudes?
o For purposes of the NCC, these are used interchangeably
o Servitude – used in common law (personal and real
easements), and they only use “easement” only for real
properties
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Distinguish between positive and negative easements:
o Positive – the servient estate is either obliged to allow
someone to do something on his property, or to do it himself
o Negative – the servient estate is prohibited from doing
something on his property which he could otherwise do
o Give examples of positive easement.
Right of way, because the servient estate is required
to let other people pass through his property
Tree with branch hanging out over neighbor‟s
property – required to cut
o Give examples of negative easement.
Easement of light and view – cannot block neighbor‟s
view
Distinguish from continuous and discontinuous.
o Discontinuous – only used in intervals, and with intervention of
man
o Continuous – constant, no need for intervention of man
Apparent from non-apparent.
o Non-apparent – no external signs
o Apparent – made known and with external signs
Why is the classification needed?
o Positive/negative – determines rights
o Continuous/discontinuous and apparent/non-apparent –
determines how to acquire
Prescription only applies to apparent continuous
How to acquire easement?
o Title
Juridical act (there is a mode of acquiring ownership
ex. Donation, succession, etc.)
Or law
o Prescription
10 years of use of servient estate
Only covers apparent continuous easements
E.g. Easement of right of way can never be
acquired by prescription, because it is
apparent, but discontinuous
Ex. On another note, easement over
aqueducts can never be acquired by
prescription even if it is A + C, by express
provision of the Water Code.
How to count prescription of A+C?
1. Positive: Count period from actual use
2. Negative: from notarial act
will contain
the prohibition. Not just sending a letter to a
neighbor. You have to have a basis; that
you are a dominant estate.
X owned a piece of property, where there was a house on the
southern portion overlooking the northern portion through doors
and windows. X subdivided the property into two: the empty
northern portion and the southern portion with the house. He sold
it to Y and Z respectively. Y wanted to build a house on the
northern property. Z said that it should be not less than 3 m from
their boundary. Who wins?
o Z wins. Under the NCC, when there is an apparent sign of
easement between two properties maintained by the same
owner and these are subsequently alienated to different
owners – and there is no intent to the contrary – the new
owners must respect the easement.
o Apparent easement here is of light and view: demonstrated by
the windows and doors overlooking the northern portion.
o What are the requisites for this rule to apply?
1. Apparent sign of easement in two estates originally
owned by one owner
2. The sign was established by the owner
3. One or both are alienated
4. The contrary was not provided in the deed of
conveyance
Title – is there a specific form?
o Under Statute of Frauds, any transaction over real right over
immovable property must be put into writing
E.g. if you acquire it through tradition, you have to put
it into writing
If not put into writing, it is unenforceable
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o
N.B. Check the intent. If a railroad company was
given right of way over several lots to transport sugar
canes, check whether it is only sugar canes that can
be transported, or if he can transport other goods or
transport for other persons, etc.
o 2. Can‟t make the easement more burdensome
Villanueva v. Velasco – it is the need of the dominant
estate that determines the width of the easement
Rights of the Servient Estate
o To register the easement, even without permission from
dominant estate
If servient estate registers land without mentioning
easement, the voluntary easement is extinguished. If
dominant estate registers his land without mention of
the easement, the easement still subsists.
o Retains ownership of the portion where the easement is
established and may use it in a manner not affecting exercise
of the easement
Obligations of the Servient Estate
o Cannot impair in any manner the easement
o But if the easement becomes very inconvenient to the owner of
the servient estate, or prevents him to make important works,
repairs, or improvements thereon, it may be changed at his
expense
He must provide another place or manner equally
convenient
How does an easement terminate?
o 1. Merger in the same person of ownership of both dominant
and servient estates
o 2. Non-use for 10 years
For discontinuous easements: count from last use
For continuous easements: count from contrary act
o 3. When either or both of the estates fall into condition that the
easement cannot be used
But it shall revive if the condition of either or both
should again permit its use
Except if prescription has set in
o 4. Expiration of term or fulfillment of condition
If granted on basis of donation: it must be a public writing (both
donation and acceptance) and in writing
Otherwise, it is void
o If through succession, it must be through a will
What is the meaning of permanence as a characteristic of
easement?
o General use: non-use will not extinguish easement
o Although, non-user for ten years will also extinguish the right
E.g. drainage – you are required to have neighbor‟s
water pass by you. You see the water and block it. It
is an act contrary to the easement. Non-use kicks in
upon the blocking.
Inseparability?
o You cannot separate the easement from the immovable.
When you sell property, and you do not inform the buyer about the
registered encumbrance?
o The encumbrance exists
o But you are guilty for breach of warranty, and the buyer can
sue you for not telling him about the encumbrance
o When does registration of an estate without mention of the
easement extinguish the voluntary easement?
If the dominant estate is registered without annotation
of the voluntary easement in its favor, it still exists
If the servient estate is registered without annotation
of the voluntary easement, the easement is
extinguished
Indivisibility
o Increase in number of owners does not increase the burden on
the servient estate. There is just one easement.
o If servient estate partitioned or alienated, it still doesn‟t change
anything.
Rights of the Dominant Estate
o To make all works necessary for the use and preservation of
the servitude
Obligations of the Dominant Estaete
o 1. Can‟t alter the easement (only for the benefit of the movable
originally contemplated)
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o
o
5. Renunciation of owner of dominant estate
6. Redemption agreed upon both owners
1. Owner of dominant estate must prove he
can dispose of the water and it is sufficient
for the use for which it is intended
2. Show that the proposed right of way is the
most convenient and lease onerous to others
3. Indemnify the owners of the servient
estates
4. Secure a water right from the National
Water Resource Council
o IMPLICATION: cannot acquire
aqueduct by prescription
o Banks of rivers, etc. – 3 m, etc. covered by Water code
2. Right of way
o Most common right of way: road right of way
o Requisites:
1. Dominant estate surrounded by other immovables
and there is no adequate outlet to a public highway
There must be NO outlet, not merely
inconvenient
2. Payment of proper indemnity
3. Isolation not due to acts of dominant estate
4. Right of way claimed is at the point least prejudicial
to the servient estate
5. Shortest distance to public highway
o Generic rule: you have to pay indemnity to get road right of
way
You are not paying rentals, because you have a right
of way
It is a one-time indemnity
o Exception: Isolation on account of sale/transfer or donation
[N.B. the rules on sale and donation are inverse]
If you are the buyer of the property and you property
is in the middle, and is isolated. You are entitled to
ask the vendor to give you a right of way. You do not
have to pay for that.
Legal easements
Not an exclusive list. There are other kinds.
o Ex. Easements for aerial navigation
1. Easements relating to waters
o What is the legal easement of drainage of waters?
Lower estates are obliged to receive waters which
naturally and without intervention of man descend
from higher estates, as well as the stones/earth
carried along
The lower estate cannot construct works that impede
the flow. The higher estate cannot construct works
the increase the burden
Water code governs
To extent not covered by Water code, use
Civil Code
So lower estates still obliged to receive
waters from higher estates; and higher
estates cannot construct something to
hasten down-flow of water
Addition by Water Code: servient estate can block this
flow, but must provide an alternative method of
drainage
o What is the legal easement of aqueduct?
Any person who may wish to use upon his own estate
any water which he can dispose has the right to make
it flow through intervening estates
He must indemnify the owners of those estates AND
the owners of the estates where the waters may filter
or descend
What is the nature of this easement?
Continuous and apparent
Requisites?
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o
o
o
If the one that is isolated is the seller‟s property, he is
also entitled to demand right of way. But he has to
pay
Donation: if you receive property through donation,
you can demand for right of way, but you have to pay,
because it‟s too much to ask if you get it for free na
nga, you burden the donor more pa.
If it‟s the donee‟s property that surrounds the property
of the donor, the donor can demand right of way and
he doesn‟t have to pay indemnity.
Can the width of the easement of right of way be
changed?
Yes, from time to time, to suit the sufficient needs of
the dominant estate. For instance, when the
dominant estate used to use a tricycle to pass through
the road but changed to a jeep to suit the flourishing
plant nursery business, it can acquire from the
servient estate a bigger width.
What is the measure of indemnity?
1. If easement is permanent and general – value of
land and damage caused
Because here, you‟re practically taking it
2. If easement is limited and merely temporary – just
damage caused
3. No indemnity for the two above situations:
Sale of land surrounded by other estates of
vendor
Donation of land surrounding other estates
of the donor
When can the servient estate demand that the right of way
be extinguished?
When the dominant estate joins with another, which
has a right of way abutting a public road.
In this case, the servient estate returns what he may
have received by way of indemnity. The interest on
the indemnity is deemed payment of rent for use of
the easement.
3. Party walls
o Rules on co-ownership can apply
o The party wall itself is the servient estate, and the estates are
dominant
o You cannot open a window on a party-wall
If someone does and the other does not object, you
can acquire it after 10 years by prescription
o Ma‟am did not choose to discuss the dimensions, heights, etc.
of windows in detail.
4. Light and view
o How do you count prescription for acquisition of
easement of light and view
1. From opening of a window, if through a party wall
2. From time of formal prohibition upon the adjoining
estate, if window is through a wall of the dominant
estate
Through a notarial instrument
o When is it positive? When negative?
Positive – open window through party wall or wall of
adjoining tenement
Negative – open window through wall of dominant
estate
o What is the implication of failure to follow minimum
distances?
Cannot acquire by prescription
Distances:
2 meters from other lot if direct view
60 cm from oblique view
When the easement already exists, any other
construction must be at least 3 meters away as to not
block the view
o X built a house adjoining the lot owned by Y. It had
several windows overlooking Y’s half a meter away from
the boundary line. After 15 years, Y brought an action to
close the window. Has X acquired the easement by
prescription?
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o
o
No. There was no notarial prohibition, so no
prescription can vest.
Will the action of Y prosper?
No. Because the action has prescribed after
10 years.
Doesn’t this mean X acquired the easement of
light and view by prescription?
No. Because Y can validly build something
or raise a wall that block X‟s view.
5. Drainage of buildings
o What is the rule?
Roof must be constructed in a way that the rainwater
falls on his own land or street/public place
NOT on the land of his neighbor
o What is an easement on drainage of buildings?
When rainwater cannot be collected in the required
areas stated above, it can be made to pass through
contiguous lands or tenements where egress may be
easiest and it causes least damage to the servient
estate
6. Trees extending over another‟s property
o Who owns the fruit on the trees?
Still the owner of the tree
But if the naturally fall on the other owner‟s land, the
other owner gets them
o What is the right of the adjacent lot’s owner?
Demand that branches extending over his property be
cut off by the tree‟s owner.
CANNOT cut them off himself
But for roots, he may
3. Shocks, defies, or disregards decency or morality
4. Obstructs or interferes with free passage of any public
highway or street, or body of water
o 5. Hinders or impairs the use of property
Classify nuisances:
o Nuisance per se – always a nuisance
o Nuisance per accidens – nuisance by circumstance
o Public nuisance – affects a considerable number of persons,
even if the extent may be different
1. Criminal prosecution
2. Civil action
3. Extrajudicial abatement
o Private nuisance – only a person or small number of persons
1. Civil action
2. Extrajudicial abatement
X has a small house where he sells shabu and other drugs. X was
caught by the police. The police demolished the house for being a
nuisance per se. Are they right?
o No. It is not a nuisance per se because it is not a nuisance in
itself and at all times – it was just the venue for the illegal act.
What are the requisites before there can be summary abatement of
nuisance by a private person?
o 1. Specially injurious to him
o 2. Demand must first be made to owner/possessor, but was
rejected
o 3. Abatement approved by district health officer and executed
with assistance of local police
o 4. No breach of the peace or unnecessary injury is done
o 5. Value of destruction not exceeding P3000
What is the doctrine of attractive nuisance?
o A person who maintains in his premises a dangerous
instrumentality of any character which is attractive to children
of tender years at play and fails to exercise due diligence to
prevent them from playing therewith
o Even if the child is technically trespassing
Nuisance
What is a nuisance?
o Any act, omission, establishment, business, condition of
property, or anything which:
o 1. Injures or endangers health/safety of others
o 2. Annoys or offends the senses
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o
Ex. a swimming pool per se is not an attractive nuisance but if
there is an artificial condition or feature that will add another
danger to children, it is an attractive nuisance
Domesticated animals are those taken from
the wild and then tamed.
Occupation over domestic animals cannot be
acquired by occupation unless they had
been abandoned. Domestic means that they
are never wild to begin with.
o Intellectual creation
o Acquisitive Prescription
Possession + just title (acquired through mode of
acquiring ownership) + 30 years
So valid only if acquired through res nullius (in this
case, it‟s really occupation)
Derivative Mode – dependent on former owner or title of another
person
o Succession – from whom you inherit
o Donation – from donor
o Law
o Tradition
Modes of acquiring ownership
How do you acquire property?
o Occupation
o Law
o Donation
o Tradition
o Intellectual Creation
o Prescription
o Succession
Sale is not a mode, it is tradition
Mode:
o Process of acquiring ownership
o Mode does not need a corresponding title
Title:
o Juridical justification for a mode
o Title needs a corresponding mode
Original Mode – not dependent on former owner
o Occupation
Seizing of the property physically
Not owned by anyone or because there is a previous
owner and has abandoned it
You do not occupy land; you occupy corporeal things.
Land is never without an owner – the State owns it by
default. Except if land was previously owned and it
has been abandoned: this does not revert to the
State.
If intangible – acquired by (1) intellectual creation, or
(2) tradition
Occupation of animals
If the animal is wild – a person becomes the
owner upon capture.
Occupation over domesticated animals, after
20 days, unless claim has been made.
Donation
Requisites of donation:
o 1. Decrease or reduction in the patrimony of the donor
o 2. Increase of patrimony of the donee
o 3. Animus donandi or intent to make a donation
Classes of donation:
o 1. Donations inter vivos
Simple
pure liberality
Remunerative
On account of services rendered by the
donee, but not a demandable debt
Conditional
Imposes a charge or burden on the donee
less than the thing given
Onerous
Given in consideration of demandable debt
Actually governed by rules on contract
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o
2. Donations mortis causa
Actually governed by rules on wills
Distinguish between illegal and impossible conditions in a simple
donation from illegal and impossible conditions in an onerous
donation:
o In simple donation, considered not written
o In onerous donation, annul the donation (since governed by
rules of contract)
Distinguish between inter vivos and mortis causa donations:
Inter vivos
Mortis causa
Takes effect independently of
donor‟s death
Title or ownership conveyed before
death of transferor
Takes effect upon death of donor
Valid if transferor survives transferee
Void if transferor survives transferee
Generally irrevocable
Always revocable
Comply with formalities on donations
Comply with formalities on wills
indicates that the donor parted with ownership of the land prior
to his death.
Property is donated in a deed named “donation inter vivos.” It
said that the land donated shall be delivered immediately to X
upon the perfection of the donation, with all the fruits thereof, but
“title shall only pass to the donee upon the donor’s death.” What
is this?
o Mortis causa: the fact that no title or ownership is conveyed
until the death of the transferor controls.
Capacity of donor and donee:
o Donor:
1. Must have capacity to enter into contracts
2. Must be able to dispose of property
3. Must not be prohibited or disqualified by law from
making the donation
o Donee:
1. Must not be prohibited or disqualified by law from
accepting the donation
A, from Manila, offered B, who lived in Cebu, in writing to donate
his car. Two days after , B’s letter of acceptance reached A, but
before it reached A, A has been confined in the psychiatric/mental
ward. Is the donation binding?
o No. The donor‟s capacity is determined from the perfection of
donation. A donation is perfected the moment the donor
knows of the acceptance. Here, before he found out, he
already lost capacity.
Prohibited donations:
o By reason of relationship
1. Between husband and wife, except moderate gifts
in family rejoicing or distress
2. And those with amorous relationships, living
together as husband and wife [here, there is no
criminal act, unlike adultery/concubinage]
o By reason of public policy
1. Parties guilty of adultery/concubinage at the time
the donation is made
Do they have to be convicted? No.
Title or ownership conveyed only
upon death of the transferor
A donation provides that it will take effect after the death of the
donor, that the donor will not dispose of it or take it away from the
donee, that he had beneficial ownership while he lived. Is it inter
vivos or mortis causa?
o Inter vivos, since the donor intended to part with ownership
during his lifetime. Providing that the donor will not dispose of
it or take it away means that the donation is irrevocable; thus,
inter vivos. It is also clear that he parted with naked title, while
maintaining beneficial ownership.
What does a habendum clause and a reddendum clause signify?
o Inter vivos. Habendum cause indicates a grant of the property
before death of the donor, while the reddendum, in so far as it
imposes a condition on how the donees should spend some of
the income of the property and limits on how to dispose it
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Public document – specifying the property + charges
Acceptance must be:
In same deed
Or separate public document. Here, the
donor must be notified in an authentic form,
and the step noted in both instruments.
o C. Special rules on form:
Onerous donation
ordinary contract
Mortis causa donation
formality of wills
What is the effect of non-registration? Registration? Actual
knowledge?
o Non-registration, although the donation of immovable is in a
public document
only binds the parties thereto
o Registration
binds the whole world
o Third party with actual knowledge
bound by the donation
between the parties, even if unregistered
X wrote Y, donating in the letter a piece of land. Y accepted by
means of public instrument. X died. His surviving son, B, wanted
to cure the defect of the donation by executing a public instrument
of ratification. Effect?
o No effect. A void contract cannot be ratified. The contract is
void because it was not in a public instrument.
X donated land to Y in a public instrument. Y accepted in a
separate public instrument. X died before the acceptance could be
communicated to him. Valid?
o No. The constancia autentica (notification of the donor in
authentic form) is an essential formal requisite not complied
with. The donation has no effect.
X donated land to Y. Y accepted in a separate instrument, but did
not communicate it formally to the donor. Y paid taxes over the
land, since it was in the black list for non-payment of taxes. Was it
an onerous donation? Was the donation valid?
o It was a gratuitous donation, because payment of the taxes
was not a condition/burden imposed upon Y. It was just a
consequence of the donation.
o Thus, since it was NOT an onerous donation, it must follow the
formal requisites of a contract. The formal requisite of
If they have already parted, then it is valid.
2. Guilty of committing the same crime AND in
consideration thereof
You don‟t have to be both principals
When must it be given?
o It can be given before committing a
crime (donation as the inducement)
o It can be during or after (reward)
Distinguish: for adultery/concubinage – it
cannot be after, and it must be in
consideration of the relationship. Here, it
can be after, but it must be in consideration
of the crime.
3. Made to public officers, spouses, etc. by reason of
his office
4. Those disqualified under wills apply as well:
A. Priest who heard confession or minister
who extended spiritual aid during last illness
th
B. The relatives within 4 degree of
abovementioned person, or his church/sect
C. Ward to guardian, before final accounting
o Except if guardian is ascendant,
descendant, or sibling
D. Physician, or other health officer who took
care of donor during last illness
5. Made by individuals, associations, corporations not
permitted by law to do so
Formalities of a donation:
o A. MOVABLE
Oral:
Must have simultaneous delivery of thing
Or simultaneous delivery of document
representing the right
Writing:
If the property‟s value exceeds P5K
Acceptance must be in writing too
o B. IMMOVABLE
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o 2. Supervening BAR
o 3. Inofficious donations
Revocation of donations:
o As a general rule, these are irrevocable. These cover
donations inter vivos. Donations mortis causa are really based
on succession, so they are revocable.
o 1. BAR – for those with no descendants
A. Birth
B. Adoption
C. Reappearance of child
These apply to those who have made donations
thinking they will not have successors, and these
would affect their legitime.
Subject to reduction or revocation. This ground does
not consider the donation per se as revoked. It is only
reduced to the extent that it is inofficious
Determine the legitimate at that point in time (this is
where presumptive legitime is first introduced in the
NCC), then determine if what was given exceeded.
What is the prescriptive period?
Period of four years – from birth, adoption, or
filiation, or receipt of information re: missing
child
Cannot be renounced
Transmissible to LCs, ICs, or descendants
upon death of donor
o 2. Ingratitude:
1. Donee commits an offense against person or
property of donor, spouse, or children under parental
authority
2. Imputation of a crime involving moral turpitude
Is veracity of the claim a defense? No.
The only time it is a defense, is if the crime is
committed to the donee, his spouse, or
children under parental authority.
3. When donee unduly refuses to support the donor
when there is a legal or moral obligation
constancia autentica was not complied with; thus, the donation
was invalid until communicated formally.
Incapacity that would prevent a person from succeeding:
o Testamentary – Art. 1027
Applicable to testamentary succession, but not to
donation: Witnesses to the will, because there are no
witnesses required to a donation
o Intestate – unworthiness (Art. 1032)
Limitations on donations:
o 1. Donor must reserve sufficient means to support himself and
all relatives, who at the time of the acceptance of the donation,
are entitled to support
Reduce upon petition of such persons
o 2. Donations cannot comprehend future property
Exception: donations propter nuptias in a marriage
settlement
o 3. No more than he may give or receive by will
Reduce what is inofficious
A donated all his property to a foundation bearing his name,
ignoring claims of wife and children, except for a provision for
their maintenance and education during their lifetime. Effects of
this donation during A’s lifetime and after A’s death?
o Valid during lifetime of A. The donee can appropriate all the
fruits.
o Once A dies, it is inofficious. It must be reduced to avoid
impairing the heirs‟ legitimes, upon petition.
Is there a right of accretion in donation?
o None, by default.
o Exception: H and W jointly.
When may a donation inter vivos be revoked?
o 1. Supervening BAR
o 2. Non-fulfillment of condition
o 3. Acts of ingratitude
o 4. Inofficious donations
When may a donation inter vivos be reduced?
o 1. Donor did not reserve sufficient means to support himself
and relatives entitled to support
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o
o
Prescriptive period? One year from knowledge of
the donor.
It is purely personal and thus intransmissible
to one‟s heirs.
What are the exceptions to
intransmissibility?
o 1. Donor already brought action but
died
o 2. Donor prevented from filing
action due to sickness, fortuitous
event, etc.
o 3. Donee killed the donor
o 4. Donor died without knowing act
of ingratitude
o 5. Donor already instituted criminal
proceedings but died before filing
civil case for revocation
3. Inofficiousness of the donation
When does this action accrue?
This action ONLY arises when the donor
dies
Unlike supervening BAR which can be filed
while donor is alive
Only compulsory heirs and heirs/successors in
interest may bring action
The creditors may only bring about
rescission if it was in fraud of them
Prescription of four years is counted from the death of
the donor. So even if he donated the inofficious
donation in 1960, and he died in 1984, the heirs have
up until 1988 to challenge the donation.
4. Non-compliance with a condition imposed
This is a modal issue
The donor has discretion
Prescription?
4 years from non-compliance
Also transmissible to heirs
X donated property to Y, with a condition. Y failed
to comply. X sold the property to Z. Valid?
No. He has to file a judicial action first within
4 years to revoke, unless there is an
automatic revocation clause in the donation.
Rule on fruits for these revoked donations?
o Based on BAR
donee entitled to fruits until filing of
complaint
o Based on non-fulfillment of condition
donee must return the
fruits which he may received after failing to fulfill the condition,
along with the property
o Based on inofficiousness
donee entitled to fruits while the
donor lives
SUCCESSION
General provisions
(774) A mode of acquiring ownership
o It is not delivery (tradition) that vests ownership. Succession
itself is the mode. You do not need delivery of the thing to the
successors.
o In due time, the successor acquires a right to possession of the
thing, which may be in the hands of someone else. But this is
an action of assertion/vindication of possession based on
ownership.
What is transferred?
o The inheritance.
o Inheritance is defined in 776 as the transmissible rights and
obligations of a person
o Are there intransmissible rights and obligations?
Yes.
1. Purely personal;
2. Intransmissible by stipulation
3. Intransmissible by operation of law
Are these conveyed by succession?
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children are excluded (unlike in the NCC, where they
would get something)
o 2. Even before the actual partition of the estate, the heir can
dispose can dispose of his/her interest over the inheritance.
De Borja v. De Borja – the heir was allowed to
onerously dispose of her share even if she did not
know how much exactly she would get.
Could she have disposed of it gratuitously?
Yes.
o 3. Heirs have a right to substitute their predecessor in an
action that survives.
Bonilla v. Barcena
Patrimonial right – right to prosecute an action
Updates on the abovementioned jurisprudence:
o Lee v. RTC (423 SCRA 497)
An heir can sell his right/interest in property under
administration. However, an heir can only alienate
such portion of the estate allotted to him in the
division of estate.
So he can only sell his ideal or undivided share in the
estate, and not specific properties.
o Liu v. Loi (405 SCRA 316)
An heir can sell his interest in the decedent‟s estate,
but always subject to the rights of the creditors and
the result of the partition.
So if you end up having no share in the estate, then
what you sold is subject to the creditor‟s claim.
o Heirs of Conti v. CA (300 SCRA 345)
Reiterated Bonilla case: prior settlement of estate not
necessary for heirs to commence action or continue
action pertaining to the estate.
o Heirs of Pinchay [?] v. Del Rosario
Prevented from filing action because the plaintiffs
have not established proof that they are the
decedent‟s heirs.
How to resolve: you can continue an action if you are
indisputably an heir.
What are the three kinds of succession?
No.
What are examples?
A purely personal obligation or right
Ex. Right to receive support from one‟s
parents
Give an example of a transmissible obligation.
X entered into a perfect contract to sell his
car to Y, but it has not been consummated.
X died. This transfers to his heirs.
o Is a money debt a transmissible obligation?
Yes.
But is it transmitted directly to the heirs?
No. It is paid by the estate, upon claim by
the creditor. (Unionbank v. Santibanez)
Does this not violate Article 774?
No. Although the creditors do not claim
directly from the heirs, the effect is the same
– what the heirs would have otherwise
gotten is diminished, so they are indirectly
and ultimately paying the debt.
Does this provision on money claims affect other
claims?
No. They are still transmitted to the heirs.
When does transmission take place?
o (777) Transmission takes place from the moment of death
o This is legal fiction, because you don‟t really physically get the
inheritance at the moment of death.
o Why is it proper to say the rights to succession “vest”
instead of “get transmitted”?
Because you already have that right, albeit inchoate.
It only vests upon death of the predecessor.
What are the consequences of Art. 777?
o 1. Determination of who the heirs will be is determined at the
moment of death; also, what law is in effect; what portions they
will get, etc.
Uson v. Del Rosario: Decedent died during
effectivity of the old Civil Code, so the spurious
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o
o
o
o 3. SS
o 4. ICs
Which are primary and which are secondary?
o Primary – those who are never excluded
Legitimate children/descendants
o Secondary – those who receive only in default of the primary
Legitimate parents/ascendants
Illegitimate parents
N.B. does not go beyond parents
o Concurring compulsory heirs
Surviving spouse
Illegitimate children/descendants
What are the two principles?
o A) Exclusion and B) concurrence
o These two principles simultaneously operate to establish
combinations of compulsory heirs
Legitimary combinations – [recit]
1. Compulsory
2. Testamentary
3. Intestate
In absence or default of valid will
(781)
is a WRONG provision. The heirs acquire rights to the
inheritance upon death. Any fruits/accruals after will indeed belong to
the heirs, but not through succession, but through accession discrete or
continua.
What is the importance of distinguishing between heirs and
legatees/devisees?
o This is an important distinction because of the rules on
preterition.
o Heirs – succeeds to an aliquot part of the estate, whether
through testate or intestate
COMPULSORY SUCCESSION
Legitimes
1 LC, 1 IC
1 LC, 2 IP
3 IC, 2 LP, SS
(886) Legitime –
o A part of the testator‟s property
An aliquot or fractional part
o Which he cannot dispose of gratuitously
Why is “gratuitously” underlined?
Because he can dispose of it onerously. He
cannot donate to an extent that will eat into
the value of the legitime.
But he can sell his properties. Onerous
dispositions do not impair the legitime.
(Joaquin v. CA)
So he can gratuitously dispose?
YES. But, he cannot eat into the legitime.
Manongsong v. Estimo: Sale does not affect the
value of the decedent‟s estate. There is an exchange
of value.
Who are the compulsory heirs? – (887)
o 1. LC and descendants
o 2. LPs and ascendants (in default of #1)
2 IP; SS
2 AC; 1 LC; 1 IC
1 LC; 2 IC; SS
6 LC; 3 IC
5 IC; SS
1 AC; 2 LP; SS
3 LGP; SS
1 IC; SS
2 AC; 2 LP
3 LC; 2 IC; SS
2 AC; 1 LP; SS
LC = ½; IC = ¼
LC = ½
LP = ¼ each; 3 IC = 1/12 each; SS =
1/8
IP = 1/8 each; SS = ¼
LC = 1/6 each; IC = 1/12
LC = ½; SS = ¼; IC = 1/4 each, but
reduced to 1/8
LC = 1/12; IC = 1/24
SS = 1/3; IC = 1/15
AC = ½; SS =1/4; LP = 0
1 LGP (one line) = ¼; 2 LGP (other
line) = 1/8; SS = ¼
IC = 1/3; SS =1/3
AC = ¼ each
LC = 1/6 each; IC = 1/12 each; SS =
1/6
AC = ¼ each; SS = ¼
Legitimate children or descendants
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o
Get a constant ½
Note: There are only three cases where nobody gets
½:
SS – 1/3; IC – 1/3
SS, exceptional circumstance of in articulo
mortis – 1/3
SS – 1/4; IP – 1/4
o They are the primary compulsory heir
o The nearer exclude the more remote. So children exclude
grandchildren.
o BUT the grandchildren can inherit if representation is proper
Predecease
Disinheritance
Incapacity/Unworthiness
o N.B. If all the children renounce, then the grandchildren will all
inherit equally (per capita)
But if only a few renounce and not all, the remaining
child/children will get what is left to the exclusion of
the grandchildren
o The adopted child is, for purposes of succession, in the exact
position as a LC
Must be legally, not de facto adopted
o Does the adopted child retain the right to succeed his
biological parents?
This is still an open question. There is an obiter in the
Stephanie Garcia case that the adopted child does,
but it is a mere obiter, and it cites a Family Code
provision that might have been repealed by the
Domestic Adoption Act.
Legitimate parents or ascendants
o Nearer exclude more remote. Parents exclude grandparents.
o Equal division by line. So paternal and maternal lines split by
half then divide between the parents.
Surviving spouse
o Before, in the Spanish Code, she cannot concur with LC; she
would only get usufructuary right over the property of the LC.
Now, she can concur, and is in fact always an heir. But her
share is variable.
o What kind of marriage is needed to become a SS?
Valid or voidable
o What is the effect of legal separation?
Final decree will disqualify the guilty spouse from
inheriting through compulsory, testamentary, or
intestate succession.
Unless there is reconciliation.
Lapuz v. Eufemio: If pending a case for legal
separation, one of the spouses dies, the action is
automatically extinguished and there will be no LS.
o What are the prerequisites to have the SS inherit only 1/3?
1. SS inherits alone
2. The marriage was in articulo mortis
3. Decedent dies within 3 months of the marriage
4. Couple did not live together for at least 5 years
5. The decedent was the one at the point of death
upon marriage
Illegitimate Children or descendants
o
No more distinction between natural and spurious children.
o What if they concur with legitimate children?
Always get ½ of one LC‟s share
Their share can be reduced pro rata if the shares
exceed 1 whole. They are less preferred than SS and
LC.
o What if they do not concur with legitimate children?
Variable shares. If with SS, then 1/3. If with IP, then
¼. Alone, ½ collectively. If with LP and SS, then ¼.
o What is the rule on representation?
The illegitimate children of an illegitimate child can
represent the latter. The illegitimate children of a
legitimate child cannot represent the latter.
Illegitimate Parents
o Excluded by BOTH legitimate and illegitimate children.
o No succession for illegitimate ascendants beyond IPs
Preterition (854)
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o Not always! [ex. there was no disposition in his favor]
X has two children, A and B. X made a will giving B ½ of his
estate, and the other half to Ateneo. X did not give A anything by
way of donation inter vivos either. But A predeceased X. Is there
preterition?
o No. A predeceased. You only determine fact of preterition
upon death of testator. (JLT Agro)
[Same facts] A, however, had a son A1. A predeceased X still. Is
there preterition?
o Yes. But not of A, but of A1.
o Does it matter than A1 was born after the will was made?
It does not matter. The reckoning point is still time of
death of the testator, not time of making the will.
o What is the effect?
The entire estate is thrown open to intestacy because
there are no legacies or devises.
X said “I will disinherit my son B because he took up law, not
medicine.” Is this a valid disinheritance?
o No. It is not one of the grounds. It is rendered ineffective, and
therefore, there is no preterition.
[Same facts] But the second sentence now says, in addition, “…so
I give ½ of my estate to Ateneo, and the other 1/2 to my brother Z.”
What happens here?
o There was no preterition. So X will get his legitime because
the disinheritance is ineffective. The dispositions in favor of
Ateneo and Z are valid but inofficious, so these will just be
reduced but not rendered invalid. [Take note of this
scenario]
o Why does it become like this? Because preterition will only
apply when there is inadvertent omission from the will (“without
the heir being expressly disinherited”). An ineffective
disinheritance, thus only results into the heir being able to
demand his rightful share. Preterition does not vest.
What is preterition?
o Total omission of a compulsory heir in the direct line from the
inheritance.
o What is the mistake of the judge in Seangio?
He said that it is total omission from the will. It must
be total omission from the inheritance.
When is a compulsory heir completely omitted?
o When he gets nothing in the way of:
1. testamentary (institution of heir) disposition
2. legacy or devise
3. intestate succession
4. donation inter vivos
Don’t forget donation inter vivos!
…and he was not disinherited.
Why does it mention “compulsory heirs in the direct line”? Who is
a compulsory heir not in the direct line?
o The surviving spouse.
o So who is covered?
It can be LC, IC, and as circumstances apply, LP or
IP
o How do you determine who are the compulsory heirs?
Determine only at the time of death because that is
only when the rights to succession vest.
What if there is something is given but is insufficient?
o Remedy is completion of legitime (906)
What is the effect of preterition?
o Annulment of the institution of heir. But legacies and devises
are valid in so far as they are not inofficious.
o If there are no legacies or devises, the entire estate is thrown
open to intestacy.
Does the fact that an heir is not mentioned in the will mean that he
is preterited?
o No, if the will does not dispose of the entire estate. (Seangio)
If someone dies intestate, can there be preterition?
o No.
Does the fact that an heir is mentioned in the will mean he is not
preterited?
Disinheritance (915-923)
What is the effect of disinheritance?
o Primary effect – exclusion from the legitime
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o Actual effect – TOTAL exclusion of the heir from all manner of
succession: exclusion of the heir from the legitime and the
intestate portion, if any, and also from testamentary succession
is instituted in an earlier will.
Requisites?
o 1. Made in a will
Can you disinherit in a medium other than a will?
No. ONLY through a will.
o 2. Done for a cause specified by law.
o 3. Specify the cause
o 4. Must be unconditional
o 5. Must be total
o 6. Cause must true
o 7. If the truth of the cause is challenged, the truth of the cause
must be proved by the proponent
What is the policy of the law?
It is reluctant to grant disinheritance. This is
why the burden of proof is automatically with
the proponent of the will. The rebutting heir
is not tasked to prove the denial.
Take note of the following:
o 1. Some of the requisites require conviction by final judgment.
Example: Number 1. Mere attempt to take the life is
not enough; there must be conviction.
But some do not need final conviction, like –
Maltreatment by word or deed
Living a dishonorable life
o 2. The grounds are exclusive.
o [The grounds are discussed in a table below]
Which grounds require conviction by final judgment?
o 1. Attempt against life of testator, spouse, descendant,
ascendant
o 2. Adultery/concubinage with spouse of testator
o 3. Conviction of crime which carries with it penalty of civil
interdiction
What is the special requirement for the ground of refusal to give
support?
o There must have been a prior demand, and the demand must
have been unjustifiably refused.
What is “maltreatment by word or deed”?
o It covers a wide range of misdeeds, but it must be verbal or
physical assault of a serious nature
o No need for conviction
What is “abandonment” as a ground to disinherit a parent?
o Complete withholding of presence, love, care, and opportunity
to display maternal affection; total denial of support and
maintenance
o See discussion below in unworthiness
Must there be conviction in “Attempt against virtue”?
o No.
What is “giving cause for legal separation” as ground to disinherit
a spouse imply?
o No need for decree of legal separation, because merely giving
ground is enough
o Contrast this with “loss of parental authority” as a ground
to disinherit a parent:
Need actual loss of parental authority for this ground
Is there representation in disinheritance?
o Yes, if the disinherited heir is a descendant.
Also for brothers/sisters being represented by
nephews/nieces but only in intestacy and not
compulsory (because brothers/sisters are not
compulsory heirs)
o No, if the disinherited heir is an ascendant.
o N.B. representation does not apply to testamentary succession
(obviously).
o What does representation cover?
Compulsory and intestate succession
See rules on representation for further distinction
Does the disinherited parent have right to usufruct or
administration of the property constituting the legitime?
o No. The usual rule in the FC that the parents are legal
guardians of the child‟s property does not apply to a
disinherited parent.
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Abandonment has no precise meaning. How do
we understand it here?
When the parent/ascendant culpably
neglects the support of the child. “Culpably”
means without justification.
What about giving consent to adoption, is it
abandonment?
No. It is not a culpable act. It is encouraged
by law.
o 2. Inducement by parent for daughters to live a corrupt or
immoral life
Re: inducement. What about
grandchildren/granddaughters? What about
grandsons?
A liberal interpretation would include all
these.
o 3. Attempt against virtue of daughter
Attempt against virtue?
This should include grandparents
Does this need conviction?
No.
What does “attempt” cover?
All stages of commission.
Also not limited to rape: it should cover other
offenses against chastity.
Are the grounds exclusive?
o Yes.
Do you need actual disinheritance?
o No. The law itself excludes the heir.
What is the extent of the disqualification?
o Total, like in disinheritance – no compulsory, testamentary,
intestate
Is there representation here?
o Yes, in the same way as disinheritance.
How does one set aside unworthiness?
o 1. Written condonation
How can disinheritance be lifted?
o Reconciliation between the parties.
o It may be oral, in writing, or by conduct (implied).
o What must be the form of express pardon?
It must be a pardon expressly and concretely
extended to the offender, and not a mere general
pardon extended to all who have offended him
o What is the nature of pardon through conduct?
The intent to forgive must be clear. This is a question
of fact.
What is the effect of reconciliation?
o It removes the disinheritance.
o Does he recover legitime?
Definitely. The heir recovers his right to the legitime.
o Does he receive anything by intestate succession?
He recovers the right to the intestate portion, if there
is any left.
o Does it revive testamentary dispositions in a prior will?
Yes, unless it was revoked.
o What if there is reconciliation before disinheritance is
made?
The right to disinherit is extinguished
Unworthiness (1032-1040)
1032 enumerates causes for incapacity to succeed/unworthiness and
there is a close parallel with disinheritance. As with disinheritance,
there is need for final conviction for some, not for others, and one
requires exoneration.
First ground (actually three):
o 1. Abandonment of child
This article refers to unworthiness of compulsory
heirs. Parents who have abandoned their
children. But what if the child is under the
authority of grandparents, will this apply?
RFB thinks so. It should probably be
“ascendants who abandon descendants.”
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In good faith if he acquired the thing for value (can‟t
be a donation) and without knowledge of the defect of
the transferor‟s title
o 2. But the co-heirs can recover damages regardless from the
disqualified heir
o 3. But for necessary expenses, regardless of GF or BF, there
must be indemnification of the disqualified heir
What is the nature of the possession of the disqualified heir?
o Possession in BF. Thus, must return the thing, with all its
accessions, and all the fruits he actually and could have
received
What is the prescriptive period to declare incapacity and recover
property from the disqualified heir?
o Five years from time of possession
o
2. Execution by offended party of a will with knowledge of the
cause of unworthiness
o Viz: in disinheritance, there can be implied reconciliation
Why is the code stricter in unworthiness than disinheritance?
o This is an inconsistency, because there are many grounds
common between both unworthiness and disinheritance. This
happens when if the offended party avails himself of that
ground and actually disinherits.
o Ex. X is the son of Y. X attempts to take Y‟s life. A case for
frustrated parricide was filed, and he was convicted with final
judgment. It is a common ground in unworthiness and
disinheritance. So in this case, he is automatically unworthy.
But Y still disinherits X, which he can do. There is no problem
here; he is just “double dead.” But what if X and Y reconcile?
Y admitted X back into his house, and forgave him orally.
Under the rules on disinheritance, reconciliation is enough to
set aside the disinheritance. But because there is no written
pardon, the unworthiness persists.
o How do we resolve this?
Commentators like Tolentino say that it is the rules on
disinheritance that prevail, because disinheritance is
the express will of the aggrieved party. It should
prevail over unworthiness.
If the facts are the same but Y did not disinherit X,
unworthiness will apply. So there has to be a written
pardon.
When is capacity or incapacity determined?
o 1. In general, upon time of death of decedent
o 2. If institution is subject to a suspensive condition:
Time of decedent‟s death AND
Happening of the condition
o 3. If judgment is a requisite of unworthiness, time of final
judgment
What if the disqualified heir makes alienations of hereditary
property and acts of administration?
o 1. As to third persons in GF, these are valid
Grounds for disinheritance and unworthiness:
D of child/des
Attempt against
3
life
Accusation of
4
crime
5
Adultery/conc.
Force to change
will
Refuse to
support
Maltreatment by
word/deed
Dishonorable life
Crime with civil
interdiction
D of parent/as
Attempt against
life
Accusation of
crime
Adultery/conc.
Force to change
will
Refuse to
support
Abandoned,
induced to
corrupt life,
attempt v. virtue
3
D of spouse
Attempt against
life
Accusation of
crime
Force to change
will
Refuse to
support
Unworthiness
Attempt against
life
Accusation of
crime
Adultery/conc.
Force to change
will
Abandoned,
induced to
corrupt life,
attempt v. virtue
Of testator, spouse, ascendants, or descendants – need conviction
Crime must be 6 years or more and found groundless
5
With testator’s spouse; Needs conviction
4
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Loss of P.A.
Attempt by one
parent against
life of other
1. Abandonment, corrupting influence, attempt at
virtue
2. Prevent making or revocation of will
3. Falsification or forgery of will
Loss of P.A.
Cause for LS
Prevent from
making will or
revoking one
Falsification or
forgery of will
Representation
Definition of representation?
o The representative is raised to the place and degree of the
person represented and acquires the rights which the latter
would have if her were living or if he could have inherited
When does representation apply?
o 1. Predecease,
o 2. Disinheritance,
o 3. Unworthiness/incapacity
o There is no representation in renunciation
In what kinds of succession does representation operate?
o 1. Compulsory
o 2. Intestate
In what lines does representation obtain?
o For compulsory succession –
ONLY in the descending direct line.
N.B. NEVER in ascending.
o For intestate succession –
1. Direct descending line
2. One instance in collateral line: nephews and nieces
representing brothers and sisters of the deceased
What is the rule on adopted children?
o Cannot represent nor be represented, because the legal
relationship in adoption is strictly between adopter and
adopted.
What is the rule on representation by illegitimate children? (“iron
curtain”)
o Illegitimate child of a legitimate child cannot represent the
latter.
o Illegitimate child of an illegitimate child can represent the latter.
o If the child is legitimate, he can always represent his parents.
What is the rule on shares of the succeeding representatives?
Tips to remember the grounds:
o A. Common five grounds:
1. Attempt against life
2. Accusation of crime
3. Forced to change will
4. Adultery/concubinage with testator‟s spouse
Except D of spouse, because obviously
he/she cannot screw him or herself
5. Refusal to support
Except U; it‟s not automatic
o B. Grounds for children: involve being a disappointment to their
ascendants:
1. Maltreatment
2. Dishonorable life
3. Civil interdiction
o C. Grounds for ascendants: being bad parents/examples
1. Abandonment, corrupting influence, attempt at
virtue
2. Loss of PA
3. Attempt against life by one against the other
o D. Grounds for spouse: just loss of PA and cause for legal
separation
1. Loss of PA
2. Cause for legal separation
o E. Grounds for unworthiness: two grounds involving fraud in
making of the will + triple-ground
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o
o
Since they are only stepping into the shoes of the person
represented, they could get unequal shares (per stirpes). Ex.
A had 2 children, B had 3. Both A and B predecease their
father, X. The 2 children of A split A‟s share by ½ each and
the 3 children of B split B‟s share by 1/3 each.
o When does the rule change from per stirpes to per capita?
The rule changes when ALL, and not just some, of the
children renounce. The grandchildren will inherit per
capita.
o What if all children predecease?
The grandchildren still inherit by representation, and
not per capita.
o How does the rule change for the sole case of
representation in the collateral line?
A, B, and C are brothers and sisters of X. If A and B
predecease X, then the children of A and B inherit per
representation.
But if ALL of A, B, and C predecease (or are
disqualified) – the nieces and nephews of X will inherit
per capita. NOTE that this is different because in the
descending line, it will be still succession by
representation.
What if there is renunciation by all collateral
heirs?
Same rule as direct line heirs: the nephews
and nieces will inherit per capita.
N.B. there is no distinction among the kinds of
disqualifications in collateral representation, so as
long as all brothers/sisters die or renounce (no such
thing as disinheritance or unworthiness for brothers
and sisters), the nephews/nieces inherit per capita
o Is it even relevant to talk about disinheritance or
unworthiness for collateral heirs?
It‟s not. You cannot disinherit a brother or sister
because he‟s not a compulsory heir.
What are the 3 rules on qualification?
o 1. Representative must be qualified to succeed the decedent
(e.g. C must be qualified to represent A)
2. Representative need not be qualified to succeed the person
represented (e.g. C need not be qualified to succeed B)
o 3. The person represented need not be qualified to succeed
the representative (e.g. B need not be qualified to succeed C)
What is the difference between representation OF and BY a
renouncer?
o Representation OF renouncer
does not happen
o Representation BY renouncer
can happen.
Illustrate this rule. A B C. C renounced B‟s
inheritance. But C can represent B if B predeceases
A, because C is inheriting from A, not B.
Reserva troncal
What is Reserva Troncal?
o See Article 891
What’s the purpose of reserva troncal?
o To keep property or return property to the line of origin.
(Sanchez Roman view)
What are the requisites of RT?
o 1. Person acquires property from ascendant or brother/sister
through gratuitous title
o 2. Dies without legitimate issue
o 3. Inherited by another ascendant through operation of law
rd
o 4. There are relatives within the 3 degree of consanguinity
from the prepositus belonging to the line from where the
property came
Why is the reserva troncal included in compulsory succession?
o The RT can limit the operation of the legitime
o If that part which is reservable passes as legitime, the law says
that it should pass with no burden. But if it passes as RT, it will
be under the burden of RT because the law says so.
o It‟s better to take it up as part of compulsory succession
because it can become an encumbrance on the legitime.
What are the two transmissions that have to take place?
o 1. By gratuitous title, from the origin to the prepositus
This can include donation or any kind of succession
o 2. By operation of law, from the prepositus to the reservista
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ONLY compulsory or intestate succession
What if there is only one transmission?
o There is no RT. There have to be two transmissions for there
to be RT.
o Solivio: there was just one transmission from the mother to the
son, by donation. When the son died, he had no ascendants
at all or descendants either. Because there was no other
ascendant, the second transmission could not happen. The
closest relatives are two aunts, who are not ascendants.
Who are the parties in RT?
o But first, two basic rules:
1. All of these parties must be legitimate. If any of the
relationships is illegitimate, there can be no RT.
2. No further inquiry beyond the origin is required
o 1. The origin –
Ascendant of prepositus, of any degree, of either line
Or brother/sister of prepositus, either full or half blood
If full blood, Manresa says “yes.” JBL says
“no, because there is no possibility of the
property leaving the line. The ascendant
6
lines are common.”
o 2. Prepositus
o 3. Reservista
Has to be a different ascendant from the origin
Must he be another ascendant from another line
or can it be same line?
If another line, no question he can be a
reservista. (Ex. F
S
M)
If same line (Ex. GF
grandson
F [same
line as grandfather, since he is the son of the
grandfather]), according to JBL, there is no
RT. According to Manresa and Sanchez7
Roman, there is an RT.
o
6
The difference is explained by different theories. JBL’s view is that RT is
curative or remedial; if it does not leave the line, no need for RT. Manresa
says that it is preventive, too – the RT seeks to prevent the property from
leaving the line as well.
7
4. Reservatarios
They must be related within the third degree, in
relation to the prepositus, and of the line where the
property originally came from
N.B. Of course exclude legitimate
descendants, since if the prepositus had
decendants, there would have been no RT
Who are these possible reservatarios?
Parent, grandparent, great grandparent,
Brother, sister, nephew, nieces, uncles,
aunts
Note: in the situation that JBL seeks to exclude (but
Manresa favors), there is no need to make a
distinction since there is no change in lines.
When do you determine who the reservatarios?
When the reservista dies. They do not have
to exist when the prepositus dies.
If there are several, but of different degrees, how
do you determine who gets what?
Tolentino: Selection is made on preferential
basis, not integral and indiscriminate, as
Scaevola believed.
Apply the rules on intestate succession
(direct over collateral). Another rule of
intestacy that applies is representation of
nephews or nieces of brothers/sisters [so the
brothers/sisters do not exclude
nieces/nephews].
What is the consequence?
Gonzales: The reservista cannot choose, by
will who the reservatarios will be. The law
chooses for her.
Again, the source of disagreement is a different in theories on nature and
purpose of RT. RFB leans towards Manresa’s and Sanchez Roman’s view.
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Should the reservatario be related to the origin?
A1 and A2 have a child, B1. B1 is married to
B2, and have a child C. A1 donates property
to C. B1 died, when C dies, it goes to B2.
Thus, there is an RT here. When B2 dies,
A2 survives and claims the property as
nd
reservataria (since she is related by 2
degree to C, the prepositus).
MANRESA – she is a reservataria, she
meets the purpose and requirements
SANCHEZ ROMAN – she is not, because
you didn‟t return it to A1‟s line and A1‟s
relatives. A2 is not related .
So what is the majority view?
The reservatarios must be related by blood
to the origin.
This is not yet established by jurisprudence,
but this is a good view point.
What is the nature of the right of the reservista? (Edroso)
o 1. Right of ownership
o 2. Subject to the resolutory condition that there will be
reservatarios present upon the reservista‟s death
o 3. The right is alienable, subject to the same resolutory
condition
4. The right of ownership is registrable
What is the right of the reservatarios? (Sienes)
o 1. Right of expectancy
o 2. Subject to a suspensive condition, that there will be
reservatarios present upon the reservista‟s death
o 3. The right is alienable, subject to the same suspensive
condition
o 4. The right of expectancy is registrable
o Don’t these two rights of registration conflict with each
other?
No. There‟s only one title. The right of the reservista
is annotated as ownership; the right of the
reservatario is annotated as an encumbrance.
What kind of property can be reserved?
o Any type
o What is the effect of substitution (e.g. the prepositus sells
the property)?
No RT because it must be the very same property
that goes through the two transmissions for RT to
arise
What is the nature of the reserved property when the reservista
dies?
o It‟s not part of his estate upon death. It passes by strict
operation of law to the reservatarios.
What are the rights and obligations of the reservatarios and
reservistas?
o Reservista prepares inventory
o Right of reservatarios to annotate in case the reservista
alienates (within 90 days from acceptance by the reservista)
o Appraise the movables
o Secure by means of mortgage
o Registration is demandable Sumaya
What are the causes for extinguishment of RT?
o 1. Death of reservista (causes it to transfer)
o 2. Death of all the reservatarios
o 3. Renunciation by all the reservatarios, and none is born
subsequently
o 4. Total fortuitous loss of the property
o 5. Merger or confusion of rights
o 6. Prescription or adverse possession
TESTAMENTARY SUCCESSION
In general
What is the nature of making of a will?
o It is a strictly personal act. It cannot be delegated.
o The mechanical aspect is delegable but not the disposing
power.
o What cannot be delegated?
1. Designation of heirs, legatees, devisees
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2. Duration or efficacy of the designation
3. Determination of the portions they get
o What is the exception to non-delegation?
The testator must determine: a) property or amount of
money given, and b) the class or cause to be
benefited.
And then he may delegate to a third person: a) the
designation of persons, institutions, establishments
within the class or cause, or b) manner of distribution
Testamentary succession can never impair the legitime
What is a will?
o An act instrument whereby a person is permitted, with the
formalities prescribed by law, to control to a certain degree the
disposition of his estate to take effect after his death
What are the two kinds of wills?
o Holographic and attested/notarial
What are the three common requisites for both attested and
holographic wills (first two, textual; one is non-textual)?
o 1. It must be in writing
o 2. Executed in a language or dialect understood by the testator
Is this rule mandatory?
Definitely.
So can the will be translated to the testator?
No. It must be written in a language known
to him. Do not confuse this with the
attestation clause, which can be translated.
Must the will state it was written in a language
known to the testator?
No. It can be shown by extraneous
evidence/evidence aliunde.
o 3. Testamentary capacity
Who can make a will?
Natural person (juridical person cannot make
a will)
Who are the two classes of disqualified persons?
Those below 18 years old
Those of unsound mind
Putting it positively, one must be a natural person 18
years old or above and of sound mind.
What must you know to establish a sound mind?
1. Character of estate
2. Proper objects of your bounty
3. Nature of the testamentary act
Is there a presumption?
Yes, a rebuttable presumption of
testamentary capacity
When is there no presumption?
o 1. If the testator, 1 month or less
before the making of the will, was
publicly known to be of unsound
mind
o 2. When the testator has been
placed under guardianship for
insanity
What is the presumption then?
o There is a presumption of insanity,
not just a presumption of sanity.
Again, this is rebuttable
Where must the testator sign?
o 1. He must sign the will
o 2. Also every page at the left hand margin, except the last.
o How can the testator usually sign?
He writes his name
o What are the other recognized ways?
Affixing thumbmark (Matias v. Salud)
Is the thumbmark for the testator always a valid
way to sign the will?
Yes. Under all circumstances, even if not
infirm or ill.
Is a cross allowed (Garcia v. Lacuesta)?
No, in general.
THE EXCEPTION: If that is his usual way of
signing.
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There are two ways of interpreting the word “the end,”
where the testator’s signature should be. What are these?
1. The physical end, where the writing stops
2. The logical end, if there are non-dispositive
portions written in the will
o Must the signing always be at the left margin?
No. It can be any margin.
Why is there no requirement for marginal signing
on the last page?
Because it would be superfluous. He also
signs at the end.
The testator must sign in the presence of the witnesses. The
witnesses must also sign in the presence of the testator and of one
another. What does the law mean by “in the presence”?
o Nera: The requirement of presence does not mandate that the
person must actually see the other party signing; what is
required is that he could have seen, by casting his eyes in the
proper direction (without changing his physical position).
One of the options given to the testator is that he/she may ask
someone else to sign for him, provided some conditions are
present (1. Express direction; 2. In his presence).
o Should the testator be physically prevented from signing
or have any particular reason to get an agent?
No.
o What should the agent write?
He must write the testator‟s name
It must be in the agent‟s own handwriting
o Must the agent write his own name?
It is not required.
Must the attestation clause be signed?
o Yes.
o By whom?
The witnesses.
o What about the testator?
No. The attestation clause is purely an affair of the
witnesses.
o Where should the witnesses sign the attestation?
o
At the end of the attestation clause.
Can they sign at the margin or elsewhere
(beside)?
No. The attestation clause is deemed
unsigned.
o What must the attestation clause state?
1. Number of pages of the will
2. Fact that the testator signed the will and all the
pages thereof, or caused some other person to write
his name under his express direction, and in the
presence of the instrumental witnesses
3. That the witnesses signed the will and all the pages
thereof in the presence of the testator and of one
another
Must the attested will bear a date?
o No.
o Why?
The certification in the acknowledgement will be dated
anyway.
o Who certifies?
The notary public – as required by the notarial law.
o Viz: should a holographic will be dated?
Yes.
What if the notary public acted outside his notarial jurisdiction?
o It is void and tantamount to not being notarized.
If the will was notarized by one of the witnesses, who was also a
notary public, will this make the will void?
o No, if there are three other witnesses apart from the notary.
o If there are less than three witnesses including him?
The will is void. There is a failure to meet the
required number of witnesses.
o But can a notary public be a witness?
Definitely. But the notary public cannot be counted as
a witness, and the witness cannot be the notary public
too. For the latter, you are undermining the notary
public‟s impartiality.
What is the requirement if the testator is blind?
91
Two readings – by the notary public and by one of the attesting
witnesses.
o Is this mandatory?
Yes. Non compliance makes the will void.
Should this mandatory nature extend to illiterate
deaf mutes?
Yes.
Of course, the two persons need not be the
notary and one witness; it can be whoever
can practicably communicate the will‟s
contents to him
o Must the will or attestation clause mention compliance
with this mandatory requirement?
No. It can be established by extrinsic evidence.
o Garcia: The lawyer who assisted the testator read the will.
It was read only once. The lawyer, however, read it aloud
in the presence of the attesting witnesses and the notary
public, who had their own copies of the will. The testator
was also listening. Art. 808 was hence not complied with.
But is this valid?
This is valid, because there was substantial
compliance. The intent of the law was achieved – to
prevent fraud upon the testator.
o Alvarado: Invalid because it was done by the lawyer who
drafted the will who read it aloud, so it wasn‟t even one of the
two parties enumerated. And he read it out loud only once.
Art 809 is the provision on substantial compliance with respect to the
attestation clause, which needs three things (# of pages, fact that the
testator signed at the end in the presence of the witnesses, and that the
witnesses did the same in the presence of the testator and of one
another). How strict must this be in light of Art. 809?
o In the code itself, there is no clear rule about how liberal
interpretation could be.
o Caneda: defect was failure to state that the witnesses signed
in the presence of the testator and of one another. HELD:
This was a fatal defect. Adopting JBL Reyes‟s suggested
standard, it could not be remedied by visually examining the
will.
o
o
Azuela: Deficiency was failure of the clause to state the
number of pages, which was left blank. HELD: valid omission,
because it can be supplied by a visual examination of the will.
Requirements of a Holographic will?
o Completely written, dated, and signed by the testator
o Roxas v. de Jesus: Feb/61 was held as a sufficient date – this
is a problematic decision. Fortunately, there was no other will
also made in Feb/61, which could have possibly repealed it. In
a very liberal decision, it was upheld.
o Where should the date be?
There was no mention where it should be. It could be
in the body.
o Can you sign by a thumbmark, as in an attested will?
Seems unlikely. It must be “written by the hand” – not
a thumbmark. Though there is no jurisprudence on
this.
813-4 – dispositions after the signature
o Some commentators say that this implies that the signature
must be at the bottom of the holographic will.
o If there is only one additional disposition, it must be written and
signed by the testator.
o If there are several, what is the rule?
1. Dated and signed
2. Or each additional disposition may be signed,
provided the last one is dated and signed
What is required for insertions, cancellations, erasures, or
alterations in holographic wills?
o It must be authenticated by the testator through his signature
o Kalaw v. Relova: Cancellation of the name of the original heir
and writing above it of the name of another heir – invalid
because it was not validated, because it was not signed.
o But the court weirdly held that the cancellation was valid! But it
was not signed. This is an odd decision, because it had an
internal contradiction.
Are joint wills allowed?
o No.
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Sometimes it‟s hard to determine whether it is a codicil or a
second will.
If it makes an independent disposition, it is a second
will.
If it alters, modifies, changes, it is a codicil.
o But honestly, this distinction is academic, because the
requirements of a codicil and a will are just the same.
o 827 – An incorporated document. It is attached to a will and
is intended to explain. It cannot make a testamentary
disposition because otherwise, it has to comply with the
requisites and form of a will.
Requisites?
1. It must predate the will
2. It must be signed on every page by the
testator and witnesses, except if it is
voluminous
3. It must be clearly referred to in the will
4. It must be referred to in probate as that
document
So since it requires witnesses, can you not have
an incorporated document with holographic wills?
Some say you cannot because there are no
witnesses. RFB says that you must interpret
it liberally, and since there are no witnesses,
then it just means it‟s just the testator that
signs.
Two modes of testamentary succession:
o 1. Institution of an heir
o 2. Institution of devisee or legatee
What is the permissible form of instituting a successor, whether
heir, devisee, or legatee?
o Only thing required is that the identity of the successor is
adequately determined in the will. No need to mention by
name, as long as the successor‟s identity is determinable.
“I institute my brothers and sisters to ½ of the share of my estate.”
What does this mean?
o
o
But for aliens, if they execute their will abroad and their
national law allows it, then it‟s valid.
o If aliens execute it locally, there are two views: it‟s either valid
because national law allows it, or it is void due to public policy.
o If a Filipino and alien execute a joint will, it‟s always void as to
the Filipino.
What are the requisites to become a witness to a will executed in
805?
o 1. Of sound mind
o 2. At least 18 years old
o 3. Not blind, deaf, dumb
o 4. Able to read and write
o 5. Domiciled in the Philippines
o 6. Not convicted for falsification of document, perjury, or false
testimony
o What do these qualifications establish?
Competence only, but not credibility per se
o When is competence of the witnesses needed?
During attestation only. If they become incompetent
after, it has no effect.
When is a witness to a will disqualified to succeed?
o When he is a witness to a will where something is given to him,
his spouse, parent, or child
o What is the effect?
The will is valid but the witness can‟t succeed to the
will
o How many witnesses are needed for this provision to
apply?
Only three witnesses. If there are at least three other
competent witnesses, there is no disqualification
o What kind of succession is affected?
Only the testamentary dispositions, but not legitime or
intestate share because this is not affected by the
witnessing (i.e. if the witness is a son of the testator)
Codicils and incorporation by reference (825 and 827)
o Article 825 defines a codicil. This is exam material. It assumes
the existence of a prior will. You cannot have a codicil without
a prior will. It can explain or alter the prior will.
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o
Siblings, whether legitimate, illegitimate, or half, inherit in equal
shares.
o This is different from intestacy, where whole, half, and
illegitimate siblings inherit in 2:1:0 ratio. (You cannot inherit
from your illegitimate sibiling)
What is the rule on statement of false causes on a will?
o In general, it is deemed not written.
o Exception – requisites:
1. Cause must be false
2. It must be shown to be false
3. It must appear on the face of the will that the
testator would not have made the institution had he
known of the falsity of the cause
If heirs are given different fractions each, and the total is less than
the free portion, what happens? (852/3)
o The rest of the free portion goes into intestacy.
o But what if it is shown that the testator intended to
dispose the entire free portion?
If the disposition is less than the portion, you increase
proportionately. If more, you decrease
proportionately.
TYPE OF
CIRCUMSTANCES
EFFECT
Giving a thing in legacy
or devise
He gives more than he
owns
Decedent just gives what his
interest covers
The estate will attempt to
acquire it. Failing to do so, it
gives the monetary
equivalent.
He gives just that
DISPOSITION
General rule
Legacy or
devise of
something
belonging to
another
He gives less than he
owns
He can give an order to
acquire it
Testator thought he
owned the thing
Thing already
belongs to the
devisee/legatee
(D/L)
924-959 – Legacies and devises
Some provisions are inaccurate. It is the estate that is liable for
legacies and devises, not compulsory heirs as 925 says. You cannot
charge the compulsory heir for the legacies and devises. Exception:
indirect legacy
What is the liability of two or more heirs who take possession of
the estate?
o Solidarily liable for loss or destruction of the thing devised or
bequeathed, even if only one is negligent
Who is liable for eviction?
o In general, the estate
o For subsidiary legacy or devise – the heir, legatee, or devisee
charged
929-937 outline:
D/L directing
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He knew he did not own
it, but did not give an
order to acquire
If it already belongs to
the devisee/legatee
Testator thought he
owned the thing, and
then the D/L acquired
the thing
Testator knew it did not
belong to him, and then
the D/L acquired it
onerously
Testator knew it did not
belong to him, and then
the D/L acquired it
onerously
Testator owned it when
he made the will, but
the D/L acquired the
thing from him after
In general
The estate will attempt to
acquire it. Failing to do so, it
gives the monetary
equivalent.
Void disposition, except if
subsequent to the disposition,
the testator acquired the thing
gratuitously or onerously
Implied order to acquire
Void disposition. Subsequent
alienation by the D/L does not
validate it, unless it was in
favor of the testator.
Void disposition; the testator
was still in error
The estate pays the value
There is nothing left to be
done
Void disposition (because any
subsequent disposition, even
to the D/L himself nullifies the
disposition)
The estate pays for it
o
It exists if one provides that among several things mentioned
only one is given.
o Who has right of choice?
1. In general, the estate, acting through the E/A
2. In a subsidiary legacy or devise, the heir, legatee,
or devise charged
If he dies, his heirs choose
3. If so provided, the legatee or devisee
o What is the nature of the choice?
Irrevocable
What is the rule on validity of generic legacies/devises?
o 1. Generic legacy – valid even if no such movables exist in the
testator‟s estate upon his death (estate just acquires it)
o 2. Generic devise – valid only if there exists such an
immovable in his estate upon death
o Who chooses?
The executor or administrator
Except if the choice is expressly given to someone
else
o What is the limitation?
Neither superior nor inferior in quality
o What is the nature of the choice?
Irrevocable
Legacy of education, support, or periodical pension:
o A. Education
Lasts until age of majority or completion of the course,
whichever comes later
Amount – as fixed by the testator; secondarily, that
which is proper, depending on social standing or
value of disposable portion of the estate
o B. Support
Lasts until the legatee‟s lifetime, unless the testator
provides otherwise
Amount – as fixed by the testator; secondarily, that
which the testator used to give when he was alive
unless disproportionate to the estate value; tertiarily,
social standing or value of the disposable portion of
the estate
the estate to
remove
encumbrance
from another’s
property
Legacy of
credit or
remission
Pledge/mortgage
Any other kind of
encumbrance like
easement
Giving to the legatee
the debt owed to the
testator by another
person
If the testator sues that
other person
Generic disposition of
debts
The estate pays for it first
Passes with the things
Effective as to the remaining
debt owned upon the testator
when he dies
Ipso facto revokes the legacy.
Mere filing in court already
revokes the disposition;
however, extrajudicial
demand does not revoke the
disposition.
Covers debts existing when
the disposition was made.
Ex. X owed Y 2 debts in
1999. Y, in his will, gave Z
the debts X owed Y. X
owed Y 3 more debts in
2001. Y died. What debts
transfer?
Just the 2 existing when the
will was made.
What is the treatment of a legacy/devise to a creditor?
o It will be treated like any other legacy or devise and will not be
imputed to the debt.
o What is the exception?
Imputed to the debt if the testator provides so. If the
debt exceeds the legacy/devise, the remainder may
be demanded as an obligation of the estate
When are there alternative legacies or devises?
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o
o 2. Accretion
o 3. Intestacy
When is a legacy or devise without effect?
o 1. Transformation –
Converted the thing
o 2. Alienation
Either onerous or gratuitous, and even if the thing
reverts to the testator
Exceptions?
1. Reversion was caused by annulment of
alienation because there was vitiated
consent
2. Reversion due to redemption in a pacto de
retro sale
o 3. Total loss before the testator‟s death
C. Legacy of a periodical pension
Demandable upon the testator‟s death, and
succeeding ones at the beginning of the period
without duty to reimburse should the legatee die
before the lapse of the period
What is the order in 950 for reduction? (i.e. what is the order of
payment of legacies/devises if there is not enough)
o 1. Remuneratory
o 2. Preferred
o 3. Legacy for support
o 4. Education
o 5. Specific thing
o 6. All other, pro rata
What is the rule in 911?
o 1. Reduce pro rata non-preferred legacies and devises
o 2. Reduce pro rata preferred legacies and devises
When do you use which?
o If the reason for reduction is impairment of legitimes, use Rule
in 911 (non-preferred, then preferred).
o If the reason for reduction is something else, use Rule 950.
o What other reasons could exist?
A testator has no compulsory heirs, but he gave away
too many legacies and devises, by sheer
mathematical necessity. Rule 950 is followed.
Or maybe the testator already covered for the
compulsory heirs‟ legitimes through donations inter
vivos, so the remaining parts are all free portion.
What is the rule on acceptance and repudiation of legacies and
devises?
o Acceptance may be total or partial
o Except: if the legacy/devise is partly onerous and partly
gratuitous, the recipient cannot accept the gratuitous part and
renounce the onerous part
Other combinations are allowed
In case of repudiation or incapacity of the legatee/devisee, what
are the applicable rules (in order)?
o 1. Substitution
Rules common to heirs, legatees, and devisees
Capacity to succeed:
o In fact, the basic rules are common to all kinds of succession
(Alive + qualified to succeed at the time succession opens.
There is no exception here.)
Art 1025 – The heir, legatee, or devisee must be living when the
testator dies. There is NO exception, contrary to what this provision
suggests.
o Representation is not an exception because the representative
must at least be conceived already.
o For juridical persons, it must exist juridically when the testator
dies.
1027 – First 5 paragraphs are important because they enumerate
instances where one is incapacitated to succeed in testamentary
succession. It does not apply to other kinds of succession.
o 1. Priest who heard confession of testator during last illness or
minister of gospel extending spiritual aid in this period.
Requisites:
A. Will executed during last illness
B. Spiritual ministration extended during last illness
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C. Will executed during or after the spiritual
ministration
th
o 2. Relatives of priest/minister within 4 degree or his institution
o 3. Guardian, from ward before final accounts of guardianship
approved
Except if guardian is A/D/sibling/spouse
o 4. Attesting witness to the execution of a will, spouse, parents,
children, or anyone claiming under that witness, spouse,
parent, or children
Put in the exception, where there are three other
competent witnesses to the will, under here too
o 5. Physician or health officer who took care of the testator
during last illness
1028 – only applies to testamentary succession: extend to prohibited
donations in 739
What if the disposition is for prayers and pious works for the
benefit of his soul and no specifications are given?
o ½ to the church/denomination of testator
o ½ to the State
1032 disqualifications (unworthiness) – these are general; these bar the
DQ heir from compulsory, testamentary, or intestate succession
Predecease, incapacity, renouncement
How do you make it?
Enumerate all the three causes
o Can you restrict vulgar to 1 or 2 grounds?
Yes. Just specify.
What are the requisites for fideicomissary?
o 1. First heir takes the inheritance
o 2. Second heir takes the thing after tenure of the first heir
o 3. The second heir must be one degree from the first heir
What does “first degree” mean?
It refers to relationship.
o 4. The first heir must have absolute obligation to preserve and
transmit
o 5. Both heirs are alive and capacitated at the death of the
testator
What is the tenure of the first heir?
o What is specified by the testator
o If not specified, it is the lifetime of the testator
Does the first heir have a right to alienate?
o NO. This rule is unlike the reserva troncal.
o
Conditions, terms, modes
Substitutions (857-870)
These all burdens in succession, especially since the testator has free
disposal of his property.
What are the types of conditions?
o Suspensive
o Resolutory
What are the special rules on suspensive conditions?
o An impossible condition (873) – considered not imposed. The
disposition is valid and becomes pure.
o What about condition not to contract first marriage?
ALWAYS considered not written
o What about subsequent marriages?
Generally void, unless imposed by the deceased
spouse or the latter‟s ascendants/descendants
For what kind of succession does this apply?
o Only testamentary succession. You cannot have substitution
in compulsory and intestate succession.
What are the two kinds of substitutions?
o 1. Vulgar
o 2. Fideicomissary
o The code seems to enumerate two more:
1. Reciprocal
2. Compendious
(Several heirs one substitute)
…but these actually are just variations. They go into
mode.
What is substitution vulgar?
o Instituting an heir in default of the one instituted
97
After the testator‟s death, you give it to the instituted heirs, and
when the term arrives, they turn it over to the legal heirs.
A condition suspends, but not obligates. A term obligates, but does not
suspend. A term does not delay the efficacy of the disposition, but it
places an obligation upon the instituted heir (even suspensive, since the
instituted heirs have an obligation to turn the property over to the
instituted heir when the term arrives).
What is a mode?
o You have to do something alongside the disposition.
What if the heir fails or refuses to perform the act required?
o The beneficiary can ask for the performance of the obligation.
o The legal heirs can ask for the forfeiture of the disposition.
How must a mode be stated?
o It must be a clear command, not just a request.
When is a caucion muciana needed?
o 1. In a potestative suspensive condition (879)
It is under the sole control of the heir (ex. I give X my
house and lot, as long as he doesn‟t use it as a drug
den. In order to guarantee that the legal heirs, who
will then be entitled to the property upon violation of
the condition, then X has to put up a bond – the
caucion muciana).
o 2. Resolutory term, before the term arrives
The legal heirs have the right to enjoin disposition of
the property, but they have to put up a caucion
muciana
o 3. In case of a mode (882)
As security for compliance with the testator‟s wishes
o
o
BUT what is allowed is to impose a usufruct or some personal
prestation as long as one remains unmarried or a widow is
valid.
o A disposition on condition that the heir/legatee/devisee
must also in turn make a disposition in favor of the
testator or another person?
The entire disposition is void. Take note of this. The
purpose is to prevent the whole system from being
corrupt.
This is also called the disposition captatoria
When does a suspensive condition take effect?
o If both conditions exist: 1) the heir is alive when the testator
dies, 2) the heir is alive when the condition happens
What happens while waiting for the suspensive condition to
happen?
o Place the property under administration of
executor/administrator
What is the difference between a term and condition?
o A term is certain, a condition is not.
What are the two types of terms?
o Suspensive term
o Resolutory term
When does an institution based on a term vest?
o A disposition with a term vests upon the death of the testator,
unlike a conditional disposition (esp. suspensive) which only
vests upon the happening of the condition. Since a term is
certain to happen, it follows the general rule in 777 that it vests
upon death.
So must the heir be alive when the term arrives?
No. Just when the testator dies.
So he can transfer his vested right upon his
own successors.
What do you do as you wait for a suspensive term to arrive?
o Governed by 885. While you wait for the term to arrive, you
give it to the legal heirs (intestate heirs).
For resolutory terms?
Accretion (1015-23)
To which kinds of succession does it apply?
o Applies only to testamentary and intestate succession.
Requisites?
o 1. Two or more heirs, legatees, devisees, called to the same
inheritance or portion thereof pro indiviso
What does “pro indiviso” here mean?
98
o
2. Subsequent will/codicil
1. The will must comply with the requirements of wills
2. Testamentary capacity
3. Either an express revocatory clause or
incompatibility in the dispositions
4. The will must be admitted to probate
o 3. Physical destruction
Either by the testator personally or in the case of
attested wills, it can be done by his agent acting
under his express direction and in his presence
Molo: There must be both a) corpus (actual
destruction), and b) animus (intent)
What if a will is revoked based on a false cause?
o The revocation is null and void.
o What are the requisites for this situation to apply?
1. Cause must be concrete, factual, and not purely
subjective
2. It must be false
3. The testator must not know of its falsity
4. It must appear in the will that the testator is
revoking because of the cause which is false
What if the revocation was unauthorized?
o If it is an attested will, it can be proved, if there are people
available who can attest to the contents of the will
o If it is a holographic will, too bad if no copies survive. There‟s
no way of probating it.
Some commentators say they must have
equal shares (like Tolentino), but this is
wrong. There‟s no requirement of equality,
just as long as they have aliquot shares.
This means even the shares can be unequal.
There is no accretion is the shares are
earmarked.
o 2. One or more must predecease the testator, become
incapacitated, or renounce the inheritance.
X gives his BPI account to A, Citibank account to B, PNB to C. C
predeceases. Is there accretion?
o No. The shares are earmarked.
X gives ½ of his estate to A, 1/3 to B, 1/6 to C. C predeceases. Is
there accretion?
o Yes, because they got aliquot shares. A and B receive C‟s
shares according to the proportion they received their shares.
In testamentary disposition, what wins out, accretion or
substitution?
o Substitution
In intestate disposition, what wins out, accretion or
representation?
o Representation, when proper
o So if the intestate decedent has three brothers (X, Y, and Z)
and X has X1 and X2, if X dies, representation applies. If X
has no children and X dies, accretion applies.
Revocation of wills (828-834)
Republication and revival
There is no such thing as an irrevocable will. It only becomes
irrevocable when the testator dies.
What are the three ways of revoking a will, whether total or partial?
o 1. By operation of law
Legal separation (offending party is instituted as a
beneficiary in a will)
Preterition
Where the testator disposes property that is given as
legacy or devise in a will (the legacy/devise is
revoked)
835 and 836 are inconsistent with each other.
Republication/revival is giving efficacy to a will which somehow lost its
efficacy
o Ex. it has been revoked, and now you want to revive it.
If it is defective as to form?
o You have to reproduce it in the form of a valid will or codicil.
o You cannot revive it by reference.
What if it is inoperative by some other reason other than form?
o You can merely revive it by reference.
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Executors and administrators (1058-1060)
What if the decedent dies with a will? With no will?
o It has to be probated, and if the will has appointed someone to
take care of the estate, then he becomes the executor.
o If there is none appointed or no will, then the court appoints an
administrator.
o
Probate
Two aspects of validity of a will?
o Formal (Extrinsic validity)
including capacity of witnesses
o Substantive (intrinsic validity)
Ex. impairment of legitimes, preterition, capacity of
heirs, legality or possibility of conditions
What is probate?
o Mandatory proceeding to determine only the formal validity of
the will
o There is no substitute for probate.
o Guevarra v. Guevarra, Seangio v. Reyes, Heirs of Lasam:
All lay down the rule that probate is mandatory.
Probate is determinative or conclusive of the validity and due execution
of the will.
How does it become final?
o Just like any decision of court.
o Once it becomes final, it becomes res judicata – it becomes
unassailable as to matters of form of the will.
o Even if the decision is wrong.
What cannot be assailed after finality of probate decree?
o 1. Testamentary capacity
o 2. That he acted freely
o 3. Followed all the requirements of the will, as to witnesses,
etc.
o 4. It is genuine and not forged
For probate of holographic wills, what must one remember?
o 1. You have to present the will itself (Gan v. Yap)
Except there is a photocopy that survives (Rodella v.
Aranza)
2. If the holographic will is contested as probate, three
witnesses who can identify the will and attest to its validity
must be presented.
Is this mandatory?
The leading case of Azaola says that it is
only directory
Godoy: Says that it is mandatory, although it
is criticized
When is it deemed contested?
If it is challenged as a forgery. If it is
admitted as genuine but admitted on other
grounds such as mistake, fraud, or duress, it
is not a contest under 811 and you do not
need three witnesses.
Conflicts rules
Substantive validity?
o Time – law as of time of death
o Place – law of citizenship of decedent
Formal validity?
o There are always five choices:
o 1. Law of citizenship
o 2. Philippine law
o 3. Law of residence
o 4. Law of place of execution
o 5. Law of domicile
INTESTATE SUCCESSION
In general
What is intestate succession?
o Takes place by operation of law in default of a valid will
Look at the instances in 960 where total or partial intestacy occur:
o 1. No will, void will, or ineffectual will
100
o
o
o
Is there representation if the collateral line?
Nephews and nieces exclude predeceased or
unworthy brothers/sisters of decedent
What is the nature of the spouse?
o Concurs with both direct and collateral (up to third degree)
What is the rule of proximity of degree?
o Nearer exclude the more remote
o What is the exception?
Representation (see above – direct descending and
nephews/nieces only for collateral)
What is rule of equality of relatives of the same degree?
o Relatives of equal degree inherit equally
o Exceptions?
1. Preference of lines
ex. legitimate direct descendant of 1 degree
excludes legitimate direct ascendant of 1
degree
2. In collateral relationships, full blood and half-blood
distinction
Siblings
Nephews and nieces
3. Representation
See the combinations in the book.
Can the adopted succeed to his biological parents?
o This is the same problem as in compulsory succession so see
the discussion above.
o But for the purposes of the Bar, the answer is yes, because the
provision in the FC pertaining to succession by adoptee from
biological parents is within the coverage.
Combinations 2 and 4 in the book are dangerous, so take note that
here (children and illegitimate children) – each legitimate child gets
double what the illegitimate children will get. What is the usual
pitfall?
o If you observe the 2:1 ratio intestacy, remember that you still
have the legitimes. You might end up impairing the legitime of
the legitimate children, which cannot be impaired. The
2. Does not dispose of all property (partial intestacy)
3. Suspensive condition did not occur, predecease, repudiation
And there is no substitution (testate)
And there is no accretion (testate/intestate)
o 4. Heir is incapacitated/unworthy
o 5. Resolutory condition happens
o 6. Resolutory term expires
o 7. Preterition
What are the principles of intestacy?
o Exclusion and concurrence, just like compulsory succession
What is the rule of relationship?
o The intestate heir must be related to the decedent
o Jus familiae (ascendant/descendant)
o Jus sanguinis (collaterals up to fifth degree)
o Jus xxx (husband and wife)
o Jus imperii (decedent and State)
Jus familiae and sanguinis requires blood relationship. What is
the exception?
o Legally adopted children and legally adoptive parent
What are the limits?
o Going down, there is no limit
o Going up, there is no limit
o Collateral line, the limit is up to the fifth degree
How do you count degrees?
o For direct line, count degrees
o For collaterals, count up to the nearest ancestor
nd
2 – brothers, sisters
rd
3 – nephews, nieces, uncles, aunts
And so on
Rule of preference of lines?
o Direct excludes collaterals
o As a general rule, descending excludes ascending
Except: legitimate ascendants not excluded by
illegitimate descendants
o Is there representation in the direct line?
Yes, only in the descending
o Collateral – nearer excludes more remote
101
illegitimate children can suffer impairment if there are a lot of
them, but never the legitimate children.
o This problem doesn‟t apply in any other instance apart from
these two cases.
What is the successional bar?
o Art. 992. An illegitimate child has no right to inherit ab intestato
from the legitimate children and relatives of his father or
mother; nor shall such children or relatives inherit in the same
manner from the illegitimate child.
o Compare:
In representation, an IC cannot represent his
legitimate parent, IC can represent IP, and LC can
represent either LP or IP.
Here, in inheritance, an IC cannot inherit per se from
the legitimate relatives of his parents and vice versa.
Situations to take note of:
o In case of the concurrence of the SS and 1 LC, the SS will get
½, and the LC gets ½.
o SS, brothers, sisters, nephews, nieces – SS gets ½, brothers
sisters nephews nieces get ½.
According to the rules of division.
o Nephews and nieces concurring with aunts/uncles of the
decedent – nephews and nieces exclude the aunts/uncles
even if they are in the same degree.
What is the difference in rules for brothers/sisters in testate and
intestate succession?
o TESTACY: Difference in the rule of brothers and sisters – if
they are instituted indiscriminately, they receive equal shares
whether full or half blood.
o INTESTACY: Take note of the 2:1 ratio [for full and half blood]
and the successional bar.
Is partial intestacy possible?
o Yes, there is a will but it doesn‟t dispose of the entire free
portion.
Give an example of the difference between total and partial
intestacy.
o Full intestacy:
o
Legitimes – ½ to LC, ¼ to SS
Thus, ½ to LC, ½ to SS (entire ¼ free portion went to
the SS)
Partial intestacy: Ex. I gave 1/8 of my estate to Ateneo.
Note that the legitimes are ½ to LC, ¼ to SS.
½ to legitimate children, 1/8 to Ateneo, 3/8 to spouse
Note: the entire remaining free portion of 1/8 went to
the SS.
Acceptance and repudiation of the inheritance (1041-57)
Acceptance and repudiation are always free acts. A person may always
accept or reject, whether compulsory, testatamentary, intestate.
Exception: accion pauliana
o If there are creditors and the decedent does not have enough
property to pay the creditors, the creditors can compel the heir
to accept to the extent of the credit
What is the difference in form?
o Laxer rules in acceptance, and stricter rules in renunciation,
because it is prejudicial
There is need for judicial approval for renunciation of
incapacitated person. For acceptance, no need.
o Acceptance – there can be express acceptance in writing, oral,
or there can be tacit acceptance (by doing nothing).
o Renunciation – you have to do it in writing or by judicial
approval.
What is the retroactivity rule?
o Acceptance – as if the property passed at the moment of death
(Art 777)
o Renunciation – as if the renouncer never owned or possessed
the property (the substitute, co-heir, or intestate heir receives it
at the moment of death)
o Conditional institutions – retroactivity still applies even if the
condition happens later
What is the rule for public official establishments?
o Can neither accept nor repudiate an inheritance without the
approval of the government
When is there deemed acceptance?
102
2. Imputation – donations inter vivos by decedent are charged
either to the donee‟s legitime or against the disposable portion
o 3. Return – donations inter vivos is found to be inofficious and
the inofficious value is actually returned to the estate to satisfy
legitimes
N.B. if property is to be returned, following Art. 777,
the fruits will pertain to the proper person (ex. entirely
inofficious donation – fruits go to compulsory heir;
partially inofficious donation – some to compulsory
heir and some to donee)
For return, what expenses must be reimbursed by
the final recipient?
Necessary expenses – full extent
Useful expenses – full extent as long as
improvement still exists
You have to collate:
o 1. Inventory
What results are his gross assets
o 2. Deduct debts
This is where the Santibanez and Hemady doctrines
come in. The estate, after all pays money debts, prior
to the heirs receiving their shares.
What results: available assets
o 3. Add the value of donations inter vivos
Net hereditary estate results.
What are not included?
Support, education, medical attendance,
customary gifts, etc. (since these are
impractical to calculate)
What about expenses for professional,
vocational, or other career expenses of
the child, as given by the parents?
o Charged against the free portion,
unless:
1. Provided otherwise
2. Inofficious
o
o
1. Heir disposes onerously or gratuitously his right to one or
more co-heirs or stranger
o 2. Heir renounces it gratuitously to one or more co-heirs
o 3. Heir renounces it onerously to all co-heirs indiscriminately
What about a gratuitous disposition to all co-heirs
indiscriminately?
This is a true renunciation and thus there is
no acceptance
What about a gratuitous disposition to all co-heirs
but in different portions?
Still a conveyance and is thus tacit
acceptance
What if an heir dies without have accepted or repudiated the
inheritance?
o The right passes on to his heirs
What if a renouncing person is both a testamentary and interstate
heir?
o A. If he renounces the testamentary disposition – he impliedly
renounces the intestate share too
o B. If he renounces as intestate heir without knowledge of being
a testamentary heir, he can still accept the disposition
o N.B. this doesn‟t affect compulsory succession
What is the nature of acceptance/renunciation?
o Final, except:
1. Vitiated consent
2. Appearance of an unknown will
Collation and partition
What is the effect upon death of the decedent?
o The immediate effect of death is the vesting of successional
rights. But at this point, nobody knows what part of the estate
goes to whom.
o The heirs co-own the mass of properties.
What are the three ways by which collation is understood?
o 1. Computation – simple accounting process where value of
donation inter vivos is added to the available assets
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o
If imputable (the two above), deduct
what the parents would have spent
on the child had he stayed home
and loafed
What is the measure of the value of the property
donated?
Value when the donation was made, since
this was when it was perfected. Any
subsequent increase inures to the benefit of
the donee.
What if the recipients of the donations are the
compulsory heirs?
You impute against their legitimes what they
have received as donations inter vivos.
Exceptions?
o 1. Donor provides otherwise
o 2. The donee renounces the
inheritance, because he gives up
the status as compulsory heir
What if the donation to the compulsory
heir exceeds his legitime?
o The excess is taken out of the free
portion
What if the recipients of the donations are
strangers?
You impute it against the free portion.
What if the free portion can accommodate all
those donations?
You take it all out from there
What is the special rule for grandchildren
inheriting by representation, concurrently with
their uncles/aunts and other grandchildren?
Compute both: a) what their parents would
have been obliged to collate and b) whatever
they themselves are obliged to collate.
Does collation mean you have to physically obtain the assets?
o No. Collating means a purely mathematical computation.
If he died with a will and the free portion cannot accommodate all
the dispositions?
o Reduce testamentary dispositions
o First to be reduced are the non preferred testamentary
dispositions
After reducing them to zero, what if the legitimes are still
impaired?
o Reduce the donations to strangers or donations to compulsory
heirs considered strangers
o How do you reduce?
NOT pro rata but in reverse order. The latest
donation gets reduced first.
o N.B. contrast this with legacies and devises, which are
reduced pro rata (non-preferred, then preferred)
Afterwards, the heirs can agree on a partition or go to settlement
proceedings. Partition here is the physical division of the estate.
How is partition done?
o 1. Extrajudicial agreement by the heirs or
o 2. Judicial order in settlement proceedings
What are the kinds of partition?
o 1. Actual – physical division of the thing
o 2. Constructive – any act other than physical division that
terminates the co-ownership (e.g. sale to third person)
What are the characteristics of partition made by the decedent
himself?
o 1. It only takes effect upon death
o 2. It is revocable as long as he is still alive
o How can the decedent/causante make partition?
1. Will
2. Act inter vivos
Must be in writing and in public document
It must be accompanied by a prior will
because disposal of property mortis causa
can only be done through a will
N.B. unless the partition through act inter
vivos conforms strictly to intestate
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Period: within 10 years from date of right to action
What is the liability for co-warranty?
Proportional liability of co-heirs
If one of the obligors is insolvent, his portion
are borne proportionally by all, including the
one entitled to the warranty
o 3. Co-heirs warrant solvency of debtor of the estate whose
credit is assigned to a co-heir
But they only warrant against insolvency during
partition and not subsequent insolvency
Period: 5 years from partition
o When is there no mutual warranty?
1. Partition by the testator himself, except when the
legitime has been impaired
2. Agreement among co-heirs to suppress the
warranty
3. Supervening events causing loss or diminution in
value
4. Fault of the co-heir
5. Waiver
What are the causes to annul or rescind a partition?
o Same as causes for voidable and rescissible contracts
o N.B. the special provision on lesion in partition, however,
provides that it must be “at least ¼” rather than the usual “more
than ¼” value.
o When is the partition not subject to rescission due to
lesion?
When it was the testator who made the partition
himself, except:
1. Impairment of the legitime (even if the
lesion was less than ¼)
2. Mistake by the testator or vitiation of his
intent
o What are the options of the co-heir who is sued for
rescission?
1. Have a re-partition
2. Indemnify the co-heir the amount of lesion suffered
succession portions, so it does not make a
disposition
o What is partition to keep an enterprise intact?
A parent can keep an enterprise intact by covering for
his compulsory heirs‟ legitimes through cash or other
property
Who can the decedent designate as a mandatary?
o One who is not a co-heir can be chosen. He is designated to
make the partition after death.
What is the nature of the right to demand partition?
o Generally, it is a mater of right, so any co-heir may demand
partition at any time.
o Exception:
A. Partition forbidden by testator for period not
exceeding 20 years
Exceptions to this exception:
o 1. Any of the causes for dissolution
of partnership
o 2. Court finds compelling reasons
for partition
B. Co-heirs agree on indivision for period not
exceeding 10 years, renewable for like periods
o What about heirs upon whom some suspensive condition
has been imposed?
Cannot demand partition since he has no rights yet.
But the other co-heirs can demand partition but must
issue a security to protect the inchoate right of the
conditional heir.
What if an heir sells his undivided share prior to partition to a
stranger?
o The other heirs may exercise right to redemption within one
month from written notice of the sale and prior to partition.
o N.B. some decisions say written notice is mandatory, while
some say that it can be replaced by actual knowledge.
Effects of partition:
o 1. Absolute ownership over share
o 2. Each co-heir warrants the share of the others
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Ex. employer can be responsible for employee‟s wages if not
paid
5. Unity in modern legislation
o This is especially important in global commerce
o Ex. Bills of Lading, Trust Receipts, Intellectual Property, etc.
o
OBLIGATIONS
Trends in Obligations and Contracts:
1. Obligations have been progressively spiritualized
o There is very little requirement as to form. Upon meeting of
the minds, in general, there is a K.
2. The principle of autonomy of will, which is still the general rule in K
law, has been restricted.
o There are prohibited obligations from being entered into
o Art. 1306 – Contracting parties may establish clauses and
terms as they may deem convenient
Provided they are not contrary to law, morals, public
order, good customs, or public policy
There are five categories of restrictions. They restrict
freedom but promote the greater good.
Ex. labor contract with consideration less than the
minimum wage.
Ex. Those that violate environmental considerations,
social justice, gender issues, etc.
3. Mitigation of the principle that the debtor must answer with all his
property
o Before: you enter into a K and the creditor can pursue all your
properties to exact fulfillment of the obligation
o Now: In the interest of social justice, there are many things that
the creditor cannot levy upon, although the principle is still
good – the creditor csan pursue the property of the debtor to
exact fulfillment of the obligation
o In the Rules of Court, there is a list of properties exempt from
attachment, for instance:
1. The Family Home
2. What you receive from support
Etc.
4. Weakening of the principle that liability results from responsibility
o In general, under the law, you are only liable if you are
responsible. Ex. if you are guilty of driving recklessly.
Essential requisites of obligations
What are the requisites of obligations?
o Four generally accepted requisites:
o 1. Active subject
A.K.A. Creditor (to give) or obligee (to do)
Has right to demand that the obligation be performed
o 2. Passive subject
A.K.A. Debtor or obligor
Has to perform the obligation (reciprocal obligations)
Note: In a sale of a thing, both parties are
debtors and creditors of each other, with
correlative obligations (as to the thing; and
as to the money)
o 3. Object
o 4. Vinculum juris
For both the active and passive subject, what is required?
o They must be determined or determinable.
What are the types of determined/determinable subjects?
o 1. Obligations where subjects are completely and absolutely
determined at the birth of the obligation
Most common type
o 2. One of the parties is determined, but one is determinable
with a previously-established criterion
Ex. Negotiable instrument: “I promise to pay X or
order the amount of P5000, on November 15, 2011.”
One of the parties (i.e., me) is determined. The other
is determinable, because X can negotiate it. The
instrument lays down the criterion.
o 3. Subject/s is/are determined in accordance with their relation
to a thing. (Real contracts)
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1. Vinculum juris, “the efficient cause of the obligation”
2. The object (prestation/conduct to be observed)
3. Subject persons, the active and passive subject
Combined #s 1 and 2 into one.
What is the fifth element, according to Castan?
o The causa. It is the “why” of the contract.
o Ex. Why is Y bound to deliver the car to X? Because X will
deliver P400000 to Y. Why is X bound to give P400000 to X?
Because Y will deliver the car to X.
o What is the causa for a gratuitous contract?
Liberality.
o What is the causa for a quasi-delict?
Causing an injury to the other.
What is the sixth requisite?
o The form. But it does not refer to a specific form, like putting it
in writing. It refers to the outward or external manifestation of
the obligation.
o
o
o
The subject/s may change at the thing passes from
one person to another.
Ex. X borrowed 3M from Y, and placed his house and
lot as security. There is a K of loan and a K of
mortgage, which is registered. X sold his house and
lot to Z, who registered the property in her name. The
mortgage in favor of Y is still annotated. X doesn‟t
pay by the due date. Y sought to foreclose the
mortgage, and Z cannot deny the mortgage, because
Z is the mortgagor now.
What is the object of the obligation?
o It‟s the prestation. It consists of conduct or an activity to be
performed by the debtor or obligor.
o It‟s not the physical thing to be delivered in an obligation to
give. That is merely the object of the prestation.
o Ex. Y has to deliver a car to X on Feb 15, 2011. The object of
the obligation of sale is the act of delivering to X the ownership
the car (tradition). The car is the object of the prestation.
o This distinction is, not, however always observed even by the
NCC.
o What are the requisites for the prestation?
1. Licit
Cannot enter into contract of sale for shabu,
because the object of the prestation is illicit.
2. Possible
Cannot deliver Mount Apo
3. Determinate or determinable
Cannot enter into a K with no defined
prestation
4. With pecuniary value
What is the vinculum juris?
o The compulsive element; the obligatory element in an
obligation. It makes an obligation an obligation.
o This is why an obligation dependent solely on one‟s will is void.
o Ex. X tells Y, “I will sell my car to you when I feel like it.” Here,
there is no obligatory force.
Yu v. Asuncion: Enumerated requisites of an obligation.
Sources of obligations
Art 1157 – Obligations arise from:
o 1. Law
o 2. Contracts
o 3. Quasi-contracts
o 4. Crimes
o 5. Quasi-delicts
Arts. 1158-62 regulate these five sources
Is this list exclusive?
o Sagrada Orden v. NACOCO: The Japanese during the war
seized the Sagrada Orden‟s property during the war. Upon
liberation, the US seized enemy property, which included
Sagrada‟s property. The US entered into a custodianship
agreement with NACOCO. Sagrada Orden wanted to collect
rentals from NACOCO. Issue: is there an obligation to pay
rentals to Sagrada? HELD: No obligation to pay rentals. The
court, to arrive at this answer, the court looked at the five
sources of obligations – there was no contract, quasi-delict, no
provision of law that requires payment of rental, crime, or
107
o
quasi-contract. The implication the court forwarded is that this
is a closed list.
But is it, really? Or should it, really?
o Many commentators believe it is not exclusive.
What are the other obligations?
o Public offer is a sixth source of obligation, for instance
(auslobung in the German code – or the unaccepted offer). A
person who by public notice advertises an award in exchange
for a particular result is bound to grant this award.
Ex. Proctor and Gamble announces on TV: “For 30
wrappers of Tide, you get a glass imported from
Switzerland. Offer good until Feb 28, 2011 only!” X
saw this advertisement, and on Feb 27, 2011,
presents 30 wrappers to the P&G office. Issue: is
there an obligation here? Held: yes. There is a public
offer here.
Ex. X left his important papers inside a cab. X
advertised that whoever returns his papers will get a
P20000 reward. – There is a public offer here.
Some commentators say there are only two sources: law and contract.
Some say: laws and acts of persons (whether voluntary or involuntary).
What is the nature of a contract as a source of obligation?
o What the contracting parties establish has the force of law
between them, and must be complied with in GF. They are
free to enter into any contract, provided the stipulations do not
violate Art. 1306. In general, there is no specific form needed.
o How must compliance be done?
1. It must be complied with according to its terms (ius
civile – pacta sunt servanda)
2. And according to good faith (ius gentium – bona
fide).
What is the general rule for obligations arising from delicts
(crimes)?
o If you commit a crime, you are liable both criminally and civilly,
except if there is no private offended party.
Distinguish a quasi-delict from a contractual obligation:
Quasi-delict only arises when there is a violation. The breach
itself gives rise to the obligation.
o In contractual obligations, the obligation precedes breach and
is not dependent on one in order to exist.
Are quasi-delicts and contracts mutually exclusive?
o No.
o They can co-exist separately.
Ex. a bus and car collided, and a bus passenger
suffered injuries. The car‟s driver was a minor and
incompetent driver. The passenger sued them all.
The liability of the owner of the bus and bus driver
rests on contract. The father‟s responsibility for his
child‟s act is based on quasi-delict.
o They can also overlap.
Ex. A bus driver drives recklessly and the bus hits a
tree. A passenger is injured and sues. The bus
driver is liable based on quasi-delict or crime (criminal
negligence). The bus company is liable based on
contract of carriage or quasi-delict (negligence is
selection and supervision of driver).
You are driving a car. Your car gets into an accident with a bus.
Who do you sue? What are your options?
o 1. Bus driver
o 2. Bus company
o 3. Sue both – because they‟re joint tortfeasors, and thus
solidarily liable
Do you have to prove negligence when you sue under quasidelict?
o Yes, you have to prove negligence of the bus driver. It is not
presumed.
Do you also have to prove the negligence of the bus company?
o Yes, in the selection and supervision of the bus driver. (Culpa
in eligiendo, culpa in vigilando)
o This is a rebuttable/disputable presumption.
As opposed to conclusive and quasi-conclusive
presumptions
108
o
Accessory obligations:
1. After constitution of obligation and before delivery:
take care of the thing with diligence of GFF
Except when law or stipulation requires
another standard
If the thing is damaged, debtor is liable for
damages
2. Account and deliver to creditor the fruits of the thing
from the time of obligation to deliver
What is the nature of the right of the
creditor?
o Before delivery, merely personal
o Upon delivery, real
o A sold B a mango orchard to be
delivered Jan 1. A did not deliver
on Jan 1, and instead sold fruits
to C, a buyer in GF. B sued for
specific performance and won.
Can B recover the fruits?
As against A, yes.
But as against C, no
because B‟s right is merely
personal, not real. He can
sue A for the fruits‟ value.
3. To deliver accessories
What are the creditor’s remedies for an obligation to give a
determinate thing?
o 1. Specific performance
o 2. Equivalent performance – damages
Either exclusively or in addition to specific
performance
Rules on improvement, deterioration, and loss
o When do these rules apply – requisites?
1. Obligation has suspensive condition (1189),
resolutory condition (1190), or a term (1194)
2. Obligor is obligated to deliver a determinate thing
In a situation where damage or injury is caused to a party, and
there is a contract between him and the person who caused the
damage, there is no question he can sue under contract. But can
he also sue under quasi-delict?
o There is an old line of SC decisions in this country which says
that you cannot sue under quasi-delict if there is a contract.
There is some basis for this, because Art. 2176 says that the
act or omission must occur “when there is no pre-existing
contractual relation between the parties.”
o There is, however, the theory of concentric circles (the smaller
circle of contract is always within the bigger circle of quasidelict). So if you sue under quasi-delict, you are disregarding
the contract between the parties. This is valid.
o You can sue under quasi-delict if it is the tort breaches the
contract. If an act that constitutes breach of contract would in
itself constitute the source of a quasi-delictual liability had there
been no contract, then there is breach of contract through tort.
o So you can choose to sue under quasi-delict or contract.
Theory of vicarious liability:
o If you sue under quasi-delict and you choose to sue the
company and not the employee, you are really suing under Art.
2180.
o This is actually a wrong term because vicarious means you are
answering for the liability of someone else.
o But the theory under 2180 is that the company/employer itself
is negligent as well.
Nature and effect of obligations
What are the kinds of prestations?
o 1. To give
To give a determinate thing
To give a generic thing
o 2. To do
o 3. To not do
What is the primary obligation in giving a determinate thing? The
accessory obligations?
o Primary obligations – give what must be given
109
3. There is improvement, loss, or deterioration before
the fulfillment of the condition or arrival of the period
4. The condition is fulfilled or period arrives
o What are the rules on loss?
Without fault of debtor:
Extinguish obligation
With fault of debtor:
Pay damages
o What are the rules on deterioration?
Without fault of debtor:
Creditor must accept the thing (bear loss)
With fault of debtor, either:
1. Resolution and damages
2. Fulfill obligation and damages
o What are the rules on improvement?
Improved by time or nature:
Creditor benefits
Improved by debtor‟s expense:
Same rights as a usufructuary
o (579) he can remove improvements
if no damage is caused to the
property
o (580) he may set-off the
improvements he made against any
damage to the same
What are the creditors’ remedies if the obligation is to give a
generic thing?
o 1. Specific performance
o 2. Substitute performance
Done by someone else at the debtor‟s expense
o 3. Equivalent performance
Damages, by itself
Damages in addition to #1 and #2
What are the creditors’ remedies if the obligation is to do?
o Something only the obligor can do (personal):
Equivalent performance (damages)
o Anyone else can do it:
1. Substitute performance
2. Equivalent performance
What are the creditor’s remedies if the obligation is not to do?
o 1. Substitute performance
o 2. Equivalent performance
Exclusive or in addition
To give
Determinate
thing
Determinable
thing
To do
Very personal
Not very
personal
Not to do
SPECIFIC
PERFORMANCE
EQUIVALENT
PERFORMANCE
SUBSTITUTE
PERFORMANCE
Yes
Yes
No
Yes
Yes
Yes
No
No
Yes
Yes
No
Yes
No
Yes
Yes
Irregularity in performance
What are the types of irregularity of performance?
o I. Culpable (1170)
1. Malice (fraud)
2. Negligence
3. Delay
o II. Non-culpable
Fortuitous event/force majeure
MALICE (FRAUD):
o Responsibility arising from fraud is demandable in all
obligations. Any waiver of an action for future fraud is void.
o What about waiver of malice already committed?
This can be waived.
o What is another word for “fraud”?
Malice (This means it is intentional or deliberate
evasion of the normal fulfillment of an obligation.)
110
o
Differentiate this from the other kind of fraud mentioned in
Obligations and Contracts (1338).
Deceit. This refers to vitiation of consent by a party
(through insidious words or machinations without
which the other party would not be induced to enter
into the contract).
o Is there a difference in effect?
Yes.
Deceit makes the obligation annullable, because it
preceded the obligation.
Malice only succeeds the obligation. The creditor
may insist on performance (specific or substitute),
resolution, and in either case, damages.
o What are the effects of malice?
1. Creditor may insist on specific/substitute
performance, whichever applies
2. Resolution [for reciprocal obligations]
3. Damages, either way
NEGLIGENCE:
o Always refers to the omission of something that should be
there
required degree of diligence. This differs depending
on attendant circumstances.
o What are the kinds of negligence?
Simple
Gross/wanton – if it is so reckless, that it practically
amounts to malice, and is treated as such
o What is the default standard of diligence required?
The fictional standard of a “good father of a family.”
(In common law, they refer to it as “diligence of a
prudent businessman.”)
o Is waiver of future negligence allowed?
Accepted view: waiver of future gross negligence is
not allowed, because it‟s tantamount to malice
Waiver of future simple negligence is allowed
o Effects of negligence?
1. Creditor may insist on specific/substitute
performance, whichever applies
2. Resolution [for reciprocal obligations]
3. Damages, either way
DELAY/DEFAULT (MORA)
o What are the three kinds of mora?
1. Solvendi
Delay in performance
This applies here, in this provision
2. Accipiendi
Delay of creditor in accepting performance.
This applies in payment/performance
(particularly, consignation).
3. Compensatio morae
Reciprocal delay. (Taken alongside mora
solvendi)
o What is mora solvendi?
Non-performance with respect to time, whereas
malice and negligence are with respect to quality.
o What are the requisites?
1. Obligation is liquidated and demandable
2. Debtor delays in the performance due to dolo or
culpa (thus, w/o justifiable reason)
3. The creditor requires performance, judicially or
extra-judicially (demand)
General rule: demand is required prior to
mora solvendi applying (this requirement is
called mora solvendi ex persona. If demand
is not required mora solvendi ex re).
o N.B. Jurado defines these
differently – his ex persona is delay
in obligation to do, and his ex re is
delay is obligation to give
When is demand not required?
o 1. The obligation/law expressly so
declares.
It is not enough that the
contract states specific
dates. Mere setting of
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date is not enough. Need
to demand still.
o 2. Time is of the essence.
Look at intent of the
parties and attendant
circumstances.
o 3. Demand is useless
N.B. under the law on partnership, a promise
to make contributions on a particular date,
and then failing to do so, would make the
person a debtor of the partnership and is
liable for interest and damages
o Can you have mora solvendi in negative obligations?
You cannot have mora in negative obligations
o What are the effects of mora solvendi?
Obligations to deliver a determinate thing: place the
risk on the debtor
Liable for damages
Basic remedy: performance or resolution
The provision also mentions “contravene the tenor of the
obligation.” What is this?
o Just as all-around term that encapsulates all the culpable
violations. But actually nothing will get through the three
above.
What is compensatio morae?
o If both sides are in delay, these cancel out.
o But when one party complies or is ready to comply with his
obligation, delay by the other begins
FORCE MAJEURE
o What are the requisites of casa fortuito?
1. The cause was unforeseen and unexpected and
was independent of human will
2. Impossible to foresee, or if foreseen, impossible to
avoid
3. Impossible for the debtor to fulfill his obligation in
the normal manner
o
o
o
4. Obligor must be free from participation in the
aggravation of the injury to the creditor
If any of the four is not present, there is no fortuitous event
If there is a fortuitous event, what is the effect?
As a general rule, the debtor is free from liability
What are the exceptions?
1. If the parties agree
2. If the law so declares (ex. in delay)
3. Nature of the obligation requires
assumption of risk
o Ex. insurance
Are defective brakes, blown tires, and other similar
problems fortuitous events?
Our SC is consistent in denying such claim.
Other provisions
What are the presumptions re: interest and debt?
o 1. If principal has been received without reservation re: interest
– presume the interest has been paid
o 2. If later installment has been received without reservation re:
prior installments – presume the prior installments have been
paid
o N.B. these are rebuttable presumptions
What are the four types by which creditors can satisfy their
claims?
o 1. Levy and execution on debtor’s non-exempt property
o 2. Accion subrogatoria
Creditor sues on behalf of his debtor, against his
debtor‟s debtor
Requisites?
1. Creditor has credit against the debtor
2. Credit is due and demandable
3. Failure of debtor to collect his own credit
from a third person (through malice or
negligence)
4. Insufficiency of assets of debtor to satisfy
creditor‟s credit
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o
o
o
Suspensive, potestative, and is dependent on the sole will of
the debtor
the obligation is void.
o Ex. “I will sell you my car when I feel like it.”
o Because there is no juridical tie here.
What if it’s a suspensive, potestative condition dependent on the
sole will of the creditor?
o Ex. “I will sell you my car when you feel like it.”
o It‟s VALID. In fact, it becomes pure.
Obligation that depends on an impossible or illegal suspensive condition
o What is contemplated by this provision, original or
supervening impossibility?
ORIGINAL impossibility.
The supervening impossibility does not annul the
obligation; it just extinguishes it.
o A positive obligation to do an impossible thing:
Both the condition and obligation are void.
o Negative obligation not to do an impossible thing:
Condition is disregarded. The obligation is valid.
Ex. X sells Y his house and lot on condition that Y
does not transfer the house and lot to California.
o Negative condition not to do an illegal thing:
Both the condition and obligation are valid.
Ex. X sells Y his house and lot on condition that Y
does not turn the house into a shabu den.
Obligations with supensive conditions:
o That X will happen by a certain time –
Extinguished when time passes
Or indubitable that it will happen
o That X will not happen by a certain time –
Take effect when time passes
Or indubitable that it will not happen
What are the requisites of constructive compliance/fulfillment of
conditions?
o 1. Intent of the obligor to prevent fulfillment of the obligation
o 2. Actual prevention
o What is the effect?
The condition is deemed complied with.
5. Right is not intuit personae
3. Accion pauliana
Right of creditors to rescind alienations by their
debtors to defraud them
Requisites?
1. There is credit in favor of plaintiff
2. Debtor performed an act subsequent to
the contract giving advantage to other
persons
3. Creditor is prejudiced by the debtor‟s act
4. Creditor has no other legal remedy
5. Debtor‟s acts are fraudulent
4. Accion directa
Direct action by the creditor against his debtor‟s
debtor – the creditor acts in his own name
Exception to relativity of contracts
Give examples:
1. Lessor against sublessee (skip lessee)
2. Laborer against principal (skip
independent contractor)
3. Principal against subagent (skip agent)
4. Vendor-a-retro against transferee of
vendee (skip vendee)
Types of obligations
Classes of obligations?
o Pure
o Conditional
Happening gives birth/death to the obligation
o With a term
Happening makes it demandable
What is a potestative condition?
o Something that depends solely on one of the parties
What is casual?
o Depends solely on chance or a third party‟s will.
What condition will make obligation void?
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o
o
To which does constructive compliance apply?
Only to potestative conditions or mixed conditions
with potestative conditions.
Ex. X sells Y a lot, if Y builds a road from the lot to the
highway. The only road Y can build must go through
X‟s property, but X refuses to allow.
X sells Y a piece of land in year 2000, subject to the condition that
Y pass the Bar examinations. Y passes the Bar in 2005. What is
the effect?
o The condition is deemed to have arisen in year 2000.
o But not fruits.
X sold the land to Z in 2001, when the condition had
not yet happened. Y sold the land to W in 2002. Y‟s
sale wins out because the sale of X to Y retroacted to
2000.
o What is the right of the creditor in the mean time?
The creditor can take any action that protects his
rights.
Ex. He can put an adverse annotation on the title.
When can the debtor recover due to payment by mistake?
o 1. Performance by mistake
o 2. Action for recovery is brought before condition happened or
it‟s apparent the condition will not happen
What are the rules re: deterioration and improvement and loss
before the happening of the suspensive condition?
o 1. Fortuitous loss – obligation is extinguished
o 2. Culpable loss – debtor liable for damages
o 3. Fortuitous deterioration – borne by creditor
o 4. Culpable deterioration – creditor chooses:
A) rescission with damages
B) fulfillment with damages
o 5. Fortuitous improvement – benefit to the creditor
o 6. Intentional improvement – governed by Art. 579 of the
usufruct
Can take it out if it does not lead to damage
If it would cause damage, no compensation
Rule on fruits:
Those produced from the constitution of the obligation to the
happening of the condition: not covered by the rule on
retroactivity
Resolution in 1191 – what is the effect?
o Mutual restitution. They are returned to status quo ante.
1191 –
o Compare rescission and resolution:
Resolution – primary remedy
Rescission – subsidiary
There must be no other remedy
It has to be a last recourse
o Compare the basis:
Resolution – non-fulfillment of obligation
Rescission – based on economic prejudice (lesion)
o Resolution can be extrajudicial or judicial. Either is valid, but
extrajudicial resolution is always subject to court checks and
balance, so it‟s at the risk of the party who resolves.
o Is an express provision allowing extra-judicial resolution
mandatory?
No. Parties can resolve even without an express
provision allowing so.
Outline of 1191 (resolution):
o 1. Only applies to reciprocal obligations
Elements:
1. 2 prestations arising from same source
2. Each prestation designed to be the
counterpart or equivalent of the other
Ex. Contract of sale
o 2. There is a tacit resolutory condition: breach
o 3. The party seeking to rescind must be ready to comply with
the obligation, otherwise he is in BF
o
4. The injured party can elect resolution even without court
action
o 5. Effect: mutual restitution –
What if the other party does not want to return
what you have given him, after resolution?
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The creditor cannot demand, and the debtor cannot
insist on pre-payment
o If it is for the benefit of the debtor:
“I promise to pay you on or before March 2011” – this
is for the benefit of the debtor.
This is an example of a term benefit for the debtor
When can the court fix the duration of the period?
o 1. If it does not fix a period but a term is assumed to have
been intended
o 2. If the period entirely depends upon the will of the debtor
o Two requisites for the application of this article?
1. Parties did not fix the period but from the nature of
the circumstances, it can be inferred that the period
was intended by them
OR there was a period, but it was made
dependent on the will of the debtor
2. The court must decide what period the parties
probably intended. The court cannot decide for itself,
it must infer the parties‟ intent
o Action for 1197 can only be for the fixing of the period. It
cannot be for fixing of the period and specific performance at
the same time, because the period is presumed not to have
arrived yet.
o Exception: if a separate action for performance would be only
dilatory (i.e. whatever the period was, it already has passed)
When can the court fix the period for an obligation?
o 1. 1197, par. 1 (above): Parties did not fix the period but from
the nature of the circumstances, it can be inferred they
intended a period
Exceptions:
A. 1682, 1687 – these are leases payable
monthly or yearly; these terminate at the end
of the month/year (the K fixed the period)
B. Pacto de retro under 1606 – the law fixes
the period of redemption for four years
C. Contracts of service for indefinite period
(involuntary servitude)
Go to the court to recover. The action is not
for resolution, but recovery, because
resolution does not need court action.
Obligations with a term/period – what is the difference from a
condition?
o Term is certain, condition is uncertain. They are alike in the
sense that they‟re both future.
o Only demandable when the day arrives.
In case of loss, deterioration, or improvement before the day
certain, what do you follow?
o Follow the same rules as in suspensive conditions.
Anything paid before the day arrives
o If made consciously, what is the implication?
Nothing can be recovered, because the term was
effectively waived.
o What if it was made out of mistake?
Old code: only fruits and interests can be recovered
Now: The thing and the fruits and interests can be
recovered.
Who is entitled to the fruits received from the constitution of the
obligation until the arrival of the term?
o One view: fruits belong to the debtor
o Other view: fruits belong to the creditor, even if they should not
be delivered „til the term arrives
o RFB’s view: The debtor keeps the fruits in the interim.
What are the instances when the fruits cannot be recovered
notwithstanding premature delivery?
o 1. When the obligation is reciprocal and there is pre-payment
on both sides (so both things are fruit producing)
o 2. The obligation is a loan where the debtor is bound to pay
interest
o 3. When the period is exclusively for the benefit of the creditor
o 4. When the debtor, aware that the period has not yet arrived,
pays anyway
When is a term for the benefit of the debtor? For the creditor?
o Presumption: a term is beneficial for both
o What is the consequence of this?
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o
o
2. 1197, par. 2 (above): Period entirely depends on the will of
the debtor
o 3. 1191, par. 3
This is resolution – instead of decreeing the
resolution, the court decides to fix a period instead
o 4. 1687
nd th
Contracts of lease falling under the 2 -4 sentences
o 5. 1180
If the debtor binds himself to pay when his means
allow him to do so
Deemed to be one with a term
Supposing the court fixes a period, can the parties agree to extend
it further?
o Yes, it is contractual freedom. It is a novation – there has to be
an agreement between the parties, however.
When does the debtor lose right to avail of the period? – these
obligations become pure
o 1. After the obligation have been contracted, he becomes
insolvent, unless he gives security/guarantee for the debt
This is not limited to judicial insolvency
o 2. He does not furnish to the creditor the guarantees/securities
promised
o 3. By his own acts, he impaired said guarantees/securities, and
by fortuitous event, they are lost. UNLESS he replaces them
with securities just as good.
o 4. He violates undertaking in consideration of which the
creditor agreed to a period.
o 5. He attempts to abscond.
o 6. Article 2109 – Creditor is deceived as to the substance or
quality of the thing
Two or more obligations are agreed upon but one, some, or
not all have to be performed.
o Who has the choice?
Depending on whom the parties name as having to
make that choice.
If there is no choice, the debtor chooses.
o How must a choice be made?
Any form – writing, oral, or implied/passive
o Why must a choice be communicated?
If it depends on the creditor, duh, because the debtor
is not a mind reader.
Ong: But even if it depends on the debtor, it gives the
creditor the chance to consent to or impugn the
choice. RFB does not agree with this, because the
creditor has no right to impugn because the debtor is
acting within his right.
What is the real reason?
1. To give the creditor the chance to prepare
for acceptance.
2. Because once the choice is
communicated, it is irrevocable – and the
obligation ceases to be alternative
Implications when debtor has right of choice?
o 1. Limitation of choice
What if there is one choice left due to the
fortuitous event?
The debtor has no choice but to perform it
What if is limitation of choice left due to the
creditor’s acts?
Right to resolution, with damages.
o 2. Own fault
If all of the things are lost due to the debtor’s
fault?
Creditor entitled to damages
If some of the things are lost due to the debtor’s
fault?
Can perform what remains
Classification according to number of prestations.
o Conjunctions – 2 or more prestations, all of which must be
performed. No special rules apply here.
o Alternative – 1199-1205
o Facultative – 1206
What is an alternative obligation?
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o
o
3. All lost
If all are lost due to fortuitous event?
Obligation is extinguished
If all but one are lost due to fortuitous event, and
the last one lost due to debtor’s fault?
Creditor can demand damages.
If all but one are lost due to debtor’s fault, and the
last one lost due to fortuitous event?
Obligation is extinguished
Implications when creditor has right of choice?
o 1. Some lost
If some lost due to fortuitous event?
Perform what remains
If some are lost due to debtor’s fault?
Creditor can ask for performance of any of
them or value of one of them + damages
If some are lost due to creditor’s fault?
Creditor can choose from remainder
o 2. All lost
If all are lost due to debtor’s fault?
Creditor can choose value of any of them +
damages
If all lost due to fortuitous event?
Obligation extinguished
If all lost due to creditor’s fault?
Obligation extinguished
What is a facultative obligation?
o There is only one obligation agreed upon, but the debtor has
the right to substitution.
o What is the difference from alternative obligation?
If one or some of the obligations are impossible or
illegal, then there can still be performance of the
others.
In facultative, if the principal obligation is impossible
or illegal, then the obligation is extinguished
o Who has the right to substitution?
Always the debtor.
o
What if through the debtor’s fault, the principal prestation
is lost? Can you compel him to perform the substitute
obligation?
No. You cannot compel substitution – it always
belongs to the debtor as a choice. But you can ask
for damages.
What if the substitute prestation is lost due to the debtor’s
fault, and then before the due date, the main prestation is
lost due to fortuitous event?
You cannot compel performance, unless there is
abuse of right. Because even if the substitute
prestation has not been lost, loss of the main
prostation due to fortuitous event will extinguish the
obligation anyway.
What is a joint obligation? (or mancomunada or pro rata)
o The debtors are liable only for a proportionate part of the debt
o Or the creditors are entitled only for a proportionate part of the
debt
What is a solitary obligation? (or joint and several, in solidum, or
solidaria)
o Debtors can be held liable for the entire part of the debt
o Or the creditors can demand the entire part of the debt
o What does “individually and jointly” mean?
Solidary
o Where there are several debtors and the obligation
mentions a singular (“I” or “notice to me”) and then
signed by several people, what does this mean?
Solidary
What is the essential nature of jointness?
o Active joint (many creditors, one debtor) – You have as many
obligations as creditors multiplied by debtors
o Passive joint (many debtors, one creditor)
o Mixed joint (many debtors, many creditors)
What is the essential nature of solidarity?
o Active – There is mutual agency, up to a certain point (because
if there are multiple creditors, and one collects, he must deliver
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what is not his. So it‟s not complete agency because he keeps
some for himself)
o Passive – There is mutual guarantee among the multiple
debtors, as to the single creditor
o Mixed solidary –
What is the presumption?
o In favor of joint obligations.
When is there soldarity?
o 1. When the law so states (ex. joint tortfeasors)
o 2. When parties stipulate
o 3. When the nature of the obligation demands solidarity
What is the effect of demand by any of the solidary creditors?
o The debtor may pay any of the creditors, but if any demand,
judicial or extrajudicial, is made on him, he must pay only the
one demanding payment
o What is the problem here?
If one of the creditors demands, but fails to follow up
on it, the rest cannot demand anymore. The debtor
will get off scot-free.
o What if the debtor paid the wrong creditor (non-demanding
creditor)? Can the demanding creditor still demand?
He can only recover the amount the whole obligation
minus the share of the creditor whom he paid. In
effect, the debtor pays a little less than twice the
amount
o Commentary: if the debtor paid the share of the wrong creditor,
this is fine. The demanding creditor can still recover the whole
amount minus the share of the creditor whom he had paid.
o What if there are multiple creditors (A B C) and debtors (X
Y Z), and A demanded Z. Can B demand X?
Yes, and X can pay B. A‟s demand on Z is moot and
academic.
What is the conflict between 1212 and 1215?
o According to 1212, in the case of active solidarity, the solidary
creditors can do what is beneficial but not prejudicial
o
Whereas in 1215, the creditor can perform acts like remission,
novation, compensation, or confusion and this extinguishes the
debt
o Ex. (A B and C) are soldiary creditors, X is the debtor. Can
B remit X’s debt?
1212 disallows this because B‟s remission is
prejudicial to A and C.
1215 seems to allow it.
o How do you reconcile these?
The remission was a true remission. The debt is
extinguished. But B will be liable for A and C for their
shares.
A remits one of the solidary debtor’s shares.
o Can A go against one of the other debtors for the
remaining amount?
Yes.
o Can A go against the debtor whose share he remitted for
the remaining amount?
Yes, because that debtor can recover from the rest
anyway.
o One of the other solidary debtors becomes insolvent. Will
the debtor whose share was remitted share in covering for
the insolvent debtor’s share?
Yes. The remission only extended to that debtor‟s
original shares, and not to that insolvent debtor‟s
shares which has to be covered for now.
What defenses are available to a solidary co-debtor?
o 1. From nature of obligation
o 2. Personal to him
o 3. Personal to a co-debtor
What is the effect of each of these defenses?
o Nature of the obligation – total defense (ex. the obligation is
void because the prestation is illegal)
o Person to him – partial (ex. there is a special term or condition
as to him)
o Person as to a co-debtor – partial (ex. when the co-debtor
entered into the obligation, he was insane)
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What is a divisible obligation?
o One susceptible of partial performance
o It does not follow that because the object of the prestation is
divisible that the obligation is also divisible
What is the general rule?
o Obligations are indivisible, as a general rule because the law
says so
When are obligations divisible?
o 1. Parties provide so
o 2. Nature of the obligation necessarily entails performance in
parts (Ex. 1225, par. 2 – first clause)
o 3. The law provides otherwise
See these in “payment or performance” under the
topic of indivisibility of payment
Obligations with a penal clause:
o This is especially common in construction projects
o Sometimes there is an incentive too
o What is the nature of the punishment?
Civil punishment. Usually a penalty or a fine.
o Purposes?
1. To provide for liquidated damages, saving him the
trouble of having to prove damages
2. To strengthen the coercive force of the obligation
o What is the safeguard?
The courts can reduce it if unconscionable
o Characteristics?
1. Subsidiary
Only upon non-performance can the penalty
be demanded, nothing else
Debtor cannot save himself from performing
the obligation by paying the clause
Exception: cumulative, when both the
principal obligation and the penalty can be
demanded
2. Exclusive
It takes the place of liquidated damages.
o
o
When are the cases when both the
penalty and actual damages can be
demanded?
o 1. Express stipulation
o 2. Debtor refuses to pay the penalty
o 3. Debtor is guilty of fraud in the
fulfillment of the obligation (fraud as
malice)
Pamintuan: There was an obligation with a penalty clause.
It called for liquidated damages or penalty in the form of
100K. There was fraud in the fulfillment of the obligation.
The aggrieved party was able to prove actual damages in
the amount of 190K. HELD: Since the amount of actual
damages is bigger (190K), it absorbs the 100K. So if greater, it
absorbs the penalty. BUT this is wrong.
Country Bankers: interpreted the rule correctly. The
aggrieved party can collect BOTH, without absorption.
Extinguishment of obligations
What are enumerated?
o 1. Payment
o 2. Loss
o 3. Condonation/remission
o 4. Confusion/merger
o 5. Compensation/set-off
o 6. Novation
Is this an exclusive enumeration?
o It‟s not.
What else are there?
o 1. Death, for certain obligations (purely personal)
o 2. Renunciation by the creditor
o 3. Compromise
o 4. Arrival of resolutory term
o 5. Mutual desistance/dissent
Ex. Landlord and lessee agree to cut short the lease
o 6. Unilateral withdrawal
Ex. partnership
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o
o
o
o
7. Change of civil status
8. Rebus sic stantibus
9. [spaced out]
10. Judicial insolvency
refused. Cathay bumped them off. X sued for
damages. HELD: Won, because you can demand the
very thing to be done or delivered – even if the
alternative was superior.
o If it’s a generic obligation?
Cannot demand what is superior and cannot be given
what is inferior.
What is the special rule on money debts?
o Made in the currency stipulated
N.B. There was a time when you cannot stipulate
currency other than peso, but now you can.
o If not possible, whatever is legal tender in the Philippines
What about payment in negotiable paper?
o General rule: payment of money debt must be in legal tender
o Seneris: Manager‟s check
same as legal tender
Corrected in subsequent cases which said that
manager‟s, cashier‟s, or certified check is not legal
tender and can be rejected by the creditor
o BUT the creditor can accept, and if he does, this payment is
only provisional.
o X issued a check to Y or order. Y endorsed it to Z. Z lets it go
stale and he goes to the depositary bank and gets refused.
This is the case where due to the creditor‟s fault, there was
prejudice.
Namarco: Impairment has to be by someone else,
because if it was Y who impaired, X can just issue
again.
Rule on inflation or deflation?
o It must be extraordinary – there must be a declaration from the
Bangko Sentral.
What are the exceptions to the requirement of identity?
o 1. Dacion en pago
o 2. Novation
What does integrity mean?
o One must deliver the whole prestation
o Exceptions to integrity?
1. Substantial performance in good faith
PAYMENT
Payment or performance: (1232-1251)
o This is the “normal” way of extinguishing an obligation
o Distinguish payment from performance.
Payment is the proper term for obligations to give
Performance is the proper term for obligations to do
o Outline this provision:
I. As to prestation
Identity
Integrity
Indivisibility
II. As to parties
Payer
Payee
III. As to time/place
o Special forms of payment:
A. Dacion en pago
B. Imputacion
C. Cession
D. Consignation
Requisites of payment?
o For the prestation:
1. Identity
2. Integrity
3. Indivisibility
What does identity mean?
o The very thing itself must be done or delivered
o If it’s a specific thing?
Cannot compel the creditor to receive some other
thing, even if it‟s the same value
Cathay Pacific: Business class has been fully
booked, so X was being upgraded to first class, but X
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If it is done with the debtor‟s consent, then there is
subrogation. The one who pays becomes the creditor
and he can go after the debtor.
Exception: if the third person intended it as
a donation.
What if it is without the debtor’s consent?
Payment, but only to the extent of the
benefit.
Ex. X has a debt to Y for P70K. Y reduced
the debt to P50K. Z did not know about this,
so Z paid Y P70K on X‟s behalf. How much
can Z demand from X?
o Only P50K.
o [Beyond topic: Z can demand as
the P20K from Y as solutio indebiti]
Who can you pay?
1. Creditor/obligee
2. His successor or transferee
3. Agent
4. Third person, as long as:
o It redounded to the creditor‟s
benefit, and the payment is good
only to the extent of the benefit
o When is the benefit deemed to be
total?
1. After payment, the third
person acquires the
creditor‟s rights
2. Creditor ratifies
payment to the third
person
3. By creditor‟s conduct,
debtor was led to believe
third person had authority
to receive payment
5. Anyone in possession of the credit
o Ex. NIL
2. Waiver by the debtor/obligee
3. Application of payments/imputacion (several debts
are equally onerous)
What does indivisibility mean?
o Performance must be in one act
o Exceptions to indivisibility?
1. Waiver/agreement between the parties
2. Prestations that necessarily entail partial
performance
3. Cases when the law itself provides for divisibility:
A. Debt is liquidated in part and unliquidated
in part (1248)
B. Joint divisible obligation (you have as
many obligations as creditors divided by
debtors)
C. Solidary obligation where the debtors are
bound under different terms and conditions
D. Compensation, where there is a balance
left
E. Work is to be delivered partially
F. Where there are several guarantors that
demand division (2065)
G. Impossibility or difficulty of single
performance
o This is an equity measure
The payor (1236-8) –
o Who can the payor be (and the payee cannot refuse)?
The debtor/obligor himself
Debtor‟s heir or assignee
Debtor‟s agent (provided there is proof of agency)
Anyone interested in the fulfillment of the obligation
(ex. guarantor)
o Who can the payor be with the payee’s consent?
Anyone.
o What is effect of payment by a third person, if accepted?
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o
What if the debt has been garnished?
The payment is no good, provided that the
notice of garnishment has been served on
the payee. This is because the funds are
held in escrow on behalf of another person.
When is time/place of payment?
o Time – when it is due
Generally, when there is judicial or extra-judicial
demand
Except – the three exceptions on mora solvendi ex re
o Place –
Primary rule: stipulated place
Secondary rule: place where the thing was located
at the time of constitution of obligation (only if the
obligation is to deliver a determinate thing)
Tertiary rule: (for instance, if it is a generic thing, or
an obligation to do) – debtor‟s domicile
1. Dacion en pago (dation in payment)
o Filinvest: The delivery and transmission of the ownership of a
thing by the debtor to the creditor as an accepted equivalent of
the performance of an obligation.
o Go: A special form of payment by virtue of which the debtor
offers another thing to the creditor who accepts it as the
equivalent of payment for an outstanding debt.
o Note: There is no requirement that it must be to satisfy a
money debt. It can be for some other obligation.
o What is the legal effect, as stated before?
The debtor becomes the seller, the creditor becomes
the buyer, and the debt becomes the purchase price
Since it is governed by the law of sales, there are
implications: warranty against eviction, etc.
This has been criticized precisely because of this.
o What is the other point of view?
Dacion en pago is a novation.
This has also been criticized because in a novation,
the original obligation is extinguished and a new one
takes its place. Here, there is no new obligation that
takes the place of the old one.
So what is it, really (Castan)?
It‟s a special form of payment.
Because it departs from the rule on identity
o To what extent is the obligation extinguished?
To the extent of the value of the thing given
Unless the parties agree on total extinguishment –
generally the parties do
o What is the essential requirement?
Both parties must consent
o What are the requisites of dacion en pago?
1. Performance of a prestation in lieu of payment
2. Some difference between the prestation due and
that which is given
3. Agreement between the debtor and creditor that
the debt is extinguished by the performance of the
substitute prestation
2. Imputacion (application of payment)
o What is it?
Designation of debt which is being paid by the debtor
who has several debts of the same kind to the creditor
who is paid
o Give an example.
X owes Y four debts: 10k, 20k, 30k, 40k. They are all
due. X remits 100k to Y. No need to apply the rules
on imputacion.
X remits 90k to Y. In this case, this is less than what
he owes in total. How is the payment applied?
See rules below
o What are needed?
1. Debtor
2. Creditor
3. Several debts which are due
4. Remittance of a payment which is less than the
total
o How do you apply the amount paid to the several debts?
Primary rule – apply according to the agreement of
the parties (1)
122
Next – the debtor may apply if there is no agreement,
subject to rules on indivisibility of performance (2)
What if the debtor does not apply?
The creditor may apply (3)
What if neither the debtor nor creditor applies?
Apply to the most onerous first. (4)
Ex. interest-bearing debt > non-interest
bearing debt
Ex. secure debt > non-secure debt
Ex. debt with penal clause > without one
What if there are equally onerous?
Apply proportionally to all (5)
o What makes imputacion a special form of payment?
It departs from the rule on indivisibility and integrity
3. Payment by cession
o When does it apply?
When there is one debtor and many creditors.
o What happens?
The debtor turns over all his assets to the creditors,
allows them to sell the assets, and then the creditors
divide the proceeds proportionally
o Does cession require creditor’s acceptance?
Yes.
o Does ownership over the thing pass to the creditors?
No, they just receive authority to sell.
As opposed to dacion en pago, where ownership
transfers.
o What is the extent of extinguishment of the debts?
Only to the extent of the proceeds.
Unless there is an agreement that the entire debt is
extinguished.
o Why is it a special form of payment?
Departs from integrity and indivisibility
o Does this contemplate voluntary or legal cession?
Voluntary. It is extra-judicial.
It is legal if the debtor goes to court and applies for
public auction and receives an acquittal (under
Insolvency Law)
4. Consignation
o N.B. “Tender of payment on consignation” is not the correct
term
o What is this?
Act of depositing the thing due with the court or
judicial authorities whenever the creditor cannot
accept or refuses to accept payment
It generally presupposes or requires prior tender of
payment
o Requisites?
1. There must be a debt due
2. Consignation was made due to some legal cause
There was a prior tender which was unjustly
refused
Or there exist circumstances that make a
prior tender unnecessary or impossible
3. First notice of consignation given to interested
parties
4. Actual deposit with court
5. Second notice given after consignation
o What is a tender?
Manifestation made by debtor of his desire/willingness
and ability to make immediate payment
o When is prior tender dispensed with?
1. Creditor is absent or unknown or does not appear
in place of payment
2. Creditor incapacitated during time of payment
3. When without just cause, he refuses to give a
receipt
Odd: this still presupposes tender of
payment
4. When two or more persons claim the same right to
collect
5. Title of the obligation has been lost
123
o
o
Why is consignation a special form of payment?
Departs from requisite of parties
What if it is a case of mora accipiendi, where the creditor
unjustifiably refuses payment?
Go to court and consign it there. (The French and
German Codes just provide that the obligation is
extinguished. This is probably better and easier.)
promised to sell Y his Innova for P1M. It was then lost. Does Y still
have the obligation to give the money?)
o One view (Germanic view) – the entire obligation is
extinguished
Res perit domino – the debtor in effect bears the
burden
N.B. we generally follow this
o Other view (Romanic view) – Y still has to pay the money
Res perit creditori – the creditor in effect bears the
burden
Exceptions:
o 1504 – sales of goods: res perit domino applies
o 1655 – destruction of the thing leased through fortuitous event
If total: extinguish lease
If partial: lessee chooses between rescission or
proportional reduction of lease payment
o 1717 – contract for a piece of work, where the contractor
furnishes the material
Contractor bears the loss of the materials if prior to
delivery
Unless the creditor delayed in receiving the thing to
be delivered
What is another mode of extinguishment hidden in the folds of this
provision?
o Rebus sic stantibus – When the services become so difficult as
to be manifestly beyond the contemplation of the parties, the
obligor is excused
o Contracts which have stipulations on successive performances
(several prestations) or dependent on the future
o Must interpreted in accordance with the situation that existed
when the obligation was entered into
o Requisites?
1. The event of change could not have been foreseen
at the time of the agreement
2. Makes the performance extremely difficult, but not
impossible
What if it makes it impossible?
LOSS/IMPOSSIBILITY (fortuitous event)
When is it loss, when is it impossibility?
o Loss, if to give
o Impossibility, if to do
What happens when loss occurs in an obligation to give a
determinate thing (1262)?
o The obligation is extinguished
Does it apply to an obligation to give a generic thing? (1263)
o No.
o Genus nunquam perit- the genus never perishes
Except: if the thing is deemed contraband before
delivery, so the genus perished
o Ex. X had an obligation to deliver a sack of rice, and the stocks
perished. X just has to buy rice.
What about a limited generic thing?
o The obligation can be extinguished.
o Ex. X entered into an agreement to sell Y one of his cars. If he
lost all of them in a fortuitous event, the obligation perishes.
What about obligations to do? (1266)
o Released from the obligation is the prestation becomes
impossible.
What do all of these presuppose?
o That when the obligation was entered into, the obligation was
possible. The loss or impossibility simply supervened.
o If the obligation was initially impossible, there is no obligation
to begin with.
In a reciprocal obligation, one of the prestations is lost under
fortuitous event. Does it affect the other obligation? (Ex. X
124
o
o
o
You can invoke impossibility of
performance
o You do not need to invoke rebus sic
stantibus
3. The event was not due to the act of any of the
parties
4. The K of the obligation was a future prestation
To what kind of obligation does it apply?
Only to do, but not to give
But in the Philippines, it has evolved into including
even obligations to give, see Naga Telephone
Because it just says “obligations” in general
o
What if there is delivery by mistake?
The creditor can claim this and rebut the presumption
What is the debtor’s defense in this case?
He can claim that he actually paid the debt
What is the presumption that gives rise to this
presumption above?
If the debtor has the instrument in his possession, it is
presumed the creditor delivered it to him
MERGER/CONFUSION
What is this?
o When the debtor and the creditor in the obligation is the same
person
Requisites?
o 1. Takes place between the creditor and the principal debtor
o 2. The very same obligation is involved
What is the most common cause of merger?
o Intestate succession, where you inherit your own debt/credit.
Ex. X owes his brother Y a sum of money. Y dies intestate and
X receives the credit, so there is confusion.
Y has a debt to X. The debt is guaranteed by Z. X assigns the debt
to Z. Did remission happen?
o No. Z is not the principal debtor, he was just a guarantor.
o The guaranty is extinguished, and Z can go after Y.
CONDONATION/REMISSION
What is this?
o Act of liberality wherein without receiving any equivalent, the
creditor renounces the debt
o Extinguishes the debt in whole or in part
Requisites?
o 1. Debt existing at the time the remission is made
No need for the debt to be due, as long as it exists
o 2. The remission or the waiver must be gratuitous
o 3. Acceptance by the debtor
o 4. Capacity between the parties to enter into a contract of
donation
What is the form?
o If it is express remission, it must follow the rules on donations
as to form
o If it is an implied remission, and thus not governed by any
form. (Here, the creditor just does not collect)
In case there is a debt evidenced by a private document and then
later on, it is voluntarily surrendered by the creditor to the debtor,
what is the implication?
o The creditor is impliedly remitting the obligation
Because he will lose his proof to collect
o It does not apply to a public document because there will be a
copy of the document in the notarial archives
COMPENSATION/SET-OFF
What is this?
o Concurrent amount of two persons who in their own right are
reciprocal debtors and creditors of each other
How similar is this to merger?
o There are at least two debts in both, but in merger, it is
concentrated in one person. In compensation, in two persons.
What are the kinds of compensation?
o 1. Legal compensation (1279) –
Automatically when all requisites are present
o 2. Facultative compensation
125
o
But now, before legal compensation takes place, X
assigns to A credit 1. So for credit 1, A becomes the new
creditor. There are three possibilities:
1. The assignment was with Y‟s consent –
A goes against Y when the assigned
credit becomes due. Can Y set up
against A credit 2 (what X owes Y)?
o No, because Y consented to the
assignment.
2. The assignment was with Y‟s knowledge, but
without his consent –
A goes against Y. Can Y set up against A
credit 2?
o Yes, as long as credit 2 existed by
the time credit 1 was assigned.
Does not cover subsequent debts.
3. The assignment was without Y‟s knowledge –
A goes against Y. Can Y set up against A
credit 2?
o Yes, as long as it arose before he
learned of the assignment
Facultative compensation
o 1287 – when legal compensation does not automatically take
place
1. Deposit
X deposited 1000kg rice with Y (depositary).
In another unrelated transaction, Y owes X
1000kg rice. – There is no legal
compensation here because one of the
contracts is a contract of deposit.
But the depositor can claim in his favor
compensation. (Facultative in his favor)
2. Commodatum
3. Support
o 1288 – one of the debts arises from civil liability from a crime
The victim of the crime from which the liability arises
can invoke this
Can only be claimed by one party, but not the other
(READ 1287-8)
o 3. Conventional/contractual compensation
Parties agree to compensate, even if the requisites
are not complete (1282)
o 4. Judicial compensation
By means of court order/decree
What is legal compensation?
o 1. Parties are mutually debtors and creditors of each other
as principals
and in their own right
X owed Y 10,000. X lent Y’s son 5,000 which the
son used for nightclubbing. When the debt was
due, X only gave 5,000 claiming compensation.
Correct?
No. Compensation must be between two
parties who are mutually creditors and
debtors of each other. Regardless of how the
son spent the money, he‟s not part of the K.
o 2. Both debts consist of sum of money, or fungible goods of the
same kind/quality
Note: it must be “fungible” – the code wrongly says
“consumable”
o 3. The two debts are due
o 4. They be liquidated and demandable
Liquidated
the amount is determined already
o 5. Neither of the debts must be garnished
o 6. Must not be prohibited by law
Conventional – requisites?
o 1. Each of the parties …
o 2. The parties agree to mutually extinguish the credit
(See 1285) Assignment of credits – confusing wording in the
provision, so here’s the explanation
o Y owes a debt to X (credit 1). X owes a debt to Y (credit 2).
In any other case, when both debts fall due, there is automatic
compensation. This is not the concern of 1285.
126
o
o 4. Validity of new
Two types of novation?
o 1. Express
o 2. Implied
The two obligations must be incompatible
What is expromission?
o The consent of the creditor and the new debtor are required,
but the consent of the old debtor is not required
o X owes Y 50000. Z approaches Y and tells him that he will
pay the debt. Is this valid?
Yes.
o Consequence?
The release of the old debtor is absolute, even if the
new debtor becomes insolvent.
What is delegacion? (conventional subrogation)
o The consent of all three – creditor, original debtor, new debtor
– are all required. The initiative comes from the old debtor.
Delegante – old debtor
Delegatario – creditor
Delegado – new debtor
o X owes Y 50000. X approaches Z to ask him to pay for his
debt. Y agreed. Is this valid?
Yes.
o Consequence?
The old debtor is absolved, in general. Exceptions:
1. If the new debtor was already insolvent at
the time of the novation AND
2. Such insolvency was known to the old
debtor or public knowledge
o What about assignment of credit, do you need the consent
of all three parties too?
No. Just the old creditor and the new creditor. The
consent of the debtor is not required. He must just be
notified.
When the principal obligation is extinguished, are the accessory
oligations extinguished too?
o As a general rule, yes. (Art. 1296)
N.B. usually the creditor is the one entitled to this option
(bailor, depositor, recipient of support, victim of crime)
When do the modes of compensation take place?
o 1. Legal – when all the requisites concur
o 2. Conventional – upon agreement of the parties
o 3. Facultative – when the creditor entitled to the option
communicates his decision
o 4. Judicial – final judgment
Not covered by compensation:
o 1. From deposit K
o 2. From commodatum K
o 3. From support due by gratuitous title
o 4. Obligations from criminal offense
o 5. Taxes, fees, duties due to government
o N.B. what is common is that these are not debts per se
NOVATION
When does it arise?
o 1. Changing object or principal conditions
o 2. Changing the debtor
o 3. Subrogating third person to rights of the creditor
Types?
o 1. Subjective/personal novation
Change in one or more parties
Active subjective – change in person of creditor
Passive subjective – change in person of debtor
Expromission
Delegacion
o 2. Objective/real novation
Change in the object or in the principal conditions
o 3. Mixed novation
Requisites of novation?
o 1. Previous valid obligation
Includes voidable
o 2. Agreement by the parties to the new obligation
o 3. Extinguishment of the old obligation
This is actually a consequence
127
o
So pledge, mortgage, antichresis, guaranty, etc. are
extinguished.
o Exception?
When there is benefit for a third person (stipulations
pour autrui)
o What is problem, as to subrogation?
In subrogation, Art. 1303, the guarantors, sureties,
mortgagors, etc. continue to be bound.
How to resolve the conflict – Art. 1303 is the
exception to 1296. It only refers to one kind of
novation: active subjective novation. (When the
change is just from one creditor to another.)
Distinguish conventional subrogation from legal subrogation:
o Conventional – with consent of original creditor, new creditor,
and debtor
Distinguish from assignment of rights:
In assignment, no need for consent of the
debtor
Assignment doesn‟t extinguish the old
obligation and create a new one; it is just a
transmission of rights. Any vice in the
obligation carries over
o Legal – by operation of law due to acts of the new creditor
When is legal subrogation presumed?
1. Creditor pays another creditor who is
preferred even without debtor‟s consent
2. Third person not interested in the
fulfillment of the obligation pays the debt with
the debtor‟s express or tacit approval
3. Even without knowledge of the debtor,
person interested in the fulfillment of the
obligation pays without prejudice to
confusion as to the latter‟s share
Definition of contract?
o Meeting of the minds between two or more parties
o Can one contract with oneself?
Yes, an “auto-contract” – one person acting as two
parties. (Ex. an agency to borrow money: he can also
act as the lender)
This is why “party” is the proper term.
Characteristics of obligations?
o 1. Obligatory force
o 2. Mutuality
Performance cannot be left to the will of one of the
parties
o 3. Relativity
o 4. Autonomy of parties
Elements of contract?
o A. Essential
1. Consent
2. Subject matter
3. Cause
o B. Natural
Those incorporated by law into the contract
automatically
Ex. Warranties in sales (against eviction, of
fitness, etc.)
Ex. Right to resolve in reciprocal contracts
o C. Accidental
Need to be stipulated by the parties
Ex. Purchase price in sales
Ex. Conditions for performance of the
contract
Classification of contracts?
o A. Degree of dependence
1. Preparatory
One intended to lead into another K (ex. K of
agency)
2. Principal
Complete in themselves
CONTRACTS
128
o
o
o
o
o
o
o
3. Accessory
Cannot exist alone (ex. mortgage)
B. According to perfection
1. Consensual
Most Ks are consensual
o Ex. Sales
2. Real
Perfected by consent + delivery of the
property
o Ex. deposit, pledge, commodatum
3. Formal
Need form for validity
o Ex. donation of property
C. According to purpose [just theoretical]
1. Transfer of ownership
2. Conveyance of use
3. Rendition of service
D. According to subject matter
1. Involving things
2. To render service
E. According to the nature of the obligation produced
1. Bilateral
2. Unilateral
Ex. commodatum
F. According to cause
1. Onerous
2. Gratuitous/lucrative
Implication?
Can determine degree of diligence required.
For instance a gratuitous deposit requires
less diligence
G. According to risk
1. Commutative
Exchange of value, so there is no risk
2. Aleatory
Contract of risk/chance/hazard
o Ex. buying a lotto ticket
H. According to name
1. Nominate
Ex. sales, lease, etc.
2. Innominate
“Do ut des” – I give, you give
“Do ut facias” – I give, you do
“Facio ut des” – I do, you give
“Facio ut facias” – I do, you do
What is autonomy of will?
o Generally, you can enter into contracts depending on what you
want
o This principle, however yields to various restrictions:
1. Law
2. Public policy
3. Public order
4. Morals
5. Good customs
What is the rule on usury?
o It‟s now not a crime anymore.
o The only limit is that it is not unconscionable
o When is it unconscionable?
It changes from decision to decision. Some decisions
say that 5.5%/month is invalid, while some say
7%/month is valid
Latest – Macalinaw v. BPI: Interest rate of the credit
card is 3%/month (36%/annum). HELD: Any interest
of 3%/month and above is invalid, and will be reduced
to 1%.
What is mutuality of contracts?
o The K must bind both contracting parties. The legal tie must
be mutual.
o What about contracts with escalation clause (adjustment
of interest)?
It is valid as long as it is tied to a factor not entirely
dependent on the will of the creditor (purely
potestative)
What is relativity of contracts?
129
o
the contract. HELD: not a stipulation pour autrui because
there was no deliberate benefit intended for the agents.
When can you sue a third party for damages due to tortuous
interference?
o 1. There is a valid contract
o 2. Knowledge by the third party of the existence of that contract
o 3. Interference by that third person on the contractual
relationship without legal justification
Is it required that third person act maliciously?
No. As long as it was deliberate.
For instance, in an old case, the Augustinian
fathers thought an old lady was being
cheated in a contract so they induced her to
break it.
N.B. So good faith/bad faith is not a measure – it is
legality/illegality of justification that prevails
What if one enters into a contract in the name of another without
authority or beyond the scope of his authority?
o The contract is unenforceable
Acts between two persons cannot affect, positively or
negatively, a third person
o Third persons neither can sue or be sued for the benefits of the
contract
o What if the contract is transmissible?
If the contract is transmissible, it can pass on to heirs,
assignees, or successors-in-interest
o When do contracts affect third parties?
1. Stipulation pour autrui
2. Accion pauliana
3. Accion directa
4. Contracts involving real rights
Ex. mortgages, etc.
What is a stipulation pour autrui – requisites?
o 1. Contracting parties clearly and deliberately conferred a
favor/benefit to a third person
Not merely incidental
o 2. The stipulation in favor of a third person is a part, not the
whole of the entire contract
o 3. It must not be compensated by any obligation whatsoever
o 4. Neither of the contracting parties must bear the legal
representation of the third party
o 5. The third party communicated his acceptance to the obligor
before the revocation by the original parties
Give examples showing/not showing stipulations pour autrui.
o There were squatters living in Krus na Ligas, near UP. For
humanitarian considerations, UP entered into a contract with
the QC government to develop the area. The contracting
parties are QC and UP. The informal settlers were third
parties. Later on, there were snags in the arrangements, so
the squatters filed a suit under the contract to carry out the
project. HELD: it is a stipulation pour autrui
N.B. the most important element is the clear and
deliberate benefit conferred
o
There was a sale of two parcels of property which was on a
precipice. The sale was eventually rescinded because the
land was unsuitable. The commission agents protested, saying
that their commissions must be paid nonetheless, suing under
Consent
What are the elements of consent?
o 1. Plurality of subjects
o 2. Capacity
o 3. Intelligent and free will
o 4. Express/tacit manifestation of the will
o 5. Conformity of the internal will and its manifestation
What are the requisites of a valid offer?
o 1. Definite
o 2. Complete
o 3. Intentional
What are the requisites of acceptance?
o 1. Unequivocal
o 2. Unconditional
If it is qualified, it is a counter-offer
What about an amplified acceptance?
130
What if S sells the car to someone before the
period is done?
S is guilty of contractual breach.
What if there is no consideration given?
S can withdraw the offer anytime.
Does S still have to communicate the
withdrawal?
o No. There is no separate option
contract that requires him to do so.
Original facts (B gave consideration). Within the
30 day period, B told S that he wanted to buy the
car. S refused. What is B’s remedy?
Specific performance, because upon
communication of the option, there is an
acceptance of the offer already. (Carceller
v. CA)
What if S had withdrawn the offer
contrary to the period or has already sold
the car to X when B communicated his
acceptance – what is B’s remedy?
o Recover damages from S.
o He cannot sue for specific
performance because X is an
innocent purchaser.
Differentiate an option contract from the Right of First Refusal
(RFR):
o RFR is the right to have first opportunity to purchase, or the
right to meet any other offer.
o An option contract limits the offeror‟s power to revoke the offer.
o What is determined in an RFR? What is undetermined?
The object is determined.
The terms are not.
Does RFR need separate consideration?
o Equatorial v. Mayfair says no. RFB disagrees with this.
o Lintonjua v. CA says that the consideration for the loan or
mortgage is already the consideration for the RFR.
Does RFR allow actions for specific performance?
It may or may not be an acceptance. It
depends on the circumstances
o Is silence acceptance?
Depends on the circumstances. For instance, X
delivers rice to A and B, who own rice stalls. X
delivers rice to A every Sunday, and when A is not
there, his employee takes the rice. There is no such
prior arrangement with B. If both A‟s and B‟s
employees were silent when X delivered rice to them,
A is deemed to have accepted, and B not.
What is the cognition theory of acceptance?
o Offer and acceptance take effect only from the time knowledge
is acquired by the other person. If during the intervening time,
the party dies or becomes insane, the acceptance (or offer)
has no effect.
o X made an offer in Davao on Feb 1, through mail to Y, who
received it Feb 5. Y accepted the offer Feb 5 through mail
to X. On Feb 8 Y becomes insane. The mail reaches X on
Feb 13. Is the offer accepted?
No, under the cognition theory.
o X made an offer in Davao on Mar 1, through mail to Y, who
received in Mar 3. On Mar 4, Y sent his acceptance to X.
On Mar 5, X countermanded the offer. Both the
acceptance and countermand are in the mail. Which
prevails?
Whichever reaches the other party first.
Can an offeror withdraw his offer even if he gave the offeree a
certain time to accept?
o In general, yes.
What is the exception?
o When there is an option contract, which is supported by a
separate consideration.
o Give an example.
S is offering to sell B a car. B asked for 30 days to
think about it and paid S P5000 for this period. This is
a distinct contract – an option contract.
131
o
Yes. The actual vendee may be required to sell the property to
the holder of the RFR at the price which he bought it for.
(See Equatorial and Paranaque Kings as examples
where there was specific performance to enforce a
RFR. This can be differentiated from Ang Yu which
didn‟t allow specific performance of the RFR because
in Equatorial and Paranaque Kings, the right was
integrated into contract – in these cases, for lease.
Ang Yu didn‟t stipulate RFR into contract)
o Contrast: not allowed for option contracts.
What if the one with the RFR refuses to exercise his option?
o If the one with the RFR refuses to exercise his option, the
seller cannot sell the property to another person on better
terms. It has to be equal or more onerous.
Who cannot give consent to a contract?
o 1. Minors
Only the minor can sue to annul the contract.
What about a minor who actively misrepresents
himself as a non-minor? Can the minor still sue
to annul the contract?
He still can. If he is too young to enter into a
contract, he is also too young to be held in
estoppel.
o 2. Insane or demented persons, and illiterate deaf-mutes
N.B. Different from insanity of in testamentary law
Being a deaf-mute is not enough; you have to be
illiterate too.
What is the exception to the insanity rule?
When he entered into the contract during a
lucid interval
What are the situations where there is vitiation of consent?
o 1. Mistake
When is mistake as to legal effect a vitiation of
consent?
If the mistake is mutual and it frustrates the
real intent of the parties
To which must the mistake of fact refer to?
1. Substance of the thing which is the object
of the contract
2. Conditions which principally moved either
or both parties to enter into the contract
What if mistake is as to identity?
Generally, not a ground to annul a contract.
EXCEPT if the identity or qualifications is the
principal cause of the contract
What about mistake as to accounting?
It only gives rise to correction
o
o
o
132
2. Fraud
Different from fraud in 1170
It must be dolo causante, or one that has a decisive
effect on the giving of consent
Requisites:
1. Employed by one party against the other
2. Induced the other to enter into the contract
3. It must have been serious
What if both parties employ fraud?
No annulment.
Compare with dolo incidente?
Does not annul the contract because it did
not induce the giving of consent
The consequence of incidental fraud is
merely damages
What about dolus bonus?
This is “tolerable fraud” and does not lead to
damages
(Usual exaggerations in trade, when the
other party had an opportunity to know the
facts) – Art.1340
3. Violence
Requisites of violence?
1. Physical force is irresistible
2. It is the determining factor to give consent
4. Intimidation
Requisites?
o
What is the effect of violence if perpetrated by a third person (Art.
1336)?
o It still makes it voidable. The contract is still voidable even if
employed by a third person who did not take part in the
contract.
o What about undue influence by a third person?
By analogy, same rule.
o What about fraud by a third person (Art. 1342)?
Does not vitiate consent
Unless it led to substantial mistake and it is mutual
What are the two kinds of simulation of contract?
o 1. Absolute
There is no underlying contract, and no intent to be
bound
What is the effect?
It is void, because there is no consent
o 2. Relative
They intend to be bound, but concealing the real
agreement
Ex. making a donation to a son seem like a
sale as to not make siblings jealous
What is the effect?
It will be treated in accordance with the rules
of the concealed contract
1. Threat is determining factor to give
consent
2. Threat is unjust and unlawful
o What if the threatened act is
lawful, for instance, “You, Mr. X
from Surigao Institute of Law, got
my daughter pregnant. You
better marry her, or I will report
to the SC that you got her
pregnant”?
This is a lawful threat, so it
does not vitiate consent.
o When will there be intimidation
even if the threatened act is
lawful?
When there is no
connection between the
threatened act and the
situation behind it (ex. sell
me your house or else I
will report the crime I saw
you did).
3. Threat is real and serious
4. Threat produces a well-grounded fear that
the person making it can and will inflict harm
5. Undue influence
What do you consider for undue influence?
Consider both the person invoking influence
and one being influenced
Consider:
o Confidentiality, family, relations
If the person was mentally weak, ignorant, or
financially distressed
It must be influence that deprives one of freedom. So
it can‟t be lawful or due influence (ex. parental
guidance).
Object
Requisites of object of contract?
o 1. It must be within the commerce of man, whether existing or
in potency
o 2. It must be licit
o 3. It must be possible
At the time of perfection of the contract
What if it is impossible from the very start?
The contract does not exist because the
prestation does not exist
What if it becomes impossible in the middle of the
contract?
133
o
o
o
4. Partnership where real property is contributed
5. Interests in mutuum
Must be expressly stipulated
o 6. Sale of land by an agent
Power of agent must be in writing, else, sale is void
o 7. Chattel mortgage
o 8. Stipulation limiting common carrier‟s duty of extraordinary
diligence to ordinary diligence
o Can one party require the other to follow the correct form?
No, because that would presuppose a valid contract.
There is none here for failure of form.
There are cases when form is required but not for validity but for
registration. What are these?
o Those in Art. 1358
1. Acts and contracts for real rights over immovable
property,
EXCEPT sales of real property or interest
therein, which is governed by the SOF
2. Cession, repudiation, renunciation or hereditary
rights or those in CPG
3. Power to administer property or any other power
which:
Should appear in a public document
Or should prejudice a third person
4. Cession of actions or rights from a public document
o Failure to follow form makes it valid and enforceable but
cannot be registered
o Can one party require the other to follow the correct form?
Yes. One party can require the other party to follow
the correct form needed (since they are valid)
Extinguishes the obligation
4. It must be determinate as to its kind and determinable as to
quantity
Causa
What is the causa in onerous reciprocal obligations, like a contract
of sale?
o For the seller, the payment of the money to him
o For the buyer, the delivery of the thing bought
What about a remuneratory obligation?
o The service performed
For donations?
o Gratuity or liberality
Distinguish object form causa:
o Object is – what is owed?
o Causa – the proximate “why” of the contract.
Not the ultimate “why,” which is motive
Requisites?
o 1. It must exist
o 2. It must be real
o 3. It must be licit
Is there any instance when failure of the motive will lead the
contract to fail?
o Yes.
o 1. When the motive is stipulated to be a suspensive condition
o 2. The realization of the motive is the cause of the contract and
there is an intervening serious mistake of fact
Form
General rule: no specific form required
When is it required?
o 1. Donation of property
o 2. Sale of large cattle
o 3. Antichresis
Requires statement of the principal and interest in
writing
Defective contracts
What are the types of defective contracts?
o 1. Rescissible
o 2. Voidable
o 3. Unenforceable
o 4. Void/inexistent
134
o
1. Entered into by guardians when wards suffer lesion by more
than ¼ of the value of the thing
Ex. the guardian of a ward who owns harvest with
value of P100K sells it for P80K.
Is there lesion?
o Yes.
Is there rescissible lesion?
o No, because P20K is less than ¼ of
the harvest‟s property.
A guardian is judicially appointed. If the sale is
made with court consent, what is the effect?
There can be no rescission.
Sale of fruits and personalties are acts of
administration. These do not need judicial approval,
so lesion can result. But for sale of real property, for
instance, where there must be court approval, there
can be no rescission.
N.B. it‟s “more than ¼” not “at least ¼”
o 2. Same, but for representatives of absentees
o 3. Disposition in favor of third person in fraud of creditors
What is the extent of rescission?
Only to the extent of creditor prejudice
o 4. Refer to things under litigation if entered into without
knowledge of litigants or consent of judicial authority
Rescissible at plaintiff‟s instance
o 5. By special provision of law
o (1382) 6. Payments made under state of insolvency for
obligations to whose fulfillment the debtor would not be
compelled at the time they were effected
Does this require judicial insolvency?
No, just actual insolvency
What is the effect?
o Return what he may be obliged to return
o When does it apply?
Only instances #3 and 4 since for the rest there is
nothing to return
When is it rescissible?
o When there is particular economic damage to one of the
parties or a third person
How does the law treat the contract?
o It is intrinsically valid but external factors allow it to be
rescinded
When is it voidable?
o Defect in consent in one of the parties
How does the law see it?
o Valid until annulled
When is it unenforceable?
o For lack of authority, or writing, or incompetence of parties
How does the law see it?
o Cannot be given effect unless ratified
When is it void?
o Lack of requisites
Which can be cured?
o Voidable and unenforceable
Rescissible
What is rescission?
o A process or remedy designated to render inefficacious a
contract validly entered into and normally binding by reason of
external conditions creating an economic prejudice, either to a
party or to his creditors
What are the requisites for rescission?
o 1. The contract must be rescissible under 1381-2
o 2. Last resort for plaintiff
o 3. Plaintiff must be able to return what he would be obliged to
return if rescission takes effect
Sometimes, there is nothing to return, like a creditor in
action pauliana
o 4. The object of the contract must not have passed to an
innocent third person
What are the rescissible contracts?
Voidable
135
What are the characteristics of voidable contracts?
o 1. Effective unless set aside
o 2. It may be assailed only for an action specifically for that
purpose
Cannot attack it collaterally
o 3. It can be confirmed
N.B. the law uses “ratify” – “confirm” is a better term
Ratification is for 1403 par. 1
Acknowledgement is for 1403 par. 2
Confirmation may be express or tacit (implied waiver)
May the guardian effect the ratification?
Yes.
o 4. May be assailed only by the party with vitiated consent, his
heirs, or subsidiaries
What are the requisites of confirmation?
o 1. Contract is voidable
o 2. Confirmation made with knowledge of voidability
o 3. The cause for voidabilty has been removed
o 4. The one who is doing so if the one whose consent is
defective
When will action for annulment not prosper?
o 1. If it has been confirmed
o 2. Prescription
What is the period to file the action?
4 years from the disappearance of the cause
for intimidation, violence, or undue influence
4 years from discovery, for mistake or fraud
4 years from cessation of guardianship, in
case of minor or incapacitated persons
o 3. Loss of the thing due to fraud or fault of person with right to
institute proceedings
o 4. Estoppel
1400 and 1401 – In a voidable contract, upon annulment, there
must be mutual restitution (just like resolution and rescission).
Are there any instances when the duty of mutual restitution is not
present?
o The thing is lost due to defendant’s fault or fraud:
o
o
o
o
return the fruits, value of the thing at the time of the
loss, interest
What if it is lost fortuitously?
Return fruits and value of the thing at the time of the
loss, but no interest
What if the thing the plaintiff must return is lost through
fault or fraud?
Action is extinguished
Even if the party was incapacitated. If the party was
incapacitated, he has to prove there was no fault or
fraud, if he wants the action to prosper.
What if it is lost fortuitously?
Tolentino: action is extinguished unless the plaintiff
offers to pay the value of the thing
Caguioa: plaintiff can still recover
What is the rule for restitution if one of the parties is
incapacitated?
The incapacitated person is not obliged to make
restitution except insofar as he has been benefited by
the thing or price or received by him
Unenforceable
What are the kinds?
o 1. Entered into in the name of another by one with no authority
or legal representation, or acting beyond powers
o 2. Both parties are incapable of giving consent
What if one becomes capacitated and confirms it?
It becomes voidable
And if the other does so too?
Becomes valid
o 3. Falling under the Statute of frauds
A. Agreement whereby its terms, cannot be begun
within one year from the agreement
Refers to commencement, not completion
B. Special promise to answer for debt, default, or
miscarriage of others
Contract of guaranty or suretyship
136
C. Agreement made in consideration of marriage
except mutual promise to marry
D. Sale of chattel/goods/things in action for price
P500 or more
Unless there is payment of price or delivery
of goods
E. Agreement for leasing for period longer than 1 year
or sale of real property/interest therein
Amount is immaterial for real property
F. Representation as to the credit of a third person
G. (Art. 1443) – no express trust concerning an
immovable or any interest therein may be proved by
parol evidence
How does the contract get out of the SOF?
o 1. There is a note or memorandum in writing
o 2. Subscribed to by the party charged or his agent
What are the rules re: Statute of frauds?
o 1. Only applies to actions which are for specific performance or
breach
o 2. Does not make void the contracts falling under the
enumeration if not in writing. It just bars action for specific
performance or breach
o 3. Applies only to executory, and not executed contracts in
whole or in part
Executory – one where there is no performance in
either side
If either side has performed, then it gets out of SOF
(1405 – acceptance of benefit)
o 4. Cannot be proved by parol evidence.
How do you resist a claim on an unenforceable contract?
o File a motion to dismiss
o Or use SOF as affirmative defense
o Or object to presentation of parol evidence during trial
Failure to object: waiver
Can a third person assail the enforceability of an unenforceable
contract?
o No, only the parties.
Void
What is it?
o No force and effect, as if never entered into
o Never validated, either by time or ratification
Enumeration in 1409:
o 1. Cause, object, or purpose is against law, morals, GC, PP,
PO
o 2. Absolutely simulated
o 3. Cause or object could not exist at the time of the transaction
This says “those whose cause or object did not exist
at the time of the transaction.” This is wrong,
because there can be a contract over a future thing.
It must be “cause or object could not exist” – original
impossibility.
o 4. Object is outside commerce of men
o 5. Contemplates an impossible service
o 6. Intent of the parties relative to the principal object of the
contract cannot be ascertained
o 7. Expressly prohibited or declared void by law
Characteristics?
o 1. No effect whatsoever
o 2. No action for annulment necessary because the nullity exists
ipso jure
Judgment of nullity is merely declaratory
o 3. It cannot be confirmed, ratified, or acknowledged
o 4. If performed, the restoration of what has been given is in
order
o 5. Right to set-up defense of nullity cannot be waived
What are the special instances of void contracts?
o 1490, 1491 – ex. contract between husband and wife
What is the pari delicto rule (1411-2)?
o It literally means “in equal fault.”
What if the act constitutes a criminal offense?
o 1. It‟s a void contract which happens to constitute a criminal
offense
o 2. If they are in pari delicto: no action for specific performance
or restitution for either side – both are prosecuted
137
o
3. What if only one party is guilty?
For the guilty party, no action for restitution
For the innocent party, there can be
What if the object/cause is unlawful but not criminal?
o 1. If both are guilty, there can be no specific performance or
restitution
o 2. What if only one party is guilty?
For the guilty party, no action for restitution
For the innocent party, there can be
N.B. So whether criminal offense or not, no action for specific
performance. Restitution depends on guilt/innocence.
Article 1412-19: exceptions to pari delicto rule
o N.B. The parties are in pari delicto, but despite that, due to
social considerations, allows one of the parties recovery:
o 1. Interest paid in excess of allowable by usury laws
o 2. Money paid for illegal purpose, but before it was
accomplished or damage has been caused to third persons
o 3. One of the parties to the illegal contract was incapacitated
o 4. Agreement is not illegal per se but merely prohibited, and
prohibition is to protect the party seeking recovery of the
money paid
o 5. Payment of price beyond maximum price allowed by law for
a commodity
o 6. Employer and employee voluntarily agreeing on wages
below the minimum wage or more hours than allowable
working hours (can ask for OT pay)
What is pactum commissorium?
o The creditor cannot appropriate the things given by way pledge
or mortgage, or dispose of them.
Contrary stipulation is null and void.
What is pactum de non alienado?
o There can be no stipulation prohibiting the mortgagor from
alienating his own property.
What is pactum leonina?
o A stipulation which excludes one or more partners from any
share in the profits or losses of the partnership is void.
LAND TITLES
What are the purpose and advantages of the Torrens system?
o 1. Make a title indefeasible
o 2. Make it imprescriptible
o 3. Make it immune to collateral attacks
When is an attack direct?
When the object is to annul or set aside the
decree of title
Can a counter-claim be considered a direct attack
on the title?
Yes. (Erman v. Erman)
o 4. Conclusive (after lapse of period for remedies)
o 5. Declares the titled property free from liens and
encumbrances not annotated, except:
A. Those not required to be annotated
B. Unpaid real estate taxes within 2 years prior to
purchase (the taxes pre-2 years are paid by the
delinquent taxpayer alone)
C. Existing:
public highways, government irrigation canal;
legal right of way under private law;
and the like
D. Limitations on disposition or use, under law
But is registration a mode of acquiring title?
o No, it‟s not. There has to underlying basis for title before
registration.
o Such as?
1. Possession
2. Succession
3. Donation
4. Accretion
5. Sale
6. Acquisitive prescription (10/30 years)
Can land registered under the Torrens system and for which a
certificate of title has been issued be taken?
o No.
138
o
What is the exception?
If taken by the Dept. of Agrarian Reform (CARL)
Police Power, Eminent Domain, Taxation
Who can register under PD 1529?
o 1. Those with open, continuous, exclusive, and notorious
(OCEAN) possession and occupation
Of what?
Alienable and disposable lands of public
domain
What if the land is not alienable (ex.
forest or park reservation)?
o It cannot be registered. The
certificate of title is void.
Since when?
June 12, 1945 or earlier
Possession by whom?
The registrant or his predecessors-in-interest
o 2. Acquired ownership of private lands by prescription
o 3. Accretion
What can be acquired?
Private lands
Or abandoned river beds
When is there accretion (requisites)?
1. The deposit is gradual and imperceptible
2. Made through effects of water current
3. Land is adjacent to river banks
What does registration do?
To confirm and make the title imprescriptible
o 4. Acquired ownership of land in any other manner provided by
law
Who can register under RA 8371 (IPRA)?
o Individual members of IP communities, as to ancestral lands
(not domain), which they continuously possessed and
occupied in the concept of an owner since time immemorial or
at least 30 years before 29 Oct 1997 (approval of IPRA)
What else is required?
It must not be contested by fellow IPs in the
community
Which lands are treated as alienable and
disposable agricultural lands?
Those ancestral lands which are agricultural
in character and actually used for
agricultural, residential, pasture, and tree
farming purposes
Including those with a slope 18% or more
Until when can this right be exercised?
Unless extended, until 29 Oct 2017
o What is the rule on Ancestral Domains?
It is communally owned. Registration is with the
Ancestral Domains Office of the NCIP, which shall
cause notice through publication and subsequent
survey.
Is this communal ownership the same as coownership under the NCC?
No.
o What is the relationship of A.D. registration with existing
property rights?
Existing property rights prevail.
o What is the priority as re: natural resources in these
Ancestral Domains?
The IP groups possess priority rights in using such.
Non members of the IP group may develop and use
these resources for agreements not exceeding 25
years, renewable for not more than 25 years
What is specially required?
There must be a formal and written
agreement
Extractions must be used to facilitate
development and improvement of ancestral
domains
Can a corporation register public land?
o No. It can only lease public lands.
o But can a corporation acquire private land?
139
N.B. contrast with accretion
o [public waters]
o 1. Rivers
o 2. Lakes
o 3. Water sheds
o
[reservations]
o 1. Military reservations
o 2. Other reservations
o [previously titled]
o 1. Previously titled lands
What is the process of land registration?
o 1. Survey
Who performs this step?
Survey plan is signed by geodetic engineer
Approved by Director of Lands
Is this an essential requisite?
YES.
o 2. File application for registration
Where?
In RTC where the land is actually situated
Can be to MTC is value is 100k or less
What to identify?
1. Basis of ownership
2. Identity of Land
3. Adjacent owners
4. Occupants/tenants
5. Encumbrances
o 3. Set date of initial hearing
o 4. Publication/posting
What is the time frame?
It must precede the initial hearing or else the
court has no jurisdiction
Publication:
1. Official Gazette
2. Newspaper of general circulation
N.B. both must be done (Director v. CA)
Notice:
Yes, as long as it is a Philippine corporation (60%
rule).
N.B. If land is held by an individual from June 12, 1945 or ealier, it ipso
jure becomes private land (akin to #1 in the enumeration)
o THUS, if a corporation has personally possessed or is claiming
under a predecessor-in-interest who has possessed the
property since June 12, 1945, the land is ipso facto converted
to private land, which it can own.
o Is forest land registrable?
No, it cannot be registered.
o Who can declassify it?
Executive branch of government
o Is payment of land taxes sufficient?
No. It must be couple with possession in the concept
of an owner
o If it is not held since June 12, 1945, then what is required
apart from adverse possession for the proper period?
The claimant must prove, by government act, that the
land was classified as public and alienable lands.
What is the status of reclaimed lands?
o Lands reclaimed by government are not available for sale to
private parties unlike other alienable public lands. (Chavez v.
PEA)
o The general rule that the grant of patent or certificate of title
makes alienable land of the public domain automatically
become private land does not apply to government units and
entities like the PEA.
o When then can it become private land?
When it is transferred to qualified private parties or
government entities not tasked to dispose public
lands (unlike the PEA)
What properties cannot be registered?
o [public lands]
o 1. Forest lands
o 2. Mineral lands
o 3. Grazing lands
o 4. Mangroves
o 5. Manmade alluvial deposits along a river
140
o
o
o
o
o
1. To all persons whose addresses are
known
o Within 7 days of publication in OG
2.To DPWH, governor, and mayor – if
adjacent to road or public highway
3. To DAR, if river, farm, etc.
4. Others, by discretion
Posting by ex-officio sheriff:
1. Conspicuous place
o At least 14 days before hearing
2. Bulletin board in municipality or city
5. Oppositor files verified opposition
When?
On or before hearing
6. Otherwise, court issues order of general default
What if the oppositor attends hearing but does not
file an opposition?
1. Can be declared in default
2. Or can be given extension, after which,
failure to comply leads to default
7. Ocular inspection
What is checked?
1. Improvements
2. Lot owners
3. Adjacent owners
What happens after?
The court prepares a report
8. Hearing/trial
What must the applicant prove?
1. Proof of publication (jurisdictional matter)
2. Proof of ownership
3. Proof of identity of land
What can the oppositors introduce?
Rebuttal evidence
9. Decision
What are the 3 situations?
1. In favor of applicant
2. In favor of oppositor/s
3. Dismiss case because nobody proved
ownership
o 10. Court issues order for Decree
o 11. Issuance of Decree
Becomes incontrovertible after 1 year from issue
(because the law allows the remedy of Petition for
Review within this period, under PD 1529)
o 12. ROD issues OCT
What are the remedies from an Order of Default?
o 1. Before decision –
Motion to lift order of default based on FAME
o 2. After decision –
Petition for relief based on FAME
What are the remedies from a Decision?
o 1. MR on ground that decision is contrary to law/evidence
o 2. MNT on grounds of FAME or newly discovered evidence
o 3. Appeal, on ground that it is contrary to law/evidence
o When must any of these be filed?
Within 15 days from receipt of decision
What are the remedies from a Final Judgment?
o (N.B. decision becomes final after lapse of 15 days)
o A. When a decree has not been issued
1. Petition for relief under ROC Rule 38
What grounds?
o FAME
What are the requirements?
o 1. Verified
o 2. Filed 60 days from notice but no
more than 6 months from entry of
decision
o B. When a decree has been issued –
1. Petition for review under PD 1529, Sec. 32
What grounds?
o Actual and extrinsic fraud
When may it be filed?
141
o
o
Within 1 year from issuance of
decree
Exception?
o When there is an innocent
purchaser for value
When is there an IPV?
o 1. No knowledge of defect in title
o 2. Payment of just price
o 3. Examined seller‟s duplicate
certificate of title
2. Action for reconveyance
When do you file this?
o If more than 1 year has elapsed
Ground?
o Extrinsic fraud or breach of trust
Exception?
o When there is an IPV
o What is the remedy then?
Action for damages ( value
of land + damages)
When can it be filed?
o 1. Within 4 years of discovery of
fraud when there is need to annul
fraudulent deed
o 2. Within 10 years from breach of
implied trust if aggrieved party is
not in possession of the land
o 3. Imprescriptible from breach of
implied trust if aggrieved party is in
possession of the land
Akin to a quieting of title
o 4. Imprescriptible from breach of
express trust
3. Action for damages
Requisites for award of damages?
o 1. Unlawful deprivation of land
2. No negligence of the party
deprived
o 3. Reconveyance is not possible
o 4. Action filed within 4 years
What is the effect of a final decision with publication?
o It binds all parties in rem (binds the whole world)
o How can oppositors and squatters who entered before the
decree be evicted thereafter?
Writ of possession from the court
o What about those who entered after the issuance of the
decree?
Ejectment suit
What is a certificate of title?
o It is evidence of title, that the land is registered under the
Torrens system
o How many copies of the certificate?
Original – with the ROD
Duplicate – with the registered owner
o What happens when there are conflicting certificates?
Earlier one prevails unless it is defective
Compare cadastral registration with ordinary land registration:
o In cadastral registration, it is the government, through the
Director of Lands, that commences the petition and NOT the
persons claiming.
o Those claiming are merely compelled to go to court to make a
claim or make known their interest in the land.
What is the procedure in cadastral registration?
o 1. Survey conducted
President tells Director of Lands to conduct the survey
Notice and publication to those with interest and
general public
Official Gazette
Conspicuous place on municipal building
bulletin board
Copy sent to mayor, barangay captain, and
Sanggunian
142
o
o
o
o
Persons claiming interest inform the geodetic
engineers of boundaries of claimed land
Parcels are designated as “lots”
2. Petition
Filed by Director of Lands (represented by Sol-Gen),
filed with RTC, and showing public interest involved.
Describe the land and the plan.
3. Notice given (same as usual)
Publication
Mailing
Posting
4. Answer to petition filed by claimant
1. Identity of claimant
2. What is the lot claimed and what is the interest
therein or time of possession/manner of acquisition
3. Provide adjoining owners and encumbrances or
adverse claims, if any
When is a MTD allowed?
Already subject to prior patent
Or res judicata applies
5. Hearing, judgment, and issuance of decree
What are the possible results?
1. Judgment of ownership
o Usual remedies allowed
o If no appeal performed, court orders
LRA to issue certificate of title
o Registration of decree by the LRA
2. Declare land as public
3. Order correction of technical description of
the land or resolve overlapping titles
o For both, as long as no impairment
of substantive rights of owners
2. Clerical error in certificate
3. No serious dispute as to error or change of status
4. Not amount to reopening
5. Not impair rights of IPV
o What if there is substantial change in the CT?
It must go through ordinary registration proceeding
2. Reconstitution
o `What if the duplicate OCT is lost?
File action for replacement
o What if the original OCT is lost?
File action for reconstitution
What is the requirement for this?
Petition that notifies occupants, adjacent
owners, adverse claimants by publication,
posting, and personal notices
Otherwise, the reconstituted title is void
o What is the special requirement re: IPVs on reconstituted
titles?
If a title has been reconstituted the buyer must
exercise extraordinary diligence to be deemed an IPV
o X pretends to be owner of land, files, for reconstitution,
obtains reconstituted certificate, and mortgages to Z. Y,
the true owner, still has his TCT copy. Does Z have a right
through the mortgage?
No. Z has no better right than X, especially where Y,
the true owner, still has his TCT copy.
o When is notice to owners or adjacent lots or actual
occupants NOT needed for reconstitution?
When the source of reconstitution is the owner‟s
duplicate copy thereof
3. Double sale
o In a double sale situation, to whom does ownership
passes?
The buyer in GF who first records the sale in the ROP
o What is a notice of adverse claim?
Actions, dealings, and subsequent registration
1. Amendments of CT
o When can amendment be done summarily?
1. Registered interest has terminated
143
o
o
A measure to protect interest of person dealing over a
piece of land, and to warn third persons dealing with
that property
What is specially required in the notice?
It must state how and under whom the right
was acquired
When is a notice of adverse claim effective?
Upon entry in the day book, even if the
owner‟s duplicate has not been surrendered
What is subsequent registration?
o When the land is already titled and you deal with it
o When is there registration of voluntary transactions?
Once the deed is entered into the day book, the
registrant surrenders the owner‟s duplicate of title,
and pays fees
o Example of voluntary transactions?
Sale and mortgage
o When is mortgage deemed registered?
Entry in the day book, even if it is not annotated at the
back of the title
NOTE: for involuntary dealings, entry in the day book
is enough, even if the title is not surrendered. The
reason is obvious: the owner is likely not to surrender
his title in an involuntary dealing, unlike a voluntary
one.
o How long is the life of an adverse claim?
30 days, after which it lapses
What must be done and what is the effect?
The affidavit of adverse claim must be
entered into the day book, so the
subsequent buyer is constructively bound
If there is a notice of lis pendens or adverse claim,
how does it affect the double sale situation?
The party seeking to register cannot invoke
good faith when there is an annotation at the
back of the title
Can a private individual bring an action for reversion?
No he cannot.
What is the prescriptive period for reversion?
None, because it‟s the right of the State to recover
properties registered but are not capable of private
appropriation
Chain of title
Can the buyer have title even if the seller does not?
o Yes, on certain situations. This is an exception to the civil law
doctrine that the stream cannot be higher than the source.
In general, what is the effect of a forged deed?
o It is a nullity and cannot serve as just title.
Situation 1: X is the registered owner of TCT 12345. X goes to the
US and gives title to Y in trust. Y forges X’s signature in the deed
of sale in Y’s favor. Y gets TCT 12346. Y sells land to Z as IPV. Z
registers the land and gets TCT 12347.
o Does Y have a valid title?
No, it‟s void.
o Does Z have a valid title?
Yes.
o X returns from the US and learns of the sale. Can X
recover from Z?
No. Z is an IPV.
What is X’s remedy?
Go after Y for damages.
When can X recover from Z?
If Z had not yet obtained his TCT.
o Hypothetically, could Y have mortgaged the land in favor
of Z, and would it have been valid?
Yes and yes. While legally Y is not the owner of the
land and cannot mortgage it, as far as Z is concerned,
Y is the registered owner. X must respect the
mortgage.
Situation 2: X is the registered owner of TCT 12345. Y
misrepresents to Z that he is X and sells the land to Z. Z gets title
TCT 12345.
o Does Z have a valid title?
144
No. Z is negligent because he has the duty to find out
if the seller is the registered owner. (This duty also
applies if the price is suspiciously low.)
Note that there is no chain of title, since Y did not get
title in his name. Thus, Z has no title either.
o What is X’s remedy?
Since the title is void, X can recover the property from
Z.
Situation 3: Y forges the deed of sale but does not register it to get
a new title. Y shows it to Z, and Z buys. Y makes deed of title in
favor of Z.
o Can X recover the property from Z?
Yes, he can. There is no chain of title.
o Who should shoulder the loss?
The one who is negligent. In this case, it was Z.
What is the requirement of diligence for those dealing with
property covered by a Torrens title?
o Not required to go beyond what appears on the face of title.
Distinguish the two.
Commodatum
SM is non-consumable
Ownership retained by bailor
Essentially gratuitous
Return same thing
Real or personal property
Loan for use or temporary
possession
Right to demand return of the thing
in case of urgent need, even before
expiration of term
Loss shouldered by bailor
Mutuum
SM is consumable
Ownership transferred to bailee
Gratuitous or onerous
Pay same amount or same
kind/quality
Personal property only
Loan for consumption
No right to demand return before
lapse of term agreed upon
Loss shouldered by bailee even if
the loss is caused by fortuitous event
Distinguish between commodatum and lease.
Commodatum
Lease
Real contract
Consensual contract
SM is non-consumable thing
SM can be even work or service
Essentially gratuitous
Onerous
Distinguish between commodatum and usufruct.
CREDIT TRANSACTIONS
Commodatum
By law or by contract
Loan Contracts
What are the characteristics of a loan contract?
o 1. Real Contract, because delivery of the thing loaned is
necessary to perfect the K
o 2. Unilateral Contract – only the borrower has obligations upon
perfection
What are the kinds of Loan?
o 1. Commodatum (hiram)
The bailor delivers to the bailee a non-consumable
thing and the bailee may use it for a certain time and
return the same thing
o 2. Mutuum (utang)
The bailor delivers to the bailee money or some
consumable thing and the latter will pay the same
amount or the same kind/quality
Purely personal right to use
another‟s property
Essentially gratuitous
Real contract
Bailee only acquires use of thing, but
not fruits
Consumable goods may be the SM
only when the purpose of the K is for
mere exhibition
Usufruct
By law, contract, testamentary
succession, or prescription
Real right to the fruits of another‟s
property
May be onerous
Consensual contract
Usufructuary acquires right to both
use and fruits of the property
May be over consumables like
money
What are the characteristics of commodatum?
o 1. Essentially gratuitous
What if it’s not?
It‟s a lease.
145
o
Is the bailee liable for ordinary wear and tear of
the thing due to use?
No.
What are the exceptions?
o 1. If done with fault or negligence
o 2. Devoted the thing to a different
purpose from what was stipulated
o 2. Bailee not liable for loss due to fortuitous event
What are the exceptions?
1. Bailee devoted thing to different purpose
2. Bailee kept thing longer than period
stipulated
3. Thing was delivered with appraisal of its
value
o Unless stipulated otherwise
4. Balee lent the thing to a third person
outside his household
5. Bailee, given a choice to save either the
thing or his own thing, chose the latter
X lent Y his jeep to bring Y’s sick wife the
hospital. On the way back, Y took on paying
passengers who paid money. The jeep then was
struck by lahar and was destroyed. Is Y liable?
Yes. The contract is commodatum, and Y
devoted the jeep to a purpose different from
what it was lent for.
o 3. Bailees are solidarily liable when the thing is loaned to 2 or
more bailees in the same contract
o Can the bailee retain the thing loaned as security for
claims against the bailor?
No, not even due to extraordinary expenses incurred
What are the obligations of the bailor?
o 1. Allow the bailee the use of the thing loaned for the period
stipulated, or until accomplishment of the purpose
What are the exceptions?
1. Urgent need, which suspends the
commodatum
2. Purpose: temporary use of the thing loaned
Can acquisitive prescription in favor of the bailee
vest?
No. There is no just title. The duty to return
prevails.
o 3. Use is limited to the thing, but not the fruits
Exception?
If stipulated otherwise
o 4. SM is generally non-consumables unless the purpose of the
contract is exhibition of consumable things
X lent Y P200000 to deposit in Y’s corporation’s
bank account to meet the minimum capitalization
requirement. Y would be tasked to return it after a
month. What is the contract?
Commodatum, even if the SM was
consumable goods. The purpose was
merely to show requisite capitalization, not
for consumption.
o 5. Bailor need not be the owner, as long as he has possessory
interest
o 6. Personal contract
What if one of the parties dies?
The contract is extinguished; it doesn‟t get
inherited.
Cf. for usufruct, this is not the rule because
usufruct is a real right over the property. It
attaches.
o 7. Bailee cannot lend or lease the SM of the contract to a third
person
What is the exception?
Member of the bailee‟s household
What are the exceptions to the exception?
1. Stipulated to the contrary
2. Nature of the thing forbids its use
What are the obligations of the bailee?
o 1. Liable for ordinary expenses for use and preservation of the
thing
146
2. Precarium:
o A. Duration not stipulated
o B. Use or purpose not stipulated
o C. Use of thing merely tolerated by
the bailor
When else can the bailor demand the thing to be
returned?
Acts of ingratitude by the bailee
o 2. Refund extraordinary expenses for preservation of the thing
What is the notice requirement?
The bailor must be notified before the
expenses were incurred
What is the exception to this?
Urgent need to repair
o 3. Refund 50% of extraordinary expenses from actual use of
thing loaned
What is the exception?
Contrary stipulation
o 4. Pay damages to bailee for known hidden flaws in the thing
loaned
What are the characteristics of mutuum?
o 1. Borrower acquires ownership of the thing and can dispose of
it
o 2. If the thing loaned is money, it must be in legal tender and in
case of extraordinary inflation or deflation, basis of payment
may be value of the currency at time of creation of obligation
o 3. If consumable thing is loaned, borrower must return thing of
same kind/quality
Distinguish between mutuum and lease:
Mutuum
SM is money or consumable thing
Ownership is transferred
Relationship is creditor-debtor
o
o
o
Lease
Anything
Ownership is retained by lessor
Relationship is landlord-tenant or
lessor-lessee
o
What are the rules on interest?
o 1. Interest must be expressly stipulated in writing
147
What are the exceptions?
1. Debtor is in delay – liable to pay legal
interest as indemnity, even in the absence of
stipulation of interest
2. Interest due shall earned interest from the
time it‟s judicially demanded (interest on the
interest)
2. Usury Law has been suspended
But in case the interest rate is too exorbitant, the
obligation is still valid although the interest may be
reduced
What is the legal interest?
12% for loan or forbearance of money
6% for other obligations
Ex. damages for personal injury, unearned
profits, etc.
But it becomes 12% from the time when
judgment becomes final and executory –
until payment of such
From whence can legal interest be counted?
Usually, from rendition of judgment, not
demand
But when the demand is established with
reasonable certainty, the interest begins to
run from when judicial or extrajudicial claim
is made (from default)
What are examples of SC rulings re: interest rate?
5.5%/month is excessive and unconscionable (“E and
U”)
6%/month (72% per annum) is E and U
3%/month (36% per annum)
reduced to 1%/month
(12% per annum)
Penalty charge of 5%/month is E and U
Is an escalation clause valid?
Yes, if it also includes a de-escalation clause or a
stipulation that the rate of interest shall be reduced in
o
o
the event that the maximum rate of interest is reduced
by law or the Monetary Board
Can an escalation clause stipulate that escalation
is dependent on one of the parties?
No. That would violate mutuality of
contracts.
Can a debtor be made liable for both stipulated monthly
interest and the stipulated penalty charge?
Yes.
Can there be compounding of the penalty or
compensatory interest (adding to the principal)?
Yes, and this shall earn new interest.
What are the kinds of deposit?
o 1. Judicial
o 2. Extra-judicial
Voluntary
necessary
Distinguish between judicial and extra-judicial deposits.
Extra-judicial
By will of the parties
SM is movables
Purpose is safekeeping
Deposit
Essentially gratuitous
Return upon demand by depositor
What are the characteristics of deposit?
o 1. Real contract
o 2. If gratuitous, unilateral. If onerous, bilateral.
o 3. Principal purpose is safekeeping of the thing delivered
o 4. Essentially gratuitous
Exceptions?
1. Contrary stipulation
2. Depositary is in business of storing goods
3. Property saved from destruction during
calamity without owner‟s knowledge (must
compensate depositary)
Distinguish deposit from mutuum.
Deposit
Purpose is safekeeping
Depositor can demand return at will
SM is movables (extra-judicial) and
immovables (judicial)
What are the characteristics of voluntary deposit?
o 1. Delivery made upon will of depositor
o 2. Depositor need not be the owner of the thing, although that‟s
usually the case
o 3. May be oral or in writing
What are the obligations of the depositary?
o 1. Keep the thing safely and return it when required, even if a
specific term was stipulated
What are the special requirements in return if it is
locked or sealed?
1. Return the thing deposited in the same
condition, if delivered closed and sealed
2. Pay for damages if the seal or lock is
broken through his fault (which is presumed)
3. Keep secret of the deposit when the
seal/lock is broken
When can the depositary open the thing
deposited, even if locked and sealed?
1. Presumed authority (ex. keys were
delivered)
Mutuum
Purpose is consumption of SM
Lender must wait for period to expire
SM is money or consumable thing
Distinguish between deposit and commodatum.
Deposit
Purpose is safekeeping
May be gratuitous
Judicial
By order of court
SM may be immovable or movables
Purpose is to secure or protect
owner‟s right
Always onerous
Thing delivered only upon court
order
Commodatum
Purpose is transfer of use
Always gratuitous
148
o
o
o
o
o
o
o
What if the thing is non-consumable and the
depositary has permission to use it?
It becomes commodatum
What if it is money or consumable thing?
It becomes mutuum
But what if the principal purpose is still
safekeeping?
o Then it becomes an irregular
deposit
o When is the depositary liable even if loss is due to
fortuitous event?
1. Stipulated
2. Used the thing without depositor‟s permission
3. Delays in return
4. Allows others to use it, although the depositary
himself may be authorized to use it
To whom can return of the thing deposited be made?
o 1. To the depositor, heirs, or successors, or to the person
designated in the contract
o 2. If the depositor was incapacitated when the deposit was
made (ex. minor):
Return to his guardian or administrator
Or the depositor himself if he acquires capacity
o 3. If the depositor was capacitated, but he lost it, then return to
his guardian/legal representative
Where must it be returned?
o 1. Place agreed upon
o 2. If no stipulation, place where the thing deposited is
Even if it was transferred?
Yes, even if it should not be the same place
where the original deposit was made
Exception?
When there is malice on the part of the
depositary who transferred the thing
Who shoulders transportation costs?
The depositor
When must the thing be returned?
2. In case of necessity
2. Liable for loss if through fault or negligence
What is the presumption?
If lost while in the possession of depositary,
there is presumption of fault
How does the degree of negligence differ?
For gratuitous deposit, the standard of care
required is less than for onerous deposit
3. Cannot deposit the thing to a third person
4. Liable for loss of the thing deposited, if:
1. Transferred to a third person without authority
Negligence need not be proved
2. Transferred to a third person, with authority, but the
third person is manifestly careless or unfit
Negligence need not be proved
3. Thing is lost due to negligence of own employees
When is the depositary not liable?
Loss of the thing without negligence of the
third person, if transfer was authorized, and
the person was not manifestly careless or
unfit
5. Notify the depositor and wait for decision if he will change
the way or manner of deposit
Exception?
If the delay will cause danger
6. If the thing earns interest, must 1) collect interest as it
becomes due, and 2) take steps as may be necessary to
preserve its value and the rights corresponding to it
7. Not to commingle things deposited if so stipulated, even if
they are the same kind/quality
So usually he can commingle?
Yes.
8. Not to make use of the thing, otherwise, liable for damages.
Exceptions?
1. Express permission of depositor
2. Preservation of the thing requires its use
149
o
Generally, upon demand or at will, regardless of period
stipulated
o Exceptions?
1. Thing is judicially attached while in depositary‟s
possession
2. Depositary was notified of the opposition of a third
person to the return or removal of the thing
When can the depositary return the thing deposited at his will
(Requisites)?
o 1. The deposit must be gratuitous
o 2. Justifiable reasons exist
What are the rules on alteration by the depositary’s heir (i.e. heir of
the depositary sold the thing deposited)?
o 1. If in GF, the heir may either return the price he received or
assign his right of action against the buyer in case the price
was not yet paid
o 2. If in BF, heir liable for damages and may be sued for estafa
What is the relationship between a bank and depositor?
o The depositor is the creditor, and the bank is the debtor
o It is NOT a deposit contract, but a mutuum
So what is the legal effect of failure to pay
deposited money?
It‟s failure of debtor to pay a loan, and not
breach of trust from depositary‟s failure to
return the SM
When does the obligation of a bank to pay interest
on a deposit cease?
When the operations of the bank are
completely suspended by the C.B.
What are the obligations of the depositor?
o 1. Pay expenses for preservation of the thing if deposit is
gratuitous
o 2. Pay for losses incurred due to character of the thing
deposited
What are the exceptions?
1. Depositor was unaware
2. Depositor was not expected to know the
dangerous character of the thing
3. Depositor notified the depositary about it
4. Depositary was aware, even without
depositor‟s advice
o Can the depositary retain the thing deposited in pledge
until full payment of what is due him by reason of deposit?
Yes, he may.
Cf. The rule is different from commodatum, which
does not allow retention
When is there necessary deposit?
o 1. In compliance with legal obligation
A. judicial deposit of thing where multiple persons
dispute possession of such
B. deposit with bank or public institution of public
bonds/instruments of credit [payable to order/bearer]
given in usufruct, when the usufructuary does not give
proper security for their conservation
C. Deposit of thing pledged when the creditor uses it
without authority of the owner or misuses the thing
D. In suits, when provided by the ROC
E. Constituted to guarantee contracts with the
government
o 2. Made during a calamity
o 3. By travelers, in hotels and inns
What are the required actions of the depositor?
1. Depositary is informed about the effects
brought by the guests
2. Guests took precautions for safekeeping
When is the hotelkeeper liable, regardless of
amount of care exercised?
1. Loss or injury is caused by servants,
employees, or strangers [if the two requisites
concur above]
2. Loss is caused by robber or thief acting
without irresistible force
When is the hotelkeeper not liable?
150
If there is doubt, what is presumed, guaranty or suretyship?
o Guaranty. Suretyship is never presumed.
o Is an “unconditional guaranty” a suretyship?
No. It just means that unlike a conditional guaranty, it
needs no other extraneous event to trigger the
guarantor‟s liability. But the principle remains that the
principal must first default.
Differentiate “insurer of debtor’s insolvency” (G) and “insurer of
the debt”:
o 1. Surety promises to pay the principal‟s debt if the principal
will not pay.
Must a surety be notified of the principal’s default
first?
No. In fact, no prior demand is needed;
direct suit against the principal is the
demand in itself.
Is there need to demand the principal to pay first?
No, especially where demand would be
useless. A suretyship is a direct contract to
pay the debt of another. The surety is
absolutely liable as soon as default is made,
without need for demand from the principal
or notice of default.
o 2. Guarantor promises to pay the principal‟s debt if the
principal cannot pay. So this requires due diligence and
exhaustion of remedies against the debtor.
X Corp is liable to Y Corp for P5M. Z is X corp.’s surety. X Corp
defaulted and was placed in a state of suspension of payments.
Can Y Corp. proceed against Z?
o Yes. The suspension only applies to X Corp, and as surety,
there is no need to exhaust X corp.‟s property before going
against Z.
H and W are spouses. H signed a suretyship agreement to cover
for the liabilities of XYZ corp. Can the conjugal partnership be
made liable when XYZ defaults?
o No. This act did not redound to the benefit of the partnership
and is thus borne alone by H.
1. Loss is caused by force majeure or
theft/robbery attended by irresistible force
2. Loss is due to acts of guests, his family,
servants/visitors
3. Loss due to character of the things
brought into the hotel
Can a hotelkeeper stipulate absolute exemption
from liability?
No. This is void.
Can the hotelkeeper retain the things of guests as
security for unpaid lodging expenses and
supplies?
Yes.
See the usual rule on deposits, with which
this is consistent.
Contra commodatum – can‟t do this.
Judicial deposit: see above table for distinction vis-à-vis extra-judicial
deposits
Guaranty and Suretyship
Distinguish between guaranty and suretyship
Guaranty
G is secondarily liable
G binds himself to pay only when
principal cannot pay
G is insurer of debtor‟s insolvency
Usually embodied in a separate
agreement before or after the
principal obligation
Suretyship
S is primarily liable and not entitled
to benefit of excussion
S assumes liability as a regular party
to the undertaking and promises to
pay if the principal does not pay
S is an insurer of the debt
Usually embodied in the same
instrument as the principal
obligation; thus, the surety is a party
to the contract
Is there need for a separate consideration which the surety must
receive?
o No. The surety is bound by the same consideration that
makes the contract effective between the primary parties.
151
[nature of obligation]
4. Suretyship
5. He is a judicial bondsman and sub-surety
6. Pledge or mortgage has been given by the G as
special security
[debtor clearly insolvent]
7. Debtor is insolvent
8. Presumed that execution of debtor‟s property will
not satisfy the obligation
[absconding]
9. G absconded or cannot be sued in the Philippines
Unless he left a manager/representative
o 2. Compromise between the creditor and principal – can
benefit but not prejudice the guarantor, otherwise, he would be
released
o 3. If there are several guarantors and only one debtor, the
guarantors are entitled to benefit of division. Their liability is
joint.
Exceptions?
1. Solidarity
2. Any of the circumstances in 2057 taking
place
o A. A guarantor is convicted of crime
involving dishonesty
o B. Guarantor becomes insolvent
When can a guarantor who paid the entire debt
seek reimbursement from co-guarantors?
1. He paid by virtue of judicial demand
2. AND because the principal debtor was
insolvent
o What is a continuing guaranty or suretyship?
One that is constituted to cover even future debts, the
amount of which is not yet known.
What are the effects of guaranty between the debtor and
guarantor?
o A. Guarantor who pays for a debtor must be indemnified by the
latter.
What is the nature and extent of guaranty?
o 1. Guarantee is generally gratuitous
What is the exception?
Contrary stipulation
o 2. Accessory contract
What if the principal obligation is void?
The guaranty cannot exist.
o 3. Guarantor‟s liability cannot exceed the principal obligation
But does this provision include interest and other
costs?
No. The liability for interest and other costs
does not stem from contract but from the
default. So the guarantor can technically
pay more than the obligation secured.
o 4. Doubt must be resolved in favor of the guarantor or surety
What is the exception?
Compensated sureties
What are the qualifications of a guarantor?
o 1. Possesses integrity
o 2. Capacity to bind himself
o 3. Sufficient property to answer for obligation
o What if the creditor required and stipulated a specific
person should be the guarantor, can there be
substitution?
No. The selection of the guarantor is part of the terms
of agreement.
What are the effects of guaranty between the guarantor and
creditor?
o 1. Guarantor has right to benefit of excussion
o Exceptions?
[waiver]
1. G expressly renounced excussion
2. G fails to set-up benefit of excussion and fails to
point out to the creditor available property of the
debtor in the Philippines
3. G fails to interpose it as defense before judgment is
rendered against him
152
o
o
What does the indemnity cover?
1. Amount of debt
2. Legal interest from the time payment was
made known to the debtor
3. Expenses incurred by guarantor after
notifying debtor that payment has been
demanded of him
4. Damages, if due
What are the exceptions to indemnity rule?
1. Guaranty constituted without knowledge
or against the will of the debtor. In this case,
the guarantor can only recover to extent
debtor was benefited.
2. Guaranty did not intend to be paid back
(donation) – although in this case, debtor‟s
acceptance is needed
o In any case, payment is valid as to
the creditor who has accepted it
3. Waiver
Can the guarantor demand more than what he has
paid?
No.
B. Guarantor has right to be subrogated against the debtor to
enforce the indemnity
C. Guarantor can proceed (see below what “proceed” means)
against debtor even before payment when:
[Just causes for guarantor]
1. He is sued for payment
2. Reasonable grounds to fear the debtor intends to
abscond
[Insolvency]
3. Insolvency of debtor
4. Debtor is in imminent danger of insolvency
[Expiration of period, etc.]
5. Debtor bound himself to relieve him from the
guaranty within a specific period, and this period has
expired
6. Debt has become demandable because period for
payment has expired
7. After lapse of 10 years when the principal
obligation has no fixed period for maturity
Unless the nature of the obligation is such
that it cannot be extinguished except for a
period longer than 10 years
o In all these cases under #3, what are the options of the
guarantor (what does “proceed against the debtor”
mean)?
1. Obtain release from the guaranty
2. Demand security to protect him against creditors‟
claims or insolvency of the debtor
How is guaranty extinguished?
o 1. When the principal obligation is terminated (the usual ways
– see oblicon)
Also, material alterations (where there is additional
obligation, new burden, etc.)
o 2. Release of one guarantor by the creditor
What is the effect if it is without the consent of the
other guarantors?
Then they benefit to the extent of the share
of the released guarantor
o 3. Extension of term granted by the creditor to the debtor
without guarantor‟s consent
What if there’s a continuing guaranty allowing for
extensions?
Then extension of term does not extinguish
the guaranty.
Does the creditor’s neglect to immediately sue the
principal constitute an “extension of term”?
No. There has to be a separate agreement
for a definite period without the consent of
the guarantor.
o 4. If there can be no subrogation because of the fault of the
creditor
What is an example of this?
153
Because the obligation solely rests on the part of the
creditor: to return the thing upon fulfillment of the
principal obligation
Can the pledgee keep the thing for himself after
default?
No. This is pactum commissorium
o 4. Subsidiary contract
Obligation does not arise until fulfillment of the
principal obligation
X borrowed 400K from Y, pledging shares of stock worth 800K to
secure the obligation. An economic crisis occurred, plunging the
value of the stocks to 100K. Can Y demand X surrender other
shares worth 700K?
o No. There is no showing the fall in value was due to X‟s fault.
Likewise, there was no showing Y was deceived as to the
substance or quality of the shares, where would have the right
to claim another thing in their place or immediate payment of
the obligation.
o And more importantly, the right of a pledgee is to just sell the
pledged share at a public sale.
May the pledge secure future advancements that the pledgor may
procure from the pledge?
o Yes.
o Contra: chattel mortgage cannot secure future debts
Distinguish pledge from REM:
When the creditor releases or fails to register
a mortgage
What if the guarantors are solidary?
Same effect.
Does this provision apply to sureties?
No. (Zobel v. CA)
What about legal and judicial bonds?
o They are not entitled to the benefit of excussion because they
are guarantors but sureties whose liability is primary and
solidary.
Pledge
What is a pledge?
o It is a contract by virtue of which the debtor delivers to the
creditor or third person a movable or document evincing
incorporeal rights
o Purpose is to secure a principal obligation
What are the essential requirements of pledge?
o 1. Constituted to secure fulfillment of principal obligation
o 2. Pledgor or mortgagor is absolute owner of the thing
What if the thing is conjugal property of spouses
and only one acted as pledgor?
The pledge is only over ½ of the property
What if the property is covered by certificate of
title (this actually applies more to REM, not
pledge)?
The innocent pledgee or mortgagee for value
can rely on the certificate, if there is no
reason to further inquire, and is protected
o 3. Person has free disposal of the property, or legally
authorized to do so
o 4. Thing pledged is delivered to the creditor or third person by
common agreement
Characteristics of pledge?
o 1. Real contract – thing must be delivered
o 2. Accessory contract
o 3. Unilateral contract
Pledge
Movable property
Delivery of object pledged
Pledge not valid against third
persons unless description of the
thing pledged + date of pledge is in
public instrument
REM
Immovable property
Delivery of the thing NOT necessary
REM not valid against third persons
if not registered
Who has ownership of the thing pledged?
o Still the pledgor
o Can he sell the thing pledged?
Yes, as long as the pledgee assents
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o
Does this sale extinguish the pledge?
No, it survives and follows the thing, even if
ownership is transferred
o What happens then?
1. The pledgee still possesses the thing until the
obligation is paid
2. The pledgee may still sell the thing in case of
default
Can the debtor demand its return before the debt is paid?
o No, possession is the security of the creditor.
o What is the exception?
If the thing is in danger of being impaired or
destroyed, the pledgor can substitute it with a thing of
the same kind and quality
o What presumption arises upon return of the thing
pledged?
That the pledge has been extinguished
Is there a presumption that the main obligation
has been extinguished too?
No.
What is the obligation of the pledgee?
o Take care of the thing pledged with the diligence of a GFF
o When is he entitled to reimbursement?
Expenses incurred for preservation
o When is he liable?
Loss or deterioration by reason of fraud, negligence,
delay, or violation of terms of contract
Is a pledgee authorized to transfer possession of the thing to
another?
o No. Remember, he‟s not the owner. He has to be authorized
to do this.
o Can the pledgee use the thing pledged?
None. He needs authority, again.
o X borrowed P10K from Y, payable Dec. 1. X pledged his
car to Y, allowing Y to use it by express stipulation. X
wanted to pay his debt on June 1, demanding that Y
accept the money and return the car. Can X compel Y to
accept?
No. The debt was due Dec. 1. When a period is
stipulated, it is presumed to be for the benefit of both
the debtor and creditor. In fact here, Y is authorized
to use the car, which is the presumed benefit. X
cannot pre-pay.
When can the pledgor request the thing pledged be deposited
judicially or extra-judicially?
o 1. Creditor used the thing without authority
o 2. Creditor misused the thing
o 3. Thing is in danger of being lost or impaired due to
negligence or willful act of the pledgee
What is the effect of sale of the thing pledged upon default of the
debtor?
o The principal obligation is extinguished whether the price of
sale is more or less than the amount due
o 1. If the price is more than the amount due, the debtor is not
entitled to excess
o 2. If the price is less than the amount due, the creditor is not
entitled to recover the deficiency
o Differentiate from CM:
In CM, the excess is returned, and the deficiency is
demandable
(Take note of Recto Law, however)
What are examples of legal pledges under the law?
o 1. Possessor in GF exercising right of retention for necessary
and useful expenses
o 2. Usufructuary exercising right of retention for taxes paid on
the capital and for extraordinary expenses
o 3. Mechanic‟s lien
o 4. Agent exercising right of retention for necessary expenses
for execution of agency and for damages which execution of
agency caused him
o 5. Bailee exercising right of retention for damage caused by
flaws in the thing loaned where the bailor knew about it but did
not inform the bailee
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o
o
o
6. Depository exercising right of retention for necessary
expenses if deposit is gratuitous or for fortuitous damages
caused him by the character of the thing deposited
7. Hotel-keeper, over guest‟s things for unpaid board and
lodging
How does the pledgee/creditor exercise his remedy?
But must first demand payment of the amount due
Have the thing retained sold at public auction, within 1
month after demand
Creditor has no right to fruits
Upon default, creditor is not the
owner (no pactum commissorium)
What is the effect of REM?
o It subsists until after payment of obligation.
o The right of the mortgagee in case of non-payment is
foreclosure of the REM. Pactum commissorium is against
public policy.
What is the extent of the mortgage?
o REM is not limited to the property itself, but also its accessions,
improvements, growing fruits, rents, income, proceeds of
insurance in case it perishes, or expropriation value if
condemned.
o EXCEPT: contrary stipulation.
Can the mortgage be alienated or assigned?
o Yes and the assignee or transferee is entitled to foreclose the
mortgage in case of non-payment of the obligation. If the
transferee becomes the owner of the property this is a void
pactum commissorium.
What if the mortgagor transfers the property?
o 1. It does not relieve him from his obligation to pay the debt to
the creditor, in the absence of novation.
o 2. Creditor must make demand against the debtor. If the latter
cannot pay, then the creditor can demand payment of the
credit from the possessor of the property (transferee), and
foreclose thereafter if there is non-payment.
1. Judicial foreclosure under Rule 68 of the ROC.
o Is there redemption here?
No, just equity of redemption where the mortgagor is
given the chance to pay the debt within the 90-120
days period after the judgment becomes final OR
after the foreclosure sale but before confirmation.
o There is redemption, however, if the mortgagee is a banking
institution (1 year for natural person mortgagors and 3
months/before registration whichever comes first for juridical
person mortgagors)
Real Estate Mortgage (REM)
What is a REM?
o A contract where the debtor secures to the creditor the
fulfillment of a principal obligation, by subjecting to such
security immovable property or real rights in case the principal
obligation is not complied with.
What are the characteristics of a REM?
o 1. Accessory and subsidiary contract
o 2. Unilateral because the only obligation is for the creditor to
free the property from encumbrance upon payment
o 3. Mortgagor retains possession of the property in general
Remember: pactum non alienando is void (prohibition
for the mortgagor to dispose the property)
o 4. Over immovable or alienable real rights over immovables
o 5. REM must appear in a public document recorded in the
ROP
If not registered, just binding between the parties
o 6. REM is a real right that attaches to the property
So the REM is both a real right and real property by
itself
o 7. Mortgagor must be the absolute owner of the property,
otherwise, it is void
REM
Accessory contract
No transfer of title
No transfer of possession
Vendee entitled to fruits
Upon consolidation, vendee is the
owner
Pacto de retro sale
Principal contract
Conditional title
Conditional transfer of possession
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o
What if the purchaser contends the right of the redeeming
person to do so (e.g. it was not the mortgagor but one of
his heirs that is redeeming)?
The sheriff cannot usurp judicial functions. He cannot
decide, so he must advice judicial redress to the
parties.
Does the mortgagee have a right to recover deficiency postforeclosure?
o Yes, he may. The action to recover the deficiency prescribes
after 10 years from right of action.
If a mortgagor dies, what are the 3 mutually exclusive options of
the mortgagee?
o 1. Waive mortgage and pursue claim against estate as an
ordinary claim
o 2. Judicial foreclosure of the mortgage, and recover deficiency,
if any as an ordinary claim against the estate
o 3. Rely on the mortgage exclusively (e.g. EJ foreclosure),
without right to file claim for deficiency
What if the mortgagor files a collection suit?
o It bars foreclosure of mortgage. The creditor cannot avail both
remedies because it is in essence a splitting of his cause of
action into two.
What is the nature of a writ of possession?
o The purchaser may petition for a writ of possession within the
redemption period by filing an ex parte motion under oath.
o He files a bond. Upon approval of the bond thereafter, the
court must issue a writ of possession. It is a matter of course
and not a matter of discretion.
o Since, it‟s ex parte, any questions regarding the validity of the
sale, the mortgage, etc. must be tried in separate proceedings.
When else may the purchaser file for a writ of possession?
o When ownership has been consolidated upon himself, at the
end of the redemption period.
o The bond is no longer necessary in this case because he is the
absolute owner already.
2. Extrajudicial foreclosure under Act 3135.
o When does this apply?
When the mortgagee is given specific power or
express authority to foreclose.
If there is none, there can be no EJ foreclosure.
o Where must auction be conducted?
Province where the property is found
o What is the requirement of notice?
1. Posting of notice of sale in 3 public places therein
2. Publication in newspaper of GC once a week for 3
consecutive weeks
If the sale is postponed, republish.
Is personal notice to the mortgagor required?
No. Unless, of course, the contract provides
for it.
Can these notice requirements be waived?
No, it‟s for the benefit of the public, not the
parties.
o How long does the mortgagor have to redeem?
Within 1 year from date of sale. If the land is
registered property, then from registration of
certificate of sale.
But if the mortgagor is a juridical person and the
mortgagee is a bank, quasi-bank, or trust entity, then
redemption is only within 3 months from foreclosure
or registration of certificate of sale with ROD,
whichever is first.
o What is required for a valid redemption?
1. Within proper period
2. Payment of purchase price of property plus 1%
interest per month
Taxes with same 1% interest if paid by
purchaser
3. Written notice of redemption served on officer who
made the sale, and duplicate filed with ROD
157
o
o
1. Accessory contract
2. Formal contract – because the amount of the principal and
of the interest must be in writing or else the antichresis contract
is void
Is delivery of the property a requisite for the contract’s validity (i.e.
is it a real contract)?
o NO. The delivery is only to allow the creditor to receive the
fruits and apply them, and not to make the contract valid.
o But note, it is a formal contract.
What is the requirement of appraisal?
o The fruits of the immovable must be appraised at their actual
market value at the time of application (to know how much is
deducted).
Can the debtor demand the return of the property before the debt
is totally paid?
o No. It stands as security.
What are the obligations of the antichretic creditor?
o 1. Pay taxes and charges of the estate and necessary
expenses on the property
Where does he take the funds?
From the fruits of the property
Failure to do so – damages in favor of debtor
There can be contrary stipulation as re: payment of
taxes and charges
o 2. Apply fruits to the interest, and then the principal of the debt
What are the creditor’s remedies in case of default?
o 1. Bring action for specific performance
o 2. Petition for sale of real property in foreclosure sale under
Rule 68 of the ROC, or if the parties agreed upon it, extrajudicial foreclosure under Act 3135
Can an ex-parte writ of possession be enforced against a third
party who is in actual possession of the foreclosed property and is
not in privity with the mortgagor?
o No, it cannot. Under Art. 433 of the NCC, one who claims to
be owner of a property possessed by another must bring
appropriate judicial action – in this case, it must be an action
for ejectment (or publiciana).
o To rule otherwise would unduly prejudice the third person who
did not have a chance to oppose the claim, since the
proceedings to issue a writ of possession are ex parte.
What are the remedies of such third party claimants to property
involved in a foreclosure sale, when the third party was not part of
the foreclosure and there is no privity?
o Two options: a) “terceria” where he serves upon the sheriff an
affidavit of his title and a copy is given to the judgment
creditors; in this case, the officer is not bound to keep the
property; b) independent separate action, to recover ownership
and possession of the contested property (Rule 39, Sec. 16 of
the ROC)
Is a purchaser in a foreclosure sale who hasn’t turned over the
excess of the proceeds of sale to the mortgagor entitled to a writ of
possession?
o In a case, the SC ruled that he‟s not entitled.
Can a REM cover future loans or advancements?
o Yes, if stipulated by the parties in the contract.
Antichresis
What is a contract of antichresis?
o A contract where the creditor acquires right to receive the fruits
of an immovable of his debtor, with the obligation to apply the
proceeds to the payment of interest (if there is), and then to the
principal of the credit
o What if the loan does not earn interest?
There can still be a contract of antichresis. The
payments are applied directly to the principal, then.
o Again, take note that pactum commissorium is void.
What are its characteristics?
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Antichresis
Real property
Formal contract
Pledge
Personal property
Real contract
Antichresis
Property delivered to creditor
REM
Debtor usually retains the property
Creditor acquires only the right to
receive fruits of the property. It is
NOT a real right.
Creditor pays taxes and charges
unless stipulated otherwise
Creditor given possession of the
property must apply the fruits to the
interest then the principal
No right over fruits, but it is a real
right that attaches to the property
one can file for replevin)
Registration in CM Registry is
necessary to be valid beyond the
parties
If foreclosed, excess goes to debtor
and deficiency can be recovered by
the creditor. EXCEPT: if Recto Law
applies
Creditor has no such obligation
Mortgagee has no such obligation
Chattel Mortgage
What are the offenses involving CM?
o 1. Knowingly removing personal property covered by CM to
any other province or city without written consent of the
mortgagee
o 2. Selling or pledging such personal property without consent
of the mortgagee written on the back of the mortgage and
recorded in CM Registry
o What if the mortgagor thereafter pays the debt anyway or
informs the mortgagee post-sale?
He is still criminally liable under the RPC.
o Is the sale valid?
Yes, but the mortgagor is liable criminally.
What is valid subject matter of CM?
o 1. Shares of stock in corporation
o 2. Interest in business
o 3. Machinery and house of mixed materials treated by the
parties as personal property
And no third party will be prejudiced thereby
o 4. Vessels, if the mortgage is recorded with MARINA
o 5. Motor vehicles, if mortgage is recorded with both the LTO
and the CM Registry
o 6. House intended to be demolished
o 7. Growing crops and large cattle
What is the rule when the parties constitute a CM over a building?
o In general, this cannot be done, but the parties are estopped
from questioning it. Thus, the CM is valid. But if it will be
foreclosed, follow procedure for foreclosure of REM, because
third parties are not bound by the constitution of a CM over
immovables.
What are the characteristics of a CM contract?
o 1. Accessory contract
o 2. Formal, because it must be registered in the CM Registry to
be valid
What if it’s not registered?
It‟s not null and void, but it only binds the
parties.
o 3. Unilateral – only the creditor has obligation: to free the thing
from encumbrance upon fulfillment of the obligation
o 4. It must be constituted by the absolute owner of the thing with
free disposal of the property
X went abroad and left his car with its certificate of registration
with Y. Y falsified X’s signature and sold it to Z. Z, in order to pay
for the amount, executed a CM over the car in favor of a savings
and loan association which lent money to him. Z failed to pay and
the car was sold at a public auction where the SLA won. X
returned to the country and sought to recover possession of the
car. Can he?
o Yes. A CM can only be constituted by the absolute owner with
free disposal thereof, which Z was not since the seller, Y, had
no title over the car. Since X was unlawfully deprived of
possession of a movable, he can recover possession.
o However, since Z purchased the car from a public sale, X must
reimburse the SLA for the price at which it was bought for.
CM
Delivery is not necessary (to get it,
Registration in ROP not necessary
for validity (just in a public
document)
If sold, excess and deficiency are not
recoverable in general
Pledge
Delivery is necessary
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What if the property is found in a place other than where the
mortgagor resides?
o Register it in both registers in both provinces. Otherwise, the
CM is void as to third parties.
o But again, the CM is valid as between the parties – this is
always the rule if there is some infirmity: valid between the
parties, but not against the world.
What is the effect of registration?
o Makes the CM effective against third parties. It creates a
lien/real right which follows the chattel wherever.
What if the mortgage is assigned to another?
o 1. No need to record the assignment in the registry
o 2. The assignee is subrogated to the rights of the transferee to
the CM
What is an Affidavit of GF?
o It is an oath in a contract of CM that the parties:
severally swear that the mortgage is made for the
purpose of securing the obligation specified therein
and for no other purpose
and that it is a just and valid obligation and not one
entered for fraud
o If it is not appended, same rule as above: it cannot bind third
persons without notice or subsequent creditors.
o In effect: an Affidavit of GF gives the CM preferred status.
o What is the implication of the Affidavit of GF which has
then become doctrinal in CMs?
Because it only secures the obligation specified, a CM
cannot cover future debts, unlike a REM.
What are the options in foreclosure?
o 1. Public sale
o 2. Private sale – needs express stipulation in the contract
EXCEPT: a) fraud or b) duress
o When can a CM be foreclosed?
After 30 days from time that the condition is broken
N.B. the 30 day period is a grace period to
help the mortgagor discharge the obligation
After there is 10 day notice:
o
o
1. Given to the mortgagor
o N.B. unlike REM, where it isn‟t
essential to give personal notice to
the mortgagor
2. Posting of public notice of time, place, and
purpose of the sale
Is there right of redemption after sale?
No, there is none, unlike in a REM.
Can the mortgagee recover deficiency post-sale?
Yes, unlike in a pledge.
Action accrues within 10 years from sale.
What is the exception?
Recto Law, if it is a sale of personal property
in installments.
So if it is foreclosed, no deficiency. But
under the Recto Law, after specific
performance which leads to execution sale,
there can be recovery of deficiency because
it is not a foreclosure.
Quasi-contracts
When does negotiorum gestio arise?
o When one voluntarily takes charge of the management of
business or property of another, without any power from the
latter
o What is he obliged to do?
Continue such management until termination of the
affair and its incidents, or the owner is in a position to
substitute him
o When does negotiorum not arise?
1. Property or business has been abandoned
2. Manager has been tacitly authorized
What are the obligations of the officious manager?
o 1. Perform duties with diligence of GFF
o 2. Liable for damages through fault or negligence
o 3. Liable for acts of a delegate, if he appoints one
o 4. Liable for fortuitous event if:
160
A. He undertakes risky operations
B. Prefers own interest to that of the owner
C. Fails to return the property or business upon
demand of owner
D. Assumption of management in BF
E. He is manifestly unfit to carry on the management,
unless done to save the property or business from
imminent danger
F. His intervention prevented a more competent
manager from taking over, unless done to save the
property or business from imminent danger
o 5. Liable for contracts entered into with third persons, unless:
A. owner ratified
B. the contract refers to things pertaining to the owner
What are the obligations of the owner?
o If he derived benefit or the property was saved from imminent
danger:
1. Liable for obligations incurred in his interest
2. Reimburse officious manager for necessary and
useful expenses, and damages the manager may
have suffered
o If he did not derive benefit:
Still liable as above if: a) the manager acted in GF,
and b) property or business is intact and ready to be
returned to the owner
When does negotiorum end?
o 1. Owner repudiates it or ends it
o 2. Manager withdraws from management
o 3. Death, civil interdiction, insanity, or insolvency of owner or
manager
When does solutio indebiti arise?
o Something is received when there is no right to demand it and
it was given through mistake
What is the obligation of the recipient?
o He must return it.
o What if he accepted it in BF?
o
1. He must pay legal interest if a sum of money is
involved
2. Liable for fruits received or fruits that should have
been received if it bears fruits
3. Answerable for loss or impairment
What if he accepted it in GF?
1. Answerable for loss or impairment only so far as it
has benefited him
2. If he already alienated it, return the price or assign
the action to collect the sum
3. Exempt from returning/restoring it if in GF, he
already destroyed the document, allowed action to
prescribe, gave up pledges, or cancelled guaranties
Concurrence and Preference of Credits
What are properties exempt from liability for obligations?
o Survival necessities
o 1. Family Home, except for:
A. non-payment of taxes
B. debts prior to constitution of FH
C. debts secured by mortgage on premises of the FH
D. debts due to laborer, mechanics, architects, etc. for
the construction of the FH
o 2. Clothing and necessaries of the family
o 3. Furniture and household things not exceeding 1K
o 4. Provisions for family for 3 months
o Money received for support
o 1. Right to receive support and things procured from such
support
o 2. Earnings within the month to support the family
o 3. Proceeds of life insurance
o 4. Right to receive legal support from government or those
procured from such
o Employment/trade necessities
o 1. Tools and implements for trade/employment
o 2. 2 beasts of burden used in occupation
o 3. Professional libraries
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o 4. One fishing boat and net for fishermen
o Specially enumerated
o 1. Lettered gravestones
o 2. Copyrights and other properties exempted by law
o 3. Property in custodia legis, and of public dominion
What are preferred credits as to specific movable property? (2241)
o 1. Taxes on the movable
o 2. Malversation by public officials of such movables
o 3. Vendor‟s lien
As long as debtor still possesses it
if resold, on the proceeds of sale
o 4. Credits secured by pledge, chattel mortgage
o 5. Mechanic‟s or repairman‟s lien, on the thing
o 6. Laborer‟s wages, on the thing
o 7. Salvage, on the goods saved
o 8. Tenancy, on the share of fruits/harvest
o 9. Carrier‟s lien, on the goods carries
o 10. Hotel‟s lien
On movables belonging to guests, but not for money
loaned to guests
o 11. Crop loan, over the fruits harvested
o 12. Rentals for one year, on the movables in the property
leased
o 13. Claim of depositor, on goods wrongfully sold by the
depositary
o For these cases, what if the movables on which the lien
exists have been wrongfully taken?
The creditor can demand them from any possessor,
within 30 days from unlawful seizure
What are preferred credits over specific immovable property?
(2242)
o 1. Taxes, on the immovable
o 2. Vendor‟s lien, for sale of real property
o 3. Contractor‟s lien, over the property
o 4. Lien of material-men, when material was used for property
o 5. Mortgages recorded in ROP
o 6. Expenses of preservation, when the law authorizes
reimbursement (see property law and oblicon)
o
o
o
7. Recorded attachments, by virtue of judicial order
8. Warranty in partition of co-heirs of property
9. Conditional donations, on the immovable donated as to
pecuniary charges and other conditions
o 10. Premiums for 2 years in favor of insurers, on the insured
property
What is the order of preference as to other properties of the
debtor? (2244)
o 1. Funeral expenses
o 2. Wages of employees – for one year
o 3. Expenses of last illness
o 4. Workmen‟s compensation
o 5. Support for one year
o 6. Support during insolvency
o 7. Fines in crimes
o 8. Legal expenses for administration of insolvent‟s estate
o 9. Taxes other than those over specific property
National government first
Then to province
Then to city or municipality
o 10. Torts
o 11. Donations
o 12. Credits in public instrument or covered by final judgment
Have preference among themselves in order of
property of dates of instruments or judgments
What is the order of preference of credits?
o 1. Credits which enjoy preference as to specific movables
exclude all others to the extent of the value of the movable
o 2. If there are two or more credits as to the same movable,
claims are pro rata (meaning, the enumeration is not in order)
Except for payment of taxes due the State; this
always goes first
o 3. APPLY SAME RULES TO SPECIFIC IMMOVABLES
o 4. For enumeration in 2244, follow the order
o 5. For common credits, no preference; just apply property pro
rata regardless of dates
X purchased an aircraft in cash, and had outstanding balance of
P500K. He incurred indebtedness of P300K for repairs with a
162
o
repair company over the aircraft. He borrowed P1M from a bank
for additional capital and constituted a CM on the aircraft. During
a flight, a passenger was injured and was awarded P200K in
damages. The aircraft was sold for 1M. The following claims thus
exist –
o A. Vendor’s lien on movable
o B. Repairman’s lien on movable
o C. CM lien on bank loan
o D. Tort claim
o What is the order of preference?
C
CM lien on bank loan prevails over the tort claim.
The liens of the vendor and repairman do not exist
anymore because the property has been sold and
thus the debtor is not in possession of the thing. The
claims become ordinary claims that are defeated by
the CM lien of the bank.
When does the preference of workers to wages apply?
o When there is a declaration of bankruptcy or judicial liquidation
of the company
What happens when there is a distressed corporation that asks for
rehabilitation and suspension of payments?
o Preferred creditors cannot assert preference anymore, and
stand in equal footing with other creditors. This allows the
receiver to exercise discretion free from legal interference that
might hinder rescue of the company.
It applies to situations where a debtor has properties, but not
enough to pay debts as they fall due. He is still solvent, but not
liquid.
What is the effect of suspension of payments?
o 1. No disposition of property of debtor except in ordinary
course of business
o 2. No payment except in ordinary course of business
o 3. Upon request to court, all pending executions against debtor
shall be suspended
Except those covered by mortgage
Which creditors are not affected by suspension of payments?
o 1. Those with claims within 60 days immediately preceding
filing of petition:
A. claims for personal labor
B. claims for maintenance
C. expenses of last illness of debtor
D. Funeral of spouse or children of debtor
o 2. Those possessing legal or contractual mortgages
What is the procedure to petition for suspension of payments?
o 1. File petition in RTC where debtor resides 6 months prior.
o 2. Along with the petition, file:
A. Verified list of creditors
B. Debts and liabilities
C. Statement of assets and liabilities
D. Proposed agreement/schedule
o 3. Court issues order calling all creditors to a meeting (2-8
weeks from order)
Publication and notice
o 4. Meeting of creditors
Quorum: represent at least 60% of liabilities of the
debtor
o 5. Creditors approve the proposition
Need double majority vote to approve:
A. 2/3 of creditors
B. 2/3 of 60% of the liabilities
o 6. Objections can be made within 10 days of meeting
A. Defects in call for meeting or the meeting itself
Insolvency Law (old law)
What is the difference between suspension of payments and
insolvency?
o In suspension, purpose is to delay payments; in insolvency,
purpose is to discharge debtor from debts
o In suspension, amount of debt is not changed; in insolvency,
creditors receive less than their credits (or where there are
preferences, some may not receive at all)
N.B. correlate with concurrence and preference
What is suspension of payments?
163
B. Fraudulent connivance between one or some
creditors and the debtor to vote in favor of the
agreement
C. Fraudulent conveyance of claims to obtain a
majority
o 7. Court issues order directing the agreement to be carried out
What is the procedure for voluntary insolvency?
o 1. Debtor files petition that he is insolvent and cannot pay
debts in full, accompanied by:
A. verified schedule of liabilities
B. verified inventory of properties
o 2. Court issues order of adjudication
Publication and service of order to creditors
Is hearing needed?
No, not in voluntary insolvency
o 3. Meeting of all creditors to elect assignee of debtor‟s property
Clerk of court conveys property to him
What is the effect?
The assignee gets legal title over the
property
What if someone has a mortgage over the
property?
File a motion to be excluded from the
insolvency proceedings because he will
pursue the mortgage lien
What if there is an existing claim being filed in
court?
The case will only determine how much is
due the creditor, but he has to join the other
creditors when he takes what is due him
What attachments and judgments shall be set
aside?
Those levied or secured within 30 days
before insolvency proceeding (again, there is
badge of fraud)
SAME RULE for dispositions within 30 days
before insolvency proceedings, unless there
is value received in GF for the property
o 4. Liquidation of assets and payment of debts
o 5. Composition
Offer of terms of composition is made after filing of
schedule of liabilities and creditors
The offer must be accepted in writing by the same
double majority of creditors
It is made after depositing the consideration to be
paid and the cost of proceedings
The court must approve the terms of composition
o What is the effect?
The debtor is discharged from debts, except if
corporation
o What are available remedies?
Objection
Appeal to SC
What is the procedure for involuntary insolvency?
o 1. Three or more creditors file petition
When should they have been creditors?
More than 30 days prior to petition, to avoid
fraudulent conveyance
The creditors must be residents of the Philippines
o 2. Court issues order requiring debtor to show cause why he
must not be declared insolvent
Debtor files MTD or answer
o 3. Hearing of the case
Issuance of order declaring debtor insolvent
Then he will be required to submit schedule of assets
and liabilities
Publication and service of order
o (N.B. procedure from this point is the same as voluntary
insolvency – including commentaries)
o 4. Meeting of all creditors to elect assignee of debtor‟s property
Clerk of court conveys property to him
o 5. Liquidation of assets and payment of debts
o 6. Composition
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o
o
What is the effect?
The debtor is discharged from debts, except if
corporation
What are available remedies?
Objection
Appeal to SC
(whichever
is higher)
-andThe claims
are at least
more than
60 days old
or a creditor
has initiated
foreclosure
proceedings
that makes
debtor
insolvent
FRIA
N.B. see how FRIA has modified the above rules
What is the biggest change introduced by the FRIA?
o There are new rules for out-of-court settlement of liabilities of
debtors. Before, it‟s purely contractual. Now there are rules
governing these.
How does the FRIA define an “insolvent”?
o One who is unable to pay his liabilities as they fall due in the
ordinary course of business or has liabilities greater than his
assets
What are the three methods of rehabilitation of a corporation under
the FRIA?
o 1. Court-supervised rehabilitation
o 2. Pre-negotiated rehabilitation
o 3. Out-of-court restructuring agreements
Voluntary
rehab
Involuntary
rehab
Petitioner
Debtor
Creditors
How to
initiate
Corporations:
majority of
BOD + 2/3
votes of SH
interest
Creditors
have
aggregate
claim of 1M+
or at least
25% of
subscribed
capital stock
Partnerships:
majority
Prenegotiated
rehab
Debtor who
may be
joined by
any of his
creditors
Plan
approved by
creditors
with at least
2/3 of
debtor‟s
liabilities,
including
secured
creditors
holding more
than 50% of
secured
claims and
unsecured
creditors
holding 50%
of unsecured
claims
secured
obligations
approved
-andCreditors
with at least
75% of
unsecured
obligations
approved
-andApproved by
creditors
holding at
least 85% of
total
liabilities
(secured
and
unsecured)
When is a petition for voluntary rehabilitation deemed to
commence?
o Upon the court issuing a commencement order, indicating that
the petition is sufficient in form or substance
o Issued within 5 working days from filing of the petition
o What if the petition is deficient?
Instead of dismissing it, the court may order the
issuance of an amended/supplemental petition or the
submission of additional documents
What does the commencement order do?
o 1. Declare the debtor under rehab
o 2. Orders publication of order and notice to creditors
o 3. Appoints a rehab receiver
General rule: Court‟s discretion
Informal
rehab
None
Debtor
agreed
-andCreditors
with at least
67% of
165
1. But if the debtor is a securities market participant,
court prioritizes nominee of the appropriate securities
or investment protection fund
2. If nominated by at least 50% of secured creditors
and unsecured creditors, court must appoint him
o 4. Sets date for initial hearing
Covers w/n the debtor can be rehabilitated
o 5. Directs creditors to file claims within 5 days from initial
hearing
o 6. Invites government through BIR to file a comment to the
petition or file claims against the debtor
When does the stay or suspension order (SO) issue?
o In addition to the commencement order
What is the SO?
o It prohibits sale and disposition of assets of the debtor and
orders suspension of all actions against him or his estate.
What are the actions not covered by the SO?
o [SC or QJA]
o 1. Appeal already pending in the SC
Once there is FJ, directed to the rehab court
o 2. Subject to rehab court‟s discretion, actions pending in QJAs
Any FJ will be directed to court as a non-disputed
claim
o [Nature of action]
o 3. Claim against sureties and those solidarily liable with debtor,
accommodation mortgagors, issuers of LOC
o 4. Criminal actions
o [Securities transactions]
o 5. Actions by customers of a securities market participant to
recover those entrusted to the latter in the ordinary course of
business or action by the securities market participant to pay
off these claims
o 6. Actions by licensed broker or dealer to sell pledged
securities of the debtor (pursuant to pledge or margin
agreement)
o 7. Clearing and settlement of financial transactions through
facilities of SEC/BSP accredited clearing agency and actions
by these agencies to reimburse themselves for transactions
settled for the debtor
What is the difference of effect of the SO on secured and
unsecured claims?
o It applies with equal force. The SO does not impair the
security or lien of a secured creditor, except that it suspends
the right to enforce the claim.
What are the other effects of commencement?
o 1. The court can issue can order prohibiting suppliers from
withholding essential goods and services from the debtor.
This ensures the continuous delivery of goods and
services necessary for the debtor‟s business.
o 2. Waiver of all taxes from commencement order to approval of
the rehabilitation plan or its dismissal
How long does the commencement order last?
o For as long as there is a substantial likelihood that the debtor
will be successfully rehabilitated
When can the court modify the terms of the SO or relieve from
suspension a creditor’s claim?
o Either:
1. A creditor does not have adequate protection over
the property securing his claim, or
Lack of adequate protection:
o A. Debtor fails to honor pre-existing
agreement with creditor to keep the
property insured
o B. Debtors fails to take reasonable
steps to preserve the property
o C. Property has depreciated to
extent that creditor is undersecured
2. The value of the claim exceeds the FMV of the
property securing it
o What can the court order?
1. Additional securities or steps to preserve the
property; or
2. Allow creditor to enforce security claim on debtor
166
For what purposes can the debtor’s property still be used?
o 1. Ordinary course of business
o 2. Admin expenses during rehab proceedings
o When is the debtor allowed to dispose of encumbered
property?
When necessary for continuation of ordinary course of
business
o What is “new money”?
Post-commencement-order loans or obligations
approved by court. These are considered admin
expenses.
What is the rule on cancellation or confirmation of contracts?
o Within 90 days from the commencement order, the debtor may
elect to confirm or cancel contracts. This is to get out of
onerous obligations.
o Any contract not confirmed in 90 days is deemed cancelled.
o What is the remedy of creditors with cancelled contracts?
Can claim actual damages (if any), which will be
considered a pre-commencement-order claim.
What are the powers of the rehab receiver?
o Annul pre-commencement transactions intended to defraud the
creditors
o N.B. Creditors may file or commence it if receiver refuses – the
creditor benefits from such action to extent of his claim
Who approved the rehab plan drawn by the receiver?
o Just majority of each sub-class of creditors (as determined by
the plan)
o Unlike the old law, the debtor does not vote
o What if the creditors do not approve?
The court may still confirm the plan if it‟s proven that
the creditors would still receive a net present value
greater than what they would have received if the
debtor had been under liquidation
What are the only grounds by which the creditors can oppose a
plan if approved by court?
o 1. Creditor‟s support induced by fraud
o 2. Documents or data relief upon were false or misleading
o 3. Rehab plan not supported by voting creditors
What is the period for confirmation of the plan?
o Within1 year, or else there will be automatic liquidation (to
avoid delaying)
PRESCRIPTION
What are the kinds of prescription?
o 1. Acquisitive
What are the requisites of acquisitive
prescription?
1. Capacity to acquire by prescription
2. Thing is capable of acquisition by
prescription
3. Possession of the thing under certain
conditions
4. Lapse of required time under law
o 2. Extinctive or statute of limitations
Who may acquire by prescription?
o 1. Person capable of acquiring property through other modes
o 2. State
o 3. Minors – through guardians or personally
Against whom may prescription run?
o 1. Incapacitated person/minors with guardians
o 2. Absentees with administrators
o 3. Persons abroad with administrators
o 4. Juridical persons except the state as to non-patrimonial
property
When does prescription not run?
o 1. Between husband and wife even if there is CSP or JSP
o 2. Between parents and children, during minority/insanity
o 3. Between guardian and ward, during guardianship
Which are subject to prescription?
o All things within the commerce of men – private property and
patrimonial property of State
167
o
o
What are not subject to prescription?
1. Public domain
2. Intransmissible rights
3. Movables possessed through crime
4. Registered land
What is the rule on renunciation of prescription?
o Person may renounce prescription already obtained, but not
right to prescribe in the future
o How is renunciation done?
Express or tacit. Tacit is when acts imply
abandonment of the right acquired
o Who may impugn renunciation?
Creditors and other persons interested in making
prescription effective – notwithstanding renunciation
o X borrowed money from Y on November 29, 1933 as
evidenced by a PN. Y said that he waives prescription and
may still collect even after the 10 year period under law. X
failed to pay after repeated demands so Y sued him on
January 7, 1953. Can Y collect?
Yes. What happened here was not an actual waiver
of prescription (which cannot be done) but since there
was a 10 year “grace period,” the period only started
running from November 29, 1943. So the 10 year
period ends on November 29, 1953. January 7, 1953
is within the period.
What are the kinds of acquisitive prescription and their requisites?
Ordinary acquisitive
Possession in GF
Just title
Period:
Movables – 4 years
Immovables – 10 years
In concept of owner
Public, peaceful, uninterrupted
Reasonable belief by the person that he is the owner and could
validly transmit ownership
o Must exist through the entire period required for prescription
What does “just title” mean as applicable to both ordinary and
extraordinary acquisitive prescription?
o Titulo Colorado – where there was a mode of transferring
ownership but something is wrong because the grantor was
not the owner
Had the grantor been the owner, the mode would
have transferred ownership
o How does this differ from mere “titulo putativo”?
Here, there was no mode of acquiring ownership,
although the person believes he has obtained title
What is “in concept of owner”?
o It not out of mere tolerance of the owner, but is actually
adverse to the latter. It is a claim that the acquirer owns the
property.
What is “public, peaceful, uninterrupted”?
o Known to the owner of the thing
o Not acquired through violence
o And continuous enjoyment of the property
o When is there an interruption?
1. If natural –
If through any cause, possession ceases for
more than 1 year.
If 1 year or less, as if no interruption.
2. If civil (judicial summons)–
interrupts, by default
Exceptions?
o 1. Lack of legal solemnities
o 2. Plaintiff desists from complaint,
or allows lapse of proceedings
o 3. Possessor is absolved from
complaint
3. Renunciation by possessor
4. Possession during wartime
What are the rules in computing the period?
Extraordinary acquisitive
Possession in BF
Just title
Period:
Movables – 8 years
Immovables – 30 years
In concept of owner
Public, peaceful, uninterrupted
What is the concept of good faith that differentiates ordinary from
extraordinary prescription?
168
o
o
o
Tacking is allowed to predecessor-in-interest
When does this happen?
There must be privity; possible when there is
succession of rights
What if the character of possession
differs?
o Predecessor in bad faith, possessor
in GF – use extraordinary
acquisition
Presumed to be in possession in intervening periods unless
disproved
Exclude first day, include last
Declare contract void
Recover property under express
trust
Probate of will
Quieting of title if possessed
SALES
Introduction
What are the obligations created by a contract of sale?
o Seller:
Transfer ownership
Deliver possession of the subject matter
o Buyer:
To pay the price
What are the elements of a contract of sale?
o 1. Consent
o 2. Subject matter
Upon perfection: determinable
Capable of being made determinate without
further agreement between the parties
Is a generic-determinable subject matter
subject to loss?
o No.
Upon consummation: determinate (requires physical
segregation or particular designation)
o 3. Price
What are the stages in the life of sale?
o 1. Negotiation
o 2. Perfection
A contract of sale (COS) is already perfected at this
point
A contract to sell (CTS) is already perfected too, but
has a suspensive condition – payment of full price
o 3. Consummation
What are the characteristics of a sale contract?
Prescription of actions:
30 years
Recovery of immovables (from loss
of possession)
10 years
Mortgage
Written contract
Obligation created by law
Judgment
8 years
Recovery of movables (from loss of
possession)
6 years
Oral contract
Quasi-contract
5 years
Default period
4 years
Injury to rights of plaintiff
Quasi-delict
1 year
Forcible entry/unlawful detainer
Defamation
Imprescriptible
Demand right of way
Abate public/private nuisance
169
o
o
1. Nominate, principal
2. Consensual
Non-performance does not void the contract
Does the seller need to own the thing during
perfection of the contract?
No. Only upon consummation.
o 3. Bilateral and reciprocal
Obligation of one party is the cause of the other
Recall:
Compensatio morae rules
Resolution for failure to comply with
reciprocal obligation
o 4. Onerous
o 5. Commutative
Inadequate price does not invalidate sale, but may be
a badge of vitiated consent
o 6. Title, not a mode
Tradition is the mode to transfer ownership
Sale just creates the obligation to transfer and deliver
Distinguish from barter:
o Barter is thing-for-thing; sale is thing-for-money
o Special rules for barter:
1. If the thing received in barter is found not to be the
other party‟s, cannot be compelled to deliver what he
promised
2. If he lost by eviction the thing received in barter, he
may recover what he gave in exchange, with
damages
As long as it didn‟t fall in the hands of a third
person in GF
o Special rules for sales:
1. SOF
2. Right of legal redemption to adjoining owners of
urban lands
Distinguish from piece-of-work:
o 1. Check if it is possible to produce the product ahead of any
special order –
POW if it can only be made upon receipt of
specifications (ex. A/C specially fitting building space)
Otherwise, sale (ex. window sashes that can be
customized)
o 2. POW is unique and always different from other orders
o 3. Essence of sale is object; essence of sale is service
Service takes into account the plan and the labor.
Sale just requires that an object be delivered at some
future date.
o Is research output POW?
No. There is no transfer of ownership.
o Why is it important to distinguish?
Sale is obligation to give. POW is obligation to do.
Remedies differ.
Distinguish from agency to sell:
o There is sale, not agency, if the middle man had to pay the
price for the thing, and then sell it thereafter. There are two
contracts of sale here.
o Agency is fiduciary, and the agent must act with loyalty.
Distinguish Contract of Sale (COS) from Contract to Sell (CTS):
o CTS, upon perfection, must:
Have a stipulation that the SM remains with the seller
until full payment of the price
Specific right granted to the seller to extra-judicially
rescind the contract in case of default
If missing, it‟s a COS
OR, there is a stipulation that upon payment of full
price, the seller executes a deed of sale in favor of the
buyer
o Upon consummation:
COS – title passes upon delivery
Non-payment is a substantial breach
CTS – title not passed to the buyer until payment of
full purchase price
Payment of the full purchase price is a
suspensive condition
o Remedies:
170
COS – need to rescind to recover ownership
There can be forfeiture of payments already
made by the buyer to the seller as long as
it‟s provided for in the contract and it‟s not
unconscionable
CTS – ownership retained, so the contract is
automatically extinguished
Only action is for recovery of possession
Return payments made
But there can be decision based on equity if
there were sufficient payments already made
What if the executor or administrator bought the
property after administration ceased?
Generally, valid.
But void if there was an agreement entered
into with the heir during administration.
Short gap of time between termination of
administration and sale is a badge of fraud.
o 4. Public officers and employees over property of the State,
subdivision, or GOCC entrusted to them
o 5. Officers of the court over property under litigation or levy in
the court they function in
What is the rule on sale of property after litigation
or levy?
If it was offered before, it cannot be “ratified”
after.
If it‟s just the first time, it‟s valid.
o 6. Lawyers over property and rights under litigation
Are contingency fees valid?
Yes. Transfer of property only happens after
favorable judgment.
Courts may only nullify it if the lawyer
exercises undue influence.
Can there be ratification?
o No. These are void contracts.
o But there can be a new contract entered into, applying to:
Agent
Guardian
Executor/administrator
o The following cannot “ratify” through new contracts:
Public officers and employees
Officers of court
Lawyers
Parties
Who has capacity to enter into a sale contract?
o Anyone with capacity to enter into a normal contract.
o For minors, follow usual rule.
What is the status of a Contract for sale of
necessaries to minor?
If perfected and delivered, it is a valid
contract.
If just perfected, it is voidable, as per usual
rule.
What do prohibited “sales” here include?
o Also legal redemption, compromises, and renunciations
Can spouses sell to each other?
o In general, no.
o Exceptions?
1. CSP
2. JSP
o N.B. prohibition also applies to common law spouses
What are the special disqualifications?
o 1. Agents over principal‟s property
Unless the principal consented. This is the only
relationship that can be validated by the principal by
consent.
o 2. Guardian over ward‟s property
o 3. Executor or administrator over estate property
Subject matter
What are the requisites for a valid subject matter?
o 1. Possible subject matter
o 2. Licit
171
o
o 3. Determinate or at least, determinable
What does “possible” subject matter mean?
o The person need not be the owner of the subject matter upon
perfect of the sale contract, and only during delivery must he
have a right to do so
o “Possible” means that it may not exist at the moment but it can
definitely exist.
So you cannot sell a fountain of youth, because it‟s an
impossible thing.
What is “emptio rae speratae"?
o A sale based on the suspensive condition that the thing comes
into existence.
What is “emptio spae”?
o Sale of a vain hope or expectancy. It is void. (Under Jurado, it
says that it‟s valid and perfected because what was sold was
hope itself)
What are examples of illicit subject matters?
o Sale of intransmissible rights, sale of future inheritance, etc.
What is “determinable” and what is “determinate”?
o Determinable – upon perfection of the contract, the thing is
capable of being made determinate, without necessity for a
new agreement between the parties.
Ex. a contract refers to an existing document
o Determinate – particularly designated or physically segregated
already
o If neither determinable nor determinate, no contract.
What is essential for perfection as re: quantity and quality?
o Identity and quality of the subject matter is ESSENTIAL for
perfection.
o Quantity is not as important, but the standard is that there is no
need to enter into a new contract to determine it.
o What is the status of generic things sold?
Upon perfection, they are determinable.
They are not subject to loss.
Upon consummation, they are determinate.
o What about sale of undivided interest in property?
Co-ownership comes about
What about sale of undivided share in mass of fungible
goods?
Proportional co-ownership over the mass
If mass is less than the measure bought, the buyer
owns the entire mass and the seller must make up the
deficiency
But if a specific mass is sold without weighing, the
subject matter is a definite object even if there are
minor differences in measure
What is the effect of failure to deliver the subject matter?
o It does not affect the validity of the contract.
o If the person sold something not his, the buyer does not obtain
better right over the goods, unless the real owner is estopped.
o What is the exception to this rule?
Judicial sale. The owner of property sold on judicial
sale must be the absolute owner.
This is why the mortgagor must be the absolute
owner of the thing mortgaged.
o What if the seller subsequently obtains title over the thing
sold?
It passes to the buyer by operation of law.
But of course, there must be physical delivery.
Price
What are requisites of valid price?
o 1. Real
o 2. Must be in money or its equivalent
Note: there can be post-perfection agreements like
dacion en pago to give something else other than
money
o 3. Certain or ascertainable at the time of perfection
What is “real”?
o When the buyer has every intention to pay and seller has every
intention to receive.
o Take note of absolutely or relatively simulated contracts.
o What if the price indicated is false but not simulated?
The contract is valid.
172
Seller is estopped. He cannot ask for the thing
back. Also, return of the thing would violate mutuality
of contract because the buyer already appropriated it.
Buyer is unjustly enriched. He must pay a
reasonable price.
What is the rule on manner of payment?
o It must also be certain or ascertainable. It is essential, being
part of the prestation of the contract.
o What is the presumption?
Immediately demandable and payable, if nothing is
provided
o What is the exception?
If the intent clearly shows some other manner apart
from immediate payment but the contract does not
provide for it, there is no contract (no price).
o X wanted to buy a car from ABC Company, on the
condition that X would procure a loan from DEF Finance,
as stipulated on the agreement. The loan was denied. Is
there a void contract for lack of manner of payment?
No. There is a valid contract, but with a suspensive
condition that did not come into fruition.
For an executory contract of sale, how is it taken out of the SOF?
o 1. Written memorandum must evince all the essential
requisites of a contract of sale, or
o 2. If it has been partially or fully executed
What is the effect of deficiency of price?
o Does not affect validity of the sale contract, but may indicate
vitiated consent or that it is a donation contract.
o For a judicial sale, inadequacy can avoid a sale if:
1. Price is shocking to the conscience
2. And one can get a better price
3. And there is no right to redeem
Because if there is right to redeem, the low
price would make it easier to get the property
back
o What if it’s sale for an inadequate price by a guardian or
absentee’s representative?
The contract may be reformed to reflect the true intent
of the parties.
o What if the price indicated is only nominal/meager (ex. P1),
is it valid?
If it masks the true price given, it‟s valid.
But note that Philippine law requires not just
consideration but valuable consideration, so if it is
found out that there is none, the price is invalid
(because it might actually be a donation).
So gross inadequacy in itself does not invalidate the
contract but it may indicate vitiation or that it‟s a
donation.
What is “certain or ascertainable”?
o Certain if it is in a definite amount.
o Ascertainable if reference can be made to another thing certain
or judgment of another person.
Can a third party fix the price?
Yes, it is valid. The third party‟s act is a
suspensive condition.
What if the third party refuses or cannot fix the
price? Or what if the price cannot be determined
through the thing certain?
The contract is inefficacious because of
failure of suspensive condition.
So there is a valid contract at one point.
Can either party fix the price?
No.
When can the courts fix the price?
1. Third party is in BF
2. Mistake
What is the rule for sales where there is no price agreed upon?
o Attempt to determine the price in any other matter.
But most of the time, it becomes an inefficacious
contract (because for instance, the thing certain
cannot determine the price, or a third person
designated to do so does not or cannot).
o If there is delivery and appropriation already:
173
o
Remember the “more than ¼ lesion” rule, which can
lead to rescission.
What if a sale with right to repurchase has a deficient
price?
There is a presumption that it is an equitable
mortgage. The remedy for the seller is to reform the
contract, while the buyer can foreclose the equitable
mortgage.
What is the rule and remedy when an option contract is perfected?
o The optionee has the right to exercise the option anytime
during the period, and this will bring about a valid contract of
sale.
o If the offer is withdrawn, then it results in a breach of the option
contract, but the offer cannot be accepted anymore. (Ang Yu)
CLV’s opinion: if the offeror withdraws the offer
during the period, it is void. The offeree can still
accept the offer.
o If the offeror withdraws the offer and sells the thing it to a third
person in BF, the optionee can exercise the option and compel
specific performance from the third person.
o If the offeror withdraws the offer and sells the thing to a third
person in GF, the optionee can recover damages from breach
of contract of sale, and not just breach of the option contract.
What is the Right of First Refusal (RFR)?
o A promise on the part of the owner that he will sell it first to the
promisee should he decide to sell the thing.
o What is certain among perfection of the RFR?
Just the object of the contract. NOT YET the price
and manner of payment.
o Must there be a consideration?
Yes, but need not be separate from the main contract.
o Must it be in a written contract?
Yes, otherwise it is unenforceable. (SOF)
What if a RFR is not honored?
o No specific performance
o Damages only
What if the property is offered to a third person after being offered
to one with a RFR?
o The offered price to the third person must at least be under the
same terms and conditions as the prior offer.
N.B. Take note of the usual rule – offer must be certain, acceptance
must be absolute, otherwise it‟s a counter-offer.
What is the nature of earnest money?
o It‟s part of the purchase price.
o It‟s given only when there is already a sale.
Formation of contract of sale
What is the rule on offers and acceptance?
o See OBLICON notes.
What is the difference of Contract to Sell (CTS) from an option
contract (OC)?
o CTS – promise to buy and sell a determinate thing for a price
certain
o OC – contracted offer, securing the privilege to buy, so the
other party cannot enter into a contract with another
What is their similarity?
o Both contracts are subject of specific performance.
o Both are perfected contracts, but not the COS per se
What is required for an OC to be valid?
o 1. Agreed time
o 2. Determined price
o 3. Separate consideration
Need not be in cash. It can be a mortgage, buying
the lands in half a property, etc., as long as it‟s an
undertaking of value.
Does the OC fall under the SOF?
o No. But the resulting sale contract will.
What if the requisites for an OC are not complete?
o It‟s a VALID offer but a VOID option contract.
o So it can be withdrawn with no consequence. But if it‟s
accepted before withdrawal, a contract of sale ensues.
How is the option exercised?
o Merely advising the offering party. No need to pay stipulated
price of the sale yet upon exercise of the option.
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o
Buyer is bound to pay the balance. When there is failure to
pay the balance, the earnest money is returned upon
resolution; it is not forfeited.
What are the rules on form that you must take note of?
o 1. Sale of real property by an agent (must be in SPA)
o 2. Sale of large cattle (in writing and registered w/ municipal
treasurer)
o 3. Sale of land by “non-Christians”
o 4. Transactions involving rights over real property must be in
public document to be registrable (1358)
But not a requirement for perfection
o 5. SOF
material possession of the thing from a third
person
3. Seller did not have control or ability to transfer
physical possession of the property for a reasonable
length of time after execution of the public instrument
What is the rule on delivery by carrier?
o GENERALLY, delivery to carrier is delivery to buyer
o Exceptions:
1. FAS sales (Free Alongside Ship)
Delivery when goods placed alongside
vessel
2. FOB sales (Free On Board)
FOB “shipping point” – delivery to carrier is
delivery to buyer
o Buyer must pay freight
FOB “destination” – delivered to buyer only
upon reaching destination
o Seller must pay freight
3. CIF sales (Costs, Freight, Insurance)
The buyer pays fixed price while seller pays
insurance and freight up to the point of
destination
In delivery of movables, what if the seller delivered less goods
than what he contracted to sell?
o 1. Buyer may reject.
o 2. If buyer accepts and retains the goods knowing the contract
won‟t be performed in full, he must pay at contract rate
(meaning, lessen the cost).
o 3. If buyer used or disposed the goods before he knew the
contract won‟t be performed in full, he just pays fair value.
What if the seller delivered more than what he contracted to?
o 1. Buyer may reject the excess.
o 2. If it‟s indivisible subject matter, he may reject the whole.
o 3. If he accepts the whole, he still pays contract rate.
o 4. Same rule if the seller delivers goods where some match the
contract specifications and some do not.
What is the rule for sale of immovables where the area is stated?
Transfer of ownership/performance of sale contract
When is there tradition?
o When the thing sold is placed in the control and possession of
the vendee
o With intent to deliver
What are the types?
o 1. Actual
o 2. Constructive – any manner signifying transfer of possession
Constitutum Possessorium: sold as owner, continue
to possess as lessee
Traditio Brevi Manu: bought as lessee, and become
owner
Traditio Longa Manu: delivery by agreement
o 3. Symbolic – ex. delivery of keys to a car
What is the effect of execution of public instrument?
o For both movables and immovables, it is equivalent to delivery
of the thing, unless the contrary can be inferred.
o What are the exceptions to this rule?
1. Contrary stipulation in the instrument
2. Seller did not control the subject matter at the time
of execution of the instrument
Except: when there is express agreement
that the buyer will take steps to obtain
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4. Purchased in merchant‟s store, fairs,
markets
o
o
The seller must deliver all that is stated in the contract.
If the area is less or the quality is different:
1. Proportional reduction of price OR
2. Resolution of contract (as long as the lack is more
than 1/10 of the area)
But if the buyer would not have bought the
property had he known the smaller area or
inferior quality, he can still resolve even if
less than 1/10
o If area is more than stated:
1. Reject excess OR
2. Accept all, but pay contract price
o What if the sale of property is by lump sum?
No change in the price even if the area is less or more
than what is in the contract.
Usually indicated by lack of price-per-unit
When does delivery not transfer title?
o 1. “On sale or return”
Buyer has option to return instead of paying the price
Delivery vests ownership but the buyer may return the
goods within the time stipulated/reasonable time
o 2. “Sale on acceptance” (or “on approval” or “on trial”)
Delivery is transfer only, until:
Buyer signifies approval
Buyer does not signify approval but retains
goods without notice of rejection
o N.B. for #1 and 2, there must be clear and written agreement
that sale is on sale or return or sale on acceptance
o 3. Reservation of ownership
o 4. Sale is not valid
o 5. Seller is not owner
What are the exceptions?
1. True owner is estopped
2. Sale made by registered or apparent
owner according to registration laws
3. Sale pursuant to statutory power of sale or
under order of court
Double sales
What is the general rule for double sales (registered immovables)?
o The Torrens system prevails in setting priorities.
o When the property is covered by two different titles, the earlier
one prevails.
o When one buyer bought the land as registered under Act 3344
(old registration law), and another bought the land as
registered under Torrens title (PD 1529), the latter prevails.
What if there was a prior unregistered sale and a subsequent
judicial sale?
o 1. If the land was registered, the judicial sale wins
Because the rule that first-registrant-wins applies –
and in this case, the ordinary sale was unregistered
while the judicial sale is
o 2. If the land was unregistered, the unregistered sale wins
Because there are no rights to step into for the
second buyer
What is the rule for movables?
o First person to take possession of it in GF wins (no need to
register for movables)
What is the rule for unregistered immovables?
o 1. First person who registers the land in the ROP in GF
o 2. If neither, the first person who possessed it in GF
o 3. If neither,s the person who presents older title in GF
o N.B.: this pertains to unregistered lands, and “registration”
here is registration of the land in the ROP (Torrens)
o When does this rule apply?
1. Two valid sales
2. Same subject matter
3. From same person
4. Conflicting interests
What does “purchaser in GF” mean?
o No notice of other person‟s right or interest. Paid full and fair
price upon purchase, and before notice.
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o
o
If the circumstances call for an investigation and he did not,
he‟s in BF (ex. lis pendens or annotated adverse claim).
o So what is required for second person:
Second buyer must show continuing GF until full
ownership vests.
The first buyer can simply defeat this continuing GF
by registering.
As soon as he second buyer obtains knowledge of the
first sale, it‟s akin to registration in favor of buyer #1,
because second buyer loses GF.
What is the subsidiary rule?
o Primus tempore, potior jure (First in time, first in right). This
applies when the above rule doesn‟t apply for lack of
requisites, or if one is a CTs and one is a COS.
o If one is a CTS and one is a COS, the CTS wins if the CTS
buyer fulfilled all the conditions already and there was a
subsequent COS after.
o
Follow res perit domino. The goods remain at the seller‟s risk
until ownership is transferred to the buyer. When the
ownership of the goods has been transferred to the buyer, then
the risk transfers to him.
What are the exceptions?
1. If the possession has been transferred to the buyer
or the latter‟s bailee, but the ownership remained with
the seller as a security (think: trust receipts), then risk
has passed to the buyer;
2. If delivery has been delayed due to the buyer‟s or
seller‟s fault, then the party at fault bears the risk
Documents of title
Recall WAREHOUSE RECEIPTS notes, esp. on warranties and how to
garnish/levy a negotiable document of title and a non-negotiable
document of title
o Ex. need to surrender receipt, can ask help from court for
injunction, conflict between assignment of document and levy
of the same document and the rule on notice, etc.
What is a document of title and its purpose?
o It is a document used in the ordinary course of business in the
sale or transfer of goods, as proof of possession or control of
the goods, or authorizing the possessor of the document to
transfer or receive (by endorsement or delivery) the goods
represented by the document
What are the warranties of seller of documents of title?
o 1. The document is genuine
o 2. He has legal right to negotiate or transfer it
o 3. He has no knowledge of any fact that would impair the
validity or worth of the document
o 4. He has right to transfer title to the goods and that the goods
are merchantable or fit for a particular purpose
What are the rules on levy/garnishment of the goods?
o If a document of title has been transferred but not negotiated to
a person:
The person acquires right title over the goods as
against the transferor only
Risk of loss
What are the general rules to remember?
o 1. Generic things do not perish
o 2. The 6 rules on loss, deterioration, and improvement with or
without fault (Art. 1189)
What if the loss occurred prior to perfection?
o The seller obviously bears the loss
What if the loss occurred after perfection but before delivery of the
thing?
o If entirely lost, then the contract is extinguished.
o If partially lost, the buyer may either resolve the contract or
demand delivery with reduction of price.
o What if there is sale of specific goods and the seller did
not know that the goods perished in part or have
deteriorated as to change the goods’ character?
1. Buyer may avoid the sale or
2. Treat the sale as valid as to existing or nondeteriorated goods and pay price for such
What if the loss occurred when ownership is transferred?
177
o
If the document is non-negotiable, he may inform the
bailee-issuer of the receipt of the transaction and
have the bailee hold the goods for him
What happens prior to the transferee informing
the bailee?
He may be defeated in right by an attaching
creditor, or by the transferor/another
transferee who informs the bailee of another
sale
How goods can be garnished:
Before the bailee can heed a garnishment order, the
receipt must either be:
1. Surrendered or impounded by court, or
2. Further negotiated be enjoined by court
What is the remedy of such creditor?
May ask help from the court for injunction or
attachment
What are the special remedies for an unpaid seller? (Note: these
are “special” because they are self-help remedies and can be done
as long as there is no physical intrusion)
o 1. Possessory lien over the goods
When ownership has been transferred:
Seller has lien on goods or right to retain
goods if he still possesses them.
When ownership has not been transferred:
Seller has right to withhold delivery.
Buyer‟s disposition of the goods does not terminate
lien. Exceptions:
1. If seller assents
2. What was sold was a negotiable
instrument held by a possessor in GF
When can possessory lien be exercised?
1. Goods sold without credit stipulation or
term of credit has expired already OR
2. Buyer has become insolvent
When does the possessory lien terminate?
1. Seller delivers goods to carrier or bailee
without reservation of ownership
2. Buyer lawfully obtains possession of
goods
3. Waiver
o 2. Stoppage in transitu
Right to stop goods in transit
Buyer‟s disposition of the goods does not affect
stoppage. Exceptions:
1. If seller assents
2. What was sold was a negotiable
instrument held by a possessor in GF
N.B. Same exceptions as in possessory lien
When are the goods in transit?
Carrier/bailee has them before buyer takes
delivery of the goods
Goods rejected by buyer and carrier/bailee
continues in possession
Remedies of unpaid seller
What is an unpaid seller?
o 1. Whole price has not been paid or tendered
o 2. Negotiable instrument received as conditional payment and
the condition was broken due to dishonor, insolvency, etc.
What are the ordinary remedies of an unpaid seller?
o 1. If ownership has been transferred to the buyer, specific
performance for price
o 2. If ownership has not yet been transferred to the buyer, it can
be resold for a reasonable price. The seller can also offer to
deliver to the buyer.
If the buyer refuses to receive the goods, the seller
becomes a bailee for the buyer.
The seller can ask for specific performance for the
price.
o 3. If price is payable on a certain day, the seller can ask for
specific performance for the price regardless of delivery
The buyer can launch as a defense the seller‟s
incapability to perform his obligation
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BUT if the goods are being carried on behalf
of the buyer already or the carrier wrongfully
refuses to deliver goods to the buyer, they
are deemed NOT in transit
How is this right exercised?
1. Actual possession
2. Notice to carrier
3. If there is negotiable document of title,
need to cancel it first before carrier gives
goods back to seller
[N.B. the next two special remedies require prior exercise of possessory
lien over the goods or stoppage in transitu]
o 3. Special right of resale
In what instances does this right apply?
1. Perishable goods
2. Seller expressly reserves right of resale in
case of default
3. Buyer has been in default for
unreasonable time
What is the prerequisite?
The unpaid seller should have a right of lien
or should have stopped the goods in transitu
What is the effect?
Seller may resell even without rescinding the
original sale contract
Buyer is liable for:
o 1. Damages and
o 2. Difference for the price, if the
subsequent sale is for a lower price
When does seller have to give notice?
1. If goods are perishable, no need for notice
2. When the goods are not perishable, to see
if the default has been for an unreasonable
time
Seller cannot buy the goods for himself.
o 4. Special right to rescind
When may this right be exercised?
1. Express reservation of right to rescind
2. Default for unreasonable time
What is the prerequisite?
The unpaid seller should have a right of lien
or should have stopped the goods in transitu
Buyer is liable for breach
Give notice to buyer of rescission, not in order to
exercise the right, but to determine whether default
has been for unreasonable time period
Warranties
What are express warranties?
o Those provided in the contract
What are implied warranties?
o 1. Implied warranty by seller that he has a right to sell the thing
at the time ownership is to pass and that the buyer from that
time will have legal and peaceful possession of the thing
o 2. Implied warranty that the thing is free from any hidden faults
or defects, or any undeclared charges/encumbrances
o BUT this cannot hold liable a pledgee, mortgagee, sheriff,
auctioneer, with authority under fact or law, for the sale of a
thing where a third person has legal or equitable interest
What are the buyer’s remedies for breach of warranty by the
seller?
o 1. Accept the goods but recoup price or have it reduced
o 2. Accept the goods and file for damages
o 3. Refuse to accept the goods and file for damages
o 4. Resolve COS and refuse to accept the goods OR have
mutual restitution, if applicable
When can the buyer not rescind?
If he knew of breach of warranty but
accepted goods without protest
Failed to notify the seller within reasonable
time
If he fails to return the goods or offer to
return them
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4. Vendor must be summoned in the suit for eviction
at the vendee‟s instance
o What can the vendee demand of the vendor in case of
breach of warranty against eviction?
1. Return value of the thing when sold
2. Income or fruits if he has been ordered to deliver
them to the party who won the suit
3. Cost of suit which caused eviction (or suit brought
against vendor)
4. Expenses of the contract if vendee paid
5. Damages and interests, and ornamental expenses
if sale was in BF
When can the vendee demand the rescission of
the contract?
1. If due to the eviction a part of the thing
sold was so important that the vendee would
not have bought it without said part
2. Two or more things jointly sold for lump
sum (or for separate price for each if it is
clear the vendee would not have purchased
one without the other)
o What are the two kinds of waiver of warranty against
eviction?
1. Consciente – voluntary renunciation made by the
vendee of the right
Effect: liability of the vendor in case of
eviction only extends to the payment of the
value of the thing sold
2. Intencionada – voluntary renunciation by the
vendee of the right to warranty against eviction with
knowledge of the risk of eviction and assuming its
consequences
Effect: no liability whatsoever for the vendor
What is an accion redhibitoria?
o Actions instituted by the vendee against the vendor to avoid a
sale on account of some vice or defect in the thing which
renders it unfit for the use intended
If the goods are not in good condition
anymore due to the buyer‟s fault
What if the seller refuses to accept the goods
back?
The buyer becomes a bailee
With lien to secure price which has already
been paid
With no prejudice to seller‟s right to enforce
liens of an unpaid seller
Are these remedies mutually exclusive?
Yes
Except: may seek rescission even after
choosing fulfillment if it becomes impossible
o 5. If there is breach of warranty of quality, the loss is the
difference between the actual value of the goods and the value
of the goods had they complied with the warranty
When is there an implied warranty on quality or fitness of the
goods?
o 1. Buyer expressly/impliedly makes known to the seller the
particular purpose for which the goods were acquired and the
buyer relies on the seller‟s judgment or skill – implied warranty
that the goods are suited for the purpose
o 2. Goods are bought by description from a seller who deals in
goods of that description – implied warranty that the goods are
of merchantable quality
What is warranty in case of eviction?
o It is an implied warranty wherein if the vendee is deprived of
the whole or part of a thing purchased by FJ based on a right
prior to the sale by the vendor, the vendor is answerable for
the eviction
o What are the requisites?
1. Deprivation of the vendee of the whole/part of the
thing bought
2. By virtue of final judgment
3. Based on a right prior to the sale or an act
imputable to the vendor
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The buyer can launch as a defense the seller‟s
incapability to perform his obligation
What is the remedy for sale of movables on installment (RECTO
LAW)?
o Three options:
1. Exact fulfillment of the obligation, if buyer fails to
pay an installment
Can there be recovery of deficiency?
o Yes.
2. Cancel the sale, if buyer fails to pay 2 or more
installments
Is there return of price?
o Usually, none, to compensate for
deterioration
What is the validity of an agreement not
to return price already paid?
o Valid as long as not unconscionable
What is the nature of rescission?
o It bars further recovery (because
payments are returned and the SM
is returned)
3. Foreclose CM on the thing, if buyer fails to pay 2 or
more installments
NO ACTION to recover unpaid balance
Does this bar foreclosure on another
guarantee and another security?
o Yes.
What if the seller forecloses on additional
securities instead of the CM?
o Loses lien on the CM.
What is the effect of taking back the SM
by the seller?
o It‟s tantamount to foreclosure
What if property is sold for two
installments only?
o There can be no failure to pay 2 or
more installments, so even if CM is
What is accion quanti minoris?
o Action to procure return of a part of the purchase price paid by
the vendee to the vendor due to the defect
What is the prescriptive period for either?
o 6 months from date of delivery
o Except redhibitory actions based on faults/defects of animals,
which is 40 days from date of delivery
Breach of contract
What are the remedies covered by this section (overview)?
o 1. Ordinary remedies of seller for breach of sale of movables
o 2. Recto Law
o 3. Ordinary remedies of seller for breach of sale of immovables
Art. 1592 – for failure to pay
Anticipatory breach
o 4. Maceda Law
o 5. Remedies of buyer in sale of movables
Specific performance
Four actions in case of breach of warranty
Anticipation of breach
o 6. Remedies of buyer in sale of immovables
Anticipation of breach
Condominium law
What are the remedies of the seller for breach of contract of sale of
movables?
o 1. If ownership has been transferred to the buyer, specific
performance for price
o 2. If ownership has not yet been transferred to the buyer, it can
be resold for a reasonable price. The seller can also offer to
deliver to the buyer.
If the buyer refuses to receive the goods, the seller
becomes a bailee for the buyer.
The seller can ask for specific performance for the
price.
o 3. If price is payable on a certain day, the seller can ask for
specific performance for the price regardless of delivery
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foreclosed, the unpaid balance can
still be recovered (exception to
1484)
o What else is deemed a “purchase of movables on
installment”?
1. Financing agreements
2. Lease with option purchase
o Are the remedies mutually exclusive?
Yes.
But if the chosen remedy fails, can choose another.
Remedies of seller for sale of immovables? (if not covered by
Maceda Law)
o 1. For anticipatory breach
If the seller has reasonable fear of breach or loss,
may immediately sue for rescission of sale
Or else, he can only rely on substantial breach
o 2. For failure to pay the price
It does not bar the transfer of ownership or nullify the
sale K
But he can rescind it through judicial or notarial
demand
What does Art. 1592 provide?
Even if it is stipulated that failure to pay the
price leads to rescission, there has to be a
demand for rescission first, to grant the
buyer of every opportunity to comply with the
obligation
So if there is no judicial demand or notarial
act, the buyer can still pay what is due
When does Art. 1592 apply?
o Ordinary sale of real property transferring ownership
simultaneously with the delivery of the real property sold
What is the remedy for seller of immovable on installment
(MACEDA LAW)?
o When ML applies:
1. Sale in installments AND
o
182
2. The immovable is residential real estate or condo
unit (not commercial, industrial, or agrarian reform
land) AND
3. Either a CTS (notice of cancellation) or COS
(demand for rescission)
Even applies to financing transactions
If buyer has paid at least 2 years of installments:
1. Grace period of 1 month for every 1 year of
installment payments to pay (without interest)
Can only be availed once every 5 years
What if there is a stipulation that there is
no grace period or there is payment of
interest?
o INVALID.
2. If the seller cancels the contract, he must refund to
the buyer the cash surrender value of payments
already made: 50% + 5% for every year beyond 5
years of installments (not exceeding 90% total)
When does actual cancellation take place?
AFTER expiration of grace period, the seller
gives:
o 1. Cash surrender value
o 2. Notarial demand for rescission
o 3. And there is lapse of 30 days
from receipt of notarial demand
What if the lot has been sold to an innocent
purchaser for value at this time?
Option 1: Buyer can demand return of actual
market value + 12% interest
Option 2: Buyer may demand substitute lot
What is the nature of this 30 day period after
notarial demand?
nd
It, in fact, is a 2 30 day grace period for
which payment can be made.
But in this grace period, there are interests
and penalties.
Can there be judicial rescission under the ML?
Is trespassing considered as a valid ground to
suspend payments?
No.
What are the remedies of the buyer in a sale of immovables?
o 1. Suspension of payment if there is reasonable fear of
disturbance or danger
Unless the seller gives security for return of price
o 2. Subdivision or condominium projects (PD 957)
No forfeiture of payments where there is failure to
develop condominium projects or subdivisions and
then the buyer stopped payments
Buyer can ask for refund of what he paid – notice and
demand can be simultaneous
No. The law requires notarial rescission. If
a judicial rescission is filed instead, the court
will dismiss it.
Note again – if the situation involves Maceda Law,
then judicial rescission (actually, resolution), does not
apply because the action must be a notarial
rescission
If Art. 1592 (not ML) applies:
Either judicial or notarial rescission.
Rescission cannot be extra-judicial; buyer
can otherwise still continue paying.
o If buyer has paid less than 2 years of installments:
1. Grace period: only 60 days from date the
installment became due
2. After grace period, the seller may either cancel the
contract (CTS) by giving notarial notice of rescission
(COS). There is another 30 day period before the
cancellation or rescission takes effect.
What about the cash surrender value?
It doesn‟t apply to this situation. The buyer
does not get it back.
What are the remedies of the buyer in a sale of movables?
o 1. Specific performance
o 2. Recall four actions above for breach of warranty:
1. Accept goods, but recoup/reduce price
2. Accept goods, with damages
3. Refuse goods, with damages
4. Resolve contract
o 3. Suspension of payments in anticipation of breach
If buyer has a reasonable fear of disturbance,
vindicatory action, or foreclosure
Until when must suspension last?
1. Seller has caused disturbance to stop
2. Seller issues a security for return of the
price
3. There is stipulation that the buyer must
pay nonetheless
Extinguishment of sale
What are the causes to extinguish a contract of sale?
o 1. Ordinary causes to extinguish an obligation
o 2. Breach (discussed directly before)
o 3. Conventional or legal redemption
What is conventional redemption (sale pacto de retro)?
o When the seller expressly reserves the right to repurchase the
thing sold. It must be reserved by the seller in the same
instrument of sale.
Once consummated, cannot make pahabol the
stipulation in a separate document. In fact, it cannot
be in a separate document (unless it‟s something else
like an option to buy).
It MUST be in the same sale instrument and
stipulated before consummation.
o It does not prevent the consummation of the sale.
o Can enforce the right from third persons or possessors deriving
right from the buyer, even if the subsequent sale contract did
not mention the conventional redemption.
Of course, respect laws on Mortgage and Property
Registration Decree.
Compare with option contract?
183
o
o
Conventional redemption need not have separate and distinct
consideration to be valid.
o The period of the conventional redemption cannot exceed 10
years, while an option contract may exceed this period.
o Option contract – need to just give notice that you are
exercising the option.
o Conventional redemption – give notice AND tender payment
with consignation
What is the period for redemption?
o 1. If none agreed upon, 4 years
o 2. If there is a period agreed upon, cannot exceed 10 years
o 3. 30 days from judgment of the court, if there is judgment
declaring a contract one with conventional right to redeem and
not something else (ex. Equitable mortgage)
o When is the period suspended?
Pendency of action in GF questioning the validity of
the underlying sale contract suspends the
prescription. But mere failure to pay the price does
not suspend it.
What is the effect of the agreement?
o It is a valid contract of sale with a resolutory condition that the
seller exercising right to redeem.
What must be returned to the buyer by the seller?
o 1. Price
o 2. Expenses of the contract
o 3. Necessary and useful improvements/expenses
When is a contract presumed to be an Equitable Mortgage (EM)?
o 1. Price of sale with right to repurchase is unusually
inadequate
o 2. The seller remains in possession of the property as lessee
or otherwise
o 3. The period of redemption is extended in another instrument
o 4. The buyer retains for himself a part of the purchase price
o 5. The seller binds himself to pay for the taxes of the thing sold
o 6. Any other similar case
In case of doubt, what is the rule?
A sale purporting to be pacto de retro (with conventional
redemption) is deemed an EM.
o Same with absolute sales, but the real intent is to secure an
obligation.
What is the consequence if a contract is declared an EM, and not
pacto de retro?
o Title of buyer cannot ripen into full ownership because his
possession is not in the concept of an owner.
o There can be no consolidation of title in the buyer‟s hands
(otherwise it‟s pactum).
o The seller can redeem as long as the buyer hasn‟t foreclosed
yet.
How is consolidation of ownership in the vendee by failure of the
vendor to exercise option in a pacto de retro done?
o Through an ordinary civil action (so all indispensable parties
i.e. those with interest must be impleaded)
What is legal redemption and when does it apply?
o Mechanism of law to minimize co-ownership.
o 1. Among co-heirs
Selling to a stranger prior to partition
Can redeem within 1 month from receipt of notice of
sale to stranger
Applies only to hereditary rights (co-heirs)
o 2. Among co-owners
Selling to a stranger of a co-owner‟s share
If two or more co-owners decide to redeem, they
acquire in proportion to their existing shares
o 3. Adjoining owners of:
A. Rural land
Sale of land which does not exceed 1
hectare
Not applicable to lands separated by
servitudes
If two or more are requesting redemption,
prefer the one with the smaller lot. If equal,
prefer the first requestor to redeem.
Purpose: maximize use of rural lands
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B. Urban land
ONLY applies when there is sale of a small
piece of land which was bought by a seller
for mere speculation (sold when prices go
up)
Purpose: prevent speculation in real estate
when there is housing problem already in
urban area
What is the special rule for sale of
adjoining urban land?
o The right is not just of redemption
but also preemption. It means if the
resale has not yet been perfected,
the adjoining owner can preclude
sale because he is preferred.
o 4. Sale of credit in litigation by the creditor
When does legal redemption start to run?
o Within 30 days of receipt of notice in writing by the prospective
seller or seller
o Written notice is indispensable even if the redeemer gains
knowledge of the sale some other way
o Exceptions?
1. Suit in court to eject or collect rentals from coowners
2. Laches by redeemers
3. The co-owner himself acted as middleman or
intermediary in the sale to the third party
You cannot add a new person to the partnership
unless everyone consents
Mere co-ownership does not make a partnership
o 2. Agreement to contribute to common fund with joint interest
in the profits or losses thereof
Share of profits must come from the equity position
and not some other role (ex. creditor, employee)
o 3. Consideration: promised contributions
Partners are debtors to the partnership to the extent
of promised contribution. They pay damages and
interest for failing to do so.
Industrial partners contribute their service, so they
cannot engage in a business for themselves.
What are the two essential requisites of any partnership contract?
o 1. Two or more persons bind themselves to contribute money,
property, or industry to a common fund
N.B. mere co-ownership does not per se constitute a
partnership
o 2. Intention by the partners to divide the profits amongst
themselves
What is the presumption?
Receipt of share in net profits is prima facie
evidence that the person is a partner
What are the cases where this rule does not
apply?
1. Wages of an employee
2. Rentals paid to landlord
3. Annuity of surviving spouse or
representative of deceased partner
4. Consideration for sale of goodwill or other
property
Key attributes of Partnership:
o 1. Consensual, but weak juridical personality
Arises even if the partnership is not registered
Can be extended beyond term if the partnership is not
liquidated or settled at end of term
PARTNERSHIP
Contract of partnership
What are the elements of a Partnership contract?
o 1. Meeting of the minds to form a partnership
A partnership is consensual contract
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o
Can spouses enter into a partnership?
No. This would indirectly change their property
relations.
o What is the default rule?
Particular partnership
o X and Y are partners in real estate projects. X was abroad and
Y stumbled upon a potentially lucrative piece of property. Y
was convincing X to commit to the new venture but X refused.
Y initially temporarily used partnership property to secure the
new property but returned it and used his own property when X
refused. The property earned big profits. X is claiming part of
the earnings. Is X entitled?
HELD: No. They are not universal partners, and only
particular partners. Without sufficient basis, the law
cannot presume a partnership between X and Y as to
the new property.
Term of partnership:
o 1. Fixed term or particular undertaking
But partners may choose to continue after, which will
turn it into a partnership at will
Even if there is specific duration or purpose, any
partner may choose to dissolve the partnership
But if there is no cause or there is BF,
damages
o 2. Partnership at will
Any partner may dissolve it at will, but if there is BF,
damages
What is the extent of a general partner’s liability?
o 1. Liable pro rata when partnership properties have been
exhausted
o 2. Solidarily liable with the partnership for wrongful acts or
omissions causing injury to third persons when the partner acts
in the ordinary course of business
o 3. Also solidarily liable with the partnership when a partner
acting with apparent authority receives money from a third
person and misappropriates it
o What about a subsequent partner?
Really merely for convenience of transacting with the
public
o 2. Mutual agency
o 3. Delectus personae
There is special fiduciary relationship between
partners. There is utmost trust. When it is breached,
any partner can dissolve the partnership midstream,
even before stated period.
In fact, even if there is bad faith, a partner may
dissolve the partnership midstream, but with
damages.
The moment one partner is gone, the partnership is
dissolved.
o 4. Subject to unlimited liability
Partners are liable pro rata with their separate
property after all partnership assets have been
exhausted
Does this include even industrial partners?
Yes
Can there be a contractual stipulation denying
unlimited liability?
No. But it can be valid only as an internal
agreement among partners.
Characteristics of a partnership contract:
o 1. Nominate and principal
o 2. Consensual
Failure to register and provide a public instrument is
not fatal to the existence of the partnership
o 3. Onerous and bilateral
o 4. Preparatory and progressive
Distinguish universal from general partnership:
o Universal – partner contributes all his property
o Particular – determinate things, or specific undertaking, or
exercise of profession or vocation
o Why is the distinction important?
Those who cannot donate to each other cannot enter
into contract of universal partnership
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He is not personally responsible for liabilities arising
prior to his joining the partnership
Distinguish a capitalist partner from an industrial partner:
o Capitalist:
Contributes money or property
Liable for losses (cannot stipulate otherwise)
Cannot engage in competing business or venture
o Industrial:
Contributes services
Not liable for losses (except when all the partnership
assets have been exhausted)
Cannot engage in any other business at all
o Terms of a partnership contract provide “Participation: A –
40%, B – 40%, C – 20%. Both A and B provide the entire
capital and C was industrial partner. The partnership went
bankrupt. Can a creditor hold C liable for losses?
Yes, because third parties are not subject to internal
agreements between the partners as to losses. So
the creditor can hold C liable for 20% since that is his
participation.
C, in turn, can ask for reimbursement from A and B
because of their agreement that C does not share in
losses.
What is a partner by estoppel?
o He is not really a partner, but because of his acts, he has led
third parties to believe so. He is liable as a regular partner as
to these creditors.
Pro rata with other partners who consented to the
representation.
The partnership itself is only liable as the partnership
per se if all the partners acceded to the representation
What is the registration requirement?
o 1. If capital contributed is 3K or more, must be in a public
document and registered with SEC
What is the consequence of failure to register?
None. It has no adverse legal consequence.
It does not affect partnership liability to third
persons.
Purpose of registration:
Prevent tax evasion by large partnerships
Allow public to determine nature of the
partnership more accurately
o 2. For partnerships where real rights or immovable properties
are contributed there must be a public document, inventory,
and registration with the SEC
What is the consequence of failing to register this
public document?
The partnership is void, under express
provision of law. But this cannot prejudice
liability towards third parties.
N.B. The partners lose the benefit of
excussion. They are solidarily liable, and not
just jointly and subsidiarily liable.
N.B. But under CLV‟s blog discussion, failure
to register really has no adverse effect even
here because third parties cannot be
prejudiced by failure to register, and as
among the partners, there are still
contractually bound (consensual
agreement).
Priority rules if registered –
A. Partnership creditors over partnership
properties
B. Separate creditors over separate
properties
Can a corporation enter into a partnership? What about a JV?
o Cannot enter into partnership.
o But can become a limited partner because there is no unlimited
liability in this case and it will not participate in the
management of the partnership.
o Can enter into a JV (because there is a particular purpose
only)
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communicated it to the acting partner – operate as notice to
the partnership
o 3. See the two rules on solidary liability as re: wrongful acts or
omission in ordinary course of business and misapplication of
property received from third person
What is the rule as to acts NOT within ordinary course of
business?
o NOT valid unless approved by all the partners.
o Examples:
Assigning partnership property in trust, mortgaging, or
pledging it
Disposing of the goodwill of the business
Confession of judgment
Entering into compromise as to liability or claim
Renouncing claims by partnership or submitting it to
arbitration
What if management is stipulated in favor of one partner?
o He may execute all acts of administration despite opposition by
other parties.
o If stipulated in the articles of partnership, it is irrevocable
except for just or lawful cause. If not stipulated in the articles
of partnership, it is essentially revocable.
What if management is stipulated in favor of 2 or more partners?
o If there is opposition, majority wins.
o If there is a tie, controlling interest prevails.
What if it is stipulated that none of the managing partners should
act without consent of the others?
o Follow the rule, then.
o Exception is if there is imminent danger or irreparable injury to
the partnership.
What is the nature of power of alteration (ownership/control)?
o Cannot be done without consent of all other partners, even if
useful
o But if the refusal is manifestly prejudicial to the partnership,
court intervention may be sought
What is the rule on sale of real property?
o If the title is in the name of the partnership,
What is the rule on liabilities as regards the firm name?
o If a non partner has his name in the firm name, he is subject to
the liability of a partner.
Rights and powers of the partners
What are the three general rights of the partners?
o 1. Right to participate in management of the partnership
(manager)
o 2. Right over specific property of the partnership (agent of
other partners)
o 3. Interest in the partnership (equity holder)
What is the management right of the partners?
o Presumption is that there is mutual agency – acts of one can
bind the partnership. But what is stipulated in the partnership
articles is what prevails.
o BUT the doctrine of apparent authority prevails. Third persons
cannot be prejudiced; they are not expected to look up the
articles of partnership, even if registered.
What is the rule as to acts within the ordinary course of business?
o Representations by partners bind the partnership, if acting
within scope of his authority.
o Wrongful acts in ordinary course of business:
Solidarily liable with the partnership for wrongful acts
or omissions causing injury to third persons when the
partner acts in the ordinary course of business
Also solidarily liable with the partnership when a
partner acting with apparent authority receives money
from a third person and misappropriates it
What are the other acts exhibiting that the partners generally act
as agents for the partnership?
o 1. Admission or representation made by any partner
concerning partnership affairs within scope of authority:
evidence against the partnership
o 2. Notice to any partner regarding partnership affairs,
knowledge acquired by a partner while a partner, and
knowledge of a partner who reasonably could and should have
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Conveyance in the name of the partnership, done
with authority – valid
Conveyance in the name of the partnership, done
by a partner without authority – partnership may
recover it unless the purchaser is in GF and for value
Conveyance in the name of a partner, done with
authority – only equitable interest is passed
Conveyance in the name of a partner, done
without authority – no effect
o If title is in the name of a partner,
Conveyance by a partner with authority (whether
in the name of the partnership or own name) –
only equitable interest is passed
Conveyance by a partner without authority – no
effect
o If title is in the name of some but not all of the partners:
If the records disclose partnership interests –
partners named in the title can convey title, but the
partnership may recover if they acted without
authority, except for purchaser in GF and for value
If the records do not disclose partnership
interests – partners named in the title may convey
title over property, but the partnership may recover if
they acted without authority
o If title is in the name of all of the partners:
Conveyance done by all the partners passes all their
rights over the property
What is the nature of their co-ownership interests over the
partnership property?
o Partner has equal right to posses the partnership property only
for partnership purposes
Compare with normal co-ownership: can use the
property as long as non-injurious to other co-owners
o Partner‟s right over partnership property is non-assignable
except in assignment of rights of all partners over the
property
o Partner‟s right over the property is not subject to:
1. Attachment or execution on personal claims, unless
on claim against the partnership
2. Legal support
What is the rule on equity rights?
o These can be transferred or assigned. What is passed is the
right of the assignor to receive profits.
o Does this dissolve the partnership?
No. The rights are separable.
o Does this give the transferee management rights?
No. The rights are separable.
When can separate creditors attach and publicly sell the shares of
a partner on assets?
o It must be during dissolution only, and after satisfaction of
partnership creditors.
What is the share of the partners in profits and losses?
o It is done according to agreement.
o A. If only shares are mentioned, losses follow the same
proportion
o B. In absence of stipulation, follow proportion of contribution
But industrial partners do not share in losses
o Can designation of profits and losses be left to one of the
partners?
No.
o Can it be left up to a third person?
Yes, but it can be impugned if manifestly inequitable.
Unless it has been executed or more than 3 months
have passed.
What are the other rights?
o 1. Right to inspect partnership books at reasonable hour
o 2. Right to demand true and full information of all things
regarding the partnership
o 3. Right to demand accounting
Partner who receives partnership profits holds it in
trust for everyone
When can there be demand for formal
accounting?
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o
2. Dissolution of the partnership
NOT rescission, because you cannot have mutual
restitution (will prejudice business)
o What is unlimited liability?
When the partnership is insolvent
It is pro rata and subsidiary
BUT insolvency does not automatically dissolve the
partnership. The partners can continue to pursue the
business in hopes of improvement.
2. Fiduciary duties to partners
o A. Duty to account
What is the rule on secret profits/benefits?
Only held in trust for the partnership.
Other partners can seek recovery or dissolve
the partnership.
o B. Duty of diligence
Liable for damages to the partnership through own
fault.
Can he compensate liability for damages with
profits/benefits he might have earned for the
partnership?
No.
BUT he may equitably lessen his liability if
his extraordinary efforts have led to unusual
profits for the partnership.
When can the acts of a designated managing
partner be opposed?
If done in BF.
And his power may be revoked.
o C. Duty of loyalty
Liable to partnership if he took partnership funds or
property and applied them to his own use – with
interest and damages
What if there is a debtor to both the partnership
and a partner?
1. Excluded from partnership business or
property
2. Right is stipulated in articles
3. When it is just/reasonable
4. Right to dissolve the partnership
Can be done whenever
But there are damages if done in bad faith
Duties and obligations of the partners
1. Obligation to contribute to the common fund
o The partners are debtors to the partnership to the extent of
what was promised.
MONEY: incurs damages and interest for delay
PROPERTY:
Liable for breach of warranty against eviction
Liable for fruits from date of obligation
Risk is borne by the partnership if appraised,
up to appraised value, or if fungible and
cannot be used without deteriorating, or
meant to be sold
REAL PROPERTY: need registration, as stated
above
SERVICE OR INDUSTRY:
No specific performance (obviously), so only
damages for failure to perform
o Is there obligation to make additional contributions?
None, generally.
What if there is imminent loss or danger to the
firm?
Still no compulsion to contribute.
But all those who do not contribute are
obliged to sell their interest to the other
partners, except of course for industrial
partners.
o What if there is default of obligation to contribute – what
are the remedies?
1. Specific performance with damages
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o
o
1. If he pays debt to partner alone – split
proportionately between partnership and
partner‟s credit
2. If he pays debt to partnership alone –
apply entirely to the partnership
Exception?
o If the debtor provides otherwise and
the debt to the partner is more
onerous
D. Separate fiduciary duties of an partner
1. Industrial partner cannot engage in any other
business, regardless of nature
Remedies of other partners:
o Exclude industrial partner from the
firm, with damages
o Avail of benefits derived by the
industrial partner, with damages
2. Capitalist partner cannot engage in competing
business
Remedies of other partners:
o Have that partner give all benefits
accrued to the partnership and bear
all the losses to the partnership
because of the competing business
3. Subsequent partner only liable for obligations of
partnership prior to joining with partnership property
(not personally)
When are non-partners liable?
1. Names appear in firm name
2. Estoppel, as to third persons
Bind the partners who consented or acted under the
representation as well
o
B. For contracts entered into for and in behalf of the
partnership
o C. Keeping of books at principal place of business, accessible
at reasonable hour
2. To third persons
o A. From firm name: for anyone represented as partner therein
o B. Partners are assumed to be mutual agents for the
partnership, and their acts generally bind the partnership
except:
1. Act is not in ordinary course of business and the
one acting has no authority
2. The third person knows the partner acting has no
authority
NOTE: intra-partnership problems cannot prejudice third parties in good
faith, who have expectations that the contract will push through
o Third persons have no duty to know what is stipulated in the
articles of partnership. They can rely on normal right and
authority of the partners to bind the partnership.
Dissolution, winding up, termination
What is the effect of dissolution?
o It breaks up the vinculum juris between the partners but does
not terminate it until there is full winding up.
o But not all dissolution leads to winding up and termination.
The partners can choose to continue on the business.
What are the effects of dissolution?
o Extinguishes the right and power of the partners to represent
each other in the partnership as a going concern.
1. Except winding up and completion of pending
transactions
2. And except acts that would have bound the
partnership had it not been dissolved, when the third
person is not aware of the dissolution, such fact not
advertised in a newspaper of GC.
What are the exceptions to these exceptions?
1. When the partnership purpose was
declared illegal
Obligations of the partnership
1. To the partners
o A. For amounts disbursed for and in behalf of the partnership
With interest
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They cannot force continuation of the business,
unless they agree to settle the equity interests of the
withdrawing partner.
What is the effect of dissolution in violation of partnership
agreement?
o The partners seeking dissolution are liable for damages. They
cannot participate in continuation of the business.
o Right of the partners who did not dissolve the
partnership?
If the business is discontinued, right to share in net
assets + damages from erring partners.
May decide to continue the business. They may
possess the partnership property by either paying a
bond in court or paying the erring partner the value of
his interest in the partnership.
o Right of the partners who dissolved the partnership?
If the business is discontinued, right to share in net
assets, less damages.
If the business is continued:
Released from liabilities
Have value of his interest in the partnership
secured by a bond in court or paid in cash,
less damages.
What is the right of the partner with lawful/just cause to ask for the
judicial dissolution of the partnership due to
fraud/misrepresentation by other partners (see enumeration
above)?
o He has a lien on:
1. Surplus of partnership property after satisfying
liabilities to third persons
2. Any sum of money paid to purchase interest in the
partnership
3. Any capital or advances contributed by him
o He can stand in the creditor‟s place for payments made by him
for partnership liabilities
o He should be indemnified by the guilty party
What are the priority rules in winding up of partnership?
2. When the partner acting was insolvent
3. The partner has no authority to wind up
o But since the partners can choose to continue with the
partnership even after dissolution, and so contracts entered
into by the partnership after dissolution are not void. In a case,
there was no termination and there was no publication to warn
third persons: creditors can fully expect transactions to push
through.
What are the grounds that dissolve the partnership without need
for court decree?
o 1. Dissolution without violation of partnership agreement
o 2. Dissolution with violation of partnership agreement
o 3. Dissolution by force majeure
Loss of specific thing to be contributed
Business became unlawful
Death, insolvency, civil interdiction of any partner
What dissolves the partnership with need for court decree?
o [loss of capacity]
o 1. Partner became insane in judicial proceeding
o 2. Partner became incapacitated in performing his part in the
contract
o [wrongful acts]
o 3. Partner guilty of conduct prejudicial to the business
o 4. Partner willfully and persistently breached the partnership
contract
o [equity]
o 5. Partnership business can only be carried out with a loss
o 6. Other equitable grounds
What is the effect of dissolution not in violation of partnership
agreement?
o No damages. Any of the partners can participate in the
winding up.
o Except, of course, when a partner is expelled in good faith.
The one expelled is disqualified.
o The remaining partners have no choice but to wind-up, if the
withdrawing partner insists.
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o 1. To non-partner creditors
o 2. To partners, other than capital or profits
o 3. To partners, for capital
o 4. To partners, for profits
When a partner dissolves the partnership, can he demand for the
return of his shares, contributions, etc.?
o No. Go through dissolution. This way, the partnership
creditors are given priority.
2. Act that would make the business impossible to
carry on
3. Confession of judgment against the partnership
4. Use of partnership property other than for
partnership purpose
[expansion of participants]
5. Admitting another person as GP
6. Admitting another person as LP
o What is the relationship of general and limited partners?
Not mutual agency, but business trust.
The limited partners thus can engage in other
businesses.
What are the rights and obligations of limited partners?
o [as to contribution]
o 1. Limited liability – only to extent of contribution
What if they interfere with management?
A. They become general partners as to third
persons
B. But not as to co-partners, who must
respect the contractual agreement inter se
o 2. Return of contribution
What are prerequisites to return of contribution?
1. All partnership liabilities to third persons
paid
o If there is premature return of
contributions, these are liable for
the obligations to third persons
2. Consent of all members obtained
o Except when there can be legal
demand for return of contribution
(see below)
3. Certificate cancelled or amended to allow
for withdrawal or reduction of members
When can there be legal demand for return of
contribution?
1. Dissolution of partnership
2. Date for return had arrived
Limited partnership
What are the requirements to form a limited partnership?
o 1. Execute a certificate of limited partnership
Provide who are general, and who are limited
partners
Provide their contributions and when these are
returned.
Limited partners cannot be industrial partners.
o 2. File certificate with the SEC
N.B. Regardless of compliance, who are limited and
who are general partners are binding inter se.
What is the rule on false statements in the
certificate?
Those who knew of the falsity are liable to
third persons prejudiced. (So if the third
person was not prejudiced by the falsity, no
liability.)
o 3. Name of the partnership must have “LTD.”
o When can there be cancellation of the certificate?
Dissolution of the partnership
Or all limited partners cease to be such
o How can a certificate be amended?
Signed and sworn by all members
What are the powers of general partners?
o Same as in a normal non-limited partnership.
o But the following acts need consent of limited partners:
[prejudice to the partnership]
1. Any act in contravention of the certificate
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o
o
o
o
o
o
3. After six months notice for return of
contributions (if no return date stated)
What is returned to him?
Cash, regardless of what he contributed.
Unless, of course, there is agreement
otherwise.
o [as to income]
o 3. Receive share by way of income
After liabilities to creditors have been settled
o 4. To assign equity interest
Only gets profits, but does not become limited partner
unless there is consent and amendment of certificate
o [fringe acts]
o 5. To inspect books
o 6. To demand accounting
o 7. To loan money and transact other business, but should not:
Receive partnership property as collateral
Receive payment if there are not enough partnership
assets to discharge other obligations
o [to dissolve]
o 8. To dissolve the partnership
ONLY when he demands rightfully for his
contributions but he did not get them or
partnership does not have enough properties to return
his contributions whence it also has not paid liabilities
Can limited partners be compelled to contribute to assets of
partnership in case there is imminent loss?
o No, unless provided in the contract.
o BUT the usual provision that there is forced sale of partnership
interest to other partners for failure to contribute does not apply
to LPs.
Does death of a limited partner dissolve the partnership?
o No. Only a general partner‟s death (of course, the others can
choose to continue)
o The limited partner‟s estate can simply settle liabilities and
claims of the limited partner.
What is the order of payment of liabilities?
1. To third party creditors
2. To LPs, for profits
3. To LPs, for capital contribution
4. To GPs, other than capital or profits
5. To GPs, for profits
6. To GPs, for capital (N.B. 5 and 6 deviate from usual rule)
AGENCY
Define agency:
o Agency is where a person binds himself to render service or to
do something in representation of another, with the latter‟s
consent or authority
Nature of agency:
o Agent acts as a representative and not for himself
o Agent acts within scope of his authority
Elements of contract of agency?
o 1. Consent of the principal and agent
o 2. Object: execution of a juridical act in relation to third parties
o 3. Consideration: either commission or liberality
Characteristics of agency contract?
o 1. Nominate, principal
o 2. Consensual
o 3. Unilateral and generally onerous
o 4. Preparatory and representative
o 5. Fiduciary and revocable
Neither the principal or agent can be forced to remain
in the relationship when they choose to have it
terminated
Consequences of fiduciary relationship:
o 1. Agent estopped from asserting adverse title over subject
matter of agency belonging to the principal
o 2. Must choose best course of action for the principal, and not
one that favors himself to the detriment of the principal
o 3. Cannot acquire for himself property of the principal entrusted
for disposition
194
Unless principal consents, or
Agent purchases after agency is terminated
Doctrines flowing from preparatory and representative character of
agency:
o 1. Agent is stranger to the resulting contract between the
principal and third party
No rights
No obligations
No legal standing
o 2. Liabilities pertain to the principal
o 3. All the acts the principal can do in person, he may do
through an agent except those strictly personal
o 4. Agent not liable to a contract, except:
A. if he binds himself to the contract expressly
B. if he exceeds limits of powers without giving the
other party sufficient notice of his powers
o 5. Knowledge of agent is knowledge of principal, except:
A. where agent‟s interests are adverse to the principal
B. agent‟s duty is not to disclose the information
C. person claiming benefit of the rule colludes with the
agent to defraud the principal
Differentiate from a broker:
o A broker is just a middleman between two parties, and he does
not represent either and cannot bind either to the transaction.
o Not prohibited from purchasing property of the primary party,
unlike an agent.
What is the form needed for a contract of agency?
o None in particular; it‟s a consensual contract
o But sometimes a written SPA is needed.
Differentiate an express from an implied agency:
o Express agency – there is actual acceptance
o Implied agency – implied from:
1. Acts of principal
2. Silence or lack of action
3. His failure to repudiate the agency, knowing that a
person is acting on his behalf without authority
4. Principal delivers power of attorney to the agent
and he accepts it without objection – if both are in the
same place, physically present
N.B. But if not physically present in the same place,
as when the power is delivered through mail, silence
is not implied acceptance
Exceptions to this?
1. Principal transmits power of attorney to
the agent who receives it without objection
2. Principal entrusts to the agent by letter or
telegram a power of attorney with respect to
the business in which the latter is habitually
engaged in, and he did not reply
o By estoppel
How can the agent be duly authorized as to particular third
persons?
o A. If the principal informs another person that he has given
power of attorney to an agent, the latter becomes a duly
authorized agent as to that third person
o B. If the principal states by public advertisement the
constitution of agency, the agent is duly authorized as to any
person
o How long does this power last?
Until notice is rescinded in the same manner in which
it was given
What is agency by estoppel?
o Even when the agent has exceeded his powers, the principal
should be made liable if he allowed the agent to act as though
he had full powers.
o Elements:
1. Principal manifested a representation of the agent‟s
authority
2. Third person in GF relied on the representation
3. Third person changed his position, to his detriment,
relying on the representation
Differentiate a general from special agency?
195
o
General agency is one that encompasses all of the business of
the principal. (Universal agency)
o Special agency is to cover only one or more specific
transactions. (Particular agency)
What is the general obligation of the agent who accepts the
agency?
o Legally bound to carry out the terms of the agency
o Breach: principal can sue for damages, but not compel specific
performance because it doesn‟t apply to obligations to do
o What is the measure of damages?
Based on the prejudice the principal suffered due to
non-performance of the act required
The general rule is that death of the principal terminates the
agency. What is the narrow exception?
o The agent must finish business already began prior to the
principal‟s death, should delay entail any danger
What is the obligation of an agent who declines the agency?
o Bound to observe diligence of GFF in the custody of the goods
until the owner appoints an agent or takes charge of the goods
Is the agent liable for contracts he enters?
o Generally, no.
o UNLESS:
1. He exceeds authority
2. He binds himself to the contract personally
o What if the agent exceeds his powers?
1. The principal may ratify.
Can the third party still invoke the agent
exceeding his authority?
o No, because the principal has
ratified the act already.
2. If the principal does not ratify, the contract is
unenforceable as against principal. But if the third
party did not know the extent of the agent‟s powers,
the contract is binding between the agent and third
party.
Usual rule: agent is bound if he exceeds
authority
3. But if the third person was aware that the agent
exceeded his powers, the contract is unenforceable
even between the agent and the third person.
[Both are in pari delicto]
o What if the agent acts within the scope of his authority as
written but contrary to a personal understanding between
him and the principal?
The act will bind the principal as to a third party who
relies on the power of the agent as written.
Private or secret orders will not prejudice a third party
relying on written powers of agent.
o What if the agent acts in a manner more advantageous to
the principal?
He is deemed to have acted within the scope of his
authority.
What is the obligation of one dealing with an agent?
o Must discover, upon his peril, not only the fact of agency but
also the nature and extent of the authority of the agent
When is the third party directly liable to the agent himself?
o 1. Agent contracts in own name on matter within scope of
agency
o 2. Agent possesses a beneficial interest in the subject matter
of agency (ex. selling under a del credere commission)
o 3. Third party commits tort against the agent
What is the duty of diligence of the agent?
o Cannot carry out an agency if its execution will manifestly
result in loss or damage to the principal.
o N.B. the word is “manifestly” because the agent does not
guarantee against small loses in the exercise of business
judgment
o What if the agent breaches this duty?
Liable for damages to the principal
If an agent is empowered to sell his principal’s property, may he
purchase it for himself?
o No, he cannot. This is provided in Art. 1491. Of course, the
principal may ratify the sale.
o Special rule in Sales law.
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the agency, even though it may not be owing to the principal
(ex. excess price). Any agreement or stipulation to the
contrary is void.
o An agent who derives secret benefit from the contract of
agency is liable to the principal for breach of duty of loyalty,
and will forfeit his commissions.
o When does the duty to account not apply?
The agent may retain in pledge the things which are
the object of the agency until the principal reimburses
and pays indemnity in 1912 (agent advancing costs of
agency) and 1913 (damage caused to agent through
no fault of his)
When can the agent appoint a sub-agent?
o If the principal did not prohibit him from doing so.
o What is the main effect?
Sub-agent is agent of principal too
o When is the agent responsible for the acts of the subagent?
1. When he was not given power to appoint one
2. When he was allowed, but the one chosen was
notoriously incompetent/insolvent
o What if the principal expressly prohibited appointment of a
subagent?
1. All acts of sub-agent are void as to the principal
2. The agent is responsible personally for the
contracts entered into by the sub-agent
What is the scope of the powers of an agent in general?
o General powers: Only acts of administration
o Even if the principal provides that the agency may do whatever
he deems appropriate, or even if the agency authorizes
general and unlimited management
What needs a SPA?
o N.B. these are acts of strict dominion
o 1. Making payments not considered as acts of administration
o 2. Effect novation of obligations
o 3. Compromise, submit to arbitration, renounce right to appeal,
waive objections, renounce prescription
o 4. Waive obligations gratuitously
If an agent is empowered to borrow or lend money, may he
transact with himself?
o 1. If empowered to borrow, he may be the lender at the current
interest
Else, liable for return difference
o 2. If empowered to lend, he may not borrow without the
principal‟s consent
Else, liable for damages
What if the agent acts in his own name?
o The principal has no right of action against the third persons,
neither do the third persons have right of action against the
principal.
o Exceptions to this rule?
1. When the transaction involves the things of the
principal. In this case, the principal is bound.
2. When the principal ratifies the contract or derives
benefit from it.
o What is the remedy of the principal?
The principal can file action as against the agent for
damages.
o What if the agent enters into a contract in his own name
on a matter that falls within the scope of the agency?
He is bound to render an account of his transactions
and deliver to the principal what he received by virtue
of the agency even if it may not be owing to the
principal
This is based on the duty of loyalty and Art. 1891
o What if the agent uses the principal’s own funds?
The agent owes interest from the day he borrowed
the money
This presumes the transaction was not one in breach
of the duty of loyalty (scope of agency) or else, the
effect is not payment of interest on the “loan” but an
accounting and turn-over in favor of the principal
What is the rule as bonuses or profits derived by the agent through
the agency, but not owing to the principal?
o He must account it to the principal. Every agent is bound to
deliver to the principal what he may have received by virtue of
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o
o
o
5. Transfer of immovable (whether onerous or gratuitous)
6. Make non-customary gifts
7. Loan or borrow money
Unless urgently needed to preserve a thing under
administration
o 8. Lease for more than 1 year
o 9. Contract for principal to perform service without
compensation
o 10. Bind principal in partnership contract
o 11. Obligate principal as guarantor or surety
o 12. Convey or create rights over real property
o 13. Accept or repudiate inheritance
o 14. Ratify or recognize obligations contracted before agency
o 15. Other acts of strict dominion
o Must a SPA be in writing?
Technically no, but if it‟s not the contract is virtually
unenforceable. The principal may however pursue
the resulting contract, while the third-party is estopped
from refusing to comply with a contract he willingly
entered into absent written authority of the agent.
Except sale of piece of land (see below)
For the power of an agent to sell a piece of land, what is required?
o It must be in writing, or else it is void.
o What does this provision really mean in light of Ocfemia?
It‟s void to the extent that a third person cannot
enforce the obligation against a principal if the
authority of the agent is not placed in writing.
But if the principal wants the sale to push through,
then it can push through. So it‟s an odd “void”
contract because it‟s subject to ratification.
o Does special authority to sell property include authority to
mortgage it?
No, by express provision of Art. 1879.
What are the obligations of a commission agent?
o 1. Take custody of goods
o 2. Not to commingle similar goods belonging to different
principals
o 3. Cannot sell on credit without principal‟s authorization
If pre-authorized to sell on credit, inform principal with
the names of buyers – or else, deemed sold on cash
basis
o 4. Bear risks of collection of proceeds of the transaction under
del credere commission set-up
o 5. Collect credits for principal
Else, liable for damages
o 6. Take responsibility for fraud and negligence
What are the rights and obligations of the principal?
o 1. The principal is NOT bound by contracts entered into by the
agent without or outside scope of authority, EXCEPT:
1. If he ratified it expressly or tacitly
2. Principal allowed agent to act as if he had full
authority
3. Principal revoked agency but the third party acted
in GF without such notice of revocation
o 2. Principal is liable for torts committed by the agent within
scope of authority
o 3. Principal must advance sums necessary for the agency if
the agent requests. If the agent paid for it first, the principal
must reimburse
o 4. Principal NOT liable for expenses of agent if:
A. Outside scope of authority
B. Incurred due to agent‟s fault
C. Agent incurred them with knowledge of
unfavorable result, if the principal was not aware
thereof
D. Express stipulation
o 5. Must indemnify agent for damages sustained without agent‟s
fault
o 6. Pay agent for his services
o 7. If two or more principals constituted the same agent for a
common undertaking, they are solidarily liable
As opposed to constituting two agents by the same
persons, the usual rule is joint liability, not solidary
liability as between the agents
What is the power given to the agent if the principal has not
reimbursed or indemnified the former?
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o He may hold things which are the subject of agency in pledge
A constituted B as an agent to sell a piece of property for 30K, and
B will get 5% commission. B found a buyer, C, but A said that he
is no longer interested in selling and terminated B’s authority.
Thereafter, A sold the land to C. Can B ask for commission?
o Yes, A acted in bad faith, so B is entitled to his commission.
The termination of B‟s contract of agency is clearly to evade
paying commission.
o CONTRAST this to another case where the agent found a
buyer, but the buyer was willing to pay only P9/SQM whereas
the agency was for him to sell the property for P10/SQM. The
agent‟s authority was terminated, but when he asked for an
extension, he was given it. Three months after, the seller sold
the land to the same buyer the agent found. There was no
badge of bad faith here.
What is an irrevocable agency?
o An agency cannot be revoked if:
1. A bilateral contract depends upon it
2. It is the means of fulfilling an obligation already
contracted
3. A partner is appointed managing partner and there
is no just cause
o What are examples of agency coupled with an interest?
X sold Y a parcel of land and to help Y pay for the
purchase price, constituted Y as an agent to
subdivide and sell the parcels of land. X cannot
revoke the agency at will.
X sold Y a vessel on the condition that for the first five
years, Y would appoint X the agent of the vessel. Y
cannot revoke the agency at will.
o Otherwise, when can an agent withdraw?
He just gives due notice to the principal.
If the principal suffers damage due to the withdrawal,
the agent must indemnify the principal, unless the
agent‟s basis for withdrawing is impossibility to
continue performance of obligation without grave
detriment to himself.
What happens in the meantime?
The agent continues to act as such for the
meantime until the principal is able to
constitute a new agency. EVEN IF the
reason for withdrawing is valid.
When is agency extinguished?
o 1. Revocation
Even if it is constituted as irrevocable for a definite
term or period – the principal just pays damages to
agent for damages caused if any
When is there implied revocation?
Appointing a new agent for the same
business, or
The principal directly manages the business
Or by granting a SPA as regard the same
business to another agent, where he
previously granted a GPA to one agent.
Principal must give notice:
To particular third parties
Or the world, through publication
N.B. a third party with no notice of
revocation, acting in GF, can still pursue the
contract entered with an agent
Recall: when an is agency irrevocable
o 2. Withdrawal of agent
o 3. Death, civil interdiction, insanity, or insolvency of principal or
agent
When does agency remain in full force
notwithstanding death of the principal?
A. Constituted in common interest of the
principal and agent
B. There is stipulation pour autrui which has
been accepted
C. Agentt did not know the principal was
dead and third party was in GF
o N.B. If the third party was in BF,
void for lack of consent, an
essential element
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o
4. Dissolution of juridical entity which entrusted or accepted the
agency
o 5. Accomplishment of purpose or object of agency
o 6. Expiration of period of agency
What is the obligation of the agent even after the agency was
terminated?
o Keep confidential matters learned during course of agency, if
confidential
use of a thing or render some service to another, who pays
compensation.
Define lease of services and lease of things:
o Lease of things – one party binds himself to give to another the
enjoyment or use of a thing for a price certain, whether for a
definite or indefinite period
What is the ceiling for the period?
Ninety-nine years
o Lease of service – one party binds himself to execute a piece
of work or render some service for a price certain
Without an agency relationship
Distinguish the two kinds of lease:
o In things, the object is a thing, and in services the object is
some service
o In things, the principal obligation of the lessor is to deliver the
thing leased to the lessee, and in series the principal obligation
is to perform some service
o In things, specific performance is a remedy, in service, only
damages
Is a boundary-based contract between the owner of a jeep and the
driver a lease?
o No. The driver does not spend anything to acquire the jeep.
The boundary and gas obligation which must be covered by
the driver and the keeping of excess earnings is just a system
of compensation. Instead, there is an employer-employee
relationship.
COMPROMISE
What is a compromise?
o It is a contract where parties make reciprocal concessions to
put an end to litigation or avoid it altogether.
What matters cannot be compromised?
o 1. Civil status of persons
o 2. Validity of marriage or legal separation
o 3. Ground for legal separation
o 4. Future support
o 5. Jurisdiction of courts
o 6. Future legitime
What is the effect of compromise?
o It has the effect of res judicata between the parties.
o If the one party does not want to comply with the compromise,
the other party may:
Enforce the compromise
OR rescind the compromise and insist on his original
demand
Lease of rural and urban lands
May the lessee assign the lease to a third person without the
lessor’s consent?
o No. The lessee may not assign the lease without the lessor‟s
consent.
May the lessee sublease the property to a third person without the
lessor’s consent?
o Yes. The lessee may sublease the property even without the
lessor‟s consent. But the lessee must still comply with his
responsibility to perform the contract toward the lessor.
LEASE
What is lease?
o Lease is a consensual, bilateral, onerous, and commutative
contract where one person binds himself to grant temporary
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lease for 15 days, with acquiescence of the lessor – and no
notice to contrary provided by lessor.
o Period of the new lease is according to provisions of law:
A. for rural lands, duration is what is necessary to
gather fruits it may yield for a year
B. for urban lands, duration is depending on rent paid
(yearly if monthly rent; monthly if weekly rent, etc.)
But if lessee has stayed more than 1 year,
the courts may fix a longer term than the
usual monthly rent
If lessee has stayed more than 6 months, the
courts may fix a longer term than the usual
weekly rent
If lessee has stayed more than 1 month, the
courts may fix a longer term than the usual
daily rent
o But all other terms of the contract are the same.
o Of course, if there is an option to purchase the leased property
within the original lease period, and it expires, and only tacitly
extended, the option to purchase is not renewed (it is a
separate contract, and is not a mere clause/term).
What are the grounds to eject a lessee judicially?
o 1. Period has expired
o 2. Lack of payment of price
o 3. Violation of conditions of contract
o 4. Lessee devotes the thing leased to use other than what was
stipulated or its nature
What are the different instances where the purchaser of the thing
leased cannot terminate the lease?
o 1. When the lease is recorded in the ROP
o 2. There is a stipulation in the contract of sale that the
purchaser will respect the lease
o 3. The purchaser actually knows of the existence of the lessee
o 4. The sale is fictitious
o 5. The sale is pacto de retro
What is the rule as to improvements introduced by the lessee on
the property, upon termination of the lease?
May the lessor hold the sublessee for rent due from the lessee?
o Yes, there can be an accion directa. But the sublessee cannot
be held liable beyond the amount due from him under the
sublease.
What is the nature of the sublease agreement?
o It must comply with the lease agreement as to the manner of
use and preservation of the thing.
o And so, if the lease agreement provides that the property must
only be residential, the sublease cannot be for the use of the
property as a commercial area.
Is a lessor responsible for hidden defects in the property that is
leased to a lessee?
o Yes. The warranties applicable to sale also apply to lease,
even if the lessor was not aware of such defects.
What are the obligations of the lessor?
o 1. Deliver the thing, which must be fit for the use intended
o 2. To make necessary repairs on the thing to keep it fit for such
use
Unless provided otherwise
o 3. Maintain the lessee in peaceful and adequate enjoyment of
the lease during the contract
What are the obligations of the lessee?
o 1. Pay the price of lease
o 2. Use the thing leased with diligence of GFF, devoting it to
use stipulated (or according to nature of the thing if none is
stipulated)
o 3. Pay expenses for deed of lease
What is the remedy for breach by either party?
o 1. Rescission with damages
o 2. Damages alone
What if the thing leased is lost fortuitously?
o The lease is terminated.
o If the thing is reconstructed, there is no automatic renewal of
the lease contract, if there is no BF involved.
What is tacit renewal of a contract of lease (tacita reconduccion)?
o A new contract of lease is impliedly created or established if at
the end of the lease contract, the lessee continues enjoying the
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For useful improvements –
PREMISE: these are suitable to the purpose of the
lease and did not alter the form/substance of the
property
The lessor must pay the lessee ½ of the value of
improvement
What if the lessor refuses?
The lessee can remove the thing, even if it
causes damage
o For ornamental improvements –
Lessee not entitled to reimbursement
But the lessee may remove it if it doesn‟t cause any
damage
But the lessor may choose to pay the value of the
thing, which terminates the lessee‟s right to remove
the improvement
o Do the rules for builders in GF under property law apply to
lessees?
No, lessees are not builders or possessors in GF
because they know their right and occupancy of the
land is based on the contract of lease.
If the period of the lease is not fixed, what is the period?
o A. for rural lands, duration is what is necessary to gather fruits
it may yield for a year
o B. for urban lands, duration is depending on rent paid (yearly if
monthly rent; monthly if weekly rent, etc.)
But if lessee has stayed more than 1 year, the courts
may fix a longer term than the usual monthly rent
If lessee has stayed more than 6 months, the courts
may fix a longer term than the usual weekly rent
If lessee has stayed more than 1 month, the courts
may fix a longer term than the usual daily rent
o
o
One where the contractor binds himself to execute a piece of
work for the employer, in consideration of a certain price or
compensation.
o The contractor may either employ only his skill/labor, or furnish
the material himself.
What is the rule on loss if the contractor bound himself to
purchase the material?
o If the loss occurs before the delivery, the contractor bears the
loss
o EXCEPT: if there is delay in receiving it (mora accipiendi)
TORTS
Principles of torts and classification
Define quasi-delicts:
o Fault or negligence of a person, who by his act or omission,
connected or unconnected with but independent from any
contractual relation, causes damage to another person
o Whether punishable or not punishable by law
o Whether criminal in character or not
Classify torts:
o Whether intentional, voluntary, or negligent
o Key element: it must cause damage to another
Can an act that breaks a contract also be a tort?
o Yes.
What is the rule prohibiting double recovery?
o The injured party cannot recover damages twice.
o Ex. in negligence cases, the aggrieved party can either enforce
civil liability under culpa criminal (Art. 100 of RPC) or file a
separate action for quasi-delict (Art. 2176 of NCC). When he
has recovered from one action, the injured party is barred from
the other remedy because he cannot recover damages twice
for the same act.
Differentiate between double recovery and double remedy?
Contract for piece of work
What is a contract for piece of work?
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o
o
o
Double recovery is not allowed; double remedies are allowed.
An aggrieved party may resort to both remedies
simultaneously or successively, but may only recover the
bigger amount. So if he successively files the cases, he can
nd
only recover from the 2 if the amount adjudged is larger and
only to the extent of the excess.
What are the elements in an action based on quasi-delict?
o 1. Fault or negligence of the defendant
o 2. Damage suffered by the plaintiff
o 3. The relation of cause and effect between the
fault/negligence of the defendant and the damage incurred by
plaintiff
Recall: that for a collision of cars, the passenger has remedies:
o 1. Culpa contractual against employer
car wherein he is
riding, because there is a contract of transportation
Defense of ER is extraordinary diligence
o 2. Culpa aquliana against either driver and their companies
(joint tortfeasors)
Defense of ER is diligence of GFF is selection and
supervision
o 3. Culpa criminal against either driver, with the employers
liable subsidiarily if the drivers are insolvent
Defense of ER is solvency of the EE
2. Guardians, as re: damage caused by minors or
incapacitated persons under their authority and living in their
company
o 3. Owners and managers of establishment/enterprise, as re:
damage caused by employees on occasion of their functions
o 4. Employers, as re: damage caused by employees and
household helpers acting within scope of duties
Even if the employer is not engaged in
business/industry
N.B. this thus covers responsibility of the registered
owner of a vehicle for acts of his driver
o 5. State, when it acts through a special agent
But not when the damage is caused by the official to
whom the task done properly pertains. In this case,
the official alone is responsible.
What is a “special agent”?
A government employee who is performing a
job foreign to his usual duties
o 6. Teachers or heads of establishments of arts and trade, as
re: damage caused by students or apprentices when they are
in the former‟s custody
Differentiate claim for employer’s liability under Art. 2180 of the
NCc and Art. 103 of the RPC.
o Under the NCC, in quasi-delicts:
Only requires preponderance of evidence
Employer‟s liability is direct and primary
Defense available: due diligence in the selection and
supervision of the employee
The employee need not be insolvent, because the
employee and employer are both primarily liable
(joint tortfeasors)
o Under the RPC, in civil liability for crimes:
Employer‟s liability is subsidiary; so the employee has
to be found insolvent
The felony committed by the employee must be in the
discharge of his duty
Requisites for subsidiary civil liability of
employer?
The tortfeasor
Who are possible tortfeasors?
o 1. Direct tortfeasor
o 2. Persons made responsible for others
Who are the persons who can be made responsible for others?
o 1. Parents, as re: damage caused by minor children who live in
their company
What is the definition of “Minor” here?
Still 21, and not 18, because RA 6809 has
excepted marriage and torts from the
complete emancipation of one who has
reached 18 years old.
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o
There s a presumption that the employer is also negligent and
is thus solidarily liable
o Rebuttable by showing exercise of diligence of GFF in
selection and supervision of the employee
X sold his car to Y and Y failed to register it. Y ended up being
responsible for a car accident due to negligence. Since the
registration was still under X’s name, can X be sued?
o Yes, the suit can prosper against the registered owner, but it is
the actual owner who is ultimately liable. The purpose of car
registration is to reduce the difficulty in identifying the party
liable in accidents.
What is the rule if the owner of the vehicle is inside the vehicle
with his driver when the accident happened?
o Art. 2154: if the owner was in the vehicle and could have,
through due diligence, prevented the misfortune, then he is
solidarily liable with the driver
o Thus, his defense is different from the employer who is not in
the car, who can use diligence of GFF in selection and
supervision of employees.
o What is the difference in liability?
If the owner is in the car, he can demand
reimbursement of ½ of the amount from his driver
after paying
If the owner was not in the car, he can demand
reimbursement of the whole amount from his driver
after paying
o When is a driver presumed negligent?
1. Guilty of reckless driving at least twice in the
preceding two months
2. Violation of traffic regulations at least twice in the
preceding two months
3. Violating a traffic regulation during the mishap
What is the liability of joint tortfeasors (Art. 2194)?
o If two or more persons are liable for a quasi-delict, their
responsibility is solidary.
o The responsibility is solidary so long as the accident causing
the injury was due to the concurrent acts of two or more
persons: whether quasi-delict, intentional tort, strict liability (or
1. ER-EE relationship
2. ER is engaged in some industry
3. EE committed criminal act in the
discharge of his duties (not necessarily
*while* in the discharge of duties)
4. EE is insolvent
What if the felony was committed by a minor?
Then it is an exception to the general rule,
because under Art. 101 of the RPC, the
liability of parents for felonies of minor
children is also primary, and not subsidiary
Does the ER need to be impleaded?
No. Enforcing liability subsidiarily is just an
enforcement issue. Therefore, neither can
there be modification or relitigation. The
enforcement motion, however may be
conveniently litigated within the same
proceeding at that which held the EE liable.
Is a hospital liable for the negligence of an independent contractor
physician?
o Generally, hospitals are not liable under the Schloendorff
doctrine, which deems physicians as professionals and
independent contractors whose performance of duties are
beyond the control of the hospital.
o Exceptions to this rule?
1. Apparent authority
If the hospitals‟ actions as principal misleads
the public into believing that the relationship
or authority exists
2. Corporate negligence
If the hospitals fail to give reasonable effort
in monitoring or overseeing the treatment
prescribed and administered by the
physicians practicing in their premises
What is the presumption when an injury is caused by the
negligence of an employee?
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arising from criminal offenses or even if there is an underlying
contract).
When can the State be a tortfeasor?
o 1. Performance of proprietary functions
o 2. State enters into contract with private person
o 3. Imputed liability under Art. 2180 for acts of special agents
o
Proximate cause
What is proximate cause?
o That cause which, in natural and continuous sequence,
unbroken by any efficient intervening cause, produces the
injury and without which the result would not have occurred
o Remote cause:
One that is removed or separate from the proximate
cause of the injury
o Immediate cause:
Final act in the series of causes leading to a particular
result or event, directly producing the result
(Stricter that proximate cause – in torts, only
proximate cause is needed)
What is contributory negligence?
o If the negligence of the plaintiff cooperated with the negligence
of the defendant in bringing about the injury, such negligence
of the plaintiff would be an absolute bar to recovery.
o If the negligence of the plaintiff was merely contributory, the
immediate and proximate cause to the injury still being the
defendant‟s acts, then the amount recoverable by the plaintiff
is mitigated by the courts.
What is imputed negligence?
o The negligence of a certain person in a transaction or act
which gave rise to the injury complained of is imputable or
chargeable against the person for whom he was acting or
against his associates.
What is last clear chance (or “discovered peril” or “humanitarian
doctrine”)?
o Where both parties are negligent in such a way that it would be
impossible to determine whose negligence was the proximate
cause, then the party with the last clear opportunity to avoid
the accident through proper care and failed to do so is the
party solely responsible for the injury.
Elements of last clear chance?
1. Prior negligence of the plaintiff
2. Defendant knew the plaintiff‟s negligence
3. Defendant had last clear chance to avoid the peril
but failed to do so
4. Accident occurs due to the negligence of the
defendant
Intentional torts
What are the elements of abuse of right?
o 1. Legal right or duty
o 2. Exercised in bad faith
o 3. For the sole intent of injuring or prejudicing another
o Ex. creditors already discussed pari passu division of claims
against insolvent person, then one creditor assigned his claim
to a third person so the latter can recover in full
What are the elements of acts contrary to law?
o 1. Act is willful or negligent
o 2. It is contrary to law
o 3. Damages suffered by the injured party
o When does this apply?
When there is no specific law providing for indemnity
for the violation of such and damage is caused
What are the elements of acts contrary to morals?
o 1. Legal act
o 2. Contrary to morals, good customs, public order, or public
policy
o 3. Done with intent to injure
What the elements of unjust enrichment?
o 1. No just or legal ground for defendant‟s enrichment
o 2. Enrichment on the part of the defendant
o 3. Enrichment is at the expense of the plaintiff
o 4. Damage or loss suffered by the plaintiff
o When does this claim apply?
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o
Is good faith a defense?
No.
o Differentiate this from the Bill of Rights:
Under the Bill of Rights, the act complained of must
be committed by public officers. Under the NCC, it
can be by public officers or private individuals.
Under the NCC, there can be indirect or direct
violations.
o What kind of duty is contemplated here?
Duty that is owed to an individual particularly, and
there is particular injury to him. It does not cover
duties owing in general to the public, collectively.
What are the elements of interference in contractual relations?
o 1. Valid contract
o 2. Outsider knew the existence of the contract
o 3. The third party induces one party to breach the contract
without valid justification or excuse
o 4. Damage
o What are the defenses by the one charged with tortuous
interference?
1. Business competition and lawful means are used
2. Honest advice in GF, in his duty as an adviser
3. Lack of inducement
4. If the interest protected is superior to the interest
broken in social importance
o What is the liability of the party induced to break the
contract?
In bad faith: liable for all the natural and probable
consequences of his act or omission, whether
foreseen or unforeseen
In good faith: only liable for foreseen consequences
When there is no other remedy in contract, quasicontract, crime, or quasi-delict.
And so if there is failure to pay for services, but there
is a contract, file under the contract and not unjust
enrichment.
What is thoughtless extravagance?
o If done during period of acute public want or emergency
o May be stopped by the courts at the instance of government or
a private charitable institution
What is meddling with social relations?
o 1. Prying into another‟s residence
o 2. Meddling or disturbing the private life or family relations of
another
o 3. Intriguing to cause another to be alienated from his friends
o 4. Vexing or humiliating another on account of beliefs, lowly
station in life, place of birth, physical defect, or other personal
condition
What are the elements of dereliction of duty?
o 1. Public servent defendant exercises ministerial duty
o 2. Neglect or refusal to perform a duty owing the plaintiff
o 3. Damage to plaintiff
o Note: it must be done with bad faith. This does not apply
when the officer thought in GF that the plaintiff is not entitled to
some relief or service.
What is unfair competition as a tort?
o It must be through the use of force, intimidation, deceit,
machinations, or other unjust, oppressive, or highhanded
method
o Applies to agricultural, industrial, and commercial enterprises
What is violation of civil/political rights as a tort?
o When public officers or employees or a private individual
directly or indirectly obstructs, violates, or impedes/impairs the
plaintiff‟s constitutional rights and liberties
This is an independent civil action.
Can have exemplary or moral damages.
o What is the required evidence?
Preponderance of evidence.
Negligence
When is there presumption of negligence?
o 1. Res ipsa loquitur
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o
2. If the death or injury results from possession of dangerous
weapon or substances, except when possession of such is
indispensable to his occupation or business
o 3. Violation of traffic rules
o 4. Common carriers
o 5. Repondeat superior
What is res ipsa loquitur?
o Where a thing is shown to be under the management of the
defendant or his employees, and the accident in the ordinary
course of events would not have occurred had there been
proper care, it gives rise to evidence that the accident was due
to the fault of the defendant, unless rebutted
o What are the elements of res ipsa loquitur?
1. Accident would not ordinarily occur in the absence
of negligence
2. Caused by an agency or instrumentality under the
exclusive control of the defendant
3. Not due to any voluntary action or contribution of
the plaintiff
What are the defenses against negligence?
o 1. Contributory negligence
See above for discussion.
Remember that this is only a partial defense that
mitigates damages.
o 2. Assumption of risk
But note: even if there is an assumption of risk,
measures must be taken by the defendant to
minimize risk to the injured party
Elements?
1. Plaintiff knew the risk is present
2. He understood its nature
3. He freely and voluntarily chose to incur
the risk
o 3. Last clear chance
See above discussion
NOTE: that this doctrine will not apply as a defense
for breach of contract of carriage. Neither can one
o
o
o
o
o
o
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negligent party use this as a defense against liability
to a third person, by pointing at the negligence of
another. It must be between two parties in a situation
where it is impossible to determine whose negligence
it was that was the proximate cause of the accident.
4. Prescription
What is the usual prescription?
4 years from discovery of the act (“discovery
rule”)
1 year if from the act of a public officer
involving exercise of powers/duties
What are the prescriptive periods under the
Consumer Act?
4 years from purchase for apparent defects
2 years from knowledge or purchase for
hidden defects
5. Fortuitous events
See Oblicon discussion
6. Diligence
For employers: diligence of a GFF is selection and
supervision of employees
7. Mistake and waiver
See Oblicon discussion
8. Damnum absque injuria
What is this?
Damage without injury, arising from a
person‟s exercise of his legal rights.
If the injury arises from abuse of right, then damnum
absque injuria does not apply.
9. Emergency rule
What is this?
One who suddenly finds himself in danger
and is required to act without time to
consider the best means to avoid the danger
is not guilty of negligence for failing to
choose the best option, in hindsight
Unless the emergency in which he finds himself in is
of his own doing
b) use and hazards reasonably expected out of it, and
c) time it was put into circulation
NOT simply because a better product is on the market
o When is the manufacturer or producer not liable?
1. It did not place the product in the market
2. It placed it in the market but it was not defective
3. Consumer or third party is solely at fault
o When is the seller liable?
1. When it is not possible to identify the manufacturer
or producer or importer
2. The product supplied does not clearly identify the
manufacturer or producer or importer
3. He does not adequately preserve perishable goods
o What is the liability for product or service imperfection?
If the products are unfit or inadequate for
consumption, or there is inconsistency with
information in the container
The provider must correct the imperfection within 30
days of demand by the consumer (parties can change
period to 7-180 days, min and max)
What are the options of the consumer if the
provider fails to correct it?
1. Replacement of the product
2. Immediate reimbursement of the amount
paid
3. Proportionate price reduction
When can an engineer, architect, or contractor be liable for
collapse of a building?
o The engineer or architect who drew up plans and specifications
is liable for damages if within 15 years from completion, if it
collapses due to:
1. defects in the plans OR
2. defects in the ground
o The contractor is liable for damages if within 15 years the
edifice falls due to:
1. defects in construction
2. use of inferior materials
Special liability in particular activities
What is the special liability of provinces, cities, municipalities as to
roads and streets?
o They are liable for injuries caused by defective condition of
roads and streets.
o This special liability trumps provisions on liability arising from
charters and general laws.
o The road or street need not necessarily be owned by the LGU
(thus it can be a national road). What matters is that it is under
the control of supervision of the said road/street.
What is the responsibility of a proprietor of a building/structure?
o He is responsible for injuries caused by its total or partial
collapse, if it be due to lack of necessary repairs
o The doctrine of last clear chance does not apply here (De Roy
v. CA)
o Proprietors likewise are responsible for:
1. Explosion of machinery not taken care of with due
diligence
2. Excessive smoke harmful to persons/property
3. Falling trees situated near highways or lanes, if not
due to force majeure
4. Emanations from tubes, canals, sewers, or
deposits of infectious matter constructed without
precautions
What is the responsibility of manufacturers and processors?
o In general, manufacturers and processors of foodstuffs, drinks,
toilet articles, and similar goods are liable for damages for
death and injuries caused by noxious or harmful substances
used, even if there is no contractual relation with the
consumers.
o When is a product defective under the Consumer
Protection Act (CPA)?
When it does not offer the safety rightfully expected of
it, taking into account: a) presentation of the product,
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o
o
o
o 2. Moral
o 3. Nominal
o 4. Temperate or moderate
o 5. Liquidated
o 6. Exemplary or corrective
What are the general principles applied to damages?
o 1. Amount must be fair, just, and commensurate to the damage
o 2. Damage and amount proven by competent evidence
o 3. Only proximate damages, not remote or speculative, may be
recovered
What must be proved so that damages may be recovered?
o 1. Injury (legal invasion of a right)
o 2. Breach of duty (wrongful act, not just hurtful)
o 3. Breach must be the proximate cause of the injury
3. violation of terms of contract
What if the engineer/architect supervises
construction?
He is solidarily liable with the contractor
What is the effect of accepting the building?
It is not a waiver of action on these claims
What is the prescriptive period?
Within 10 years of collapse of building
Can the owner of the building demand reconstruction
thereof if the building collapses due to the fault of the
engineer, architect, or contractor?
Yes, he may. The obligation is an obligation to do. If
a person is obliged to do something in contravention
of an obligation, it may be executed at his own cost.
Or what has been poorly done can be undone, and
then reconstructed.
Actual or compensatory damages
What are actual damages?
o Compensation for pecuniary loss actually suffered and proved
by the plaintiff.
What is the general rule?
o One is entitled to adequate compensation only for pecuniary
loss suffered by him as has been proved.
o Measure is not defendant‟s gain, but plaintiff‟s loss.
Except in certain cases like in the IP Code (measured
by benefit of defendant)
What is the exception that recovery is limited to proven loss?
o 1. Stipulation
o 2. Provided by law (ex. fixed indemnity)
What are the kinds of actual damages?
o 1. Cano emergente – loss of what a person already possesses
o 2. Lucro cesante – failure to receive as a benefit that would
have pertained to him
What is “restitutio in integrum”?
o Amount awarded to the plaintiff must be that sum which will put
the party who was injured or who has suffered in the same
position as he would have been if he had not sustained the
injury
Strict liability
Who are instances that fall under the doctrine of strict liability?
o 1. Possessors and users of animals
o 2. Nuisance
o 3. Product liability/violations of Consumer Act
What is the liability of possessors and users of animals?
o The possessor, and not just the owner, of the offending animal
is liable even if the animal escapes or becomes lost. It does
not matter that the dog was tame and was merely provoked.
o The owner/possessor is liable as long as the animal causes
injury.
Nuisance: see Property Law
Manufacturers and processors: See above discussion
DAMAGES
What are the different kinds of damages?
o 1. Actual or compensatory
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What is the recoverable value in the following instances –
o Damage to property – value of the property at the time of
destruction
o Personal injury and death –
1. Reasonable expenses incurred to treat his or her
relative‟s injury
2. Future medical expenses
3. In case of death, for wake and funeral expenses
N.B. Expenses after burial are NOT compensable
Differentiate recoverable damages based on breach of contract or
quasi-contract, depending on GF or BF:
o Defendant in GF – liable for natural and probable
consequences of the breach which the parties could have
foreseen when the obligation was entered into
o Defendant in BF – liable for all damages reasonably
attributable to the obligation
What about recoverable damages from quasi delicts?
o Defendant is liable for all damages which are the natural and
probable consequences of the act or omission. It need not
have been foreseen or reasonably foreseen by the defendant.
A. What are covered by cano emergente?
o Court only gives credence to those expenses supported by a
receipt and which appear to have been incurred in connection
with the wake, death, or burial of the victim.
o The following cannot be recovered:
1. Incurred after considerable lapse of time from burial
or with no relation death, wake, or burial
2. Incurred for purely aesthetic or social purpose
3. Receipt appears to have been modified
4. Incurred before date of slaying of victim
5. Not in fact shouldered by heirs
Ex. plane tickets of relatives or in-laws
6. Merely incidental
7. Cannot reasonably be itemized
B. What is disability/commercial credit?
o 1. Actual damages for loss or impairment of earning capacity
for personal injury (temporary or permanent)
o
2. Actual damages for injury to business standing or
commercial credit
C. What is fixed indemnity?
o It does not replace the loss of earning capacity
o P50K payment to heirs of deceased
o P75K payment for qualified rape
D. What is the loss of earning capacity?
o Loss of earning capacity = Life expectancy x (Gross annual
income – necessary living expenses)
Note: Life expectancy: (2/3 x [80 – age at time of
death])
o How are net earnings proved?
Sufficient evidence to prove net earnings of the
deceased
Exceptions – when non-availability of
documentary evidence is fine:
1. Victim was self-employed earning less
than minimum wage
2. Victim was employed as a daily wage
worker earning less than minimum wage
o How are living expenses proved?
Fixed at 50% of the gross income in the absence of
proof of amount of living expenses
o What if the deceased was obliged to give support
according to law?
The recipient who is not an heir called to inheritance
by law may demand support from the person causing
death for a period not beyond 5 years (court sets the
length of time)
E. Interest
o 1. If there is a stipulation as to rate, apply it, unless it is
unconscionable and excessive – apply legal rate
o 2. If interest is imposed, but no rate stipulated, apply legal rate
A. Obligation involving payment of damages: 6%
Compute from date of demand if indemnities
can be established with reasonable certainty
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Compute from date of judgment of trial court,
if indemnities cannot be established with
reasonable certainty
B. Obligation involving loan or forbearance of money:
12%
Compute from date of default (extrajudicial
or judicial demand)
o 3. Once there is finality of judgment , interest becomes 12%
o Can there be interest for unliquidated damages?
No. There must be certainty of amount of damages
before interest is demanded.
F. Attorney’s fees
o What is the general rule?
Attorney‟s fees cannot be recovered
o What are the exceptions?
[Based on award]
1. Exemplary damages are awarded
2. Double judicial costs awarded
[Bad faith]
3. Malicious prosecution
4. Clearly unfounded civil actions against plaintiff
5. Defendant grossly acted in BF in refusing to satisfy
a plainly valid claim
6. Defendant‟s acts/omissions compelled plaintiff to
litigate with third persons or incur expenses to protect
his interests
[Nature of action]
7. Action for legal support
8. Action for recovery of wages
9. Indemnity under ECSIF and employer‟s liability
laws
10. Separate civil action to recover culpa criminal
liability
[Equity]
11. Any other case where the court deems it equitable
o What are the rules in awarding attorney’s fees?
Plaintiff must clearly state basis in the complaint
o
o
Court must state basis for the award, or else it‟s null
and void
As fees
go to lawyer
As damages
go to client
When can there be attorney’s lien?
There can be none, over real property subject of
litigation
If the action is for damages, can claim a lien on the
award
What is the basis of the amount?
That which is stipulated in the retainer agreement
If there is none stipulated, it is fixed on the basis of
quantum meruit – the reasonable worth of his
services
Moral damages
What are moral damages?
o To alleviate the moral suffering the injured party has
undergone by reason of the defendant‟s culpable action
What are the requisites of moral damages?
o 1. Injury sustained by claimant (physical, mental, or
psychological)
o 2. Culpable action or omission established
o 3. It is the proximate cause of the tortuous act (fraud or bad
faith)
o 4. Award of damages predicated on circumstances
enumerated below
o 5. Testimony or evidence proves the suffering caused
When is moral suffering presumed?
1. Rape
2. Murder
3. Homicide
In what circumstances may moral damages be awarded?
Culpa aquiliana
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Physical injuries
Intentional torts (e.g. human
relations chapter)
Culpa contractual
Culpa criminal
Contract of carriage
Labor cases
Bad faith (except banks – no need to
prove bad faith)
Gross negligence
Physical injuries
Lascivious acts
Adultery or concubinage
Illegal or arbitrary arrest
Illegal search
Defamation
Death of passenger
Fraud or bad faith
Bad faith
Oppression against labor
o
EXCEPT libel or slander against the corporation (damage of
corporate reputation)
Nominal damages
What are nominal damages?
o In order that a right of the plaintiff, which has been violated or
invaded by the defendant, may be vindicated or recognized
o Not for the purpose of indemnifying the plaintiff for loss
suffered
What is the nature of nominal damages?
o If there is absence of proof of actual damages, only nominal
damages are awarded
o Assessment of nominal damages up to the court. The plaintiff
has to just prove breach of right – no need to prove bad faith,
fraud, or malice.
Examples of violation of nominal damages:
o Violation of due process in labor cases, although dismissal
may be valid
o Act of bank which merely relied on entries in a deed of
mortgage without checking or adjusting its records, leading to
prejudice to plaintiff
Can nominal damages co-exist with actual damages or any other
kind of damages for that matter?
o No. Nominal damages ALWAYS stand alone.
Who may recover moral damages?
o Only the party who suffered.
o Except: parents of the child seduced, abducted, raped, or
abused
What are the factors in determining amount of moral damages?
o 1. Sentimental value
o 2. Extent of humiliation
o 3. Extent of pain and suffering
o 4. Standing of the offender and offended
o 5. Age of the claimant
What are the elements of malicious prosecution in criminal case?
o 1. Fact of prosecution and the action terminated with an
acquittal
o 2. Prosecutor acted without probable cause
o 3. There was legal malice
What are the elements of malicious prosecution in civil case?
o 1. False allegation
o 2. Lack of probable cause
o 3. Malice or bad faith
o 4. Injury
o 5. Action terminated
Can corporations and other artificial beings be entitled to moral
damages?
o No.
Temperate damages
What are temperate or moderate damages?
o These are more than nominal, but less than actual. These are
awarded when the court finds some pecuniary loss has been
suffered but the amount, from the nature of the case, cannot
be established with certainty.
Ex. NAPOCOR‟s construction of geothermal plants resulted into
damages to a nearby resort. There is pecuniary loss, but it cannot be
ascertained so temperate damages were awarded.
Liquidated damages
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o
o
o
o
o
o
[acts of other party]
3. Contributory negligence of the other party
4. Plaintiff himself contravened terms of the contract
5. Plaintiff derived some benefit from the contract
[equity]
6. When defendant acted upon advice of counsel which led to
exemplary damages being awarded
o 7. Loss would have resulted anyway
o 8. Defendant has done his best to lessen the plaintiff‟s loss or
injury since the filing of the action
What is the duty of the party suffering loss or injury?
o Must exercise diligence of GFF to minimize damages arising
from the act or omission in question
What is the doctrine of avoidable consequences?
o A party cannot recover damages from consequences which the
party could reasonably have avoided
o These are acts or omissions of the plaintiff after the
defendant‟s act or omission (as opposed to contributory
negligence, which precedes the act or omission)
What are liquidated damages?
o Those agreed upon by the parties in a contract, in case of
breach thereof.
Can these co-exist with actual damages?
o No. Liquidated and actual damages are mutually exclusive.
What is the general rule?
o Liquidated damages substitute for damages and interest.
Exceptions?
o 1. Stipulated otherwise
o 2. Interest was not paid
o 3. Fraud
Exemplary or corrective damages
What are exemplary damages?
o Those imposed by way of example or correction for the public
good.
o In addition to moral, temperate, liquidated, or actual damages
Who determines when exemplary damages are given?
o The courts, on its discretion. It cannot be:
demanded
alleged
waived
What must be established first?
o Claimant must first establish its right to actual, moral,
temperate, or liquidated damages
When is it awarded?
o Culpa aquiliana
attended by gross negligence
o Culpa contractual
wanton, fraudulent, reckless, oppressive,
or malevolent manner
o Culpa criminal
attended by aggravating circumstances
Damages in case of death
1. Indemnity for death: fixed at 50K
2. Indemnity for loss of earning capacity
o Unless the deceased had no earning capacity at said time
o If deceased obliged to give support, the recipient who is not an
heir may demand support from the accused for a period not
exceeding 5 years, in a period set by court
3. Moral damages for mental anguish
o ONLY spouse, legitimate or illegitimate descendants and
ascendants (SAD)
o Not brothers/sisters
4. Exemplary damages
o If crime attended by aggravating circumstances
5. Attorney’s fees and expenses of litigation
o When a separate civil action to recover civil liability from a
crime is filed
o Or there are exemplary damages awarded
Mitigation of damages
What are the factors that mitigate liability?
o [defenses]
o 1. Diligence of a GFF
o 2. Mitigating circumstances
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6. Interests, if proper
214