ATENEO CENTRAL
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CIVIL LAW (AND PRACTICAL EXERCISES)
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CIVIL LAW (AND PRACTICAL EXERCISES)
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CIVIL LAW (AND PRACTICAL EXERCISES)
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CIVIL LAW (AND PRACTICAL EXERCISES)
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CIVIL LAW (AND PRACTICAL EXERCISES)
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CIVIL LAW (AND PRACTICAL EXERCISES)
TABLE OF CONTENTS
PART I: CIVIL LAW I ............................................................................................................................ 18
I.
PRELIMINARY TITLE .................................................................................................................... 18
A.
B.
II.
EFFECT AND APPLICATION OF LAWS .................................................................................... 18
1. WHEN LAW TAKES EFFECT ..................................................................................................... 18
2. RETROACTIVITY OF LAWS ....................................................................................................... 19
3. MANDATORY OR PROHIBITORY LAWS ................................................................................... 19
4. WAIVER OF RIGHTS ................................................................................................................ 19
5. REPEAL OF LAWS .................................................................................................................... 20
6. JUDICIAL DECISIONS ............................................................................................................... 20
7. DOUBTFUL STATUTES ............................................................................................................. 21
8. CUSTOMS................................................................................................................................ 21
9. RULE ON PERIODS .................................................................................................................. 21
10.CONFLICT OF LAWS (UNDER THE CIVIL CODE) ....................................................................... 21
HUMAN RELATIONS............................................................................................................. 24
PERSONS AND FAMILY RELATIONS.............................................................................................. 29
A.
B.
C.
D.
E.
PERSONS ............................................................................................................................. 30
1. CIVIL PERSONALITY (ART. 44-47, NCC) ................................................................................... 30
2. USE OF SURNAMES................................................................................................................. 31
3. ENTRIES IN THE CIVIL REGISTRY AND CLERICAL ERROR LAW (R.A. 9048, AS AMENDED) ...... 31
4. ABSENCE ................................................................................................................................. 32
A. CIVIL CODE PROVISIONS............................................................................................... 32
B. PRESUMPTIVE DEATH OF ABSENT SPOUSE UNDER THE FAMILY CODE....................... 33
MARRIAGE .......................................................................................................................... 34
1. REQUISITES OF MARRIAGE..................................................................................................... 34
2. EXEMPTION FROM LICENSE REQUIREMENT .......................................................................... 34
3. MARRIAGES SOLEMNIZED ABROAD AND FOREIGN DIVORCE................................................ 36
4. VOID AND VOIDABLE MARRIAGES ......................................................................................... 38
A. ANNULMENT UNDER ARTICLE 36 (AS RECENTLY ARTICULATED UNDER TAN-ANDAL V.
ANDAL, G.R. NO. 196359, MAY 11, 2022; TOTALITY OF EVIDENCE RULE)................... 41
LEGAL SEPARATION ............................................................................................................. 45
1. GROUNDS ............................................................................................................................... 45
2. DEFENSES................................................................................................................................ 45
3. PROCEDURE............................................................................................................................ 45
4. EFFECTS OF FILING PETITION.................................................................................................. 45
5. EFFECTS OF PENDENCY........................................................................................................... 45
6. EFFECTS OF DECREE OF LEGAL SEPARATION (ART. 63).......................................................... 46
7. RECONCILIATION .................................................................................................................... 46
8. EFFECT OF DEATH OF ONE OF THE PARTIES........................................................................... 46
RIGHTS AND OBLIGATIONS BETWEEEN HUSBAND AND WIFE............................................... 47
PROPERTY RELATIONS BETWEEN HUSBAND AND WIFE ....................................................... 47
1. GENERAL PROVISIONS ............................................................................................................ 47
2. DONATIONS BY REASON OF MARRIAGE ................................................................................ 48
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CIVIL LAW (AND PRACTICAL EXERCISES)
3. ABSOLUTE COMMUNITY OF PROPERTY ................................................................................ 49
4. CONJUGAL PARTNERSHIP OF GAINS ...................................................................................... 51
5. SEPARATION OF PROPERTY AND ADMINISTRATION OF COMMON PROPERTY BY ONE SPOUSE
DURING THE MARRIAGE.............................................................................................................. 54
6. REGIME OF SEPARATION OF PROPERTY................................................................................. 54
7. PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE .......................................................... 56
FAMILY HOME (NOTE: THIS SECTION INCLUDES THE WHOLE DISCUSSION ON FAMILY) ........ 58
1. FAMILY (ART. 149) .................................................................................................................. 58
2. FAMILY HOME ........................................................................................................................ 59
PATERNITY AND FILIATION .................................................................................................. 60
1. LEGITIMATE CHILDREN ........................................................................................................... 60
2. PROOF OF FILIATION .............................................................................................................. 60
3. ILLEGITIMATE CHILDREN ........................................................................................................ 62
4. LEGITIMATED CHILDREN ........................................................................................................ 63
ADOPTION........................................................................................................................... 65
1. DOMESTIC ADOPTION (R.A. NO. 8552) .................................................................................. 65
A. WHO MAY ADOPT ........................................................................................................ 65
B. WHO MAY BE ADOPTED............................................................................................... 65
C. RIGHTS OF AN ADOPTED CHILD ................................................................................... 66
D. INSTANCES AND EFFECTS OF RESCISSION.................................................................... 66
2. INTER-COUNTRY ADOPTION (RA 8043).................................................................................. 67
A. WHEN ALLOWED .......................................................................................................... 67
B. WHO MAY ADOPT ........................................................................................................ 67
C. WHO MAY BE ADOPTED............................................................................................... 67
SUPPORT ............................................................................................................................. 68
1. WHAT IT COMPRISES .............................................................................................................. 68
2. WHO ARE OBLIGED TO GIVE SUPPORT .................................................................................. 68
3. SOURCE OF SUPPORT ............................................................................................................. 68
4. ORDER OF SUPPORT ............................................................................................................... 69
5. AMOUNT OF SUPPORT ........................................................................................................... 69
6. MANNER AND TIME OF PAYMENT ......................................................................................... 69
7. RENUNCIATION AND TERMINATION...................................................................................... 69
8. SUPPORT PENDENTE LITE ....................................................................................................... 69
9. PROCEDURE IN APPLICATION FOR SUPPORT ......................................................................... 70
PARENTAL AUTHORITY ........................................................................................................ 70
1. GENERAL PROVISIONS ............................................................................................................ 70
2. SUBSTITUTE PARENTAL AUTHORITY ...................................................................................... 71
3. SPECIAL PARENTAL AUTHORITY ............................................................................................. 71
4. EFFECT OF PARENTAL AUTHORITY OVER THE CHILD’S PERSON ............................................ 72
5. EFFECTS OF PARENTAL AUTHORITY OVER THE CHILD’S PROPERTY....................................... 72
6. SUSPENSION OR TERMINATION OF PARENTAL AUTHORITY.................................................. 73
7. SOLO PARENTS ACT (R.A. NO. 8972) ...................................................................................... 73
EMANCIPATION................................................................................................................... 74
1. CAUSE OF EMANCIPATION ..................................................................................................... 74
2. EFFECT OF EMANCIPATION .................................................................................................... 74
RETROACTIVITY OF FAMILY CODE........................................................................................ 74
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III. SUCCESSION ............................................................................................................................... 76
A.
B.
C.
D.
GENERAL PROVISIONS......................................................................................................... 76
1. DEFINITION ............................................................................................................................. 76
2. SUCCESSION OCCURS AT THE MOMENT OF DEATH .............................................................. 76
3. KINDS OF SUCCESSORS........................................................................................................... 77
TESTAMENTARY SUCCESSION .............................................................................................. 77
1. WILLS ...................................................................................................................................... 77
2. INSTITUTION OF HEIRS ........................................................................................................... 89
3. SUBSTITUTION OF HEIRS ........................................................................................................ 92
4. CONDITIONAL TESTAMENTARY DISPOSITIONS AND DISPOSITIONS WITH A TERM............... 94
5. LEGITIME ................................................................................................................................ 96
6. DISINHERITANCE................................................................................................................... 104
7. LEGACIES AND DEVISES ........................................................................................................ 109
LEGAL AND INTESTATE SUCCESSION .................................................................................. 113
1. GENERAL PROVISIONS; RELATIONSHIP AND RIGHT OF REPRESENTATION.......................... 113
A. RELATIONSHIP ............................................................................................................ 114
B. RIGHT OF REPRESENTATION ...................................................................................... 115
2. ORDER OF INTESTATE SUCCESSION ..................................................................................... 116
PROVISIONS COMMON TO TESTATE AND INTESTATE SUCCESSION .................................... 121
1. RIGHT OF ACCRETION........................................................................................................... 121
2. CAPACITY TO SUCCEED BY WILL OR INTESTACY................................................................... 121
3. ACCEPTANCE AND REPUDIATION OF INHERITANCE ............................................................ 125
4. PARTITION AND DISTRIBUTION OF ESTATE.......................................................................... 128
IV. OBLIGATIONS AND CONTRACTS................................................................................................ 132
A.
OBLIGATIONS .................................................................................................................... 132
1. GENERAL PROVISIONS .......................................................................................................... 132
A. DEFINITION................................................................................................................. 132
B. ELEMENTS OF AN OBLIGATION.................................................................................. 132
C. SOURCES OF OBLIGATIONS ........................................................................................ 133
2. NATURE AND EFFECT............................................................................................................ 135
A. OBLIGATION TO GIVE ................................................................................................. 135
B. OBLIGATION TO DO OR NOT TO DO .......................................................................... 135
C. TRANSMISSIBILITY OF OBLIGATIONS ......................................................................... 136
D. PERFORMANCE OF OBLIGATIONS .............................................................................. 136
E. BREACHES OF OBLIGATIONS ...................................................................................... 136
F. REMEDIES AVAILABLE TO CREDITOR IN CASES OF BREACH....................................... 141
3. KINDS OF OBLIGATIONS ....................................................................................................... 141
A. PURE OBLIGATIONS.................................................................................................... 141
B. CONDITIONAL OBLIGATIONS ..................................................................................... 141
C. OBLIGATIONS WITH A PERIOD OR A TERM................................................................ 143
D. ALTERNATIVE OR FACULTATIVE OBLIGATIONS.......................................................... 145
E. JOINT AND SOLIDARY OBLIGATIONS.......................................................................... 146
F. OBLIGATIONS WITH A PENAL CLAUSE ....................................................................... 150
4. EXTINGUISHMENT ................................................................................................................ 151
A. PAYMENT OR PERFORMANCE.................................................................................... 152
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B.
B.
C.
D.
E.
F.
V.
LOSS OF DETERMINABLE THING DUE OR IMPOSSIBILITY OR DIFFICULTY OF
PERFORMANCE .......................................................................................................... 158
C. CONDONATION OR REMISSION OF DEBT .................................................................. 159
D. CONFUSION................................................................................................................ 160
E. COMPENSATION......................................................................................................... 160
F. NOVATION.................................................................................................................. 161
CONTRACTS....................................................................................................................... 164
1. GENERAL PROVISIONS .......................................................................................................... 164
A. STAGES OF CONTRACTS ............................................................................................. 164
B. CLASSIFICATIONS........................................................................................................ 164
2. ESSENTIAL REQUISITES ......................................................................................................... 166
A. CONSENT .................................................................................................................... 166
B. SUBJECT MATTER (SM)............................................................................................... 170
C. CAUSE OR CONSIDERATION ....................................................................................... 171
3. REFORMATION OF INSTRUMENTS ....................................................................................... 172
4. INTERPRETATION OF CONTRACTS........................................................................................ 173
5. RESCISSIBLE CONTRACTS ...................................................................................................... 173
6. VOIDABLE CONTRACTS ......................................................................................................... 175
7. UNENFORCEABLE CONTRACTS ............................................................................................. 176
8. VOID OR INEXISTENT CONTRACTS........................................................................................ 177
NATURAL OBLIGATIONS .................................................................................................... 179
ESTOPPEL .......................................................................................................................... 180
TRUSTS.............................................................................................................................. 180
1. EXPRESS TRUST..................................................................................................................... 181
2. IMPLIED TRUST ..................................................................................................................... 182
A. IMPLIED TRUST WHEN PROPERTY IS GRANTED TO ONE/TRUSTEE BUT PRICE IS PAID
BY ANOTHER FOR THE INTEREST OF BENEFICIARY .................................................... 183
B. IMPLIED TRUST IN DONATION ................................................................................... 183
C. IMPLIED TRUST IN SALE OF PROPERTY ...................................................................... 183
D. IMPLIED TRUST IN CO-OWNERSHIP ........................................................................... 183
E. IMPLIED TRUST IN SUCCESSION ................................................................................. 183
F. PROPERTY CONVEYED IN RELIANCE UPON HIS DECLARED INTENTION TO HOLD IT FOR
ANOTHER.................................................................................................................... 184
G. AN ABSOLUTE CONVEYANCE TO SECURE PERFORMANCE OF OBLIGATION.............. 184
H. TRUSTEE’S USE OF FUNDS HELD IN TRUST ................................................................ 184
I. PROPERTY ACQUIRED THROUGH MISTAKE OR FRAUD.............................................. 184
QUASI-CONTRACTS............................................................................................................ 185
SALES........................................................................................................................................ 188
A.
B.
NATURE AND FORM .......................................................................................................... 188
1. ESSENTIAL REQUISITES ......................................................................................................... 188
A. ELEMENTS OF A CONTRACT OF SALE: (CSP)............................................................... 188
B. REQUISITES OF A VALID SUBJECT MATTER (ARTS. 1459-1465) ................................. 192
C. REQUISITES FOR A VALID PRICE (REM-C) ................................................................... 193
2. PERFECTION OF SALES.......................................................................................................... 195
3. CONTRACT OF SALE V. CONTRACT TO SELL.......................................................................... 195
CAPACITY TO BUY OR SELL................................................................................................. 196
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D.
E.
F.
G.
H.
CIVIL LAW (AND PRACTICAL EXERCISES)
1. ABSOLUTE INCAPACITY......................................................................................................... 196
2. RELATIVE INCAPACITY .......................................................................................................... 196
EFFECTS OF THE CONTRACT WHEN THE THING SOLD HAS BEEN LOST ................................ 198
OBLIGATIONS OF VENDOR ................................................................................................. 198
1. OBJECTS THAT THE VENDOR HAS TO DELIVER: (THI-F-A) .................................................... 198
2. OBLIGATIONS OF THE VENDOR ............................................................................................ 198
OBLIGATIONS OF VENDEE .................................................................................................. 200
BREACH OF CONTRACT ...................................................................................................... 201
1. REMEDIES ............................................................................................................................. 201
A. REMEDIES OF SELLER IN CASE OF MOVABLES ........................................................... 201
B. REMEDIES OF SELLER IN CASE OF SALE OF IMMOVABLES ......................................... 202
C. REMEDIES OF BUYER.................................................................................................. 202
2. RECTO LAW AND MACEDA LAW........................................................................................... 203
A. RECTO LAW: SALE OF MOVABLES ON INSTALLMENT (ARTS. 1484-1486) ................. 203
B. MACEDA LAW (R.A. 6552).......................................................................................... 204
3. OTHER REMEDIES ................................................................................................................. 205
A. REMEDIES IN DOUBLE SALES ...................................................................................... 205
B. REMEDY OF RESCISSION IN CONTRACTS COVERING IMMOVABLES (ARTS. 1191 &
1592) 206
EXTINGUISHMENT ............................................................................................................. 207
1. IN GENERAL .......................................................................................................................... 207
2. PACTO DE RETRO/CONVENTIONAL REDEMPTION (SALE WITH RIGHT TO REPURCHASE) ... 207
3. EQUITABLE MORTGAGE ....................................................................................................... 208
4. LEGAL REDEMPTION............................................................................................................. 209
ASSIGNMENT OF CREDITS .................................................................................................. 211
VI. LEASE........................................................................................................................................ 214
A.
B.
GENERAL PROVISIONS ....................................................................................................... 214
1. LEASE OF THINGS.................................................................................................................. 214
2. LEASE OF WORK AND SERVICES ........................................................................................... 214
RIGHTS AND OBLIGATIONS OF THE LESSOR AND OF THE LESSEE ........................................ 215
1. OBLIGATIONS OF THE LESSOR (ART. 1654) (DNM) .............................................................. 215
2. OBLIGATIONS OF THE LESSEE (ART. 1657) (PUP) ................................................................. 215
VII. PARTNERSHIP ........................................................................................................................... 220
A.
B.
GENERAL PROVISIONS....................................................................................................... 220
1. DEFINITION ........................................................................................................................... 220
2. ELEMENTS............................................................................................................................. 220
3. CHARACTERISTICS................................................................................................................. 221
4. RULES TO DETERMINE EXISTENCE........................................................................................ 221
5. PARTNERSHIP TERM ............................................................................................................. 221
6. PARTNERSHIP BY ESTOPPEL ................................................................................................. 222
7. PARTNERSHIP AS DISTINGUISHED FROM JOINT VENTURE .................................................. 222
8. PROFESSIONAL PARTNERSHIP .............................................................................................. 223
9. MANAGEMENT ..................................................................................................................... 224
OBLIGATIONS OF THE PARTNERS ....................................................................................... 224
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D.
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1. RIGHTS AND OBLIGATIONS OF THE PARTNERSHIP .............................................................. 224
2. OBLIGATIONS OF PARTNERS AMONG THEMSELVES............................................................ 225
3. OBLIGATIONS OF PARTNERS TO THIRD PERSONS ................................................................ 228
DISSOLUTION AND WINDING UP ....................................................................................... 230
1. CAUSES OF DISSOLUTION (CIVIL CODE, ART. 1830) ............................................................. 230
2. EFFECTS OF DISSOLUTION .................................................................................................... 231
A. AUTHORITY OF PARTNER TO BIND PARTNERSHIP ..................................................... 231
B. QUALIFICATIONS ........................................................................................................ 231
C. POST DISSOLUTION (CIVIL CODE, ART. 1834) ............................................................ 231
3. RIGHTS OF PARTNERS UPON DISSOLUTION ......................................................................... 231
A. RIGHTS OF PARTNER WHERE DISSOLUTION NOT IN CONTRAVENTION OF AGREEMENT
232
B. RIGHTS OF PARTNER WHERE DISSOLUTION IN CONTRAVENTION OF AGREEMENT . 232
C. RIGHTS OF INJURED PARTNER WHERE PARTNERSHIP CONTRACT IS RESCINDED ON
GROUND OF FRAUD/MISREPRESENTATION BY ONE PARTY (CIVIL CODE, ART. 1838)
232
D. SETTLEMENT OF ACCOUNTS BETWEEN PARTNERS ................................................... 232
4. WHEN BUSINESS OF DISSOLVED PARTNERSHIP IS CONTINUED .......................................... 232
5. PERSONS AUTHORIZED TO WIND UP ................................................................................... 232
LIMITED PARTNERSHIP ...................................................................................................... 233
1. CHARACTERISTICS OF LIMITED PARTNERSHIP ..................................................................... 233
2. GENERAL PARTNERS V. LIMITED PARTNERS ........................................................................ 233
3. REQUIREMENTS FOR FORMATION OF LIMITED PARTNERSHIP............................................ 233
4. CONSENT/RATIFICATION OF ALL LIMITED PARTNERS NEEDED............................................ 234
5. RIGHTS OF LIMITED PARTNERS ............................................................................................ 234
6. REQUISITES FOR RETURN OF CONTRIBUTION OF LIMITED PARTNER.................................. 234
7. LIABILITIES OF A LIMITED PARTNER ..................................................................................... 234
8. DISSOLUTION OF LIMITED PARTNERSHIP............................................................................. 235
9. AMENDMENT OF CERTIFICATE OF PARTNERSHIP ................................................................ 235
VIII. AGENCY .................................................................................................................................... 238
A.
B.
DEFINITION OF AGENCY..................................................................................................... 238
1. CHARACTERISTICS................................................................................................................. 238
2. ESSENTIAL ELEMENTS (CROW)............................................................................................. 239
NATURE, FORMS, AND KINDS OF AGENCY ......................................................................... 239
1. NATURE OF RELATIONSHIP................................................................................................... 239
2. OTHER CLASSIFICATIONS OF AGENCY .................................................................................. 241
A. AS TO MANNER OF CREATION ................................................................................... 241
B. AS TO CHARACTER...................................................................................................... 241
C. AS TO EXTENT OF BUSINESS OF THE PRINCIPAL ........................................................ 241
D. AS TO AUTHORITY CONFERRED ................................................................................. 241
E. AS TO NATURE AND EFFECTS ..................................................................................... 241
3. FORMS OF AGENCY .............................................................................................................. 241
4. KINDS OF AGENCY ................................................................................................................ 243
A. BASED ON BUSINESS OR TRANSACTIONS ENCOMPASSED ........................................ 243
B. WHETHER IT COVERS LEGAL MATTERS ...................................................................... 243
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C.
C.
D.
E.
WHETHER IT COVERS ACTS OF ADMINISTRATION OR ACTS OF DOMINION – GENERAL
POWER VS. SPECIAL POWER OF ATTORNEY .............................................................. 244
5. HOW AGENCY IS REVOKED ................................................................................................... 246
OBLIGATIONS OF THE AGENT ............................................................................................ 247
1. GENERAL OBLIGATIONS........................................................................................................ 247
2. EFFECTS OF AGENT’S ACTS TO PRINCIPAL’S LIABILITY ......................................................... 247
3. APPOINTMENT OF SUB-AGENT ............................................................................................ 248
4. RESPONSIBILITY OF TWO (2) OR MORE AGENTS APPOINTED SIMULTANEOUSLY ............... 248
5. OBLIGATION RULES FOR COMMISSION AGENTS ................................................................. 251
OBLIGATIONS OF THE PRINCIPAL ....................................................................................... 251
1. OBLIGATIONS OF THE PRINCIPAL TO THE AGENT ................................................................ 251
2. RULES ON LIABILITY OF TWO (2) OR MORE PRINCIPALS...................................................... 252
3. PRINCIPAL’S LIABILITIES FOR EXPENSES ............................................................................... 252
4. AGENCY BY ESTOPPEL .......................................................................................................... 252
5. PRINCIPAL'S REVOCATION OF THE AGENCY......................................................................... 253
6. PRINCIPAL’S LIABILITY FOR DAMAGES DESPITE REVOCATION............................................. 253
MODES OF EXTINGUISHMENT ........................................................................................... 254
1. HOW AGENCY IS EXTINGUISHED .......................................................................................... 254
2. OTHER MODES...................................................................................................................... 254
3. EXCEPTIONS TO EXTINGUISHMENT BY DEATH..................................................................... 254
IX. CREDIT TRANSACTIONS............................................................................................................. 257
A.
B.
C.
D.
X.
LOAN................................................................................................................................. 257
1. IN GENERAL .......................................................................................................................... 257
2. COMMODATUM ................................................................................................................... 258
3. SIMPLE LOAN ........................................................................................................................ 260
4. INTERESTS ON LOAN ............................................................................................................ 260
DEPOSIT ............................................................................................................................ 263
GUARANTY AND SURETYSHIP ............................................................................................ 271
QUASI-CONTRACTS............................................................................................................ 281
TORTS AND DAMAGES.............................................................................................................. 284
A.
TORTS ............................................................................................................................... 284
1. ELEMENTS............................................................................................................................. 284
2. CULPA AQUILIANA V. CULPA CONTRACTUAL V. CULPA CRIMINAL ...................................... 284
3. VICARIOUS LIABILITY ............................................................................................................ 285
A. FATHER/MOTHER FOR THEIR MINOR CHILDREN....................................................... 285
B. GUARDIANS ARE LIABLE FOR THE MINORS AND INCAPACITATED PERSONS UNDER
THEIR AUTHORITY. ................................................................................................... 285
C. SCHOOLS, ADMINISTRATORS AND TEACHERS, AND INDIVIDUALS, ENTITIES OR
INSTITUTIONS ENGAGED IN CHILD CARE HAVING SPECIAL PARENTAL AUTHORITY
OVER CHILDREN. ........................................................................................................ 285
D. OWNERS/MANAGERS OF ESTABLISHMENT OR ENTERPRISE FOR THEIR EMPLOYEES.
286
E. EMPLOYERS FOR THEIR EMPLOYEES AND HOUSEHOLD HELPERS. ......................... 286
F. STATE FOR THEIR SPECIAL AGENTS............................................................................ 286
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G.
B.
C.
D.
TEACHERS/HEADS OF ESTABLISHMENT OF ARTS AND TRADES FOR THEIR PUPILS/
STUDENTS/APPRENTICES (ART. 2180, NCC)............................................................... 286
4. RES IPSA LOQUITUR.............................................................................................................. 286
5. LAST CLEAR CHANCE............................................................................................................. 287
6. DAMNUM ABSQUE INJURIA ................................................................................................. 287
PROXIMATE CAUSE............................................................................................................ 288
NEGLIGENCE...................................................................................................................... 290
1. STANDARD OF CARE ............................................................................................................. 290
2. PRESUMPTIONS .................................................................................................................... 291
DAMAGES ......................................................................................................................... 291
1. GENERAL PROVISIONS .......................................................................................................... 291
2. KINDS OF DAMAGES ............................................................................................................. 291
A. ACTUAL DAMAGES ..................................................................................................... 291
B. MORAL DAMAGES...................................................................................................... 297
C. NOMINAL DAMAGES.................................................................................................. 298
D. TEMPERATE DAMAGES .............................................................................................. 298
E. LIQUIDATED DAMAGES .............................................................................................. 298
F. EXEMPLARY DAMAGES .............................................................................................. 298
3. IN CASE OF DEATH................................................................................................................ 299
PART II: CIVIL LAW II (AND PRACTICAL EXERCISES) ........................................................................... 308
I.
PROPERTY ................................................................................................................................ 308
A.
B.
C.
D.
CLASSIFICATION OF PROPERTY .......................................................................................... 309
1. IMMOVABLES ....................................................................................................................... 309
2. MOVABLES............................................................................................................................ 311
OWNERSHIP ...................................................................................................................... 312
1. GENERAL PROVISIONS .......................................................................................................... 312
A. BUNDLE OF RIGHTS .................................................................................................... 312
B. DISTINCTION BETWEEN REAL AND PERSONAL RIGHTS ............................................. 313
C. MODES OF ACQUIRING OWNERSHIP ......................................................................... 313
D. LIMITATIONS OF OWNERSHIP.................................................................................... 313
2. RULES OF ACCESSION ........................................................................................................... 314
A. FOR IMMOVABLES ..................................................................................................... 315
B. FOR MOVABLES.......................................................................................................... 320
C. RIGHTS OF BUILDER/PLANTER/SOWER IN GOOD FAITH ........................................... 322
CO-OWNERSHIP ................................................................................................................ 325
1. CHARACTERISTICS OF CO-OWNERSHIP ................................................................................ 325
2. SOURCES OF CO-OWNERSHIP .............................................................................................. 325
3. RIGHTS OF CO-OWNERS ....................................................................................................... 325
4. TERMINATION OF CO-OWNERSHIP ...................................................................................... 327
POSSESSION ...................................................................................................................... 329
1. CHARACTERISTICS................................................................................................................. 329
2. KINDS OF POSSESSION.......................................................................................................... 329
3. ACQUISITION OF POSSESSION.............................................................................................. 330
4. EFFECTS OF POSSESSION ...................................................................................................... 331
5. LOSS OR UNLAWFUL DEPRIVATION OF A MOVABLE ........................................................... 335
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F.
G.
H.
I.
CIVIL LAW (AND PRACTICAL EXERCISES)
USUFRUCT ......................................................................................................................... 336
1. CHARACTERISTICS................................................................................................................. 336
2. CLASSIFICATION.................................................................................................................... 337
3. RIGHTS AND OBLIGATIONS OF USUFRUCTUARY.................................................................. 339
4. RIGHTS OF THE OWNER........................................................................................................ 341
5. EXTINCTION, TERMINATION, AND EXTINGUISHMENT......................................................... 341
EASEMENTS....................................................................................................................... 342
1. CHARACTERISTICS................................................................................................................. 343
2. CLASSIFICATION.................................................................................................................... 343
3. MODES OF ACQUIRING EASEMENTS .................................................................................... 344
4. RIGHTS AND OBLIGATIONS OF THE OWNERS OF THE DOMINANT AND SERVIENT ESTATES
345
5. MODES OF EXTINGUISHMENT.............................................................................................. 346
6. LEGAL VS. VOLUNTARY EASEMENT ...................................................................................... 346
7. KINDS OF LEGAL EASEMENTS ............................................................................................... 346
A. RELATING TO WATERS ............................................................................................... 346
B. RIGHT OF WAY ........................................................................................................... 347
C. LIGHT AND VIEW ........................................................................................................ 348
NUISANCE ......................................................................................................................... 348
1. NUISANCE PER SE ................................................................................................................. 349
2. NUISANCE PER ACCIDENS ..................................................................................................... 349
3. LIABILITIES ............................................................................................................................ 349
4. NO PRESCRIPTION ................................................................................................................ 349
5. REMEDIES AGAINST A PUBLIC NUISANCE ............................................................................ 349
6. REMEDIES AGAINST A PRIVATE NUISANCE .......................................................................... 350
7. CRIMINAL PROSECUTION ..................................................................................................... 350
8. JUDGMENT WITH ABATEMENT ............................................................................................ 350
9. EXTRAJUDICIAL ABATEMENT................................................................................................ 350
10.SPECIAL INJURY TO INDIVIDUAL ........................................................................................... 351
11.RIGHT OF INDIVIDUAL TO ABATE A PUBLIC NUISANCE........................................................ 351
12.RIGHT TO DAMAGES............................................................................................................. 351
13.DEFENSES TO ACTION........................................................................................................... 351
14.WHO MAY SUE ON PRIVATE NUISANCE ............................................................................... 351
MODES OF ACQUIRING OWNERSHIP ................................................................................. 351
1. OCCUPATION ........................................................................................................................ 351
2. DONATIONS .......................................................................................................................... 352
A. NATURE ...................................................................................................................... 352
B. PERSONS WHO MAY GIVE OR RECEIVE...................................................................... 354
C. EFFECTS AND LIMITATIONS OF DONATIONS ............................................................. 355
D. REVOCATION AND REDUCTION OF DONATION ......................................................... 356
3. PRESCRIPTION ...................................................................................................................... 359
A. GENERAL PROVISIONS................................................................................................ 359
B. PRESCRIPTION OF OWNERSHIP AND OTHER REAL RIGHTS ....................................... 359
C. PRESCRIPTION OF ACTIONS ....................................................................................... 362
QUIETING OF TITLE ............................................................................................................ 365
1. REQUISITES ........................................................................................................................... 365
2. DISTINCTIONS BETWEEN QUIETING TITLE AND REMOVING/PREVENTING CLOUD ............. 366
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J.
II.
CIVIL LAW (AND PRACTICAL EXERCISES)
3. PRESCRIPTION/NON-PRESCRIPTION OF ACTION ................................................................. 366
ACTIONS TO RECOVER PROPERTY ...................................................................................... 367
1. ACCION INTERDICTAL OR EJECTMENT SUIT ......................................................................... 367
2. ACCION PUBLICIANA ............................................................................................................ 368
3. ACCION REIVINDICATORIA ................................................................................................... 368
CREDIT TRANSACTIONS............................................................................................................. 373
A.
B.
PERSONAL PROPERTY SECURITIES (R.A. 11507).................................................................. 373
REAL ESTATE MORTGAGE .................................................................................................. 383
III. LAND TITLES & DEEDS ............................................................................................................... 393
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
TORRENS SYSTEM; GENERAL PRINCIPLES........................................................................... 393
REGALIAN DOCTRINE......................................................................................................... 396
ORIGINAL REGISTRATION .................................................................................................. 397
1. ORDINARY REGISTRATION .................................................................................................... 398
A. WHO MAY APPLY ....................................................................................................... 408
B. DECREE OF REGISTRATION......................................................................................... 409
C. REVIEW OF DECREE OF REGISTRATION; INNOCENT PURCHASER FOR VALUE...........410
CERTIFICATE OF TITLE ........................................................................................................ 411
SUBSEQUENT REGISTRATION ............................................................................................ 415
1. VOLUNTARY DEALINGS......................................................................................................... 418
2. INVOLUNTARY DEALINGS ..................................................................................................... 421
A. ADVERSE CLAIM ......................................................................................................... 421
B. NOTICE OF LIS PENDENS ............................................................................................ 423
NON-REGISTRABLE PROPERTIES ........................................................................................ 426
DEALINGS WITH UNREGISTERED LANDS ............................................................................ 427
ASSURANCE FUND ............................................................................................................. 428
1. ACTION OF COMPENSATION FROM FUNDS......................................................................... 429
2. LIMITATION OF ACTION........................................................................................................ 429
CADASTRAL SYSTEM OF REGISTRATION (ACT NO. 2259, AS AMENDED) ............................. 430
REGISTRATION THROUGH ADMINISTRATIVE PROCEEDINGS (C.A. 141, AS AMENDED) ....... 433
RECONSTITUTION OF TITLES .............................................................................................. 439
IV. PRACTICAL EXERCISES............................................................................................................... 450
A.
B.
DEMAND AND AUTHORIZATION LETTERS .......................................................................... 450
1. DEMAND LETTERS ................................................................................................................ 450
A. RELEVANT PROVISIONS .............................................................................................. 450
B. FORM: DEMAND LETTER ............................................................................................ 451
2. AUTHORIZATION LETTER ...................................................................................................... 452
A. DEFINITION................................................................................................................. 452
B. FORM: AUTHORIZATION LETTER................................................................................ 452
SIMPLE CONTRACTS .......................................................................................................... 453
1. LEASE AND SALE ................................................................................................................... 453
A. SPECIAL RULES FOR TRANSACTIONS INVOLVING REAL PROPERTY............................ 453
B. FORM: CONTRACT OF SALE AND LEASE ..................................................................... 454
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C.
D.
E.
F.
CIVIL LAW (AND PRACTICAL EXERCISES)
C. FORM: DEED OF SALE OF REGISTERED REAL PROPERTY............................................ 455
D. FORM: DEED OF SALE OF PERSONAL PROPERTY (MOTOR VEHICLE) ......................... 457
E. SPECIAL RULES FOR SALE OF PERSONAL PROPERTY .................................................. 458
F. FORM: CONTRACT OF LEASE ...................................................................................... 459
G. SPECIAL RULES FOR CONTRACT OF LEASE: ................................................................ 460
COMPLAINT....................................................................................................................... 460
1. DEFINITION ........................................................................................................................... 460
2. FORM: COMPLAINT .............................................................................................................. 460
JUDICIAL AFFIDAVIT .......................................................................................................... 462
1. DEFINITION ........................................................................................................................... 462
2. FORM: JUDICIAL AFFIDAVIT.................................................................................................. 462
SPECIAL POWER OF ATTORNEY.......................................................................................... 464
SUBSCRIPTION AGREEMENT.............................................................................................. 465
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CIVIL LAW (AND PRACTICAL EXERCISES)
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PART I: CIVIL LAW I
I.
PRELIMINARY TITLE
TOPIC OUTLINE UNDER THE SYLLABUS
A. EFFECT AND APPLICATION OF
LAWS
1. When Law Takes Effect
2. Retroactivity of Laws
3. Mandatory or Prohibitory Laws
4. Waiver of Rights
5. Repeal of Laws
6. Judicial Decisions
7. Doubtful Statutes
8. Customs
9. Rule on Periods
10. Conflict of Laws (Under the Civil
Code)
B. HUMAN RELATIONS
CIVIL LAW (AND PRACTICAL EXERCISES)
A. EFFECT AND APPLICATION OF LAWS
1. WHEN LAW TAKES EFFECT
GENERAL RULE: Laws shall take effect after
fifteen days following the completion of their
publication either in the Official Gazette or in a
newspaper of general circulation in the
Philippines, unless it is otherwise provided. (Article
2, New Civil Code as amended by E.O. No. 200)
NOTE: The phrase “unless it is otherwise
provided” as written in Article 2 of the New Civil
Code refers to the 15-day period before which a
law takes effect and not to provision in the same
article requiring publication. (Tañada v, Tuvera,
G.R. No. L-63915, 1986)
NOTES REGARDING PUBLICATION
1. Publication is mandatory.
2. Publication must be in full. Otherwise, it
is no publication at all. (Ibid.)
3. The purpose of publication is to inform
the public of its contents. (Ibid.)
4. It applies to all statutes, including local
and private laws, unless there are
special laws providing for a different
mechanism for the effectivity of specific
statutes. (Ibid.)
EFFECT OF NON-PUBLICATION:
1. If there is a lack of/absence of full
compliance with the publication
requirement, it will render the law
ineffective (Nagkakaisang Maralita ng
Sitio Masigasig, Inc. v. Military Shrince
Services, G.R. No. 187587)
2.
If there is lack of/absence of full
compliance with the publication
requirement, a citizen may be excused
from his non-compliance with the law if it
was done due to ignorance.
The publication requirement as
provided in Article 2 of the New Civil
Code is the legal basis for which the
implementation of Article 3 of the
New Civil Code, which provides that
Ignorance of the Law excuses no
one from compliance therewith, is
justified.
WHEN IS PUBLICATION NOT REQUIRED
1. Interpretative regulations and other
internal regulations which regulate only
the personnel of an administrative
agency and not the public.
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2.
Letters of Instruction issued by the
administrative superiors concerning rules
or guidelines to be followed by their
subordinates in the performance of their
duties.
EXCEPTION: When the law explicitly provides for
its
date
of
effectivity.
NOTES REGARDING THE EXCEPTION:
1. If the law provides for a different period,
regardless of the fact that the period
provided is shorter or longer than the 15day period as written in Article 2 of the
New Civil Code, that period will prevail.
2. If the law explicitly provides that it shall
take effect immediately, it means that the
law will take effect immediately after
compliance with the publication
requirement.
2. RETROACTIVITY OF LAWS
GENERAL RULE: Laws shall have no retroactive
effect, unless the contrary is provided (Article 4,
New Civil Code)
EXCEPTIONS:
1. When the law is penal in nature and is
favorable to the accused, who is not a
habitual criminal/delinquent (Article 22,
Revised Penal Code)
2. When the law expressly provides for
retroactivity
3. When the law is interpretative
4. When the law is curative
5. When the law is remedial
6. When the law is procedural
7. Emergency Laws
8. When the law is penal in character and is
favorable to the accused
EXCEPTION TO THE EXCEPTIONS:
1. Ex post facto laws
2. Bills of Attainder
3. When to give retroactive effect will impair
the obligation of contracts
4. When to give retroactive effect will affect
injuriously vested rights
5. When to give retroactive effect to a
change in a substantive law will
prejudice a party that has followed the
earlier law or judicial doctrine (People v.
Licera, L-39990)
6. When there is doubt as to whether the
legislature intended the law to have
retroactive effect.
CIVIL LAW (AND PRACTICAL EXERCISES)
7.
When the law is penal in nature and is
favorable to the accused, but the
accused is a habitual delinquent.
NOTE REGARDING RETROACTIVITY OF
PENAL LAWS: An accused is deemed to be a
habitual delinquent if, within 10 years from his or
her release or final conviction for the same crimes,
he was found guilty any of the following crimes for
the third time or as an oftener: serious or less
serious physical injuries, robo, hurto, estafa or
falsification.
3. MANDATORY OR PROHIBITORY
LAWS
General Rule: Acts executed against the
provisions of mandatory or prohibitory laws shall
be void. (Art. 5)
Exception: If the law expressly provides for the
validity of acts committed in violation of a
mandatory or prohibitory provision of a statute.
4. WAIVER OF RIGHTS
Right - A legally enforceable claim of one person
against another, that the other shall do a given act,
or shall not do a given act.
Kinds of rights
a. Natural Rights – Those which grow out of the
nature of man and depend upon personality.
Example: right to life, liberty, privacy, and
good reputation.
b. Political Rights – Consist in the power to
participate, directly or indirectly, in the
establishment
or
administration
of
government. Example: right of suffrage, right
to hold public office, right of petition.
c. Civil Rights– Those that pertain to a person
by virtue of his citizenship in a state or
community. Example:
property rights,
marriage, equal protection of laws, freedom of
contract, trial by jury.
1. Real rights – enforceable against the
whole world (absolute rights)
2. Personal rights – enforceable against a
particular individual (relative rights)
Waiver – intentional relinquishment of a known
right. (Castro v. Del Rosario, G.R. No. L-17915)
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CIVIL LAW (AND PRACTICAL EXERCISES)
Waivers are not presumed but must be clearly and
convincingly shown either by express stipulation
or acts admitting no other reasonable explanation
(Arrieta v. National Rice and Corn Corporation,
G.R. No. L-15645)
General Rule: Rights may be waived. (Art. 6)
Requisites of a valid waiver: (Herrera v.
Borromeo, G.R. No. L-41171)
1. Existence of a right
2. Knowledge of the existence of such right
3. An intention to relinquish the right
Exceptions: When waiver is
i. Contrary to law, public order, public policy,
morals, good customs (e.g. waiver of future
inheritance, political rights, future support)
ii. Prejudicial to a third person with a right
recognized by law.
5. REPEAL OF LAWS
Repeal
It is the legislative act of abrogating through a
subsequent law the effects of a previous statute or
portions thereof (STA. MARIA, PERSONS AND FAMILY
RELATIONS LAW (2019), p. 11.).
TYPES OF REPEAL
Express Repeal
An express repeal is one which is literally declared
by a new law, either in specific terms, where
particular laws and provisions are named, or in
general terms (Ibid.).
Implied Repeal
An implied repeal is one which takes place when
a new law contains provisions contrary to or
inconsistent with those of a former without
expressly repealing them (Ibid.).
Requisites of an Implied Repeal
1. The laws cover the same subject matter; and
2. The latter law is repugnant to the earlier law
(Agujetas v. CA, G.R. No. 106560).
Effect if the Repealing Law is Itself Repealed
1. When a law which expressly repeals a prior
law is itself repealed, the law first repealed
shall not be revived, unless expressly so
provided (1 PARAS, Civil Code of the
Philippines Annotated (2016), p. 49
[hereinafter 1 PARAS].).
Example: Law A is expressly repealed by
Law B. If Law B is itself repealed by Law C, is
Law A revived?
No, unless Law C expressly so provides.
2.
When a law which impliedly repeals a prior law
is itself repealed, the prior law shall be revived
unless the language of the repealing statute
provides otherwise (U.S. v. Soliman, G.R. No.
L-11555).
Example: Law A is impliedly repealed by Law
B. Law B is later repealed by Law C. Is Law A
revived?
Yes, unless Law C provides otherwise.
6. JUDICIAL DECISIONS
STARE DECISIS
Effect of Judicial Decisions
Judicial decisions applying or interpreting the laws
or the Constitution shall form part of the legal
system of the Philippines (Art. 8).
Only decisions of the Supreme Court establish
jurisprudence or doctrines in this jurisdiction (Vda.
De Miranda v Imperial, G.R. No. L-49090).
When Judicial Decisions Deemed Part of the
Law. The application and interpretation by the
Supreme Court are part of the law as of the date
of the law’s enactment (People v. Licera, G.R. No.
L-39990).
BUT: When a doctrine of the Supreme Court is
overruled and a different view is adopted, the new
doctrine will be applied prospectively and will not
be applied to parties who had relied on the old
doctrine and acted on the faith thereof (People v.
Jabinal,G.R. No. L-30061).
How Judicial Decisions May Be Abrogated
1) By contrary ruling of the Supreme Court itself;
and
2) By corrective legislative acts of Congress,
although said laws cannot adversely affect
those favored prior to the Supreme Court
decisions (1 PARAS, supra at 69).
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CIVIL LAW (AND PRACTICAL EXERCISES)
DUTY OF JUDGES
Duty of a Judge if the Law is Silent
No judge or court shall decline to render judgment
by reason of the silence, obscurity, or insufficiency
of the laws (Art. 9).
Judicial Legislation
The judiciary is tasked with resolving legal
controversies and interpreting statutes; it cannot
legislate.
BUT: Even a legislator, through Art. 9, recognizes
that in some instances, courts “do and must
legislate” to fill in the gaps in the law, because the
mind of the legislator is finite and therefore cannot
envisage all possible causes to which the law may
apply (STA. MARIA, supra at 17).
7. DOUBTFUL STATUTES
Day
Note: Art. 13 has been impliedly
repealed by E.O. 292 or the
Revised Administrative Code of
1987.
30 days, unless the month is
identified, in which case it shall
be computed according to the
number of days the specific
month contains (Art. 13).
24 hours
Night
Sunset to sunrise
Week
Count 7 days as indicated, not
necessarily Saturday to Sunday
Month
To count the period, the first day is excluded and
the last day is included (Art. 13).
Rule in Case of Doubt
In case of doubt in the interpretation or application
of laws, it is presumed that the lawmaking body
intended right and justice to prevail (Art. 10).
Example: If a law states that a statute takes effect
on the 20th day from its publication and such
publication was made on Feb. 3, 1988, then the
law shall be effective on Feb. 23, 1988.
When Applicable
Where the law is clear, it must be applied
according to its unambiguous provisions. (Acting
Commissioner of Customs v. Manila Electric
Company, G.R. No. L-23623). Construction and
interpretation come only after it has been
demonstrated that application is impossible or
inadequate without them (Republic Flour Mills, Inc.
v. Commissioner of Customs, G.R. No. L-28463).
The first day, which is Feb. 3, 1988, is excluded
while the last day, which is Feb. 23, 1998, is
included.
8. CUSTOMS
Custom
A custom is a rule of conduct formed by repetition
of acts, uniformly observed (practiced) as a social
rule, legally binding, and obligatory.
Rules
1) Customs which are contrary to law public
order or public policy shall not be
countenanced (Art. 11).
2) Customs must be proved as a fact according
to the rules of evidence (Art. 12).
9. RULE ON PERIODS
Rule on Periods
Period
Rule
Year
Year shall be understood to be
12 calendar months (E.O. 292,
Book I, Sec. 31).
10. CONFLICT OF LAWS (Under the
Civil Code)
Penal Laws
Territoriality Principle: Penal laws and laws of
public security and safety shall be obligatory upon
all who live or sojourn in the Philippine territory
(Art. 14.).
Exceptions:
1) Principles of Public International Law
Example: Immunities granted to diplomatic
officials and visiting heads of state.
2)
Treaty stipulations
Example: Philippine-United States Military
Bases Agreement (dated March 14, 1947),
which contains provisions exempting certain
members of the armed forces of the United
States from the jurisdiction of our courts.
3) Laws of Preferential Application
Example: Foreign Ambassadors, ministers
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Note: Consuls do not enjoy the privilege of
immunity.
Laws Relating to Family Rights and Duties
Nationality Principle: Regardless of where a
Philippine citizen may be, he will be governed by
Philippine laws with respect to –
1) Family rights and duties;
2) Status;
3) Condition; and
4) Legal capacity of persons (Art. 15.).
If a Filipino initiates a petition abroad to obtain an
absolute divorce from his wife or her husband who
is also a Filipino and successfully gets a divorce,
the Philippines will not recognize such absolute
divorce. This is because under Art. 26(2) of the
Family Code, the only absolute divorce which the
Philippines may recognize is a mixed marriage
between a Filipino and a foreigner.
Hence, in the eyes of Philippine law, they are still
married, and therefore should anyone of them
marry again, he or she can be considered to have
committed either concubinage or adultery, as the
case may be (See Tenchavez v. Escaño, G.R. No.
L-19671).
Laws Governing Property (Real and Personal)
Lex Situs or Lex Rei Sitae: Real property, as well
as personal property, is subject to the law of the
country where it is situated (Art. 16, par. 1.).
Exception: Intestate and testamentary
succession, which are regulated by the national
laws of the deceased regardless of the nature of
the property; in particular, this rule applies to the
following: (CIAO)
1)
2)
3)
4)
CIVIL LAW (AND PRACTICAL EXERCISES)
Note: The enumeration above is governed by the
national law of the decedent, regardless of place
of death.
Q: A Turkish citizen wrote a last will, which
provides that his property should be disposed of
pursuant to Philippine laws. Is the provision valid?
A: No, the provision is illegal and void because,
pursuant to what is now Article 16 of the Civil
Code, the national law of the deceased should
govern. Hence, Turkish laws should apply
(Miciano v. Brimo, G.R. No. L-22595).
Laws Relating to Forms and Solemnities
Lex Loci Celebrationis: Forms and solemnities of
contracts, wills, and other public instruments
(extrinsic validity) shall be governed by the laws of
the country in which they are executed (Art. 17,
par. 1.).
Acts Before Diplomatic and Consular Officials:
Any act or contract made in a foreign country
before diplomatic and consular officials must
conform to the solemnities under Philippine law
(Art. 17, par. 2.).
Prohibitive Laws
General Rule: Prohibitive laws concerning
persons, their acts or property, and those which
have for their object public order, public policy, or
good customs are not rendered ineffective by laws
of judgments promulgated or by determinations or
conventions agreed upon in a foreign country (Art.
17, par. 3.).
Exception: Art. 26, par. 2 of the Family Code (e.g.
Divorce)
Capacity to succeed (Art. 1039.);
Intrinsic validity of testamentary provisions;
Amount of successional rights; and
Order of succession.
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CIVIL LAW (AND PRACTICAL EXERCISES)
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SUMMARY OF PROVISIONS ON CONFLICTS OF LAW
LAW
Penal Laws
MATTERS/
PERSONS BOUND
All those who live or sojourn
in Philippine territory
Laws Relating to
Family Rights and
Duties
Citizens of the Philippines,
including
those
living
abroad
Laws
Governing
Property (Real and
Personal)
Real and personal property
GOVERNING PRINCIPLE/ DOCTRINE
Principle of Territoriality: Law of the place where crime
was committed (Art. 14).
Exceptions:
1) Principles of Public International Law
2) Treaty Stipulations
Principle of Nationality: National law of the person, with
respect to –
1) Family rights and duties;
2) Status;
3) Condition; and
4) Legal capacity (Art. 15).
Lex situs or Lex rei sitae: Law of the place where the
property is situated (Art. 16)
Exception: Intestate and testamentary succession, in
particular:
1) Capacity to succeed (CIVIL CODE, Art. 1039.);
2) Intrinsic validity of testamentary provisions;
3) Amount of successional rights; and
4) Order of succession.
Laws Relating to
Forms
and
Solemnities
Forms and solemnities of
contracts,
wills,
public
instruments
Note: The enumeration is governed by the national law of
the decedent, regardless of place of death.
Lex loci celebrationis: Law of the country in which they
are executed (Art. 17)
Exception: If executed before Philippine diplomatic or
consular officials abroad, Philippine laws shall govern.
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B. HUMAN RELATIONS
Principle of Abuse of Rights (Art. 19)
Every person must, in the exercise of his rights
and in the performance of his duties, act with
justice, give everyone his due, and observe
honesty and good faith.
Requisites/Elements:
1. There is a legal right or duty
2. Which is exercised in bad faith
3. For the sole intent of prejudicing or injuring
another. (Sps. Andrada v. Pilhino Sales
Corporation, G.R. No. 156448, 2011)
Standards to Observe in the Exercise of One’s
Rights or Performance of Duty:
1. Act with justice
2. Give everyone his due
3. Observe honesty and good faith
Acts Contrary to Law (Art. 20)
Every person who, contrary to law, willfully or
negligently causes damage to another, shall
indemnify the latter for the same.
Acts Contra Bonos Mores (Art. 21)
Any person who willfully causes loss or injury to
another in a manner that is contrary to morals,
good customs or public policy shall compensate
the latter for the damage.
Elements:
1. There is an act which is legal;
2. But contrary to morals, good customs, public
order, or public policy; and
3. It is done with intent to injure
Note:
Similarities: In Arts. 19-21, at the core is bad
faith or malice and the aggrieved party must
be indemnified.
Differences: Under Arts. 19 & 21, the act
must be done intentionally. Art. 20, however,
does not distinguish (the act may be done
either willfully or negligently, as long as the act
is be contrary to law).
Actions for Breach of Promise to Marry
General Rule: Breach of promise to marry is not
actionable.
CIVIL LAW (AND PRACTICAL EXERCISES)
Exception: When one party has already made
real efforts to prepare and spend for the wedding.
Such act is unjustifiably contrary to good customs
for which the defendant must be held answerable
for damages in accordance with Art. 21 of the
NCC. (Wassmer v. Velez, G.R. No. L-20089,
1964)
Unjust Enrichment / Accion in rem verso (Art.
22)
Every person who through an act or performance
by another, or any other means, acquires or
comes into possession of something at the
expense of the latter without just or legal ground,
shall return the same to him.
Conditions for Unjust Enrichment to Arise
First, a person must have been benefited without
a real or valid basis or justification. Second, the
benefit was derived at another person’s expense
or damage (Art. 22 and Loria v. Muñoz, G.R.
187240, 2014).
Requisites (EWLN)
1. Defendant had been Enriched;
2. Plaintiff suffered a Loss;
3. Unjust enrichment of defendant is Without just
or legal ground; and
4. Plaintiff has No other action based on
contract, quasi-contract, crime, or quasidelict.
Note: Mistake is an essential element in solutio
indebiti but not in accion in rem verso.
Duty to Indemnify One for Damage to Property
Even when an act or event causing damage to
another’s property was not due to the fault or
negligence of the defendant, the latter shall be
liable for indemnity if through the act or event he
was benefited.
(Art. 23)
Duty of Courts to Protect a Party in a Contract
When such party is at a disadvantage on account
of his: (MIgIMenTO)
(a) Moral dependence
(b) Ignorance
(c) Indigence
(d) Mental weakness
(e) Tender age
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(f) Other handicap (Art. 24)
Thoughtless Extravagance (Art. 25)
May be stopped by order of courts if the following
requisites are present:
1. During an acute public want or emergency;
and
2. Person seeking to stop it is the government or
a private charitable institution.
Rights to Personal Dignity and Privacy (Art. 26)
Every person shall respect the dignity, personality,
privacy and peace of mind of others.
The following acts produce a cause of action for
damages, prevention and other relief: (PMIV)
i. Prying into the privacy of another’s
residence
Note: It includes "any act of intrusion into,
peeping or peering inquisitively into the
residence of another without the consent
of the latter." It may extend to places
where he has the right to exclude the
public or deny them access. It covers
places, locations, or even situations
which an individual considers as private
such as a business office located within
his residence. (Spouses Hing v.
Choachuy, Sr., G.R. No. 179736, 2013).
ii.
Meddling with or disturbing the private life
or family relations of another
iii. Intriguing to cause another to be
alienated from friends
iv. Vexing or humiliating another on account
of his religious beliefs, lowly station in life,
place of birth, physical defect, or other
personal condition
Relief Against Public Officials (Art. 27)
Any person suffering material or moral loss
because a public servant or employee refuses or
neglects, without just cause, to perform his official
duty may file an action for damages and other
relief against the latter, without prejudice to any
disciplinary administrative action that may be
taken.
Article 27 presupposes that the refusal or omission
of a public official is attributable to malice or
CIVIL LAW (AND PRACTICAL EXERCISES)
inexcusable negligence (Philippine Match Co.,
Ltd. v. City of Cebu, G.R. No. L-30745).
Violation of Civil and Political Rights (Art. 32)
An individual can hold a public officer or a private
individual personally liable for damages on
account of an act or omission that violates a
constitutional right only if it results in a particular
injury to the former. (See Vinzons-Chato v.
Fortune Tobacco Corp, G.R. No. 141309).
Note: Good faith is not a defense. To be liable
under Art. 32, it is enough that the plaintiffs’
constitutional rights were violated. It is not required
that the defendants acted with malice or bad faith.
The object of Art. 32 is to put an end to abuses
which are justified by a plea of good faith (Lim v.
Ponce de Leon, G.R. No. L-22554).
Members of Municipal or City Police Force (Art.
34)
1) Primary liability is assessed against a member
of the municipal or city police force who
refuses or fails to render aid or protection.
2) Subsidiary liability is imposed on the city or
municipality concerned in case of insolvency.
Unfair
Competition
through
Unjust,
Oppressive, or Highhanded Methods (Art. 28)
Unfair competition in agricultural, commercial or
industrial enterprises or in labor through the use of
force, intimidation, deceit, machination or any
other unjust, oppressive or highhanded method
shall give rise to a right of action by the person who
thereby suffers damage.
Article 28 does not prohibit competition with regard
to enterprises. What it seeks to be prevented is not
competition per se but the use of unjust,
oppressive or highhanded methods which may
deprive others of a fair chance to engage in
business or earn a living (Willaware Products
Corp. v. Jesichris Manufacturing Corp., G.R. No.
195549, 2014).
Civil Action After Acquittal in Criminal Case
(Art. 29)
When the accused in a criminal prosecution is
acquitted on the ground that his guilt has not been
proved beyond reasonable doubt, a civil action for
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damages for the same act or omission may be
instituted.
Example: A was accused of theft, but he was
acquitted because his guilt had not been proved
beyond reasonable doubt. B, the offended party,
can institute the civil action for damages for the
same act and this time, mere preponderance of
evidence is sufficient.
Civil Liability Arising from an Unprosecuted
Criminal Offense (Art. 30)
Even if the civil obligation arose from a criminal
offense, the required quantum of evidence is not
proof beyond reasonable doubt but merely
preponderance of evidence.
Example: A accused B of stealing his (A’s) watch,
and so he (A) brought a civil action against B to
get the watch and damages. If the fiscal institutes
a criminal proceeding against B the civil case is
suspended in the meantime (Rule 111, Rules of
Court), this case not being one of those for which
there can be an independent civil action. But if the
fiscal does not, then the civil case continues, and
here, a mere preponderance of evidence would be
sufficient to enable A to recover.
Civil Obligation Not Arising From Felony. (Art.
31)
Article 31 was enacted to provide an aggrieved
party a remedy and cause of action in situations
wherein they sustained an injury which was not
necessarily a result of a commission of a crime.
Example: Quasi-Delicts (Culpa Aquiliana) as
provided under Article 2176 of the Civil Code of the
Philippines and Culpa Contractual.
Note: Article 31 of the Civil Code does not provide
for an independent civil action, as compared to
Article 32, 33 and 34 of the same code. Further, it
does not refer to a civil action based on the
commission of a felony but refers to one based on
an obligation arising from another source, such as
one arising from law or from a contract.
Civil Action Arising from Defamation, Fraud
and
Physical
Injuries
(Art.
33)
In cases of Defamation, Fraud and Physical
Injuries, a separate and distinct civil action for
CIVIL LAW (AND PRACTICAL EXERCISES)
damages may be instituted by the injured party
which shall proceed independently of the criminal
action.
Required
Quantum
Preponderance of Evidence.
of
Evidence:
Rationale: To allow a citizen to enforce his rights
in a private action brough by him, regardless if
there is action or inaction on the part of the
prosecutor. It promotes self-reliance on the part of
citizens for the proper vindication of their private
rights, rather than merely relying on the
government for the enforcement and protection of
the same. (Records of the Civil Code Commission)
Construction: The terms ‘fraud’, ‘defamation’,
and ‘physical injuries’ must be understood in their
ordinary sense. Thus, ‘fraud’ includes estafa,
‘defamation’ includes libel, and ‘physical injuries’
can include death or homicide (Dyogi v. Yatco,
G.R. No. L-9623), but not reckless imprudence
resulting in homicide (Marcia v. Court of Appeals,
G.R. No. L-34529).
Reservation of Civil Actions (Art. 35)
In cases wherein the justice of peace determines
that there are no reasonable grounds to believe
that a crime has been committed or in cases when
the prosecuting attorney refuses or fails to institute
criminal proceedings, the injured party may file a
civil action for damages.
If an information is filed by the prosecuting
attorney after the injured party has initiated the civil
action, the civil action shall be suspended until the
termination of the criminal action.
When applicable: When a person claims to be
injured by a felony for which no independent icvil
action is granted in accordance with the Civil Code
or any other special law.
Required
Quantum
Preponderance of Evidence.
of
Evidence:
Prejudicial Questions (Art. 36)
A prejudicial question is one that arises in a case,
the resolution of which is a logical antecedent of
the issue involved therein, and the cognizance of
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CIVIL LAW (AND PRACTICAL EXERCISES)
which pertains to another tribunal (Zapanta v.
Montesa, G.R. No. L-14534).
In prejudicial question circumstances, there
always two cases involved: a criminal and a civil
one.
case must be first resolved before the criminal
case could proceed.
2. When the law provides that both civil and
criminal case can be instituted and may proceed
simultaneously. (Example: Art. 33)
Two Essential Elements of a Prejudicial
Question: (Sec. 5, Rule 111, Rules of Court)
1. The civil action always involves an issue similar
or intimately related to the issue raised in the civil
action and
2. The resolution of such issue determines
whether or not the criminal action may proceed.
Note: The existence of a civil suit for annulment of
marriage does not constitute as to pose a
prejudicial question to warrant suspension of a
criminal case for bigamy because prior to
judgement granting the petition for annulment, the
marriage is presumed to be validly existing. Same
rule applies for a civil suit for the declaration of
nullity of marriage on the ground of psychological
incapacity, except for purpose of remarriage under
Article 40 of the Family Code. (Ibid.)
Rules Regarding Precedence of Actions
(Benitez v. Concepcion, G.R. No. L-14646)
General Rule: Where both a civil and a criminal
case arising from the same facts are filed, the
criminal case takes precedence.
————- end of topic ————-
Exceptions:
1. If there exists a prejudicial question. In such
case, the prejudicial question as raised in the civil
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CIVIL LAW (AND PRACTICAL EXERCISES)
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II.
PERSONS AND FAMILY
RELATIONS
CIVIL LAW (AND PRACTICAL EXERCISES)
2.
TOPIC OUTLINE UNDER THE SYLLABUS
A.
1.
2.
3.
4.
B.
1.
2.
3.
4.
PERSONS
Civil Personality
Use of surnames
Entries in the Civil Registry and Clerical
Error Law (R.A. No. 9048, as amended)
Absence
a. Civil Code provisions
b. Presumptive death of absent spouse
under the Family Code
d. Instances and effects of rescission
Inter-country adoption (R.A. No. 8043)
a. When allowed
b. Who may adopt
c. Who may be adopted
I.
SUPPORT
J.
PARENTAL AUTHORITY
K. EMANCIPATION
L.
RETROACTIVITY OF FAMILY CODE
MARRIAGE
Requisites of marriage
Exemption from license requirement
Marriages solemnized abroad and
foreign divorce
Void and voidable marriages
a. Annulment under Article 36 (as
recently articulated in Tan-Andal v.
Andal, G.R. No. 196359, May 11,
202; Totality of Evidence Rule)
C. LEGAL SEPARATION
D. RIGHTS AND OBLIGATIONS
BETWEEN HUSBAND AND WIFE
E. PROPERTY RELATIONS BETWEEN
HUSBAND AND WIFE
1. General provisions
2. Donations by reason of marriage
3. Absolute Community of Property
4. Conjugal Partnership of Gains
5. Separation of property and
administration of common property by
one spouse during the marriage
6. Regime of separation of property
7. Property regime of unions without
marriage
F.
FAMILY HOME
G.
1.
2.
3.
4.
PATERNITY AND FILIATION
Legitimate children
Proof of filiation
Illegitimate children
Legitimated children
H. ADOPTION
1. Domestic Adoption (R.A. No. 8552)
a. Who may adopt
b. Who may be adopted
c. Rights of an adopted child
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CIVIL LAW (AND PRACTICAL EXERCISES)
BAR OPERATIONS 2022
A. PERSONS
1. CIVIL PERSONALITY (ART. 44-47,
NCC)
a.
b.
c.
The State and its political subdivisions
Other corporations, institutions, and
entities for public interest or purpose
created by law
Corporations,
partnerships,
and
associations for private interest or
purpose to which the law grants a juridical
personality
Laws Governing Juridical Persons (Art. 45)
a. The State, its political subdivisions,
and corporations, institutions, and
entities for public interest or purpose:
governed by the laws creating or
recognizing them.
b. Private corporations: governed by the
Revised Corp. Code (R.A. 11232)
c. Partnerships
and
associations:
governed by the provisions of the New
Civil Code on partnerships, except those
registered with the SEC which should be
governed like corporations
Extinguishment
By termination of existence either through law,
dissolution, or expiration of corporate life
Rights of a Juridical Person (Art. 46)
a. Acquire and possess property of all kinds
b. Incur obligations
c. Bring civil or criminal actions
JURIDICAL CAPACITY
Fitness
to
the
subject
legal relations)
be
of
CAPACITY TO ACT
Power to do acts with
legal effect
Passive
Active
Inherent
Not Inherent; attained
or conferred
Lost through death
and other causes
Cannot exist without
juridical capacity
Can be restricted,
modified, or limited
Lost only through
death
Can exist without
capacity to act
Cannot be limited or
restricted
Upon the dissolution of coporations,
institutions, and other entities for public
interest or purpose (Art. 47):
their property and other assets shall be disposed
of in pursuance of law or the charter creating them.
If nothing has been specified on this point, the
property and other assets shall be applied to
similar purposes for the benefit of the region,
province, city or municipality which during the
existence of the institution derived the principal
benefits from the same.
Restrictions on Capacity to Act (MInD-ICIP)
a. Minority
b. Insanity
c. State of being Deaf-mute
d. Imbecility
e. Civil Interdiction
f. Prodigality - state of squandering money
or property with a morbid desire to
prejudice the heirs of a person (Martinez v.
Martinez, G.R. No. 445, 1902)
NOTE: But these do not exempt the incapacitated
person from certain obligations
Circumstances that Modify or Limit Capacity to
Act (FAT-DA-PAPIII)
a. Family relations
b. Alienage
c. Trusteeship
d. State of being Deaf-mute
e. Age
f. Penalty
g. Absence
h. Prodigality
i. Insanity
j. Insolvency
k. Imbecility (Art. 39)
DOMICILE AND RESIDENCE OF PERSONS
Place of Domicile (Art. 50-51)
For natural persons, it is the place of
habitual residence
For juridical persons
o General rule: In accordance
with the law creating or
recognizing them, or any other
provision
o Exception: If the law is silent,
the residence shall understood
to be the place where their legal
representation is established or
where they exercise their
principal functions
NOTE: A person may have as many residences as
he wants, but he can only have one domicile.
Under the Family Code, the husband and wife
shall fix the family domicile. In case of
disagreement, the Court shall decide (Art. 69)
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CIVIL LAW (AND PRACTICAL EXERCISES)
A minor follows the domicile of his parent
Domicile of origin can only be lost when a
change of domicile occurs
If the child is illegitimate, the domicile of
the mother is followed
Requirements for the Acquisition of New
Domicile
1. Bodily presence in new locality;
2. Intention to remain therein (animus
manendi); and
3. Intention to abandon the old domicile
(animus non revertendi)
Kinds of Domicile
a. Domicile of Origin: received by a
person at birth
b. Domicile of choice: the place freely
chosen by a person sui juris
2. USE OF SURNAMES
a.
b.
c.
Legitimate and legitimated children shall
principally use the surname of the father.
An adopted child shall bear the surname of
the adopter.
Illegitimate children shall bear the
surname of the mother
HOWEVER: Illegitimate children may use
the surname of their father if their filiation
has been expressly recognized by the
father:
i.
Through the record of birth
appearing in the civil register; OR
ii.
When an admission in a public
document or private handwritten
instrument is made by the father
(RA 9225, amending Art. 176 of
the Family Code)
d.
e.
f.
Children conceived before the decree
annulling a voidable marriage shall
principally use the surname of the father.
A married woman may use
1. Her maiden first name and surname
and add her husband’s surname, or
2. Her maiden first name and her
husband’s surname or
3. Her husband’s full name, but
prefixing a word indicating that she
is his wife, such as “Mrs.”
In case of annulment of marriage, and the
wife is the guilty party, she shall resume
her maiden name and surname.
If she is the innocent spouse, she may
resume her maiden name and surname.
However, she may choose to continue
employing her former husband’s surname,
unless:
i. The court decrees otherwise
ii. She or the former husband is
married again to another person.
g.
h.
i.
j.
When legal separation has been granted,
the wife shall continue using her name and
surname before the legal separation
A widow may use the deceased
husband’s surname as though he were still
living.
In case of identity of names and surnames,
the younger person shall be obliged to use
such additional name or surname as will
avoid confusion.
In case of identity of names and surnames
between ascendants and descendants,
the word “Junior” can be used only by a
son. Grandsons and other direct male
descendants shall either:
1. Add a middle name or the mother’s
surname, or
2. Add the Roman Numerals II, III, and
so on.
3. ENTRIES IN THE CIVIL REGISTRY
AND CLERICAL ERROR LAW
(R.A. 9048, AS AMENDED)
What can be corrected under R.A. 9048
Only clerical or typographical errors and change of
first name or nickname which can be corrected or
changed by the concerned city or municipal civil
registrar or consul general
Who May File the Petition and Where.
a. Any person having direct and personal
interest in the correction of a clerical or
typographical error in an entry and/or
change of first name or nickname in the
civil register may file, in person, a verified
petition with the local civil registry office of
the city or municipality where the record
being sought to be corrected or changed
is kept.
b. Citizens of the Philippines who are
presently residing or domiciled in foreign
countries may file their petition, in person,
with the nearest Philippine Consulates.
Grounds for Change of First Name or
Nickname
a. The petitioner finds the first name or
nickname to be ridiculous, tainted with
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b.
c.
dishonor or extremely difficult to write or
pronounce.
The new first name or nickname has been
habitually and continuously used by the
petitioner and he has been publicly known
by that by that first name or nickname in
the community: or
The change will avoid confusion.
Form and Contents of the Petition.
Form: The petition shall be in the form of an
affidavit, subscribed and sworn to before any
person authorized by the law to administer oaths.
Contents:
a. The affidavit shall set forth facts necessary
to establish the merits of the petition
b. It should also show that the petitioner is
competent to testify to the matters stated.
c. The petitioner shall state the particular
erroneous entry or entries, which are
sought to be corrected and/or the change
sought to be made.
Supporting Documents:
a. A certified true machine copy of the
certificate or of the page of the registry
book containing the entry or entries
sought to be corrected or changed.
b. At least two (2) public or private
documents showing the correct entry or
entries upon which the correction or
change shall be based; and
c. Other documents which the petitioner or
the city or municipal civil registrar or the
consul general may consider relevant and
necessary for the approval of the petition.
4. ABSENCE
a. Civil Code Provisions
What are the provisional measures in case of
absence?
When a person:
a. Disappears from his domicile;
b. His whereabouts being unknown; and
c. Without leaving an agent to administer his
property,
Then: the judge, at the instance of an interested
party, a relative, or a friend, may appoint a person
to represent him in all that may be necessary.
CIVIL LAW (AND PRACTICAL EXERCISES)
Who is the preferred representative?
The spouse present shall be preferred when there
is no legal separation.
If the absentee left no spouse, any competent
person may be appointed by the court. (Art. 383,
NCC)
When absence may be declared
1. Two (2) years having elapsed without any
news about the absentee, or since the receipt
of the last news, and
2. Five (5) years in case the absentee has left a
person in charge of the administration of his
property (Art. 384, NCC)
Who may ask for a declaration of absence
1. The spouse present
2. The heirs instituted in a will, who may present
an authentic copy of the same;
3. The relatives who may succeed by the law of
intestacy;
4. Those who may have over the property of the
absentee some right subordinated to the
condition of his death. (Art. 385, NCC)
When will a judicial declaration take effect
Six (6) months after its publication in a newspaper
of general circulation. (Art. 386, NCC)
Alienation and Encumbrance of Property
The wife who is appointed as an administratrix of
the husband’s property cannot alienate or
encumber the husband’s property; or that of the
conjugal partnership, without judicial authority.
(Art. 388, NCC)
Administrator of absentee’s property shall be
appointed in accordance with Art. 383 (Art.
387).
When will administration cease
a. When the absentee appears personally or
by means of an agent;
b. When the death of the absentee is proved
and his testate or intestate heirs appear;
c. When a third person appears, showing by
a proper document that he has acquired
the absentee’s property by purchase or
other title.
In these cases, the property shall be at the
disposal of those who may have a right thereto.
(Art. 389, NCC)
Same rule applies when under similar
circumstances, the power conferred by the
absentee has expired (Article 381, NCC).
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b. Presumptive death of absent
spouse under the Family Code
When a person is presumed dead
After an absence of seven years, it being unknown
whether or not the absentee still lives, he shall be
presumed dead for all purposes, except for those
of succession. (Art. 390, NCC)
Who are presumed dead
1. A person on board a vessel lost during a
sea voyage, or an aeroplane which is
missing, who has not been heard of for
four years since the loss of the vessel or
airplane;
2. A person in the armed forces who has
taken part in war, and has been missing
for four years;
3. A person who has been in danger of
death under other circumstances and his
existence has not been known for four
years.
Note: In the cases above, the person is presumed
dead for all purposes, including the division of the
estate among the heirs. (Art. 391, NCC)
Four Essential Requisites for the Declaration
of Presumptive Death (4YRBF)
1. The spouse’s husband or wife has been
absent for 4 consecutive Years, or 2
consecutive years if the disappearance
occurred where there is danger of death
under the circumstances laid down in Art.
391 of the Civil Code;
2. That the present spouse wishes to
Remarry
3. That the present spouse has a wellfounded Belief that the absentee is dead;
and
4. That the present spouse Files a summary
proceeding for the declaration of
presumptive death of the absentee
[Republic vs Sareñogon, 2016 (citing
Republic v. Cantor, 2013)]
For a subsequent marriage to be valid, the prior
marriage must first be dissolved either by the
death of the previous spouse or the final
judicial declaration of nullity or annulment of the
previous
marriage obtained before the
subsequent marriage is entered into, regardless
of the reason for the nullity or defect of the
previous marriage, including lack of marriage
license (Lasanas v. People, G.R. No. 159031,
2014).
CIVIL LAW (AND PRACTICAL EXERCISES)
The well-founded belief in the absentee’s death
requires the present spouse to prove that his/her
belief was the result of diligent and reasonable
efforts to locate the absent spouse and that
based on these efforts and inquiries, he/she
believes that under the circumstances, the absent
spouse is already dead. Mere claim of diligent
search is insufficient without corroborative
evidence such as testimonies of the persons from
whom she inquired (Republic v. Villanueva, G.R.
No. 210929, 2015).
It must be shown that sincere honest-to-goodness
efforts had indeed been made to ascertain
whether the absent spouse is still alive or is
already dead. Even after the non-return of
the husband who was a member of the army
and assigned to Sulu and was thereafter not
heard of anymore by the wife for 33 years, there
was still failure on the part of said wife to actively
look for her missing husband, and her purported
earnest efforts to find him by asking her
husband's parents, relatives, and friends did not
satisfy the strict standard and degree of diligence
required to create a "well-founded belief' of his
death. She did not approach the AFP for
information (Republic v. Tampus, G.R. No.
214243, 2016).
NOTES:
In this case, the subsequent marriage is
valid but it shall be automatically
terminated by the recording of the
affidavit of reappearance of the absent
spouse. (Art. 42)
Without filing of the affidavit of
reappearance, there will exist two valid
marriages (valid bigamous marriage).
If both spouses of the subsequent
marriage acted in bad faith, such
marriage is void ab initio. (Art. 44)
Effect of Reappearance
The subsequent bigamous marriage under Art. 41
remains valid despite reappearance of the
absentee spouse, unless the reappearance made
in a sworn statement is recorded in the
civil registry in the place where the parties to
the subsequent marriage resides. In such case,
the subsequent marriage is automatically
terminated.
However, if there was a previous judgment
annulling or declaring the first marriage a nullity,
the subsequent bigamous marriage remains
valid.
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Nullity of judgment of presumptive death is the
proper remedy and not an affidavit of
reappearance when the person declared
presumptively dead has never been absent. In this
case, the husband was able to secure a
declaration of presumptive death by alleging
fraudulent facts. (Santos v. Santos, G.R.
No. 187061, 2014)
Summary proceedings under the Family Code are
final and executory pursuant to Article 247. Hence,
a summary proceeding for the declaration of
presumptive death of an absent spouse under
Article 41 of the Family Code is nonappealable. (Republic v. Tango, G.R. No.
161062, 2009)
However, a petition for certiorari under Rule 65
is still available (Republic v. Sarenogon, Jr.,
2016).
For the purpose of not only terminating the
subsequent marriage but also of nullifying the
effects of the declaration of presumptive death and
the subsequent marriage, mere filing of an affidavit
of reappearance would not suffice (Castro v.
Gregorio, G.R. No. 188801, 2014).
Effects of Termination of Subsequent
Marriage: (LDBD-RI) (Art. 43, Family Code)
a. Children of the subsequent marriage
conceived prior to its termination shall be
considered Legitimate, unless the
marriage is void ab initio due to bad faith
of both spouses of the subsequent
marriage, in which case the children shall
be deemed illegitimate
b. The absolute community or conjugal
partnership shall be Dissolved and
liquidated
c. If either spouse acted in Bad faith, his/her
share in the net profits shall be forfeited:
i.
In favor of the common children
ii.
If none, in favor of the children
of the
guilty
spouse
by
previous marriage
iii.
In default of children, in favor of
the innocent spouse.
d. Donations by reason of the marriage
remain valid except if the donee
contracted the marriage in bad faith (in
which case, the donation is revoked by
operation of law)
e. The innocent spouse may Revoke the
designation of the spouse in bad faith as
the beneficiary in any insurance policy,
even if designation is stipulated as
irrevocable
CIVIL LAW (AND PRACTICAL EXERCISES)
f.
The spouse who contracted the
subsequent marriage in bad faith shall be
disqualified to Inherit from the innocent
spouse
by
testate
or
intestate
succession
NOTE: The above effects apply to voidable
bigamous marriages.
Except for the first enumerated item (re: legitimate
children), the above effects also apply to
marriages which are annulled or declared void ab
initio under Art. 40.
B. MARRIAGE
Definition of Marriage (Art. 1)
1. Special contract;
2. Permanent union;
3. Between a man and a woman;
4. Entered in accordance with law; and
5. For the establishment of conjugal and
family life
1. REQUISITES OF MARRIAGE
Essential Requisites of Marriage: (LCI) (Art. 3)
1. Legal capacity of contracting parties;
a. Must be between a male and
female
b. Must be at least 18 years old
2. Consent freely given, in the presence of
the solemnizing officer; and
3. Absence of any Impediment
Formal Requisites of Marriage: (ALC) (Art. 4)
1. Authority of solemnizing officer;
2. Valid marriage License (except in cases
where a marriage license is not required);
and
a. Valid only for 120 days from
issue in any part of the
Philippines
3. Marriage
Ceremony
where
the
contracting parties appear before the
solemnizing officer, with their personal
declaration that they take each other as
husband and wife in the presence of not
less than two witnesses of legal age.
2. EXEMPTION FROM LICENSE
REQUIREMENT
Effects of the Absence of Requisites for
Marriage
General Rule: Absence of any of the essential or
formal requisites – void ab initio
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Exceptions:
a. If solemnized by an unauthorized person,
the marriage will still be valid if either or
both contracting parties believed in good
faith that the solemnizing officer had legal
authority (Art. 35[2])
b. In instances where marriage license need
not be procured:
i.
Marriage in articulo mortis (one
or both of the parties at the point
of death) (Art. 27)
ii.
If the residence of either party is
so remote there is no means of
transportation to enable such
party to appear personally before
the civil registrar (Art. 28)
iii.
Marriage solemnized outside the
Philippines where no marriage
license is required by the country
where it was solemnized (Art.
26)
iv.
Marriage among Muslims or
among members of ethnic
cultural
communities
in
accordance with their customs
(Art. 33)
v.
Marriage between persons who
have lived together as husband
and wife for at least five years
and
without
any
legal
impediment to marry each other
during the 5-year period of
cohabitation (Art. 34)
Procedural Requirements in Case of
Cohabitation for Five Years:
a. The parties must execute an affidavit
stating that they have lived together for at
least 5 years and are without legal
impediment to marry each other; and
b. The solemnizing officer must execute a
sworn statement that he had ascertained
the qualifications of the parties and that
he had found no legal impediment to their
marriage (Art. 34)
NOTE: Absence of any of these procedural
requirements does not make the marriage void.
What is indispensable is the 5-year cohabitation
as husband and wife.
The 5-year period should be a period of
cohabitation characterized by exclusivity –
meaning no third party was involved at any time
– that is, unbroken. (Niñal v. Bayadog, G.R.
No. 133778, 2000)
CIVIL LAW (AND PRACTICAL EXERCISES)
The absence of the legal impediment must be
throughout the 5-year period. (Office of the
Administrator v. Necessario, A.M. No. MTJ-071691, 2013)
Effect of Defects in the Requisites for Marriage
(Art. 4)
Defect in any of the essential
requisites – voidable
Irregularity in any of the formal
requisites – does not affect the validity of
the marriage by will make the party
responsible
civilly,
criminally,
or
administratively liable
Authorized Solemnizing Officers: (JPCCCM)
(Art. 7)
1. Incumbent member of the Judiciary
(judge – within the court’s jurisdiction;
Justices – within Philippine territory)
2. Any Priest, rabbi, imam or the minister
of any church or religious sect
a. Duly authorized by his church
or religious sect
b. Registered with the civil
registrar general;
c. Within limits of the written
authority of the church or
sect; and
d. At least one of the
contracting parties belongs to
the church or religious sect.
3. Ship Captain or airplane chief
a. At least one of the parties is
in articulo mortis;
passengers
or
b. Between
crew members; and
c. While the ship is at sea or the
plane is in flight and also
during stopover at ports of
call (Art. 31)
4. Military Commander (Art. 7 and Art.
32)
a. Must be a commissioned
officer
b. Of a unit to which a chaplain
is assigned;
c. Chaplain is absent at the time
of marriage;
d. During military operations;
e. Must be one in articulo mortis;
and
f. Between persons within the
zone of military operations or
whether members of the
armed forces or civilians
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g. Consul-general, consul, or
h.
vice-consul Between Filipino
citizens abroad
Mayor- effective January 1,
1992 (LGC);
Venues for Marriage (Art. 8) (Directory)
General Rule: Must be solemnized publicly, and
not elsewhere, in the:
a.
b.
Chambers of the judge or in open court
Church, chapel, or office of consul-general,
consul, or vice-consul
Exceptions:
a. Marriage at the point of death (in articulo
mortis)
b. Marriage in remote places
c. Marriage at a house or place
designated by the parties in a sworn
statement upon their written request to
the solemnizing officer
Other Requirements (Art. 14-15)
EITHER OR BOTH
PARTIES
18 years old and
above but below 21
21 years old and above
but below 25
REQUIRES
Parental
consent
Marriage
counseling
Parental
advice
Marriage
Counseling
Effects of Lack of Parental Consent, Parental
Advice, or Marriage Counselling If Required
GROUND
Lack
of
consent
parental
Lack of parental advice
or failure to attach
certificate of marriage
counseling
EFFECTS
Marriage is voidable
No effect on validity of
marriage. However,
this will suspend
the
issuance of
the marriage license
for 3 months from
the
completion of
publication
of the
application. (Art. 16)
If they get
during the
period with a
the marriage
valid
but
married
3-month
license,
shall be
civil
and criminal liability
may attach. (Art. 16)
If they get married
during the 3-month
period
without
a
license, the marriage
shall be void for lack
of
a
formal requirement.
No marriage license
will be issued in the
absence of Certificate
of Compliance issued
by
the
Family
Planning Office. (R.A.
10354, Sec. 15)
Marriage Certificate
While a marriage certificate is considered the
primary evidence of a marital union, it is not
regarded as the sole and exclusive evidence of
marriage. The fact of marriage may be proven by
relevant
evidence
other
than
the
marriage certificate. Hence, even a person’s birth
certificate may be recognized as competent
evidence of the marriage between his parents.
(Anonuevo v. Int. Estate of Jalandoni, G.R. No.
178221, 2010)
3. MARRIAGES SOLEMNIZED
ABROAD AND FOREIGN DIVORCE
MARRIAGES CELEBRATED ABROAD (Art. 26,
par. 1)
General Rule: Marriages solemnized outside the
Philippines in accordance with the laws of the
foreign country shall be valid here (lex loci
celebrationis)
Basis: Principle of Comity
However, if solemnized inside the
Philippine Consulate abroad, Philippine
laws must be observed
Exceptions to Lex Loci Celebrationis
a. Where either or both parties are below 18
years old
b. Bigamous or polygamous marriage
(except Art. 41 on presumptive death of
spouse)
c. Mistake in identity
d. Marriage void under Art. 53 – contracted
following the annulment or declaration of
nullity of a previous marriage but before
recording of partition
e. Psychological incapacity
f.
Incestuous marriage
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g.
Marriage void for reasons of public policy
Thus, what is dispensed with are merely the
authority of the solemnizing officer and the
marriage license requirements.
Is the “marriage ceremony” requirement
dispensed with, thus allowing common-law
marriage? – NO, Art. 26 of the Family Code uses
the word “solemnized”. However, if solemnized
abroad, the ceremony prescribed in the place of
celebration shall apply.
Is the same-sex marriage of Filipinos abroad
valid? NO, Article 15 of the Civil Code provides
that laws relating to family rights and duties, or to
status, condition and legal capacity of persons are
binding upon citizens of the Philippines, even
though living abroad. In the Philippines, a person
has legal capacity to marry only a person of the
opposite sex. Hence, public policy mandates that
only a man and woman can marry each other.
To establish a valid marriage, it is necessary to
prove:
1.
2.
The foreign law as a question of fact; and
The celebration of marriage pursuant
thereto by convincing evidence (Ching
Huat v. Co Heong. G.R. No. L-1211)
NOTE: If such law of the other state is not pleaded
nor proved and for purposes of determining the
validity of a marriage in the said state, the laws of
such state, in the absence of proof to the contrary,
will be presumed by the Court to be the same as
the laws of its own state. (Processual
presumption)
FOREIGN DIVORCE
Requisites for a Filipino Spouse to Gain
Capacity to Remarry under Philippine Law
After Divorce with Foreigner-spouse (Art. 26,
par. 2)
1. A valid marriage that had been celebrated
between a Filipino citizen and a foreigner;
and
2. A valid divorce subsequently obtained
abroad by the alien spouse capacitating him
or her to remarry
The letter of the law does not demand that
the alien spouse should be the one who initiated
the proceeding wherein the divorce decree
was granted. It does not distinguish whether
the Filipino spouse is the petitioner or the
CIVIL LAW (AND PRACTICAL EXERCISES)
respondent in the foreign divorce proceeding
(Republic v. Manalo, G.R. No. 221029, 2018).
Article 26 should be interpreted to mean that it is
irrelevant for courts to determine if it is the foreign
spouse that procures the divorce abroad. Once a
divorce decree is issued, the divorce becomes
"validly obtained" and capacitates the foreign
spouse to marry. The same status should be given
to the Filipino spouse. The national law of Japan
does not prohibit the Filipino spouse from initiating
or participating in the divorce proceedings. It
would be inherently unjust for a Filipino woman to
be prohibited by her own national laws from
something that a foreign law may allow (Racho v.
Seiichi Tanaka, G.R. No. 199515, June 25, 2018)
NOTE: The determinative point when the foreigner
who procured the divorce should be a foreigner
at the time of the divorce, and not at the time of
the marriage ceremony.
How to prove foreign divorce:
1. Present the divorce decree, proven as a
public or official record of a foreign
country by either:
a. An official publication; or
b. A copy thereof attested by
the officer having legal custody of
the document
c. If the record is not kept in the
Philippines, such copy must be:
i. Accompanied
by
a
certificate issued by the proper
or consular officer in the
Philippine
foreign service
stationed in the foreign country
in which the record is
kept; and
ii. Authenticated by the seal of
his office
2. Prove the conformity of the decree to the
foreign law (Garcia v. Recio, 2001)
Settled is the rule that in actions involving the
recognition of a foreign divorce judgment, it is
indispensable that the petitioner proves not only
the foreign divorce judgment granting the divorce,
but also the alien spouse’s national law. The
English translation submitted was published by
Eibun Horei-Sha, Inc., a private company in Japan
engaged in publishing English translation of
Japanese laws, which came to beknown as the
EHS Law Bulletin Series. However, these
translations are "not advertised as a source of
official translations of Japanese laws;" rather, it is
official laws and regulations are published, albeit
in Japanese. Accordingly, the English translation
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submitted by Mrs. X is not an official publication
exempted from the requirement of authentication.
Neither can the English translation be considered
as a learned treatise. (Arreza v. Toyo, G.R. No.
213198, July 1, 2019)
4. VOID AND VOIDABLE
MARRIAGES
VOID MARRIAGES
Marriages Void from the Beginning (Void Ab
Initio):
A.
B.
C.
D.
Void under Article 35:
a. Contracted by any party below 18 years
old;
b. Solemnized by an unauthorized
solemnizing officer
i. Exception: If either or both parties
believed in good faith that the
officer had authority
c. Solemnized without a valid marriage
license
i. Exception: When license not
required
d. Bigamous or polygamous marriages
i. Exception: Art. 41 – Marriage
contracted by a person whose
spouse has been absent for 4
years (ordinary absence) or 2
years (extraordinary absence),
where such person has a well
founded belief that his/her absent
spouse is already dead, and had
obtained
a
declaration
of
presumptive death, and at the time
of marriage ceremony is in good
faith together with the subsequent
spouse
e. Those contracted through mistake of
one contracting party as to the identity
of the other; and
f. Those subsequent marriages that are
void under Article 53.
Psychological Incapacity (Art. 36)
Incestuous Marriage (Art. 37)
By Reasons of Public Policy (Art. 38)
Good faith marriage (Art. 35[2])
Good faith means an honest and reasonable belief
that the marriage was valid at its inception, and
that no legal impediment exists to impair its validity
(52 Am. Jur. 2d 96)
Marriage without a valid marriage license
A certification of no marriage license by the
local civil registrar stating that there was not
CIVIL LAW (AND PRACTICAL EXERCISES)
enough staff to search for the marriage license is
not adequate and will not prove absence of a
marriage license. The certification, in fact, proves
that no diligent search was made. (Sevilla vs.
Cardenas, G.R. No. 167684, 2006)
A Certification of the Civil Registrar to the
effect that “after a diligent search on the files of
Registry Book on Application for Marriage
License and License Issuance available in this
office, no record could be found on the alleged
issuance of this office of Marriage License No.
XXXXX in favor of Mr. A and B dated XXXX” does
not categorically prove that there was no marriage
license. Furthermore, marriages are not dissolved
through mere certifications by the civil registrar. It
will be wrong to establish a doctrine that a
certification that a marriage license cannot be
found may substitute for a definite statement that
no such license existed or was issued (Vitangcol
v. People, G.R. No. 207406, 2016).
The Certification by the Municipal Civil
Registrar that the Office of the Local Civil
Registrar “has no record nor copy of any marriage
license” ever issued in favor of petitioner and
respondent, coupled with respondent’s failure to
prfoduce a copy of the alleged marriage license
or of any evidence to show that such license was
ever issued, proves that no valid marriage license
was, in fact, issued (Kho v. Republic and Kho,
G.R. No. 187462, 2016)
Valid Bigamous Marriages
General Rule: Marriage contracted by any person
during the subsistence of a previous marriage is
void (Art. 35)
Exception: If subsequent marriage was
contracted with a valid declaration of presumptive
death.
First marriage was not judicially declared void nor
was Z judicially declared presumptively dead
under the Civil Code. Parties to a marriage should
not be permitted to judge for themselves its nullity,
only competent courts having such authority. Prior
to such declaration of nullity, the validity of the first
marriage is beyond question. A party who
contracts a second marriage then assumes the
risk of being prosecuted for bigamy. The absolute
nullity of a previous marriage may be invoked for
purposes of remarriage on the basis solely of a
final judgment declaring such previous marriage
void. Bigamy was consummated when X
subsequently married Y without his first marriage
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to Z having been judicially declared void (Vitangcol
v. People, G.R. No. 207406, 2016).
Mistake in Identity (Art. 35[5])
The contemplated mistake refers to the actual
physical identity of the other party, and not merely
mistake in the name, character, age, or other
attributes of the person.
Subsequent Marriage Void under Art. 53
A person whose marriage has been annulled or
declared null and void may remarry as long as,
after the marriage is annulled/nullified, he does the
following:
1. Partition and distribution of the properties
of the spouses;
2. Distribution of the presumptive legitimes
of the children; and
3. Recording of the judgement of annulment
or absolute nullity (Art. 40), the partition
and distribution, and the delivery of the
presumptive legitimes in the appropriate
civil registry and registries of the
property.
Failure to comply with these requisites will make
the subsequent marriage void ab initio.
Furthermore, failure to record in the proper
registries will mean that such will not affect third
persons (Art. 52-53).
Liquidation, partition, and distribution of
presumptive
legitimes
apply
only
to
marriages declared void under Art. 40 and 45.
(Diño v. Diño, G.R. No. 178044, 2011)
Psychological Incapacity (Art. 36)
Marriage where any of the parties, at the time of
the
celebration
of
the
marriage,
was
psychologically incapacitated to comply with the
essential marital obligation, even if incapacity
becomes manifest only after solemnization.
Psychological Incapacity must be judged on a
case-by-case basis. It should refer to no less than
a mental (not physical) incapacity. It must be
characterized by: (JIG)
1. Juridical antecedence
2. Incurability
3. Gravity (Carating-Siaynco v. Siaynco,
G.R. No. 158896, 2004)
Mere showing of irreconcilable differences and
conflicting personalities do not constitute
psychological
incapacity.
(Carating-Siaynco
v. Siaynco, G.R. No. 158896, 2004)
CIVIL LAW (AND PRACTICAL EXERCISES)
Mere sexual infidelity or perversion and
abandonment
do
not
by
themselves
constitute psychological incapacity within the
contemplation of the Family Code. (Dedel v. CA,
G.R. No. 151867, 2004)
One of the essential marital obligations is "to
procreate children based on the universal principle
that procreation of children through sexual
cooperation
is
the
basic
end
of
marriage." Constant non-fulfillment of this
obligation will finally destroy the integrity or
wholeness of the marriage. The senseless and
protracted refusal of one of the parties to fulfill this
marital obligation is equivalent to psychological
incapacity. (Chi Ming Tsoi v. CA, G.R. No. 119190,
1997)
A finding of psychological incapacity on the part of
one spouse shows non-cognizance of one’s
essential marital obligation, and therefore negates
bad faith. As a consequence, moral and
exemplary damages cannot be awarded. Moral
damages should be predicated on specific
evidence that was done deliberately and with
malice by a party who had known of his or her
disability and yet willfully concealed the
same. (Buenaventura v. CA, GR No. 127358,
2005)
The burden falls upon petitioner, not just to prove
that respondent suffers from a psychological
disorder, but also that such psychological disorder
renders her "truly incognitive of the basic marital
covenants that concomitantly must be assumed
and discharged by the parties to the marriage."
(Baccay v. Baccay, GR No. 117318, 2010)
Jurisprudential guidelines: (BRE-IGO-IC)
a. Burden of proof to show the nullity of
marriage is upon the plaintiff;
b. The Root cause of the psychological
incapacity must be: (CCEE)
a. Medically or Clinically identified;
b. Alleged in the Complaint;
c. Sufficiently proven by Experts
d. Clearly Explained in the decision
c. The incapacity must be proven to be
Existing at the time of the celebration of
the marriage
d. Such incapacity must be shown to be
medically or clinically permanent or
Incurable
e. Such illness must be Grave enough to
bring about the disability of the party to
assume the essential obligations of
marriage
f. Essential marital Obligations must be
those embraced by Arts. 68-71, as well as
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g.
h.
Arts. 220, 221, and 225 of the Family
Code.
Interpretations given by the National
Appellate Matrimonial Tribunal of the
Catholic Church in the Philippines, while
not controlling or decisive, should be
given great respect by our courts
The trial court must order the prosecuting
attorney or fiscal and the Solicitor General
to appear as Counsel for the State
NOTE: The foregoing guidelines do not require
that a physician examine the person to be
declared psychologically incapacitated. What is
important is that the totality of evidence can
adequately establish the party’s psychological
condition. (Republic v. CA & Molina, G.R. No.
108763, 1997)
“Totality of Evidence” principle means that
medical experts’ testimony is not required, if the
totality of all other evidence presented is sufficient
to prove psychological incapacity. If not, the
testimony of experts is crucial. (Marcos v. Marcos,
G.R. 136490, 2000)
Incestuous Marriage (Art. 37)
Whether the relationship is legitimate or
illegitimate:
a. Between ascendants and descendants of
any degree
b. Between brothers and sisters, whether full or
half
blood
Void for Reasons of Public Policy (Art. 38)
(exclusive list)
a. Between collateral blood relatives up to
4th civil degree
o There is no prohibition regarding
marriages between collateral
blood relatives by half-blood
b. Between step-parents and step-children
c. Between parents-in-law and children-inlaw
d. Between adopting parent and adopted
child
e. Between surviving spouse of the adopter
and the adopted child
f. Between surviving spouse of the adopted
child and the adopter
g. Between adopted and a legitimate child of
adopter
h. Between adopted children of same
adopter
i. Between parties where one, with the
intention to marry the other, killed the
other person’s spouse or his/her own
spouse
CIVIL LAW (AND PRACTICAL EXERCISES)
o
No prior criminal conviction by
the court is required by the law
since mere preponderance of
evidence is required to prove the
killing
The following can marry each other:
a. Brother-in-law and sister-in-law
b. Stepbrother and stepsister
c. Guardian and ward
d. Adopted and illegitimate child of the adopter
e. Parties who have been convicted of adultery
or concubinage
NOTE: Relationship by affinity between
the surviving spouse and the kindred of the
deceased spouse continues even after the death
of the deceased spouse, regardless of whether
the marriage produced children or not. (Vda.
de Carungcong v. People, G.R. No. 181409,
2010)
Subsequent
Marriage
Without
Judicial
Declaration of Nullity of Previous Void
Marriage
For purposes of remarriage, the only acceptable
evidence that the previous marriage has been
voided is a final judgment declaring such marriage
null and void; if the purpose is NOT TO
REMARRY, other evidence can be presented to
prove the nullity of the previous marriage. (Art. 40)
Even if a marriage is void, it must be declared
void first by final judgment before the parties to
such void marriage can remarry. The parties
cannot decide for themselves the invalidity of
their marriage.
ABSENCE
of
a
formal
requisite
of
solemnization of Marriage – A judicial declaration
of nullity is not needed where the parties merely
signed a marriage contract on their own and NO
marriage ceremony was performed by a duly
authorized solemnizing officer. Such act alone,
without more, cannot be deemed to constitute an
ostensibly valid marriage (Morigo v. People, G.R.
No. 145226, 2004).
VOID Marriage under the Civil Code – If a
marriage is void under a ground provided in the
Civil Code and a subsequent marriage
was contracted before the effectivity of the FC
without having the first marriage declared null and
void, the second marriage is valid. The Civil Code
contains no express provision on the necessity
of a judicial declaration of nullity of a
marriage considered void under the Civil Code.
The requirement of a judicial decree of nullity does
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not apply to marriages celebrated before
the effectivity of the Family Code, particularly if
the children of the parties were born while the
Civil Code was in force. (Castillo v. Castillo, G.R.
No. 189607, 2016)
VOIDABLE MARRIAGES
Grounds for Annulment (PUFFIS) (Art. 45)
a. Lack of Parental consent
b. Either party is of Unsound mind
c. Fraudulent means of obtaining consent
of either party
d. Consent was obtained by Force,
intimidation, or undue influence
e. That either party was physically Incapable
of consummating the marriage with the
other. Such incapacity:
i.
Continues; and
ii.
Is Incurable
f. Either party afflicted with a Sexually
transmissible disease. The disease:
i.
Is found to be Serious; and
ii.
Appears to be incurable
a. Annulment under Article 36 (as
recently articulated under TanAndal v. Andal, G.R. No.
196359, May 11, 2022; Totality
of Evidence Rule)
Psychological incapacity is not a medical but
a legal concept. It refers to a personal
condition that prevents a spouse to comply
with fundamental marital obligations only in
relation to a specific partner that may exist at
the time of the marriage but may have revealed
through
behavior
subsequent to the
ceremonies. It need not be a mental or
personality disorder. It need not be a
permanent and incurable condition. Therefore,
the testimony of psychologist or psychiatrist
is not mandatory in all cases. The totality of the
evidence must show clear and convincing
evidence to cause the declaration of nullity of
marriage.
Circumstances constituting fraud (Art. 46)
a.
Non-disclosure of conviction by final
judgment of crime involving moral
turpitude
b.
Concealment of pregnancy by another
man
c.
Concealment of sexually transmissible
disease, regardless of nature, existing at
the time of marriage
d.
Concealment of drug addiction, habitual
alcoholism,
homosexuality and
lesbianism
ARTICLE 45 STD
ARTICLE 46 STD
Ground for annulment
Type of fraud which is
a
ground
for
annulment
Does not have to be
concealed
Must be serious and
appears
to
be
incurable
STD itself is a ground
for annulment
Must be concealed
Need not be serious
and appear to be
incurable
It is the concealment
of which constitute the
ground for annulment
Doctrine of Triennial Cohabitation
Presumption that the husband is impotent should
the wife still remain a virgin after 3 years of living
together with her husband. Burden of proof to
prove non-impotency shifts to the husband.
NOTE: Grounds for annulment must exist at
the time of the celebration of the marriage.
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BASIS
VOID
VOIDABLE
As to nature
Inexistent from the time of performance
Valid until annulled
As to prescriptibility
Does not prescribe (Art. 39)
Prescriptive period depends on the
ground/s invoked.
(a) Cannot be attacked collaterally,
only directly (i.e. there must be a
decree of annulment)
As to how
marriage may be
impugned
(a) May be attacked directly or
collaterally but for the purpose of
remarriage, there must be a judicial
declaration of nullity
(b) Can no longer be impugned after
death of one of the parties
(b) Direct: Only the spouses
(c) Collateral: Any interested party in
any proceeding where the
determination of the validity of the
marriage is necessary to give rise to or
negate certain rights
Family Court of the province or city where the petitioner or the respondent has been
residing for at least 6 months prior to the date of filing (if the respondent is a nonresident: where he may be found in the Philippines) at the election of the petitioner.
(A.M. No. 02-11-10-SC)
Cannot be ratified
Can be ratified either by free
cohabitation or prescription
Venue for action
As to susceptibility
to ratification
As to effect
on property
As
to
children
effect
No community property,
ownership (Art. 147/148)
on
only
co-
Absolute community exists unless they
agreed upon another system in their
marriage settlement
Children are illegitimate
Except those falling under the following:
i. In case of psychological incapacity
(Art. 36)
ii. Children born of subsequent marriage
(Art. 53)
Children are legitimate if conceived
before decree of annulment
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SUMMARY FOR VOIDABLE MARRIAGES
GROUNDS
FOR
ANNULMENT
Lack
of
parental
consent
WHO CAN
PRESCRIPTIVE PERIOD
RATIFICATION
Underage party (1821 years old)
Within 5 years after turning 21
Parent or guardian
Before child reaches 21
Sane spouse who
had no knowledge of
insanity
Before the death of the other party
Guardian of insane
spouse
Any time before the death of either party
Insane spouse
During lucid interval or after regaining
sanity also before death of other party
Injured Party
Within 5 years after discovery of fraud
Free cohabitation with full
knowledge
of
facts
constituting the fraud
Vitiated
consent
Within 5 years from time force,
intimidations or undue influence
disappeared or ceased
Incapability to
consummate/
STD
Within 5 years after the marriage
ceremony
Free cohabitation after the
cause (force, intimidation,
undue
influence)
disappeared or ceased.
Intimidation can be on the
person or the property of the
injured party and his/her
immediate family
No ratification since defect is
permanent, but right of
action may prescribe
Insanity of one
party
Fraud
Free
cohabitation
reaching 21
after
Free
cohabitation
after
insane
spouse
regains
sanity
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CIVIL LAW (AND PRACTICAL EXERCISES)
EFFECTS OF VALID BIGAMOUS MARRIAGE, DECLARATION OF NULLITY, AND ANNULMENT
Status
of
Children
Property
Relations
VALID
BIGAMOUS
MARRIAGE (ART. 41- WITH
DECLARATION
OF
PRESUMPTIVE DEATH)
Children
of
subsequent
marriage conceived before its
termination – legitimate
ACP/CPG shall be liquidated.
The share in the net profits
of community property or
conjugal partnership property of
the spouse who contracted the
marriage in bad faith, shall be
forfeited
in
favor
of
common children or if there are
none, children of the guilty
spouse by previous marriage or
in
default
thereof,
the
innocent spouse. (Art. 43 [2])
Donations
Propter
Nuptias
Succession
Shall remain valid except:
- If donee contracted the
marriage in bad faith, donations
propter nuptias made to the
donee
are
revoked
by operation of law. (Art. 43[3])
- If both spouses acted in bad
faith, donations propter nuptias
made by one in favor of the
other are revoked by operation
of law.
If one spouse contracted the
marriage in bad faith, he shall
be disqualified to inherit from
the innocent spouse in both
testate
and
intestate
succession. (Art. 43[5])
If both spouses acted in bad
faith,
all
testamentary
dispositions made by one in
favor of the other are revoked by
operation of law. (Art. 44)
DECLARATION OF NULLITY
Illegitimate except Art. 36 and
Art. 53.
If void under Art. 40 (when
contracted by a spouse of a
prior valid marriage, before
the latter is judicially declared
void): Same as property
relations of Valid Bigamous
Marriage. Par. 2 of Art. 43
applies.
If not void under Art. 40, the
provisions of Arts. 147 and 148
govern. The share of the
party in bad faith in the coownership shall be forfeited in
favor of their common children.
If void under Art. 40: Same as
effect on donations for Valid
Bigamous Marriage. Par. 3 of
Art. 43, and Art. 44, apply.
ANNULMENT
Children conceived or born
before annulment decree –
legitimate
ACP/CPG
shall
be liquidated.
The share in the net profits
of community property or
conjugal
partnership
property of the spouse
who
contracted
the
marriage in bad faith, shall
be forfeited in favor of
common children or if there
are none, children of the
guilty spouse by previous
marriage
or in default
thereof,
the
innocent spouse. Same as
Art. 40
Same as effect on donations
for
Valid
Bigamous
Marriage. Par. 3 of Art. 43,
and Art. 44, apply.
If not under 40: option belongs
to the donee. (Art. 86[1])
If void under Art. 40: Same as
effect on succession for Valid
Bigamous Marriage. Par. 5 of
Art. 43, and Art. 44, apply.
Same
as
effect
on
succession
for
Valid
Bigamous Marriage. Par. 5
of Art. 43, and Art. 44, apply.
If
marriage
is void,
no successional rights
involved.
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C. LEGAL SEPARATION
1. GROUNDS
Grounds for Legal Separation: (PRC-FAAL BILA) (Art.
55)
d. Repeated Physical violence or grossly abusive
conduct directed against petitioner, a common
child or a child of the petitioner
e. Physical violence or moral pressure to compel the
petitioner
to
change
Religious
or
political affiliation
f. Attempt of respondent to Corrupt or induce the
petitioner, a common child, or a child of
the petitioner, to engage in prostitution,
or connivance in such corruption or inducement
g. Final judgment sentencing respondent to
imprisonment of more than 6 years (even
if pardoned)
h. Drug Addiction or habitual Alcoholism
i. Lesbianism or homosexuality
j. Subsequent Bigamous marriage
k. Sexual Infidelity or perversion
l. Attempt by respondent against the Life of the
petitioner
m. Abandonment for more than 1 year without
justifiable cause
2. DEFENSES
Grounds to Deny Legal Separation/Defenses to Legal
Separation: (C4-D-GRP) (Art. 56)
a. Condonation
NOTE: Failure of the husband to look for his
adulterous wife is not a condonation of wife’s
adultery.
b.
c.
d.
e.
f.
g.
h.
Consent
Connivance
Collusion
Death of either party during the pendency of
the case (Lapuz-Sy v. Eufemio, G.R. No. L30977, 1972).
Equal Guilt
Reconciliation
of
the
spouses
during
the pendency of the case (Art. 66)
Prescription
3. PROCEDURE
When to file/try an action for legal separation
An action for legal separation shall be filed within 5 years
from the time of occurrence of the cause (Art. 57). The
time of discovery of the ground for legal separation is not
material in the counting of the prescriptive period.
The action for legal separation shall not be tried before 6
months shall have elapsed since the filing of the petition,
CIVIL LAW (AND PRACTICAL EXERCISES)
(Art. 58) except interlocutory matters such as
the determination of custody of children,
alimony, and support pendente lite.
No legal separation may be declared unless the
court has taken steps towards the reconciliation
of the spouses and is fully satisfied, despite
such efforts, that reconciliation is highly
improbable. (Art. 59)
The six-month-cooling-off-period requirement
can be dispensed with if the ground for legal
separation involves violence against the woman
or the child. Thus, the Court shall proceed on
the main case and other incidents of the case as
soon as possible (Sec. 28, RA 9262).
Stipulation of Facts or Confession of
Judgement
No decree of legal separation shall be based
upon a stipulation of facts of confession of
judgement. In any case, the court shall order
the prosecuting attorney or fiscal assigned to it
to take steps to prevent collusion between the
parties and to take care that the evidence is not
fabricated or suppressed. (Art. 60)
4. EFFECTS OF FILING PETITION
Effects of Filing a
Separation (Art. 61)
Petition
for Legal
a. The spouses shall be entitled to live
separately from each other;
b. The court, in the absence of a written
agreement between the spouses, shall
designate either of them or a third person to
administer the absolute community or
conjugal
partnership
property.
The
administrator appointed by the court shall
have the same powers and duties as those
of a guardian under the Rules of Court
5. EFFECTS OF PENDENCY
Effects of Pendency of Action for Legal
Separation (Art. 62 in relation to Art. 49)
During the pendency of the action and in
the absence of adequate provisions in a
written agreement between the spouses, the
Court shall provide for the following:
a. The support of the spouses
b. The custody and support of their
common children;
NOTE: The Court shall give
paramount consideration to the
moral and material welfare of said
children and their choice as to the
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CIVIL LAW (AND PRACTICAL EXERCISES)
parent with whom they wish to remain
c.
Appropriate visitation rights of the other parent
6. EFFECTS OF DECREE OF LEGAL
SEPARATION (ART. 63)
a.
b.
c.
d.
Spouses are entitled to live separately
Marriage bond is not severed
Dissolution of property regime
Forfeiture of the share of the guilty spouse in the
net profits of the ACP/CPG
NOTE: For purposes of computing the net profits
subject to forfeiture, the said profits shall be
the increase in value between the market price
of the community property at the time of the
celebration of the marriage and at the time of
dissolution. What is forfeited is not the share of
the guilty spouse in the liquidation of the
community property but merely the profits.
(Siochi v. Gozon GR Nos. 169900 and 169977,
2010)
If there is no separate property, the net
remainder is the profit and therefore the
remainder (which includes the profit) pertaining
to the share of the guilty spouse is his/her entire
share which must be forfeited (Quiao v. Quiao,
2012)
e.
Custody of minor children to innocent spouse
(subject to Art. 213: parental authority shall be
exercised by parent designated by the court)
The imposed custodial regime under the
second paragraph of Article 213 is limited in
duration, lasting only until the child’s seventh
year. From the eighth year until the child’s
emancipation, the law gives the separated
parents
freedom,
subject
to
the
usual contractual limitations, to agree on
custody regimes they see fit to adopt
(Dacasin vs. Dacasin, G.R. No. 168785,
2010).
f.
Guilty spouse is disqualified from intestate
succession and provisions made by innocent
spouse in his favor in a will shall be revoked by
operation of law
Effects Upon Finality of the Decree (Art. 64)
a. Innocent spouse may revoke the donation
made by him or her in favor of the offending
spouse. The revocation of the donations shall
be recorded in the registries of property in the
places where the properties are located.
However,
alienations,
liens
and
encumbrances registered in good faith before
the recording of the complaint for revocation
b.
in the registries of property shall be
respected.
Innocent spouse may revoke
designation of guilty spouse as
beneficiary in the insurance policy
even if such designation be
stipulated as irrevocable. The
revocation of or change in the
designation of the insurance
beneficiary shall take effect upon
written notification to the insured.
NOTE: Action to revoke the donation must be
brought within 5 years from the time the decree
has attained finality.
7. RECONCILIATION
Reconciliation
If the spouses should reconcile, a corresponding
joint manifestation under oath duly signed
by them shall be filed with the court in the same
proceeding for legal separation (Art. 65).
Effects of Reconciliation
a. The legal separation proceedings, if still
pending, shall thereby be terminated at
whatever stage (Art. 66)
b. The final decree of legal separation
shall be set aside (Art. 66)
c. The separation of property and any
forfeiture of the share of the guilty
spouse already effected shall subsist,
unless the spouses agree to revive
their former property regime (Art. 66)
d. Joint custody of the children is restored
e. The right to intestate succession by the
guilty spouse from the innocent spouse
is restored
f. The right to testamentary succession
depends on the will of the innocent
spouse
8. EFFECT OF DEATH OF ONE OF
THE PARTIES
Effect of Death (Sec. 21, Rule on Legal
Separation, A.M. No. 02-11-11-SC)
In case a party dies at any stage of proceedings
before the entry of judgment, the court shall
order the case closed and terminated without
prejudice to the settlement of estate proper
proceedings in the regular courts.
If the party dies after the entry of judgment, the
same shall be binding upon the parties and their
successors in interest in the settlement of the
estate in the regular courts.
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D. RIGHTS AND OBLIGATIONS BETWEEEN
HUSBAND AND WIFE
Obligations of Husband and Wife (L2H2DS) (Art. 6871)
a. Live together
b. Observe mutual Love, respect and fidelity
c. Render mutual Help and support
d. Management of the Household
e. Fix the family Domicile
f. Joint responsibility for the Support of the family
Fixing the Family Domicile (Art. 69) General rule: The
husband and wife shall fix the family domicile
Except: In case of disagreement, the court shall decide.
NOTE: The Court may exempt one spouse from living
with the other if the latter should live abroad or there are
other valid and compelling reasons, unless it is not
compatible with the solidarity of the family.
Sources for Support and Management of Household
(Art. 70-71):
a. From the community property
b. In the absence thereof, from the income or fruits
of the separate properties
c. In case of insufficiency or absence thereof, from
their separate properties
Right to Bring an Action in Court (Art. 72) When one
of the spouses neglects his or her duties to the conjugal
union or commits acts which tend to bring danger,
dishonor, or injury to the other or to the family, the
aggrieved party may apply to the court for relief.
Profession (Art. 73)
General Rule: Either spouse may exercise any legitimate
profession, business, or activity without the consent of the
other.
Exception: The other spouse may object on valid,
serious and moral grounds. In case of disagreement, the
court shall decide whether:
a. The objection is proper, and
b. Benefit has accrued to the family before or after
the objection.
If benefit accrued to the family before the objection, the
resulting obligation shall be enforced against the
community property.
If benefit accrued to the family after the objection has
been made, the resulting obligation shall be enforced
against the separate property of the spouse who has not
obtained consent (R.A. 10572, 2013)
NOTE: This is without prejudice to the rights of creditors
who acted in good faith.
CIVIL LAW (AND PRACTICAL EXERCISES)
E. PROPERTY RELATIONS BETWEEN
HUSBAND AND WIFE
1. GENERAL PROVISIONS
What Governs Property Relations Between
Spouses (Art. 74)
a. Marriage Settlement – future spouses
may agree upon the regime of ACP,
CPG, complete separation of property,
or any other regime
b. Family Code – if there is no marriage
settlement or when the regime agreed
upon therein is void, the system of ACP
shall govern
c. Local customs
General Rule: Property Relations are governed
by Philippine laws (Art. 80)
Exceptions:
a. When there is a contrary stipulation in the
marriage settlement
b. When both are aliens, even if married in
the PH
c. As to extrinsic validity of contracts
affecting property not situated in the
Philippines (Art. 80).
MARRIAGE SETTLEMENTS
Requisites of a Valid Marriage Settlement:
(WSB-TCR)
1. In Writing;
2. Signed by the parties;
3. Executed Before the celebration of
marriage
4. To fix the Terms and conditions of their
property relations;
5. If the party executing the settlement is
under Civil interdiction or any other
disability, the guardian appointed by the
court must be made a party to the
settlement (Art. 79); and
6. Registration (merely to bind 3rd
persons)
Requisites for a Valid Modification of
Marriage Settlement:
a. In writing;
b. Signed by the parties;
c. Executed before the celebration of the
marriage, unless:
i.
there is a revival of property
regime in case of reconciliation in
legal separation
proceedings
(Art. 66-67)
ii.
there is sufficient cause for
judicial separation of property
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iii.
d.
under Art. 135
spouses file for voluntary dissolution of
property regime under Art. 136
Registration: to bind 3rd persons
Effectivity of a Marriage Settlement in Consideration
of Future Marriage
Everything stipulated in the settlements or contracts
referred to in the preceding articles in consideration of a
future marriage, including donation made between
prospective spouses, shall be void if the marriage does
not take place. Stipulations not dependent on the
celebration of the marriage shall be valid (Art. 81).
CIVIL LAW (AND PRACTICAL EXERCISES)
celebrated or is judicially declared void ab
marriage shall be void, while those not
dependent shall remain valid.
DONATION PROPER NUPTIAS V ORDINARY
DONATIONS
Formalities
2. DONATIONS BY REASON OF
MARRIAGE
Requisites: (BCF) (Art. 82)
1. Made Before celebration of marriage;
2. In Consideration of marriage; and
3. In Favor of one or both future spouses
Present
Property
General Rule: Future spouses cannot donate to each
other more than 1/5 of their present property. Any excess
shall be considered void (Art. 84)
Exception: If they are governed by ACP (because they
own everything in common)
Grounds to Revoke Donation Propter Nuptias:
(CARNIVAL) (Art. 86)
a. Marriage without the needed parental Consent
b. Marriage is Annulled and donee is in bad faith
c. If it is with a Resolutory condition and the
condition is complied with
d. Marriage is Not celebrated
e. Donee commits acts of Ingratitude such as:
i.
Commits an offense against the
person, honor or property of the donor,
his wife, or children under his parental
authority
ii.
Imputes to the donor any criminal
offense or any act involving moral
turpitude, unless the crime was
committed against the donee himself,
his wife, or children under his authority
iii.
Unduly refuses to support the donor
when he is legally or morally bound to
give such support
f.
g.
Marriage is judicially declared Void Ab initio
In Legal separation and donee is the guilty
spouse
NOTE: In case of donations included in the marriage
settlement, when the marriage thereafter
is not
Future
Property
Grounds
for
revocation
DONATION
PROPTER
NUPTIAS
Governed by
the rules on
ordinary
donations
except
if
future
property, it
must
conform with
formalities of
wills
May
be
donated but
up to 1/5 of
donor's
present
property
May
be
included
provided
donation is
mortis causa
Art. 86 of
Family Code
ORDINARY
DONATIONS
Governed by
rules
on
donations
(Arts. 725-773
NCC)
No
person
may give or
receive,
by
way
of
donation, more
than he may
give or receive
by will. (Art.
752)
Cannot
be
included
Arts. 752, 760,
764, 765 NCC
Prescriptive Periods for Filing Action for
Revocation of Donation Propter Nuptias
PRESCRIPTIVE PERIODS FOR FILING
ACTION
FOR
REVOCATION
OF
DONATION PROPTER NUPTIAS
If marriage is not 5 years (Art. 1149
celebrated
NCC) from the time
(Except: donations in marriage
is
not
marriage settlements solemnized on the
automatically void if fixed date
marriage
not
celebrated)
If
marriage
is By operation of law if
judicially declared donee-spouse
void (Note: deleted contracted
items – no distinction subsequent
void
made by law)
marriage in bad faith,
and if not, 5 years
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When
marriage
takes place without
the
required
parental consent
If
resolutory
condition
is
complied with
If donee commits an
act of ingratitude
In case of
separation
legal
from finality of judicial
declaration of nullity
5
years
from
celebration
of
marriage
5
years
from
happening
of
condition
1 year from donor’s
knowledge of that
fact
5 years from the time
the
decree
of
separation
has
become final
3. ABSOLUTE COMMUNITY OF
PROPERTY
Absolute Community of property
The property regime of spouses in the absence of a
marriage settlement or when the regime agreed upon is
void (Art. 75)
NOTE: It shall commence at the precise moment that the
marriage is celebrated. Any stipulation, express or
implied, for the commencement of the regime at any
other time, shall be VOID (Art. 88).
No waiver of rights, interests, shares and effects of the
ACP during the marriage, except in case of judicial
separation of property. The waiver must be in a public
instrument. Creditors of the spouse who made such
waiver may petition the court to rescind the waiver to the
extent that is sufficient to cover the amount of the credit
(Art. 89).
Property acquired during the marriage, whether
acquisition appears to have been made in the name of
one or both spouses, is PRESUMED to belong to the
community (Art. 93).
The original property regimes subsisting under the New
Civil Code when the Family Code took effect are
immutable and remain effective.
Art. 256 provides that the Family Code shall have
retroactive effect insofar as it does not prejudice or impair
the vested or acquired rights in accordance with the Civil
Code or other laws.
General Rule: The community property consists of all
the property owned by the spouses before, at the time
of, or after the celebration of the marriage (Art. 91).
Exceptions/Exclusions from Community Property
(Art. 92)
a. Those indicated in the marriage settlement (Art.
CIVIL LAW (AND PRACTICAL EXERCISES)
b.
c.
d.
91)
Property acquired during the marriage
by gratuitous title plus its fruits and
income,
except when the donor,
testator, or grantor expressly provides
otherwise
Property for personal and exclusive
use, except jewelry
Property acquired before the marriage
by either spouse who has legitimate
descendants by a former marriage and
its fruits and income
Presumption of Community Property: (Art.
93)
Property acquired during the marriage is
presumed to belong to the community, unless it
is proved that it is one of those excluded
therefrom.
Charges Upon and Obligations of the ACP
(Art. 94)
a. Support of spouses, their common
children and legitimate children of
either spouse
b. Debts and obligations contracted during
the marriage:
By a designated administratorspouse for the benefit of the
community
By both spouses
By one with the consent of the
other
By either spouse without the
consent of the other to the extent
that it benefited the family
c. Taxes, liens, charges and expenses
including major or minor repairs upon
community property
d. Taxes and expenses for mere
preservation made during the marriage
upon the separate property of either
spouse used by the family
e. Expenses for professional or vocational
course
f. Ante-nuptial debts which redounded to
the benefit of the family
g. Donated or promised to common
legitimate
children for profession,
vocational course or self-improvement
h. Other ante-nuptial debts, support of
illegitimate child, and liabilities for crime
or quasi-delicts in the absence of
separate
property are chargeable
against the separate properties of the
spouses but may be advanced by the
ACP in case of absence
or
insufficiency of the exclusive property of
the debtor-spouse
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i.
Expenses of litigation between spouses unless
the suit is found to be groundless
of the court before the offer is
withdrawn by either or both offerors.
NOTE: If the community property is insufficient to cover
all these liabilities (except those falling under cases of
absence or insufficiency of the exclusive property of the
debtor-spouse), the spouses shall be solidarily liable for
the unpaid balance with their separate properties.
Donation of Community Property
General rule: Neither spouse may donate any
community property without the consent of the
other
A loan used for the family business is one which
redounds to the benefit of the family, even if the business
fails (ROS v. Phil National Bank, GR No. 170166, 2011)
Exception: Moderate donations for charity or on
occasions of family rejoicing or family distress
Under the Family Code, one spouse cannot sell property
which is part of the community properties without the
written consent of the other spouse or the authority of the
court. Without such consent or authority, the entire sale
is void. While the law does not require a person dealing
with registered land to inquire further than what the
Torrens Title on its face indicates, the rule is not
absolute. If there are other surrounding circumstances
relevant to the sale which show that the purchaser should
have taken the necessary precaution required of a
prudent buyer, the purchaser cannot be considered in
good faith. (Nobleza v. Nuega G.R. No. 193038, 2015)
In order to be considered a buyer in good faith, the
following must be shown: (a) the diligence in verifying the
validity of the title covering the property; and (b) the
diligence in inquiring into the authority of the transacting
spouse to sell conjugal property in behalf of the other
spouse. Mere reliance on the SPA given by the selling
spouse without further questioning despite knowing that
the lots were conjugal property is insufficient. (Spouses
Aggabao v. Parulan, G.R. No. 165803, 2010)
Administration, Enjoyment, and Disposition
Community Property (Art. 96)
General rule: It shall belong to both spouses jointly
of
Exceptions:
a. In case of disagreement, the husband’s decision
shall prevail subject to recourse by the wife in
court to be availed within 5 years from the date
of the contract implementing the husband’s
decision
b. In case of incapacity of one spouse or inability to
administer the common properties, the other
spouse may assume sole powers of
administration, except powers of disposition and
encumbrance which requires authority from the
court or written consent of the other spouse
In the absence of such authority or consent, the
disposition or encumbrance shall be void.
However, the transaction shall be construed as
a continuing offer on the part of the consenting
spouse and the third person, and may be
perfected as a binding contract upon the
acceptance by the other spouse or authorization
Dissolution of the ACP (Art. 99)
a. Upon death of either spouse
b. Decree of legal separation
c. Marriage is annulled or nullified
d. Judicial separation of property
during the marriage (Arts. 134-138)
Liquidation of the ACP (Art. 102)
a. Inventory of all properties
Inventory of community property
Inventory of separate property of
the wife
Inventory of separate property of
the husband
b. Debts and obligations of ACP are paid
• In case of insufficiency of assets, the
spouses shall be solidarily liable for the
unpaid balance with their separate
properties.
c. Remainder of the separate properties of
the spouses are returned to the owner
d. Net remainder of the ACP is divided
equally between husband and wife
Unless a different proportion is
agreed
upon in the marriage
settlement or there has been a
voluntary waiver of such share
e. Presumptive legitimes of children are
delivered
f. Adjudication of conjugal dwelling and
custody of common children
Given to the spouse to whom the
majority of the common children
choose to remain
Since the petitioner is the guilty party in the legal
separation, his share from the net profits is
forfeited in favor of the common children. In both
regimes (assuming that it was ACP), petitioner,
as the guilty spouse, is not entitled to any
property at all. The husband and the wife did not
have any separate properties. Therefore, there
is no
separate property which may be
accounted for in the guilty party’s favor. (Quiao
v. Quiao G.R. No. 176556, 2012)
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4. CONJUGAL PARTNERSHIP OF GAINS
When applicable: If the spouses agree in the marriage
settlement to be governed by the regime of conjugal
partnership of gains
Governing law: The marriage settlement shall primarily
govern but the provisions of the Family Code on CPG
shall apply suppletorily. The rules on contract of
partnership shall also apply in all that is not in conflict
with the marriage settlement and the provisions of the
Family Code on CPG.
The spouses contribute the following to a common
fund (Art. 106):
a. Proceeds, products, fruits and income of
separate properties of spouses
b. Everything acquired by spouses through their
efforts
c. Everything acquired by spouses through
chance
It shall commence at the precise moment that the
marriage is celebrated. Any stipulation, express or
implied, for the commencement of the regime at any
other time shall be void.
No waiver of rights allowed during the marriage except
in case of judicial separation of property. The waiver
must be in a public instrument.
The fruits, natural, industrial, or civil, due or received
during the marriage from the common property, as well
as the net fruits from the exclusive property of each
spouse are included in
the conjugal partnership
properties. (Art. 117(3))
What Constitutes CPG (FOLCHIC) (Art. 117)
a. Fruits of conjugal property due or received
during the marriage and net fruits of separate
property
b. Those acquired through Occupation
c. Livestock in excess of what was brought to the
marriage
d. Those acquired by onerous title during the
marriage with Conjugal funds
e. Share in Hidden treasure
f. Those obtained from labor, Industry, work or
profession of either or both spouse
g. Those acquired by Chance
Accession– if the cost of the improvement and any
resulting increase in value are equal or less than the
value of the entire property at the time of
the
improvement, the entire property remains the exclusive
property of the owner-spouse (subject to reimbursement
of improvement cost to the CPG)
Reverse Accession – if the cost of the improvement and
any resulting increase in value are more than the value
of the entire property at the time of the improvement, the
property becomes conjugal (subject to reimbursement of
CIVIL LAW (AND PRACTICAL EXERCISES)
the value of the property of the owner-spouse)
Exclusive Property in CPG (Art. 109)
a. That brought into the marriage as
his/her own
b. That acquired during the marriage
gratuitously (net fruits and income are
conjugal)
c. That acquired by redemption, barter or
exchange with exclusive property
d. That purchased with exclusive money
Presumption of Conjugality (Art. 116)
Property acquired during the marriage,
whether acquisition appears to have been
made in the name of one or both spouses, is
presumed to be conjugal. The party who
invokes the presumption must first prove that
the property was acquired
during the
marriage. Otherwise, the presumption of
conjugality will not apply. (Tan v. Andrade,
G.R. Nos. 171904 & 172017, 2013)
Installment purchases (Art. 118)
Property bought on installments paid partly from
exclusive funds and party from conjugal funds:
Belongs to the buyer/s: If full
ownership vested before the
marriage
Belongs
to
the
conjugal
partnership: If full ownership
vested during the marriage In either
case, any amount advanced by the
partnership or by either or both
spouses shall be reimbursed by
the owner upon liquidation.
Credits in Installment (Art. 119)
Whenever an amount or credit payable within a
period of time belongs to one of the spouses:
Belongs to the spouse: Sums
collected in partial payments or by
installments during the marriage
Belongs
to
the
conjugal
partnership: Interests falling due
during the marriage on the principal
of both spouses shall pertain to the
partnership. (Art. 120)
Rules in Cases of Improvement of Exclusive
Property General Rule: The ownership of
improvements made on the separate property of
the spouses at the expense of the partnership or
through resulting in increase in value are equall
or less than the value of the entire property at
the time of the improvement, the property
becomes conjugal (subject to reimbursement of
the value of the property of the owner-spouse)
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CIVIL LAW (AND PRACTICAL EXERCISES)
Charges upon CPG (Art. 121)
Same as that under ACP, except that under taxes and
expenses for preservation of separate property of either
spouse during the marriage property need not used by
the family
Liquidation of the CPG (Art. 129)
i.
Inventory of all property
ii.
Amounts advanced by CP in payment
of personal debts and obligations of
either spouse is credited
iii.
Reimbursement for use of exclusive
funds
iv.
Debts and obligations of the CP are
paid
In case of insufficiency of assets, the
spouses shall be solidarily liable for
the
unpaid balance with their
separate properties.
NOTE: If the conjugal partnership is insufficient, the
spouses shall be solidarily liable for the unpaid balance
with their separate properties.
The conjugal partnership property shall likewise be liable
for the payment of the personal debts of either spouse
insofar as they have redounded to the benefit of the
family. (Art. 121)
Payment of criminal indemnities can be advanced by the
conjugal partnership assets even before these are
liquidated. It may be enforced against the partnership
assets after the responsibilities in Article 121 have been
covered. No prior liquidation of those assets is required.
(Pana v. Heirs of Juanite, Sr., G.R. No. 165201, 2012)
v.
vi.
vii.
Administration and Enjoyment of CPG (Art. 124):
Same as that under ACP
Donation of Conjugal Property (Art. 125): Same as that
under ACP
Dissolution of the CPG (Art. 126): Same as that under
ACP.
Remains of exclusive properties are
returned
Indemnify loss of deterioration of
movables belonging to either spouse
used for the benefit of the family
Net remainder of conjugal property is
divided equally
Unless a different proportion is
agreed
upon in the marriage
settlement or there has been a
voluntary waiver or forfeiture of such
share
viii.
Delivery of children’s presumptive
legitimes
ix.
Adjudication of conjugal dwelling and
custody of children
• Given to the spouse to whom the majority
of the common children
An extrajudicial dissolution of the conjugal partnership
without judicial approval is void. A notary public should
not facilitate the disintegration of a marriage and the
family. In so doing, a notary public may be held
accountable administratively. (Rodolfo Espinoso v. Juliet
Omana, A.C. 9081, 2011)
ABSOLUTE COMMUNITY OF PROPERTY
CONJUGAL PARTNERSHIP OF GAINS
WHAT IT CONSISTS OF
All the properties owned by the spouses at the time of
marriage become community property (Art. 91)
1.
2.
3.
4.
5.
6.
7.
8.
Fruits of conjugal property due or received
during the marriage and net fruits of separate
property
Those acquired through Occupation
Livestock in excess of what was brought to the
marriage
Those acquired during the marriage with
Conjugal funds
Share in Hidden treasure
Those obtained from labor, Industry, work or
profession of either or both spouse
Those acquired by Chance (Art. 117)
The ownership of improvements made on the
separate property of the spouses at the
expense of the partnership or through efforts of
both spouses shall pertain to the partnership
(Art. 120)
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ATENEO CENTRAL
CIVIL LAW (AND PRACTICAL EXERCISES)
BAR OPERATIONS 2022
WHAT REMAINS AS EXCLUSIVE PROPERTY
1. Property acquired before the marriage by either 1. That brought into the marriage as his/her own
spouse who has legitimate descendants by a former 2. That acquired during the marriage gratuitously
marriage and its fruits and income
3. That acquired by redemption, barter or
2. Property for personal and exclusive use, except
exchange with exclusive property
jewelry
4. That purchased with exclusive money (Art. 109)
3. Property acquired during the marriage by gratuitous
title plus its fruits and income, except when the
donor, testator, or grantor expressly
provides
otherwise (Art. 92)
PRESUMPTION
Property acquired during the marriage is presumed to
belong to the community, unless it is proved that it is
one of those excluded therefrom (Art. 93)
All property acquired during the marriage, whether
the acquisition appears to have been made,
contracted or registered in the name of one or both
spouses, is presumed to be conjugal unless the
contrary is proved (Art. 116)
CHARGES AND OBLIGATIONS
1.
2.
3.
4.
5.
6.
7.
8.
9.
Debts and obligations contracted during the
marriage:
By either spouse without the consent of the
other to the extent that it benefited the family
By designated administrator-spouse By both
spouses
By one with the consent of the other
1.
Taxes, liens, charges and expenses including
major or minor repairs, upon community property
Support of spouses, their common children and
legitimate children of either spouse
Expenses of litigation between spouses unless the
suit is found to be groundless
Ante-nuptial debts which redounded to the benefit
of the family
Taxes and expenses for mere preservation made
during the marriage upon the separate property of
either spouse used by the family
Expenses for professional or vocational course
Other ante-nuptial debts, support of illegitimate
child, and liabilities for crime or quasi delicts in
absence of separate property are chargeable
against the separate properties of the spouses but
may be the advanced by the ACP in case of
absence or insufficiency of the exclusive property
of the debtor-spouse
Donated or promised to common
legitimate
children for profession, vocational course or selfimprovement (Art. 94)
3.
2.
4.
5.
6.
7.
8.
9.
The support of the spouse, their common
children, and the legitimate children of either
spouse
All debts and obligations contracted during the
marriage by the designated administrator
spouse for the benefit of the conjugal
partnership of gains, or by both spouses or by
one of them with the consent of the other
Debts and obligations contracted by either
spouse without the consent of the other to the
extent that the family may have benefited
All taxes, liens, charges, and expenses,
including major or minor repairs upon the
conjugal partnership property
All taxes and expenses for mere preservation
made during the marriage upon the separate
property of either spouse
Expenses to enable either spouse to
commence or complete a professional,
vocational, or other activity for self improvement
Ante-nuptial debts of either spouse insofar as
they have redounded to the benefit of the family
The value of what is donated or promised by
both spouses in favor of their common
legitimate children for the exclusive purpose of
commencing or completing a professional or
vocational course or other activity for self
improvement
Expenses of litigation between the spouses
unless the suit is found to be groundless (Art.
11)
LIQUIDATION
1.
2.
3.
Inventory of all properties
Inventory of community property
Inventory of separate property of the wife
Inventory of separate property of the
husband
Debts and obligations of ACP are paid
Remainder of the separate properties of the
1.
2.
3.
4.
5.
Inventory of all property
Amounts advanced by CP as payment for
personal debts and obligations of either spouse
are credited
Reimbursement for use of exclusive funds
Debts and obligations of the CP are paid
Remains of exclusive properties are returned
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4.
5.
6.
spouses are returned to the owner
Net remainder of the ACP is divided equally
between husband and wife
Presumptive legitimes of children are delivered
Adjudication of conjugal dwelling and custody of
common children (Art. 102)
CIVIL LAW (AND PRACTICAL EXERCISES)
6.
7.
8.
9.
Indemnify loss of deterioration of movables
belonging to either spouse used for the benefit
of the family
Net remainder of conjugal property is divided
equally
Delivery of children’s presumptive legitimes
Adjudication of conjugal dwelling and custody of
children (Art. 129)
b.
5. SEPARATION OF PROPERTY AND
ADMINISTRATION OF COMMON
PROPERTY BY ONE SPOUSE DURING
THE MARRIAGE
General rule: The administration and enjoyment of the
conjugal partnership shall belong to both spouses jointly
Exception: In case of disagreement, the husband’s
decision shall prevail subject to recourse by the wife in
court to be availed within 5 years from the date of the
contract implementing the husband’s decision
In case of incapacity of one spouse or inability to
administer the common properties:
The other spouse may assume sole powers of
administration, except powers of disposition and
encumbrance which requires authority from the
court or written consent of the other spouse
In the absence of such authority or consent, the
disposition or encumbrance shall be void
o However, the transaction shall be
construed as a continuing offer on the
part of the consenting spouse and the
third person, and may be perfected as a
binding contract upon the acceptance
by the other spouse or authorization of
the court before the offer is withdrawn
by either or both offerors.
6. REGIME OF SEPARATION OF
PROPERTY
When applicable: If provided under the marriage
settlement (Art. 134)
Properties Included
The parties may agree on the extent of their separation
of property regime. It may involve present or future
property or both. It may be total or partial. If it is partial,
the property not agreed upon as separate shall pertain
to the absolute community (Art. 144)
Rights and Liabilities of the Spouses
Each spouse shall:
a. Own, dispose of, possess, administer and enjoy
his or her own separate estate, without need of
the consent of the other
c.
Own all earnings from his or her own
profession, business or industry
Own all fruits, natural, industrial or civil,
due or received during the marriage
from his or her
Both spouses shall bear the family
expenses in proportion to their income, or,
in case of insufficiency or default thereof, to
the current market value of their separate
properties. The liability of the spouses to
creditors for family expenses shall be
solidary. (Art. 146)
Grounds for Transfer of Administration of
Exclusive Property of Either Spouse (GACA)
(Art. 142)
a. One spouse becomes Guardian of
the other
b. One spouse is judicially declared
Absent
c. One spouse is sentenced to
penalty with Civil interdiction
d. One spouse becomes a fugitive
from justice or is hiding as an
Accused in a criminal case
If the other spouse is not qualified by reason of
incompetence, conflict of interest, or any other
just cause, the court shall appoint a suitable
person to be the administrator.
JUDICIAL SEPARATION OF PROPERTY
When applicable: In case of a judicial order,
which may either be voluntary or for sufficient
cause. (Art. 134)
Voluntary separation (Art. 136)
The spouses may jointly file a verified petition
with the court.
All creditors of the absolute community or of the
conjugal partnership of gains, as well as the
personal creditors of the spouse, shall be listed
in the petition and notified of the filing thereof.
The court shall take measures to protect the
creditors and other persons with pecuniary
interest.
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Sufficient cause for judicial separation (Art. 135):
a. That the spouse of the petitioner has been
sentenced to a penalty which carries with it civil
interdiction
b. That the spouse of the petitioner has been
judicially declared an absentee
c. That loss of parental authority of the spouse of
petitioner has been decreed by the court
d. That the spouse of the petitioner has abandoned
the latter or failed to comply with his or her
obligations to the family as provided for in Article
101
e. That the spouse granted the power of
CIVIL LAW (AND PRACTICAL EXERCISES)
f.
administration
in
the
marriage
settlements has abused that power
That at the time of the petition, the
spouses have been separated in fact
for at least one year and reconciliation
is highly improbable
In the cases provided for in letters (a), (b) and
(c), the presentation of the final judgment
against the guilty or absent spouse shall be
enough basis for the grant of the decree of
judicial separation of property.
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CIVIL LAW (AND PRACTICAL EXERCISES)
BAR OPERATIONS 2022
7. PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE
Applicability
ARTICLE 147
A. To a man and woman who are:
ARTICLE 148
A. To a man and woman who are:
1.
1.Capacitated to marry each other:
a.
b.
c.
d.
At least 18 years old
Not falling under Article 37
(incestuous void marriage)
Not falling under Art. 38
(void marriage by reason
of public policy)
Not bigamous
2. Live exclusively with each other
as husband and wife
3. Without the benefit of marriage
B. Other void marriages/live-in
Salaries
and
Wages
Properties
acquired
through
exclusive funds
Property
acquired while
living together
Owned by parties in equal shares
Remains exclusive provided that there
is proof that it was acquired by
exclusive funds
Presumed to have been obtained by
their joint efforts, work or industry and
shall be owned by them in equal
shares
If a party did not participate in the
acquisition—shall be deemed to have
contributed jointly if efforts consisted
in the care and maintenance of the
family and the household
2.
3.
Not capacitated to marry each other
(under 18 years old)
Live exclusively with each other as
husband and wife
Without the benefit of marriage
B.
Adulterous
concubinage)
relationship
(e.g.
C. Bigamous or polygamous marriage (Art.
35(4))
D. Incestuous marriages under Art. 37
E. Void marriages by reason of public policy
under Art. 38
Note: If capacitated, but relationship is NOT
exclusive, it will fall under this provision
Exclusively owned, and if any of the spouses is
married, his legitimate marriage
Remains exclusive
Only the properties acquired by both parties
through their actual joint contribution of money,
property, or industry shall be owned by them in
common in proportion to their respective
contributions. (Art. 148)
Without proof of actual contribution by both
parties, there can be no presumption of coownership and equal sharing. (Villanueva v. CA,
G.R. No. 143286)
Once proof of actual contribution is shown, their
contributions and corresponding shares are
presumed to be equal, in the absence of proof to
the contrary. The same rule and presumption
shall apply to joint deposits of money and
evidences of credit. (Art. 148)
Encumberance
or Disposal of
his/her share
Forfeiture
Neither party can encumber or
dispose by acts inter vivos of his/her
share in the property acquired during
cohabitation and owned in common,
without the consent of the other, until
after the
termination of their
cohabitation
When only one of the parties to a void
marriage is in good faith, the share of
the party in bad faith in the co-
-
If one of the parties is validly married to another,
his or her share in the co-ownership shall accrue
to the absolute community or conjugal
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CIVIL LAW (AND PRACTICAL EXERCISES)
ownership shall be forfeited in favor of
their common children, descendants,
or innocent party.
In case of default of or waiver
by any or all of the common
children or their descendants,
each
vacant share shall
belong to the
respective
surviving descendants.
In
the
absence
of
descendants, such share
shall belong to the innocent
party.
partnership existing in such valid marriage.
If the party who acted in bad faith is not validly
married to another, his or her share shall be
forfeited in favor of their common children,
descendants, or innocent party. The share shall
be forfeited in the same manner as in Art. 147.
Rules on forfeiture of shares will apply even if
both are in bad faith.
In all cases, the forfeiture shall take
place upon termination of the
cohabitation
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The registration of a property in the name of the
paramour who had no income whatsoever at the
time of the donation by another’s husband is
tantamount to a donation which is void under
Article 87 of the Family Code. The paramour then
holds the property under a constructive trust under
Article 1456 in favor of the conjugal partnership of
the husband with the legitimate spouse (Joaquino
v. Reyes, G.R. No. 154645, 2004).
Under Art. 147, property acquired by both spouses
through their work and industry shall be governed
by the rules on equal co-ownership. Any property
acquired during the union is prima facie presumed
to have been obtained through their joint efforts.
Here, the former spouses both agreed that they
acquired the subject property during the
subsistence of their marriage. Thus, it shall be
presumed to have been obtained by their joint
efforts, work or industry, and shall be jointly owned
by them in equal shares (Barrido v. Nonato, 2014).
Under Article 148, there must be proof of actual
joint contribution by both the live-in partners before
the property becomes co-owned by them in
proportion to their contribution. Otherwise, there
are no presumptions of co-ownership and equal
sharing. (Villanueva v. CA, G.R. No. 143286,
2004, reiterated in Ventura v. Sps. Paulino, G.R.
No. 202932, 2013)
No co-ownership exists between parties to an
adulterous relationship. In such a relationship, it is
necessary for each of the partners to prove his or
her actual contribution to the acquisition of
property in order to lay claim to any portion of it.
Presumptions of co-ownership and equal
contribution do not apply. (Rivera v. Heirs of
Villanueva, G.R. No. 141501, 2006)
Art. 148 of the Family Code provides that only the
property acquired by both of the parties through
their actual joint contribution of money, property,
or industry shall be owned in common and in
proportion to their respective contributions. Such
contributions and corresponding shares were
prima facie presumed to be equal. However, for
this presumption to arise, proof of actual
contribution was required. Petitioner failed to
prove that she made an actual contribution to
purchase the condominium unit. (Soledad L.
Lavadia v. Heirs of Juan Luces Luna G.R. No.
171914 2015)
CIVIL LAW (AND PRACTICAL EXERCISES)
F.
FAMILY HOME (NOTE: THIS
SECTION INCLUDES THE WHOLE
DISCUSSION ON FAMILY)
1. FAMILY (ART. 149)
CONCEPT OF FAMILY
Basic social institution
cherishes and protects.
which public policy
Family Relations
a. Between husband and wife
b. Between parents and children
c. Among
other
ascendants
and
descendants
d. Among brothers and sisters, full or half
blood. (Art. 150)
A. Effects On Legal Disputes
Suit Between Family Members (Art. 151)
General Rule: No suit between members of the
same family shall prosper unless it should appear
from the verified complaint or petition that earnest
efforts toward a compromise have been made, but
that the same have failed. If it is shown that no
such efforts were in fact made, the same case
must be dismissed.
Exception: These rules shall not apply to cases
which may not be the subject of compromise
under the Civil Code.
Allegation of “earnest efforts” is jurisdictional: if it
is absent, the court can dismiss the case.
BUT this rule is inapplicable in the following
cases: (CLV FJF)
a.
b.
c.
d.
e.
f.
Civil status of persons
Any ground for Legal separation
Validity of marriage or legal separation
Future support
Jurisdiction of courts
Future legitime (Art. 2035, Civil Code)
Spouses Jointly Sued
The husband and wife shall sue or be sued jointly
except as provided by law. (Section 4, Rule 3 of
the 1997 Rules of Civil Procedure)
The term “jointly” means that the spouses shall be
sued together and it does not refer to the nature of
the civil liability. This is so because when the
spouses are sued for the enforcement of an
obligation entered into by them or of an obligation
which redounded to the benefit of the family, they
are being impleaded in their capacity as
representatives of the absolute community or the
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conjugal partnership and not as independent
debtors such that the concept of joint or solidary
liability, as between them, does not arise (Alipio v.
CA, G.R. No. 134100)
The necessity of being jointly sued is also because
generally the spouses are joint administrators of
either the absolute community property or the
conjugal partnership of gains. However, if what is
involved in the litigation is his or her separate and
exclusive property, the spouse may appear along
in court (Art. 111).
2. FAMILY HOME
Family Home (Art. 152)
The dwelling house where they (husband and wife
or an unmarried head of the family) and their family
reside, and the land on which it is situated.
Constitution of a Family House (FH):
i.
Jointly by the husband and wife or by an
unmarried head of a family
ii.
From the time it is occupied as a family
residence so long as any of its
beneficiaries actually reside therein (Art.
153)
Other Rules:
a. FH must be owned by person
constituting it
b. FH must be permanent
c. FH continues despite death of one or
more spouses or unmarried head of
the family for 10 years or as long as
there is a minor beneficiary (Art. 159)
d. Only one FH can be constituted
Beneficiaries of a Family Home
a. Husband and wife, or unmarried head
of the family
b. Parents (may include parent-in-laws)
c. Ascendants
d. Descendants
e. Brothers
and
sisters
(legitimate/illegitimate) living in the
family home and dependent on head
of family for support. (Art. 154)
Qualified Property
Actual value of the family home shall not exceed,
at the time of its constitution, P300,000 in urban
areas and P200,000 in rural areas. (Art.157)
Rules regarding Subsequent Improvements of
Family Home
Any subsequent improvement of the family home
by the persons constituting it, its owners, or any of
its beneficiaries will still be exempt from execution,
CIVIL LAW (AND PRACTICAL EXERCISES)
forced sale or attachment provided the following
conditions obtain:
1. The actual value of the property at the
time of its constitution does not exceed
Php 300,000 in urban areas and Php
200,000 in rural areas under Art. 157;
and
2. The improvement does not result in an
increase in its value exceeding the
statutory limit.
Otherwise, the family home can be the subject of
a forced sale, and any amount above the statutory
limit is applicable to the obligations under Art. 160.
To warrant the execution sale of a family home
under Art. 160, the following facts should be
established:
1.
2.
3.
There was an increase in its actual value;
The increase resulted from voluntary
improvements on the property introduced
by the persons constituting the family
home, its owners or any of its
beneficiaries; and
The increased actual value exceeded the
maximum allowable under Article 157.
(Eulogio v. Bell, G.R. No. 186322, 2015)
Exempt from Execution (Art. 153)
General Rule: The FH is exempted from:
a. Execution
b. Forced sale
The right to exemption from forced sale
is a personal privilege granted to the
judgment debtor which must be
asserted before the public auction.
Failure to do so would estop the party
from later claiming on the exemption. It
is a right that can be waived or be
barred by laches by failure to set up
and prove the status of the property as
a family home at the time of levy. (De
Mesa v. Acero, G.R. No. 185064,
2012)
c.
Attachment
Exceptions: (Art. 155)
a. Non-payment of taxes
b. Debts incurred prior to constitution of
home
c. Debts secured by mortgages on the
premises
d. Debts
due
laborers,
mechanics,
architects, builders, materialmen, and
others who have rendered service or
furnished materials for the construction of
the building
NOTE: The exemption is limited to the value
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allowed by the Family Code.
Sale, Alienation, Donation, Assignment, or
Encumbrance of the Family Home (Art. 158)
a. The person who constituted the same
must give his/her written consent.
b. The spouse of the person who constituted
the family home must also give his/her
written consent.
c. A majority of the beneficiaries of legal age
must also give their written consent.
d. In case of conflict, the court shall decide.
Requisites for Creditor to Avail of The Right to
Execute: (Art. 160)
1. He must be a judgment creditor;
2. His claim is not among those excepted
under Art. 155; and
3. He has reasonable grounds to believe
that the family home is worth more than
the maximum amount fixed in (Art. 157)
Procedure:
a. Creditor must file a motion in the court
proceeding where he seeks to obtain a
writ of execution against the FH.
b. Hearing on the motion where the creditor
must prove that the actual value of the
FH exceeds the maximum amount fixed
by the Family Code, either at the time of
its constitution or as
a result of
improvements introduced thereafter.
c. If creditor proves that the actual value
exceeds the maximum amount, the court
will order its sale in execution.
d. If FH is sold for more than the value
allowed, the proceeds shall be applied as
follows:
First, the obligations enumerated in
Art. 155 must be paid (listed above)
Then the judgment in favor of the
creditor will be paid, plus all the costs
of execution
The excess, if any, shall be delivered
to the judgment debtor.
G. PATERNITY AND FILIATION
The filiation of children may be by nature or by
adoption. Natural filiation may be legitimate or
illegitimate (Art. 163)
1. LEGITIMATE CHILDREN
Those conceived or born during a valid
marriage. (Art. 164).
CIVIL LAW (AND PRACTICAL EXERCISES)
This also includes children who are:
a. Conceived as a result of artificial
insemination
b. Conceived or born of a voidable marriage
before decree of annulment;
c. Conceived or born before judgment of
absolute
nullity
under
Art.
36
(psychological incapacity) becomes final
and executory;
d. Conceived or born of a subsequent
marriage under Art. 53 (failure to record
the judgment, partition and distribution of
properties, and delivery of children’s
presumptive legitime);
e. Legally adopted; and
f. Legitimated, conceived and born outside
of wedlock of parents without impediment
at the time of conception and who
subsequently married
A child born inside a valid marriage is legitimate.
Hence a child born inside a bigamous marriage,
which is void, is considered a child under the first
marriage, which has not been nullified or annulled,
unless the husband timely impugns the legitimacy
of the child. (Concepcion v. CA, G.R. No. 123450,
2005)
An agreement by parties as to the status of a child
is void. Only the law determines legitimacy or
illegitimacy. Thus, the child, in the eyes of the law,
is
legitimate
under
the
first
marriage
notwithstanding the admission in pleadings by the
wife and her second husband that the child is their
legitimate son. Similarly, any declaration of the
mother that her child is illegitimate has no
probative value. (Concepcion v. CA, G.R. No.
123450, 2005)
Requisites
for
Children
by
Artificial
Insemination to be Considered Legitimate
1. The artificial insemination must be made
on the wife;
2. Either the sperm of the husband or a third
party donor may be used;
3. The artificial insemination has been
authorized or ratified by both spouses on
a written instrument executed and signed
by them before the birth of the child; and
4. The written instrument is recorded in civil
registry together with the birth certificate
of the child (Art. 164, par. 2)
2. PROOF OF FILIATION
General Rule: Filiation of legitimate or illegitimate
children is established by any of the following (Art.
172, par. 1):
a. The record of birth appearing in the civil
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CIVIL LAW (AND PRACTICAL EXERCISES)
register or a final judgment
A certificate of live birth purportedly
identifying the putative father is not
competent evidence of paternity when
there is no showing that the putative
father had a hand in the preparation of
said certificate. The local civil registrar
has no authority to record the paternity of
an illegitimate child on the information of
a third person. (Cabatania v. CA, G.R.
No. 124814, 2004)
It is well settled that a record of birth is
merely a prima facie evidence of the facts
contained therein. It is not conclusive
evidence of the truthfulness of the
statements made by the interested
parties. (Benitez Badua v. CA, G.R. No.
105625, 1994)
b.
An admission of legitimate or illegitimate
filiation in a public document or a private
handwritten instrument and signed by the
parent concerned.
Exception: In the absence of these pieces of
evidence, the legitimate filiation may be proved
by (Art. 172, par. 2):
a. Open and continuous possession of the
status of a legitimate (or illegitimate) child
“Continuous” does not mean that the
possession of
status shall continue
forever but only that it shall not be of an
intermittent character while it continues.
The possession of such status means
that the father has treated the child as his
own, directly and not through others,
spontaneously and without concealment
though without publicity. (Mendoza v. CA,
G.R. No. 86302, 1991)
There must be evidence of the
manifestation of the permanent intention
of the supposed father to consider the
child as his, by continuous and clear
manifestations of parental affection and
care, which cannot be attributed to pure
charity. Such acts must be of such a
nature that they reveal not only the
conviction of paternity, but also the
apparent desire to have and treat the
child as such in all relations in society and
in life, not accidentally, but continuously.
(Jison v. CA, G.R. No. 124853, 1998)
b.
Any other means allowed by the Rules of
Court and special laws
c.
The due recognition of an illegitimate
child in a record of birth
A will, a statement before a court of
record, or in any authentic writing is, in
itself,
a
consummated
act
of
acknowledgement of the child, and no
further court action is required. In fact,
any authentic writing is treated not just a
ground for compulsory recognition; it is in
itself a voluntary recognition that does
not require a separate action for judicial
approval. (Eceta v Eceta G.R. No.
157037, 2004).
The father’s SSS Form E-1 satisfies the
requirement for proof of filiation and relationship of
petitioner to the Aguilar spouses under Article 172
of the Family Code. Filiation may be proved by an
admission of legitimate filiation in a public
document or a private handwritten instrument and
signed by the parent concerned, and such due
recognition in any authentic writing is, in itself, a
consummated act of acknowledgment of the child,
and no further court action is required. (Aguilar v.
Siasat, G.R. 200169, 2015)
A thumb mark has been repeatedly considered a
valid mode of signature. Thus, the document
executed by the putative father evidencing his
voluntary recognition of filiation is valid. (San
Agustin v. Sales, G.R. No. 189289, 2016)
Rules in Filing an Action (Art. 173 in relation to
175):
General rule: Only the child can bring an action to
claim legitimacy/illegitimacy:
General rule: It must be filed during his
or her lifetime
Exception: For illegitimate children,
when the action is based on par. 2 of
Art. 172, the action may be brought
ONLY during the lifetime of the alleged
parent (Ara v. Pizzaro, G.R. No.
1872773; J. Leonen).
Exception: The right may be transmitted to the
heirs of the child in the following cases:
a. Death during minority;
b. Insanity; or
c. When the action has already been
instituted by the child
NOTE: Under a & b, the heirs shall have a period
of 5 years within which to institute the action.
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3. ILLEGITIMATE CHILDREN
Those conceived AND born outside a valid
marriage. (Art. 165)
These include those who are:
a. Born of marriages which are void ab initio
such
as bigamous and incestuous
marriages and void marriages by reason
of public policy
b. Conceived and born of voidable
marriages after the decree of annulment
c. Conceived and born out of wedlock
ACTION TO IMPUGN LEGITIMACY
Grounds to Impugn the Legitimacy of the Child
(Art. 166) (Exclusive List) (PBA)
a. It was Physically impossible for the
husband to have sexual intercourse with
his wife within the first 120 days of the
300 days which immediately preceded
the birth of the child because of:
i. Physical incapacity of the husband to
have sexual intercourse with his wife
ii. Fact that the husband and wife were
living separately in such a way that
sexual intercourse was not possible,
or
iii. Serious illness of the husband which
absolutely prevented intercourse
b.
c.
If it’s proved that for Biological or other
scientific reasons, the child could not
have been that of the husband, except in
the case of children conceived through
artificial insemination
In case of children conceived through
Artificial insemination, when the written
authorization or ratification of either
parent was obtained through mistake,
fraud, violence, intimidation, or undue
influence. (Note: This assumes that there
was written authorization)
Who may impugn the Legitimacy of a Child
General Rule: Only the husband can impugn the
legitimacy of a child
Exceptions: The heirs of the husband may
impugn the child’s filiation in the following cases:
(Art. 171)
a) If the husband dies before the expiration of
period for filing the action
b) If the husband dies after filing without
desisting
c) If the child was born after the death of the
husband
CIVIL LAW (AND PRACTICAL EXERCISES)
Periods for Filing of Action to Impugn
Legitimacy
a. If the husband (or his heirs, in proper cases)
resides in the same city or municipality
where the birth took place or was recorded:
within 1 year
b. If the husband (or his heirs) does not
reside in the city or municipality where the
child’s birth took place or was recorded but
his residence is in the Philippines: within
2 years.
c. If the child’s birth took place or was
recorded in the Philippines while the
husband has his residence abroad, or
vice-versa: within 3 years. (Art. 170)
NOTE: The period shall be counted from the
knowledge of the child’s birth OR its recording in
the civil register. However, if the child’s birth was
concealed from or was unknown to the husband or
his heirs, the period shall be counted from the
discovery or knowledge of the birth of the child or
of the fact of registration of said birth, whichever is
earlier.
Presumption on the Status of a Child in Case
of Successive (Valid) Marriages (Art. 168) In the
absence of proof to the contrary:
a. Presumed to have been conceived during
the first marriage: If the child was born
before 180 days after celebration of 2nd
marriage provided it be born within 300
days after the termination of the 1st
marriage.
b. Presumed to have been conceived during
the second marriage: If the child was
born after 180
days following the
celebration of the 2nd marriage, even
though it be born within 300 days after
termination of 1st marriage.
c. No presumption: If the child was born
after 300 days following the termination
of the first marriage. In such a case, the
legitimacy or illegitimacy of the child shall
be proved by whoever alleges such (Art.
169)
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CIVIL LAW (AND PRACTICAL EXERCISES)
SUMMARY OF FILIATION
LEGITIMATE
Those
conceived or
born during a
valid marriage
(Art. 164)
These include
children who
are:
4. LEGITIMATED CHILDREN
Requisites for Legitimation: (Art. 177-178)
1. The child was conceived and born out of
wedlock;
2. The parents, at the time of child’s
conception, were not disqualified by any
impediment to marry each other or were
disqualified only because either or both
of them were below 18; and
3. There is a valid marriage subsequent to
the child’s birth.
NOTE: Legitimation takes place by the
subsequent marriage of the child’s parents.
Annulment of a voidable marriage shall not affect
the legitimation
Effect of Legitimation (Art. 179 – 181)
a. Confers on the child the rights of legitimate
children
b. Retroacts to the time of the child’s birth
c. The legitimation of children who died
before the celebration of the marriage shall
benefit their descendants.
Legitimation may be impugned only by those who
are prejudiced in their rights within 5 years from
the time the cause of action accrues. (Art. 182)
NOTE: Parents need not die for the cause of
action to accrue
a.Conceived
as a result of
artificial
insemination,
provided
written
authorization
or ratification
is given by the
spouses
before
the
birth of the
child
b.Conceived
or born of a
voidable
marriage
before decree
of annulment
c. Conceived
or born before
judgment of
absolute
nullity under
Art.
36
(psychological
incapacity)
becomes final
& executory
d.Conceived
or born of a
subsequent
marriage
under Art. 53
(failure
to
record
the
judgment,
partition and
distribution of
properties,
and delivery
of children’s
presumptive
legitime)
ILLEGITIMATE
Those
conceived AND
born outside a
valid marriage
(Art. 165)
These children
include those
who are:
a.
Born
of
marriages
which are void
ab initio such
as
bigamous
and incestuous
marriages and
void marriages
by reason of
public policy
b. Conceived
and born of
voidable
marriages after
the decree of
annulment
c. Conceived
and born out of
wedlock
LEGITIMATED
For a child to
be
considered
legitimated,
the following
requisites
must be met:
(Art. 177)
a. The child
was conceived
and born out of
wedlock
b. The parents,
at the time of
child’s
conception,
were
not
disqualified by
any
impediment to
marry
each
other or were
disqualified
only because
either or both
of them were
below 18
c. There is a
valid marriage
subsequent to
the child’s birth
Legitimation
takes place by
the
subsequent
marriage of the
child’s
parents.
e.Legally
adopted
f.Legitimated,
conceived
and
born
outside
of
wedlock
of
parents
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without
impediment at
the time of
conception
and
who
subsequently
married
RIGHTS OF LEGITIMATE/LEGITIMATED VIS-ÀVIS ILLEGITIMATE CHILDREN
Surname
Support
RIGHTS OF
LEGITIMATE
CHILDREN
(ART. 174)
RIGHTS
OF
ILLEGITIMATE
CHILDREN
(ART. 176)
Bear
the
surnames of
the
father
and mother
Use
of
surname
of
the mother,
and has no
right to use
the surname
of the father
Has the right
to
receive
support from
their parents,
their
ascendants,
and in proper
cases, their
brothers and
sisters
Exception:
They may be
allowed to use
the surname
of their father
only if there is
primary
evidence of
such
illegitimate
filiation
between them
but
without
need
of
establishing
such filiation
in a judicial
proceeding. In
such
case,
the
father
during
his
lifetime, may
institute
an
action
to
prove
nonfiliation.
Has right to
receive
support from
both parents
but only the
separate
property
of
the
person
obliged
to
give support
Successional
Rights
Preferential
successional
rights in both
intestate and
compulsory
succession
shall
be
answerable,
provided that
in case the
obligor has no
separate
property, the
absolute
community or
the conjugal
partnership, if
financially
capable, shall
advance the
support,
which shall be
deducted
from
the
share of the
spouse
obliged upon
the liquidation
of ACP or
CPG
Preferential
successional
rights in both
intestate and
compulsory
succession
a. Use the surname of the mother if the
requisites of R.A. 9255 are not complied
with
b. Use the surname of the father if the child’s
filiation has been expressly recognized by
the father, either through:
Record of birth in civil register
Father’s
admission
in
public
document
Father’s admission in private
handwritten document
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H. ADOPTION
Note that RA 8552 and RA 9523 were repealed,
and RA 8043 amended, by RA 11642, which took
effect on January 28. 2022 (beyond the cut-off
date for the 2022 Bar).
1. DOMESTIC ADOPTION (R.A. No.
8552)
a. Who May Adopt
a.
b.
A Filipino citizen of:
1. Legal age;
2. In possession of full civil capacity and legal
rights;
3. Good moral character
4. Has not been convicted of any crime
involving moral turpitude;
5. Emotionally and psychologically capable
of caring for children;
6. In a position to support and care for his
legitimate and illegitimate children, in
keeping with the means of the family and;
7. At least 16 years older than the person to
be adopted, unless the adopter is:
i. The natural parent of the child to be
adopted, or
ii. The spouse of the legitimate parent of
the person to be adopted (Sec. 7, R.A.
8552)
Alien
1. Possessing the same qualifications as
above stated for Filipino nationals;
2. His/her country has diplomatic relations
with the Philippines;
3. He/she has been living in the Philippines
for at least 3 continuous years prior to the
filing of the application for adoption and
maintains such residence until the
adoption decree is entered;
4. He/she has been certified by his/her
diplomatic or consular office or any
appropriate government agency that
he/she has the legal capacity to adopt in
his/her country;
5. His/her government allows the adoptee to
enter his/her country as his/her adopted
son/daughter
Requirements for No. 3 and 4 may be waived in
the following instances:
1. A former Filipino citizen who seeks to
adopt a relative within the 4th degree of
consanguinity or affinity; or
2. One who seeks to adopt the legitimate
child of his/her Filipino spouse; or
CIVIL LAW (AND PRACTICAL EXERCISES)
3.
One who is married to a Filipino citizen and
seeks to adopt jointly with his/her spouse
a relative within the 4th degree of
consanguinity or affinity of the Filipino
spouse
c. Guardians
With respect to the ward after the termination of
the guardianship and clearance of his/her financial
accountabilities.
All statutory requirements for adoption must be
met, and when a court issues an adoption decree
despite the fact that all the said requirements are
not met, such decree is a nullity (In re O’Keefe,
164 Misc 473).
Rule on Adoption by Spouses:
General Rule: Husband and wife shall
jointly adopt.
Exceptions:
1. One spouse seeks to adopt the legitimate
son/daughter of the other;
2. One spouse seeks to adopt his/her own
illegitimate son/daughter. This is provided
that the other spouse has signified his/her
consent; or
3. The spouses are legally separated from
each other
NOTE: In case husband and wife jointly adopt, or
one spouse adopts an illegitimate child of the
other, then joint parental authority shall be
exercised
The law requires that for adoption to be valid, the
spouse seeking to adopt must first obtain the
consent of his or her spouse and the consent of
the adopter’s children 10 years old and above. To
secure this, personal service of summons should
have been effected on the spouse and all
legitimate children to ensure that their substantive
rights are protected. It is not enough to rely on
constructive notice as in this case. Surreptitious
use of procedural technicalities cannot be
privileged over substantive statutory rights (Castro
v. Gregorio, G.R. No. 188801).
b. Who May be Adopted
Who May be Adopted (BAILORP)
a. Any person Below 18 years of age who
has been administratively or judicially
declared available for adoption
b. Under R.A. 9523, a child which can be
certified as “legally Available for adoption”
includes a person below eighteen (18)
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c.
d.
e.
f.
g.
years of age or a person over eighteen
(18) years of age but is unable to fully take
care of him/herself or protect him/herself
from abuse, neglect, cruelty, exploitation,
or discrimination because of physical or
mental disability or condition
Illegitimate son/daughter by a qualified
adopter to improve his/her status to that of
legitimacy
Legitimate son/daughter of one spouse by
the other spouse
Person of legal age if, prior to the adoption,
said person has been consistently
considered and treated by the adopter as
his/her Own child since minority;
Child whose adoption has been previously
Rescinded
Child whose biological or adoptive Parents
have died provided that no proceedings
shall be initiated within 6 months from the
time of death of said parents
NOTE: A “child” refers to a person below eighteen
(18) years of age
Written consent is necessary for adoption
from the ff: (A-BLISS)
a. Adoptee, if 10 years of age or over;
b. Biological parents of the child, if known, or
the legal guardian, or the proper
government instrumentality which has
legal custody of the child;
c. Legitimate and adopted children of the
adopter and adoptee, 10 years old or over;
d. Illegitimate children of the adopter, 10
years old or over and living with him or her
e. Spouse of the adopted, if married
f. Spouse of the adopter, if married
Effectivity of Decree of Adoption
A decree of adoption is effective as of the date the
original petition was filed. This also applies in case
the petitioner dies before the issuance of the
decree of adoption
Where the petition for adoption was granted after
the child killed a girl, no retroactive effect may be
given to the decree of adoption so as to impose a
liability upon the adopting parents accruing at a
time when the adopting parents had no actual or
physically custody over the adopted child.
Retroactive effect may perhaps be given where
such is essential to permit the accrual of some
benefit or advantage in favor of the adopted child.
To hold that parental authority had been
retroactively lodged in the adopting parents so as
to burden them with liability for a tortious act that
they could not have foreseen nor prevented would
CIVIL LAW (AND PRACTICAL EXERCISES)
be unfair and unconscionable (Tamargo v. CA,
G.R. No. 85044).
c. Rights of an adopted child
Effects of Adoption:
a. Sever all legal ties between the biological
parent(s) and the adoptee, except when
the biological parent is the spouse of the
adopter;
b. Deem the adoptee as a legitimate child of
the adopter; and
c. Give adopter and adoptee reciprocal rights
and obligations arising from the
relationship of parent and child, including
but not limited to:
1. The right of the adopter to choose
the name the child is to be known;
and
2. The right of the adopter and
adoptee to be legal and compulsory
heirs of each other.
Therefore, even if emancipation terminates
parental authority, the adoptee is still considered a
legitimate child of the adopter with all the rights of
a legitimate child such as:
(1) to bear the surname of the father and the
mother;
(2) to receive support from their parents; and
(3) to be entitled to the legitime and other
successional rights (In Re: Petition for
Adoption of Michelle P. Lim, Monina P.
Lim, G.R. Nos. 168992-93).
Rules on Succession
In legal and intestate succession, the adopters
and the adoptee shall have reciprocal rights of
succession without distinction from legitimate
filiation. However, if the adoptee and his/her
biological parents had left a will, the law on
testamentary succession shall govern
d. Instances and
Rescission
Effects
of
Rescission of Adoption
Who may file: Only the adoptee may file for
rescission of the adoption decree.
The adopters may disinherit the adoptee
for causes provided in Art. 919 of the NCC
NOTE: If the adoptee is a minor or if over 18 years
old but is incapacitated, he/she must be assisted
by the Department of Social Welfare and
Development as guardian/counsel
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Grounds for Rescission of Adoption: (MASA)
a. Repeated
physical
and
verbal
Maltreatment by the adopters despite
having undergone counseling
b. Attempt on the life of the adoptee
c. Sexual assault or violence
d. Abandonment and failure to comply with
parental obligations.
Effects of the Rescission of the Adoption:
a. The parental authority of the adoptee's
biological parents, if known, OR the legal
custody of the DSWD shall be restored if
the adoptee is still a minor or
incapacitated.
b. The reciprocal rights and obligations of the
adopters and the adoptee to each other
shall be extinguished.
c. The court shall order the Civil Registrar to
cancel the amended certificate of birth of
the adoptee and restore his/her original
birth certificate.
d. Succession rights shall revert to its status
prior to adoption, but only as of the date of
judgment of judicial rescission. Vested
rights acquired prior to judicial rescission
shall be respected.
2. INTER-COUNTRY ADOPTION (RA
8043)
Inter-Country Adoption
Refers to the socio legal process of adopting a
Filipino child by a foreigner or a Filipino citizen
permanently residing abroad where the petition is
filed, the supervised trial custody is undertaken,
and the decree of adoption is issued outside the
Philippines
NOTE: A “child” refers to a person below fifteen
(15) years of age unless sooner emancipated by
law
a. When allowed
Inter-Country Adoption: Refers to the socio legal
process of adopting a Filipino child by a foreigner
or a Filipino citizen permanently residing abroad
where the petition is filed, the supervised trial
custody is undertaken, and the decree of adoption
is issued outside the Philippines
NOTE: A “child” refers to a person below
fifteen (15) years of age unless sooner
emancipated by law
b. Who may adopt
CIVIL LAW (AND PRACTICAL EXERCISES)
Qualifications and Disqualifications of an
Adopter
An alien or a Filipino citizen permanently residing
abroad may file an application for inter-country
adoption of a Filipino child if: (DEBT-CAMPS)
a. Comes from a country with whom the
Philippines has Diplomatic relations and
whose government maintains a similarly
authorized and accredited agency and
that adoption is allowed under his/her
national laws;
b. Eligible to adopt under his/her national
law;
c. Agrees to uphold the Basic rights of the
child as embodied under Philippine laws,
the U.N. Convention on the Rights of the
Child, and to abide by the rules and
regulations issued to implement the
provisions of this Act;
d. Has not been convicted of a crime
involving moral Turpitude;
e. Has the Capacity to act and assume all
rights and responsibilities of parental
authority under his national laws, and has
undergone the appropriate counseling
from an accredited counselor in his/her
country;
f. At least 27 years of Age and at least 16
years older than the child to be adopted, at
the time of application unless the adopter
is the parent by nature of the child to be
adopted or the spouse of such parent;
g. If Married, his/her spouse must jointly file
for the adoption;
h. Possesses all the qualifications and none
of the disqualifications provided herein and
in other applicable Philippine laws; and
i. In a position to provide the proper care and
Support and to give the necessary moral
values and example to all his children,
including the child to be adopted
c. Who may be adopted
Qualifications
and
Disqualifications
of
Adopted
Who may be adopted: Only a legally free child
may be the subject of inter-country adoption
Legally-free child: A child who has been
voluntarily or involuntarily committed to the
Department, as dependent, abandoned,
or
neglected, in accordance with the Child and Youth
Welfare Code
No child shall be matched to a foreign
adoptive family unless it is satisfactorily
shown that the child cannot be adopted
locally
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CIVIL LAW (AND PRACTICAL EXERCISES)
c.
Limitation on Voluntarily Committed Children
General Rule: In the case of a child who is
voluntarily committed, the physical transfer of said
child shall be made not earlier than 6 months from
the date the Deed of Voluntary Commitment was
executed by the child’s biological parent/s
Exception: It does not apply to adoption by a
relative or children with special medical conditions.
IMPORTANT TO NOTE:
There are differences between the two adoption
laws regarding:
a. Definition of a child
b. Procedure (where to file, what petition may
include,
publication
requirements,
supervised trial custody)
c. Qualifications of adopter
d. Who may be adopted
e. Court that issues decree of adoption
(Family court vs. Foreign court)
I.
SUPPORT
1. WHAT IT COMPRISES
Support consists of everything indispensable
for: (METS-DC) (Art. 194):
a. Medical attendance
b. Education – includes schooling (formal
education)
or
training
(non-formal
education) for some profession, trade or
vocation, even beyond the age of majority
c. Transportation – includes expenses going
to and from school, or to and from place of
work (Art. 194)
d. Sustenance
e. Dwelling
f. Clothing
There is no distinction between natural support
(basic necessities) and civil support (those beyond
the basic necessities)
In an action for support, the court can declare a
marriage void to determine the rights of the child
to be supported. There is no need that a judicial
declaration of nullity be filed first before the lower
court can rule that the marriage was void (De
Castro v. Assidao-De Castro, G.R. No. 160172).
2. WHO ARE OBLIGED TO GIVE
SUPPORT
Persons Obliged to give Support to Each
Other to the Whole Extent: (SAPL) (Art. 195)
a. Spouses
b. Legitimate Ascendants and Descendants
d.
Parents and their Legitimate/Illegitimate
Children/Grandchildren
Legitimate Brothers and Sisters, whether
full or half-blood
Rules Regarding Support for Illegitimate
Brothers and Sisters (Whether Full or Half
Blood)
If the one asking for support is below
majority age, he is entitled to support from
his illegitimate brother or sister to the full
extent, without any condition
If the one asking for support is of majority
age, he is entitled to support only if his need
for support is not due to a cause imputable
to his fault or negligence. (Art. 196)
Insofar as Philippine laws are concerned,
specifically the provisions of the Family Code
on support, the same only applies to Filipino
citizens. Petitioner cannot rely on Article 195 in
demanding support from respondent, who is a
foreign citizen. However, in view of
respondent’s failure to prove the national law
of the Netherlands, the doctrine of processual
presumption shall govern, which states that if
the foreign law involved is not properly
pleaded and proved, our courts will presume
that the foreign law is the same as our local or
domestic or internal law. Thus, the law in the
Netherlands is presumed to be the same with
Philippine law, which enforces the obligation of
parents to support their children and penalizing the
non-compliance therewith. Moreover, foreign law
should not be applied when its application
would work undeniable injustice to the citizens
or residents of the forum. (Norma A. Del
Socorro, for and in behalf of her minor child,
Roderigo Norjo Van Wilsem v. Ernst Johan
Brinkham Van Wilsem, G.R. No. 193707)
3. SOURCE OF SUPPORT
For the support of spouses, their common
children, and legitimate children of either spouse,
the absolute community or the conjugal
partnership shall be liable (Art. 94(1), Art. 121(1)).
For others obliged to give support, the separate
property of the obligor shall be answerable:
Provided, that the absolute community or
the conjugal partnership shall advance
the support in case the obligor has no
separate property
o Under CPG, in case of
insufficiency,
the
conjugal
partnership shall be liable only
after the responsibilities under
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Art. 121 have been covered (Art.
122)
Any advance/s made shall be deducted
from the share of the obligor spouse upon
liquidation of the absolute community or
of the conjugal partnership (Art. 197)
4. ORDER OF SUPPORT
When two or more persons are obliged to give
support, liability shall devolve based on the
following order:
a. Spouse;
b. Descendants in the nearest degree;
c. Ascendants in the nearest degree; and
d. Brothers and sisters (Art. 199)
Rule in case of multiple obligors with one and
the same oblige:
The payment shall be divided between the
obligors in proportion to their resources
(Art. 200(1))
In case of urgency or special
circumstances, the judge may order only
one of them to furnish provisional support
o Without prejudice to his or her right
of reimbursement from the other/s
(Art. 200(2))
Rule in case of multiple obligees with one and
the same obligor:
General Rule: The obligor must satisfy all the
claims
Exception: In case the obligor has no sufficient
means to satisfy all the claims, the order above
(See: order of support or Art. 199) shall be
followed
Exception to this: Between the spouse
and a child subject to parental authority,
the child is preferred (Art. 200 (3))
5. AMOUNT OF SUPPORT
The amount of support shall be in proportion to:
The resources or means of the giver and
To the necessities of the recipient (Art.
201)
The amount of support shall be reduced or
increased proportionately according to:
Changes in the necessities of the
recipient and
The resources of the provider (Art. 202)
CIVIL LAW (AND PRACTICAL EXERCISES)
6. MANNER AND TIME OF PAYMENT
Time of payment (Art. 203):
The obligation to give support can be demanded
from the time the person who has the right to
receive the same needs it for maintenance
However, it shall be paid only from the
date of judicial or extrajudicial demand
Payment shall be made within the first five (5) days
of each corresponding month
In case the recipient dies, his heirs shall
not be obliged to return what he has
received in advance
Manner of payment (Art. 204):
Here, the obligor has two options:
1. To pay the allowance fixed; or
2. To receive and maintain the person who
has a right to receive support in the family
dwelling, unless there is a moral or legal
obstacle
7. RENUNCIATION AND
TERMINATION
The waiver, renunciation, transmission, or
compensation of the right to receive support
cannot still be undertaken as such acts are
contrary to law, public policy, morals, or good
customs pursuant to Article 6 of the Civil Code.
It is in violation of the of the mandatory
obligation under Article 195 and
therefore, if such prescribed acts are
undertaken, they shall be void pursuant to
Article 5 of the Civil Code
8. SUPPORT PENDENTE LITE
Support shall be given during the proceedings for:
Legal separation
Annulment of marriage, and
Declaration of nullity of marriage
Who are entitled to it: Spouses and their children
General Rule: As between spouses, the
obligation of mutual support ceases after final
judgement granting the petition.
Exception: This is unless, in case of legal
separation, the court orders the guilty spouse to
furnish support to the innocent one, specifying the
terms thereof
Source of support: The absolute community or
the conjugal partnership (Art. 198)
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In an action for support, adultery is a good defense
and if properly proved and sustained, will defeat
the action (Reyes v. Ines-Luciano, G.R. No. L48219). However, while adultery may be a
defense in an action for personal support, that is,
support of the wife by the husband from his own
funds, it is not a defense when the support is to be
taken from the conjugal partnership property.
(Lerma v. Court of Appeals, G.R. No. L-33352)
9. PROCEDURE IN APPLICATION
FOR SUPPORT
Interlocutory nature of support pendente lite
In a Petition for Review under Rule 45, petitioner
argues that the CA should not have dismissed her
appeal because the arrears in support pendente
lite which respondent failed to pay have ceased to
be provisional and have become final.
The SC held that it is important to emphasize the
temporary or provisional nature of support
pendente lite. It is but an incident to the main
action for declaration of nullity; and whether an
order or resolution is final or interlocutory is not
dependent on compliance or non-compliance by a
party to its directive, questioning the subject
interlocutory orders of the RTC, petitioner's appeal
was correctly dismissed by the CA.
The remedy against an interlocutory order not
subject of an appeal is a special civil action under
Rule 65 provided that the interlocutory order is
rendered without or in excess of jurisdiction or with
grave abuse of discretion. Having chosen the
wrong remedy in questioning the subject
interlocutory orders of the RTC, petitioner's appeal
was correctly dismissed by the CA (Calderon v.
Roxas and CA, G.R. No. 185595).
X prayed for support from the putative father of her
child (who is also X’s father). While the grant of
support was contingent on ascertaining parental
relations between the child and the putative
parent, it was unnecessary for the action for
support to be dismissed by the appellate court. An
integrated determination of filiation is "entirely
appropriate" to an action for support. Concerned
parties may be allowed to present evidence to
establish their cause of action, inclusive of their
underlying claim of paternal relations. An action for
support may very well resolve that ineluctable
issue of paternity if it involves the same parties, is
brought before a court with the proper jurisdiction,
prays to impel recognition of paternal relations,
and invokes judicial intervention to do so. This also
serves the interest of judicial economy — avoiding
multiplicity of suits and cushioning litigants from
CIVIL LAW (AND PRACTICAL EXERCISES)
the vexation and costs of a protracted pleading of
their cause (Abella v. Cabañero, G.R. No.
206647).
Q: Can the Pension Gratuity Management
Center of the AFP (PGMC) be ordered to
automatically deduct a percentage from the
retirement benefits of its enlisted personnel,
and to give the same directly to the latter's
lawful wife as spousal support in compliance
with a protection order issued by the RTC
pursuant to RA. No. 9262?
YES. We hold that Section 8(g) of RA.
No. 9262, being a later enactment,
should be construed as laying down an
exception to the general rule that
retirement benefits are exempt from
execution. It bears stressing that
Section 8(g) providing for spousal
and child support, fulfills the
objective of restoring the dignity of
women who are victims of domestic
violence and provides them
continued protection against threats
to their personal safety and security
(PGMC v. AAA, G.R. No. 201292).
J. PARENTAL AUTHORITY
1. GENERAL PROVISIONS
Parental Authority (patria potestas)
The mass of rights and obligations which parents
have in relation to the person and property of their
children until their emancipation, and even after,
under certain circumstances
Characteristics of Parental Authority:
a. It is a natural right and duty of the parents
over the person and property of their
unemancipated children (Art. 209);
b. It cannot be renounced, transferred,
except in cases authorized by law (Art.
210);
c. It is jointly exercised by the father and the
mother (Art. 211);
d. It is purely personal and cannot be
exercised through agents; and
e. It is temporary
Rules as to the exercise of Parental Authority
a. The father and the mother shall jointly
exercise parental authority over
the
persons of their common children. In case
of disagreement, the father's decision shall
prevail, unless there is a judicial order to
the contrary (Art. 211);
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b.
c.
d.
If the child is illegitimate, parental authority
is with the mother;
In case of absence or death of either
parent, the parent present shall continue
exercising parental authority (Art. 212);
The marriage of the surviving
parent shall not affect parental
authority over the children, unless
the court appoints another person
to be the guardian of the person or
property of the children
In case of separation of the parents,
parental authority shall be exercised by the
parent designated by the Court
The Court shall take into account all
relevant considerations, especially
the choice of the child over 7 years
of age, unless the parent chosen is
unfit
No child under 7 years old shall be
separated from the mother, unless
the Court finds compelling reasons
to order otherwise
Once parental authority is vested, it cannot be
waived except in cases of adoption, guardianship
and surrender to a children’s home or an orphan
institution. (Sagala-Eslao v. Court of Appeals,
G.R. No. 116773)
It is not enough to show that the biological mother
is a lesbian so that she can be denied the custody
of a child not more than 7 years of age. X must
also demonstrate that she carried on her
purported relationship which is not conducive to
the child’s proper moral development. In choosing
the parent to whom custody is given, the welfare
of the minor should always be the paramount
consideration. The “tender-age presumption” may
be overcome only by compelling evidence of the
mother’s unfitness (Pablo-Gualberto v. Gualberto,
G.R. No. 154994).
The matter of custody is not permanent and
unalterable and can always be re-examined and
adjusted. Custody, even if previously granted by a
competent court in favor of a parent, is not
permanent. The paramount interest of the child
should always be considered (Beckett v.
Sarmiento, RTJ-12-2326)
A joint agreement that the father shall have
custody of the child below seven is void for being
contrary to law. To limit this provision’s
enforceability to court sanctioned agreements
while placing private agreements beyond its reach
is to sanction a double standard in custody
regulation of children under seven years old of
CIVIL LAW (AND PRACTICAL EXERCISES)
separated parents. This effectively empowers
separated parents, by the simple expedient of
avoiding the courts, to subvert a legislative policy
vesting to the separated mother sole custody of
her children under seven years of age (Dacasin v.
Dacasin, G.R. No. 168785)
2. SUBSTITUTE PARENTAL
AUTHORITY
Order of Substitute Parental Authority:
In default of parents or a judicially appointed
guardian, substitute parental authority shall be
exercised by:
1. The surviving grandparent;
2. The oldest brother or sister over 21 years
old, unless unfit or disqualified;
3. The child’s actual custodian, over 21
years old, unless unfit or disqualified (Art.
216)
In a custody case where the father of an
illegitimate child was the actual custodian of said
child, the SC ruled that while it may be argued that
Article 176 has effectively disqualified the father
from exercising substitute parental authority under
Article 216, the Court cannot adopt a rigid view,
without running afoul to the overarching
consideration in custody cases, which is the best
interest of the minor. The best interest demands a
determination if the mother is unfit; and if so,
whether it is best that custody be with her father
rather than her grandparents upon whom the law
accords a far superior right to exercise substitute
parental authority. (Masbate and Spouses
Masbate v. Relucio, G.R. No. 235498)
In case of foundlings, abandoned children,
neglected children, or abused children, and
other children similarly situated, summary
judicial proceedings shall be instituted so that
they may be entrusted to:
a. Heads of children’s homes
b. Orphanages, or
c. Similar institutions duly accredited by the
proper government agency (Art. 217)
3. SPECIAL PARENTAL AUTHORITY
People Exercising Special Parental Authority:
a. School
b. Administrators and teachers
c. Individual, entity, or institution engaged in
childcare
NOTE: Special parental authority can be
exercised only over minors while under their
supervision, instruction, or custody. The authority
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and supervision also attach to all authorized
activities whether inside or outside the school,
entity, or institution
Liability of those Exercising Special Parental
Authority Over the Child
They are principally and solidarily liable for
damages caused by the acts or omissions of the
child while under their supervision, instruction or
custody. However, this liability is subject to the
defense that the person exercising parental
authority exercised proper diligence. The parents
and judicial guardians of the minor or those
exercising substitute parental authority over the
minor are subsidiarily liable for said acts and
omissions of the minor. The responsibility given to
an academic institution for the welfare of its
students has been characterized by law and
judicial doctrine as a form of special parental
authority and responsibility.
This responsibility has been amplified by the
enactment of the Anti-Hazing Law, in that the
failure by school authorities to take any action to
prevent the offenses as provided by the law
exposes them to criminal liability as accomplices
in the criminal acts. Thus, the institution and its
officers cannot stand idly by in the face of patently
criminal acts committed within their sphere of
responsibility. They bear the commensurate duty
to ensure that the crimes covered by the AntiHazing Law are not committed (People v.
Bayabos, G.R. No. 171222).
4. EFFECT OF PARENTAL
AUTHORITY OVER THE CHILD’S
PERSON
Parental Rights and Duties:
a. To keep them in their company
b. To support, educate and instruct them by
right precept and good example
c. To provide for their upbringing in keeping
with their means
d. To give them love and affection, advice
and
counsel,
companionship
and
understanding
e. To provide them with moral and spiritual
guidance, inculcate in them honesty,
integrity, self-discipline, self-reliance,
industry and thrift, stimulate their interest
in civic affairs, and inspire in them
compliance with the duties of citizenship
f. To furnish them with good and wholesome
educational materials, supervise their
activities, recreation and association with
others, protect them from bad company,
and prevent them from acquiring habits
CIVIL LAW (AND PRACTICAL EXERCISES)
g.
h.
i.
j.
detrimental to their health, studies and
morals
To represent them in all matters affecting
their interests
To demand from them respect and
obedience
To impose discipline on them as may be
required under the circumstances
To perform such other duties as are
imposed by law upon parents and
guardians (Art. 220)
The person exercising substitute parental
authority shall have the same authority over
the person of the child as the parents
In no case shall the school administrator,
teacher, or individual engaged in childcare and
exercising special authority, inflict corporal
punishment upon the child (Art. 233)
Liability of Persons Exercising Parental
Authority
Civilly liable for the injuries and damages caused
by the acts or omissions of their unemancipated
children living in their company and under their
parental authority. This is subject to appropriate
defenses provided by law (such as the exercise of
diligence of a good father of a family) (Libi v. IAC,
G.R. No. 70890).
5. EFFECTS OF PARENTAL
AUTHORITY OVER THE CHILD’S
PROPERTY
Effect of Parental Authority Upon the Property
of the Child:
a. The father and mother shall jointly
exercise legal guardianship over the
property of the minor common child
without court appointment
b. In case of disagreement, the father’s
decision shall prevail, unless there is
judicial order to the contrary
c. If the market value of the property or the
annual income of the child exceeds
P50,000, the parent is required to furnish
a bond of not less than 10% of the value of
the child’s property or income
d. The property of the unemancipated child
earned or acquired with his work or
industry or by onerous or gratuitous title
shall belong to the child in ownership and
shall be devoted exclusively for support
and education, unless the title or transfer
provides otherwise
The fruits and income of the child’s
property shall be limited primarily to
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the child’s support and secondarily
to the collective daily needs of the
family
The parent’s authority over the estate of the ward
as a legal guardian would not extend to acts of
encumbrance or disposition, as distinguished from
acts of management or administration (Nario v.
Philippine American Life Ins. Co., G.R. No. L22796).
A parent has no power to compromise their
children’s claims, for a compromise has always
been deemed equivalent to an alienation, and is
an act of strict ownership that goes beyond mere
administration (Visaya, et al. v. Suiguitan, et al.,
G.R. No. L-8300).
6. SUSPENSION OR TERMINATION
OF PARENTAL AUTHORITY
Grounds for Suspension of Parental
Authority: (CHOBA)
a. Conviction of parent for crime with civil
interdiction (Art. 230)
b. Treats child with excessive Harshness and
cruelty
c. Gives corrupting Orders counsel, or
example
d. Compels child to Beg
e. Subjects to or allows him to be subjected
to Acts of lasciviousness (Art. 231)
Revival of Suspended Parental Authority
If under a: The authority is automatically
reinstated upon service of the penalty or upon
pardon or amnesty of the offender
If under b-e: The suspension or deprivation may
be revoked and the parental authority revived in a
case filed for the purpose or in the same
proceeding if the court finds that the cause
therefore has ceased and will not be repeated
Termination of Parental Authority:
a. Death of parents
b. Death of child
c. Emancipation of child
d. Parents exercising parental authority has
subjected the child or allowed him to be
subjected to sexual abuse (ground for
permanent termination) (Art. 228)
Other Cases Where Parental Authority May Be
Terminated (Art. 229)
a. Adoption of child
b. Appointment of general guardian
c. Judicial declaration of abandonment
CIVIL LAW (AND PRACTICAL EXERCISES)
d.
e.
Final judgment divesting parental authority
Judicial declaration of absence or
incapacity of person exercising parental
authority
7. SOLO PARENTS ACT (R.A. No.
8972)
Who are solo parents: Any individual falling
under any of the following categories:
a. A woman who gives birth as a result of
rape and other crimes against chastity
even without a final conviction of the
offender: provided, that the mother keeps
and raises the child;
b. Parent left solo or alone with the
responsibility of parenthood:
1. due to death of spouse;
2. while the spouse is detained or is
serving sentence for a criminal
conviction for at least one (1) year;
3. due to physical and/or mental
incapacity of spouse as certified by
a public medical practitioner;
4. due to legal separation or de facto
separation from spouse for at least
one (1) year, as long as he/she is
entrusted with the custody of the
children;
5. due to declaration of nullity or
annulment of marriage as decreed
by a court or by a church as long as
he/she is entrusted with the custody
of the children;
6. due to abandonment of spouse for
at least one (1) year;
c. Unmarried
mother/father
who
has
preferred to keep and rear her/his
child/children instead of having others care
for them or give them up to a welfare
institution;
d. Any other person who solely provides
parental care and support to a child or
children;
e. Any family member who assumes the
responsibility of head of family as a result
of
the
death,
abandonment,
disappearance or prolonged absence of
the parents or solo parent.
Provided, that a change in status or circumstance
of a parent claiming benefits under this Act, such
that he or she is no longer left alone with the
responsibility of parenthood, shall terminate his or
her eligibility for benefits under this Act (Sec. 3(a))
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Comprehensive
Package
of
Social
Development and Welfare Services
The package to be developed by the departments
concerned will initially include:
a. Livelihood
development
services,
including trainings on livelihood skills,
basic business management, value
orientation, and provision of seed capital
or job placement
b. Counseling services, including individual,
peer group, or family counseling
c. Parent effectiveness service, including
provisions and expansion of knowledge
and skills of solo parent on early childhood
development, behavior management,
health care, rights and duties of parents
and children
d. Critical incidence stress debriefing,
including preventive stress management
designed to assist solo parent in coping
with crisis situations and abuse
e. Special projects for individuals in need of
protection, including temporary shelter,
counseling, legal assistance, medical
care, self-concept or ego-building, crisis
management and spiritual enrichment
(Sec. 5)
Other rights and benefits (Sec. 6-11):
a. Flexible Work Schedule: Provided, it
does not affect individual and company
productivity and the employer is not
granted an exemption by DOLE
b. No work discrimination
c. Parental leaves of not more than seven
(7) working days every year, provided the
solo parent employee has rendered
services of at least one year
d. Educational Benefits such as:
1. Scholarship programs for qualified
solo parents and their children in
institutions of basic, tertiary, and
technical/skills education; and
2. Nonformal education programs
appropriate for solo parents and
children
e. Housing Benefits:
1. Allocation in housing projects
2. Liberal terms of payment on said
government
low-cost
housing
projects
f.
NOTE: Priority is given to
applicants who are below the
poverty line as declared by the
NEDA
Medical Benefits
CIVIL LAW (AND PRACTICAL EXERCISES)
Who are entitled to such rights and benefits
(Sec. 4):
Any solo parent whose income in the place of
domicile falls below the poverty threshold set by
NEDA and subject to the assessment of the
DSWD worker in the area
On the other hand, a solo parent whose income is
above the poverty threshold shall enjoy the
following benefits:
a. Flexible Work Schedule
b. Freedom from work discrimination
c. Parental Leave
K. EMANCIPATION
1. CAUSE OF EMANCIPATION
Emancipation takes place by the attainment of
majority.
Unless otherwise provided, majority commences
at the age of eighteen years (Art. 234, as amended
by RA 6809)
2. EFFECT OF EMANCIPATION
Emancipation for any cause shall terminate
parental authority over the person and property of
the child who shall then be qualified and
responsible for all acts of civil life, save the
exceptions established in by existing laws in
special cases.
Contracting marriages shall require parental
consent until the age of twenty-one. (Art. 236)
L. RETROACTIVITY OF FAMILY CODE
This code shall have retroactive effect insofar as it
does not prejudice or impair vested or acquired
rights in accordance with the Civil Code or other
laws (Art. 256)
Since the petitioner and the respondent suffer no
legal impediment and exclusively lived with each
other under a void marriage, their property relation
is one of co-ownership under Article 147 of the
Family Code. The said provision finds
application in this case even if the parties were
married before the Family Code took effect by
express provision of the Family Code on its
retroactive effect for as long as it does not
prejudice or impair vested or acquired rights in
accordance with the Civil Code or other laws
(Paterno v. Paterno, G.R. No. 213687).
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CIVIL LAW (AND PRACTICAL EXERCISES)
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III.
SUCCESSION
TOPIC OUTLINE UNDER THE SYLLABUS:
A. GENERAL PROVISIONS
1. Definition
2. Succession Occurs at the Moment of
Death
3. Kinds of Successors
B. TESTAMENTARY SUCCESSION
1. Wills
2. Institution of heirs
3. Substitution of heirs
4. Conditional testamentary dispositions
and testamentary dispositions with a term
5. Legitime
6. Disinheritance
7. Legacies and devises
C. LEGAL OR INTESTATE SUCCESSION
1. General provisions;
a. Relationship
b. Right of representation
2.
Order of intestate succession
D. PROVISIONS COMMON TO TESTATE AND
INTESTATE SUCCESSION
1. Right of accretion
2. Capacity to succeed by will or intestacy
3. Acceptance and repudiation of the
inheritance
4. Partition and distribution of estate
CIVIL LAW (AND PRACTICAL EXERCISES)
A. GENERAL PROVISIONS
1. DEFINITION
Succession – mode of acquisition by virtue of
which the property, rights and obligations to the
extent of the value of the inheritance, of a person
are transmitted through his death to another or
others either by his will or by operation of law. (Art.
774)
Kinds of succession
(a) Compulsory — succession to the legitime
(this prevails over all kinds)
(b) Testate — succession by will
(c) Intestate — succession by operation of law;
occurs in the absence of a valid will
(d) Mixed — a combination of testate and
intestate succession. (Balane, Jottings and
Jurisprudence in Civil Law, p. 29, 2016)
ELEMENTS OF SUCCESSION
(a) Subjective Element
(i) Decedent — person whose property is
transmitted through succession (Art.
775); also called testator in testate
succession.
(ii) Successors/Heirs – those who are
called to succession to the whole or to an
aliquot portion of the inheritance either by
will or by operation on law. (Art. 782)
2. SUCCESSION OCCURS AT THE
MOMENT OF DEATH
(b) Causal Element
Death of the Person – The rights to the
succession are transmitted from the moment of the
death of the decedent. (Art. 777)
Thus, the capacity of the heir is determined as of
the time the decedent died (Art. 1034); the legitime
is to be computed as of the same moment (Art.
908), and so is the inofficiousness of the donation
inter vivos (Art. 771). Similarly, the legacies of
credit and remission are valid only in the amount
due and outstanding at the death of the testator
(Art. 935), and the fruits accruing after that are
deemed to pertain to the legatee. (Art. 948;
Calalang-Parulan v. Calalang-Garcia, G.R. No.
184148)
In addition, the law in force at the time of the
decedent’s death will determine who the heirs
should be [Uson v. Del Rosario, 92 Phil. 530)] and
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CIVIL LAW (AND PRACTICAL EXERCISES)
ownership passes to the heir at the very moment
of death, therefore, from that moment: (a) the heir
acquires the right to dispose of his share [De Borja
v. Vda. De Borja, 46 SCRA 577] and; (b) the heir’s
interest in the estate may be attached for purposes
of execution of his creditor [Reganon v. Imperial,
22 SCRA 80]
(a) Devisees – persons to whom gifts of real
property are given by virtue of a will (Art.
782)
(b) Legatees – persons to whom gifts of
personal property are respectively given
by virtue of a will (Art. 782)
3)
However, a person may be presumed dead for the
purpose of opening his succession. (see rules on
presumptive death, Art. 390-391) In this case,
succession is only of provisional character
because there is always the chance that the
absentee may be alive.
Future inheritance cannot be the subject of a
contract of sale because the seller owns no
inheritance while his predecessor lives. (Art. 1347
in relation to Art. 777)
(c) Objective Element (Art. 776)
Inheritance – is the subject matter of succession
and includes all the transmissible property, rights,
and obligations of a person, which are not
extinguished by his death.
NOTE: If the right or obligation is strictly personal,
it is not transmissible, hence, it is extinguished by
death. (Balane, supra, p.2)
Determination of “Non-Transmissibility” of
Obligation
1) Nature of the Obligation- must be personal
obligation (e.g., to sing, dance, or obligations
to do)
2) Intransmissibility by stipulation of the parties;
3) Intransmissible by law
Succession Distinguished From Inheritance
Succession refers to the legal mode by which
inheritance is transmitted to the persons entitled to
it; while inheritance refers to the universality or
entirety of the property, rights and obligations of a
person who died.
3. KINDS OF SUCCESSORS
1)
2)
Compulsory – those who succeed by force
of law and are entitled to a legitime, which is
in proportion to the entire disposable estate
and is predetermined by law, of which they
cannot be deprived by the testator, except
through a valid disinheritance
Voluntary or Testamentary – those who are
instituted by the testator in his/her will to
succeed to the free portion (that which the
testator can freely dispose)
4)
Legal or Intestate – those who succeed to
the estate of the decedent who dies without a
valid will, or one who does not leave a will, or
to the portion of such estate not disposed of
by will
Mixed – is that effected partly by will and
partly by operation of law (Art. 780)
NOTE: The distinction between heirs and
devisees or legatees is important in these cases:
(a) Preterition (Art. 854), which totally annuls
the institution of heirs but devisees and
legacies remain valid
(b) Imperfect/Ineffective
disinheritance,
which annuls institution of heirs only
insofar as it may prejudice the person
disinherited
(c) After-acquired properties
(d) Acceptance or non-repudiation of
successional rights
B. TESTAMENTARY SUCCESSION
1. WILLS
Concept of a Will
It is an act 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. (Art. 783)
NOTE: A will disposes only the free portion of the
estate. (Art. 886; Balane, supra, p. 38)
Characteristics of a Will
1)
Unilateral — does not need the approval of
any other person (implied in Art. 783)
2)
Strictly Personal Act (Arts. 784-785)
The making of a will is strictly a personal
act; it cannot be left to the discretion of a
third person, or accomplished through the
instrumentality of an agent or attorney
(Art. 784)
The following acts or stipulations may not
be delegated to third persons:
a. Designation of heirs, devisees, or
legatees; (Balane, supra, p.41)
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b.
c.
d.
Duration
or
efficacy
of
the
designation of heirs, devisees or
legatees;
Determination of the portions which
the heirs, devises, or legatees are to
take, when referred to by name; and
Determination of whether or not the
testamentary disposition is to be
operative (Arts.785 and 787)
NOTE: This is entirely different from
the acceptance or renunciation by the
heir as beneficiary. The heir has the
freedom to accept or renounce the
testamentary benefit.
Acts which may be delegated to third
persons (Art. 786):
a. Distribution of specific property or
sums of money that the testator may
leave in general to specified classes
or causes; and
b. Designation
of
the
persons,
institutions or establishments to
which such property or sums are to
be given or applied.
3)
Free and Voluntary Act — any vice affecting
testamentary freedom can cause the
disallowance of the will (Art. 839)
4)
Formal and Solemn Act — the formalities
are essential for validity (Art. 804-814; 820821) and will depend if what is executed is
an attested or holographic will.
5)
Act Mortis Causa — takes effect only after
the death of the testator (Art. 783)
6)
Revocable or Ambulatory —Revocable at
any time during the testator’s lifetime (Art.
828)
7)
8)
CIVIL LAW (AND PRACTICAL EXERCISES)
property to take effect after his death.
783)
9)
(Art.
Executed with testamentary capacity –
see below (Art. 796-803)
10) Dispositive of property (Art. 783)
11) Permitted/Statutory – Purely statutory such
that without a law authorizing it, it is not
available.
Interpretation of Wills
If a testamentary disposition admits of different
interpretations, in case of doubt that interpretation
by which the disposition is to be operative shall be
preferred. (Art. 788)
The words of a will are to be interpreted in a
manner which will give effect to every expression,
rather than one which will render any of the
expressions inoperative. The interpretation which
will prevent intestacy shall be preferred. (Art. 791)
Underlying Principle: Testacy is always
preferred than intestacy, because the former is the
express will of the decedent whereas the latter is
only his implied will. (Balane, supra, p. 45)
Animus Testandi - The testator’s intent
(animus testandi), as well as giving effect to
such intent, is primordial.
Exception: When the intention of the testator is
contrary to law, morals or public policy.
In case of doubt, the interpretation by which the
disposition is to be operative or will sustain and
uphold the will in all its parts shall be adopted,
provided that it can be done consistently with the
established rules of law.
Kinds of Ambiguities In Wills (Art. 789)
1)
Latent or Intrinsic Ambiguities
those which do not appear on the face of
the will
may be resolved through evidence
aliunde or those outside of the will, except
oral declarations of the testator.
However, separate or individually executed
wills,
although
containing
reciprocal
provisions (mutual wills) are not prohibited,
subject to the rules on disposicion captatoria.
(Art. 875)
2)
Patent or Extrinsic Ambiguities
those which appear on the face of the will
itself
must be resolved only by provisions
contained in the will itself.
Executed with animus testandi – testator
knowledgeable he wants to dispose of his
In resolving ambiguities in wills, any admissible
and relevant evidence may be used to determine
Individual Act — two or more persons
cannot make a single joint will, either for their
reciprocal benefit or for another person. (Art.
818)
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the intention of the testator, except for patent or
extrinsic ambiguities, for which the words of the
will are to be resorted to.
Oral declarations of the testator as to his intention
cannot be used in resolving either latent or patent
ambiguities (Balane, supra, p. 46). Why? A dead
man cannot refute a tale.
Interpretation By General Meaning
The words of a will are to be taken in their ordinary
and grammatical sense, unless a clear intention to
use them in another sense can be gathered, and
that other can be ascertained. (Art. 790, par. 1)
Technical words in a will are to be taken in their
technical sense, unless the context clearly
indicates a contrary intention, or unless it
satisfactorily appears that the will was drawn
solely by the testator, and that he was
unacquainted with such technical sense. (Art. 790)
CIVIL LAW (AND PRACTICAL EXERCISES)
that should have been acquired. (Balane, supra, p.
49)
Requirements for Validity of Wills
1) Extrinsic / Formal Validity – refers to the
requirement of form and determined in
probate proceedings; it includes:
(a) Formalities provided by law
(b) Testamentary Capacity
2)
Intrinsic / Substantive Validity – refers to
the substance of the provisions and generally
determined after probate (Balane, supra, p.
50)
GOVERNING
LAW AS TO
TIME
Principle of Severability
The invalidity of one of several dispositions
contained in a will does not result in the invalidity
of the other dispositions, unless it is to be
presumed that the testator would not have made
such other dispositions if the first invalid
disposition had not been made. (Art. 792)
Property Acquired After the Execution of the
Will
Property acquired during the period between the
execution of the will and the death of the testator
is NOT included among the property disposed of.
(Art. 793)
Exception: When a contrary intention expressly
appears on the will. (Art. 793)
Interpretation Of Legacy and Devise
General Rule: In a legacy or devise, the testator
gives exactly the interest he has in the thing. (Art.
794)
Exceptions:
1) It is clear in the will that he intended to convey
a less interest. (Art. 794)
2) The testator expressly declares that he
conveys a part greater than his interest in the
thing. (Art. 929)
NOTE: In case the testator conveys a part greater
than his interest in the thing, and if the person
owning such interest in excess of that of the
testator does not wish to part with it, the solution in
Art. 931 can be applied; the legatee or devisee
shall be entitled only to the just value of the interest
GOVERNING
LAW AS TO
PLACE
EXTRINSIC
VALIDITY
INTRINSIC
VALIDITY
For
Filipinos
and Foreigners:
Law at the time
of
execution
(Art. 795)
For Filipinos:
Law at the
time of death
(Art. 16 &
2263)
For
Filipinos
and Foreigners:
(Art. 815-817)
a. Citizenship
b. Domicile
c. Residence
d. Place of
For
Foreigners:
National law
(Art. 16,
par.2; Art.
1039)
For Filipinos:
Philippine law
For
Foreigners:
National law
Execution
e. Philippine
Law
Rules on Formal Validity of Wills
Every testator, whether Filipino or alien, wherever
he may be, has five choices as to what law to
follow for the form of his/her will:
(a) Law of his citizenship (Art. 15, 816, 817)
(b) Law of the place of execution (Art. 17)
(c) Law of his domicile (Art. 816)
(d) Law of his residence (Art. 816)
(e) Philippine law (Art. 15, 816, 817)
TESTAMENTARY CAPACITY AND INTENT
It is the ability as well as the legal capacity to make
a will. It must be present at the time of the
execution of the will. (Balane, supra, p. 52)
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Who are capacitated to make a will (NES)
1) Natural person not expressly prohibited by
law to make a will. (Art. 796)
2) Eighteen (18) years old and above (Art. 797).
3) Of Sound mind, at the time of its execution
(Art. 798)
All of these must be present at the time of the
execution of the will. (in relation with Art. 801)
Soundness of Mind
To be of sound mind, it is not necessary that the
testator be in full possession of all his reasoning
faculties, or that his mind be wholly unbroken,
unimpaired, or unshattered by disease, injury or
other cause. (Art. 799)
A testator is considered of sound mind if at the
time of making of the will he knows the following:
1) Nature of the estate to be disposed of - The
testator should have a fairly accurate
knowledge of what he owns. (Balane, supra,
p. 53)
CIVIL LAW (AND PRACTICAL EXERCISES)
NOTE: Supervening capacity or incapacity does
not invalidate an effective will, nor is the will of an
incapable validated by supervening capacity (Art.
801).
Mentally aberrant medically does not equate to
testamentary incapacity. [Galvez v. Galvez, 26
Phil 243 (1913)]
Burden of Proof of Soundness of Mind
1) The person who opposes probate of the will
has the burden of proof that the testator was
not of sound mind (Art. 800).
2) The person who maintains the validity of the
will must prove that the testator executed it
during a lucid interval, when the testator was
publicly known to be insane, one month or
less before making his will. (Art. 800)
FORMS OF WILLS
Kinds of Wills
(a) Notarial / Attested – an ordinary will
acknowledged before a notary public by the
testator and the instrumental witnesses (Art.
805-806)
(b) Holographic – a will totally handwritten,
dated, and signed by the testator alone. (Art.
810)
2)
Proper objects of his bounty - The testator
should know under ordinary circumstances,
who his relatives in the most proximate
degrees, are. (Balane, supra, p. 53)
3)
Character of the testamentary act (Art. 799)
- The testator should know the legal nature of
a will. He or she must know that he is
executing a document that disposes of his
properties gratuitously, which would take
effect upon his death. (Balane, supra, p. 5354)
Formalities Common To Notarial And
Holographic Wills:
1) Every will must be in writing (Art. 804); and
Nuncupative (Oral) Wills are not allowed
except in the Muslim Personal Laws of
the Philippines
Legal Presumption in Favor Of Soundness Of
Mind (Art. 800)
General Rule: The law presumes that every
person is of sound mind, in the absence of proof
to the contrary. Forgetfulness, even if proven, is
not proof of unsoundness of mind. (Baltazar v.
Laxa, G.R. No. 17449)
i. Must be understood by others, and
ii. Must be capable of being preserved
and with permanence. Reason:
generally, wills are probated after the
death of the testator, so it must have
the character of permanence and
must be understood by others.
Exceptions:
(a) When the testator, one month or less before
the execution of the will, was publicly known
to be insane (Art. 800);
(b) When the testator executed the will after
being placed under guardianship or ordered
committed to a mental institution (under
Rules 93 and 101, respectively of the Rules
of Court), and before said order has been
lifted. (Baltazar v. Laxa, G.R. No. 174489)
Any form of writing is allowed, provided
2)
Executed in a language or dialect known to
the testator (Art. 804)
It must be understood by testator, but it is
not required that the will specifically state
that it is in a language or dialect known to
the testator. (Abada v. Abaja, G.R. No.
147145) This is merely evidentiary and
should be proven during probate.
The presumption that testator knows
and understands language or dialect
applies only if:
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i.
ii.
The will was executed in a language
generally spoken in the place of
execution; and
The testator is a native or resident of
such locality. (Abangan v. Abangan,
G.R. No. L-13431)
CIVIL LAW (AND PRACTICAL EXERCISES)
Agent of the Testator Subscribing under his
Express Direction
The essential thing for validity is that the agent
wrote the testator’s name. It would be a good
thing, but not required, for the agent to indicate the
fact of agency or authority. (Barut v. Cabacungan,
G.R. No. L-6285)
NOTARIAL/ATTESTED WILLS
Requirements for Notarial Wills (Art. 805-806)
1) Subscribed by the testator or his agent in his
presence and by his express direction at the
end thereof, in the presence of the witnesses;
2) Attested and subscribed by at least three
credible witnesses in the presence of the
testator and of one another;
3) The testator, or his agent, must sign every
page, except the last, on the left margin in the
presence of the witnesses;
4) The witnesses must sign every page, except
the last, on the left margin in the presence of
the testator and of one another;
5) All pages must be numbered correlatively in
letters on the upper part of each page;
6) Attestation clause stating:
a) The number of pages of the will;
b) The fact that the testator or his agent
under his express direction signed the will
and every page thereof, in the presence
of the witnesses;
c) The fact that the witnesses witnessed and
signed the will and every page thereof in
the presence of the testator and one
another;
7) Acknowledgement before a notary public
Subscribed by the Testator or his Agent in his
Presence and by his Express Direction at the
End thereof, in the Presence of the Witnesses
The testator’s thumbprint is always a valid and
sufficient signature for the purpose of complying
with the requirement of the law. There is no basis
for limiting the validity of thumbprints only to cases
of illness or infirmity. (De Gala v. Gonzales G.R.
No. L-30289; Dolar v. Diancin, G.R. No. L-33365;
Lopez v. Liboro, G.R. No. L-1787)
However, a sign of the cross does not comply with
the statutory requirement of signature, unless it is
the testator’s usual manner of signature or one of
his usual styles of signing. The cross does not
have the trustworthiness of a thumbmark. (Garcia
v. Lacuesta, G.R. No. L-4067)
Signed at the End
Signing before the end invalidates not only the
dispositions that come after, but the entire will,
because the one of the statutory requirements
would not have been complied with. (Azuela v.
Court of Appeals, G.R. No. 122880)
Two Kinds of End
1. Physical end – where the writing stops
2. Logical end – where the last testamentary
disposition ends.
Signing at either end is permissible. (Balane,
supra)
Signed in the Presence of Witnesses
Actual seeing is not required, but the ability to see
each other by merely casting their eyes in the
proper direction. (Nera v. Rimando, G.R. No. L5971)
Acts of Witnesses
Attesting – act of witnessing
Subscribing – act of signing their names in
the proper places of the will (Balane, supra,
p. 81 citing Taboada v. Rosal, G.R. No. L36033; Caneda v. CA, G.R. No. 103554)
The witnesses need not sign at the end of the will.
It is sufficient that they signed the will even
marginally. (Taboada v. Rosal, G.R. No. L-36033)
Signing on Every Page, Except the Last
Signing on every page of the will is mandatory,
while the place of signing, i.e. left margin, is merely
directory. The signature can be affixed anywhere
on the page. (Balane, supra)
When No Marginal Signatures are Required
If the entire document consists of only two sheets,
the first containing the will and the second, the
attestation clause, there need not be any marginal
signatures at all. (Abangan v. Abangan, G.R. No.
L-13431)
Order of Signing
The order of signing is immaterial, provided
everything is done in a single transaction.
However, if the affixation of the signatures is done
in several transactions, then it is required that the
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testator affix his signature ahead of the witnesses.
(Balane, supra, p. 86-87)
Pagination
The pagination by means of a conventional
system, a generally accepted or known sequential
order, is required, while the pagination in letters on
the upper part of each page is merely directory.
(Balane, supra)
Attestation Clause Need Not be Signed by the
Testator
The attestation clause is the affair of the
witnesses, therefore, it need not be signed by the
testator. (Fernandez v. Vergel de Dios, G.R. No.
L-21151)
Witnesses Must Sign at the End of Attestation
Clause
The attestation clause is a memorandum of the
facts attending the execution of the will required by
law to be made by the attesting witnesses, and it
must necessarily bear their signatures. An
unsigned attestation clause cannot be considered
an act of the witnesses, since the omission of their
signatures at the bottom negatives their
participation. If an attestation clause not signed at
the bottom be admitted, it would be easy to add
such clause to a will on a subsequent occasion
and in the absence of the testator and any or all
witnesses. (Cagro v. Cagro, G.R. No. L-5826;
Azuela v. Court of Appeals, G.R. No. 122880)
Attestation Clause Separate from
Acknowledgement Clause
An attestation clause is mandatory for attested
wills. It is separate and distinct from an
acknowledgement clause. These two cannot be
merged. (Echavez v. Dozen Construction, G.R.
No. 192916)
Acknowledgment
The act of one who has executed a deed in going
before some competent officer (i.e., notary public)
or court and declaring it to be his act or deed. It
involves an extra step undertaken whereby the
signatory actually declares to the notary public that
the same is his or her own free act and deed. (Lee
v. Tambago, A.C. No. 5281)
Two-Fold Purpose of the Acknowledgement
1. To safeguard the testator’s wishes long after
his demise; and
2. To assure that his estate is administered in the
manner that he intends it to be done (Lee v.
Tambago, A.C. No. 5281)
CIVIL LAW (AND PRACTICAL EXERCISES)
Certification Need Not be Signed in the
Presence of the Testator and Witnesses
Whether or not the notary signed the certification
of acknowledgment in the presence of the testator
and the witnesses, does not affect the validity of
the will. All that must be done is that the testator
and the witnesses avow to the certifying officer the
authenticity of their signatures and the
voluntariness of their actions in executing the
testamentary disposition. (Javellana v. Ledesma,
G.R. No. L-7179)
Requirements for the Notary Public
1. Must be duly commissioned for the locality
where the acknowledgment is made
(Guerrero v. Bihis, G.R. No. 174144)
2. Must not be one of the three attesting
witnesses (Cruz v. Villasor, G.R. No. L-32213)
NOTE: There is no requirement that an attested
will should be dated. Consequently, a variance
between the indicated dates of execution and
acknowledgement does not in itself invalidate the
will. (Ortega v. Valmonte, G.R. No. 157451)
Special Requirements for Handicapped
Testators
Deaf/Deaf-Mute Testator (Art. 807)
1) If able to read — he must read the will
personally
2) If unable to read — he must designate two
persons to read the will and communicate to
him, in some practicable manner, its contents.
Blind Testator (Art. 808)
The will shall be read to him twice, once by one of
the subscribing witnesses and another by the
notary public before whom the will is
acknowledged.
The rationale behind the requirement of reading
the will to the testator if he is blind or incapable of
reading the will himself (as when he is illiterate), is
to make the provisions of the will known to him, so
that he may be able to object if they are not in
accordance with his wishes. (Garcia v. Vasquez,
G.R. No. L-26615)
The special requirements for handicapped
testators are mandatory; non-compliance with
Articles 807 or 808 will result in nullity and denial
of probate. (Balane, supra) However, in the case
of Alvarado v. Gaviola, Jr., 226 SCRA 348 , the
Supreme Court stated that substantial compliance
is sufficient as when the lawyer who drafted the will
read the will aloud before the testator (who was
suffering from glaucoma), the three instrumental
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witnesses and the notary public. The court stated:
“So when an interpretation already given assures
such ends, any other interpretation whatsoever,
that adds nothing but demands more requisites
entirely unnecessary, useless and frustrative of
the testator's will, must be disregarded.“
CIVIL LAW (AND PRACTICAL EXERCISES)
The law does not specify a particular location
where the date should be placed in the will. The
only requirements are that the date be in the will
itself and executed in the hand of the testator.
(Labrador v. Court of Appeals, G.R. Nos. 8384344)
Rule on Substantial Compliance (Art. 809)
Article 809 is Applicable Only to the
Attestation Clause
1) In the absence of
a) Bad faith
b) Forgery
c) Fraud
d) Undue and improper pressure and
influence
2) Defects and imperfections in the form of
attestation or in the language used therein
3) Shall not render the will invalid
4) If it is proved that the will was in fact executed
and attested in substantial compliance with all
the requirements of Art. 805.
However, only omissions in the attestation clause
which can be supplied by an examination of the
will itself or by intrinsic evidence will not be fatal to
the validity of the will. The omissions in the
attestation clause which can only be proved by
extrinsic evidence would result in the invalidation
of the attestation clause and ultimately of the will
itself. (Caneda v. CA, G.R. No. L-18076\)
However, the attestation clause indisputably
omitted to mention the number of pages
comprising
the
will.
Nevertheless,
the
acknowledgment portion of the will supplied the
omission by stating that the will has five pages and
was therefore deemed substantial compliance by
the Supreme Court under Article 809. (Tanchanco
v. Santos, G.R. No. 204793)
HOLOGRAPHIC WILLS
Requirements for Holographic Wills (EHANDDSL)
1. Entirely HANDwritten by the testator
2. Dated by him
3. Signed by him (Art. 810; Balane, supra, p.
130)
4. Executed in a Language or dialect known to
the testator (Art. 804)
Date
The date of the will should include the day, month,
and year of its execution. (Roxas v. De Jesus,
G.R. No. L-38338)
Signed by the Testator
The testator must sign at the end of testamentary
dispositions. Otherwise, the dispositions written
below his signature, which are not subsequently
dated and signed by him will be invalidated. (Art.
812)
Forms of Holographic Wills
A holographic will is subject to no other form, and
may be made in or out of the Philippines, and need
not be witnessed. (Art. 810)
Additional Dispositions in a Holographic Will
Additional dispositions in a holographic will must
be dated and signed by the testator. (Art. 812) The
signature and the date may be done in the
following manner:
1. Signature and date after each additional
disposition, or
2. Each additional disposition signed and
undated, but the last disposition signed and
dated. (Art. 813)
What if additional dispositions are dated but
not signed? Only the last disposition that is dated
and signed will be valid.
Insertion, Cancellation, Erasure or Alteration
in a Holographic Will (Art. 813)
General Rule: If made by the testator
contemporaneously with the making of the will, the
full customary signature of the testator should
authenticate all alterations, cancellations and
erasures. If not, the general rule is that the will is
valid but the alterations, cancellations and
erasures will not be valid. (Velasco v. Lopez, G.R.
No. 905).
Exceptions:
1. Where there is only one testamentary
disposition
and
the
unauthenticated
alteration affects the sole disposition (e.g.,
one heir substituted by another), then the
whole will is void (Kalaw v. Relova, 132
SCRA 237)
2. Where the alteration or erasure is on the
signature and the date, the whole essence is
affected making the whole will void. (Spouses
Alejo v. CA, G.R. No. 106720)
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ALTERATIONS MADE BY A THIRD PERSON
Without
the The insertion, cancellation,
consent of the erasure or alteration is not
testator
considered as written.
With
the The will is void for not being
consent of the totally in the handwriting of
testator
the testator (Art. 810)
Prohibition on Joint Wills
Two or more persons cannot make a will jointly, or
in the same instrument, either for their reciprocal
benefit or for the benefit of a third person. (Art.
818)
Joint Will – One document which constitutes the
wills of two or more individuals. These kinds of
wills are void. (Balane, supra)
If there are several documents, each serving as
one independent will, even if they are written on
the same sheet, they are not joint wills. (Balane,
supra)
NOTE: Joint wills executed by Filipinos in a foreign
country shall not be valid in the Philippines, even
though authorized by the laws of the country
where they may have been executed. (Art. 819)
However, reciprocal wills of foreign nationals
jointly probated in another jurisdiction, can be
admitted for reprobate in the Philippines since the
prohibition is in the making of joint wills, and not on
the joint probate of wills. (Vda. De Perez v. Tolete,
G.R. No. 76714)
Reasons of Public Policy Against Joint Wills
1) Limitation on the modes of revocation. (i.e.
one of the testators would not be able to
destroy the document without also revoking it
as the will of the other testator, or in any event,
as to the latter, the problem of unauthorized
destruction would come in) (Balane, supra, p.
171)
2) Diminution of testamentary secrecy; (Balane,
supra)
3) Danger of undue influence (Dacanay v.
Florendo, G.R. No. L-2071)
4) Danger of one testator killing the other
(Dacanay v. Florendo, G.R. No. L-2071)
WITNESSES TO WILLS
Qualifications:
1) Of sound mind (Art. 820)
2) At least 18 years of age (Art. 820)
3) Not blind, deaf, or dumb (Art. 820)
4) Able to read and write (Art. 820)
5) Domiciled in the Philippines (Art. 821)
CIVIL LAW (AND PRACTICAL EXERCISES)
6) Must not have been convicted of falsification
of a document, perjury, or false testimony (Art.
821)
The above qualifications must be possessed at the
time of attesting the will. Their subsequent
incompetence shall not prevent the allowance of
the will. (Art. 822)
Witnesses to the will need not be “credible”
under the naturalization law as they are not
tasked to be character witness. In order to be
competent as instrumental witnesses there
must only be a showing of having the
qualification under Articles 820 to 821. It is not
mandatory that evidence be first established on
record that the witnesses have good standing in
the community or that they are honest, upright
or reputed to be trustworthy and reliable.
(Gonzales v. Court of Appeals, 90 SCRA 183)
Creditors as Witnesses
Creditors can be witnesses to his or her debtor’s
will. A mere charge on the estate of the testator for
the payment of debts due at the time of death does
not prevent the creditor from being a competent
witness. (Art. 824)
CODICILS
AND
REFERENCE
INCORPORATION
BY
Codicil – A supplement or addition to a will, made
after the execution of a will and annexed, to be
taken as a part of the will. It explains, adds, or
alters, any disposition made in the original will.
(Art. 825)
Codicils Must be Executed as in Wills
In order that a codicil may be effective, it shall be
executed as in the case of a will. (Art. 826)
However, the codicil does not need to conform to
the form of the will to which it refers. An attested
will may have a holographic codicil, or vice versa.
(Balane, supra)
Requirements for Incorporation by Reference
If a will refers to a document or paper, such
document or paper will be considered a part of the
will if the following requisites concur (EPPS):
1. The document or paper referred to in the will
must be in Existence at the time of the
execution of the will;
2. The will must clearly describe and identify the
same, stating among other things the number
of Pages thereof;
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3.
4.
It must be identified by clear and satisfactory
Proof as the document or paper referred to
therein; and
It must be Signed by the testator and the
witnesses on each and every page except in
case of voluminous books of account or
inventories. (Art. 827)
The documents, inventories, books of accounts,
documents of titles, and other papers of similar
nature should under no circumstances make
testamentary dispositions, for then the formal
requirements for wills would be circumvented.
(Balane, supra)
NOTE: Holographic wills cannot incorporate
documents by reference unless the incorporated
paper is also entirely in the handwriting of the
testator. In case of notarial wills, it is sufficient that
the signatures of the testator and witnesses on
every page of the incorporated document except
in case of voluminous books of account or
inventories. (Balane, supra, p. 183)
REVOCATION
OF
WILLS
AND
TESTAMENTARY DISPOSITIONS
A will may be revoked by the testator at any time
before his death. Any waiver or restriction of this
right is void. (Art. 828)
Rules for Revocation (Art. 829)
1) If revocation made in the Philippines –
Philippine law
2) If revocation is made outside the Philippines
and testator is not domiciled in the Philippines:
a) Law of the place where the will was made,
or
b) Law of the place where the testator was
domiciled at the time of revocation
3) If revocation is made outside the Philippines
and testator is domiciled in the Philippines
a) Philippine law
b) Law of the place of revocation
c) Law of the place where the will was made
(Balane, supra, p. 184)
Modes of Revoking a Will (Art. 830)
No will shall be revoked except in the following
cases: (LSPD)
1) By operation of Law – May be total or partial
2) By Subsequent will – some will, codicil, or
other writing executed as provided in case of
wills
3) By Physical Destruction – by burning, tearing,
cancelling, or obliterating the will with intention
of revoking it, by the testator himself, or by
some other person in his presence, and by his
express direction.
CIVIL LAW (AND PRACTICAL EXERCISES)
Instances of Revocation by Operation of Law
Decree of legal separation, nullity or
annulment of marriage for dispositions in favor
of the guilty spouse (Family Code, Art. 63, par.
4)
b) Preterition (Art. 854)
c) Legacy or credit against third person or
remission of debt was provided in will and
subsequently, testator brings action against
debtor (Art. 936)
d) Substantial transformation of specific thing
bequeathed, or sale or disposition of property
bequeathed or devised before the death of the
testator (Art. 957)
e) When heir, devisee or legatee commits any of
the acts of unworthiness (Art. 1032)
f) Annulled or void ab initio marriages revoke
testamentary dispositions made by one
spouse in favor of the other (Family Code, Art.
50)
g) If both spouses of the subsequent marriage
acted in bad faith, said marriage shall be void
ab initio and testamentary dispositions made
by one in favor of the other are revoked by
operation of law. (Family Code, Art. 44)
a)
Revocation by Some Will, Codicil, or Other
Writing Executed as Provided in case of Wills
Express – When there is a revocatory clause
expressly revoking the previous will or a part
thereof. (Balane, supra, p. 193)
Implied – When the provisions thereof are partially
or entirely inconsistent with those of the previous
wills. (Art. 831)
NOTE: Subsequent wills which impliedly revoke
the previous ones, annul only such dispositions in
the prior wills as are inconsistent with or contrary
to those contained in the later wills. (Art. 831)
Requisites for a Revocation by Subsequent
Instrument
1. The subsequent instrument must comply with
the formal requirements of a will. (Vda. de
Molo v. Molo, G.R. No. L-2538)
2. The testator must possess testamentary
capacity. (Balane, supra, p. 185)
3. The subsequent instrument must either
contain an express revocatory clause or be
incompatible with the prior will. (Art. 831)
The subsequent will must be probated in order
to take effect. (Vda. de Molo v. Molo, G.R. No.
L-2538)
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Requisites for a Valid Revocation by Physical
Destruction (Art. 830 (3); Balane, supra, p. 186187)
1. Testamentary capacity at the time of
performing the act of destruction;
2. Intent to revoke (animus revocandi);
3. Actual physical act of destruction, even partial
as long as it is not due to desistance (corpus);
4. Completion of the subjective phase; and
5. Performed by the testator himself or by some
other person in his presence and express
direction (Art. 830(3))
NOTE: No amount of destruction without animus
revocandi, without destruction (even partial, as
long as not due to desistance) will revoke a will.
(Art. 830 (3); Balane, supra, p. 187)
If the will was burned, torn, cancelled, or
obliterated by some other person, without the
express direction of the testator, the will may still
be established, and the estate distributed in
accordance therewith, if its contents, and due
execution, and the fact of its unauthorized
destruction, cancellation, or obliteration are
established according to the Rules of Court. (Art.
830)
Doctrine of Presumed Revocation
Where the will cannot be found following the death
of the testator and it is shown that it was in the
testator's possession when last seen, the
presumption is that he must have destroyed it with
animus revocandi. (Gago v. Mamuyac, G.R. No. L26317)
Revocation by Subsequent Will Effective even
if New Will Becomes Inoperative
A revocation made in a subsequent will shall take
effect, even if the new will should become
inoperative by reason of the incapacity of the heirs,
devisees or legatees designated therein, or by
their renunciation. (Art. 832)
General Rule: Revocation is always effective.
Exception: Doctrine of Dependent Relative
Revocation – when the testator provides in the
subsequent will that the revocation of the prior one
is dependent on the capacity or acceptance of the
heirs, devisees, or legatees instituted in the
subsequent will. (Vda. de Molo v. Molo, G.R. No.
L-2538)
In the doctrine of dependent relative revocation,
the first will may be admitted to probate and given
effect, despite it being torn provided that the
testator tore it with the mistaken belief that the
CIVIL LAW (AND PRACTICAL EXERCISES)
second will was perfectly valid. This is because he
would have not destroyed the first will had he
known that second will is not valid. The revocation
is therefore dependent on the validity of the
second will. (Vda. de Molo v. Molo, G.R. No. L2538)
Revocation Based on a False or Illegal Cause
Revocation based on a false or illegal cause is null
and void. (Art. 833)
Requisites for revocation for a false cause:
1) The 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 from the will that the testator is
revoking because of the cause, which is false.
(Balane, supra, p. 204)
NOTE: Even if the revocation is for a false cause
but the will is holographic and the revocation is by
physical destruction, the revoked will can no
longer be probated.
The recognition of an illegitimate child does not
lose its legal effect, even though the will wherein it
was made should be revoked. (Art. 834)
REPUBLICATION AND REVIVAL OF WILLS
Republication
If the testator wishes to republish a will that is void
as to form, the only way to republish it is to execute
a subsequent will and reproduce it. (Art. 835)
Revival (Art. 836)
The testator needs only to execute a subsequent
will or codicil referring to the previous will if the
testator wishes to republish a will that is either:
(a) Void for reason other than a formal defect
(b) Previously revoked
REPUBLICATION
Takes place by an
act of the testator
Corrects extrinsic and
extrinsic defects
REVIVAL
Takes place by
operation of law
Restores a revoked
will in certain
instances
If after making a will, the testator makes a second
will expressly revoking the first, the revocation of
the second will does not revive the first will, which
can be revived only by another will or codicil. (Art.
837)
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Illustration:
In 1985, X executed Will I. In 1987, X executed Will
II expressly revoking Will I. In 1990, X executed
Will III, revoking Will II. The revocation of Will II by
Will III does not revive Will I, unless of course, Will
III expressly revives Will I. (Balane, supra, p. 205)
PROBATE (ALLOWANCE OR
DISALLOWANCE OF WILLS)
Probate – Judicial process of proving:
1) Compliance with formal requirements of will;
and
2) Testamentary capacity of the testator.
Irrespective of whether its provisions are valid and
enforceable or otherwise. (Fernandez v.
Dimagiba, G.R. No. L-23638)
No will shall pass either real or personal property
unless it is proved and allowed in accordance with
the Rules of Court. (Art. 838 (1))
Mandatory Character of Probate
Probate is mandatory in the sense that if there is a
will, properties of the estate should pass only in
accordance with the will, provided it is admitted for
probate. It is mandatory also in the sense that it
takes precedence over intestate proceedings.
Court ordered consolidation of the intestate
proceedings with the testate proceedings, with the
testate proceedings taking precedence. Heirs
cannot enter into compromise agreement different
from the terms of the will. If admitted to probate
and found valid, the will should be the basis of
disposition as the express will of the testator.
(Roberts v. Leonidas, G.R. No. L-55509)
CIVIL LAW (AND PRACTICAL EXERCISES)
pass properties. (De la Cerna v. De la Cerna G.R.
No. L-28838)
Scope of Probate Proceedings
General Rule: Probate proceedings cover the due
execution of the will, extrinsic of formal validity and
testamentary capacity of the testator only, and no
other extraneous matters.
Intrinsic validity cannot be ruled upon (i.e.
impairment of legitime, unlawful provisions,
disqualifications of heirs, legatees, devices, etc.)
or other extraneous matters. An extrinsically valid
will admitted to probate can still be declared void
intrinsically. (Balane, supra, p. 221)
Exceptions: Other extraneous matters, which can
be raised and decided in probate proceedings.
(Nepomuceno v. CA, G.R. No. L-62952; Balanay
v. Martinez, G.R. No. L-39247.)
Thus:
1) Provisional ruling on ownership of
properties
The ruling is only for purposes of inclusion in the
inventory of assets of the estate. It not conclusive
and is subject to final decision in a separate action
to resolve title. In case of community properties of
spouses, there must first be liquidation of ACP or
CPG because the assets of the estate should be
net of the share of surviving spouse. (Pastor v.
Pastor G.R. No. L-56340).
The testator himself may, during his lifetime,
petition the court having jurisdiction for the
allowance of his will. (Art. 838)
However, the rule of provisional character of
determination of ownership not being within the
proper jurisdiction of the probate court applies only
if the dispute is between the estate and third
persons claiming ownership, in which case a
separate proceeding should be instituted to settle
the issue of ownership. A probate court has
jurisdiction if the dispute is only among heirs, and
the issue is to determine whether the property is
part of the ACP/CPG or is a separate property of
one of the spouses. (Romero v. CA, G.R. No.
188921)
Finality of a Probate Decree
Subject to the right of appeal, the allowance of the
will, either during the lifetime of the testator or after
his death, shall be conclusive as to its due
execution. (Art. 838) Once a decree of probate
becomes final in accordance with the rules of
procedure, it is res judicata.
The approval of the inventory and the concomitant
determination of the ownership as basis for
inclusion or exclusion from the inventory were
provisional and subject to revision at any time
during the course of the administration
proceedings. (Aranas v. Mercado, G.R. No.
156407)
Joint wills are considered to have a defect in form
(non-compliance with formalities). However, if
allowed and probated and becomes final, it can
2) Apparent intrinsic defect
If the intrinsic defect is apparent on the face of the
will, since probate of the will is unnecessary (as in
Two Kinds of Probate
(a) Post-mortem – After the testator’s death
(b) Ante-mortem – During his lifetime (Balane,
supra, p. 217)
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preterition, which annuls the will) (Nuguid v.
Nuguid, G.R. No. 23445)
3) For
practical
considerations
when
testamentary provisions are of doubtful validity
such as when it is apparent that the disposition is
in favor of a person the testator is guilty of
concubinage with (Nepomuceno v. CA, G.R. No.
L-62952); and
4) All heirs are in agreement that intrinsic
validity should be determined first. (Reyes v. CA,
G.R. No. 139587)
NOTE: Once the will is admitted to probate, the
court may continue to proceed in determining the
intrinsic validity of the will.
Decree of Probate Conclusive as to the Due
Execution or Formal Validity of the Will
This means that:
1) The fact that the will is indeed the testator’s
last will and testament;
2) Compliance with the required formalities
(Balane, supra, p. 221);
3) Testamentary capacity of the testator;
(Gallanosa v. Arcangel, G.R. No. L-29300)
4) Due execution of the will – meaning, that
testator was of sound disposing mind, that he
freely executed the will, that there is no
duress, fraud, undue influence, menace, that
the will is genuine (not forged), and that
testator was not disqualified from making a
will. (Dorotheo v. CA, G.R. No. 108581).
Proof of Extrinsic Validity
Attested / Notarial Will
1. Present original will (ideally)
2. Present any attesting witnesses and/or notary
public to prove due execution/ testamentary
capacity; and
3. If no one is available, present any available
evidence to show authenticity or validity of
contents of attestation clause. (Rules of Court,
Rule 76)
Holographic Will
1. Present original will or at least a photo static,
scanned or any legible copy; and
2. One person familiar with the handwriting of
the testator, unless contested in which case,
three witnesses familiar with the handwriting
of the testator must be presented to prove that
the will was written in the handwriting of the
testator. (Rules of Court, Rule 76, Sec. 5) If
there are no competent witnesses and the
court deems it necessary, expert testimony
may be resorted to. (Art. 811)
CIVIL LAW (AND PRACTICAL EXERCISES)
ATTESTED / NOTARIAL WILLS
Uncontested
One subscribing witness
only, if such witness testify
that the will was executed as
is required by law (Rule 76,
Section 5, Rules of Court)
Contested
All the subscribing witnesses,
and the notary (Rule 76,
Section 11, Rules of Court)
HOLOGRAPHIC WILLS
Uncontested
At least one witness who
knows the handwriting and
signature of the testator
explicitly declares that the will
and the signature are in the
handwriting of the testator (Art.
811)
Contested
At least three witnesses who
know the handwriting and
signature of the testator
explicitly declare that the will
and the signature are in the
handwriting of the testator (Art.
811)
Probate of Lost or Destroyed Will
Requirements for the Probate of a Lost or
Destroyed Will (Rules of Court, Rule 76, Sec. 5)
1. Establish the execution and validity of the will
2. Establish that the will is in existence at the
time of death of the testator, or is shown to
have been fraudulently or accidentally
destroyed in the lifetime of the testator without
his knowledge
3. Its provisions must be clearly and distinctly
proved by at least two credible witnesses
Lost or Destroyed Holographic Will
General Rule: In the probate of a holographic will,
the document itself must be produced. A lost
holographic will cannot be probated. (Gan v. Yap,
G.R. No. L-12190)
The oppositor may present witnesses who know
the testator’s handwriting, who after comparing the
will with other writings or letters of the deceased,
have come to the conclusion that such will has not
been written by the hand of the testator. And the
court in view of such contradictory testimony may
use its own visual sense, and decide in the face of
the document, whether the will submitted to it has
indeed been written by the testator. Obviously,
when the will itself is not submitted, these means
of opposition and of assessing the evidence are
not available. The only guaranty of authenticity—
the testator’s handwriting—has disappeared. (Gan
v. Yap, G.R. No. L-12190)
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Exception: A photostatic copy or Xerox copy of
the holographic will may be allowed because
comparison can be made with the standard
writings of the testator. (Rodelas v. Aranza, G.R.
No. L-58509)
Proof of Testamentary Capacity
Testamentary capacity including soundness of
mind can be proven by the attestation clause and
testimony of witnesses and/or notary public. In the
absence of any proof, the court may rely on the
presumption of soundness of mind. (Art. 800)
Exclusive Grounds for Disallowance of Wills
(LIF-P-FraM) (Art. 839)
1. Formalities required by Law were not
complied with;
2. Testator was Insane or incapable of making a
will at the time of execution (lack of
testamentary capacity);
3. The will was executed through Force or under
duress, or the influence of fear, or threats;
4. The will was procured by undue and improper
Pressure and influence, on the part of the
beneficiary or of some other person;
5. The testator’s signature was procured through
Fraud; and
6. If the testator acted by Mistake or did not
intend that the instrument he signed should be
his will at the time of affixing his signature.
NOTE: Once a will is disallowed because of any of
the following grounds, intestate succession will
ensue.
2. INSTITUTION OF HEIRS
An act by virtue of which a testator designates in
his will the person or persons who are to succeed
him in his property and transmissible rights and
obligations. (Art. 840)
NOTE: The declaration of heirship must be made
in a special proceeding, not in an independent civil
action. However, the Court held that recourse to
administration proceedings to determine who the
heirs are is sanctioned only if there is a good and
compelling reason for such recourse. Hence, the
Court had allowed exceptions to the rule requiring
administration proceedings as when the parties in
the civil case already presented their evidence
regarding the issue of heirship, and the RTC had
consequently rendered judgment upon the issues
it defined during the pre-trial. (Rebusquillo v.
Gualvez, G.R. No. 204029)
CIVIL LAW (AND PRACTICAL EXERCISES)
An Affidavit of Self-Adjudication is only proper
when the affiant is the sole heir of the decedent.
(Rebusquillo v. Gualvez, G.R. No. 204029)
Case Cited in the 2022 Bar Syllabus: Treyes
v. Larlar
“Unless there is a pending special proceeding for
the settlement of the decedent’s estate or for the
determination of heirship, the compulsory or
intestate heirs may commence an ordinary civil
action to declare the nullity of a deed or instrument
[in this case the Affidavit of Self-Adjudication by
the husband], and for recovery of property, or any
other action in the enforcement of their ownership
rights acquired by virtue of succession, without the
necessity of a priori and separate judicial
declaration of their status as such.” (Treyes v.
Larlar, G.R. No. 232579, 2020)
“Even assuming arguendo that the Rules (of
Court) strictly provide that a separate judicial
determination of heirship in a special proceeding
is a precondition in an ordinary civil action wherein
heirship is already established by compulsory
succession or intestacy and is only sought to be
enforced, which, as already discussed at length, is
not the case, the Rules must still yield to the
specific provisions of the Civil Code that certain
relatives of the decedent [such as the siblings in
this case] attain their status as either compulsory
or intestate heirs and that their successional rights
are transmitted and enforceable at the very
moment of death [the SC cited Article 777 of the
Civil Code] without the need of such separate
judicial determination.” (Treyes v. Larlar, G.R. No.
232579, 2020)
“Given the clear dictates of the Civil Code that the
rights of the heirs to the inheritance vest
immediately at the precise moment of the
decedent’s death [Art. 777 of the Civil Code] even
without judicial declaration of heirship, and the
various Court En Banc and Division decisions
holding that no prior judicial declaration of heirship
is necessary before an heir can file an ordinary
civil action to enforce ownership rights acquired by
virtue of succession through the nullification of
deeds divesting property or properties forming part
of the estate and reconveyance thereof to the
estate or for the common benefit of the heirs of the
decedent”, the Supreme Court clarified that the
rule
laid
down
in
Ypon,
Yaptinchay,
Portugal,…and other similar cases, which requires
prior determination of heirship in a separate
special proceeding as a prerequisite before one
can file an ordinary civil action to enforce
ownership rights acquired by virtue of succession,
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is abandoned. (Treyes v. Larlar, G.R. No. 232579,
2020)
A will shall be valid even though it does not contain
an institution of an heir, or such institution does not
comprise the estate, or even though the person so
instituted should not accept the inheritance or
should be incapacitated to succeed. In such case,
the testamentary dispositions made in accordance
with law shall be complied with, and the remainder
of the estate shall pass to the legal heirs. (Art. 841)
DISPOSITIONS BY WILL
No compulsory Dispose by will the entire
heirs
hereditary estate
With compulsory Dispose by will the free
heirs
portion (net hereditary
estate minus legitimes)
(Balane, supra, p. 239)
Intestacy Follows If Entire Free Portion Not
Disposed of by Will
If the testator has instituted one or several heirs,
and the institution of each is limited to an aliquot
part of the inheritance, intestate succession takes
place with respect to the remainder of the
disposable portion. (Art. 851)
Rules on Institution of Aliquot Share Less
Than or In Excess of the Whole Estate
The rules will apply if the following concur:
1. There is more than one instituted heir.
2. The testator intended them to get the whole
estate or the whole disposable portion.
3. The testator has designated a definite or
aliquot portion for each heir. (Balane, supra,
p. 251-252)
RULES ON INSTITUTION OF ALIQUOT
SHARE LESS THAN OR IN EXCESS OF THE
WHOLE ESTATE
Art. 852
Art. 853
Total of all the aliquot
parts of the instituted
heirs do not cover the
whole inheritance, or
the whole free portion
Remedy: Each part
shall be increased
proportionately
Total of all the aliquot
parts of the instituted
heirs
exceed
the
whole inheritance, or
the whole free portion
Remedy: Each part
shall
be
reduced
proportionately
NOTE: In Article 852, the difference between the
total of all the portions and the whole of the
inheritance or free portion cannot pass by
intestacy because the testator’s intention is to give
the instituted heirs the entire amount. (Balane,
supra, p. 252)
Requisites for a Valid Institution of Heir
1. Designation in the will of person/s to succeed
(Art. 840)
2. The will specifically assigns to such person an
inchoate share in the estate.
3. The person so named has capacity to
succeed.
4. The will is formally valid
5. No vice of consent is present
6. No preterition results from the effect of such
will (Art. 854)
Designation in the Will of Person/s to
Succeed
Directory – Designation of name and surname
(Balane, supra, p. 240)
Mandatory – Identity of the heir must be
established, otherwise void disposition, unless his
identity becomes certain.
NOTE: If there is ambiguity in the designation, the
designation must be resolved by discerning the
testator’s intent. If the ambiguity cannot be
resolved, intestacy to that portion results. (Art.
844, par. 2)
Unknown person – A successor whose identity
cannot be determined because the designation in
the will is unclear or ambiguous. (Balane, supra,
p. 241)
NOTE: Unknown persons do not refer to one with
whom the testator is not personally acquainted.
The testator may institute somebody who is a
perfect stranger to him, provided the identity is
clear. (Balane, supra, p. 241)
Dispositions in Favor of an Unknown Person
(Art. 845)
General Rule: Every disposition in favor of an
unknown person shall be void.
Exception: By some event or circumstance his
identity becomes certain.
Dispositions in Favor of a Definite Class
A disposition in favor of a definite class or group of
persons shall be valid. (Art. 845)
Presumptions in Institution of Heirs
In the absence of specific provisions in the will,
these presumptions will apply: (E-In-S)
(a) Equality – Heirs who are instituted without
designation of shares inherit in equal parts.
(Art. 846)
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Shares of Brothers and Sisters in
Testamentary Succession
If the testator should institute his brothers and
sisters, and he has some full blood and others
of half-blood, the inheritance shall be
distributed equally unless a different intention
appears. (Art. 848)
NOTE: In intestacy, the proportion of 2:1
between full and half-blood siblings and the
Iron Curtain Rule between legitimate and
illegitimate siblings shall be applied.
(b) Individuality – Heirs collectively instituted are
deemed individually named unless a contrary
intent is prove. (Art. 847)
(c) Simultaneity – When several heirs are
instituted, they are deemed instituted
simultaneously and not successively. (Art.
849)
Effect of False Cause for Institution of an Heir
General Rule: The falsity of the stated cause does
not affect the validity or efficacy of the institution.
The false cause is merely considered as not
written. (Art. 850)
Exceptions: It appears from the will that the
testator would not have made such designation if
he had known the falsity of such cause. (Art. 850)
Requisites for the Exception to Apply:
1. The cause for the institution of heirs must be
stated in the will (Austria v. Reyes, G.R. No.
L-23079);
2. The cause must be shown to be false (Austria
v. Reyes, G.R. No. L-23079);
3. It must appear from the face of the will that the
testator would not have made such institution
if he had known the falsity of the cause.
(Austria v. Reyes, G.R. No. L-23079)
PRETERITION
The preterition or omission of one, some, or all of
the compulsory heirs in the direct line, whether
living at the time of the execution of the will or born
after the death of the testator, shall annul the
institution of heir; but the devises and legacies
shall be valid insofar as they are not inofficious.
(Art. 854)
If the omitted compulsory heirs should die before
the testator, the institution shall be effectual,
without prejudice to the right of representation.
(Art. 854)
CIVIL LAW (AND PRACTICAL EXERCISES)
Definition of Preterition
Preterition is the total omission of a compulsory
heir from the inheritance. It consists in the silence
of the testator with regard to a compulsory heir,
omitting him in his will, either by not mentioning
him at all, or by not giving him anything in the
hereditary property but without expressly
disinheriting him, even if he is mentioned in the will
in the latter case. (Heirs of Ureta v. Ureta, G.R. No.
165748)
NOTE: Preterition is a concept of testamentary
succession and requires a will. (Heirs of Ureta v.
Ureta, G.R. No. 165748)
Elements of Preterition (OCLiT)
1. There must be a total Omission of one, some
or all of the heir/s in the will, without the heir
being expressly disinherited.
2. The omission must be that of a Compulsory
heir in the direct line.
3. The omitted compulsory heir must be Living
or at least conceived at the time of testator’s
death. (Art. 854)
4. The omission must be complete and Total in
character. The heir in question must have
received nothing from the testator by way of:
a. Testamentary succession;
b. Legacy or devise;
c. Donation inter vivos;
d. Intestacy (Balane, supra, p. 266)
NOTE: What constitutes preterition is not omission
in the will but being completely left out of the
inheritance. (Seangio v. Reyes, G.R. No. 14037172)
Determination of Preterited Heirs
The determination of whether or not there are
preterited heirs can be made only upon the
testator’s death. (JLT Agro v. Balansag, G.R. No.
141882)
Compulsory Heir in the Direct Line
This covers children or descendants, or in default
of children or descendants, parents or
ascendants.
Illegitimate
descendants
and
ascendants are also protected, since the law does
not distinguish. (Balane, supra)
Adopted children are considered compulsory heirs
in the direct line, and may be preterited. This is
because adoption gives to the adopted child the
same rights and duties as if he were a legitimate
child of the adopter. (Acain v. Intermediate
Appellate Court, G.R. No. 72706)
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Effects of Preterition
1. The institution of heir is annulled.
The annulment is in toto, unless in the will
there are, in addition, testamentary
dispositions in the form of devises or legacies.
(Nuguid v. Nuguid, G.R. No. L-23445)
Preterition annuls the institution of an heir and
annulment throws open to intestate
succession the entire inheritance. (Morales v.
Olandriz, G.R. No. 198994, Acain v.
Intermediate Appellate Court, G.R. No.
72706)
2.
3.
Devises and legacies shall remain valid as
long as they are not inofficious.
The only provisions which do not result in
intestacy are the legacies and devises made
in the will for they should stand valid and
respected, except insofar as the legitimes are
concerned. (Acain v. Intermediate Appellate
Court, G.R. No. 72706) If the devises and
legacies impair the legitimes, they are merely
reduced. (Balane, supra)
If the omitted compulsory heir should die
before the testator, the institution shall be
effectual, without prejudice to the right of
representation.
PRETERITION
DISINHERITANCE
Deprivation of a
compulsory heir of his
legitime is tacit
Law presumes that
there has been
merely an oversight
or mistake on the part
of the testator
It results in the
complete nullity of the
institution of heir,
except the devises
and legatees, as long
as they are not
inofficious.
Omitted heir gets not
only his legitime but
also his share in the
free portion not
disposed of by way of
legacies or devises
Deprivation of the
compulsory heir of his
legitime is express
Done with a legal
cause
The nullity is limited to
the portion of the
estate of which the
disinherited heir has
been legally deprived.
If disinheritance is
unlawful or
ineffective, for
absence of one or
other of the
requisites, the
compulsory heir is
merely restored to his
rightful share. (Nuguid
v. Nuguid , G.R. No.
L-23445)
Successional Rights are Intransmissible
An heir, whether compulsory, voluntary, or legal,
transmits nothing to his heirs, in case of
predecease,
incapacity,
renunciation,
or
disinheritance. However, in case of predecease or
incapacity of compulsory or legal heirs, as well as
disinheritance of compulsory heirs, the rules on
representation shall apply. (Balane, supra)
There is Right of Representation for
Compulsory Heirs under the ff:
1) Predecease;
2) Incapacity
3) Disinheritance (Art. 859)
No Right of Representation for Testamentary /
Voluntary Heirs
There is Right of Representation for Legal /
Intestate Heirs under the ff:
1) Predecease;
2) Incapacity
3. SUBSTITUTION OF HEIRS
The appointment of another heir so that he may
enter into the inheritance in default of the heir
originally instituted. (Art. 857)
NOTE: Only one substitution is allowed. The
person substituting cannot be substituted again.
Substitute Subject to Same Charges and
Conditions Imposed on Original Heir
General Rule: The substitute shall be subject to
the same charges and conditions imposed upon
the instituted heir. (Art. 862)
Exception: The testator expressly provided the
contrary, or the charges or conditions are
personally applicable only to the heir instituted.
(Art. 862)
Classes of Substitution
(a) Vulgar or Simple – The testator may
designate one or more persons to substitute
the heir or heirs instituted in case such heir or
heirs should:
i.
ii.
iii.
Die before him (Predecease)
Should not wish to be instituted,
(Renounce) or
Should be incapacitated to accept the
inheritance (Incapacitated) (Art. 859)
Simple Substitution
Simple substitution may be done by the
testator:
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CIVIL LAW (AND PRACTICAL EXERCISES)
i. By specifying all the three causes,
ii. By merely providing for simple
substitution. (Art. 859)
3.
A simple substitution, without a statement of
the cases to which it refers, shall comprise
the three causes mentioned, unless the
testator has otherwise provided. (Art. 859)
4.
5.
Restricted Simple Substitution
The testator may limit the operation of
simple substitution by specifying only one
or two of the three causes.
(b) Brief (Brevilocua)- Two or more persons may
be substituted for one person (Art. 860)
(c) Compendious (Compediosa) – one person
may be substituted for two or more heirs (Art.
860)
(d) Reciprocal (Reciproca) – If heirs instituted in
unequal shares should be reciprocally
substituted, the substitute shall acquire the
share of the heir who dies, renounces, or is
incapacitated, unless it clearly appears that
the intention of the testator was otherwise. If
there are more than one substitute, they shall
have the same share in the substitution as in
the institution. (Art. 861)
NOTE: If one is substituted for two or more original
heirs, substitution will only take place if all the
original heirs are disqualified. If not all of the
original heirs are disqualified, the share left vacant
will accrue to the surviving co-heir or co-heirs.
(e) Fideicommissary Substitution - If the
testator institutes an heir with an obligation to
deliver to another the property so inherited.
The heir instituted to such condition is called
the first heir or fiduciary heir, the one to
receive the property is the fideicommissary or
second heir. (Art. 863)
Requisites for a Fideicommissary
Substitution (1st-2nd-1-PT-LEFree)
1. A fiduciary or a FIRST heir who takes the
property upon the testator’s death. (Art, 863)
2. A fideicommissary or SECOND heir who
takes the property subsequently from the
fiduciary. (Art. 863)
6.
7.
The second heir must be ONE degree from
the first heir. Thus, the fideicommissary can
only be a parent or a child of the fiduciary.
(Palacios v. Ramirez, G.R. No. 27952)
The dual obligation imposed upon the
fiduciary to Preserve the property and to
Transmit it after the lapse of the period to the
fideicommissary heir. (Art. 865)
Both heirs must be Living and qualified to
succeed at the time the testator’s death.
The fideicommissary substitution must be
Expressly made. (Art. 865)
The fideicommissary substitution is imposed
on the Free portion of the estate and never on
the legitime. (Art. 864)
NOTE: Pending the transmission of the property,
the fiduciary is entitled to all the rights of a
usufructuary having the right to use and enjoy the
property, but without the right to dispose the same.
Although the fideicommissary heir does not
receive the property upon the testator’s death, his
right thereto vests at the time and merely becomes
subject to a period, and that right passes to his
own heirs should he die before the fiduciary’s right
expires. (Balane, supra)
Tenure of Fiduciary
Primary Rule: Period indicated by the testator
Secondary Rule: If the testator did not indicate a
period, then the fiduciary’s lifetime. (Balane,
supra, citing Manresa)
Two Ways of Making an Express Imposition of
Fideicommissary Substitution
1) By the use of the term fideicommissary; or
2) By imposing upon the first heir the absolute
obligation to preserve and to transmit to the
second heir. (Art. 865)
Transmission of Property from First Heir to
Second Heir
General Rule: The fiduciary should deliver the
property without deductions.
Exceptions: Deductions which arise from
legitimate expenses, credits and improvements.
(Art. 865)
Right to Succession of the Second Heir
The second heir shall acquire the right to the
succession from the time of the testator’s death,
even though he should die before the fiduciary.
The right of the second heir shall pass to his heirs.
(Art. 866)
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The following shall not take effect: (Art. 867)
1) Fideicommissary substitutions which are not
made in an express manner, either by giving
them this name, or imposing upon the fiduciary
the absolute obligation to deliver the property
to a second heir;
2) Provisions which contain a perpetual
prohibition to alienate, and even a temporary
one, beyond the limit fixed in Article 863.
3) Those which impose upon the heir the charge
of paying to various persons successively,
beyond the limit prescribed in Article 863, a
certain income or pension;
4) Those which leave to a person the whole or
part of the hereditary property in order that he
may apply or invest the same according to
secret instructions communicated to him by the
testator.
Nullity of Fideicommissary Substitution
The nullity of the fideicommissary substitution
does not prejudice the validity of the institution of
heirs first designated; the fideicommissary clause
shall simply be considered as not written (Art. 868)
such that the institution of the first heir simply
becomes pure and unqualified. (Balane, supra)
Ownership and Usufructuary Provisions
A provision whereby the testator leaves to a
person the whole or part of the inheritance, and to
another the usufruct, shall be valid. (Art. 869)
Successive Usufructuaries
If the testator gives the usufruct to various
persons, not simultaneously, but successively, the
requisites of a fideicommissary substitution must
be present. (Art. 869)
Period of Inalienability of the Estate
General Rule: The dispositions of the testator
declaring all or part of the estate inalienable for
more than 20 years are void. (Art. 870)
Exception: In fideicommissary substitution, the
period is the lifetime of the first heir.
4. CONDITIONAL TESTAMENTARY
DISPOSITIONS and
DISPOSITIONS WITH A TERM
The institution of an heir may be made
conditionally, or for a certain purpose or cause.
(Art. 871)
Three Kinds of Testamentary Dispositions
(a) Conditional dispositions
(b) Dispositions with a term
(c) Dispositions with a mode
CIVIL LAW (AND PRACTICAL EXERCISES)
Definitions
(a) Condition – Future or uncertain event, or a
past event unknown to the parties, upon which
the performance of an obligation depends
(Art. 1179)
(b) Term – The day or time when an obligation
either becomes demandable or terminates
(Art. 1193)
(c) Mode – The statement of the object of the
institution or the application of the property left
by the testator or the charge imposed on the
heir. (Art. 882) It is an obligation imposed
upon the heir, without suspending the
effectivity of the institution or the rights to the
succession. (Rabadilla v. Court of Appeals,
G.R. No. 113725)
(d) Disposicion
Captatoria/
Scriptura
Captatoria – A condition that the heir shall
make some provision in his will of the testator
or of any other person. This is prohibited
because it will make the making of the will a
contractual act. (Art. 875)
It is not merely the condition that is
declared void but the testamentary
disposition itself which contains the
condition. (Balane, supra)
(e) Casual Condition – A condition is casual if it
depends upon chance and/or upon the will of
a third person
(f) Mixed Condition - A condition is mixed if it
depends both partly upon the will of the heir
himself and upon chance and/or the will of a
third person
(g) Potestative Condition – One the fulfillment
of which depends purely on the heir.
(h) Suspensive Term – One that merely
suspends the demandability of a right;
happening is certain.
(i) Caucion Muciana – Bond or security that
should be given in favor of those who would
get the property if the condition not be
complied with. (Art. 879)
Interpretation
When in doubt whether there is a condition or
merely a mode, consider the same as mode.
When in doubt as to whether there is a mode
or merely a suggestion, consider same only
as a suggestion.
A condition suspends but does not obligate,
while a mode obligates but does not suspend
(for he who inherits with a mode is already an
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heir; one who inherits conditionally is not yet
an heir.)
Condition on the Legitimes is Prohibited
The testator cannot impose any charge, condition
or substitution whatsoever upon the legitimes.
Should he do so, the same shall be considered as
not imposed. (Art. 872)
Conditions which are Impossible, Contrary to
Law or Good Customs
These conditions are considered as not imposed,
and shall not prejudice the heir, even if the testator
provide otherwise. (Art. 873) The testamentary
disposition is not annulled; it simply becomes pure.
(Balane, supra)
Conditions Prohibiting Marriage
General Rule: An absolute condition not to
contract a first or subsequent marriage shall be
considered as not written. (Art. 874)
Exception: The condition has been imposed on
the widow or widower by the deceased spouse, or
by the latter’s ascendant’s or descendants. (Art.
874)
The right of usufruct, or an allowance or some
personal prestation may be devised or
bequeathed to any person for the time during
which he or she should remain unmarried or in
widowhood. (Art. 874)
RULES ON POTESTATIVE, CASUAL AND
MIXED CONDITIONS
Positive Potestative Condition (Art. 876)
General Rule: It must be fulfilled as soon as the
heir learns of the testator’s death.
Exception: The condition, already complied with,
is of such nature that it cannot be fulfilled again.
Negative Potestative Condition (Art. 879)
If the potestative condition imposed upon the heir
is negative, or consists in not doing or not giving
something, the heir shall comply by giving a
security (caucion muciana) that he will not do or
give that which has been prohibited by the testator,
and that in case of contravention he will return
whatever he may have received, together with its
fruits and interests.
Casual or Mixed (Art. 877)
It is sufficient if it happens or be fulfilled at any
other time before or after the testator’s death,
unless testator provides otherwise.
If already fulfilled at the time of execution of the
will
CIVIL LAW (AND PRACTICAL EXERCISES)
a.
If testator is unaware of fact of fulfillmentDeemed fulfilled.
b. If testator is aware of the fact of fulfillment
i. If it can no longer be fulfilled again –It is
deemed fulfilled
ii. If it can be fulfilled again – It must be
fulfilled again. (Art. 877)
Constructive Compliance (Art. 883, par. 2)
If the person interested in the condition should
prevent its fulfillment, without the fault of the heir,
the condition shall be deemed to have been
complied with.
RULES ON APPLICABILITY OF
CONSTRUCTIVE COMPLIANCE
CASUAL
MIXED CONDITION
CONDITION
Not
Dependent
Dependent on
Applicable
Partly on
Will of Third Party
Chance
Not
Applicable only if
Applicable
third party is
interested in the
condition (Art.
883)
The estate shall be placed under administration
until:
(a) Condition is fulfilled, or
(b) Until it becomes certain that condition will
never be fulfilled, or
(c) Until arrival of the term
The same shall be done if the heir does not give
the security required as in negative potestative
conditions. (Art. 880)
IF THE
CONDITION
HAPPENS
The property will
be turned over to
the instituted
heir.
IF IT BECOMES CERTAIN
THAT CONDITION WILL
NOT HAPPEN
The property will be turned
over to a secondary heir, if
there is one, or to the
intestate heirs, as the case
may be.
Dispositions with a Term
Suspensive Term (Art. 878)
A disposition with a suspensive term does not
prevent the instituted heir from acquiring his rights
and transmitting them to his heirs even before the
arrival of the term.
NOTE: The heir’s right vests upon the testator’s
death. Should the heir die before the arrival of the
suspensive term, he merely transmits his right to
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his own heirs who can demand the property when
the term arrives. (Balane, supra)
3.
Resolutory Term (Art. 885)
The designation of the day or time when the
effects of the institution of an heir shall commence
or cease shall be valid. (Art. 885)
4.
TERM
SUSPENSIVE
RESOLUTORY
Before the arrival of
the term, the property
should be delivered
to the intestate heirs.
However, a sufficient
security has to be
posted by the
intestate heirs.
Before the arrival of
the term, the property
should be delivered to
the instituted heir. No
security is required of
them. (Art. 885)
Dispositions with Modes
Dispositions with modes may be claimed at once,
provided that the instituted heirs give security for
compliance with the wishes of the testator and for
the return of anything he or they may receive,
together with its fruits and interests, if he or they
should disregard this obligation. (Art. 882, par. 2)
Indicators of a Modal Institution
The testator states the following:
1. The object of the institution;
2. The purpose or application of the property left
by the testator;
3. The charge imposed by the testator upon the
heir. (Rabadilla v. Court of Appeals, G.R. No.
113725)
NOTE: An obligation imposed upon the heir
should not be considered a condition unless it
clearly appears from the will itself that such was
the intention of the testator. In case of doubt, the
institution should be considered as modal and not
condition. (Rabadilla v. Court of Appeals, G.R. No.
113725, 2000)
Analogous Performance
When without fault of the heir, a modal institution
cannot take effect in the exact manner stated by
the testator, it shall be complied with in a manner
most analogous to and in conformity with his
wishes. (Art. 883, par. 1)
Prohibited or Void Conditions
The prohibited or void conditions are: (LIM-Will)
1. Charges, conditions, substitutions, upon the
Legitimes. (Art. 872)
2. Impossible conditions and those contrary to
law or good customs. (Art. 873)
An absolute condition not to contract a first or
subsequent Marriage. (Art. 874)
However, if the condition not to contract a first
or subsequent marriage has been imposed
on the widow or widower by the deceased
spouse, or by the latter’s ascendants or
descendants, such condition is valid. (Art.
874)
Disposition Captatoria – Any disposition
made upon the condition that the heir shall
make some provision in his WILL in favor of
the testator or of any other person. (Art. 875)
5. LEGITIME
The part of the testator’s property which he cannot
dispose of because the law has reserved it for his
compulsory heirs. (Art. 886)
NOTE: When the disposition is for valuable
consideration, there is no diminution of the estate
by merely a substitution of value, that is the
property sold is replaced by the equivalent
monetary consideration. (Buenaventura v. Court
of Appeals, G.R. No. 126376; Manongsong v.
Estimo, G.R. No. 136773)
Classes of Compulsory Heirs
(a) Primary – Those who have precedence over
and exclude other compulsory heirs
i.
Legitimate or adopted children and/or
descendants
(legitimate),
with
respect to their legitimate parents
and ascendants (Arellano v. Pascual,
G.R. No. 189776 citing Tolentino
1992 ed., p. 252)
(b) Secondary – Those who succeed only in the
absence of the primary heirs
i.
Legitimate parents and ascendants
(legitimate), with respect to their
legitimate children and descendants
ii.
Parents of illegitimate children – only
in default of any kind of descendants
(Arellano v. Pascual, G.R. No.
189776, citing Tolentino 1992 ed., p.
252)
(c) Concurring – Those who succeed together
with the primary or the secondary compulsory
heirs
i.
Widow or widower (legitimate) – the
surviving spouse referred to is the
spouse of the decedent.
ii.
Illegitimate
children
and/
or
descendants (Arellano v. Pascual,
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G.R. No. 189776 citing Tolentino
1992 ed., p. 252)
Compulsory Heirs (Art. 887)
(a) Legitimate or adopted
legitimate descendants.
children
and/or
NOTE: The nearer exclude the more remote.
Hence, children exclude grandchildren,
except when the rule on representation is
proper.
(b) Legitimate parents and/or
parents of illegitimate children.
ascendants,
NOTE: Legitimate parents or ascendants are
excluded only by legitimate children. Parents
of illegitimate children are excluded by both
legitimate and illegitimate children (Art. 903).
The illegitimate ascending line does not go
beyond the parents.
(c) Surviving spouse
NOTE: The marriage between the decedent
and the surviving spouse must either be valid
or voidable. If voidable, there should have
been no final decree of annulment at the time
of the decedent’s death.
Separation de facto is not a ground for the
disqualification of the surviving spouse as
heir.
Effect of decree of legal separation:
a. On the offending spouse – disqualified
from inheriting
b. On the innocent spouse – no effect
c. If after the final decree of separation there
was a reconciliation between the
spouses, the reciprocal right to succeed is
restored.
(b) Legitimate parents or ascendants are
excluded only by legitimate children. (Arts.
896, 899)
(c) Parents of illegitimate children are excluded
by both legitimate and illegitimate children.
(Art. 903)
(d) The illegitimate ascending line does not go
beyond the parents. (Art. 903; Balane, supra,
p.345)
(e) In the direct ascending line, there is the rule of
division by line. The legitime is divided equally
between the paternal and maternal side. After
the portions corresponding to the line has
been assigned, there will be equal
apportionment between or among the
recipients within the line, should there be
more than one. (Art. 890)
(f) There is no right of representation in the direct
ascending line. (Art. 972)
(g) For a surviving spouse to inherit from the
deceased, the marriage between the
decedent and the widow/widower must be
either valid or voidable. (Balane, supra, p.342)
Rules of Surviving Spouse
Compulsory Heir (Art. 900)
as
Sole
General Rule: The surviving spouse gets 1/2 of
the estate
Exception: 1/3 of the estate, if the following
circumstances are present:
1. The marriage was in articulo mortis;
2. The testator died within 3 months from the
time of the marriage;
3. The parties did not cohabit for more than 5
years; and
4. The spouse who died was the party in articulo
mortis at the time of the marriage.
(d) Illegitimate children and/or descendants
NOTE: In all cases of illegitimate children,
their filiation must be duly proved. (Art. 887)
As to illegitimate descendants the rule is also
the nearer exclude the more remote, without
prejudice to representation when proper.
General Rules in Ascertaining Legitimes
(a) Rule of proximity: The nearer exclude the
more remote, except when the rule on
representation is proper. (Art. 962)
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DIFFERENT COMBINATIONS OF Shares of Compulsory Heirs (Art. 888-903)
HEIR
LEGITIME
Legitimate Children & Descendants
FREE
PORTION
1/2
1/2
Legitimate Children – 1/2
Legitimate Children (LC) & Surviving
Spouse
Spouse – Equal to share of 1 LC
One Legitimate Child/Descendant &
Surviving Spouse
Child/Descendant – 1/2
Spouse – 1/4
Whatever
remains
1/4
Legitimate Children -1/2
Legitimate Children (LC) & Illegitimate
Children (ILC)
Illegitimate Children – 1/2 of share of 1 LC as
may be accommodated, otherwise reduce
proportionately
Whatever
remains
LC –1/2
Legitimate
Surviving
Children
Children/Descendants,
Spouse
&
Illegitimate
Spouse – equal to 1 share of 1 LC
ILC – 1/2 of share of 1 LC as may be
accommodated, otherwise reduce
proportionately
Whatever
remains
LC – 1/2
One Legitimate Child, Illegitimate
Children & Surviving Spouse
ILC – 1/2 of share of 1 LC as may be
accommodated, otherwise reduce
proportionately
Whatever
remains
Spouse –1/4 of estate
Parents & Ascendants of Legitimate
Children
Parents/Ascendants
of
Legitimate
Children & Illegitimate Children
Parents/Ascendants
of
Legitimate
Children & Surviving Spouse
Parents/Ascendants
of
Legitimate
Children,
Illegitimate
Children
&
Surviving Spouse
1/2
1/2
Legitimate Parents/Ascendants – 1/2
Illegitimate Children – 1/4
1/4
Legitimate Parents/Ascendant – 1/2
Spouse – 1/4
Parents/Ascendants –1/2
ILC –1/4
Spouse – 1/8
1/4
1/8
General Rule or If in articulo mortis, but
cohabited for more than 5 years – 1/2
1/2
1/3 if in articulo mortis
2/3
Surviving Spouse Only
Surviving
Children
Spouse
&
Illegitimate
ILC – 1/3
1/3
Spouse – 1/3
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Surviving Spouse
Illegitimate Children
&
Parents
Of
Spouse – 1/4
Parents – 1/4
1/2
Illegitimate Children Only
1/2
1/2
Parents Of Illegitimate Children
1/2
1/2
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Reserva Troncal
This is the reservation by virtue of which an
ascendant who inherits from his descendant any
property which the latter may have acquired by
gratuitous title from another ascendant or a
brother or sister, is obliged to reserve the property
for the benefit of relative within the third degree
and who belong from the same line from which the
property came from. (Art. 891)
Three Transmissions Involved in Reserva
Troncal:
1) A first transmission by lucrative title
(inheritance or donation) from an ascendant
or brother or sister to the deceased
descendant; (Mendoza v. Delos Santos, G.R.
No. 176422)
2)
NOTE: It constitutes as an exception to both the
system of legitimes and the order of intestate
succession.
Purpose of Reserva Troncal:
1) To reserve certain properties in favor of
certain persons
2) To prevent persons outside a family from
acquiring, by some chance or accident,
property which otherwise would have
remained with the said family
Requisites of Reserva Troncal (GWOT)
1) The property was acquired by a person
(Prepositus) from an ascendant or from a
brother or sister (Origin) by Gratuitous title;
Acquisition by Gratuitous
Transfer)
a. By donation, or
b. By any kind of succession
Title
A posterior transmission, by operation of law
(intestate succession or legitime) from the
deceased descendant (prepositus) in favor of
another ascendant, the reservista, which two
transmissions precede the reservation;
(Mendoza v. Delos Santos, G.R. No. 176422)
It is this second transfer that creates the
reserva. (Solivio v. Court of Appeals, G.R. No.
83484)
3)
A third transmission of the same property (in
consequence of the reservation) from the
reservistas to the reservatarios or the relatives
within the third degree from the deceased
descendant belonging to the line of the first
ascendant, brother or sister of the deceased
descendant. (Gonzalez v. CFI, G.R. No.
34395)
(First
2) The said descendant died Without legitimate
issue;
NOTE: Only legitimate descendants will
prevent the property from being inherited by the
legitimate ascending line by operation of law.
3) The property is inherited by another
descendant (Reservista) by Operation of law;
Transmission by Operation of Law (Second
Transfer)
a. Compulsory succession, or
b. Intestate succession
4) There are relatives within the Third degree
(Reservatarios) belonging to the line from
which the said property came. (Chua v. Court
of First Instance, G.R. No. L-29901)
NOTE: The provisions of Art. 891 only apply to
legitimate relatives. (Nieva v. Alcala, G.R. No. L13386)
Parties Involved
1. Origin or Mediate Source – The ascendant,
brother, or sister from whom the prepositus
had acquired the property by gratuitous title;
(Balane, supra)
2. Prepositus – The descendant/brother/ sister
who died and from whose death the
reservistas in turn had acquired the property
by operation of law. The so-called “arbiter of
the fate of the reserva troncal.” (Balane, supra)
While the property is owned by the prepositus,
he has all the rights of ownership over it and
may exercise such rights in order to prevent a
reserva from arising. He can terminate the
reserva by
(a) Substituting or alienating or disposing the
property during his lifetime;
(b) Bequeathing or devising it either to the
potential reservista or to other third person
(subject to rights of compulsory heirs to
the legitime); or
(c) Partitioning in such a way as to assign the
property to parties other than the potential
reservista (subject to the constraints of the
legitime).
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3. Reservista – The ascendant of the prepositus
of whatever degree, obliged to reserve the
property; (Balane, supra)
4. Reservatarios – The relatives of the
prepositus within the third degree and who
belong to the line from which the property
came and for whose benefit the reservation is
constituted. (Balane, supra)
NOTE: The reference point from which the
third degree requirement should be reckoned
is the prepositus – the one at the end of the
line from which the property came and upon
whom the property last resolved by descent.
(Mendoza v. Delos Santos, G.R. No. 176422,
2013)
NOTE: As long as the reservatario is alive at
the time of the reservista’s death, he qualifies
as such, even if he was conceived and born
after the prepositus’ death. (Balane, supra)
Two Events to be Considered to Determine the
Right of the Reservatarios over the Reservable
Property
1. Death of Prepositus – All qualified
reservatarios merely have an inchoate right.
The reservistas own the property subject to
the resolutory condition
2. Death of Reservista – surviving reservatarios
acquire a perfect right. (Balane, supra)
Preference Among Reservatarios
Upon the death of the ascendant reservista, the
reservable property should pass, not to all the
reservatarios as a class, but only to those nearest
in degree to the descendant (prepositus),
excluding those reservatarios of more remote
degree. The reserva troncal merely determines
the group of relatives to whom the property should
be returned; but within that group the individual
right to the property should be decided by the
applicable rules of ordinary intestate succession,
since Art. 891 does not specify. (Padura v.
Baldovino, G.R. No. 11960)
Representation Among the Reservatarios
There is a right of representation on the part of
reservatarios who are relatives of the prepositus
within the third degree. These reservatarios have
the right to represent their ascendants. (Florentino
v. Florentino, G.R. No. 14856)
CIVIL LAW (AND PRACTICAL EXERCISES)
and nieces of the prepositus, who have the right to
represent their fathers or mothers who are
brothers and sisters of the prepositus. (Mendoza
v. De los Santos, G.R. No. 176422)
There will only be one instance of representation
among reservatarios, i.e., a case of the prepositus
being survived by brothers/sisters and children of
a predeceased or incapacitated brother/sister.
(Balane, supra)
Juridical Nature of Reserva Troncal
Nature of Reservista’s Right
1) The reservista’s right over the reserved
property is one of ownership;
2) The ownership is subject to a resolutory
condition. (The existence of reservatarios at
the time of the reservista’s death)
3) The right of ownership is alienable, but subject
to the same resolutory condition.
4) The reservista’s right of ownership is
registrable. (Edroso v. Sablan, G.R. No. 6878)
The reservista has no power to appoint, by will,
which reservatarios are to get the reserved
property. (Gonzales v. CFI, G.R. No. L-34395)
Nature of Reservatarios’ Right
1) The reservatarios have a right of expectancy
over the property;
2) The right is subject to a suspensive condition.
(The expectancy ripens into ownership if the
reservatarios survive the reservista).
3) The right is alienable, but subject to the same
suspensive condition.
4) The right is registrable. (Sienes v. Esparcia,
G.R. No. L-12957)
Property Reserved
Any kind of property may be reserved. The very
same property must go through the process of the
three transmissions, in order for the reserva to
arise. (Balane, supra)
Reserva Maxima/Minima Theories: Applies only
if two circumstances concur:
1. Prepositus makes a will instituting the
ascendant-reservista to the whole or a part of
the free portion; (Balane, supra)
2. There is left in the prepositus’ estate, upon his
death, property reservable. (Balane, supra)
Relatives within the 4th and succeeding degrees
cannot be considered reservatarios. They cannot
claim representation of their predecessors since
the right granted in Art. 891 is a personal right. The
only recognized exemption is the case of nephews
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RESERVA MAXIMA
The whole property is
reservable for as long
as it can be
accommodated in the
legitime or intestate
share of the
reservatarios
Maximizes the scope
of reserve
RESERVA MINIMA
Every single property
in the Prepositus’
estate must be
deemed to pass,
partly by will and
partly by operation of
law, so that in
general, only 50% of
the property is
reservable.
Minima finds wider
acceptance in the
Philippines
Rights of the Reservatarios and the
Corresponding Obligations of the Reservista
(Balane, supra) (SIAA)
1. To Inventory reserved properties;
2. To Annotate the reservable character (if
registered immovables) in the Registry of
Property within 90 days from acceptance by
the reservista;
3. To Appraise the movables;
4. To Secure by means of mortgage:
a. The indemnity for any deterioration of or
damage to the property occasioned by
the reservista’s fault or negligence, and
b. The payment of the value of such
reserved movables as may have been
alienated by the reservista onerously and
gratuitously. (Dizon v. Galang, G.R. No.
23144)
Reserva Troncal is Extinguished By
1. The death of the reservista;
2. The death of all the reservatarios;
3. Renunciation by all the reservatarios,
provided that no other reservatario is born
subsequently;
4. Total fortuitous loss of the reserved property;
5. Confusion or merger of rights, as when the
reservatarios acquire the reservista’s right by
contract inter vivos;
6. Prescription or adverse possession. (Balane,
supra)
Principle of Non-Impairment of Legitimes
General Rule: The testator cannot deprive his
compulsory heirs of their legitime. (Art. 904)
Exception: Valid disinheritance
General Rule: The testator cannot impose upon
the same any burden, encumbrance, condition, or
substitution of any kind whatsoever. (Art. 904)
Exceptions:
1. Parent in the interest of his family to keep any
manufacturing, agricultural or industrial
enterprise intact may order the legitime of the
other children be paid in cash. (Art. 1080)
2. Express prohibition of the partition of the
estate for a period not exceeding 20 years.
(Art. 1083)
3. The family home shall continue despite the
death of one or both spouses or of the
unmarried head of the family for a period of
ten years or for as long as there is a minor
beneficiary, and the heirs cannot partition the
same, unless the court finds compelling
reasons therefor. (Family Code, Art. 159)
4. Reserva Troncal (Art. 891)
Renunciation or Compromise of Future
Legitime (Art. 905)
Every renunciation or compromise as regards
future legitime between the person owing it and his
compulsory heir is void, and the latter may claim
the same upon the death of the former; but they
must bring to collation whatever they may have
received by virtue of the renunciation or
compromise.
NOTE: The rights of the heirs are merely inchoate
because it is only perfected upon the testator’s
death. Hence, there is still nothing to renounce.
No contract may be entered into with respect to
future inheritance except in cases expressly
authorized by law. (Art. 1347, par. 2)
Completion of Legitime (actio ad supplendam
legitimam)
Any compulsory heir to whom the testator has left
by any title less than the legitime belonging to him
may demand that the same be fully satisfied. (Art.
906)
General Rule: Anything a compulsory heir
receives by gratuitous title from the predecessor is
considered an advance on the legitime and is
deducted from it. (Art. 909 & Art. 910)
Exceptions:
1. If the predecessor gave the compulsory heir a
donation inter vivos and provided that it was
not to be charged against the legitime. (Art.
1062)
2. Testamentary dispositions made by the
predecessor to the compulsory heir, unless
the testator provides that it should be
considered part of the legitime. (Art. 1063)
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The impaired legitime of a compulsory heir shall
be filled up in the following manner:
(a) It must first be taken from the part of the
estate not disposed of by will.
(b) If it is not sufficient, it must then be taken from
the shares of the testamentary heirs,
legatees, and devisees, proportionally. (Art.
855)
Testamentary dispositions that impair or diminish
the legitime of compulsory heirs shall be reduced
on petition of the same insofar as they may be
inofficious or excessive. (Art. 907)
Article 907 of the Civil Codes states
that "[t]estamentary dispositions that impair or
diminish the legitime of the compulsory heirs shall
be reduced on petition of the same, insofar as they
may be inofficious or excessive." Evidently, if the
testator disposed of his estate in a manner that
impaired or diminished the legitime of compulsory
heirs, the latter may petition to demand that those
dispositions be reduced or abated to the extent
that they may be inofficious or excessive. (Estella
v. Estella, G.R. No. 245469, 09 December 2020)
INCOMPLETE
LEGITIME
Heir not entirely
forgotten
Less than the portion
of the legitime
Remedy is to demand
for completion of
legitime
PRETERITION
Total omission of the
heir
Total deprivation of
legitime
Effect is the total
annulment of the
institution of heirs
Steps in Determining the Legitime of
Compulsory Heirs
1. Determination of the gross value of the estate
at the time of the death of the testator;
2. Determination of all debts and charges which
are chargeable against the estate;
3. Determination of the net value of the estate by
deducting all the debts and charged from the
gross value of the estate;
4. Collation or addition of the value of all
donations inter vivos to the net value of the
estate;
5. Determination of the amount of the legitime
from the total thus found;
6. Imputation of all the value of all donations inter
vivos made to compulsory heirs against their
legitimes and of the value of all donations inter
vivos made to strangers against the
disposable free portion and restoration to the
hereditary estate if the donation is inofficious.
If legitime is impaired, the following reductions
shall be made:
a.
7.
First, reduce pro-rata non-preferred
legacies
and
devises,
and
the
testamentary dispositions.
b. Second, reduce pro rata the preferred
legacies and devises.
c. Third, reduce the donations inter vivos
according to the inverse order of their
dates. (Art. 911)
d. Fourth, reduce the legitimes of the
illegitimate children.
Distribution of the residue of the estate in
accordance with the will of the testator.
Donations inter vivos to Compulsory Heirs
General Rule: Donations inter vivos to a
compulsory heir shall be charged to their legitime
(Art. 909)
Exception: If the predecessor gave the
compulsory heir a donation inter vivos and
provided that it was not to be charged against the
legitime. (Art. 1062)
Donations inter vivos to Strangers
Donations made to strangers shall be charged to
the part of the estate which the testator could have
disposed of by will. (Art. 909)
Stranger – Anyone who does not succeed as a
compulsory heir. (Balane, supra)
Principles on Devises or Legacies of Usufruct
or Life Annuities or Pensions
1. If, upon being capitalized according to
actuarial standards, the value of the grant
exceeds the free portion, it has to be reduced,
because the legitime cannot be impaired. (Art.
911)
2. The testator can impose no usufruct or any
other encumbrance on the part that passes as
legitime. (Art. 911)
3. Subject to the two rules stated above, the
compulsory heirs may elect between ceding to
the devisee/legatee the free portion, or the
proportional part thereof corresponding to the
said legacy/devise, and complying with the
terms of the usufruct or life annuity or pension.
(Art. 911; Balane, p. 435)
When Devise Subject to Reduction Consists of
Indivisible Real Property
IF THE EXTENT OF
REDUCTION IS
LESS THAN ½ OF
THE VALUE OF THE
THING
It shall be given to the
devisee.
IF THE EXTENT OF
REDUCTION IS ½
OR MORE OF THE
THING
It shall be given to the
compulsory heirs.
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In either case, there should be pecuniary
reimbursement to the party who did not get his
physical portion of the thing devised. (Art. 912)
The devisee who is entitled to a legitime may
retain the entire property, provided its value does
not exceed that of the disposable portion and of
the share pertaining to him as legitime. (Art. 912)
If the heirs or devisees do not choose to avail
themselves of the right granted in Art. 912, the
thing devised should be disposed of by:
1. Any other heir or devisee, who elects to do so,
may acquire the thing and pay the parties their
respective shares in money;
2. If no heir or devisee elects to acquire it, it shall
be sold at public auction and the net proceeds
accordingly divided between the parties
concerned. (Art. 913)
6. DISINHERITANCE
Causes of Vacancy in Succession
(a) Disinheritance - The testator creates it
himself (Art. 916)
(b) Repudiation - The heir rejects the inheritance
(Art. 1041)
(c) Incapacity/Predecease
Something
happens to the heir
CIVIL LAW (AND PRACTICAL EXERCISES)
testamentary disposition made in a prior will.
(Balane, supra at p. 437-438)
NOTE: Therefore, the heir loses his legitime.
As to the free portion, it passes through
Substitution, Accretion, and Intestacy.
The children or descendants of the person
disinherited shall take his or her place and
shall preserve the rights of compulsory heirs
with respect to the legitime. (Art. 923)
NOTE: The disinherited heir can be
represented in the legitime and also to any
intestate portion that he or she would have
inherited:
a. Only in the descending line, never in the
ascending
b. In collateral line, only with respect to
nephews and nieces.
The disinherited parents shall not have the
usufruct or administration of the property
which constitutes the legitime. (Art. 923)
Disinheritance
A compulsory heir may, in consequence of
disinheritance, be deprived of his legitime, for
causes expressly stated by law. (Art. 915)
Ineffective Disinheritance
Disinheritance without specification of the cause,
or for a cause the truth of which, if contradicted, is
not proved, or which is not one of those set forth
in this Code, shall annul the institution of heirs
insofar as it may prejudice the person disinherited;
but the devises and legacies and other
testamentary dispositions shall be valid to such
extent as will not impair the legitime. (Art. 918)
Requisites for Valid Disinheritance (WET2LUP)
1) Effected only through a valid Will (Art. 916)
Note: Will containing disinheritance must be
probated.
Disinheritance only occurs in testamentary
succession. Its counterpart in intestate
succession is unworthiness.
2) For a cause Expressly stated in the will (Art.
916, 918)
3) Cause must be certain and True (Art. 918)
4) Total;
5) It must be for a cause expressly stated by Law
(Art. 916, in relation to Art. 919-921)
6) Unconditional;
7) If the truth of the cause is denied, it must be
Proved by the proponent. (Art. 917)
Effects of Ineffective Disinheritance
1. If the testator had made disposition of the
entire estate, the testamentary disposition is
annulled only insofar as they prejudice the
legitime of the person disinherited. It does not
affect the dispositions of the testator with
respect to the free portion
2. If the testator did not dispose of the free
portion, the compulsory heir will be given all
that he is entitled to receive as if the
disinheritance has not been made, without
prejudice to lawful dispositions made by the
testator in favor of others.
3. Devisees, legacies and other testamentary
dispositions shall be valid to such extent as
will not impair the legitime. (Vitug, Civil Law
Volume III, 2006 edition, p. 263)
Effects of Disinheritance
Total exclusion of the compulsory heir from
the inheritance, which includes his legitime,
his share in the intestate portion, and any
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e)
INEFFECTIVE
DISINHERITANCE
Person disinherited
may be any
compulsory heir
Express
Intentional
Partial annulment of
institution of heirs
PRETERITION
The person omitted
must be a compulsory
heir in the direct line
Implied
Either intentional or
unintentional
Effect: Total annulment
of institution of heirs
Preterition is total omission from the inheritance,
without the heir being expressly disinherited. The
implied basis of the rule on preterition is
inadvertent omission by the testator. Thus, if the
testator explicitly disinherits the heir, Article 854 on
preterition will not apply. Should the disinheritance
be ineffective, for absence of one or other of the
requisites for a valid disinheritance, the heir is
simply entitled to demand his rightful share.
(Balane, supra)
GROUNDS FOR DISINHERITANCE
Grounds for Disinheritance of Legitimate or
Illegitimate Children and Descendants (Art.
919)
1) When the child or descendant has been found
guilty of an attempt against the life of the
testator, his or her spouse, descendants, or
ascendant;
a) Final conviction is required.
b) It includes all stages of commission of a
crime.
(Attempted,
frustrated,
or
consummated)
c) This ground also applies to disinheritance
of parents, ascendants, and spouse.
d) Felony must be intentional (not through
negligence)
2) When a child or descendant has accused the
testator of a crime for which the law prescribes
imprisonment for six years or more, if the
accusation has been found groundless;
a) It includes filing of a complaint before the
prosecutor, or presenting incriminating
evidence against the testator, or even
suppressing exculpatory evidence.
b) It may be made by the heir in a
proceeding as a complainant or witness in
a criminal case.
c) The testator must be acquitted.
d) The accusation must be found to be
groundless. The judgment of acquittal
must state either no crime was committed
or that the accused did not commit the
crime. An acquittal on reasonable doubt
will not be a ground of disinheritance.
This ground also applies to disinheritance
of parents, ascendants, and spouse.
3) When a child or descendant has been
convicted of adultery or concubinage with the
spouse of the testator;
a) Final conviction is required.
b) There must be a valid marriage between
the spouse and the testator.
c) This ground also applies to disinheritance
of parents and ascendants. (Balane,
supra)
4) When the child or descendant, by fraud,
violence, intimidation, or undue influence,
causes the testator to make a will or to change
one already made;
5) A refusal without justifiable cause to support
the parent or ascendant who disinherits such
child or descendant;
a) The obligation to support must be proven.
b) There must be a need and demand for
support.
c) The demand must be unjustifiably
refused.
d) This ground also applies to disinheritance
of parents, ascendants, and spouses
NOTE: Refusal may be justified, if the obligor
does not have enough resources for all whom
he is obliged to support. The ascendants are
only third in the hierarchy of preference
among claimants of support. (Family Code,
Art. 200, par. 3)
6)
Maltreatment of the testator by word or deed,
by the child or descendant;
a) The verbal or physical assault must be of
a serious nature.
b) No conviction is required. It is not even
required that a criminal case be filed.
By word – Slander, offensive language,
insult, libel. May be spoken or written.
By deed – No need for violence. It could be
something which caused the testator to be
humiliated.
7)
When a child or descendant leads a
dishonorable or disgraceful life;
a) The conduct must be habitual. (Balane,
supra)
8) Conviction of a crime which carries with it the
penalty of civil interdiction.
a) Final conviction is required.
b) The accessory penalty of civil interdiction
is imposed with the principal penalties of
death, reclusion perpetua, and reclusion
temporal. (Balane, supra)
NOTE: The enumeration is exclusive.
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Grounds for Disinheritance of Legitimate or
Illegitimate Parents or Ascendants (Art. 920)
1) When the parents have abandoned their
children or induced their daughters to live a
corrupt or immoral life, or attempted against
their virtue;
a) Includes all conduct constituting a
repeated or total refusal or failure to care
for a child.
b) This applies when the parents willfully left
the children to fend for themselves.
c) It is not restricted to those instances of
abandonment penalized by law.
d) Inducement- same as deprivation of
parental authority; only applies to female
descendants
e) Attempt on virtue- no conviction is
required
2) When the parent or ascendant has been
convicted of an attempt against the life of the
testator, his or her spouse, descendants, or
ascendants;
3) When the parent or ascendant has accused
the testator of a crime for which the law
prescribes imprisonment for six years or
more, if the accusation has been found to be
false;
4) When the parent or ascendant has been
convicted of adultery or concubinage with the
spouse of the testator;
5) When the parent or ascendant by fraud,
violence, intimidation, or undue influence
causes the testator to make a will or to change
one already made;
6) The loss of parental authority for causes
specified in this Code;
It refers to culpable loss of parental
authority and excludes attainment of age
of majority. (Balane, supra) The causes
for culplable loss of parental authority
include:
a) judicial deprivation of parental
authority on the ground of sexual
abuse;
b) loss of parental authority as a result of
judicial declaration of abandonment of
the child
c) judicial deprivation of parental
authority based on:
i) excessively harsh or cruel
treatment of the child
ii) giving the child corrupting orders,
counsel or example
iii) compelling the child to beg; or
iv) subjecting the child or allowing
him to be subjected to acts of
lasciviousness
CIVIL LAW (AND PRACTICAL EXERCISES)
No conviction is required.
The refusal to support the children or
descendants without justifiable cause;
8) An attempt by one of the parents against the
life of the other, unless there has been a
reconciliation between them.
a) Final conviction is not required.
b) It includes all stages of commission of a
crime.
(Attempted,
frustrated,
or
consummated)
c) Even if parents are not married, it is still a
ground. The parents do not need to be
spouses. However, the testator must be a
common child.
d) Reconciliation between the parents
removes the right of a child or descendant
to disinherit and rescinds a disinheritance
already made.
NOTE: The enumeration is exclusive.
7)
Grounds for Disinheritance of a Spouse (Art.
921)
1) When the spouse has been convicted of an
attempt against the life of the testator, his or
her descendants, or ascendants;
2) When the spouse has accused the testator of
a crime for which the law prescribes
imprisonment of six years or more, and the
accusation has been found to be false;
3) When the spouse by fraud, violence,
intimidation, or undue influence cause the
testator to make a will or to change one
already made;
4) When the spouse has given cause for legal
separation;
a) A decree of legal separation is not
required.
b) The grounds for legal separation need not
be proven, unless contested by the heir.
c) If there is already a decree of legal
separation, the ground is conclusive, but
there is still a need to disinherit by will.
5) When the spouse has given grounds for the
loss of parental authority;
Judicial decree is not required. Giving
grounds therefore is sufficient. (Art. 921)
6) Unjustifiable refusal to support the children or
the other spouse.
NOTE: The enumeration is exclusive.
Revocation of Disinheritance
1. Reconciliation (Art. 922)
2. Subsequent institution of the disinherited heir.
3. Nullity of the will, which contains the
disinheritance.
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Reconciliation
This refers to the resumption of genuine cordial
relationship between the testator and the
disinherited heir, approximating that which
prevailed before the testator learned of the cause
for disinheritance, reciprocally manifested by their
actions subsequent to the act of disinheritance.
(Vitug, supra, p. 264)
Reconciliation may be done by:
1) Concrete and express pardon extended to the
offender, who accepts it.
A general pardon extended by the testator on
his deathbed to all who have offended him will
not suffice.
2) Unequivocal conduct toward the offending
heir, by which the intent to forgive must be
clear.
OCCURRED BEFORE
DISINHERITANCE IS
MADE
Right to disinherit is
extinguished
OCCURRED
AFTER
DISINHERITANCE
IS MADE
Disinheritance is set
aside. (Art. 922)
Effects of Setting Aside the Disinheritance
1) The disinherited heir is restored to his
legitime.
2) If the disinheriting will did not dispose of the
disposable portion, the disinherited heir is
entitled to his proportionate share, if any.
3) If the disinheriting will or any subsequent will
disposed of the disposable portion in favor of
testamentary heirs, legatees or devisees,
such dispositions remain valid.
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CIVIL LAW (AND PRACTICAL EXERCISES)
Summary of Grounds for Disinheritance (Arts. 919, 920 & 921)
GROUND
CHILD/
DESCENDANT
PARENT/
ASCENDANT
SPOUSE
Attempt against the life of the testator,
spouse, ascendant, descendant
Accusation of a crime with penalty of six
years
Adultery and Concubinage with the
spouse of testator
N/A
Induce testator to make/change the will.
Support unjustifiably refused
Unjustifiable refusal to
support the children or
the other spouse
Maltreatment of the testator by word or
deed
N/A
N/A
Leading a dishonorable or disgraceful
life
N/A
N/A
Conviction of a crime which carries with
the penalty of civil interdiction
N/A
N/A
Abandonment of Children, Inducement
to live a corrupt or moral life, or
attempted against their virtue
N/A
N/A
Loss of parental authority
N/A
It is sufficient that the
spouse has given
grounds for loss of
parental authority
Attempt by one Parent against the Life of
N/A
N/A
the Other
Giving Cause for Legal Separation
N/A
N/A
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7. LEGACIES AND DEVISES
Legacy – Testamentary disposition of personal
property by particular title. (Balane, supra)
Devise – Testamentary disposition of real
property by particular title. (Balane, supra)
HEIR
One who succeeds to
the whole or a
fractional part of the
inheritance
(Balane, supra)
LEGATEE / DEVISEE
Those who succeed
to definite, specific,
and individual
properties
Things And Rights Which May Be Bequeathed
of Devised
All things and rights which are within the
commerce of man may be bequeathed or devised.
(Art. 924)
NOTE: It is not required that the thing devised or
bequeathed belong to the testator. Also, it must
not impair the legitimes.
Persons Who May Be Charged With Legacies
And Devises
A testator may charge with legacies and devises
not only his compulsory heirs but also the legatees
and devisees. (Art. 925)
General Rule: Estate is charged with the legacy
or devise.
Exception: Subsidiary legacy or devise
(Paras, Civil Code of the Philippines Annotated,
2016)
Subsidiary legacy or devise – When the testator
imposes the burden on an heir or a legatee or
devisee; the heir, legatee, or devisee charged will
be bound to deliver the legacy or devise to the
person specified. As far as the heir, legatee, or
devisee charged is concerned, it will be a mode.
(Balane, supra)
Where the will is silent as to who shall pay or
deliver the legacy/devise:
1. If there is an administration proceeding, there
is a presumption that such legacy or devise
constitutes a charge against the decedent’s
estate (Paras, supra, 2016)
2. If there are no administration proceedings, it
is a charge upon the heirs, in the same
proportion in which they may inherit. (Art. 926,
par. 2)
CIVIL LAW (AND PRACTICAL EXERCISES)
EXTENT OF LIABILITY
LEGATEE / DEVISEE
HEIR
If charged with a
If charged with a
legacy or devise, he or
legacy or devise, he
she shall be liable only
or she shall not be
for the extent of the
liable beyond the
value of the legacy or
amount of the free
devise received.
portion given to him.
(Arts. 925-926; Tolentino, supra)
NOTE: Since legacies and devises are to be taken
from the disposable free portion of the estate, the
provisions on institution of heirs are generally
applicable to them.
When Two Or More Heirs Take Possession Of
The Estate
If two or more heirs take possession of the estate,
they shall be solidarily liable for the loss or
destruction of a thing devised or bequeathed, even
though only one of them should been negligent.
(Art. 927)
Liability for Eviction
General Rule: The estate is liable for eviction.
Exception: In case of a subsidiary legacy or
devise, the heir, legatee or devise charged shall
be liable in case of eviction, if the thing is
indeterminate and is indicated only by its kind. (Art.
928)
Thing Owned In Part By Testator
General Rule: Conveys only interest or part
owned by testator (Art. 929)
Exception: If testator otherwise provides
1) He may convey more than what he owns and
the estate should try to acquire the part or
interest owned by other parties. If other
parties are unwilling to alienate, the estate
should give the legatee/devise the monetary
equivalent. (by analogy with Art. 931)
2) He may convey less than what he owns. (Art.
794)
Thing Owned by Another (Arts. 930-931)
1) If the testator orders acquisition of the thing –
The order should be complied with. If the
owner is unwilling to part with the thing, the
legatee/devisee should be given the monetary
equivalent. (Art. 931)
2)
If the testator erroneously believed that the
thing belonged to him –The legacy/devise is
void.
Exception: If subsequent to the making of the
disposition, the thing is acquired by the
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testator onerously or gratuitously,
disposition is validated. (Art. 930)
3)
the
If the testator knew that the thing did not
belong to him but did not order its acquisition
– The disposition should be considered valid.
There is an implied order to acquire the
property. (Paras, supra)
Thing Already Owned by the Legatee/Devisee
(Arts. 932-933)
1) If thing already belonged to legatee/devisee at
time of execution of will – The legacy/devise
is void even if legatee/devisee alienates the
property subsequently unless the acquirer is
the testator himself. (Balane, supra citing
Manresa)
2)
If thing was owned by another person at time
of making the will and thereafter it is acquired
by legatee/devisee:
a. If testator erroneously believed that he
owned the thing – The legacy/devise
is void.
b. If testator knew that he did not own the
thing:
i. If thing was acquired onerously
by legatee/devisee – The
legatee/devisee is entitled to
reimbursement.
ii. If thing was acquired gratuitously
by legatee/ devisee – Nothing
more is due.
3) If thing was owned by testator at time will was
made and the legatee/devisee acquired the
thing from the testator —The legacy/devise
should be deemed revoked
Legacy / Devise to Remove an Encumbrance
Over a Thing Belonging to the Testator (Art.
932, par. 2)
If the testator expressly orders that the thing be
freed from such interest or encumbrance, the
legacy or devise shall be valid to that extent.
NOTE: The legacy / devise is valid, if the
encumbrance can be removed for a consideration.
Legacy / Devise of a Thing Pledged or
Mortgaged (Art. 934)
If the testator should bequeath or devise
something pledged or mortgaged to secure a
recoverable debt before the execution of the will,
the estate is obliged to pay the debt, unless the
contrary intention appears.
The same rule applies when the thing is pledged
or mortgaged after the execution of the will. (Art.
934, par. 2)
Any other charge, perpetual or temporary, with
which the thing bequeathed is burdened, passes
with it to the legatee or devisee. (Art. 934, par. 3)
Legacy / Devise Subject to a Usufruct
If the thing bequeathed should be subject to a
usufruct, the legatee or devisee shall respect such
right until it is legally extinguished. (Art. 946)
Legacy of Credit or Remission (Art. 935-937)
1) Applies only to the amount still unpaid at the
time of testator’s death. (Art. 935);
2) Revoked if testator subsequently sues the
debtor for collection. (Art. 936);
3) If generic, applies only to those existing at the
time of the execution of the will, unless
otherwise provided. (Art. 937 and 793)
Legacy / Devise to a Creditor (Art. 938)
A legacy or devise made to a creditor shall not be
applied to his credit, unless the testator so
expressly declares.
If the testator provides that the devise or legacy
will be imputed to the debt, and if the debt exceeds
the legacy or devise, the excess may be
demanded as an obligation of the estate.
Testamentary Instruction to Pay a Debt (Art.
939)
INSTRUCTION
INSTRUCTION TO PAY
TO PAY A NONMORE THAN WHAT IS
EXISTING DEBT
DUE
The disposition
The instruction should be
should be
effective only as to what
considered as not
is due, unless the
written.
contrary intention
appears.
Alternative Legacies or Devises – One which
provides that among several things mentioned,
only one is to be given.
General Rule: The choice is left to the:
1) Direct legacy or devise – Estate, through the
executor or administrator;
2) Subsidiary legacy or devise – Heir, legatee,
devisee charged (Tolentino, supra)
Exception: If the testator provides that the legatee
or devisee himself may choose, or that a third
party may choose. (Art. 942)
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If the person who shall make the choice dies
before the choice is made: (Art. 940, par. 2)
1) If the choice belonged to the executor or
administrator – The right is transmissible to
his successor in office;
2) If the choice belongs to an heir, legatee, or
devisee – The right is transmitted to his own
heirs.
NOTE: The choice is irrevocable. (Art. 940, par. 3)
Generic Legacies or Devises
RULES ON VALIDITY (Art. 941)
GENERIC LEGACY
GENERIC DEVISE
Valid even if no such
Valid only if there
movable exists in the
exists such an
estate upon the
immovable in the
testator’s death. The
estate at the time of
estate will simply have
the testator’s death
to acquire what is
given by legacy.
Right of Choice in Generic Legacies or Devises
(Art. 941-943)
General Rule: The executor or administrator,
acting for the estate.
Exception: When the testator expressly leaves
the right of choice to the heir, or the legatee or
devisee, on whom the obligation to give is
imposed. (Subsidiary legacy or devise).
Limitation on choice
The persons who have the right of choice shall
comply with the legacy by the delivery of a thing
which is neither of inferior nor of superior quality.
(Art. 941)
If the person who shall make the choice cannot do
so:
1) If the choice belonged to the executor or
administrator – The right is transmissible to
his successor in office;
2) If the choice belongs to an heir, legatee, or
devisee – The right is transmitted to his own
heirs.
NOTE: The choice is irrevocable. (Art. 940)
If the person to whom the testator has expressly
given the right to choose does not exercise his
right, it shall be understood that he has renounced
it and the person obliged to pay the legacy or
devise may deliver any of the things designated,
provided it is not of the lowest or of the highest
quality. (Tolentino, supra)
Legacy for Education (Art. 944)
Duration – Age of majority or the completion of a
professional, vocation, or general course
CIVIL LAW (AND PRACTICAL EXERCISES)
whichever comes later. In the latter instance, only
if the legatee pursues his studies diligently.
Amount (Art. 944, par. 3)
1) The amount fixed by the testator; or
2) That which is proper, as determined by:
a) The social standing and circumstances of
the legatee, and
b) The value of the disposable portion of the
estate.
Legacy for Support (Art. 944)
Duration – During the lifetime of the legatee,
unless the testator provided otherwise
Amount (Art. 944, par. 3-4)
1) The amount fixed by the testator; or
2) That which the testator, during his lifetime,
used to give the legatee by way of support,
unless markedly disproportionate to the value
of the disposable portion.
3) That which is reasonable, as determined by:
a) The social standing and circumstances of
the legatee, and
b) The value of the disposable portion of the
estate.
Legacy of a Periodical Pension
If a periodical pension, or a certain annual,
monthly, or weekly amount is bequeathed, the
legatee may petition the court for the first
installment upon the death of the testator, and for
the following ones which shall be due at the
beginning of each period; such payment shall not
be returned, even though the legatee should die
before the expiration of the period which has
commenced. (Art. 945)
DEMANDABILITY, OWNERSHIP, AND
FRUITS
PURE AND
WITH A SUSPENSIVE
DETERMINATE
TERM OR CONDITION
OR GENERIC
Upon the
Upon the arrival of the
testator’s death
term or upon the
happening of the
condition, as the case
may be
(Art. 947; Paras, supra)
When Ownership Vests
1) Pure and determinate property – Upon
testator’s death
2) Pure and generic property –
a) If the property came from the testator’s
estate – Upon testator’s death
b) If the property is acquired from a third
person – Upon acquisition
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3)
4)
Devises or legacies with a suspensive term –
Upon arrival of the term, but the right to it vests
upon the testator’s death
Devises or legacies with a suspensive
condition – Upon the testator’s death, if the
condition is fulfilled. (Art. 948; Paras, supra)
Fruits
1) Pure and determinate property – Upon
testator’s death
2) Pure and generic property – Upon
determination, unless the testator provides
otherwise
3) Devises or legacies with a suspensive term –
Upon arrival of the term
4) Devises or legacies with a suspensive
condition – Upon the happening of the
condition, unless the testator provides
otherwise (Art. 948; Paras, supra)
NOTE: If the legacy or devise is of a specific and
determinate thing pertaining to the testator, the
legatee or devisee do not acquire the income
which was due and unpaid before the testator’s
death. (Art. 948)
From the moment of the testator’s death, the
specific and determinate thing bequeathed shall
be at the risk of the legatee or devisee, who shall
bear its loss or deterioration, and shall be
benefited by its increase or improvement, without
prejudice to the responsibility of the executor or
administrator. (Art. 948)
Obligation to Deliver the Thing Bequeathed
The thing bequeathed shall be delivered with all its
accessories and accessories and in the condition
in which it may be upon the death of the testator.
(Art. 951)
The heir, charged with a legacy or devise, or the
executor or administrator of the estate, must
deliver the very thing bequeathed if he is able to
do so and cannot discharge this obligation by
paying its value. (Art. 952, par. 1)
Possession of the Thing Bequeathed
The legatee or devisee cannot take possession of
the thing bequeathed upon his own authority, but
shall request its delivery and possession of the
heir charged with the legacy or devise, or of the
executor or administrator of the estate should he
be authorized by the court to deliver it. (Art. 953)
Order of Preference in Case Estate is
Insufficient to Cover all Legacies and Devices
(Art. 950)
If the estate should not be sufficient to cover all the
legacies or devises, their payment shall be made
in the following order:
1) Remuneratory legacies or devises;
2) Legacies or devises declared by the testator
to be preferential;
3) Legacies for support;
4) Legacies for education;
5) Legacies or devises of a specific, determinate
thing which forms a part of the estate;
6) All others, pro-rata.
REDUCTION OF
LEGACIES AND
DEVISES
(ART. 911)
Non-preferred
legacies or devises
will be reduced prorata and the preferred
legacies or devises
will be reduced last.
Applies when the
legitimes have been
impaired
ORDER OF
PREFERENCE OF
DEVISES AND
LEGACIES
(ART. 950)
In the order of
preference, the last is
to be reduced first and
the first is to be
reduced last.
Applies when the
reduction is due to
reasons other than
impairment of
legitimes
Legacies of Money Paid in Cash
Legacies of money must be paid in cash, even
though the heir or the estate may not have any.
(Art. 952, par. 2)
Rules on Acceptance and Repudiation of
Devices or Legacies
General Rule: Acceptance may be total or partial.
(Art. 954)
Exception: If the legacy or devise is partly
onerous and partly gratuitous, the recipient cannot
accept the gratuitous part and renounce the
onerous part. Any other combination is permitted.
(Art. 954)
Necessary Expenses for the Delivery of
Thing Bequeathed
The expenses necessary for the delivery of
thing bequeathed shall be for the account of
heir or the estate, but without prejudice to
legitime. (Art. 952 par. 3)
Acceptance or Repudiation by Heirs of
Legatee or Devisee (Art. 954, par. 2)
If the legatee or devisee dies before accepting or
renouncing the devise or legacy, his heirs shall
exercise such right as to their pro-indiviso share,
applying the rules in Article 954.
the
the
the
the
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TWO LEGACIES / DEVISES TO THE SAME
RECIPIENT (ART. 955)
BOTH ARE
ONE IS GRATUITOUS
GRATUITOUS
AND THE OTHER IS
OR ONEROUS
ONEROUS
The recipient may
The recipient cannot
accept or
accept the gratuitous and
renounce either or
renounce the onerous.
both.
Any other combination is
permitted.
Legacy or Devise to a Compulsory Heir
Any compulsory heir who is at the same time a
legatee or devisee may waive the inheritance and
accept the legacy or devise, or renounce the latter
and accept the former, or waive or accept both.
(Art. 955 par. 2)
NOTE: For acceptance and repudiation of devices
or legacies, the testator’s wishes are supreme. All
the rules apply in the absence of stipulation
providing otherwise. (Balane, supra)
Repudiation by or Incapacity of Legatee or
Devisee (Art. 956)
If the legatee or devisee cannot or is unwilling to
accept the legacy or devise, or if the legacy or
devise for any reason should become ineffective,
the following steps apply:
1. Follow substitution, if any.
2. Then accretion,
3. Lastly, intestacy as it shall be merged to the
mass of the estate.
When Legacy/Devise can be Revoked by
Operation of Law
1) Transformation: If the testator transforms the
thing bequeathed or devised in such a manner
that it does not retain its form and
denomination. (Art. 957)
2)
Alienation: If the testator, by any title or for
any cause, alienates the thing bequeathed or
devised or any part thereof. (Art. 957)
NOTE: The alienation revokes the legacy or
devise even if for any reason the thing reverts
to the testator (e.g. nullity of the contract)
(Paras, supra)
Exceptions:
(a) If the reversion is caused by the
annulment of the alienation and the cause
for annulment was vitiation of consent on
the grantor’s part, either by reason of
incapacity or of duress. (Fernandez v.
Dimagiba, G.R. No. L-23638, 1967)
(b) If the reversion is by virtue of redemption
in a sale with pacto de retro.
CIVIL LAW (AND PRACTICAL EXERCISES)
3)
Total Loss: If the thing bequeathed or
devised is totally lost during the lifetime of the
testator, or after his death without the heir’s
fault. (Art. 957)
4)
If the legacy is a credit against a third person
or the remission of a debt, and the testator,
subsequent to the making of the will brings an
action against such debtor for payment. (Art.
936)
Mistake in the Name of the Thing Bequeathed
or Devised
A mistake as to the name of the thing bequeathed
or devised, is of no consequence, if it is possible
to identify the thing which the testator intended to
bequeath or devise. (Art. 958)
C. LEGAL AND INTESTATE SUCCESSION
1. GENERAL PROVISIONS;
RELATIONSHIP AND RIGHT OF
REPRESENTATION
Legal or Intestate Succession – Takes place by
operation of law in the absence of a valid will.
(Paras, supra)
Instances when Legal or Intestate Succession
Operates (Art. 960)
1. If a person dies without a will, or with a void
will, or one which has subsequently lost its
validity;
2. When the will does not institute an heir to, or
dispose of all the property belonging to the
testator. In such case, legal succession shall
take place only with respect to the property of
which the testator has not disposed;
3. If the suspensive condition attached to the
institution of heir does not happen or is not
fulfilled, or if the heir dies before the testator,
or repudiates the inheritance, there being no
substitution, and no right of accretion takes
place;
4. When the heir instituted is incapable of
succeeding, except in cases provided in the
Civil Code.
Other Causes of Intestacy (Tolentino, supra)
1) Happening of a resolutory condition;
2) Expiration of a resolutory term;
3) Preterition (Balane, supra)
NOTE: Intestacy operates on the same principles
as succession to the legitime. They are both
governed by the rules on exclusion and
concurrence.
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Four Basic Rules of Intestacy
1) Rule of Relationship – the heirs must be
related to the decedent.
Four Kinds of Relationships
a) Ascendants and Descendants;
b) Collaterals;
c) Marriage;
d) State of sovereign
2)
Rule of Preference of Lines – the
descending line excludes the ascending and
the collateral, and the ascending excludes the
collateral. (Art. 965)
Three lines of relationship
a) Descending line
b) Ascending line
c) Collateral line
3)
Rule of Proximity of Degree – the nearer
exclude the more remote, without prejudice to
representation. (Art. 962, par. 1)
The rule on proximity is a concept that favors the
relatives nearest in degree to the decedent and
excludes the more distant ones except when and
to the extent that the right of representation can
apply… Respondent, being a relative within the
third civil degree, of the late Augusto H. Piedad
excludes petitioner, a relative of the fifth degree,
from succeeding an intestato to the estate of the
decedent. (Bagunu v. Piedad, G.R. No. 140975,
08 December 2000)
4)
Rule of Equality Among Relatives of the
Same Degree – the nearer exclude the more
remote, those of equal degree should inherit
in equal shares. (Art. 962, par. 2)
Exceptions to the Rule of Equality in the Same
Degree
1) The rule of preference of lines;
Note: The direct line is preferred over the
collateral, even if they are of the same
degree
2) The distinction between legitimate and
illegitimate filiation;
3) The rule of division by line in the ascending
line;
4) The distinction between full-blood and halfblood relationship among brothers and
sisters, as well as nephews and nieces;
5) Representation; and
6) Concurrence of nephews and nieces and
uncles and aunts (Paras, supra)
CIVIL LAW (AND PRACTICAL EXERCISES)
a. Relationship
Proximity of relationship is determined by the
number of generations. (Art. 963)
Degree – One generation
Computation of Degrees
1. Direct line – No legal limit to the number of
degrees for entitlement to intestate
succession.
2. Collateral line – Intestate succession extends
only to the fifth degree of collateral
relationship (Art. 1010)
Line – Series of degrees, which may be direct or
collateral
(a) Direct line – Constituted by the series of
degrees
among
ascendants
and
descendants
i. Descending line – Unites the head of the
family with those who descend from him
ii. Ascending line – Binds a person with
those from whom he descends
In the direct line, ascend to the common
ancestor.
There is no legal limit to the number of
degrees for entitlement to intestate
succession
(b) Collateral line – Constituted by the series of
degrees among persons who are not
ascendants and descendants, but who come
from a common ancestor
In the collateral line, ascend to the common
ancestor and then descend to the person with
whom the computation is to be made.
Intestate succession extends only to the 5th
degree of collateral relationship.
Full Blood Relationship
Full blood relationship is that existing between
persons who have the same father and the same
mother. (Art. 967, par. 1)
Half Blood Relationship
Half-blood relationship is that existing between
persons who have the same father, but not the
same mother, or the same mother, but not the
same father. (Art. 967, par. 2)
Importance of Distinction Between Full Blood
and Half Blood Relationship (Arts. 1006, 1008)
Ratio of 2:1 for full-blood and half-blood
relationship in Articles 1006 and 1008, for brothers
and sisters and nephews and nieces.
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ACCRETION IN INTESTACY
If there are several relatives of the same degree,
and one or some of them are unwilling or
incapacitated to succeed, his portion shall accrue
to the others of the same degree, save the right of
representation when it should take place. (Art.
968)
CIVIL LAW (AND PRACTICAL EXERCISES)
The effect of renunciation by all in the same
degree applies in cases of predecease or
incapacity by all in the same degree, except in
cases where representation is proper.
b. Right of Representation
Accretion applies among heirs of the same
degrees in the following instances: (Arts. 1015,
1016)
1) Predecease;
2) Incapacity;
3) Renunciation
Representation - a right created by fiction of law,
by virtue of which the representative is raised to
the place and the degree of the person
represented, and acquires the rights which the
latter would have if he were living or if he could
have inherited. (Art. 970; Tumbokon v. Legaspi,
G.R. No. 153736)
HOWEVER, in case of predecease or incapacity,
representation, if proper, will prevent accretion
from occurring. (Balane, supra)
In order that representation may take place, it is
necessary that the representative himself be
capable of succeeding the decedent. (Art. 973)
Relatives must be in the same kind of relationship
for accretion to take place. This is because of the
principle of preference of lines in intestate
succession. (Balane, supra)
Representation only applies in compulsory and
intestate succession in the direct descending line
(Art. 972) and in one instance in the collateral line
in the case of nephews and nieces representing
brothers and sisters of the deceased (Art. 975)
RENUNCIATION IN INTESTACY
If the inheritance should be repudiated by the
nearest relative, should there be one only, or by all
the nearest relatives called by law to succeed,
should there be several, those of the following
degree shall inherit in their own right and cannot
represent the person or persons repudiating the
inheritance. (Art. 969)
Effect of Renunciation by All in the Same
Degree
The right of succession should first be passed on
the heirs in succeeding degrees, before the next
line can succeed.
1. The descending line inherits first.
NOTE: If ALL the descendants of a certain
degree renounce, succession passes to the
descendants of the next degree, and so on.
2.
The ascending line inherits next.
NOTE: Should no one be left in the
descending line, the heirs in the ascending
line acquire the right of succession, in order of
degrees of proximity.
3.
The collateral line inherits last.
In the collateral line, the right of representation
extends no further than the nephews and nieces.
Grandnephews and grandnieces are not entitled
to inherit by right of representation in the collateral
line. (In re: Intestate Estates of Delgado & Rustia
v. Heirs of Vda. De Damian, G.R. No. 155733)
NOTE: There is no representation in testamentary
succession and in any type of succession in the
direct ascending line. (Paras, supra)
Instances When Representation
(PID)
1) Predecease;
2) Incapacity or unworthiness;
3) Disinheritance (Paras, supra)
Operates
NOTE: Representation
renunciation. (Art. 977)
apply
does
not
in
Right of Representation of Illegitimate
Children (Art. 902)
The rights of illegitimate children set forth in the
articles on legitimes and intestate succession are
transmitted upon their death to their descendants,
whether legitimate or illegitimate.
NOTE: Only if all the descendants and
ascendants renounce will the collateral
relatives acquire the right to succeed.
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Right of representation
DECEDENT IS A
LEGITIMATE
CHILD
The right of
representation is
given only to
legitimate
descendants.
DECEDENT IS AN
ILLEGITIMATE CHILD
CIVIL LAW (AND PRACTICAL EXERCISES)
by
representation.
(Art. 982)
The right of
representation is
granted to both
legitimate and
illegitimate
descendants.
Representation of and by an Adopted Child
An adopted child can neither represent nor be
represented. (Balane, supra at p. 484)
Nonetheless, an adopted child succeeds to the
property of the adopting parents in the same
manner as a legitimate child. (Art. 979, par. 2)
Representation by a Renouncer
A renouncer cannot be represented; however, he
can represent the person whose inheritance he
has renounced. (Art. 976)
Operation of Representation
Per
stirpes
–
The
representative
or
representatives receive only what the person
represented would have received. If there are
more than one representative in the same degree,
then the portion is divided equally, without
prejudice to the distinction between legitimate and
illegitimate children, when applicable. (Balane,
supra)
Rules to Qualify as a Representative
1) The representative must be qualified to
succeed the decedent. (Art. 973)
2) The representative need not be qualified to
succeed the person represented. (Art. 971)
3) The person represented need not be qualified
to succeed the decedent.
NOTE: The representative does not succeed the
person represented but the one whom the person
represented would have succeeded. (Art. 971)
Representation
BY
GRANDCHILDREN
If all children are
disqualified,
the
grandchildren inherit
BY NEPHEWS AND
NIECES
If they survive with
their
uncles
and
aunts, they shall
the
by
If all their uncles and
aunts are disqualified
from
inheriting
(predeceased,
incapacitated
or
unworthy,
disinherited),
they
inherit
in
equal
portions. (Art. 975)
(Art. 992)
An adopted child cannot represent his/her adopter
in the estate of his/her adopter’s grandparents
because the relationship between the adopter and
the adopted does not go beyond their relatives of
either party. (Teotico v. Del Val, G.R. No. L-18753)
inherit
from
deceased
representation.
2. ORDER OF INTESTATE
SUCCESSION
Intestate Heirs (Paras, supra)
1) Legitimate Children or Descendants (Art. 979)
2) Illegitimate Children or Descendants (Art. 988,
990, 992)
3) Legitimate Parents or Ascendants (Art. 986)
4) Parents of Illegitimate Children (Art. 993)
5) Surviving Spouse (Art. 994)
6) Brothers, Sisters, Nephews, Nieces (Arts.
1004-1008)
7) Other Collateral up to the fifth degree (Art.
1009)
8) State (Art. 1011)
Rules of Exclusion and Concurrence
1) Legitimate Children or Descendants (Arts.
978-982)
a) Exclude parents, collaterals, and the
State
b) Concur with surviving spouse, and
illegitimate children or descendants
c) Excluded by no one
2)
Illegitimate Children or Descendants (Arts.
983, 988-994)
a) Exclude parents of illegitimate children,
collaterals, and the State;
b) Concur with surviving spouse, legitimate
children, and legitimate parents;
c) Excluded by no one
3)
Legitimate parents (Arts. 985-986)
a) Exclude collaterals and the State;
b) Concur with illegitimate children and the
surviving spouse;
c) Are excluded by legitimate children
4)
Parents of illegitimate children (Arts. 993994)
a) Exclude collaterals and the State;
b) Concur with the surviving spouse;
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c)
5)
6)
Excluded by legitimate children and
illegitimate children
Surviving spouse (Arts. 995-1002)
a) Excludes collaterals other than brothers,
sisters, nephews, nieces, and the State;
b) Concur with legitimate children,
illegitimate children, legitimate parents,
parents of illegitimate children, brothers,
sister, nephews and nieces;
c) Excluded by no one
Brothers and sisters, nephews and nieces
(Arts. 1003-1008)
a) Exclude all other collaterals and the
State;
b) Concur with the surviving spouse;
c) Excluded by legitimate children,
illegitimate children, legitimate parents,
and parents of illegitimate children
7)
Other collaterals up to the fifth degree
(Arts. 1009-1010)
a) Exclude collaterals in more remote
degree and the State;
b) Concur with collaterals in the same
degree;
c) Excluded by legitimate children,
illegitimate children, legitimate parents,
parents of illegitimate children, surviving
spouse, brothers and sisters, nephews
and nieces;
8)
State (Arts. 1011-1014)
a) Excludes no one;
b) Concurs with no one;
c) Excluded by everyone
CIVIL LAW (AND PRACTICAL EXERCISES)
and 209018, Dec. 7, 2021), where the court ruled
that grandparents and direct ascendants fall
outside the scope of “relatives” under Art. 992. 1
Person to be Represented
ILLEGITIMATE
LEGITIMATE CHILD
CHILD
His or her
Only his or her
descendant whether
legitimate
legitimate or
descendants can
illegitimate, may
represent him, his or
represent him.
her illegitimate
descendants cannot
represent him. (Vda.
De Crisologo v. Cam
G.R. No. L-44051,
1985)
Partial Intestacy (Balane, supra)
Where a decedent left a will disposing of a part,
but not all, of the disposable portion, the following
steps may solve the problem:
1. Trace where the free portion went in total
intestacy.
2. The testamentary provision should be carried
out first, then what is left of the free portion
should then be given to the intended
beneficiary in intestacy. (Balane, supra)
Iron Curtain Rule / Barrier Principle /
Principle of Absolute Separation
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. (Art. 992)
The right of representation is not available to
illegitimate descendants of legitimate children in
the inheritance of a legitimate grandparent. (Diaz
v. Intermediate Appellate Court, G.R. No. L66574, Feb. 21, 1990)
NOTE: The above ruling in Diaz no longer applies
considering Aquino v. Aquino, (G.R. Nos. 208912
1
Note that this December 7, 2021 decision was released
beyond the cut-off date of June 30, 2021, for Bar
coverage.
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CIVIL LAW (AND PRACTICAL EXERCISES)
BAR OPERATIONS 2022
COMBINATIONS OF LEGITIMES AND INTESTATE SUCCESSION
(Arts. 888-889, 892-901, 903, 983, 986-987, 991, 993-1001, 1004-1008, 1011)
HEIRS
Legitimate
Alone
Children
Legitimate Children and
Illegitimate Children
LEGITIME
INTESTACY
TOTAL
1/2 divided equally
1/2 divided equally
Whole estate divided equally
LC – 1/2 divided equally
Residue left shall
be divided among
them, observing
the 2:1 ratio
Whole estate divided among
them, observing the 2:1 ratio
Residue left shall
be divided among
them equally
Whole estate divided equally
1/4 goes to the
spouse
LC – 1/2
ILC – 1/2 of share of 1 LC
Legitimate Children and
Surviving Spouse
LC – 1/2 divided equally
One Legitimate Child
and Surviving Spouse
LC – 1/2
Legitimate
Children,
Surviving
Spouse,
Illegitimate Children
Spouse – Share of 1 LC
Spouse – 1/4
Residue left shall
be divided among
them, observing
the 2:1 ratio
Whole estate divided among
them, observing the 2:1 ratio
LP – 1/2
1/2 goes to the
parents
Whole estate divided equally
Legitimate Ascendants
Other than Parents
1/2
1/2
Whole estate divided among
them, observe rules in
proximity in degree, and
division by line
Legitimate Parents and
Illegitimate Children
LP – 1/2
1/4 goes to the
illegitimate children
LP – 1/2
Legitimate
Alone
Parents
Legitimate Parents and
Surviving Spouse
Legitimate
Parents,
Surviving Spouse, and
Illegitimate Children
Illegitimate
Alone
LC – 1/2
Spouse – 1/2
Spouse – share of 1 LC
ILC – 1/2 of share of 1 LC
ILC – 1/4
LP – 1/2
Spouse – 1/4
LP – 1/2
ILC – 1/4
1/4 goes to the
spouse
1/8 goes to the
spouse
Spouse – 1/8
ILC – 1/4
LP – 1/2
Spouse – 1/2
LP – 1/2
ILC – 1/4
Spouse – 1/4
Children
ILC – 1/2
1/2 goes to
illegitimate children
Whole estate divided equally
Illegitimate
Children
and Surviving Spouse
ILC – 1/3
1/6 goes to
illegitimate children
ILC – 1/2
Spouse – 1/3
1/6 goes to spouse
Spouse – 1/2
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CIVIL LAW (AND PRACTICAL EXERCISES)
BAR OPERATIONS 2022
HEIRS
LEGITIME
Surviving Spouse
Alone
1/2
(continuation)
INTESTACY
TOTAL
Residue goes to the
spouse
Whole estate goes to the spouse
Spouse – 1/4
1/ 4 goes to the
spouse
Spouse 1/2
Parents of
Illegitimate
Children – 1/4
1/4 goes to the
parents of illegitimate
children
Parents of Illegitimate Children – ¼
Surviving Spouse
and
Legitimate
Brothers
and
Sisters, Nephews
and Nieces
Spouse – 1/2
1/2 goes to the
legitimate brothers
and sisters, nephews
and nieces
Spouse – 1/2
Surviving Spouse
and
Illegitimate
Brothers
and
Sisters, Nephews
and Nieces
Spouse – 1/2
Surviving Spouse
and Parents of
Illegitimate
Children
1/3 if marriage is
in articulo mortis
1/2 goes to the
illegitimate brothers
and sisters, nephews
and nieces
Legitimate brothers and sisters,
nephews and nieces – 1/2
Spouse – 1/2
Legitimate brothers and sisters,
nephews and nieces – 1/2
Parents
Illegitimate
Children Alone
of
1/2
1/2 goes to the
parents of illegitimate
children
Whole estate divided equally
Parents
Illegitimate
Children
Children of
Kind
of
Any kind of
children – 1/2,
observe 2:1 ratio
1/2 goes to the any
kind of children,
observe 2:1 ratio
Whole estate goes to the children,
observing 2:1 ratio, if applicable
and
Any
Parents of illegitimate children are
excluded by all kinds of children
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CIVIL LAW (AND PRACTICAL EXERCISES)
BAR OPERATIONS 2022
(continuation)
INTESTACY
HEIRS
LEGITIME
TOTAL
Legitimate Brothers and
Sisters Alone
N/A
Whole estate divided among them, observing the 2:1 ratio for
full-blood and half-blood siblings
Legitimate Brothers and
Sisters, Nephews and
Nieces
N/A
Whole estate divided among them, observing the 2:1 ratio for
full-blood and half-blood siblings
Nephews and Nieces
with Uncles and Aunts
N/A
Apply rules on representation when proper
Whole estate divided among nephews and nieces, observing the
2:1 ratio for full-blood and half-blood siblings
Uncles and aunts of the decedent are excluded. (Bacayo v.
Borromeo)
Illegitimate
Brothers
and Sisters Alone
N/A
Whole estate divided among them, observing the 2:1 ratio for
full-blood and half-blood siblings
Illegitimate
Brothers
and Sisters, Nephews
and Nieces
N/A
Whole estate divided among them, observing the 2:1 ratio for
full-blood and half-blood siblings
Nephews and Nieces
Alone
N/A
Whole estate divided among them, observing the 2:1 ratio for
full-blood and half-blood siblings
Other Collaterals up to
the Fifth Degree
N/A
Whole estate divided equally, observe rules in proximity in
degree
State
N/A
(Resident Decedent)
(Non-Resident Decedent)
Personal property – Municipality
of the last residence
Personal property and real
property –Municipality
where it is situated
Real property – Municipality
where it is situated
Property is to be used for the benefit of public education and
charitable institutions in the respective municipalities or cities, or
alternatively, at the instance of an interested party, or motu
proprio, court may order creation of a permanent trust for the
benefit of the institutions concerned.
————- end of topic ————-
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CIVIL LAW (AND PRACTICAL EXERCISES)
BAR OPERATIONS 2022
D. PROVISIONS COMMON TO TESTATE
AND INTESTATE SUCCESSION
1. RIGHT OF ACCRETION
Accretion – A right by virtue of which, when two
or more persons are called to the same
inheritance, devise or legacy, the part assigned to
the one who renounces or cannot receive his
share, or who died before the testator, is added or
incorporated to that of his co-heirs, co-devisees, or
co-legatees. (Art. 1015)
Elements of Accretion in Testamentary
Succession (Art. 1016)
1) That two or more persons be called to the
same inheritance, or to the same portion, pro
indiviso; and
2) That one of the persons thus called die before
the testator, or renounce the inheritance, or be
incapacitated to receive it.
Meaning of Pro Indiviso (Balane, supra)
Undivided or in common
Either the co-heirs are instituted without
individual designation of shares; or
The co-heirs are instituted with the
specification that they share equally.
The co-heirs are instituted with unequal
fractional shares.
Instances when Accretion operates
Testamentary Succession (Balane, supra)
1) Renunciation;
2) Predecease;
3) Incapacity
in
NOTE: Provided, only some, not all of the
instituted heirs renounce, predecease, or are
incapacitated to succeed. (Balane, supra)
Accretion in Intestacy
In legal succession the share of the person who
repudiates the inheritance shall always accrue to
his co-heirs. (Art. 1018)
Occasions for the Operation of Accretion in
Intestacy (Balane, supra)
1) Repudiation or renunciation; (Art. 1018)
2) Predecease, only if representation does not
take place;
3) Incapacity
or
unworthiness,
only
if
representation does not take place
NOTE: In intestacy, accretion is subordinate to
representation. (Balane, supra)
Co-heirs in the Same Category
The co-heirs in whose favor accretion occurs must
be co-heirs in the same category as the excluded
heir. (Balane, supra)
Accretion Must be Proportional
The heirs to whom the portion goes by the right of
accretion take it in the same proportion that they
inherit. (Art. 1019)
General Rule: The heirs to whom the inheritance
accrues shall succeed to all the rights and
obligations which the heir who renounced or could
not receive it would have had. (Art. 1020)
Exceptions: (Balane, supra)
1. In testamentary succession, if the testator
provides otherwise;
2. If the obligation is purely personal, and hence,
intransmissible
Accretion among Compulsory Heirs
Among the compulsory heirs the right of accretion
shall take place only when the free portion is left to
two or more of them, or to any one of them and to
a stranger. (Art. 1021)
No Accretion in the Legitime
If the part repudiated be the legitime, the other coheirs shall succeed to it in their own right, and not
by the right of accretion. (Art. 1021)
Accretion Subordinate to Substitution in
Testamentary Succession
In testamentary succession, when the right of
accretion does not take place, the vacant portion
of the instituted heirs, if no substitute has been
designated, shall pass to the legal heirs of the
testator, who shall receive it with the same
charges and obligations (Art. 1022)
Accretion Among Devisees, Legatees and
Usufructuaries
Accretion shall also take place among devisees,
legatees and usufructuaries under the same
conditions established for heirs. (Art. 1023)
2. CAPACITY TO SUCCEED BY WILL
OR INTESTACY
Persons not incapacitated by law may succeed by
will or ab intestato.
The provisions relating to incapacity by will are
equally applicable to intestate succession. (Art.
1024)
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NOTE: Both a natural person and a juridical
person may inherit. (Art. 1026)
Requisites for Natural Persons
In order to be capacitated to inherit, the heir,
devisee or legatee must be living at the moment
the succession opens, except in case of
representation, when it is proper. (Art. 1025, par 1)
A child already conceived at the time of the death
of the decedent is capable of succeeding provided
it be born later under the conditions prescribed in
Article 41 of the Civil Code. (Art. 1025, par 2)
Requisites for Juridical Persons
A testamentary disposition may be made to the
State, provinces, municipal corporations, private
corporations, organizations, or associations for
religious, scientific, cultural, educational, or
charitable purposes.
All other corporations or entities may succeed
under a will, unless there is a provision to the
contrary in their charter or the laws of their
creation, and always subject to the same. (Art.
1026)
Time to Determine Capacity to Succeed
General Rule: In order to judge the capacity of the
heir, legatee, or devisee, his qualification at the
time of the death of the decedent shall be the
criterion. (Art. 1034)
Exceptions:
1) Those disqualified under Article 1032
(Unworthiness, pars. 2,3,5) wherein it is
necessary to wait until final judgment is
rendered;
2) Those disqualified under Article 1032
(Unworthiness, par. 4) wherein it is necessary
to wait for the expiration for the month allowed
for report;
3) If the institution of the heirs, legacy or devise
is conditional, the time of compliance with the
condition shall be considered. (Art. 1034)
NOTE:
The capacity to succeed is governed by the
law of the nation of the decedent. (Art. 1039)
Persons not incapacitated by law may
succeed by will or ab intestato. (Art. 1024)
A testamentary provision in favor of a
disqualified person, even though made under
the guise of an onerous contract, or made
through an intermediary, shall be void. (Art.
755)
CIVIL LAW (AND PRACTICAL EXERCISES)
IF INSTITUTION IS
SUBJECT TO A
SUSPENSIVE
CONDITION
The successor must
be living or legally
existing both when
the decedent dies and
when the condition
happens. (Balane,
supra)
IF INSTITUTION IS
SUBJECT TO A
SUSPENSIVE TERM
The requirement of
being alive or legal
existence applies only
at the moment of the
decedent’s death.
(Balane, supra)
Incapacity to Succeed in Testamentary
Succession (Art. 1027)
The following are incapable of succeeding:
1) The priest who heard the confession of the
testator during his last illness, or the minister
of the gospel who extended spiritual aid to him
during the same period;
Requisites:
a) The will must have been executed during
the testator’s last illness;
b) The spiritual ministration must have been
extended during the last illness;
c) The will must have been executed during
or after the spiritual ministration.
Applies to all religions
2)
The relatives of such priest or minister of the
gospel within the fourth degree, the church,
order, chapter, community, organization, or
institution to which such priest or minister may
belong;
3)
A guardian with respect to testamentary
dispositions given by a ward in his favor
before the final accounts of the guardianship
have been approved, even if the testator
should die after the approval thereof;
nevertheless, any provision made by the ward
in favor of the guardian when the latter is his
ascendant, descendant, brother, sister, or
spouse, shall be valid;
a) The will must have been executed by the
ward during the effectivity of the
guardianship
b) The terms of this provision seem to be
limited to guardians over the property.
c) A guardian who happens to be an
ascendant, descendant, brother, sister, or
spouse of the ward-testator is excluded
from the prohibition
4)
Any attesting witness to the execution of a will,
the spouse, parents, or children, or any one
claiming under such witness, spouse, parents,
or children;
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CIVIL LAW (AND PRACTICAL EXERCISES)
Reiteration of Art. 823 but in more general
terms as it annuls all testamentary
disposition not only legacies and devises.
The rule that if there are three other
competent witnesses as an exception
should be read into this.
Apportionment of the disposition or its
proceeds: (Balane, supra)
1) 1/2 to the church or denomination to which the
testator belonged
2) 1/2 to the State, to be applied as provided in
Article 1013.
5)
Any physician, surgeon, nurse, health officer
or druggist who took care of the testator during
his last illness;
The physician must have taken care of
the testator during his/her final illness.
“Taking care” means medical attendance
with some regularity or continuity.
Dispositions in Favor of the Poor in General
(Art. 1030)
Testamentary provisions in favor of the poor in
general, without designation of particular persons
or of any community, shall be deemed limited to
the poor living in the domicile of the testator at the
time of his death, unless it should clearly appear
that his intention was otherwise.
6)
Individuals, associations and corporations not
permitted by law to inherit under any kind of
succession. (Art. 1027)
Prohibitions
in
donations
applies
to
testamentary succession (Art. 1028 in relation to
Art. 739)
Those who are disqualified from receiving
donations under Article 739.
Under Article 739, the following are disqualified
from receiving testamentary dispositions from the
parties specified:
1) Those made between persons who are guilty
of adultery, or concubinage at the time of the
donation;
2) Those made between persons found guilty of
the same criminal offense, in consideration
thereof;
3) Those made to a public officer or his wife,
descendants and ascendants, by reason of
his office;
Disposition For Prayers and Pious Works for
the Benefit of His Soul
Should the testator dispose of the whole or part of
his property for prayers and pious works for the
benefit of his soul, in general terms and without
specifying its application, the executor, with the
court's approval, shall deliver one-half thereof or
its proceeds to the church or denomination to
which the testator may belong, to be used for such
prayers and pious works, and the other half to the
State, for the purposes mentioned in Article 1013.
(Art. 1029)
Requisites: (Balane, supra)
1) Disposition for prayers and pious works for the
benefit of the testator’s soul;
2) No specification of the application of the
disposition.
The designation of the persons who are to be
considered as poor and the distribution of the
property shall be made by the person appointed
by the testator for the purpose; in default of such
person, by the executor, and should there be no
executor, by the justice of the peace, the mayor,
and the municipal treasurer, who shall decide by a
majority of votes all questions that may arise. In all
these cases, the approval of the Court of First
Instance shall be necessary.
The preceding paragraph shall apply when the
testator has disposed of his property in favor of the
poor of a definite locality.
Disqualification of a Witness to Succeed to a
Legacy or Devise (Art. 823)
If a person attests to the execution of a will, to
whom or to whose spouse, or parent, or child, a
devise or legacy is given by such will, such devise
or legacy shall, so far only as concerns such
person, or spouse, or parent, or child of such
person, or any one claiming under such person or
spouse, or parent, or child, be void, unless there
are three other competent witnesses to such will.
However, the person attesting shall be admitted as
a witness if such devise or legacy had not been
made or given.
Testamentary Provision in Favor of a
Disqualified Person is Void (Art. 1031)
A testamentary provision in favor of a disqualified
person, even though made under the guise of an
onerous contract, or made through an
intermediary, shall be void.
Unworthiness (Art. 1032)
The following are incapable of succeeding under
all kinds of succession by reason of unworthiness:
1. Parents who have abandoned their children or
induced their daughters to lead a corrupt or
immoral life, or attempted against their virtue;
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Three grounds are provided:
(a) abandonment;
(b) inducement of a daughter to lead a
corrupt or immoral life; and
(c) attempt against a daughter’s virtue
Abandonment - includes all conduct
constituting a repeated or total refusal or
failure to care for the child.
Inducement - same as deprivation of
parental authority; only applies to female
descendants
Attempt on virtue - no conviction is
required
5.
Any person convicted of adultery or
concubinage with the spouse of the testator;
o Final conviction required
6.
Any person who by fraud, violence,
intimidation, or undue influence should cause
the testator to make a will or to change one
already made;
7.
Any person who by the same means prevents
another from making a will, or from revoking
one already made, or who supplants,
conceals, or alters the latter's will;
Any person who has been convicted of an
attempt against the life of the testator, his or
her spouse, descendants, or ascendants;
o Covers all stages in the commission of the
crime
o Felony must be intentional (so not through
negligence)
o Final conviction required
8.
Any person who falsifies or forges a supposed
will of the decedent.
o
o
o
o
2.
3.
4.
CIVIL LAW (AND PRACTICAL EXERCISES)
Any person who has accused the testator of a
crime for which the law prescribes
imprisonment for six years or more, if the
accusation has been found groundless;
o Covers filing of the complaint before the
prosecutor,
presenting
incriminating
evidence,
suppressing
exculpatory
evidence
o The testator must be acquitted
o The accusation must be found to be
groundless—must state that no crime was
committed or that accused did not commit
the crime.
Any heir of full age who, having knowledge of
the violent death of the testator, should fail to
report it to an officer of the law within a month,
unless the authorities have already taken
action; this prohibition shall not apply to cases
wherein, according to law, there is no
obligation to make an accusation;
o There is no such obligation existing under
our present law
o Requisites:
a. the heir has knowledge of violent
death of the decedent;
b. the heir is of legal age
c. the heir fails to report it to an office of
the law within a month (after learning
of it)
d. there is a legal obligation for the heir
to make an accusation
Revocation of Unworthiness
The cause of unworthiness shall be without effect
if the testator had knowledge thereof at the time he
made the will, or if, having known of them
subsequently, he should condone them in writing.
(Art. 1033)
The unworthiness is set aside in the following
ways: (Balane, supra)
1. A written condonation, or
2. The execution by the offended party of a will
with knowledge of the cause of unworthiness.
By Operation of Law – In order to restore the
disinherited heir to capacity, subsequent
reconciliation is enough under the rules of
disinheritance while under those on unworthiness;
either a written pardon or a subsequent will is
required. These rules on disinheritance and
unworthiness would overlap the moment the
testator uses one of the acts of unworthiness as a
cause to disinherit an heir. Such act submits the
situation to the rules on disinheritance; thus,
reconciliation
renders
the
disinheritance
ineffective. (Balane, supra)
Pardon of Acts of Unworthiness (Art. 1033)
EXPRESS
IMPLIED
Made
by
the Effected when testator
execution
of
a makes a will instituting
document or any the unworthy heir with
writing in which the knowledge of the
descendent condones cause of incapacity
the
cause
of
incapacity
Cannot be revoked
Revoked when the
testator revokes the
will or the institution
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Representation in Unworthiness (Balane,
supra)
If the person excluded from the inheritance by
reason of the incapacity should be the child or
descendant of the decedent, and should have
children or descendants, the latter shall acquire
his right to the legitime.
The person excluded shall not enjoy the usufruct
and the administration of the property thus
inherited by his children. (Art. 1035)
NOTE: The extent of representation may be as to
the legitime and as to the share of the unworthy
heir in the intestate portion. (Balane, supra)
If the unworthy heir is a brother or sister, his
children (nephews and nieces of the decedent) will
represent. (Balane, supra)
Alienations Made by an Excluded Heir
Alienations of hereditary property, and acts of
administration performed by the excluded heir,
before the judicial order of exclusion, are valid as
to third persons who acted in good faith. (Art.
1036)
NOTE: The validity of the alienation is determined
by the good faith or bad faith of the transferee, not
of the transferor. (Balane, supra)
The co-heirs of the excluded heir have the right to
recover damages from the disqualified heir. (Art.
1036)
Right of an Excluded Heir for Indemnity for
Expenses
The unworthy heir who is excluded from the
succession has the right to demand indemnity for
any expenses incurred in the preservation of the
hereditary property, and to enforce such credits as
he may have against the estate. (Art. 1037)
Obligations of the Disqualified Heir in
Possession of the Hereditary Property
Any person incapable of succession, who,
disregarding the prohibition stated in the
preceding articles, entered into the possession of
the hereditary property, shall be obliged to return
it together with its accessions. (Art. 1038)
Prescriptive Period
The action for a declaration of incapacity and
recovery of the inheritance, devise or legacy shall
be 5 years from the time the disqualified person
took possession thereof. (Art. 1040)
CIVIL LAW (AND PRACTICAL EXERCISES)
NOTE: It may be brought by any one who may
have an interest in the succession. (Art. 1040)
3. ACCEPTANCE AND
REPUDIATION OF INHERITANCE
Characteristics
of
Acceptance
and
Repudiation
1) Free and Voluntary (Art. 1041)
2) Irrevocable once made and cannot be
impugned, except in cases vitiating consent or
when an unknown will appear; (Art. 1056)
3) Retroactive (Art. 777)
Requirements to Accept or Repudiate and
Inheritance
A person may only accept or repudiate an
inheritance once he or she is certain of:
1) The death of the person from whom he is to
inherit; and
2) His right to the inheritance. (Art. 1043)
Time for Acceptance or Repudiation
Within 30 days after the court has issued an order
for the distribution of the estate the heir, devisee,
or legatee shall signify to the court having
jurisdiction whether they accept or repudiate the
inheritance. If they do not do so within that time,
they are deemed to have accepted the
inheritance. (Art. 1057)
Who May Accept or Repudiate
General Rule: Any person having the free
disposal of his property may accept or repudiate
an inheritance. (Art. 1044)
Exceptions:
1) Minors or incapacitated persons
Acceptance – By their parents or guardians.
Repudiation – By their parents or guardians
with judicial authorization (Art. 1044)
2) Inheritance left to the poor – The right to
accept the inheritance shall belong to the
persons designated by the testator to
determine the beneficiaries and distribute the
property, or in their default, to those
mentioned in Article 1030. (Art. 1044)
3) Corporation, association, institution, or
entity as beneficiary (Art. 1045)
Acceptance – May be made by the lawful
representatives
Repudiation – May be made by the lawful
representatives with judicial authority
4) Literate Deaf-Mutes
Acceptance and Repudiation –Personally or
through an agent (Art. 1048)
5) Illiterate Deaf-Mutes (Balane, supra)
Acceptance – Guardians
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Repudiation
approval
–
Guardians
with
judicial
If the Beneficiary is a Married Woman (Art 1047)
She may either accept or repudiate the inheritance
without her husband’s consent.
Manner of Acceptance of Inheritance (Art.
1049)
1) Express Acceptance
a. Public Document
b. Private Writing
2)
Tacit Acceptance – one resulting from acts by
which the intention to accept is necessarily
implied or which one would have no right to do
except in the capacity of an heir. It can be
presumed from certain acts of the heir such
as:
a. If the heir sells, donates, or assigns his
right to a stranger, or to his co-heirs, or to
any of them
b. If the heir renounces the same, even
though gratuitously, for the benefit of one
or more of his co-heirs
c. If he renounces it for a price in favor of all
his co-heirs indiscriminately; but if this
renunciation should be gratuitous, and
the co-heirs in whose favor it is made are
those upon whom the portion renounced
should devolve by virtue of accretion, the
inheritance shall not be deemed as
accepted
3)
Implied Acceptance - This is acceptance by
inaction. Under Art 1057, to signify
acceptance or repudiation within 30 days after
an order of distribution by the probate court.
Manner of Repudiation (Art. 1051)
The repudiation of the inheritance shall be made
in:
1) A public document signed before a notary
public, or
2) Authentic instrument – equivalent to an
indubitable writing or a writing whose
authenticity is admitted or proved, or
3) By a petition presented to the court having
jurisdiction over the testamentary or intestate
proceedings.
The law considers that the act of repudiation
is more solemn that the act of acceptance and
that repudiation produces more violent and
disturbing consequences.
If the heir repudiates the inheritance to the
prejudice of his own creditors, the latter may
petition the court to authorize them to accept
it in the name of the heir.
If an heir is both a testate and legal heir,
repudiation of the inheritance as a testate heir,
he is understood to have repudiated in both
capacities. However, should he repudiate as
a legal heir, without knowledge of being a
testate heir, he may still accept the inheritance
as a legal heir.
If renounced in favor of other heirs, does it
mean acceptance? (Balane, supra)
It depends:
1) If specific heir – whether or not renouncing
heir receives anything, considered as
acceptance on the part of the heir. There are
two transfers.
2) If gratuitous –
a. In favor of all his co heirs indiscriminately
- there is repudiation because the heir
deemed to have not accepted. Hence,
accretion takes place.
b. In favor of all co-heirs but in proportion
different from those they would receive by
accretion:
considered
as
tacit
acceptance.
c. If gratuitous in favor of one or some of his
co-heirs – deemed conveyance in favor of
the co-heirs specified, hence there is
acceptance.
3) If onerously:
a. There is no repudiation
b. Transfer considered to be with
consideration
There are also tax implications because there are
two transfers.
COLLATION
The act by virtue of which, the persons who concur
in the inheritance bring back to the common
hereditary mass the property, which they have
received from him, so that a division may be
effected according to law and the will of the
testator. (Mison, Wills and Succession Better
Explained, 2011)
To collate is to bring back or to return to the
hereditary mass, in fact or by fiction, property
which came from the estate of the decedent,
during his lifetime, but which the law considers as
an advance from the inheritance. (Mison, supra)
Concept of Collation
The act of bringing back to the estate properties
acquired inter vivos and gratuitously from
decedent (if acquired by will, e.g. legacies and
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CIVIL LAW (AND PRACTICAL EXERCISES)
devisees, they are not collatable, but may be
reduced for being inofficious)
Obligation of Every Compulsory Heir
Every compulsory heir, who succeeds with other
compulsory heirs, must bring into the mass of the
estate any property or right which he may have
received from the decedent, during the lifetime of
the latter, by way of donation, or any other
gratuitous title, in order that it may be computed in
the determination of the legitime of each heir, and
in the account of the partition. (Art. 1061)
succession opens (if required to return in
kind)
Compulsory heirs and strangers must
collate for computation. For strangers,
there is no effect unless found to be
inofficious. If donation to strangers is not
included, compulsory heirs will be
prejudiced because basis for the legitime
will be smaller. (Balane, supra)
2.
However, donations inter vivos to compulsory
heirs shall not be imputed to the legitime:
1) If the donor expressly provided; (Art. 1062)
2) The donee repudiated the inheritance; (Id.)
3) The value of donation exceeds the donee’s
legitime
NOTE: The donation will be imputed to the
legitime to the extent of the legitime’s value,
and the excess to the free portion. (Balane,
supra at p. 577)
Properties or Rights Received by Compulsory
Heir not Subject to Collation
1) Property left by will (Art. 1063)
2) Property which may have been donated by an
ascendant of the compulsory heir (Art. 1065)
3) Property donated to the spouse of the
compulsory heir (Art. 1066)
4) Expenses for support, education, medical
attendance even in extraordinary illness,
apprenticeship, ordinary equipment or
customary gifts (Art. 1067)
5) Expenses incurred by parents in giving their
children a professional, vocational, or other
career (Art. 1068)
6) Wedding gifts consisting of jewelry, clothing
and outfit, given by parents or ascendants, so
long as they do not exceed 1/10 of the
disposable portion (Art. 1070)
Kinds of Collation (Balane, supra)
1) Collation of Values – values only, no
physical return
2) Collation in kind – actual return of property
received: only required when inofficious, i.e.,
legitime is impaired
COLLATION OF VALUES
Purposes
1. For computation – Arts. 908, 909 as basis for
determining the legitime
Determination: value at the time of
donation + fruits & legal interest from date
For equalization on account of partition
Only required for compulsory heirs; 2nd
collation; when actually charged either to
legitime or free portion.
Reason: donation to compulsory heirs are
considered
advance
of
legitime,
otherwise, it will prejudice other
compulsory heirs. For strangers, no
equalization is required, are always
charged to free portion. (Paras, supra)
Not subject to collation (i.e., charged to free
portion) if:
1. Testator provides otherwise (but still collated
for computation) (Art. 1062)
2. If compulsory heir repudiates, in which case
he is considered a stranger – for computation
only, charged to free portion (Art. 1062)
COLLATION FOR EQUALIZATION
Requisites (Art. 1069)
1. Two or more compulsory heirs. If only one,
no equalization is needed.
2.
Liberality – must be acquired gratuitously
from the decedent (inter vivos). In donation,
gratuitous act may be direct or indirect, as
when parent pays for debt of child or pays for
purchase price of the car placed in name of
the child – not a demandable debt as when
there is no intention to be reimbursed,
otherwise placed on asset side as receivables
from the heir (not collation).
If there is no liberality, such as arising
from obligation to support (e.g. education)
–other compulsory heirs cannot ask for
collation.
Exception: When liberality is present, but
no collation is required: Wedding gift of
parent/ascendants consisting of jewelry,
clothing, outfit (Art. 1070) not more than
1/10 of the sum disposable by will –
considered customary gift, not collatable,
while excess required to be collated.
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3.
Identity of heir and donee which may be:
a. Actual: e.g. F donates to son; Son
collates for computation and equalization;
If he donates to grandson, son is not
required to collate, but grandson collates
for computation as a stranger. If son
predeceases, grandson collates for
computation and equalization (now a
compulsory heir)
b. Constructive: F donates to son, son
predeceases and GS succeeds by
representation. GS must collate donation
to son even if he does not actually receive
it.
If there is no identity: no collation for equalization
is required. E.g. Father donates to spouse of son:
Son has no obligation to collate, but spouse must
collate for computation as a stranger. If he donates
to both spouses: ½ each, son collates for
computation and equalization, spouse collates
only for computation. (Paras, supra)
If collation required for equalization, may be
quantitative: same amount, or qualitative: same
kind. If immovable -equivalent, if not available, sell
other properties to generate cash, and if movable,
equivalent properties (Paras, supra)
COLLATION IN KIND
Actual return - Only if inofficious, i.e. legitime
impaired. Operates as resolutory condition:
donation terminated and must return only to the
extent inofficious: not necessarily a case of total
return. A donee who is required to collate in kind
is a possessor in good faith, and not required to
account for fruits and interests except from the
date succession opens. (Art. 1075)
Operations Related to Collation (Paras, supra)
1. Collation – adding to the mass of the
hereditary estate the value of the donation or
gratuitous disposition
2. Imputing or Charging – crediting the
donation as an advance on the legitime (if the
donee is a compulsory heir) or on the free
portion (if the donee is a stranger)
3. Reduction – determining to what extent the
donation will remain and to what extent it is
excessive or inofficious
4. Restitution – return or payment of the excess
to the mass of hereditary estate.
CIVIL LAW (AND PRACTICAL EXERCISES)
4. PARTITION AND DISTRIBUTION
OF ESTATE
PARTITION (Art. 1079, 1082)
The separation, division and assignment of a thing
held in common among those to whom it may
belong. It includes every act which is intended to
put an end to indivision among co-heirs, and
legatees or devisees, although it should purport to
be a sale, exchange, compromise, or any other
transaction. It is not subject to any form.
Who May Effect Partition
1. Decedent himself during his lifetime by an act
inter vivos or by will (Art. 1080)
2. Heir themselves (Art. 1083)
3. Competent court (Art. 1083)
4. Third person designated by the decedent (Art.
1081)
Who Can Demand Partition (Art. 1083)
1. Compulsory heir;
2. Voluntary heir;
3. Legatee or devisee;
4. Any person who has acquired interest in the
estate
When Partition Cannot be Demanded (PAPU)
1. When expressly Prohibited by the testator
himself for a period not exceeding 20 years;
(Art. 1083)
2. When the co-heirs Agreed that the estate
shall not be divided for a period not exceeding
10 years, renewable for another 10 years;
3. When Prohibited by law;
4. When to partition the estate would render it
Unserviceable for the use for which it is
intended.
NOTE:
Partition Inter Vivos (Art. 1080) – it is one
that merely allocates specific items or pieces
of property on the basis of the pro indiviso
shares fixed by law or given under the will to
heirs or successors.
Partition is not itself a mode of acquiring
ownership, nor a title, but being predicated on
succession, necessitates relationship to the
decedent (in case of intestacy) or a will duly
probated (in case of testacy).
Prohibition to Partition (Art. 1083)
1. The prohibition to partition for a period not
exceeding 20 years can be imposed on the
legitime.
2. If the prohibition to partition is for more than
20 years, the excess is void.
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3.
Even if a prohibition is imposed, the heir’s
mutual agreement can still make the partition.
CIVIL LAW (AND PRACTICAL EXERCISES)
2.
3.
Legal Redemption In Favor Of Co-Heirs (Art.
1623)
The right of legal redemption predicated upon the
fact that the sale made by the co-heir is effected
before the partition of the estate but after the death
of the decedent.
Requisites: (Aguilar v. Aguilar, G.R. No. 141613)
1. There must be several co-heirs
2. That one of them sells his right to a stranger
3. That the sale is made before the partition
4. That the right of redemption must be
exercised by one or more of the co-heirs
within 1 month from the time they were notified
in writing by the co-heir vendor
5. The vendee is reimbursed for the price of the
sale.
EFFECTS OF PARTITION
Confers upon each heir the exclusive
ownership of the property adjudicated. (Art.
1091)
After the partition, the co-heirs shall be
reciprocally bound to warrant the title to
(warranty against eviction) and the quality of
(warranty against hidden defects), each
property adjudicated. (Art. 1092)
The obligation of warranty shall cease in the
following cases: (Art. 1096)
1. When the testator himself has made the
partition unless his intention was
otherwise, but the legitime shall always
remain unimpaired.
2. When it has been expressly stipulated in
the agreement of partition, unless there
has been bad faith.
3. When the eviction was due to a cause
subsequent to the partition, or has been
caused by the fault of the distributee of
the property.
As between the deed of extra-judicial partition and
the subdivision plan which contained an
inadvertent error, the deed of extra-judicial
partition must prevail. The subdivision plan cannot
amend the deed of extra-judicial partition because
that is the binding contract to which all the heirs
agreed. (Ulay v. Bustamante, G.R. Nos. 231721 &
231722, J. Caguioa ponencia)
Effects of Inclusion of Intruder in Partition (Art.
1105)
1. Between a true heir and several mistaken
heirs – Partition is VOID
Between several true heirs and a mistaken
heir – transmission to mistaken heir is VOID
Through error or mistake; share of true heir is
allotted to mistaken heir – partition shall not be
rescinded unless there is bad faith or fraud on
the part of the other persons interested, but
the latter shall be proportionately obliged to
pay the true heir of his share
NOTE: Partition with respect to the mistaken heir
is VOID. (Art. 1105)
A Void Will may be a Valid Partition (Paras,
supra)
1. If the will was in fact a partition; and
2. If the beneficiaries in the void will were legal
heirs
RESCISSION AND NULLITY OF PARTITION
A partition, judicial or extra-judicial, may also be
rescinded on account of lesion, when any one of
the co-heirs received things whose value is less,
by at least one-fourth, than the share to which he
is entitled, considering the value of the things at
the time they were adjudicated. (Art. 1098)
Partition Made By the Testator (Art. 1099)
General Rule: A partition made by the testator
cannot be impugned on the grounds of lesion.
Exceptions:
1. When the legitime of the compulsory heirs is
prejudiced; or
2. When it appears or may reasonably be
presumed, that the intention of the testators
was otherwise.
Options Available to Obligor-Heir (Art. 1101)
The heir who is sued shall have the option of:
1. Indemnifying the plaintiff for the loss, by
payment in cash or by delivery of a thing of the
same kind and quality as that awarded to the
plaintiff; or
2. Consenting to a new partition
NOTE: If a new partition is made, it shall affect
neither those who have not been prejudiced
nor those who have not received more than
their just share. (Art. 1101)
Remedy of an Heir Who has Alienated the
Property Adjudicated to Him
An heir who has alienated the whole or a
considerable part of the real property adjudicated
to him cannot maintain an action for rescission on
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the ground of lesion, but he shall have a right to be
indemnified in cash. (Art. 1102)
Incompleteness of Partition Not a Ground for
Rescission
The omission of one or more objects or securities
of the inheritance shall not cause the rescission of
the partition on the ground of lesion, but the
partition shall be completed by the distribution of
the objects or securities which have been omitted.
(Art. 1103)
Omission of a Compulsory Heir in the Partition
General Rule: A partition made with preterition of
any of the compulsory heirs shall not be rescinded.
(Art. 1104)
NOTE: This is not preterition under Article 854.
This is simply an omission of a compulsory heir in
the partition, the assumption being that something
is left for him in the form of an undisposed portion
of the estate. The omitted heir simply gets his
rightful share. (Non v. CA, G.R. No. 137287)
Exception: Bad faith or fraud on the part of the
other persons interested. (Art. 1104)
Remedy: The other persons interested shall be
proportionately obliged to pay to the person
omitted the share which belongs to him. (Art.
1104)
PERIODS TO REMEMBER ON PARTITION
20 years (Art. 1083)
Maximum period testator can prohibit alienation of
dispositions
5 years from delivery to the State (Art. 1014)
To claim property escheated to the State
5 years from the time disqualified person took
possession (Art. 1040)
Action for declaration of incapacity & for recovery of
the inheritance, devise or legacy
30 days from issuance of order of distribution (Art.
1057)
Must signify acceptance/repudiation
deemed accepted
otherwise,
1 month form written notice of sale (Art. 1088)
Right to repurchase hereditary rights sold to a stranger
by a co-heir
10 years (Art. 1094)
To enforce warranty of title/quality of property
adjudicated to co-heir from the time right of action
accrues
5 years from partition (Art. 1095)
To enforce warranty of solvency of debtor of the estate
at the time partition is made
4 years from partition (Art. 1100)
Action for rescission of partition on account of lesion
————- end of topic ————
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IV.
OBLIGATIONS AND
CONTRACTS
CIVIL LAW (AND PRACTICAL EXERCISES)
A. OBLIGATIONS
1. GENERAL PROVISIONS
TOPIC OUTLINE UNDER THE SYLLABUS
A. OBLIGATIONS
1. General Provisions
2. Nature and Effect
3. Kinds
4. Extinguishment
B. CONTRACTS
1. General Provisions
2. Essential Requisites
3. Reformation of Instruments
4. Interpretation of Contracts
5. Rescissible Contracts
6. Voidable Contracts
7. Unenforceable Contracts
8. Void or Inexistent Contracts
C. NATURAL OBLIGATIONS
D. ESTOPPEL
E. TRUSTS
F. QUASI-CONTRACTS
a. Definition
An obligation is a juridical necessity to give, to do or
not to do. (An Act to Ordain and Institute the Civil
Code of the Philippines [CIVIL CODE], Republic Act
No. 386, art. 1156 (1950))
b. Elements of an Obligation
Essential Elements an Obligation
(Arts. 1156 – 1162) (PAVO)
1. Passive Subject (obligor/debtor) – the person
who has the duty of giving, doing or not doing;
person bound to the fulfillment
2. Active Subject (obligee/creditor) – the person in
whose favor the obligation is constituted;
person entitled to make a demand
3. Vinculum Juris/ Legal Tie – the efficient cause
or the juridical tie between two subjects by
reason of which the debtor is bound in favor of
the creditor to perform the obligation. It can be
established by various sources of obligations
(law, contract, quasi-contracts, delicts, and
quasi-delicts) and may arise either from
bilateral or unilateral acts of persons.
4. Object/ Subject Matter – the prestation or
conduct which has to be observed by the
debtor/obligor; to be valid, it must be:
(LiPoDeM):
a. Licit
b.
c.
d.
Real or Possible
Determinate/ Determinable
Must be within the commerce of men
(i.e. susceptible of appropriation and
transmissible from one person to
another) (DESIDERIO P. JURADO,
COMMENTS AND JURISPRUDENCE
ON
OBLIGATIONS
AND
CONTRACTS 457 (2010))
In certain kinds of obligations, the following may
constitute additional requirements:
5.
Form – in formal contracts where form is
necessary for validity, e.g., donation
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6.
Delivery or Tradition – real contracts where
delivery is necessary for perfection of the
obligation, e.g., deposit, commodatum, loan
(ERNESTO L. PINEDA, OBLIGATIONS AND
CONTRACTS 412 (2009))
c. Sources of Obligations
Obligations arise from: (L-CQAQ)
1.
2.
3.
4.
Law;
Contracts;
Quasi-contracts;
Acts or omissions punished by law; and
5.
Quasi-delicts (CIVIL CODE, art. 1157)
NOTE: The list is exclusive. (Sagrado Orden v.
Nacoco, G.R. No. L-37756)
LAW (OBLIGATION EX LEGE)
The law cannot exist as a source of obligation,
unless the acts to which its principles may be
applied exist.
Once the acts or facts exist, the obligations arising
therefrom by virtue of the express provisions of the
law are entirely independent of the agreement of the
parties. (Manila Trading & Supply Co. v. Saez, G.R.
No. 4386)
It must be expressly or impliedly set forth and
cannot be presumed. (Martinez v. Martinez, G.R.
No. 858)
CONTRACTS (OBLIGATIONS EX CONTRACTU)
Obligatoriness
Obligations arising from contracts have the force of
law between the contracting parties and should be
complied with in good faith. (CIVIL CODE, art. 1159)
Autonomy
Parties may freely enter into any stipulations
provided they are not contrary to law, morals, good
customs, public order or public policy. (CIVIL CODE,
art. 1306)
CIVIL LAW (AND PRACTICAL EXERCISES)
Mutuality
Neither party may unilaterally evade his obligation in
the contract, unless the contract authorizes it or the
other party assents. (PINEDA 385 (2009))
Principle of Relativity
Contracts take effect only between the parties, their
assigns and heirs, except in case where the rights
and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by
provision of law. The heir is not liable beyond the
value of the property he received from the decedent.
If a contract should contain some stipulation in favor
of a third person, he may demand its fulfillment
provided he communicated his acceptance to the
obligor before its revocation. A mere incidental
benefit or interest of a person is not sufficient. The
contracting parties must have clearly and
deliberately conferred a favor upon a third
person. (1257a) (CIVIL CODE, art. 1311)
Consensuality of Contracts
Article 1315. Contracts are perfected by mere
consent, and from that moment the parties are
bound not only to the fulfillment of what has been
expressly stipulated but also to all the
consequences which, according to their nature, may
be in keeping with good faith, usage and law. (1258)
(CIVIL CODE, art. 1315)
QUASI-CONTRACTS (OBLIGATIONS EX QUASICONTRACTU)
Definition
Quasi-contracts are juridical relations resulting from
lawful, voluntary and unilateral acts, which has for
its purpose, the payment of indemnity to the end that
no one shall be unjustly enriched or benefited at the
expense of another. (CIVIL CODE, art. 2142)
Distinguished from other Sources (LUV)
1.
3.
Literal meaning
The terms of the contracts determine the respective
obligations of the parties. If the terms of the contract
are clear and leave no doubt upon the contracting
parties’ intention, such terms should be applied in
their literal meaning. (CIVIL CODE, art. 1370)
The act giving rise to a quasi-contract must be
Lawful distinguishing it from delict;
2. The act must be Voluntary distinguishing it from
a quasi-delict which is based on fault or
negligence; and
The act must be Unilateral distinguishing it from
contract which is based on agreement.
(PINEDA 15 (2009))
DELICTS (OBLIGATION EX MALEFICIO OR EX
DELICTO)
Every person criminally liable for a felony is also
civilly liable. (An Act Revising the Penal Code and
Other Penal Laws [REVISED PENAL CODE], Act
No. 3815, art. 100 (1932))
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Such civil liability is a necessary consequence of
criminal responsibility, and is to be declared and
generally enforced in the criminal proceeding
EXCEPT where:
a. the injured party reserves his right to avail
himself of it in a distinct civil action or
b. in cases where an independent civil action is
allowed by law. (CIVIL CODE, art. 33; 2000
REVISED
RULES
OF
CRIMINAL
PROCEDURE, rule 110, § 1)
Scope of civil liability
1. Restitution
2. Reparation for damage caused
3. Indemnity for consequential damages
(REVISED PENAL CODE, art. 104)
Effect of acquittal in criminal case
General Rule: The acquittal of the accused in the
criminal case due to the prosecution’s failure to
prove guilt beyond reasonable doubt does not
prejudice the civil action, in which the offended party
may still be able to recover damages by a mere
preponderance of evidence. (CIVIL CODE, art. 29)
Exception: Where the judgment of acquittal
contained a declaration that no negligence can be
attributed to the accused and that the fact from
which the civil action might arise did not exist.
(Castillo v. CA, G.R. No. 48541, Aug. 21, 1989)
Extinguishment of liability
The civil liability for crimes is extinguished by the
same causes provided by the Civil Code for the
extinguishment of other obligations. (RULES OF
CIVIL PROCEDURE, rule 4, § 4)
NOTE: Death of the accused during the pendency
of the case can extinguish the civil liability if the
same arose directly from the crime committed.
However, this does not apply if civil liability can be
based on another source of obligation (i.e., law on
human relations). (Asilo, Jr. v. People, G.R. Nos.
159017-18 & 159059)
QUASI-DELICTS/TORTS (OBLIGATION EX
QUASI-DELICTO OR EX QUASI MALEFICIO)
It is an act or omission arising from fault or
negligence, which causes damage to another, there
being no pre-existing contractual relations between
the parties. (CIVIL CODE, art. 2176)
CIVIL LAW (AND PRACTICAL EXERCISES)
Elements: (ADD)
1. That there exists a wrongful Act or omission
imputable to the defendant by reason of his fault
or negligence;
2. That there exists a Damage or injury, which
must be proved by the person claiming
recovery;
3. That there must be a Direct causal connection
or a relation of cause and effect between the
fault or negligence and the damage or injury; or
that the fault or negligence be the cause of the
damage or injury. (CIVIL CODE, art. 2176;
Taylor v. Manila Electric Co., G.R. No. L4977)
Negligence: Failure to observe for the protection of
the interests of another person, that degree of care,
precaution
and
vigilance,
which
the
circumstances justly demand, whereby such
other person suffers injury. (US v. Barias, G.R. No.
L-7567)
Test of Negligence: “Would a prudent man, in the
position of the person to whom negligence is
attributed, foresee harm to the person injured as a
reasonable consequence of the course about to be
pursued?” (Picart v. Smith, G.R. No. L-12219)
Quasi-delict as a cause of action despite a preexisting contractual relation
General Rule: Actions based on breach of
contract and actions based on quasi-delicts
differ in terms of conditions, defenses, and
proof. They cannot co-exist. (Orient Freight v.
Keihin, G.R. No. 191937)
Exceptions:
a.
When such a contractual relation exists, the
obligor may break the contract that the
same act which constitutes a breach of the
contract would have constituted the source
of an extra-contractual obligation, had no
contract existed between the parties
(Cangco v. Manila Railroad Co., G.R. No.
L-12191);
b.
The act that breaks the contract may also
be a tort (Air France v. Carrascoso, G.R.
No. L-21438).
NOTE: When the obligation is based on a
contract, without which the obligation does
not exist, the cause of action must be
founded on the breach of contract and
cannot be based on quasi-delict (PSBA v.
Court of Appeals, G.R. No. 84698). In Air
France, what was punished was the
company’s racist policy which emboldened
the manager to expel the Filipino from first
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CIVIL LAW (AND PRACTICAL EXERCISES)
class because a white man had a better
right to the seat.
b.
Air France would apply if the act which
breaches a contract was done in bad faith
and amounts to a violation of Article 21 of
the Civil Code.
2. NATURE AND EFFECT
b. Obligation to Do or not to Do
Rights of a Creditor in an Obligation To Do or
Not To Do
1. To do (Positive Personal)
a.
a. Obligation to Give
Duties of a Debtor in an Obligation To Give
1. To give a determinate thing (CIVIL CODE, arts.
1163, 1164 & 1166)
a. To deliver the thing itself; (CIVIL
CODE, art. 1163)
b. To preserve or take care of the thing
due with the diligence of a good father
of a family (i.e., that standard of care
which an owner would give to his own
property), unless the law requires or
the parties agree otherwise; (CIVIL
CODE, art. 1163)
The law or contractual stipulation may
require a different degree of diligence:
greater or extraordinary diligence
(diligentia exactissima), or less or slight
diligence
(diligentia
levissima).
(RUBEN F. BALANE, JOTTINGS AND
JURISPRUDENCE IN CIVIL LAW
(OBLIGATIONS AND CONTRACTS)
63 (2020))
c.
d.
To deliver fruits, whether civil,
industrial, or natural fruits (obligor is
liable for fruits only from the time the
obligation to deliver arises); and
To deliver accessions and accessories
(CIVIL CODE, art. 1166)
Accessions – incorporated or
attached to the object to form part
of the principal.
Accessories – added for
completion, use perfection or
embellishment.
2.
To give a generic thing (CIVIL CODE, arts. 1246
& 1170)
a. To deliver the thing of the quality
intended by the parties, taking into
consideration the purpose of the
obligation, intent of the parties, and
other circumstances. (CIVIL CODE,
art. 1246)
To pay damages in case of breach of
the obligation. (CIVIL CODE, art. 1170)
b.
c.
The obligee is entitled to have the thing
done in a proper manner, by himself or
by a third person, at the expense of the
obligor;
To demand what has been poorly done
be undone;
To recover damages because of
breach of the obligation. (CIVIL CODE,
art. 1167)
2. Not to do (Negative Personal)
a.
b.
To have the thing undone at the
expense of the obligor; and/or
To ask for damages. (CIVIL CODE, art.
1168)
PERSONAL RIGHT
REAL RIGHT
Jus ad rem, a right
enforceable
only
against
a
definite
person or group of
persons
Right pertaining to a
person to demand from
another, as a definite
passive subject, the
fulfillment
of
the
prestation to give, to do
or not to do.
(PINEDA 15 (2009))
Jus in re, a right
enforceable
against
the whole world
Right pertaining to a
person over a
specific thing, without a
definite passive
subject against whom
the right may be
personally enforced
NOTE: The creditor has a right to the fruits of the
thing from the time the obligation to deliver it
arises. However, he shall acquire no real right
over it until the same has been delivered to him.
(1095) (CIVIL CODE, art. 1164)
NOTE: Nature of creditor’s right to fruits before
delivery
In accordance with the second sentence of the
article, before the fruits are delivered to him, the
creditor’s right to the fruits (in cases where he is
entitled to him) is purely personal (i.e. exclusively
against the debtor, his successors, or assigns).
Rule: No real right of ownership or possession
enforceable against the whole world arises in his
favor until delivery. It is not by agreement alone,
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but by delivery that ownership is transferred.
(BALANE 66 (2020)
c. Transmissibility of Obligations
General Rule: All rights acquired in virtue of an
obligation are generally transmissible (CIVIL CODE,
art. 1178)
Exception: Rights acquired in virtue of an
obligation are NOT transmissible when:
1. Prohibited by law – Examples:
a. Contract of partnership (CIVIL
CODE, art. 1767)
b. Contract of agency (CIVIL CODE,
art. 1868)
c. Contract of commodatum (CIVIL
CODE, art. 1933)
2. Prohibited by stipulation of the parties, as long
as it is not contrary to public policy.
3. The obligation is purely personal in nature —
when the obligor’s personal qualifications and
skill was the motive behind the contract.
d. Performance of Obligations
e. Breaches of Obligations
Causes of Breach
1. Incidental Fraud (Dolo incidente)
2. Negligence (Culpa)
3. Default / Delay (Mora)
4. Contravention of Terms (CIVIL CODE, art.
1170)
There is breach when the obligor fails without legal
excuse (such as fortuitous events) to perform any
promise, which forms the whole or part of an
obligation. (Guanio v. Makati ShangriLa and Resort,
Inc., G.R. No. 190601; R.S. Tomas Inc. v. Rizal
Cement Co. Inc., G.R. No.173155)
Breach
Arising
From:
DOLO
The obligation arises:
Pure obligation: Upon demand (CIVIL CODE,
art. 1179)
Obligations
with
Condition/Period
General Rule: Only from
Suspensive
the time the
condition/period is fulfilled, but the obligation
retroacts to the day of its constitution. (CIVIL CODE,
art. 1187)
CULPA
Thus, there is no liability to account for fruits and
interests in reciprocal obligations. For unilateral
obligations, the debtor shall appropriate the fruits
and interests received, unless it was intended
otherwise.
3.
Obligations subject to a Resolutory
Condition/Period: No obligation to deliver
fruits since performance or delivery is
immediate, subject to its resolution upon the
happening of the condition/period. (CIVIL
CODE, art. 1187)
Liable for all
consequences
of act, whether
foreseen or
unforeseen
(e.g., loss of
profits)
Actual
knowledge or
awareness of
the cause
Liable only for
those foreseen,
or could have
foreseen
(CIVIL CODE,
art. 2201)
Exception: Regarding fruits and interests in
reciprocal obligations (even if the two reciprocal
obligations are not of the same value), the parties
are deemed as mutually compensated during the
pendency of the condition.
BASIS OF
LIABILITY
(CIVIL CODE,
art. 2201)
1.
2.
SCOPE OF
LIABILITY
FORTUI
TOUS
EVENT
No liability –
unforeseen or
even if
foreseen, is
unavoidable
(CIVIL CODE,
art. 1174)
(CIVIL CODE,
art. 2201;
Legaspi Oil Co.,
Inc. v. CA, G.R.
No. 96595)
Possibility of
knowledge or
awareness
(ought or could
have foreseen)
(CIVIL CODE,
art. 2201)
Absence of
possibility of
knowledge
(could not be
foreseen or if
foreseen, could
not be avoided)
(CIVIL CODE,
art. 1174)
INCIDENTAL FRAUD (DOLO INCIDENTE)
Fraud is the deliberate or intentional evasion of the
normal fulfillment of an obligation. (8 Manresa, 5th
Ed., Book, 1, 72)
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Types of Fraud
INCIDENTAL
(Dolo incidente;
ART. 1170)
CAUSAL
(Dolo Causante;
ART. 1338)
Present during the
performance
of
a
preexisting obligation
Purpose is to evade
the normal fulfillment of
the obligation
Present
before
or
simultaneously with the
perfection of a contract
Purpose is to secure
the consent of another
to enter into the
contract
Results in vitiation of
consent;
voidable
contract
Gives rise to a right of
an innocent party to
annul the (voidable)
contract
Results in the breach
of an obligation
Gives rise to a right in
favor of the obligee to
sue
for
specific
performance
or
rescission,
with
damages in either
case.
(JURADO 63 (2010))
the law does NOT prohibit renunciation of the action
for damages on the ground of past fraud. (CIVIL
CODE, art. 1171)
NEGLIGENCE (CULPA)
Any voluntary act or omission, there being no malice
which prevents the normal fulfillment of an
obligation. (HECTOR S. DE LEON & HECTOR M.
DE LEON, JR., COMMENTS AND CASES ON
OBLIGATIONS AND CONTRACTS 58 (2014))
Consists in the omission of that diligence which is
required by the nature of the obligation and
corresponds with the circumstances of the persons,
of the time and of the place (CIVIL CODE, art. 1173)
FRAUD
NEGLIGENCE
There is deliberate
intention to cause
damage
Liability cannot be
mitigated
There is no deliberate
intention to cause
damage
Liability
may
be
mitigated
(CIVIL
CODE, art. 1173)
Presumed from the
breach of a contractual
obligation
Waiver
for
future
negligence may be
allowed
in
certain
cases
Waiver for future fraud
is void (CIVIL CODE,
art. 1171)
CRIME
Acts punishable by law
(REVISED
PENAL
CODE, art. 3)
Criminal
intent
necessary
Some crimes do NOT
give rise to civil liability
Violation of public and
private rights
Proof
beyond
reasonable doubt
Criminal liability cannot
be compromised
Presumption
innocence
of
NOTE: On the Presumption of negligence
NOTE: Future fraud CANNOT be waived. However,
Must be clearly proved
NEGLIGENCE
Any act with fault or
negligence
(CIVIL
CODE, art. 1173)
Criminal
intent
unnecessary
Damages may be
awarded to injured
party
Violation of private
rights
Preponderance
of
evidence
Can be compromised
as any other civil
liability
Presumption
of
negligence
(DE LEON 27 (2014))
This article creates a rebuttable presumption of
culpability when the thing to be delivered is lost
while in the debtor’s possession. This article is
quite consistent with the duty imposed in Art.
1163 to take care of the thing with the diligence of
a good father of the family. The intervention of a
fortuitous event as a causative factor of the loss
is something for the debtor to prove.
Generally, the debtor can overcome the
presumption of fault by proving fortuitous event.
o Exceptionally, the debtor’s liability is not
taken away in case of a fortuitous event
if he has incurred in delay or promised
the same thing to two or more persons.
In these cases, he becomes an insurer of
the thing. (BALANE 402 (2020))
Kinds of Negligence
1. Quasi-Delict (Culpa aquiliana/culpa extra
contractual) – source of obligation; wrong or
negligence committed independent of contract
and without criminal intent
2.
Contractual
Negligence
(Culpa
Contractual) – wrong or negligence in the
performance of an obligation or contract
3.
Criminal Negligence (Culpa Criminal) –
wrong or negligence in the commission of a
crime (DE LEON 65-66 (2014))
(DE LEON 62 (2014))
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CULPA AQUILIANA
Negligence
substantive
independent
is
and
Generally, there is no
preexisting contractual
obligation
Source
of
the
obligation
is
the
negligence itself (CIVIL
CODE, art. 2176)
CULPA
CONTRACTUAL
Negligence merely an
incident
of
performance of an
obligation
There is a preexisting
contractual relation
Source
of
the
obligation is the breach
of
the
contractual
obligation
(CIVIL
CODE, arts. 11701174; 2201)
Negligence must be Proof of existence of
proved
the contract and its
breach is prima facie
sufficient to warrant
recovery
For the negligence of For the negligence of
an employee, diligence an employee, diligence
in the selection and in the selection and
supervision of the supervision of the
employees
is
a employees is NOT
defense
of
the available as a defense
employer
of the employer
(EDGARDO L. PARAS, CIVIL CODE OF THE
PHILIPPINES ANNOTATED: PRESCRIPTION;
OBLIGATIONS AND CONTRACTS 144-145
(2016))
Rule on Standard of Care
1. That which the law requires; or
2. That stipulated by the parties; or
3. In the absence of the above, diligence of a
good father of a family (CIVIL CODE, art. 1163)
However, parties cannot stipulate that there
would be absolute exemption from liability for
any fault or negligence, since it is against public
policy. (Heacock vs. Macondray, G.R. No. L16598; CIVIL CODE, arts. 1306, 1744, 1745)
Diligence of a good father of a family – ordinary
care or that diligence which an average or
reasonably prudent person would exercise over his
own property (DE LEON 34 (2014))
Standard of care of disabled person
A disabled person is required to use the same
degree of care that a reasonably careful person
having the same disability would use. Physical
handicaps are treated as part of the circumstances
under which a reasonable person must act. Thus,
the standard of conduct for a blind person becomes
that of a reasonable person who is blind. (Francisco
v. Chemical Bulk Carriers, Incorporated, G.R. No.
193577)
Instances where the law requires a higher
standard of care
Banks – as a business affected with public
interest, and because of the nature of its
functions, banks are under obligation to treat
the accounts of its depositors with meticulous
care, always having in mind the fiduciary nature
of their relationship. (Simex v. CA, G.R. No.
88013)
Exception: Extraordinary diligence does not
cover transactions outside bank deposits, i.e.
commercial transactions. (Reyes v. CA, G.R.
No. 94214)
Realty Corporations – A corporation
engaged in the buying and selling of real estate
is expected to exercise a higher standard of
care and diligence in ascertaining the status
and condition of the property subject of its
business transaction. Similar to investment and
financing corporations, it cannot simply rely on
an examination of a Torrens certificate to
determine what the subject property looks like,
as its condition is not apparent in the document.
(Eagle Realty Corp. v. Republic, G.R. No.
151424)
Common Carriers – from the nature of their
business and for reasons of public policy,
common carriers are bound to observe
extraordinary diligence in the vigilance over the
goods and for the safety of the passengers
transported by them, according to all the
circumstances of each case. (CIVIL CODE, art.
1733)
Effects of contributory negligence of the
obligee
General rule: Reduces or mitigates the
damages which he can recover.
Exception: If the negligent act or omission of
the creditor is the proximate cause of the event,
which led to the damage or injury complained
of, he cannot recover. (CIVIL CODE, art. 2179)
DEFAULT OR DELAY (MORA)
General rule: Those obliged to deliver or to do
something incur in delay from the time the obligee
judicially or extrajudicially demands from them the
fulfillment of their obligation. (CIVIL CODE, art.
1169)
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Demand is also unnecessary where it is
apparent that it would be unavailing, as
where there has been a prior absolute refusal
by S (see 13 C.J. 661.) or S has manifested
an intention not to comply with his obligation.
(DE LEON 48-49 (2019))
Exception: Demand by the creditor NOT necessary
when: (LTU)
1. Law or obligation expressly declares so;
Examples:
When the obligation so provides:
D promised to pay C the sum of P20,000.00
on or before November 30 without the need
of any demand. Therefore, if D fails to pay
on November 30, he is automatically in
default. In this case, the parties stipulate to
dispense with the demand. (DE LEON 46
(2019))
When the law so provides:
Under the law, taxes should be paid on
or before a specific date; otherwise,
penalties and surcharges are imposed
without the need of demand for payment
by the government.
The partner is liable for the fruits of the
thing he may have promised to contribute
to the partnership from the time they
should have been delivered without the
need of any demand. (DE LEON 47
(2019))
2.
Time is of the essence
Examples:
The delivery of balloons on a particular date
when a children’s party will be held;
The making of a wedding dress where the
wedding is scheduled at a certain time;
Payment of money at a particular time so
that the creditor could pay off certain debts
due on the same date;
The delivery of a car to be used in a trip at
a particular time; etc. (DE LEON 47 (2019))
3.
Demand would be Useless (CIVIL CODE, art.
1169)
Examples:
S obliged himself to deliver a specific horse to
B on December 5. Through S’s negligence or
deliberate act, or by reason of a fortuitous event
for which S has expressly bound himself
responsible (see Art. 1174.), the horse died on
December 2.
Under this situation, any demand for the
delivery of the horse on December 5 would
be useless as S has made it impossible for
him to perform his obligation.
Requisites to be in delay: (CIVIL CODE, art.
1169)
1.
2.
3.
Obligation is Demandable
Debtor Delays performance
Creditor Demands performance judicially or
extrajudicially
NOTE: In reciprocal obligations, a party does not
incur in delay if the other party is not ready or willing
to assume and perform the obligation imposed upon
him/her (CIVIL CODE, art. 1169)
NOTE: In reciprocal obligations, if the period for the
fulfillment of the obligation is fixed, demand by the
obligee is still necessary before the obligor can be
considered in default and before a cause of action
for rescission will accrue. (Solar Harvest v. Davao
Corrugated Carton Corporation, G.R. No. 176868,
Jul. 26, 2010)
NOTE: The power to rescind is implied in reciprocal
obligations. In Lam v. Kodak (2016), although there
was no stipulation, the court ruled that since both
parties exercised their right to resolve under Art.
1191, judicial rescission is not necessary because
the power to resolve is implied in reciprocal
obligations. (Lam v. Kodak, G.R. No. 167615; see
discussion on Nissan Car Lease v. Lica
Management, Jan. 13, 2016 under “Void or
Inexistent Contracts”)
The use of a credit card to pay for a purchase is only
an offer to the credit card company to enter a loan
agreement with the credit card holder. Before the
credit card issuer accepts this offer, no obligation
relating to the loan agreement exists between them.
A demand presupposes the existence of an
obligation between the parties. (Pantaleon v.
American Express International, Inc., G.R. No.
174269)
If the contract stipulates that “the project is
estimated to be completed in 6 years,” failure to
finish the project in 6 years does not put the obligor
in delay. Mere estimate cannot be considered a
period or a day certain. (Salonte v. COA, et al., G.R.
No. 207348)
NOTE:
A reminder is not equivalent to a demand.
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Premature demand does not give rise to
default.
If there is no fixed due date, or when the
debtor promises to pay when his means
permit him to do so, there can be no default
unless a deadline is fixed by the parties or the
court.
Kinds of delay
1. Mora solvendi – delay or default committed by
obligor
2. Mora accipiendi – delay or default committed
by oblige
3. Compensatio Morae – default of both obligor
and obligee (JURADO 457 (2010))
CONTRAVENTION OF THE TENOR OF THE
OBLIGATION
This refers to failure to comply with the terms of the
obligation, and will require dolo, culpa or delay as
the cause of the failure to comply, in order to
constitute a breach. (CIVIL CODE, art. 1170;
JURADO , 74 (2010))
Defense against breach: FORTUITOUS EVENTS
Requisites of Fortuitous Events (NIIU)
1. Event must be Independent of obligor’s will;
2. Event is Unforeseeable or unavoidable
3. Such event renders it Impossible for the debtor
to perform (not only makes it difficult, but
impossible)
4. No contributory negligence (Lasam v. Smith,
G.R. No. L-19495)
General rule: Loss due to fortuitous events shall
extinguish the obligation (CIVIL CODE, art. 1174)
Exceptions: (SALTD-G)
1. If by Law the obligor is liable even for fortuitous
event
2. If by Stipulation the obligor is liable even for
fortuitous event
3. If the nature of the obligation requires the
Assumption of the risk (CIVIL CODE, art. 1174)
Example:
D insured his house against fire for
P500,000.00 with R, an insurance company.
Later, the house was destroyed by accidental
fire.
Although the cause of the loss is a fortuitous
event, D may recover the amount of the policy.
In a contract of insurance, the insurer (R), in
consideration of the premium paid by the
CIVIL LAW (AND PRACTICAL EXERCISES)
insured (D), undertakes to indemnify the latter
for the loss of the thing insured by reason of the
peril insured against even if the cause of the
loss is a fortuitous event. Here, risk of loss or
damage is an essential element in the
obligation. (DE LEON 78-79 (2019))
4.
5.
6.
If the loss of the thing occurs after the obligor
incurred in Delay; and
If the obligor promised to deliver the same thing
to Two or more persons who do not have the
same interest (CIVIL CODE, art. 1165)
If the thing to be delivered is Generic
Declaration of martial law, per se, is not a fortuitous
event. While a lot of businesses suffered financial
reverses during this period, it could not be used as
a defense when sued for collection of debts validly
incurred. (Philippine Free Press v. CA, G.R. No.
132864)
The Asian Debt Crisis in 1997 is not a fortuitous
event. A real estate company engaged in preselling
of condominium units should have been able to
assess foreign exchange risks. The fluctuating
movement of the Philippine Peso in the FX market
is a daily occurrence, so Megaworld cannot claim
fortuitous events as an excuse for non-delivery of
units. (Megaworld Globus Asia Inc. v. Tanseco, G.R.
No. 181206)
The Christmas season cannot be cited as an act of
God that would excuse a delay in the processing of
claims by a government entity that is subject to
routine accounting and auditing rules. (MIAA v. ALA
Industries Corp, G.R. No. 147349)
The sudden act of a passenger who stabbed
another passenger in the bus is within the context of
force majeure. But before common carrier may be
absolved, it is not enough that the accident was
caused by force majeure. The common carrier must
still prove that it was not negligent in causing
injuries. (Bachelor Express, Inc. v. CA, G.R. No.
85691)
If obligation is to deliver materials for a fixed period
such as 30 years, fortuitous events occurring within
the period, such as the outbreak of war which took
6 years out of the 30-year period and destroyed
plants, machinery and equipment and prevented the
obligor from making deliveries, the occurrence of
such a fortuitous event will not extend the period of
the contract beyond its fixed period. This is because
the obligor was excused from performance during
the period when the fortuitous events prevented it
from performing its obligations. (Victorias Planters
Association v. Victorias Milling, G.R. No. 6648)
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CIVIL LAW (AND PRACTICAL EXERCISES)
and after this additional time, if obligor still does
not perform, courts will allow resolution or
cancellation. (CIVIL CODE, art. 1191;
Kapisanan Banahaw v. Dejarme, G.R. No.
L32908, Nov. 28, 1930) The principle is that
resolution will not be permitted for a slight or
casual breach of a contract, but only for such
breaches as are so substantial and
fundamental as to defeat the object of the
parties in entering into the agreement.
(Multinational v. Ara Security, 441 SCRA 126
(2004))
A person obliged to perform an obligation is NOT
excused from a fortuitous event when the nature of
the obligation requires the assumption of risk. In
other words, it is NOT enough that the event should
not be foreseen or anticipated, but it must be one
that is impossible to foresee or to avoid. (Republic
v. Luzon Stevedoring, G.R. No. L21749)
f.
1.
Remedies Available to Creditor in
Cases of Breach
Specific Performance – requiring delivery or
performance of the obligation.
Can be combined with damages, but
inconsistent with the remedy of resolution or
cancellation. (Magdalena Estate, Inc. v. Myrick,
G.R. No. L-47774)
Can be pursued successively (but not
simultaneously) with resolution or cancellation;
if initial action is for specific performance and
obligor does not or cannot deliver, courts have
allowed obligee to pursue resolution or
cancellation. (CIVIL CODE, art. 1191)
Remedy Specific only to Obligations Not to
Do: to compel that the act in violation of the
obligation to be undone if possible and if not, only
damages may be pursued. (CIVIL CODE, art. 1168)
3. KINDS OF OBLIGATIONS
a. Pure Obligations
Definition – It is an unqualified obligation, which is
demandable immediately. Its performance does
NOT depend upon a future and uncertain event, or
past event unknown to the parties. (CIVIL CODE,
art. 1179)
This is NOT a remedy in an obligation “Not to
do” that has been breached since the prohibited
act has been done. (DE LEON 44 (2014))
2.
Damages – can be combined with any remedy
or pursued independently – also available in
breach of any prestation. (CIVIL CODE, art.
1191)
3.
Substitute performance – ask others to
perform and charge the cost to the obligor
(CIVIL CODE, arts. 1165-1168)
Not available in:
a)
b)
c)
4.
Obligation to give specific things (already
set apart from class or genus to which it
belongs); (CIVIL CODE, art. 1165)
Obligations not to do; (CIVIL CODE, art.
1168) and
Obligations to do which are purely personal
in character. (4 ARTURO M. TOLENTINO,
COMMENTARIES
AND
JURISPRUDENCE ON THE CIVIL CODE
OF THE PHILIPPINES 99-100 (1991))
Resolution/Cancellation – implied in
reciprocal obligations, but not available if the
breach is slight, unless time is of the essence.
(Biando v. Embestro, G.R. No. L11919) If
breach is only slight, generally courts will grant
additional time for the obligor to pay or perform
b. Conditional Obligations
Definition – The performance in conditional
obligations depends upon a (1) future AND
uncertain event, (2) or upon a past event unknown
to the parties. (DE LEON 106 (2014))
NOTE: For the first kind, Article 1179 uses the
phrase “future ‘or’ uncertain” -- it must be construed
as “and”. (4 TOLENTINO 144 (1991))
Conditional Obligations
classified into:
may
be
further
1.
2.
Suspensive or resolutory
Potestative (based on the will of one of the
parties), Casual (based upon chance or will of
3rd parties), and Mixed (combination of will of
one of the parties + chance and/or will of 3rd
persons)
3. Possible or impossible
4. Positive or negative
5. Divisible or indivisible
6. Conjunctive or alternative
7. Express or implied
(JURADO 110 (2010))
NOTE: All combinations are valid, EXCEPT only
those conditional obligations which are suspensive
and dependent solely on the will of the debtor.
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CIVIL LAW (AND PRACTICAL EXERCISES)
(DE LEON 106-107 & 111-112 (2014))
Examples:
I’ll give you P1,000,000 next month if I decide to
run for the upcoming national elections.
Trillana v. Quezon Colleges, Inc.
93 Phil. 383
FACTS: D purchased 200 shares of stock of the
Quezon Colleges, subject to the condition that
she would pay for the same as soon as she would
be able to harvest fish from her fishpond.
Issue: Is this condition valid?
HELD: No, because this suspensive condition is
purely potestative on her part. (Civil Code of the
Philippines Annotated by Edgardo L. Paras 198199 (2008))
THUS: suspensive condition + purely potestative on
debtor = both condition and obligation void. Hence,
there is no obligation.
A provision in a Conditional Deed of Sale stating that
the vendee shall pay the balance of the purchase
price when he has successfully negotiated and
secured a right of way is not a purely potestative
condition on the perfection of the contract nor on the
validity of the entire contract or its compliance as
contemplated by Art. 1308. Such a condition is
likewise dependent on chance as there is no
guarantee that the vendee and the third-party
landowners would come to an agreement regarding
the road right of way, a type of mixed condition
expressly allowed under Art. 1182. Where the socalled potestative condition is imposed not on the
birth of the obligation but on its fulfillment, only the
condition is avoided, leaving unaffected the
obligation itself. (Catungal v. Rodriguez, GR No.
146839)
SUSPENSIVE CONDITION
The happening of the condition creates the
obligation.
Not demandable at once.
Gives rise to the existence of an obligation. For
example, in a Contract to Sell, the fulfillment of
the suspensive condition, which is the full
payment of the purchase price, gives rise to the
obligation of the seller to convey the title to the
prospective buyer. If the condition was not
fulfilled, it only prevents the obligation of the
seller to convey title to arise. (DE LEON 102
(2014))
Also known as “condition precedent”
Gives birth to obligations
Rule on fruits in suspensive condition:
a) In suspensive conditions, the effect of a
conditional obligation “to give” retroacts to the
day of the constitution of the obligation.
b) Nevertheless, when the obligation imposes
reciprocal prestations, the fruits and interests
during the pendency of the suspensive
condition shall be deemed to have been
mutually compensated.
c) If the obligation is unilateral, the debtor or
obligor shall appropriate the fruits and interests
received, unless from the nature and
circumstances of the obligation it should be
inferred that the intention of the person
constituting the same is different. (CIVIL CODE,
art. 1187)
NOTE: Doctrine of constructive fulfillment –
Condition shall be deemed fulfilled when the obligor
voluntarily prevents fulfillment. (CIVIL CODE, art.
1186)
REQUISITES:
a) Condition is suspensive
b) Obligor prevents fulfillment of condition
c) Obligor acts voluntarily
RESOLUTORY CONDITION
Demandable at once
Once the condition is established or
acknowledged, the right to demand
performance immediately exists and
therefore the obligation can be demanded
at once.
It is also known as “condition subsequent”
The happening of the condition has the
effect of extinguishing an obligation. (DE
LEON 109 & 111-112 (2014))
NOTE: In case of reciprocal obligations, the
obligation of one is a resolutory condition of the
obligation of the other, the non-fulfillment of which
entitles the other party to resolve or cancel the
contract. (DE LEON 53 (2014))
POTESTATIVE CONDITION
The fulfillment of the condition entirely depends
upon the sole will of a party – may be purely
potestative on the part of the obligee (valid), or the
obligor/ debtor (void if suspensive). (PARAS 201
(2016))
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Simple potestative v. Purely potestative
suspensive condition
SIMPLE
PURELY
POTESTATIVE
POTESTATIVE
Presupposes not only
a manifestation of will
but also the realization
of an external act (e.g.,
“if you sell your
house”).
The simple potestative
condition on the part of
the debtor does not
prevent the formation
of a valid obligation.
While to a certain
extent, it depends on
the voluntary act of the
obligor, it is still
subject, in part, to
contingencies
over
which he has no
control. For instance, “I
agree to make the first
offer to you should I
decide to sell my
house.” The condition
depends upon the will
of the offeror, but in
consequence
of
external circumstances
which may arise (e.g.,
the need for money or
the
advantage
of
transferring
to
a
different location). (4
151
TOLENTINO
(1991))
Depends solely and
exclusively upon the
will (e.g., “if I like it” or
“If I deem it proper).
Destroys the efficacy of
the legal tie. If a person
says, “I will sell my
house if I deem it
proper,” there is no
seriousness in this
undertaking.
(4
151
TOLENTINO
(1991))
Effect of illegal, immoral or impossible
condition
TO GIVE / TO DO NOT TO GIVE / NOT
SOMETHING
TO DO SOMETHING
Both condition and Condition considered
obligation are void, not written, hence, the
hence, there is no obligation is valid –
the condition is merely
obligation.
In
Exception:
gratuitous obligations,
iIIegal conditions are
considered as not
written,
hence
condition is deemed
not written and the
obligation
is
valid
superfluous.
(PINEDA92 (2009))
(becomes a pure
(DE
obligation).
LEON 135 (2014))
Condition coupled with a Term
The condition that some event will not happen at a
determinate time, shall render the obligation
effective from the moment (1) the time indicated has
elapsed, or (2) if it has become evident that the
event cannot occur. (CIVIL CODE, art. 1185)
Otherwise, generally, a party must wait for the
condition to be fulfilled, until it becomes certain that
condition (1) cannot be fulfilled (parties are
released), or (2) may be deemed fulfilled at such
time as the parties contemplated, bearing in mind
the nature of the obligation. (CIVIL CODE, art. 1185)
POSITIVE
SUSPENSIVE
NEGATIVE
SUSPENSIVE
Rule
Condition must
be
fulfilled
before
stipulated term
Condition
should
NOT
happen before
stipulated term
Effect if
Condition
is fulfilled
before
arrival of
the term
Obligation
arises
from
fulfillment
The parties are
released as of
the date of the
happening of
the condition
Effect if
Condition
is not
fulfilled
before the
arrival of
the term
Parties
are
released as of
arrival of the
term
But
Parties
may
be
released even
before arrival if
it
becomes
indubitable that
the condition
will not happen
The obligation
arises from the
time the term
arrives.
c. Obligations with a Period or a Term
Obligations which are demandable on a “day
certain”.
“Day certain” refers to either:
a) A future AND certain event; or
b)
Payable when able, or when debtor
promises to pay when “his means permit
him to do so” – period is to be fixed by the
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court, taking into account intention of the
parties (PINEDA 129 (2009))
May also be further classified into:
(a) Suspensive - obligation is suspended until
arrival of the period; or
(b) Resolutory - obligation is immediate but
terminates upon arrival of the period. (DE
LEON 194 (2014))
Suspensive or resolutory condition v. term
CONDITION
Suspensive
Resolutory
Retroactivity
It may or may
not happen,
hence
uncertain
whether there
is
an
obligation.
It is not certain
if
the
obligation will
terminate at
all
Once fulfilled,
it will retroact
to date the
obligation was
entered into
(NOTE: if it is
an obligation
to do or not to
do, courts will
determine
retroactivity)
EXCEPT:
(i) fruits (Art.
1187- when
the obligation
to
deliver
arises),
(ii)
prescription
(from
fulfillment of
condition
–
when action
could
have
been brought)
(DE LEON 191 (2014))
TERM
object since there is no right or obligation yet at
this time.
Obligor: No obligation to deliver or perform yet
at this time.
NOTE: In an obligation to give specific things,
these are the effect of loss, impairment or
improvement of the specific thing which is the object
of the obligation:
CAUSE
LOSS
IMPAIR
MENT
IMPROVE
MENT
Obligor’s
Fault
Obligor
to pay
damage
s
Obligee
may
choose
resolutio
n
or
fulfillmen
t,
with
damage
s
Obligee’s
Fault
Obligor
release
d
Deliver
in
its
impaired
state
Nature/
Fortuitou
s Events
Obligor
release
d
Obligor has
usufructuar
y rights only
– i.e., can
use it but is
not entitled
to payment,
and
can
remove
it
only if it will
not cause
damage
Obligor
without right
to payment
of
improveme
nt
Inures to the
benefit
of
the obligee
It is certain
that it will
happen; just
uncertain as
to when it will
happen.
It is certain
that it will
terminate at
a future time.
There is no
retroactivity
because
there
is
already
an
obligation
from the time
the
parties
enter in the
obligation,
except only
in
prescription
(where
prescriptive
period
is
counted from
arrival of the
term – i.e.,
when
the
action could
have
been
brought).
Effects before the happening/ arrival of
condition/ term
Obligee: May file Protective Action only, such
as asking for security or requiring escrow of the
Borne by
the
obligee;
cannot
ask for
damage
s
or
refuse to
accept
impaired
object
(CIVIL CODE, art. 1189; DE LEON 135-137 (2014))
The same effect applies if the resolutory condition
happens and the party obliged cannot return the
object or is improved for the same above reasons.
Benefit of the period
Significance of Period:
a) Obligor cannot be compelled to pay or
perform before the arrival of the period
b) Obligee cannot compel payment or
performance
Both are subject to the right of each party to waive
– even if the obligor is willing to pay interest for the
remainder of the period. (JURADO
152-153
(2010))
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PRESUMPTION: for the benefit of both parties
(CIVIL CODE, art. 1196; DE LEON 197 (2014))
CIVIL LAW (AND PRACTICAL EXERCISES)
(e) If no period for the Lease has been set,
applicable in specific cases depending on the
length of the lessee’s stay in the premises
(CIVIL CODE, art. 1687)
It can be given to either party:
a) To the Debtor or Obligor: By law or by
stipulation (e.g., payable on or before)
b)
To the Creditor or Obligee: Only by Stipulation
(JURADO 152-153 (2010))
Debtor/obligor may lose the benefit of the period
(therefore may be compelled to pay immediately) in
the following cases (FAt-VISA):
a) Debtor becomes Insolvent (when his assets are
less than his liabilities) AFTER the debt has
been contracted
Exception: When he gives security for the
obligation
b)
Failure to create or establish the security
promised;
c)
When Security established but is later impaired
(through fault of debtor) or totally lost (due to
fault of debtor or fortuitous events).
Unless: Debtor provides another security of
equal value;
d)
Violation of any undertaking on the basis of
which, period is granted;
e)
Debtor Attempts to abscond (mere attempt
sufficient, because if actual abscondment is to
be awaited, creditor can no longer collect; and
f)
With an Acceleration clause stipulation
Applies to obligations payable in installments or
based on amortization schedule, where
stipulation says that failure to pay one or some
installments or amortizations will entitle creditor
to accelerate payment – i.e., to call for the
payment on the entire remaining unpaid
obligation. (CIVIL CODE, art. 1198)
When courts may fix period (ID-JBL)
(a) If the obligation does NOT fix a period, but from
its nature and circumstances it can be Inferred
that a period was intended by the parties (CIVIL
CODE, art. 1197)
(b) If the duration of the period Depends upon
the will of the debtor (CIVIL CODE, art. 1197)
(c) In case of reciprocal obligations, when there
is a Just cause for fixing a period (CIVIL CODE,
art. 1191)
(d) If the debtor Binds himself when his means
permit him to do so (CIVIL CODE, art. 1180)
NOTE: Art. 1197 is only applicable when there is
absence of any period fixed by the parties. It
requires that period cannot be set arbitrarily by the
courts.
2-step process to determine if the Court may fix
the period
a) Determine that the obligation does not fix a
period (or that period is made to depend upon
will of debtor) but from the nature and
circumstances, it can be inferred that a period
was intended
b)
Decide what period was probably contemplated
by the parties. (Gregorio Araneta, Inc. v. The
Philippine Sugar Estates Dev. Co., G.R. No. L22558)
d. Alternative
Obligations
or
Facultative
Alternative obligations
Initially, the obligation is indeterminate and
becomes determinate upon making of choice and
notification. (DE LEON 217 (2014))
General Rule: The right to make a choice is
with the debtor/obligor, subject to the rule that he
cannot choose the impossible, unlawful or could not
have been the object of the obligation. (DE LEON
218 (2014))
Exception: By contrary stipulation, the right to
make a choice may be given to the creditor/obligee
or to a 3rd person, subject also to the rule that he
CANNOT choose the:
Impossible
Unlawful
Could not have been the object of the
obligation. (DE LEON 218 (2014))
When Choice is Effective – from notification.
(a) Debtor’s Choice: upon notice to creditor
(b) Creditor’s Choice: upon notice to debtor
(c) 3rd Person’s Choice: upon notice to both debtor
and creditor (CIVIL CODE, art. 1200; DE LEON
218 (2014))
NOTE: There is no form required for the notice.
It may be oral or written, express or implied (as when
debtor delivers one of the choices and creditor
accepts). Mere notice is required, not consent.
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Once choice is made and communicated, it
becomes irrevocable, and converted to a simple
obligation. (JURADO 169 (2010))
If creditor has right of choice
ONE/SOME
ALL
Debtor’s Act Creditor may Creditor
(b)
CAUSE
If the party who has the right to make the choice
does not make it or delays, the right does not pass
to the other party – action is specific performance to
compel delivery of ANY prestation. (PINEDA146147 (2009))
NOTE: When only one object or prestation is left, it
becomes a tacit choice. The obligation becomes a
simple obligation. (CIVIL CODE, art. 1202)
Creditor’s
Act
Effect of loss / impossibility of one, some or all
prestations
If debtor has right of choice
CAUSE
ONE/SOME
ALL
Debtor’s Act Exercise of Creditor
a)
the right of
choice,
debtor may
choose from
remaining
Debtor can
Creditor’s
choose
(a)
Act
deliver object
from
remaining or
(b) resolution
or
cancellation
with
damages
Debtor may
Fortuitous
choose from
Event
remaining
objects; and
if only 1 left –
it becomes a
simple
obligation
(JURADO 172-173 (2010))
is
to
entitled
damages
based on value
of the last one
lost
Debtor
is
entitled
to
resolution
or
cancellation
plus damages
Fortuitous
Event
choose from
remaining, or
the price of
any
object
destroyed by
the
debtor,
with damages
Exercise
of
the right of
choicecreditor may
choose
the
from
remaining
objects
Creditor
to
choose from
remaining; if
only 1 left –
becomes
a
simple
obligation
entitled
to
choose
the
value of any
of the objects
lost,
with
damages
Obligation is
extinguished
Obligation is
extinguished
(JURADO 168 (2010))
In alternative obligations, various things are due but
the delivery or performance of one will extinguish
the obligation. (DE LEON 217 (2014))
If one of the prestations is illegal, others may be
valid but obligations remain. (PINEDA 147 (2009))
Obligation
is
extinguished
NOTE: As long as one choice is left, it becomes a
simple obligation and if the last object is lost due to
fortuitous events, the obligation is extinguished. (DE
LEON 221-222 (2014))
If it is impossible to give all except one, the last one
must still be given. (4 TOLENTINO 209 (1991))
The right to choose may be given either to the
debtor or creditor. (JURADO 168 (2010))
e. Joint and Solidary Obligations
Involves multiple parties (more than one debtor or
more than one creditor or more than 1 debtors and
creditors).
The liability or rights of parties may be joint or
solidary. It is presumed joint. Solidary obligation
requires either stipulation or law to create the
solidary liability/right. (CIVIL CODE, art. 1207)
In a joint obligation/credit, just divide the
obligation/credit into as many numbers of debtors
and creditors to get the sharing, unless sharing was
stipulated (sharing is presumed equal). (CIVIL
CODE, art. 1208)
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In a joint obligation, each of the joint debtors is only
responsible for his/her own share and each cannot
be made to pay for the share of others, even those
who are insolvent or who have died; joint creditors
cannot collect the share of the others. (CIVIL CODE,
arts. 1207 & 1209)
d. If two or more persons have
appointed an agent for a common
transaction or undertaking, they shall
be solidarily liable to the agent for all
the consequences of the agency.
(CIVIL CODE, art. 1915.)
In a solidary obligation, the solidary debtors can be
made to pay the full amount of the obligation
(subject to presentation of available defenses);
solidary creditors can collect the full amount of the
obligation. (CIVIL CODE, art. 1216)
3.
Among solidary debtors and creditors, one who
pays or receives the full amount of the obligation can
recover from or deliver the share of others. (CIVIL
CODE, art. 1214 &1217)
5.
JOINT (DIVISIBLE) OBLIGATIONS
Joint obligation (Obligacion Mancomunada) –
The whole obligation is to be paid or fulfilled
proportionately by different debtors or demanded
proportionately by the different creditors.
General rule: The presumption is that an
obligation is always joint. (CIVIL CODE, art.
1207)
Exceptions: (FLENT)
1. When the obligation Expressly stipulates
solidarity;
2. When the Law requires solidarity;
Examples:
a. If two or more heirs take possession
of the estate, they shall be solidarily
liable for the loss or destruction of a
thing devised or bequeathed, even
though only one of them should have
been negligent. (CIVIL CODE, art.
927.)
b. Even when the agent has exceeded
his authority, the principal is solidarily
liable with the agent if the former
allowed the latter to act as though he
had full powers. (CIVIL CODE, art.
911.)
c. All partners are solidarily liable with
the partnership for any crime or
quasi-delict committed by any
partner acting in the ordinary course
of business of the partnership or with
the authority of his co- partners.
(CIVIL CODE, art.. 1822-1824.)
4.
When the Nature of the obligation requires
solidarity;
When a charge or condition is imposed upon
heirs or legatees and the Testament expressly
makes the charge or condition in solidum
(Manresa); and
When a solidary responsibility is imputed by a
Final judgment upon several defendants.
(Gutierrez v. Gutierrez, G.R. No. 34840)
Effects of joint liability
1. Demand on one produces delay only with
respect to the debt of the debtor against
whom a demand is made.
2. Interruption in payment by one does not
benefit or prejudice the other.
3. Each debtor can be held liable only for the
payment of his proportionate share of the
debt.
4. A joint debtor cannot be compelled to answer
for the acts or liability of the other debtors.
5. Vice of one debtor to creditor has no effect on
the others.
6. Insolvency or death of one debtor does NOT
affect other debtors.
Effects of joint credit
1. Each creditor can demand for the payment
only of his proportionate share of the credit.
2. A joint creditor cannot act in representation of
the other creditors.
NOTE: Unless there is no specification as to their
proportionate share in the credit or in the debt, the
creditors and debtors in a joint obligation shall be
entitled or shall make payment in equal proportion.
JOINT (INDIVISIBLE) OBLIGATIONS
If there are 2 or more debtors, the fulfillment of or
compliance with the obligation requires the
concurrence of all the debtors, although each for his
own share. (CIVIL CODE, art. 1209) The obligation
can be enforced only by proceeding against
all of the debtors.
If there are 2 or more creditors, the concurrence
or collective act of all the creditors, although each
for his own share, is also necessary for the
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enforcement of the obligation (CIVIL CODE, art.
1209)
The Court pointed out that there’s a loan
partnership, which means that there should be an
inclined sharing of losses. However in the JVA,
there was an agreement that all cash should be paid
by X; SC held that you should apply the rules on
partnership rather than the JV contract. (Marsman
v. Philippine Geonalytics, G.R. No. 183374)
Effect of breach
If one of the joint debtors fails to comply with his
undertaking, the obligation can no longer be fulfilled
or performed. Consequently, it is converted into one
of indemnity for damages. Innocent joint debtor shall
not contribute to the indemnity beyond their
corresponding share of the obligation. (CIVIL CODE,
art.1224)
INDIVISIBILITY
Refers to the prestation
which constitutes the
object of the obligation
Plurality of subjects is
NOT required
SOLIDARITY
Refers to the legal tie
and consequently to
the subjects or parties
of the obligation
Plurality of subjects is
indispensable
(DE LEON 225 (2014))
NOTE: The indivisibility of the prestation does not
necessarily import solidarity. They arise from
different criteria of qualification. Indivisibility has to
do with the prestation and its performance.
Solidarity has to do with the parties to an obligation.
(BALANE 257-258 (2020))
SOLIDARY OBLIGATIONS
Solidary obligation (Obligacion Solidaria) –
must be expressed in stipulation or provided by law
or by nature of obligation. Otherwise, it will be
considered a joint obligation/credit. (CIVIL CODE,
art.1207)
Words denoting solidarity include “jointly and
severally” (most common); “individually and
collectively”; “severally”; “individually”; “collectively”;
“separately”; “distinctively”, “individually liable” and
“individually and jointly”. (Ronquillo v. Court of
Appeals, G.R. No. L-55138)
Also, use of pronoun “I” in a promissory note where
several
debtors
sign
denotes
solidarity.
(PINEDA163-164 (2009); Republic Planters Bank v.
CA, 216 SCRA 738 (1992))
from the co-debtor only insofar as his payment
exceeded his share in the total obligation. If the
debtor pays less than his share, he cannot demand
reimbursement because his payment is less than his
actual debt. (Republic Glass Corp. v. Qua, G.R. No.
144413)
Kinds of solidary obligations
1.
2.
3.
4.
Active Solidarity
Passive Solidarity
Mixed Solidarity
Conventional Solidarity
5. Legal Solidarity (DE LEON 217-219 (2014))
1. Active Solidarity – solidarity on the part of
creditor or obligee
(a) Each creditor represents the other in the act of
recovery of payment. (DE LEON 218 (2014))
(b) Credit is divided equally between creditors as
among themselves.
(c) Debtor may pay any of the solidary creditors.
(CIVIL CODE, art. 1214)
(d) Any creditor can collect full amount of
obligation. Unless there is an agreement as to
which creditor can collect. Debtor must pay to
the creditor who first makes a demand. There is
a case of improper payment if the debtor pays
to another creditor who did not make a demand;
he can be made to pay again to the creditor who
made the demand. (CIVIL CODE, art. 1214)
(e) After a solidary creditor collects the full amount,
all debtors are released from the obligation. The
creditor who received payment must then
deliver the shares of the other solidary creditors
(presumed equal unless amount indicated).
(CIVIL CODE, art. 1215; 4 TOLENTINO 228
(1991))
Effect if one of solidary creditor dies: Share is
transmitted to heirs (but collectively)
2. Passive Solidarity – solidarity on the part of
debtors or obligors
(a) Any debtor can be made to pay the full
amount of the obligation with the right to
recover from co-debtors. (CIVIL CODE, art.
1216)
(b) The right to make a choice of who among
the debtors the creditor will proceed
against, lies on the creditor.
If a solidary debtor pays the obligation in part and is
issued a quitclaim, he can recover reimbursement
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An accommodation party under the law is solidarily
liable based on the Negotiable Instruments Law.
(Gonzales v. PCIB, G.R. No. 180257)
Effect of demand on one solidary debtor: It will
not stop the creditor from going against another
debtor as long as the debt has not yet been paid in
full. (CIVIL CODE, art. 1216)
Effect if one of solidary debtor dies: creditor is
not bound to make a claim on the estate of the
deceased debtor within 2-year period under the
Rules of Court since creditor may choose any of the
living debtors, in which case the 2-year period does
not apply.
Although the Rules of Court mandate that in case of
death of a respondent, the claims should be filed in
the settlement of estate, the court said that’s a
procedural rule and the rule of the Civil Code on
solidary liability should prevail — in which case,
creditor can choose who to sue. (Boston v. CA, G.R.
No. 173946)
Effect if several solidary debtors offer to pay:
creditor can choose from anyone or all of them, as
long as he does not collect more than the full
amount of the obligation.
Effect of Prescription: interruption of prescription
to one creditor affects all creditors. (4 TOLENTINO
229 (1991))
Effect of Delay: interests from delay on one debtor
is borne by all debtors. (4 TOLENTINO 229 (1991))
Defenses – a solidary debtor when sued can raise
the ff. defenses:
(a) From the nature of obligation – e.g. the
obligation is void, has prescribed, or has
already been paid – the defense is complete:
debtor sued is not liable, and no one is liable;
(b) Personal to him – may be: (i) complete
(debtor sued is not liable, but others may be
sued and the amount that may be collected
should be less than the share of the debtor with
a personal defense) e.g., minority, vitiated
consent; or (ii) partial e.g., non arrival of term or
condition – possible even if solidary-debtor
sued is liable for share of others, less his own
share) (4 TOLENTINO 250-251 (1991))
(c) Those which pertains to the share of his
co-debtors – with respect to the share which
personally belong to others, the debtor may
avail himself thereof only as regards that part of
the debt for which the others are responsible.
(CIVIL CODE, art. 1222)
Once creditor is paid in full, the obligation is
extinguished, and the debtor who pays is entitled to
reimbursement from others, as if joint (based on
agreed sharing or if not, equal). (CIVIL CODE, art.
1217)
When one of the solidary debtors cannot, because
of his insolvency, reimburse his share to the
debtor paying the obligation, such share shall be
borne by all his co-debtors, in proportion to the debt
of each. (CIVIL CODE, art. 1217)
Difference from joint obligation: The share of
the insolvent debtor is assumed proportionately by
others, in the meantime.
Reimbursement includes interest from date of
payment until actual reimbursement, except if
solidary debtor pays before maturity – in which case
interest runs only from maturity.
3. Mixed Solidarity – on the part of the obligors
and obligees, or the part of the debtors and the
creditors (DE LEON 219 (2014))
4. Conventional Solidarity – agreed upon by the
parties (DE LEON 219 (2014))
5. Legal Solidarity – imposed by law
Examples:
(a) Obligations arising from tort
a. The responsibility of two or more
persons who are liable for quasidelict is solidary. (CIVIL CODE, art.
2194)
(b) Obligations arising from quasi-contracts
(c) Legal provisions regarding obligation of
devisees and legatees
(d) Liability of principals, accomplices, and
accessories of a felony
(e) Bailees in commodatum (DE LEON 219-220
(2014))
Effects:
No reimbursement if payment is made after
prescription or became illegal.
Payment made before debt is due: no interest
can be charged except from maturity, otherwise,
interest can be charged from date of payment
Insolvency of one: others are liable for share prorata
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If different terms and conditions: collect only
what is due, later on collect as and when they
become due or the conditions are fulfilled
Remission made after payment is made: codebtor still entitled to reimbursement DE LEON 238239 (2014))
Effect of insolvency or death of co-debtor: still
liable for whole amount
Fault of any debtor: everyone is responsible to
the creditor – price, damage and interest, but the
debtor at fault should reimburse those who paid the
creditor (DE LEON 240-241 (2014))
Complete/personal defense: total or partial (up
to amount of share only) if NOT personal to him
(Braganza v. Villa Abrille, G.R. No. L-12471)
SOLIDARY DEBTOR
With principal liability
SURETY
can be made to pay
only when principal
debtor does not pay
Pays for full amount
and
can
seek
reimbursement
from
other solidary debtors
If he pays the full
amount,
he
may
recover
the
FULL
amount from principal
debtors
Extension
of
time
granted
to
other
solidary debtors w/o his
consent
does
not
release him
Extension
of
time
granted to principal
debtor w/o his consent
releases him
Can be made to pay
the full amount
Can bind himself for
less than the full
amount
of
the
obligation
(DE LEON 222-223 (2014))
Effect of loss or impossibility of the
prestation:
(a) If without fault – no liability
(b) If with fault – there is liability (also for damage
and interest)
(c) Loss due to fortuitous event after default – there
is liability (because of default) (PINEDA189
(2009))
As a rule, corporations are solely liable for their
obligations. The directors or trustees and officers
are not liable with the corporation even if it is through
their acts that the corporation incurred the
obligation. As an exception, directors or trustees
and corporate officers may be solidarily liable with
the corporation for corporate obligations if they
acted “in bad faith or with gross negligence in
directing the corporate affairs.” (Oliveras v. Castillo,
G.R. No. 196251, Jul. 9, 2014)
NOTE: The law clearly provides that the creditor
who may have executed any acts mentioned in Art.
1215 (Novation, Compensation, Merger or
Confusion), as well as he or she who collects the
debts, shall be liable to the others for the share in
the obligation corresponding to them. (DE LEON
231 (2014))
f.
Obligations with a Penal Clause
One to which an accessory undertaking is attached
for the purpose of insuring its performance by virtue
of which the obligor is bound to pay a stipulated
indemnity or perform a stipulated prestation in case
of breach. (DE LEON 252 (2014))
Penal cause vs. Condition
PENAL CLAUSE
CONDITION
Serves as accessory
obligation
NOT
a
separate
obligation; part of
principal
Never
demandable
until the condition
happens
Demandable in default
Obligation exists
Depends on the nonperformance of the
principal obligation
No obligation until
suspensive condition
happens
Principal
itself
is
dependent on an
uncertain event
(PINEDA203 (2009))
Obligation with a penal clause vs. Alternative
obligation
PENAL CLAUSE
ALTERNATIVE
OBLIGATION
Only 1 prestation
Impossibility
of
principal extinguishes
penalty
Several prestations
Impossibility of 1
prestation does NOT
extinguish
the
obligation
Debtor may choose
among the different
prestations
Debtor
may
not
choose
between
principal and penalty
(PINEDA 203 (2009))
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Obligation with a penal clause vs. Facultative
obligation
PENAL CLAUSE
FACULTATIVE
OBLIGATION
Penalty of payment in
lieu of the principal
must be expressly
granted
Creditor may demand
both if expressly
granted
Power to choose
prestation is absolute
Creditor may not
demand
both
principal
and
substitute
(PINEDA 203 (2009))
Purposes of penalty:
1. to insure the performance of the obligation
2. to liquidate the amount of damages to be
awarded to the injured party in case of breach
of the principal obligation (compensatory);
and
3.
in certain exceptional cases, to punish the
obligor in case of breach of the principal
obligation (punitive). (DE LEON 253 (2014))
Characteristics
1. Subsidiary – As a general rule, only penalty
can be demanded, principal cannot be
demanded, Except: Penalty is joint or
cumulative (Art. 1227), and in monetary
obligations where both principal and interest as
a form of penalty may be collected. (DE LEON
259-260 (2014))
2.
Exclusive – generally takes place of all
damages and interests. (DE LEON 254 (2014))
Penalty as substitute for damages
General rule: the penalty fixed by the parties takes
the place of all damages and interests in case of
breach. (CIVIL CODE, art. 1226)
Exceptions: (StiRF)
1. When by Stipulation of the parties, penalty, IN
ADDITION to interest, may be collected;
2. When the debtor is sued for Refusal to pay the
agreed penalty; and
3. When debtor is guilty of Fraud. (CIVIL CODE, art.
1226)
Kinds of penalties:
(a) Legal – constituted by law
(b) Conventional – constituted by agreement of
the parties
(c) Compensatory – established for the purpose
of indemnifying the damages suffered by the
obligee or creditor in case of breach of the
obligation
(d) Punitive – established for the purpose of
punishing the obligor or debtor in case of breach
of the obligation
(e) Subsidiary or alternative- in case of nonperformance only the penalty is demandable
(f) Joint or cumulative – both the principal
undertaking and the penalty may be demanded
(DE LEON 256 (2014))
Causes for reduction of penalty
(a) Partial/irregular performance
(b) Penalty
provided
is
iniquitous/
unconscionable (CIVIL CODE, art. 1229)
Although parties may voluntarily agree on any
amount of interest, voluntariness does not make
the stipulation on interest valid. A 5% per month,
or 60% per annum, rate of interest is iniquitous, and
must be struck down. (Menchavez v. Bermudez,
G.R. No. 185368)
Parties have wide latitude to stipulate any rate of
interest in view of BSP Circular 905, which
suspended the ceiling on interest effective Jan. 1,
1983.
However,
whenever
interest
is
unconscionable, the courts may declare it illegal.
Compounded interest of 5% monthly, being
iniquitous and unconscionable, is void and
inexistent from the very beginning. Thus, the legal
rate of 6% per annum must be imposed in lieu of the
excessive interest agreed upon by the parties.
(Benavidez v. Salvador, G.R. No. 173331)
COMMENT
Iniquitous or unconscionable stipulations on interest
rates are void, thus it is as if there was no express
contract thereon. Hence, courts may reduce the
interest rate as reason and equity demand.
(MCMP Construction v. Monark Equipment
Corp., G.R. No. 201001)
4. EXTINGUISHMENT
Principal Modes of Extinguishment (PaLCoCoCo-No)
(a) Payment or performance
(b) Loss of the thing due
(c) Condonation or remission of debt
(d) Confusionor merger of rights
(e) Compensation
(f) Novation (CIVIL CODE, art. 1231)
Other modes of extinguishment
(a) Annulment
(b) Rescission
(c) Fulfillment of resolutory condition
(d) Prescription (CIVIL CODE, art. 1231)
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Not stated in Article 1231 of the Civil Code:
1. Death of a party in personal obligations (4
TOLENTINO 271 (1991))
2. Mutual Desistance (Saura Import & Export Co.
v. DBP, GR No. L-24968, Apr. 27, 1972)
3. Compromise (CIVIL CODE, art. 2028)
4. Impossibility of Fulfillment (CIVIL CODE, art.
1184)
5. Happening of Fortuitous Event (CIVIL CODE, art.
1165)
6. Arrival of Resolutory Period (CIVIL CODE, art.
1193)
a.
Payment or Performance
PRINCIPLES APPLICABLE FOR VALID
PAYMENT OR PERFORMANCE
(a) Identity
(b) Integrity or completeness
(c) Indivisibility (DE LEON 300-301 (2014))
(a) Principle of identity
With respect to the prestation or the object – the
same thing or the same prestation, in the manner
agreed upon, must be delivered or performed in
order to extinguish the obligation. The obligor
cannot compel the obligee to accept a different thing
or prestation, even if the one offered is more
valuable than the one agreed upon. (CIVIL CODE, art.
1244)
With respect to parties – must be made by proper
party to proper party
i. Payor - the one who delivers or performs must
be the debtor or anyone interested in the
fulfillment of the obligation. Any other person
requires the creditor’s consent (CIVIL CODE, art.
1236)
When there is a 3rd person interested in the
fulfillment of the obligation – creditor must
accept the payment and debtor need not give
consent.
When a 3rd person not interested in the
fulfillment of the obligation pays/performs –
creditor can refuse to accept, but once
accepted, the obligation to the creditor is
extinguished. NOTE: There is full subrogation if
the debtor consented to the payment by the 3rd
person (unless he intended it to be a donation).
In the absence of consent by the debtor, the 3rd
person is entitled only to reimbursement of the
payment made, to the extent that the debtor has
been benefitted
CIVIL LAW (AND PRACTICAL EXERCISES)
o
o
ii.
W/O DEBTOR’S CONSENT – Only the
cost which the third person paid to
creditor and the extent to which the
debtor benefited from the payment will
be the extent of third person’s right to
collect. [
W/ CONSENT – third person gets all
rights including right against securities,
collateral guarantees, etc. (CIVIL CODE,
arts. 1236-1238)
Payee - creditor or obligee at the time payment
is due (includes successor in interest of
transferee since credit is generally assignable)
(CIVIL CODE, art. 1240)
If paid to a 3rd person – Payment is valid only in
any of the ff. cases:
(a) Payment which redounded to the benefit
of the obligee
Instances when the presumption that the
payment redounded to the benefit of the
obligee:
After payment, 3rd person acquires the
creditor’s rights (subrogation)
(1) Creditor ratifies payment to 3rd
person
(2) By creditor’s conduct, debtor has
been led to believe that 3rd person
is authorized to receive payment
make the payment (estoppel)
(CIVIL CODE, art. 1241)
(b) Payment to the possessor of the credit,
when made in good faith (CIVIL CODE, art.
1242)
Requisites: (GP)
o Payment by debtor must be made in
Good faith.
o Creditor must be in Possession of the
credit and NOT merely the evidence of
indebtedness.
Payment to an incapacitated person, valid if:
(KB)
1. Incapacitated person Kept the thing delivered,
or
2. Insofar as the payment has been Beneficial to
him. (CIVIL CODE, art. 1241)
Rules on payment by an incapacitated person
As a general rule, payment by one who does not
have the free disposition of the thing due or capacity
to alienate it is not valid. This means that the thing
paid can be recovered.
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EXCEPTION: Art. 1427 provides that when a minor
between eighteen and twenty-one years of age who
has entered into a contract without the consent of
the parent or guardian, voluntarily pays a sum of
money or delivers a fungible thing in fulfillment of the
obligation, there shall be no right to recover the
same from the obligee who has spent or consumed
it in good faith. (DE LEON 287 (2019))
Where payment should be made
(a) In the place designated in the obligation
(b) If there is no express stipulation and the
undertaking is to deliver a specific thing – at the
place where the thing might be at the moment
the obligation was constituted
(c) In other case – in the place of the domicile of
the debtor (CIVIL CODE, art. 1251)
When to pay: Generally, upon demand. (See
previous discussions when demand is not
necessary)
CIVIL LAW (AND PRACTICAL EXERCISES)
deficiency that cause no serious harm to the
obligee. (International Hotel Corporation v. Joaquin
Jr., G.R. No. 158361)
Requisites of substantial performance
(GoSTeM):
1. Attempt in Good faith to perform without willful
or intentional departure
2. Deviation is Slight
3. Omission/Defect is Technical or unimportant
4. Must not be so Material that intention of parties
is not attained. (International Hotel Corporation
v. Joaquin Jr., G.R. No. 158361)
Acceptance by the obligee as full
When the obligee accepts the performance,
knowing its incompleteness or irregularity, and
WITHOUT expressing any protest or objection,
the obligation is deemed fully complied with.
This is because the obligee is deemed to have
waived his right to collect the deficiency. (CIVIL
CODE, art. 1235)
(b) Principle of integrity (CIVIL CODE, art. 1233)
General rule: A debt shall not be deemed paid
UNLESS the thing or service of which the obligation
consists of has been completely delivered or
rendered, as the case maybe. (CIVIL CODE, art.
1233)
Exceptions:
1. When the obligation has been substantially
performed in good faith CIVIL CODE, art. 1234);
2. When the obligee accepts performance despite
its incompleteness or irregularity and without
expressing any protest or correction. (CIVIL
CODE, art. 1235);
3. In cases involving divisible obligations capable
of partial performance. (PINEDA 192-193
(2009)).
Substantial performance
If the obligation has been substantially performed
in good faith, the obligor may recover as though
there had been a strict and complete fulfillment, less
damages suffered by the obligee. This is the basis
of the rule that if the breach is only slight, the obligee
cannot resolve or cancel the obligation. Generally,
the courts will grant the obligor a certain time to
make up for the slight breach. The “damages
suffered by the obligee” refers to the deficiency
which the obligee is still entitled to collect. (CIVIL
CODE, art. 1234; 4 TOLENTINO 277 (1991))
Unlike Art. 1234 where the obligee does not
give up his right to collect the balance, in Art.
1235, the obligee waives his right to collect such
balance.
Divisible obligations
An obligation that is capable of partial performance.
(PINEDA 192-193 (2009))
(a)
Execution of certain number of days’ work
(b)
Expressed by metrical units
(c)
Nature of obligation – susceptible of partial
fulfillment (DE LEON 250 (2014))
(c) Indivisible Obligations
One not capable of partial performance.
(a)
To give definite things
(b)
Not susceptible of partial performance
(c)
Provided by law
(d)
Intention of parties (DE LEON 249,
2014))
NOTES:
Divisibility or indivisibility of the obligation
refers to the performance of the prestation and
not to the thing which is the object thereof (DE
LEON 249, 2014))
Intention of parties should be taken into
account to determine whether obligation is
divisible or not (DE LEON 244, 2014))
Substantial performance is applied only when the
obligor admits breaching the contract after honestly
and faithfully performing all the material elements
thereof except for some technical aspects or
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CIVIL LAW (AND PRACTICAL EXERCISES)
SPECIAL RULES ON MONETARY
OBLIGATIONS (LOANS AND FORBEARANCE
OF MONEY, GOODS, AND CREDITS)
discharged in Philippine Pesos at rate of exchange
at the time of payment. (Union Bank v. Tui, G.R. No.
173090)
Forbearance of money, goods and is defined as
“arrangements other than loan agreements where a
person acquiesces to the temporary use of his
money, goods or credits pending the happening of
certain events or fulfillment of certain conditions.”
(Estores v. Supangan, G.R. No. 175139)
(b) Extraordinary Inflation or Deflation
(a) Payment must be in legal tender (CIVIL CODE,
art. 1249)
Personal checks, Cashier’s or Managers checks are
NOT legal tender, so creditor cannot be compelled
to accept them (unless such is stipulated as the
mode of payment). Creditor, however, has the
option to accept payment in checks of any kind. If
the creditor accepts the check or no prompt
objection to the form of payment is made, there is
valid tender of payment and creditor can no longer
claim later that payment is not in legal tender.
(Pabugais v. Sahijwani, G.R. No. 156846)
When payment in check is accepted, it produces
the effect of payment only when the check is
cleared (retroacts to the date the check was
deposited) and the funds are transferred to the
account of the creditor. Stale checks (those not
presented for payment within 6 months from date of
check) do not produce the effect of payment and
debtor can be required to issue a new check or pay
in cash since the obligation is not yet deemed paid.
Debtor cannot however be liable for interest or
penalty and cannot be declared in default since
creditor could have immediately presented it for
payment. It is only in cases where the value is
impaired through creditor’s fault (i.e., creditor
misplaced the check and someone else encashed
it), that the debtor is deemed to have paid his
obligation without having to issue a new check or
paying in cash. (Evangelista v. Screenex, Inc., G.R.
No. 211564)
Payment in coins is legal tender only up to a
certain amount:
for P1, 5 and 10 coins, only up to P1,000;
for P.01, .05, .10, and .25 coins, only up to P 100.
(BSP Circular No. 537, Series of 2006, July 18,
2006))
Payment in foreign currency is allowed, if
stipulated. The Uniform Currency Act (1950) was
expressly repealed by R.A. No. 8183 (effective July
5, 1996). Art. 1249 allowing stipulation of payment
in foreign currency has been restored. Agreements
with stipulation to pay foreign currency may be
In cases of extraordinary inflation or deflation, the
value of the currency at the time the obligation was
incurred should be the basis of payment, unless
there is stipulation to the contrary. (CIVIL CODE, art.
1250)
Inflation (or deflation) rates are determined by
economic managers (BSP specifically), but
whether extraordinary, this will require judicial
determination. The Court has ruled that whoever
alleges extraordinary inflation must prove it –
indicating that the courts will determine based on
evidence presented. (Citibank v. Sabeniano, G.R.
No. 156132)
Requisites for the application of Art. 1250 on
extraordinary inflation/deflation:
1. There is an official declaration of extraordinary
inflation or deflation from the BSP
2. The obligation is contractual in nature
3. The parties expressly agreed to consider the
effects of the extraordinary inflation or deflation.
(DE LEON 311 (2014)); see Equitable PCI Bank
v. Sheung Ngor, G.R. No. 171545)
NOTE: Inflation or deflation is based on increase
or decrease of purchasing power and not based on
Peso-US Dollar exchange rate. (Singson v. Caltex,
G.R. No. 137798, Oct. 4, 2000). The rate of
inflation/deflation is measured by determining rate of
increase or decrease of purchasing power from a
prior period. It is determined by the amount of basic
goods (within a basket) that money can buy, as
compared to a prior period. If money can buy P100
of basic goods at a certain prior period, determine
how much of the same goods can be purchased at
a later period – this represents the rate of inflation or
deflation. (Citibank v. Sabeniano, G.R. No. 156132)
Example:
A loan of P100 was obtained in 2013, and
payable after one year. At the time the
obligation was incurred, the P100 proceeds
of the loan could purchase P100 worth of
goods. In 2014 when the loan is due, P100
can purchase only ½ of the goods it could
purchase in 2013. Inflation rate is therefore
100%.
If there is no declaration of extraordinary
inflation – Debtor must pay P100 in 2014.
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If courts declare extraordinary inflation –
Debtor must pay P200 in 2014 so that
creditor will get the same value of his
money in 2013 when he lent the money.
(c) Payment of Interest
CIVIL LAW (AND PRACTICAL EXERCISES)
By way of penalty (debtor in default)
i. With penalty clause – substitutes
payment of interest, except if it is clearly
stipulated that penalty is in addition to
interest. (CIVIL CODE, art. 1226)
ii.
NOTE: In loan, ownership is transferred to the
borrower. Creditor merely has the right to an equal
amount of the same kind and quality. (CIVIL CODE,
art. 1953)
Rules on payment of interest
For use of money, no default
i. Stipulation in writing is required – if
none, no interest is collectible (CIVIL CODE,
art. 1956)
ii.
With stipulation in writing, but the
interest rate is not stipulated – interest is
legal rate of 6% per annum for loans and
forbearance of money (decrease from 12%
to 6% based on BSP Circular 799, effective
July 1, 2013). The legal rate of interest now
is the same for all obligations, including
judgment obligations not arising from loans,
forbearance of money, goods or credits,
including those based on torts. (BSP
Circular No. 799, Series of 2013, June 21,
2013)
NOTE: In the absence of an express stipulation
as to the rate of interest that would govern the
parties, the rate of legal interest for loans or
forbearance of any money, goods or credits and
the rate allowed in judgments shall no longer be
twelve percent (12%) per annum but will now be
six percent (6%) per annum effective July 1,
2013. It should be noted, nonetheless, that the
new rate could only be applied prospectively
and not retroactively. Consequently, the twelve
percent (12%) per annum legal interest shall
apply only until June 30, 2013. Come July 1,
2013 the new rate of six percent (6%) per
annum shall be the prevailing rate of interest
when applicable. (Nacar v. Gallery Frames,
G.R. No. 189871; See also Lim v. HMRPI, G.R.
No. 201483, Aug. 4, 2014)
iii. With stipulation in writing, and the rate
has been stipulated – collect the
stipulated rate of interest, subject to the
right of the courts to reduce the rate if
unconscionable or iniquitous. (State
Investment House, Inc. v. Court of Appeals,
G.R. No. 112590, Jul. 12, 2001)
Without penalty clause (even if no
interest is stipulated) – collect legal rate
of interest by way of penalty for default (no
more distinction, see above). Liability
arises only from default (unless demand
not necessary, from extrajudicial or judicial
demand). (Eastern Shipping Lines, Inc. v.
Court of Appeals, G.R. No. 97412)
NOTE: No penalty is collectible during grace
period because debtor is not in default if he is
given time to pay.
iii. Compounded interest (interest over
interest) – applies only if stipulated, or in
case of judicial demand. (CIVIL CODE, art.
1959 & 2212),
Interest due on the principal amount accruing as
of judicial demand shall SEPARATELY earn
legal interest at the prevailing rate prescribed by
the Bangko Sentral ng Pilipinas, from the time
of judicial demand UNTIL FULL PAYMENT.
(Lara’s Gifts and Decors v. Midtown Industrial,
G.R. No. 225433)
Judgment Debt (Not arising from loans or
forbearance of money, such as torts)
Except in cases where the amount can be
determined with reasonable certainty, the
amount of obligation may still be unliquidated
and not yet determined upon filing of the case.
The liquidation or the determination of the
amount of the obligation takes place only from
the time judgment is rendered in the first
instance. Thus:
i. If the amount of the obligation can be
established with reasonable certainty,
the interest runs from extrajudicial or
judicial demand (default) – [at the discretion
of the court] at the rate of 6% p/a, up to time
decision becomes final and until fully paid.
(Republic v. de Guzman, G.R. No. 175021)
ii.
If the amount of the obligation cannot be
established with reasonable certainty,
interest will run only from the time judgment
is rendered in the first instance at the rate
6% up to time of payment. (Eastern
Shipping Lines, Inc. v. Court of Appeals,
G.R. No. 97412)
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SPECIAL RULES/FORMS OF PAYMENT
(a) Application of payments
The designation of the debt which payment shall be
made, out of 2 or more debts owing the same
creditor. (CIVIL CODE, art. 1252)
Requisites (OTD)
1. There must be only One debtor and only one
creditor;
2. Two or more debts of the same kind; and
3. All debts must be Due. (CIVIL CODE, art. 1252)
Exception on 3rd requisite: There may be
application of payment even if all debts are not
yet due if:
i. Parties so stipulate
ii. When application of payment is made by
the party for whose benefit the term has
been constituted (CIVIL CODE, art. 1252)
How application is made:
(a) Debtor makes the designation
(b) If not, creditor proposes to make the application
by advising the debtor or through certain acts
such as issuing a receipt with an application of
payment. Since this is a mere proposal (since
only a debtor can make an application of
payments), the debtor must accept it either
expressly or impliedly by not objecting to the
creditor’s proposal, as when the debtor accepts
without objection the receipt issued by the
creditor with an application of payment.
(c) If the debtor makes no application and the
creditor has not made a proposal, or if the
application is not valid, then application is made
by operation of law:
i. It is to be applied to the most onerous debt
(e.g., to an interest bearing debt over debts
without interest; to a debt secured by a
mortgage over a debt that is unsecured); or
ii. If all debts are equally onerous or of the
same burden, or it cannot be determined
which debt is the most onerous, then the
payment should be applied pro rata to all
the obligations due. (CIVIL CODE, art. 12521254)
Q: Article 1176 provides that: “The receipt of the
principal by the creditor, without reservation with
respect to the interest, shall give rise to the
presumption that said interest has been paid.”
Article 1253 states that: “If the debt produces
interest, payment of the principal shall not be
deemed to have been made until the interests have
been covered.” How are these two rebuttable
presumptions reconciled?
CIVIL LAW (AND PRACTICAL EXERCISES)
A: Article 1176 should be treated as a general
presumption subject to the more specific
presumption under Article 1253. Article 1176
applies when there is doubt as to whether interest is
waived because the creditor accepts the payment
for the principal without reservation with respect to
the interest. Here, the creditor is presumed to have
waived the right to collect interest. Article 1254 has
no issue on waiver of interest because it is a given
under this Article that the debt produces interest.
The doubt is on whether the amount received by the
creditor is payment for the principal or the interest.
Article 1253 resolves this doubt by providing a
hierarchy: payments shall first be applied to the
interest; payment shall then be applied to the
principal only after the interest has been fully paid.
(Marquez v. Elisan Credit Corporation, G.R. No.
194642)
(b) Dation in payment (Dacion en pago) (CIVIL
CODE, art. 1245)
Definition – a mode of extinguishing an obligation
whereby the debtor pays a monetary obligation with
property. It is a special form of payment because
one element of payment is missing: Identity.
(PARAS 380 (2016))
Dation in payment extinguishes the obligation to
the extent of the value of the thing delivered, either
as agreed upon by the parties or as may be proved,
unless the parties by agreement – express or
implied, or by their silence – consider the thing as
equivalent to the obligation, in which case the
obligation is totally extinguished. (Tan Shuy v.
Maulawin, , G.R. No. 190375)
The contractual intention determines whether the
property subject of the dation will be considered as
the full equivalent of the debt and will therefore
serve as full satisfaction for the debt. (Luzon Dev
Bank v. Enriquez, G.R. No. 168646)
Law on Sales Apply
The law on sales will apply in case of dacion en pago
since it partakes of the nature of sale – with the
creditor purchasing the thing or property of the
debtor, the payment of which is charged to the
debtor’s obligation. It extinguishes the obligation to
the extent of the value of the thing delivered. (Tan
Shuy v. Maulawin, , G.R. No. 190375)
As in a contract of sale, valuation should be agreed
upon by the creditor as buyer, and the debtor as
seller. It is also subject to the usual warranties of
sale. (4 TOLENTINO 294 (1991))
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Requisites: (PAD)
1. There must be the Performance of the
prestation in lieu of payment which may consist
in the delivery of a corporeal thing or a real right
or a credit against the third person
2. There must be some Difference between the
prestation due and that which is given in
substitution
3. There must be an Agreement between the
creditor and debtor that the obligation is
immediately extinguished (to the extent of
agreed valuation) by reason of the performance
of a prestation different from that due. (DE
LEON 321 (2014))
Intent is Controlling
Like in all contracts, the intention of the parties to the
dation in payment is paramount and controlling. The
contractual intention determines whether the
property subject of the dation will be considered as
the full equivalent of the debt and will therefore
serve as full satisfaction for the debt. “The dation in
payment extinguishes the obligation to the extent of
the value of the thing delivered, either as agreed
upon by the parties or as may be proved, unless the
parties by agreement, express or implied, or by their
silence, consider the thing as equivalent to the
obligation, in which case the obligation is totally
extinguished.” (Luzon Development Bank v.
Enriquez, G.R. No. 168646)
(c) Cession or Assignment (in favor of
creditors) (CIVIL CODE, art. 1255)
The process by which a debtor transfers ALL his
assets which are not subject to execution in favor of
creditors, so that the latter may sell them and apply
the proceeds to his outstanding obligations. Except
if there is contrary agreement, or as may be
provided by law, the obligations are extinguished
only up to the net amount of the proceeds of the
sale. (PARAS 417 (2016))
Kinds of Assignment
1. Legal – governed by the insolvency law
2. Voluntary – agreement of creditors (PARAS
417 (2016))
Requisites of Voluntary Assignment: (DACCI)
1. More than one Debt
2. More than one Creditor
3. Insolvency of debtor
4. Abandonment of all debtor’s property not
exempt from execution
5. Acceptance or Consent on the part of the
creditors (PARAS 417 (2016))
CIVIL LAW (AND PRACTICAL EXERCISES)
Effects of Assignment
(a) Creditors do not become the owner of the
properties; they are merely assignees with
authority to sell (hence, the legal contract
involved is one of Agency and not Sale);
(b) Debtor is released up to the amount of the net
proceeds of the sale, UNLESS there is a
stipulation to the contrary
(c) Creditors will collect credits in the order of
preference agreed upon, or in default of
agreement, in the order ordinarily established
by law (PARAS 417-418 (2016))
Dation in Payment v. Cession in Payment
DATION IN
CESSION IN
PAYMENT
PAYMENT
(Art. 1245)
(Art. 1255)
One creditor
Plurality of creditors
NOT necessarily in Debtor
must
be
state
of
financial insolvent
difficulty
Thing delivered is Universality of property
considered
as of debtor is what is
equivalent
of ceded
performance
Payment extinguishes Merely releases debtor
obligation to the extent up to the net proceeds
of the value of the thing of things ceded or
delivered as agreed assigned, unless there
upon
is a contrary intention
(DE LEON 356-357 (2014))
(d) Tender of payment and Consignation (CIVIL
CODE, art. 1256)
Tender
The act of offering to the creditor what is due him
together with a demand that the creditor accepts the
same. (PARAS 419 (2016))
If the creditor refuses w/o just cause to accept
payment, he becomes in mora accipiendi and tender
alone will not extinguish the obligation; consignation
is needed. (Co v. PNB, G.R. No. L-51767)
Consignation
The act of depositing the thing due with the court or
judicial authorities whenever the creditor refuses to
accept payment, and generally requires prior tender
of payment. (RUBEN E. AGPALO, OBLIGATIONS AND
CONTRACTS 185 (2008))
Requisites of Valid Consignation (VUPAS)
1. Existence of Valid debt;
2. Creditor has Unjustifiably refused to accept
payment, i.e., previous valid tender;
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3.
4.
5.
Prior notice of Consignation had been given to
the person interested in performance of
obligation (1st notice) (CIVIL CODE, art. 1257)
Actual deposit/consignation with proper judicial
authorities
Subsequent notice of Consignation (2nd notice)
(DE LEON 359-360 (2014))
Exception on 2nd requirement, i.e., where
consignation w/o prior tender allowed (CIVIL
CODE, art. 1256):
i. Creditor absent or unknown/ does not appear at
the place of payment
ii. Incapacitated to receive payment at the time it
is due
iii. Refuses to issue receipt w/o just cause
iv. 2 or more creditors claiming the same right to
collect
v. Title of obligation has been lost
vi. Debtor had previously been notified by the
creditor that the latter would not accept any
payment (Kapisanan Banahaw, Inc. v. Dejarme,
G.R. No. L-32908)
Effects of Consignation
(a) Debtor may ask judge to order cancellation of
obligation
(b) Running of interest is suspended
(c) Before creditor accepts or before judge
declares consignation has been properly made,
obligation remains (debtor bears risk of loss at
the meantime, and after acceptance by creditor
or after judge declares that consignation has
been properly made – risk of loss is shifted to
creditor) (PARAS 433 (2016))
When Consignation Extinguishes Obligation
Consignation is completed at the time the creditor
accepts the same without objections, OR, if he
objects, at the time the court declares that it has
been validly made in accordance with law. (Dalton
v. FGR Realty and Development Corporation, G.R.
No. 172577)
Tender of payment vs. Consignation
TENDER OF
CONSIGNATION
PAYMENT
Antecedent
act; Principal act; produces
preparatory
the effects of payment
Extrajudicial
Judicial
(PARAS 419-420 (2016))
b. Loss of Determinable Thing Due or
Impossibility or Difficulty of
Performance
Includes partial or total loss of thing (CIVIL CODE,
arts. 1262 & 1264)
CIVIL LAW (AND PRACTICAL EXERCISES)
LOSS OF THE THING DUE
(a) When the object perishes (physically)
(b) When it goes out of commerce
(c) When it disappears in such a way that: its
existence is unknown or it cannot be recovered
(CIVIL CODE, art. 1189)
Effect of Loss in Obligation to Deliver a
Specific Thing
If loss was due to fortuitous events, obligation is
extinguished; no damages.
If the loss is due to the fault of the debtor or any
person, that person should be held liable for
damages. (PARAS 438 (2016))
Effect of Loss in Obligation to Deliver a Generic
Thing
General rule: Loss does NOT extinguish obligation.
Genus numguam perit: “Genus never perishes.”
Exceptions:
i.
Loss of entire genus (e.g., when sale of a
certain class of things become illegal)
ii.
Loss of entire group of limited generic
obligation (e.g., I will deliver “one of my
cars” and all cars are no lost through force
majeure. (See BALANE 400 (2020)
Effect of Partial Loss
1. When loss is significant – may be enough to
extinguish obligation
2. When loss insignificant – NOT enough to
extinguish obligation (DE LEON 377 (2014))
NOTE: When thing is lost in the possession of the
debtor, it is presumed to be due to debtor’s fault;
Exceptions: natural calamity, earthquake, flood,
storm. (CIVIL CODE, art. 1265)
IMPOSSIBILITY OF PERFORMANCE
(a) Physical impossibility – it is not within man’s
capability
(b) Legal impossibility – when the prestation is
prohibited by law
(c) Moral impossibility – when the service has
become so burdensome that it could not have
been the intention of the parties (CIVIL CODE, art.
1267)
Effect of Subsequent Impossibility of
Performance in Obligation to Do
Debtor is released when the prestation becomes
legally or physically impossible without fault on the
part of the debtor. (CIVIL CODE, art. 1266)
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NOTE: The obligation must be possible and legal
when agreed upon by the parties. The impossibility
must occur after the constitution of the obligation.
Otherwise, the obligation is void from the beginning
and there is nothing to be extinguished. (DE LEON
364 (2019))
NOTE:
Judicial determination of extent is necessary
Doctrine of Unforeseen Events: The court is
authorized to release the obligor, in whole or in
part, when the service has become so difficult
as to be manifestly beyond the contemplation of
the parties. (CIVIL CODE, art. 1267; DE LEON
389 (2014))
Doctrine of Subjective Impossibility: The
obligation undoubtedly becomes impossible if
there is no physical or legal loss but the object
obligation belongs to another person; the
obligor must indemnify the obligee for the
damages suffered by the latter. (4 TOLENTINO
336 (1991))
Rebus Sic Stantibus: The agreement is valid
only if the same conditions prevailing at time of
contracting continue to exist at the time of
performance. Obligor may be released in whole
or in part if the conditions have changed so that
it becomes manifestly beyond the intention of
the parties. (4 TOLENTINO 336 (1991))
Requisites of Rebus Sic Stantibus: (FoDAF)
1. The event or change could not have been
Foreseen at the time of the execution of the
contract
2. The performance is extremely Difficult, but NOT
impossible (because if it is impossible, it is
extinguished by impossibility)
3. The event was not due to the Act of any of the
parties
4. The contract is for a Future prestation (4
TOLENTINO 347 (1991))
The difficulty of performance contemplated should
be such that one party would be placed at a
disadvantage by the unforeseen event. Mere
inconvenience, or unexpected impediments, or
increased expenses did not suffice to relieve the
debtor from a bad bargain. (Tagaytay Realty v.
Gacutan G.R. No. 160033)
Article 1267 grants the courts the power of relief, but
not of revision. The Courts do not have the authority
to remake, modify or revise the terms and conditions
CIVIL LAW (AND PRACTICAL EXERCISES)
of the contract. (Occena v. Hon. Jabson, G.R. No.
L-44349)
Art. 1267 is not restricted to obligations to do. The
term “service” should be understood as referring to
the “performance of the obligation”, a phrase which
encompasses all obligations. (NATELCO v. Court of
Appeals, G.R. No. 107112)
Mere inconvenience, unexpected impediments,
increased expenses, or even pecuniary inability to
fulfill an engagement, will not relieve the obligor from
an undertaking that it has knowingly and freely
contracted. The closure of respondent's business
was neither a fortuitous nor an unforeseen event
that rendered the lease agreement functus officio.
(Sps Poon v. Prime Savings Bank, G.R. No.
183794)
c. Condonation or Remission of Debt
Condonation – An act of liberality by which the
creditor renounces the enforcement of the obligation
contracted in his favor. To condone is to forgive or
to remit a debt. (Bañez v. Young, L-4635)
Remission – An act of liberality by virtue of which
the obligee, without receiving any price or
equivalent, renounces the enforcement of the
obligation, as a result of which it is extinguished in
its entirety or in that part or aspect of the same to
which the remission refers (Manresa). In brief, “it is
the gratuitous abandonment by the creditor of his
right” (4 TOLENTINO 353 (1991))
Requisites (CapRe-FLAgS)
1. There must be an Agreement
2. There must be a Subject matter (object of the
remission, otherwise there would be nothing to
condone)
3. Cause of consideration must be Liberality
(Essentially gratuitous, an act of liberality)
4. Parties must be Capacitated and must consent;
requires acceptance by obligor; implied in
mortis causa and express in inter vivos
condonations.
5. Formalities of a donation are required in the
case of an express remission or condonation
6. Revocable – subject to rule on inofficious
donations. (PARAS 448 (2016))
Examples of Implied Condonation, Waiver of
Right to Collect
i. Voluntary
delivery
of
evidence
of
indebtedness
–
when
evidence
of
indebtedness is found in the possession of the
debtor – there is a rebuttable presumption of
voluntary delivery (CIVIL CODE, art. 1272), which
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if not rebutted, will create the presumption of
waiver condonation (remission) which in effect
extinguishes the debt. (CIVIL CODE, art. 1271
(1))
5.
EXCEPTION: when the waiver is inofficious.
(CIVIL CODE, art. 1271 (2))
A claim is liquidated when the amount and time of
payment is fixed. If acknowledged by the debtor,
although not in writing, the claim must be treated as
liquidated. When the defendant, who has an
unliquidated claim, sets it up by way of counterclaim,
and a judgment is rendered liquidating such claim, it
can be compensated against the plaintiff’s claim
from the moment it is liquidated by judgment.
Compensation takes place only if both obligations
are liquidated. (Lao v. Special Plans, Inc., G.R. No.
164791)
Defense to the claim of inofficiousness: the
delivery of the document was made in virtue of
payment of the debt. (CIVIL CODE, art. 1271 (2))
ii.
CIVIL LAW (AND PRACTICAL EXERCISES)
If there if actual proof, or the presumption above
is not rebutted, that the evidence of
indebtedness was returned by the creditor to
the debtor, there is a presumption of waiver
(a) If in hands of joint debtor – only his share is
condoned.
(b) If in hands of solidary debtor – whole debt
is condoned.
(c) Tacit – voluntary destruction of instrument
by creditor; made to prescribe w/o
demanding. (CIVIL CODE, art. 1271)
d. Confusion
The character of debtor and creditor is merged in
same person with respect to same obligation.
(JURADO 306 (2010))
Requisites of Merger of Rights: (COP)
1. It must take place between Principal debtor and
principal creditor only.
2. Merger must be Clear and definite.
3. Only One obligation is involved. (PARAS 456
(2016))
Confusion does not extinguish a joint obligation,
except as regards the share corresponding to the
creditor or debtor in whom the 2 characters concur.
(CIVIL CODE, art. 1277)
e. Compensation
A mode of extinguishment up to the concurrent
amount of the obligation of persons who, in their
own right, have become mutual debtors or creditors
of one another. (JURADO 309 (2010))
Requisites (LM-STD):
1. Both parties must be Mutual creditors and
debtors - in their own right and as principals.
2. Both debts must consist in Sum of money or if
consumable, of the same kind or quality.
3. Both debts are Due.
4. Both debts are Liquidated and demandable
(determined).
Neither debt must be retained in a controversy
commenced
by
Third
person
and
communicated w/ debtor (neither debt is
garnished). (CIVIL CODE, art. 1279)
Kinds of Compensation
(a) Legal – by operation of law; as long as 5
requisites concur – even if unknown to parties;
if not equal debts, only up to concurring amount.
Legal compensation takes place by
operation of law when all the requisites are
present, as opposed to conventional
subrogation which takes place when the
parties agree to compensate their mutual
obligations even in the absence of some of
the requirements.
(b) Conventional – based on agreement of
parties, even if the other requirements are not
complied with.
Conventional compensation takes place
when the parties agree to compensate their
mutual obligations even in the absence of
some requisites. (Mondragon Personal
Sales Inc. v. Sola Jr., G.R. No. 174882)
(c) Facultative – only one party may invoke the
compensation, such as the person who has the
benefit of the period who can invoke it even
before the period has arrived.
(d) Judicial – set off takes place upon order of the
court; needs pleading and proof; all
requirements
must
concur,
EXCEPT
liquidation.
(e) Total – when 2 debts are of the same amount.
(f) Partial –when 2 debts are not of the same
amount. (PARAS 461 (2016))
Effect of Assignment of Credit to Third Person:
Can There Still be Compensation?
1. If made after legal compensation has set in
– no effect; compensation has already
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2.
extinguished the obligation, so there is nothing
to assign.
If made before legal compensation has set
in:
(a) With consent of debtor – debtor is estopped
UNLESS he reserves his right to
compensate and gave notice to assignee
(b) With knowledge but w/o consent of debtor
– compensation may be set up as to debts
maturing prior to assignment
(c) W/o knowledge – compensation may be
set-up on all debts prior to his knowledge
(CIVIL CODE, art. 1285)
Compensation vs. Confusion
COMPENSATION
CONFUSION
Different persons are Only 1 person who is
involved; each is a creditor and debtor of
debtor and creditor of himself
each other
Two obligations
One obligation
Indirect payment
No need to pay oneself
(DE LEON 416-417 (2014))
Obligations not allowed to be Compensated
(Co-PGT)
(a) When one of the debts arises from a depositum
or from the obligations of a depositary or of a
bailee in Commodatum. (CIVIL CODE, art. 1287)
a. BUT NOTE: Only the bailor or
depositor is allowed to invoke legal
compensation (DE LEON 420-421
(2019))
(b) Against a creditor who has a claim for support
due by Gratuitous title, without prejudice to
Article 301 par. 2 (CIVIL CODE, art. 1287)
(c) If one of the debts consists in civil liability arising
from a Penal offense. (CIVIL CODE, art. 1288)
a. BUT NOTE: The bailor or depositor is
allowed to invoke legal compensation
(DE LEON 422 (2019))
(d) Obligation to pay Taxes is not compensable
with the government’s obligations to the
taxpayer. (Francia v. IAC, G.R. No. L-67649).
Taxes cannot be subject to compensation for the
simple reason that the government and the taxpayer
are not creditors and debtors of each other. There is
a material distinction between a tax and debt. Debts
are due to the Government in its corporate capacity,
while taxes are due to the Government in its
sovereign capacity. (United Airlines, Inc. v.
Commissioner of Internal Revenue, G.R. No.
178788)
CIVIL LAW (AND PRACTICAL EXERCISES)
f.
Novation
Novation - Extinguishment of obligation by creating/
substituting a new one in its place
(a) Changing object or principal conditions
(b) Substituting person of debtor
(c) Subrogating 3rd person to the rights of the
creditor (CIVIL CODE, art. 1291)
Requisites of novation: (VICN)
1. There must be a previous Valid obligation;
2. Intent to extinguish the old and substitute it with
the new obligation, whether expressed, or
implied as when the two obligations are
inconsistent and cannot stand together.
3. Capacity and consent of the parties to the new
obligation; and
4. Valid New obligation. (Garcia, Jr. v. CA, G.R.
No. 80201)
Novation is never presumed, there must be an
express intention to novate. The creditor’s
acceptance of another check, which replaced an
earlier dishonored check, does not result in novation
where there was no express agreement to establish
that the debtor was already discharged from his
liability. (Salazar v. J.Y. Brothers Marketing
Corporation, G.R. No. 171998)
Novation can be done without the knowledge or
even against the will of the original debtor, but not
without the consent of the creditor (Interport
Resources Corporation v. Securities Specialist, In.
G.R. No. 154069)
Effects of Novation
GR: It extinguishes the old obligation and a new
one is created in its place.
Exception:
(a) Modificatory novation only, in which case
the old obligation remains, as amended by
the new (Swagman Hotels and Travels, Inc.
v. CA, G.R. No. 161135)
(b) Old obligation is void
Conversely, the old obligation subsists if
the new obligation is void or is voidable and
later annulled. (4 TOLENTINO 397 (1991))
Novation, in its broad concept, may either be
extinctive or modificatory.
It is extinctive when an old obligation is
terminated by the creation of a new obligation
that takes the place of the former; it is merely
modificatory when the old obligation subsists to
the extent that it remains compatible with the
amendatory agreement.
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An extinctive novation results either by
changing the object or principal conditions
(objective or real), or by substituting the person
of the debtor or subrogating a third person in the
rights of the creditor (subjective or personal).
(Banate v. Philippine Countryside Rural Bank
(Liloan, Cebu), Inc., G.R. No. 163825)
There is novation when there is an irreconcilable
incompatibility between the old and new obligations.
There is no novation in case of only slight
modifications, in which case, the old obligation still
subsists. (Heirs of Franco v. Spouses Gonzales,
G.R. No. 159709)
Novation does not extinguish criminal liability
(Philippine National Bank v. Soriano, G.R. 164051)
Effect of Conditions in Either Old or New
Obligation:
(a) If old obligation is conditional
i. If resolutory and it occurred – old
obligation already extinguished; no new
obligation is created since there is nothing
to novate
ii. If suspensive – the condition must
happen, otherwise there is no old obligation
to novate. (4 TOLENTINO 399 (1991))
(b) If the new obligation is conditional:
i. If resolutory – valid
ii. If suspensive – the condition must
happen, otherwise there is no new
obligation to replace the old, so that the old
obligation
remains
subsisting.
(4
TOLENTINO 397 (1991))
Kinds of Novation:
(a) Real / objective – When there is a change in
the object, cause/consideration or principal
condition. (PINEDA 332 (2009))
(b) Personal / subjective
Substituting person of debtor (passive).
(PINEDA 332 (2009))
i.
Expromision: initiative is from a 3rd
person or new debtor who agrees to
assume the obligation of the old debtor,
with the consent of the creditor. The old
debtor’s consent is not required and upon
assumption by the new debtor of the debt,
the old debtor is released from liability.
Since the old debtor does not consent, his
liability cannot be revived even if the new
debtor becomes insolvent or cannot pay
the obligation. It is however important that
the creditor and the new debtor agree to
release the old debtor, otherwise the “new”
CIVIL LAW (AND PRACTICAL EXERCISES)
debtor only becomes a co-debtor and no
novation takes place.
ii.
Delegacion: initiative of old debtor who
“delegates” his obligation to a new
debtor; In this case all the parties must
consent.
The old debtor’s liability is
generally not revived in case of the
insolvency of the old debtor UNLESS: the
new debtor’s insolvency already existed at
the time of the delegacion AND (1) it was of
public knowledge, or (2) the old debtor
knew of the insolvency of the new debtor at
the time of delegacion. (PINEDA 341 (2009))
Parties:
(a) Delegante – old debtor
(b) Delegatario – creditor
(c) Delegado – new debtor. (PARAS 508
(2016))
Expromision vs. Delegacion
EXPROMISION
DELEGACION
Intention: old debtor be released from the
obligation
Consent of creditor required on both
Consent of creditor and Consent of debtor
third person
(initiates),
creditor
and third person;
need NOT be given
simultaneously
Governed by the rules of Same applies in the
payment by third persons absence
of
an
agreement
If w/o knowledge of Subrogation
debtor,
beneficial
reimbursement,
no
subrogation
New debtor's insolvency Same UNLESS the
does NOT make old new
debtor’s
debtor liable
insolvency already
existed at the time of
the delegacion AND
(i) it was of public
knowledge, or (ii) the
old debtor knew of
the insolvency of the
new debtor at the
time of delegacion.
(PINEDA 341-343 (2009))
(c) Subrogating 3rd person to rights of creditor
(active)
i. Conventional – agreement and consent of
all parties; clearly established (CIVIL CODE,
arts. 1300-1301)
ii. Legal – takes place by operation of law; no
need for consent; NOT presumed except
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as provided for in law: (CIVIL CODE, arts.
1300 & 1302)
When Subrogation is Presumed (CIVIL CODE, art.
1302)
i. Creditor pays another preferred creditor even
w/o debtor’s knowledge
Example:
A owes B P20,000 secured by a first mortgage
on the land of A. A also owes C P30,000.00,
which is unsecured or secured by a second
mortgage. Under the law, B, who is a preferred
creditor, has preference to payment with
respect to the land as against C who is only an
ordinary creditor. If C pays the debt of A to B, C
will be subrogated in B’s rights. C can now
foreclose the mortgage in case A fails to pay his
debt to B. (DE LEON 458 (2019))
ii.
3rd person not interested in obligation pays w/
approval of debtor
Example:
A owes B P10,000. C pays B with the express
or implied consent of A. Here, C will be
subrogated in the rights of B. (DE LEON 458
(2019))
iii. Person interested in fulfillment of obligation
pays debt even w/o knowledge of debtor
Example:
A and B are joint debtors of C for the amount of
P10,000. Without A knowing, B pays the debt of
P10,000. Here, B becomes a creditor of A for
P5,000 only (i.e., A’s share of the debt), not for
the remaining P5,000 (i.e., B’s share of the
debt), which is extinguished by confusion or
merger of rights. (DE LEON 459 (2019))
Payment by 3rd Person v. Change of Debtor
DIFFERENCE
CHANGE OF DEBTOR
FROM PAYMENT
BY 3RD PERSON
Debtor
is
NOT Old debtor is released
necessarily
released from debt
Creditor
is
not Needs consent of creditor:
bound to accept express or implied
payment,
unless
there is stipulation
to the contrary (CIVIL
CODE, art. 1236)
3rd person can make New debtor is obliged to
payments less than pay the full remaining
the amount of the amount of the obligation
obligation
and
cannot be held
CIVIL LAW (AND PRACTICAL EXERCISES)
liable
for
deficiency
the
Conventional Subrogation Vs. Assignment
CONVENTIONAL
ASSIGNMENT OF
SUBROGATION
RIGHTS
Governed by Arts. Governed by Arts. 1624
1300-1304
to 1627
Debtor’s consent is Debtor’s consent is NOT
required
required, but must be
notified in order to be
bound
Extinguishes
the Transmission of right of
obligation and gives the creditor to third
rise to a new one
person without modifying
or extinguishing the
obligation
Defects and vices in Defects and vices in the
the old obligation are old obligation are NOT
cured
cured
(PINEDA 354-355 (2009))
Novation arising from a purported change in the
person of the debtor must be clear and express
because it is never presumed. A conversion from a
partnership to a corporation, without sufficient
evidence that they were expressly released from
their obligations, does not make a new corporate
personality, a third person or new debtor within the
context of a subjective novation. (Ajax v. Court of
Appeals, G.R. No. 118585)
The obligation to pay a sum of money is not novated
by an instrument that expressly recognizes the old,
changes only the terms of payment, adds other
obligations not incompatible with the old ones, or the
new contract merely supplements the old one.
(Foundation Specialists Inc. v. Betonval Ready
Concrete, G.R. No. 170674)
Novation is not a ground under the law to extinguish
criminal liability. The legal effect of novation is
limited in its effect only to the civil aspect of the
liability. The role of novation may only be either to
prevent the rise of criminal liability, or to cast doubt
on the true nature of the original basic transaction,
whether or not it was such that the breach of the
obligation would not give rise to penal responsibility,
as when money loaned is made to appear as a
deposit, or other similar disguise is resorted to.
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B. CONTRACTS
1. GENERAL PROVISIONS
a. Stages of Contracts
(i) PREPARATION/NEGOTIATION
Period from the time the prospective contracting
parties indicate their interest in the contract to the
time the contract is perfected.
(ii) PERFECTION/BIRTH
Consensual contracts
As a general rule, contracts are perfected by mere
consent of the parties regarding the subject matter
and the cause of the contract. (CIVIL CODE, arts.
1315, 1319) They are obligatory in whatever form
they may have been entered into, provided all the
essential requisites for their validity are present.
(CIVIL CODE, art. 1356)
Real contracts
The exceptions are real contracts, which are
perfected not merely by consent but by the actual or
constructive delivery of the object of the obligation.
(CIVIL CODE, art. 1316)
Example: Depositum, pledge, commodatum
(Hector S. De Leon & Hector M. De Leon, Jr.,
Comments and Cases on Obligations and Contracts
493 (2019)
Formal/Solemn contracts
When the law requires that a contract be in some
form to be valid (CIVIL CODE, art. 1356), this
special form is necessary for its perfection
Example: Donation of real property, (Art. 749),
donation of personal property the value of which
exceeds P5,000.00 (Art. 748), sale of land through
an agent (Art. 1874), contract of antichresis (Art.
2134), stipulation to pay interest (Art. 1956),
contract of partnership (Arts. 1771, 1773), transfer
or sale of large cattle (Act No. 1147, Sec. 22),
Negotiable instruments (Act No. 2031, Sec. 1).
(Hector S. De Leon & Hector M. De Leon, Jr.,
Comments and Cases on Obligations and Contracts
637 (2019)
(iii) CONSUMMATION
CIVIL LAW (AND PRACTICAL EXERCISES)
Period when the parties perform their respective
undertaking under the contract, culminating in the
extinguishment thereof (HECTOR S. DE LEON &
HECTOR M. DE LEON, JR., COMMENTS AND
CASES ON OBLIGATIONS AND CONTRACTS 542
(2014))
Negotiation begins from the time the prospective
contracting parties manifest their interest in the
contract and ends at the moment of agreement of
the parties. The perfection or birth of the contract
takes place when the parties agree upon the
essential elements of the contract. The last stage is
the consummation of the contract where the parties
fulfill or perform the terms they agreed on,
culminating in its extinguishment. (International
Freeport Traders, Inc. v. Danzas Intercontinental,
Inc., 640 SCRA 621)
b. Classifications
As to perfection or formation
1. Consensual – perfected by mere consent of
the parties on the subject matter and cause
(CIVIL CODE, art. 1315) (e.g., contract of sale)
2. Real – perfected by delivery (CIVIL CODE, art.
1316) (e.g., commodatum, pledge, deposit)
3. Formal/Solemn – require a certain specified
form, in addition to consent, subject matter and
cause (CIVIL CODE, art. 1356) (e.g., donation
of real property)
As to cause
1. Onerous – The cause is, for each contracting
party, the prestation or promise of a thing or
service by the other (e.g., contract of sale)
(CIVIL CODE, art. 1350)
2. Remuneratory– The cause is some past
service or benefit which by itself is a
recoverable debt (CIVIL CODE, art. 1350)
a. Note: In a remuneratory donation, the
past service or debt is not by itself a
recoverable debt. (CIVIL CODE, art.
726)
3. Gratuitous
(or
contracts
of
pure
beneficence) – founded on the mere liberality
of the benefactor (e.g., pure donation) (CIVIL
CODE, art. 1350)
As to importance or dependence of one upon
another
1. Principal – when the contract does not depend
for its existence and validity upon another
contract (e.g., sale, lease)
2. Accessory – depends on another contract for
its existence and validity (e.g., mortgage,
guaranty)
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3.
Preparatory – the contract is entered into as a
means through which future contracts may be
made (e.g., agency, partnership) (ERNESTO L.
PINEDA, OBLIGATIONS AND CONTRACTS
36 (2009))
As to parties obliged
1. Unilateral – only one of the parties has an
obligation
(ERNESTO
L.
PINEDA,
OBLIGATIONS AND CONTRACTS 366 (2009))
2. Bilateral – both parties are required to render
reciprocal prestations (CIVIL CODE, art. 1191)
As to form
1. Common or informal – require no particular
form (CIVIL CODE, art. 1356)
2. Special or formal – require some particular
form (CIVIL CODE, art. 1356)
As to their purpose
1. Transfer of ownership
2. Conveyance of use
3. Rendition of service (4 ARTURO M.
TOLENTINO,
COMMENTARIES
AND
JURISPRUDENCE ON THE CIVIL CODE OF
THE PHILIPPINES 410-411 (1991))
As to their subject matter
1. Things
2. Services (4 ARTURO M. TOLENTINO,
COMMENTARIES AND JURISPRUDENCE
ON THE CIVIL CODE OF THE PHILIPPINES
410-411 (1991))
As to the risk involved
1. Commutative – when the undertaking of one
party is considered the equivalent of that of the
other (e.g., sale, lease)
2. Aleatory – when it depends upon an uncertain
event or contingency both as to benefit or loss
(e.g., insurance, sale of hope) (JURADO 361
(2010))
As to the name or designation
1. Nominate – those which have a specific name
or designation in law (e.g., lease, sale, agency,
etc.)
2. Innominate – those which have no specific
designation or name in law (CIVIL CODE, art.
1307)
a. Do ut des – I give that you may give
b. Do ut facias – I give that you may do
c. Facio ut des – I do that you may give
i. Note: Do ut des is, however,
no longer an innominate
CIVIL LAW (AND PRACTICAL EXERCISES)
d.
contract. It has already been
given a name of its own, i.e.,
barter or exchange. (CIVIL
CODE, art. 1638)
Facio ut facias – I do that you may do
(ERNESTO
L.
PINEDA,
OBLIGATIONS AND CONTRACTS
380 (2009))
Auto Contracts
Only one person represents two opposite parties,
but in different capacities. (ERNESTO L. PINEDA,
OBLIGATIONS AND CONTRACTS 367 (2009))
Example: An agent representing his principal sells
a specific car to himself, as a buyer
Collective Contracts
will of the majority binds the minority to an
agreement notwithstanding the opposition of the
latter.
(4
ARTURO
M.
TOLENTINO,
COMMENTARIES AND JURISPRUDENCE ON
THE CIVIL CODE OF THE PHILIPPINES 437
(1991))
Example: Collective bargaining contracts by labor
organizations under R.A. No. 875.
Contracts of Adhesion
One party imposes a ready-made form of contract
which the other party may accept or reject but
cannot modify; one party prepares the stipulation in
the contract, while the other party merely affixes his
signature or his “adhesion” thereto, giving no room
for negotiation and depriving the latter of the
opportunity to bargain on equal footing (Polotan, Sr.
v. CA, G.R. No. 119379); construed strictly against
the one who drafted the same (Geraldez v. CA, G.R.
No. 108253).
NOTE: It bears stressing that a contract of
adhesion is just as binding as ordinary contracts. It
is true that we have, on occasion, struck down such
contracts as void when the weaker party is imposed
upon in dealing with the dominant bargaining party
and is reduced to the alternative of taking it or
leaving it, completely deprived of the opportunity to
bargain on equal footing, Nevertheless, contracts of
adhesion are not invalid per se; they are not entirely
prohibited. The one who adheres to the contract is
in reality free to reject it entirely; if he adheres, he
gives his consent. (Rizal Commercial Banking
Corporation v. CA, G.R. No. 133107)
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2. ESSENTIAL REQUISITES
Essential Requisites - The three essential
requisites are (1) Consent; (2) Subject Matter; and
(3) Consideration.
CIVIL LAW (AND PRACTICAL EXERCISES)
4.
5.
a. Consent
Definition - Meeting of the offer and the acceptance
upon the thing and the cause which are to constitute
the contract; concurrence of a certain offer and an
absolute acceptance (CIVIL CODE, art. 1319)
6.
Subject matter becomes Illegal or impossible
before
acceptance
is
communicated;
(EDGARDO L. PARAS, CIVIL CODE OF THE
PHILIPPINES ANNOTATED: PRESCRIPTION;
OBLIGATIONS AND CONTRACTS 612 (2016))
Lapse of Period given to the offeree within
which to signify acceptance; (CIVIL CODE, art.
1324) or
Revocation of the offer in due time (i.e. before
the offeror has learned of its acceptance by the
offeree) (CIVIL CODE, art. 1324)
Offer
A proposal made by one party to another to enter
into a contract; must be certain or definite, complete
and intentional. (CIVIL CODE, art. 1319)
Period for acceptance
1. Stated fixed period in the offer – The offeree
may accept at any time until such period expires
(Young v. Court of Appeals, G.R. No. 83271)
2. No stated fixed period
a. Offer is made to a person present –
Acceptance must be made immediately
(Malbarosa v. Court of Appeals, G.R No.
125761).
b. Offer is made to a person absent –
Acceptance may be made within such
time that, under normal circumstances,
an answer can be received from him.
(ERNESTO L. PINEDA, OBLIGATIONS
AND CONTRACTS 425 (2009))
Acceptance
Manifestation by the offeree of his assent to the
terms of the offer; must be absolute (i.e., must not
qualify the terms of the offer) (Oesmer v. Paraiso
Development Corporation, G.R. No. 157493)
NOTE: For a contract to arise, the acceptance must
be made known to the offeror. Accordingly, the
acceptance can be withdrawn or revoked before it is
made known to the offeror. (Oesmer v. Paraiso
Development Corporation, G.R. No. 157493)
NOTE: A qualified acceptance constitutes counteroffer. (CIVIL CODE, art. 1319)
NOTE: We follow the theory of cognition (CIVIL
CODE, art. 1319) and not the theory of
manifestation. Under our Civil Law, the offer and
acceptance concur only when the offeror comes to
know of, and not when the offeree merely manifests
his acceptance.
3
Requisites (C ):
1. Must be manifested by the Concurrence of the
offer and acceptance upon the thing and cause;
2. Parties are legally Capacitated to enter into
contracts
3. Consent must be intelligent, free, spontaneous,
and
real
(ERNESTO
L.
PINEDA,
OBLIGATIONS AND CONTRACTS 415 (2009))
Elements of a valid offer
1. Definite
2. Complete
3. Intentional (Palattao v. CA, G.R. No. 131726,)
Elements of a valid acceptance
1. Unequivocal
2. Unconditional (Palattao v. CA, G.R. No.
131726)
When offer becomes ineffective (QR-DRIP)
1. Death, civil interdiction, insanity or insolvency of
either party before acceptance is conveyed
(CIVIL CODE, art. 1323);
2. Express or implied Rejection of the offer by the
offeree; (NHA v. Grace Baptist Church, G.R.
No. 156437)
3. Qualified or conditional acceptance of the offer,
which becomes a counter-offer; (CIVIL CODE,
art. 1319)
Rule on complex offers
1. Offers are interrelated – Contract is perfected
if all the offers are accepted.
2. Offers are not interrelated – Single
acceptance of each offer results in a perfected
contract unless the offeror has made it clear that
one is dependent upon the other and
acceptance of both is necessary. (CIVIL CODE,
art. 1319)
3. Offer interpraesentes must be accepted
immediately. If the parties intended that there
should be an express acceptance, the contract
will be perfected only upon knowledge by the
offeror of the express acceptance by the offeree
of the offer. An acceptance which is not made
in the manner prescribe by the offeror is not
effective, but a counter-offer which the offeror
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may accept or reject. (Malbarosa v. Court of
Appeals, G.R No. 125761)
Rule on advertisements as offers
1. Business advertisements – Not a definite
offer, but mere invitation to make an offer,
unless it appears otherwise (CIVIL CODE, art.
1325)
2. Advertisements for bidders – They are simply
invitations to make proposals and the advertiser
is not bound to accept the highest or lowest
bidder, unless the contrary appears (CIVIL
CODE, art. 1326)
Article 1326 of the Civil Code, which specifically
tackles offer and acceptance of bids, provides that
advertisements for bidders are simply invitations to
make proposals, and that an advertiser is not bound
to accept the highest bidder unless the contrary
appears. (PMO v. STRADEC, G.R. No. 200402)
Four (4) theories on acceptance of offer by
telegram or letter
1. Manifestation – perfected from the moment the
acceptance is declared or made.
2. Expedition – perfected from the moment the
offeree transmits the notification of acceptance.
3. Reception – perfected from the moment the
offeror receives the letter.
4. Cognition – perfected from the moment the
acceptance comes to the knowledge of the
offeror. (JURADO 402 (2010))
NOTE: Contracts under the Civil Code generally
adhere to the Cognition Theory while transactions
under the Code of Commerce adhere to the
Manifestation Theory. (JURADO 402 (2010))
When the offeror refuses to open the letter or
telegram he is held to have a constructive notice of
the contents thereof and will be bound by the
acceptance of the offeree. (JURADO 403-404
(2010))
Options
General rule: If the offeror has allowed the offeree
a certain period to accept, the offer may be
withdrawn at any time before acceptance by
communicating such withdrawal. (CIVIL CODE, art.
1324)
Exception: When the option is founded upon a
consideration as something paid or promised.
(CIVIL CODE, art. 1324)
An option, sometimes called an “unaccepted offer,”
is simply a contract by which the owner of property
CIVIL LAW (AND PRACTICAL EXERCISES)
agrees with another person that he shall have the
right to buy his property at a fixed price within a
certain time. An option is not of itself a purchase, but
merely secures the privilege to buy. It is not a sale
of property but a sale of the right to purchase.
(Adelfa Properties, Inc. v. CA, G.R. No. 111238)
Effects of option:
1. Not supported by an independent consideration
(i.e., distinct from the purchase price) – offeror
can withdraw the offer at any time before
acceptance by communicating such withdrawal
2. Supported by independent consideration –
offeror cannot withdraw his offer (CIVIL CODE,
art. 1324)
Persons incapacitated to give consent (DD-MI):
1. Minors (CIVIL CODE, art. 1327).
2. Insane or demented persons (CIVIL CODE, art.
1327), unless the contract was entered into
during a lucid interval (CIVIL CODE, art. 1328)
3. Deaf-mutes who do not know how to write
(CIVIL CODE, art. 1327).
4. In a state of Drunkenness or under a hypnotic
spell (CIVIL CODE, art. 1328)
BUT NOTE: The following are other instances
that incapacitates a person from giving consent:
1. Civil interdiction shall deprive the
offender during the time of his sentence of
the rights of parental authority, or
guardianship, either as to the person or
property of any ward, of marital authority, of
the right to manage his property and of the
right to dispose of such property by any act
or any conveyance inter vivos. (REVISED
PENAL CODE, art. 38)
2. Prodigality, in order to render a person
legally unfit to administer his own affairs his
acts of prodigality must show a morbid mind
and a disposition to spend or waste the
estate so as to expose his family to want or
to deprive his forced heirs of their
inheritances. (Martinez v. Martinez, G.R.
No. 445)
BUT NOTE: Minority, insanity or imbecility, the
state of being a deaf-mute, prodigality and civil
interdiction are mere restrictions on capacity to
act, and do not exempt the incapacitated person
from certain obligations, as when the latter arise
from his acts or from property relations, such as
easements. (CIVIL COD, art. 38)
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Contracts entered into by the persons above are in
generally valid until annulled; however, annulment
cannot prosper when they have been ratified. (CIVIL
CODE, art. 1390).
Rule on contracts entered into by minors
General rule: Voidable (CIVIL CODE, art. 1391)
Exceptions (MENGS) (These contracts are valid):
1. If upon reaching age of Majority, they ratify the
same. (Ibanez v. Rodriguez, G.R. No. 23153)
2. They were entered unto by a Guardian and the
court having jurisdiction had approved the
same. (Roa v. Roa, G.R. No. 28532)
3. They were in the form of Savings account in the
Postal Savings Bank, provided furthermore that
the minor was at least 7 years old. (Rev. Adm.
Code, Sec. 2007)
4. They were contracts for Necessaries such as
food, but here the persons who are bound to
give them support should pay therefor (CIVIL
CODE, arts. 1489 & 2164; FAMILY CODE, E.O.
209, art. 194 (1987))
5. Contracts where the minor misrepresented his
age and pretended to be one of major age and
is thus in Estoppel. (Hermosa v. Zobel, G.R. No.
L-11835). It is, however, essential here that the
other party must have been MISLED
(Bambalan v. Maramba, G.R. No. L-27710).
HOWEVER, minors can set up the defense of
minority to resist the claim when there is only
passive misrepresentation, as when they did
not disclose their minority because they had no
juridical duty to disclose their inability.
(Braganza v. De Villa Abrille, G.R. No. L-12471)
NOTE: If both parties to a contract are minors, the
contract is unenforceable. (CIVIL CODE, art.
1403(3)).
Examples of persons specially disqualified to
enter into contracts (Contracts entered into are
VOID):
1. Husband and wife selling to one another (CIVIL
CODE, art. 1490) or donating to one another
(CIVIL CODE, art. 134)
2. Insolvents before they are discharged cannot,
for example, make payments. Exception:
Payment of administrative expenses shall be
allowed. (An Act Providing For The
Rehabilitation Or Liquidation Of Financially
Distressed
Enterprises
And
Individuals
[Financial Rehabilitation and Insolvency Act of
2010], Republic Act No. 10142, § 57 (2010))
3. Persons disqualified because of fiduciary
relationship (CIVIL CODE, art. 1491)
CIVIL LAW (AND PRACTICAL EXERCISES)
INCAPACITY
DISQUALIFICATION
Restrains the exercise Restrains the very right
of the right to contract
itself
May still enter into Absolutely disqualified
contract
through
parent, guardian or
legal representative
Based upon subjective Based upon public
circumstance of certain policy and morality
person
Contracts entered into Contracts entered into
are merely voidable
are void
(ERNESTO L. PINEDA, OBLIGATIONS AND
CONTRACTS 440 (2009))
Causes which vitiate consent
A contract where consent is given through Mistake,
Violence, Intimidation, Undue Influence, or Fraud is
voidable (VIMFU). (CIVIL CODE, art. 1330)
i. Mistake
Must include both ignorance, which is the absence
of knowledge with respect to a thing, and mistake
properly speaking, which is a wrong conception
about said thing, or a belief in the existence of some
circumstance, fact, or event, which in reality does
not exist. (Theis v. Court of Appeals, G.R. No.
126013)
Requisites (FES):
a. The error must be Substantial regarding:
i.
The object of the contract, or
ii.
The conditions which principally
moved or induced one of the parties
(error in quality or in quantity), or
iii.
Identity of qualifications, but only if
such was the principal cause of the
contract (CIVIL CODE, art. 1331)
b. The error must be Excusable (not caused by
negligence). There is no mistake if the party
alleging it knew the doubt, contingency or
risk affecting the object of the contract.
(CIVIL CODE, art. 1333)
c. The error must be mistake of Fact, and not
of law. (Luna v. Linatoc, G.R. No. L-48403,
Oct. 28, 1942)
Two (2) General Kinds of Mistake
a. Mistake of Fact – When one or both of the
contracting parties believe that a fact exists
when in reality it does not, or that such fact
does not exist when in reality it does
(ERNESTO L. PINEDA, OBLIGATIONS
AND CONTRACTS 443 (2009))
b. Mistake of Law
General Rule: Mistake does not vitiate
consent (CIVIL CODE, art. 1331)
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Reason: Ignorance of the law does not
excuse anyone from compliance
therewith (CIVIL CODE, art. 3)
Exception: Mutual error as to the legal
effect of an agreement when the real
purpose of the parties is frustrated (CIVIL
CODE, art. 1334).
i. “Legal effect” here refers to the
rights of the parties as stated in the
legal provisions.
ii. Violence
Requisites (PFR):
a. Serious or irresistible Physical Force
b. Such force is the Reason why the
contract was entered into. (CIVIL
CODE, art. 1335)
CIVIL LAW (AND PRACTICAL EXERCISES)
judgment. Contracts are also valid even though they
are entered into by one of the parties without hope
of advantage or profit. (Martinez v. Hongkong and
Shanghai Bank, G.R. No. L-5496)
Note: Violence or intimidation shall annul the
obligation, although it may have been employed by
a third person who did not take part in the contract.
(CIVIL CODE, art. 1336)
iv. Undue Influence
Requisites (DIP):
a. Improper advantage
b. Power over the will of another
c. Deprivation of the latter of a reasonable
freedom of choice. (CIVIL CODE, art. 1337)
Note: Violence refers to physical coercion, while
intimidation refers to moral coercion. (EDGARDO L.
PARAS, CIVIL CODE OF THE PHILIPPINES
ANNOTATED: PRESCRIPTION; OBLIGATIONS
AND CONTRACTS 632 (2016))
Circumstances to be considered (FIRM)
a. Confidential, family, spiritual, and other
Relations between the parties
b. Mental weakness
c. Ignorance
d. Financial distress (CIVIL CODE, art. 1337).
iii. Intimidation
v. Fraud
Requisites (FReT):
a. Reasonable and well-grounded Fear of an
imminent and grave evil upon his person,
property, or upon the person or property of
his spouse, descendants, or ascendants
b. It is the Reason why the contract was
entered into
c. The Threat must be of an unjust act, an
actionable wrong (A threat to enforce a just
or legal claim through competent authority
does not vitiate consent.) (CIVIL CODE, art.
1335)
Fraud in Obtaining Consent
In order that fraud may vitiate consent, it must be the
causal (dolo causante), not merely the incidental
(dolo incidente), inducement to the making of the
contract. (Ponce de Leon v. Rehabilitation Finance
Corporation, G.R. No. L-24571)
Example: What the respondent did was merely
inform them of petitioner Edna’s conviction in the
criminal cases for estafa. It might have evoked a
sense of fear or dread on the petitioners’ part, but
certainly there is nothing unjust, unlawful or evil
in the respondent's act. ... The petitioners must
remember that petitioner Edna's conviction was a
result of a valid judicial process and even without the
respondent allegedly “ramming it into petitioner
Victor's throat,” petitioner Edna's imprisonment
would be a legal consequence of such conviction.
(Spouses Binua v. Ong, G.R. No. 207176)
Reluctant Consent – It is necessary to distinguish
between real duress and the motive which is present
when one gives his consent reluctantly. A contract
is valid even though one of the parties entered into
it against his wishes or even against his better
a. Causal Fraud (Dolo Causante)
This is the use of insidious words or machinations
by one of the contracting parties to induce the other
party to enter into a contract, which, without them,
he would not have agreed to. (CIVIL CODE, art.
1338)
Determines or is the essential cause of consent.
It is the deception employed by one party prior to or
simultaneous to the contract in order to secure the
consent of the other (Metropolitan Fabrics, Inc. v.
Prosperity Credit Resources, Inc., G.R. No. 154390)
Effects: Voidability of the contract and the
indemnification for damages (Geraldez v. CA, G.R.
No. 108253)
Requisites (PS-SOBIA)
a. There must be misrepresentation or
concealment (CIVIL CODE, arts. 1338 &
1339) by a party Prior to or Simultaneous to
the consent or creation of the contract.
b. Must be Serious. (CIVIL CODE, art. 1344)
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c. Must have been employed by only One of the
contracting parties. (CIVIL CODE, art.1342)
BUT NOTE: Misrepresentation by a third
person does not vitiate consent, unless such
misrepresentation has created substantial
mistake and the same is mutual, or when the
third person makes the misrepresentation with
the complicity or, at least, with the knowledge,
but without objection, of the contracting party
who is favored. (JURADO 449 (2010))
d. Must be made in Bad faith or with intent to
deceive. (CIVIL CODE, art. 1343)
e. Must have Induced the consent of the other
contracting party. (CIVIL CODE, art. 1338)
f. Must be Alleged and proved by clear and
convincing evidence, and not merely by a
preponderance thereof. (Tan Sua Sia v.
Sontua, 56 Phil. 711, 1932)
b. Incidental Fraud (Dolo Incidente)
Deceptions or misrepresentations which are not
serious and without which the other party would still
have entered into the contract.
It is not the cause which induced the party to enter
into a contract and refers only to some particular or
accident of the obligations. (Geraldez v. CA, G.R.
No. 108253)
Effect: Only renders the person employing it liable
for damages. (CIVIL CODE, art. 1344)
Simulated Contracts
(a) Absolute – the parties have no intention to
be bound at all (CIVIL CODE, art. 1345);
void from beginning (CIVIL CODE, art.
1346).
(b) Relative – the parties conceal their true
agreement (CIVIL CODE, art. 1345): the
real agreement binds the parties when:
a. There is no prejudice to 3rd
persons; and
b. It is not contrary to law, moral,
good customs, public order or
public policy (CIVIL CODE, art.
1346)
(c) Dealer’s Talk (Dolo bonus) - This
oxymoron (literally, good fraud) refers
to
dealer’s
talk,
the
kind
of
exaggerations in advertisement the
public is familiar with. The ancient
principle still governs in this regard: Caveat
emptor -- Buyer beware. But once the
dealer’s talk goes beyond innocent
CIVIL LAW (AND PRACTICAL EXERCISES)
conventional exaggeration and later the
realm of bad faith, then deceit (either
causante or incidental) may set in.
(BALANE 635-36 (2020))
The rule of caveat emptor requires the
purchaser to be aware of the supposed title
of the vendor and one who buys without
checking the vendor’s title takes all the risks
and losses consequent to such failure.
(Caram, Jr. v. Laureta, G.R. No. L-28740)
However, this rule only requires the
purchaser to exercise such care and
attention as is usually exercised by
ordinarily prudent men in like business
affairs, and only applies to defects which
are open and patent to the service of one
exercising such care. Moreover, it can also
only be applied where it is shown that the
parties to the contract stand on equal
footing and have equal knowledge or equal
means of knowledge and there is no
relation of trust or confidence between
them. In such a case, if a seller’s
representations prove to be false, neither
law nor equity will permit the seller to
escape responsibility by the plea that the
buyer ought not to have believed him or
ought to have applied to other sources to
ascertain the facts. (Guinhawa v. People,
G.R. No. 162822)
b. Subject Matter (SM)
Requisites of things as SM (W-PLDT):
1. Within the commerce of man (CIVIL CODE, art.
1347) – either existing or in potency
2. Licit or not contrary to law, morals, good
customs, public order or public policy (CIVIL
CODE, art. 1347)
3. Possible, legally or physically (CIVIL CODE, art.
1348).
4. Determinate as to its kind or determinable
without need to enter into a new contract (CIVIL
CODE, art. 1349)
5. Transmissible (CIVIL CODE, art. 1347)
Requisites of services as SM (PWD):
1. Within the commerce of man (CIVIL CODE, art.
1347)
2. Possible, physically or legally (CIVIL CODE, art.
1348)
3. Determinate or capable of being made
determinate (CIVIL CODE, arts. 1318[2] &
1349)
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Things which cannot be the subject matter of a
contract (I-COFID):
1. Things which are Outside the commerce of men
(CIVIL CODE, art. 1347)
2. Intransmissible rights (CIVIL CODE, art. 1347)
3. Future inheritance, except in cases expressly
authorized by law (CIVIL CODE, art. 1347)
4. Services Contrary to law, morals, good
customs, public order or public policy (CIVIL
CODE, art. 1347)
5. Impossible things or services (CIVIL CODE, art.
1348).
6. Objects which are not possible of Determination
as to their kind (CIVIL CODE, art. 1349)
NOTE: Contracts upon future inheritance are void
when:
The succession has not yet been opened;
The object of the contract forms part of the
inheritance; and
The promissor has, with respect to the object,
an expectancy of a right, which is purely
hereditary in nature. (De Belen Vda. De Cabalu
v. Tabu, G.R. No. 188417)
c. Cause or Consideration
Definition - Refers to the immediate, direct and
most proximate reason which justifies the creation
of an obligation through the will of the contracting
parties and is the essential reason for the contract.
(Uy v. CA, G.R. No. 120465)
Requisites (LET)
1. It must Exist at the time the contract is entered
into. (CIVIL CODE, art. 1352 & 1409[3])
2. It must be True. (CIVIL CODE, art 1353)
3. It must be Licit. (CIVIL CODE, art. 1352)
Motive – refers to the particular reason of one party
for entering into the contract which does not affect
the other party nor the validity of the contract;
however, when the motive predetermines the cause
or when the realization of such motive has been
made a condition upon which the contract is made
to depend, the motive may be regarded as the
cause (Uy v. CA, G.R. No. 120465).
Cause distinguished from Motive
CAUSE
MOTIVE
Immediate or direct Remote or indirect
reason of a contract
reason
Objective and juridical Psychological or purely
reason of contract; personal reason; may
always known to both be unknown to the
parties
other party
CIVIL LAW (AND PRACTICAL EXERCISES)
Remains the same
regardless of a party’s
motive for entering into
a contract
Legality or illegality of
cause
affects
the
existence or validity of
the contract
May vary although a
party enters into the
same kind of contract
Legality or illegality of
motive does not affect
the existence or validity
of contract
(HECTOR S. DE LEON & HECTOR M. DE LEON,
JR., COMMENTS AND CASES ON OBLIGATIONS
AND CONTRACTS 673-674 (2014))
Causes in some contracts:
1. Onerous contracts – The prestation of
promise of a thing or service by the other.
(CIVIL CODE, art. 1350)
2. Remuneratory contracts – The service or
benefit remunerated. (CIVIL CODE, art. 1350)
3. Contracts of Pure Beneficence – Mere
liberality of the donor or benefactor. (CIVIL
CODE, art. 1350)
4. Accessory Contracts Like Mortgage and
Pledge – The cause is generally the same as
the cause for the principal contract of loan.
(China Bank v. Lichauco, G.R. No. L-22001)
5. Accessory Contracts of Personal Guaranty
– Generally pure liberality but sometimes
material consideration may be given. (Standard
Oil Co. v. Arenas, G.R. No. L-5921)
EFFECT IN CAUSE
Absence of causa –
Total lack or absence
of cause
EFFECT
Void
–
Contract
produces no legal
effect (CIVIL CODE,
art. 1352)
Illegality of causa –
The cause is contrary
to law, morals, good
customs, public order
and public policy
Falsity of causa – A
cause is stated but it is
not true
Void
–
Contract
produces no legal
effect (CIVIL CODE,
art. 1352)
Causa not stated in
the contract
Presumed to Exist –
Burden of proof is on
the person assailing its
existence
(CIVIL
CODE, art. 1354)
Void IF it should not be
proved
that
the
contract was founded
upon another cause
which is true and lawful
(CIVIL CODE, art.
1353)
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Inadequacy of causa or
lesion (CIVIL CODE,
art. 1355)
General Rule: Does
not invalidate contract
Exceptions:
1. When,
together
with lesion, there
has been: fraud,
mistake or undue
influence
2. In cases specified
by law (the ff.
contracts may be
rescinded)
Those entered
into
by
guardians
when
the
wards suffer
lesion by more
than ¼ of the
value of the
things which
are the object
thereof (CIVIL
CODE,
art.
1381, par. 1)
Those agreed
upon
in
representation
of absentee, if
the
latter
suffer lesion
stated in par. 1
(CIVIL CODE,
art. 1381, par.
2)
Partition
among
coheirs,
when
any one of
them received
things with a
value less by
at least ¼ than
the share to
which he is
entitled (CIVIL
CODE,
art.
1098)
Failure of Cause
when the seller fails to realize the price or does
not deliver the thing to the buyer. The injured
party is entitled to specific performance or
rescission.
Moral Obligation as Cause
Where the moral obligation arises wholly from
ethical considerations, unconnected with any civil
obligations, it cannot constitute a sufficient cause or
consideration to support an onerous contract.
(Fisher v. Robb, G.R. No. 46274)
Where such moral obligation is based upon a
previous civil obligation which has already been
barred by the statute of limitations at the time when
the contract is entered into, it constitutes a sufficient
cause or consideration to support a contract.
(Villaroel v. Estrada, G.R. No. L-47362)
3. REFORMATION OF INSTRUMENTS
As distinguished from annulment where there is no
meeting of the minds, in reformation, there is
meeting of the minds but attended by mistake,
fraud, inequitable conduct, or accident. (CIVIL
CODE, art. 1359)
Requisites for action for reformation (VP-PIM)
1. Meeting of the minds (CIVIL CODE, art. 1359)
2. True Intention is not expressed (CIVIL CODE, art.
1359)
3. Clear and convincing Proof (HECTOR S. DE LEON
& HECTOR M. DE LEON, JR., COMMENTS AND
CASES ON OBLIGATIONS AND CONTRACTS 713
(2014))
4. Within proper prescriptive Period
5. Not simple unconditional donation inter vivos or
contract where real agreement is Void (CIVIL
CODE, art. 1366)
NOTE: In reformation, no new contract is made.
Contracts that may be reformed: (CM-TIFF)
1. Mutual mistake fails to disclose the real
agreement (but it must be a mistake of Fact)
(CIVIL CODE, art. 1361)
2. Unilateral mistake or the other party acted
Fraudulently (CIVIL CODE, art. 1362)
3. Unilateral mistake and the other party is guilty
of Concealment (CIVIL CODE, art. 1363)
4. Person drafting the instrument or clerk or typist
through ignorance, lack of skill, negligence or
bad faith, does not show the True Intention
(CIVIL CODE, art. 1364)
5. Parties agree on Mortgage, pledge of real or
personal property but instrument says that it is
sold absolutely or involves a right to repurchase
(CIVIL CODE, art. 1365)
No reformation is allowed in: (SD-WV)
1. Simple Donation
2. Wills
3. Real agreement is Void (CIVIL CODE, art. 1366)
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Who may ask for reformation: (NOT-FE-MM)
1. The party who is NOT at Fault (i.e., injured
party, heirs or assigns) (CIVIL CODE, art. 1367)
2. Party who is NOT asked to Enforce the
instrument (CIVIL CODE, art. 1368)
3. If there is a Mutual Mistake, reformation may be
had by either party or successor in interest
(CIVIL CODE, art. 1368)
Procedure for reformation shall be governed by the
Rules of Court as promulgated by the Supreme
Court. (CIVIL CODE, art. 1369)
The prescriptive period for actions based upon a
written contract and for reformation of an instrument
is ten (10) years under Article 1144 of the Civil Code.
(Yolanda Rosello-Bentir v. Honorable Mateo M.
Leanda, G.R. No. 128991)
4. INTERPRETATION OF CONTRACTS
If the terms of the agreement are clear and
unequivocal, their plain and literal meanings should
be followed. (CIVIL CODE, art. 1370)
In the construction or interpretation of an instrument,
the intention of the parties is primordial and is to be
pursued. (Valdez v. CA, G.R. No. 140715)
In order to judge the intention of the contracting
parties, their contemporaneous and subsequent
acts shall be principally considered. (CIVIL CODE, art.
1371)
CIVIL LAW (AND PRACTICAL EXERCISES)
When there are several provisions in a contract, the
construction to be adopted should be that one which
will give effect to all provisions. A contract must be
read in its entirety. (Rigor v. Consolidated Orix
Leasing Finance Corporation, G.R. No. 136423)
The ambiguity in a contract should be construed
against the party who caused the same. (CIVIL
CODE, art. 1377)
5. RESCISSIBLE CONTRACTS
Definition
Those which have caused economic damage either
to one of the parties or to a third person and which
may be set aside even if valid. They may be set
aside in whole or in part, to the extent of the damage
caused. (4 ARTURO M. TOLENTINO, COMMENTARIES
AND JURISPRUDENCE ON THE CIVIL CODE OF THE
PHILIPPINES 574 (1991))
Rescissible Contracts under Art. 1381: (ALLGF)
1. Entered into by Guardian whenever ward
suffers damage by more than 1/4 of value of
object;
2. Agreed upon in representation of Absentees, if
absentee suffers lesion by more than ¼ of value
of property;
3. Contracts where rescission is based on Fraud
committed on creditors (accion pauliana);
4. Objects of Litigation; contract entered into by
defendant without knowledge or approval of
litigants or judicial authority; and
In case of doubt concerning the surrounding
circumstances in the execution of a contract, the
least transmission of rights and interest shall prevail
if the contract is gratuitous, and if onerous, the doubt
is to be settled in favor of greatest reciprocity. (CIVIL
CODE, art. 1378)
The terms of an agreement or writing are presumed
to be have been used in their primary and general
acceptation. However, evidence may be admitted to
show that they have a local, technical, or otherwise
peculiar signification and were used and understood
in that particular instance, in which case, the
agreement or writing must be construed
accordingly. (REVISED RULES ON EVIDENCE, rule 130,
§ 15)
Only laws existing at the time of the execution of a
contract are applicable to it and not the later statutes
unless the latter are specifically intended to have
retroactive effect. (Vive Eagle Land, Inc. v. CA, G.R.
No. 150308)
Contracts involving things under litigation are
rescissible. Art. 1381 (4) requires the
concurrence of the following: (1) the defendant,
during the pendency of the case, enters into a
contract which refers to the subject of litigation;
and (2) said contract was entered into without
the knowledge and approval of the litigants or of
a competent judicial authority. The court then
has the duty to order the rescission of the
contract upon the concurrence of such
requisites. (Ada v. Baylon, G.R. No. 182435)
5.
Provided for by Law – e.g. Arts. 1526, 1534,
1539, 1542, 1556, 1560, 1567 and 1659
Art. 1526 – Unpaid seller of goods,
notwithstanding that the ownership in the
goods may have passed to the buyer,
subject to other provisions on Sales
Art. 1534 – Unpaid seller having the right
of lien or having stopped the goods in
transit, where he expressly reserved his
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right to do so in case the buyer should
make default, or the buyer has been in
default in the payment of the price for an
unreasonable time
Art. 1539 – In the sale of real estate at a
rate of a certain price for a unit of
measure or number, at the will of the
vendee, when the inferior value of the
thing sold exceeds one-tenth of the price
agreed upon, or if the vendee would not
have bought the immovable had he
known of its smaller area or inferior
quality
Art. 1542 – In the sale of real estate,
made for a lump sum, where the
boundaries are mentioned and the area
or number within the boundaries exceed
that specified in the contract, when the
vendee does not accede to the failure to
deliver what has been stipulated
Art. 1556 – Should the vendee lose, by
reason of eviction, a part of the thing sold
of such importance, in relation to the
whole, that he would not have bought it
without said part
Art. 1560 – Vendee may ask for
recession if the immovable sold should
be encumbered with any non-apparent
burden or servitude, not mentioned in the
agreement, of such a nature that it must
be presumed that the vendee would not
have acquired it had he been aware
thereof
Art. 1567 – In cases of breach of
warranty against hidden defects of or
encumbrances upon the thing sold
Art. 1659 – If the lessor or lessee should
not comply with their obligations, the
aggrieved party may ask for rescission
Accion pauliana refers to the action to rescind
contracts in fraud of creditors under Art. 1381.
Requisites: (NR-CAFS)
a.
b.
c.
d.
The plaintiff asking for rescission has a
Credit prior to the alienation, although
demandable later;
The debtor has made a Subsequent contract
conveying a patrimonial benefit to a third
person;
The creditor has No other legal Remedy to
satisfy his claim;
The act being impugned is Fraudulent;
CIVIL LAW (AND PRACTICAL EXERCISES)
e.
The third person who received the property
conveyed, if it is by onerous title, has been
an Accomplice in the fraud. (Anchor Savings
Bank v. Furigay, G.R. No. 191178, Mar. 13,
2013; Lee v. Bangkok Bank Public
Company, Limited, G.R. No. 173349, Feb. 9,
2011)
Under Art. 1382, payments made in a state of
insolvency for obligations to whose fulfillment the
debtor could not be compelled at the time they were
effected are also rescissible.
Requisites:
a.
b.
The debtor-payer must have been
insolvent (the insolvency need not be a
judicially declared one).
The debt was not yet due and
demandable (CIVIL CODE, art. 1382)
Obligation created by the rescission of the
contract
Mutual Restitution
a. Things which are the objects of the contract
and their fruits
b. Price with interest (CIVIL CODE, art. 1385)
NOTE: The obligation of restitution obviously does
not apply to creditors who seek to impugn fraudulent
transactions of their debtors. The obligation of
mutual restitution applies to OTHERS so that that
status quo may be restored. (EDGARDO L. PARAS,
CIVIL CODE OF THE PHILIPPINES ANNOTATED:
PRESCRIPTION; OBLIGATIONS AND CONTRACTS (2016))
Requisites: (4-TRR)
a.
b.
c.
d.
Plaintiff must be able to Return what has
been received by virtue of the rescissible
contract (CIVIL CODE, art. 1385)
Object of the contract is not in the legal
possession of Third persons in good faith.
(CIVIL CODE, art. 1385)
Plaintiff has no other legal Remedy. (CIVIL
CODE, art. 1383)
Action must be brought within the proper
prescriptive period of 4 years. (CIVIL CODE,
art. 1389)
Badges of fraud are circumstances indicating that
certain alienation has been made in fraud of
creditors. Some examples are:
a. Consideration of the conveyance is
inadequate or fictitious;
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b.
c.
d.
e.
f.
g.
Transfer was made by a debtor after a suit
has been begun and while it is pending
against him;
Sale upon credit by an insolvent debtor;
Evidence of indebtedness or complete
insolvency;
Transfer of all his property by a debtor
when he is financially embarrassed or
insolvent;
Transfer made between father and son
where this fact is considered together with
the preceding circumstances; and
Failure of the vendee to take exclusive
possession of the property (Caltex
Philippines, Inc. v. PNOC Shipping and
Transport Corporation, G.R. No. 150711)
The presumption of fraud in case of alienations by
onerous title of a person against whom a judgment
has been rendered or attachment issued does not
apply to registered lands if the judgment or
attachment made is not also registered. (Lee v.
Bangkok Bank, G.R. No. 173349)
The action to claim rescission must be commenced
within four years. For persons under guardianship
and for absentees, the period of four years shall not
begin until the termination of the former's incapacity,
or until the domicile of the latter is known (CIVIL
CODE, art. 1389)
6. VOIDABLE CONTRACTS
Definition
Intrinsic defect; valid until annulled; defect is due to
vice of consent or legal incapacity (ERNESTO L.
PINEDA, OBLIGATIONS AND CONTRACTS 601-602
(2009))
Characteristics (ACED)
1. Effective until set aside
2. May be assailed or attacked only in an Action
for that purpose
3. Can be Confirmed
NOTE: Confirmation is the proper term for
curing the defect of a voidable contract.
4.
Can be assailed only by the party whose
consent was Defective or his heirs or assigns
What contracts are voidable:
Contracts entered into: (SIM-D3)
1. By Minors (CIVIL CODE, art. 1327)
CIVIL LAW (AND PRACTICAL EXERCISES)
2.
3.
4.
5.
6.
By Insane unless he/she acted during a lucid
interval (CIVIL CODE, art. 1327 & 1328)
By Deaf mute who can’t read or write (CIVIL
CODE, art. 1327)
By Persons specially Disqualified: civil
interdiction (CIVIL CODE, art. 1329 & 38)
In state of Drunkenness (CIVIL CODE, art. 1328)
In state of hypnotic Spell (CIVIL CODE, art. 1328)
Mistake
False belief of something which is contrary to the
real intention of the parties (ERNESTO L. PINEDA,
OBLIGATIONS AND CONTRACTS 443 (2009))
Requisites: (CP-SEN)
1. Refers to the Subject of the thing which is the
object of the contract
2. Refers to the Nature of the contract
3. Refers to the principal Conditions in an
agreement (ERNESTO L. PINEDA, OBLIGATIONS
AND CONTRACTS 443 (2009))
4. Error as to Person – When it is the principal
consideration of the contract
5. Error as to legal Effect – When mistake is
mutual and frustrates the real purpose of parties
(CIVIL CODE, art. 1334)
Violence
Serious or irresistible force is employed to wrest
consent (CIVIL CODE, art. 1335)
Intimidation
One party is compelled by a reasonable and wellgrounded fear of an imminent and grave danger
upon person and property of himself, spouse,
ascendants or descendants (moral coercion) (CIVIL
CODE, art. 1335)
Undue Influence
Person takes improper advantage of his power over
will of another depriving latter of reasonable
freedom of choice (CIVIL CODE, art. 1337)
The doctrine on reluctant consent provides that a
contract is still valid even if one of the parties
entered it against his wishes or even against his
better judgment. Contracts are also valid even
though they are entered into by one of the parties
without hope of advantage or profit. (Martinez v.
HSBC, G.R. No. L-5496)
Fraud
Thru insidious words or machinations of one of the
contracting parties, the other is induced to enter into
a contract without which he will not enter it (dolo
causante). (Samson v. CA, G.R. No. 108245)
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CIVIL LAW (AND PRACTICAL EXERCISES)
Kinds of Fraud in the Performance of
Obligations or Contracts
1. Causal Fraud (dolo causante)
2. Incidental Fraud (dolo incidente)
3. Tolerated Fraud – includes minimizing the
defects of the thing, exaggeration of its good
qualities and giving it qualities it does not have;
lawful misrepresentation (CIVIL CODE, art.
1340)
location, can be construed as an implied ratification
thereof.
NOTE:
Expression of an opinion – not fraud unless made
by expert and other party relied on the former’s
special knowledge (CIVIL CODE, art. 1341)
Ratification cleanses the contract of its defects from
the moment it was constituted. (CIVIL CODE, art.
1396)
Fraud by third person – does not vitiate consent;
only action for damages except if there is collusion
between one party and the third person, or resulted
to substantial mistake, mutual between parties.
(CIVIL CODE, art. 1342)
Causes of Extinction of the Action to Annul
1. Prescription - Period to bring an action for
Annulment
(a) Intimidation, violence, undue influence
– 4 years from time defect of consent
ceases
(b) Mistake, fraud – 4 years from time of
discovery
(c) Incapacity - From time guardianship
ceases (CIVIL CODE, art. 1391)
Discovery of fraud must be reckoned to have taken
place from the time the document was registered in
the office of the register of deeds. Registration
constitutes constructive notice to the whole world
(Carantes v. CA, G.R. No. L-33360).
2.
Ratification
Requisites: (Wack)
1. Knowledge of reason rendering contract
voidable (CIVIL CODE, art. 1393)
2. Such reason must have Ceased (CIVIL CODE,
art. 1393). Except in case of ratification effected
by the guardian to contracts entered into by an
incapacitated (CIVIL CODE, art. 1394)
3. The injured party must have executed an act
which expressly or impliedly conveys an
intention to Waive his right (CIVIL CODE, art.
1393)
Even assuming that petitioner’s misrepresentation
consists of fraud which could be a ground for
annulling their Contract to Sell, respondent’s act of
affixing her signature to the said Contract, after
having acquired knowledge of the property's actual
Implied ratification may take diverse forms, such as
by silence or acquiescence; by acts showing
approval or adoption of the contract; or by
acceptance and retention of benefits flowing
therefrom. (ECE Realty v. Mandap, G.R. No.
196182, Sept. 1, 2014)
3.
Loss of the Thing which is the object of the
contract through fraud or fault of the person who
is entitled to annul the contract. (CIVIL CODE, art.
1401)
NOTE: If the object is lost through a fortuitous
event, the contract can still be annulled, but the
person obliged to return the same can be held liable
only for the value of the thing at the time of the loss,
but without interest thereon. (4 ARTURO M.
TOLENTINO, COMMENTARIES AND JURISPRUDENCE ON
THE CIVIL CODE OF THE PHILIPPINES 614 (1991))
7. UNENFORCEABLE CONTRACTS
Definition
They are valid but the execution cannot be
compelled unless ratified; extrinsic defect; produce
legal effects only after ratified.
Kinds: (URA)
1. Unauthorized or no sufficient authority –
Entered into in the name of another when: (CIVIL
CODE, art. 1404)
a. No authority conferred (CIVIL
CODE, art. 1317)
b. In excess of authority conferred
(ultra vires) (CIVIL CODE, art. 1317)
2. Curable by Ratification – Both parties incapable
of giving consent (2 minor or 2 insane persons)
(CIVIL CODE, art. 1407)
3. Curable by Acknowledgment – Failure to
comply with Statute of Frauds. (CIVIL CODE, art.
1405)
Statute of Frauds
1. Agreement to be performed within a year after
making contract
2. Special promise to answer for debt, default or
miscarriage of another
3. Agreement made in consideration of promise to
marry
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4.
5.
6.
Agreement for sale of goods, chattels or things
in action at price not less than 500; exception:
auction when recorded sale in sales book
Agreement for lease of property for more than
one year and sale of real property regardless of
price
Representation as to credit of another (CIVIL
CODE, art. 1403 (2))
Two Ways of Curing Unenforceable Contracts
1. Failure of defendant to object in time, to the
presentation of parole evidence in court, the
defect of unenforceability is cured
2. Acceptance of benefits under the contract. If
there is performance in either part and there is
acceptance of performance, it takes it out of
unenforceable contracts; also estoppel sets in
by accepting performance, the defect is waived.
(CIVIL CODE, art. 1405)
NOTE: The contracts/agreements under the Statute
of Frauds require that the same be evidenced by
some note or memorandum or writing, subscribed
by the party charged or by his agent, otherwise, the
said contracts shall be unenforceable. (CIVIL CODE,
art. 1403)
The Statute of Frauds applies only to executory
contracts, not to those that are partially or
completely fulfilled. (Carbonnel v. Poncio, G.R. No.
L-11231)
A right of first refusal is not by any means a
perfected contract of sale of real property. As such,
a right of first refusal need not be written to be
enforceable and may be proven by oral evidence.
(Rosencor Corp v. Inquing, G.R. No. 140479)
In proving the fact of partial or total performance,
either documentary or oral evidence may be
received. (Averia v. Averia, G.R. No. 141877)
Statute of Frauds is a personal act made by the
parties to the unenforceable contract. Third parties
cannot use the Statute of Frauds as defense, or
directly attack the unenforceable contract. (Ayson v.
Court of Appeals, G.R. Nos. L-6501 and L-6599).
8. VOID OR INEXISTENT CONTRACTS
Definition
These contracts have no legal effect (Modina v. CA,
G.R. No. 109355)
Characteristics:
1. It produces no effect whatsoever either against
or in favor of anyone; (Modina v. CA, G.R. No.
109355)
CIVIL LAW (AND PRACTICAL EXERCISES)
2.
3.
There is no action for annulment necessary as
such is ipso jure. A judicial declaration to that
effect is merely a declaration;
It cannot be confirmed, ratified or cured;
NOTE: Assuming that the nullified ... resolutions
may be deemed as contracts, we declared in our
[previous ruling] that the infirmity in the nullified ...
resolutions did not stem from the absence of
consent or authority, which would have made them
unenforceable contracts under Article 1401 (1) of
the Civil Code. The infirmity comes from the failure
of the NPC to comply with the requirements set forth
in the EPIRA.
On this basis, they cannot be classified as an
unenforceable contract under Article 1403 (1) of the
Civil Code, but as void contracts under Article 1409
(7) of the Civil Code for being "expressly prohibited
or declared void by law." The last paragraph of
Article 1409 of the Civil Code expressly provides
that void contracts cannot be ratified. (NPC DAMA
v. NPC, G.R. No. 156208)
If performed, restoration is in order, except if
pari delicto will apply; (CIVIL CODE, art. 1411 &
1412)
The right to set up the defense of nullity cannot
be waived; (CIVIL CODE, art. 1409)
Imprescriptible (CIVIL CODE, art. 1410); and
Anyone may invoke the nullity of the contract
whenever its juridical effects are asserted
against him (CIVIL CODE, art. 1421)
Kinds of void contract: (CIVIL CODE, art. 1409)
1) Those lacking in essential elements: No
consent, no object, no cause (inexistent ones)
– essential formalities are not complied with.
Example: Donation propter nuptias – Should
conform to formalities of a donation to be valid)
2)
Those which are absolutely simulated or
fictitious – no cause. An absolutely simulated
or fictitious contract is void, and the parties may
recover from each other what they may have
given under the contract. In absolute simulation,
there is a colorable contract but it has no
substance as the parties have no intention to be
bound by it. (Heirs of Dr. Mario S. Intac and
Angelina Mendoza-Intac v. CA, G.R. 173211).
a)
NOTE: In absolute simulation, there is a
colorable contract but the parties have no
intention to be bound by it. However, if the
parties state a false cause in the contract to
conceal their real agreement, the contract
is relatively simulated and the parties are
still bound by their real agreement. (CIVIL
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CIVIL LAW (AND PRACTICAL EXERCISES)
CODE, art. 1345; Valerio v. Refresca, G.R.
No. 163687)
3)
4)
5)
6)
7)
Those which cause or object did not exist at
the time of the transaction – no cause/object.
This refers to a contract whose cause or object
could not have existed or could not come into
existence at the time of the transaction.
(BALANE 778 (2020))
Those whose object is outside the commerce
of man – no object / illegal / impossible object
Those which contemplate an impossible
service – no object / illegal / impossible object
Those which intention of parties relative to
principal object of the contract cannot be
ascertained
Those expressly prohibited or declared void
by law – Contracts w/c violate any legal
provision, whether it amounts to a crime or not
Examples:
No contract may be entered into upon
future inheritance except in cases
expressly authorized by law. (CIVIL CODE,
art. 1347)
No contract which practically amounts to
involuntary servitude, under any guise
whatsoever, shall be valid. (CIVIL CODE,
art. 1703)
8)
Those whose cause, object or purpose is
contrary to law, morals, good customs,
public order or public policy. Example:
Contract to sell marijuana
Other void contracts:
1. Pactum Commissorium (CIVIL CODE, art.
2088, 2130, 1390)
Elements: (MAp)
a. There should be a property Mortgaged
by way of security for the payment of
the principal obligation.
b. There should be a stipulation for
automatic Appropriation by the creditor
of the thing mortgaged in case of nonpayment of the principal obligation
within
the
stipulated
period.
(Development Bank of the Philippines
v. CA, G.R. No. 118342)
2.
A stipulation forbidding the owner from
alienating the immovable mortgaged shall be
void.
Pactum De Non Alienando (CIVIL CODE, art.
2130)
It is a clause in a mortgage giving the
mortgagee the right to foreclose by executory
process directed solely against the mortgagor
and giving him or her the right to seize and sell
the mortgaged property, regardless of any
subsequent alienations.
3.
Pactum Leonina (CIVIL CODE, art. 1799)
A stipulation which excludes one or more
partners from any share in profit or loss is void.
ILLEGAL CONTRACTS
Pari Delicto Doctrine
General Rule:
Both parties are guilty, no action against each
other; (CIVIL CODE, art. 1412)
Those who come in equity must come with
clean hands; (Department of Public Works and
Highways v. Quiwa, G.R. No. 183444)
Applies only to illegal contracts and not to
inexistent contracts;
Does not apply when a superior public policy
intervenes.
The Clean Hands Doctrine states that “a litigant
may be denied relief by a court of equity on the
ground that his conduct has been inequitable, unfair
and dishonest, or fraudulent, or deceitful as to the
controversy in issue.” Bad faith and fraud are
allegations of fact that demand clear and convincing
proof. (Department of Public Works and Highways
v. Quiwa, G.R. No.183444)
Exception: If purpose has not yet been
accomplished and if damage has not been caused
to any 3rd person.
Other exceptions:
1. Payment of usurious interest. (CIVIL CODE, art.
1413)
2. Payment of money or delivery of property for an
illegal purpose, where the party who paid or
delivered repudiates the contract before the
purpose has been accomplished, or before any
damage has been caused to a third person.
(CIVIL CODE, art. 1414)
3. Payment of money or delivery of property made
by an incapacitated person. (CIVIL CODE, art.
1415)
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4.
5.
6.
7.
Agreement or contract which is not illegal per se
and the prohibition is designed for the protection
of the plaintiff. (CIVIL CODE, art. 1416)
Payment of any amount in excess of the
maximum price of any article or commodity
fixed by law or regulation by competent
authority. (CIVIL CODE, art. 1417)
Contract whereby a laborer undertakes to work
longer than the maximum number of hours fixed
by law (CIVIL CODE, art. 1418 & 1419)
One who lost in gambling because of fraudulent
schemes practiced on him is allowed to recover
his losses (REVISED PENAL CODE, art. 313) even
if gambling is prohibited.
Requisites of Illegal Contracts:
1. Contract is for an illegal purpose;
2. Contract must be repudiated by any of the
parties before purpose is accomplished or
damage is caused to third parties; and
3. Court believes that public interest will be served
by allowing recovery (discretionary upon the
court).
Based on remorse;
Illegality is accomplished when parties
entered into contract;
Before it takes effect – Party which is
remorseful prevents it.
Where laws are issued to protect certain
sectors: consumer protection, labor, and usury
law
1. Consumer Protection – If price of commodity
is determined by statute, any person paying an
amount in excess of the maximum price allowed
may recover such excess. (CIVIL CODE, art.
1417)
2. Labor – If the law sets the minimum wage for
laborers, any laborer who agreed to receive less
may still be entitled to recover the deficiency; if
the law sets max working hours and laborer who
undertakes to work longer may demand
additional compensation. (CIVIL CODE, art. 1418
& 1419)
3. Interest paid in excess of the interest allowed
by the usury law may be recovered by debtor
with interest from date of payment. (CIVIL CODE,
art. 1413)
Effects of illegal contracts
1. If one party is incapacitated, courts may allow
recovery of money, property delivered by
incapacitated person in the interest of justice.
(CIVIL CODE, art. 1415)
Pari delicto doctrine cannot apply because an
incapacitated person does not know what he is
CIVIL LAW (AND PRACTICAL EXERCISES)
entering into and is unable to understand the
consequences of his own action.
2.
If agreement is not illegal per se but merely
prohibited and prohibition is designated for the
protection of the plaintiff – may recover what he
has paid or delivered by virtue of public policy.
(CIVIL CODE, art. 1416)
3.
If a subsequent contract results directly
because of a previous illegal contract, the
subsequent contract is also void and inexistent.
“The illegality of the Sub-Contract Agreement
necessarily affects the [resulting] Deed of
Assignment because the rule is that an illegal
agreement cannot give birth to a valid contract.
To rule otherwise is to sanction the act of
entering into transaction the object of which is
expressly prohibited by law and thereafter
execute an apparently valid contract to
subterfuge the illegality. The legal proscription
in such an instance will be easily rendered
nugatory and meaningless to the prejudice of
the general public.” (Gonzalo v. Tarnate, G.R.
No. 160600)
Mutual restitution in void contracts
General rule: Parties should return to each other
what they have given by virtue of the void contract
in case
Where nullity arose from defect in essential
elements:
1. Return object of contract and fruits
2. Return price plus interest
Exception: No recovery can be had in cases where
nullity of contract arose from illegality of contract
where parties are in pari delicto. (CIVIL CODE, art.
1412)
Exceptions to the exception:
1. When incapacitated – Not obliged to return what
he gave but may recover what he has given
2. Other party is less guilty or not guilty. (CIVIL
CODE, art. 1412)
C. NATURAL OBLIGATIONS
Natural obligations, not being based on positive law
but on equity and natural law, do not grant a right of
action to enforce their performance, but after
voluntary fulfillment by the obligor, they authorize
the retention of what has been delivered or rendered
by reason thereof. (CIVIL CODE, art. 1423)
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Examples of natural obligations enumerated
under the Civil Code:
i. Performance after the civil obligation has
prescribed
ii. Reimbursement of a third person for a debt
that has prescribed
iii. Restitution by minor after annulment of
contract
iv. Delivery by minor of money or fungible thing
in fulfillment of obligation
v. Performance after action to enforce civil
obligation has failed
vi. Payment by heir of debt exceeding value of
property inherited
vii. Payment of legacy after will has been declared
void. (CIVIL CODE, art. 1423-1430)
D. ESTOPPEL
Definition
It is a condition or state by virtue of which an
admission or representation is rendered conclusive
upon the person making it and cannot be denied or
disproved as against the person relying thereon.
(CIVIL CODE, art. 1431)
Estoppel is effective only between the parties
thereto or their successors in interest. (CIVIL CODE,
art. 1439)
Kinds:
1. Estoppel in pais (by conduct)
(a) Estoppel by silence
(b) Estoppel by acceptance of benefits
2. Technical estoppel
(a) Estoppel by deed
(b) Estoppel by record
(c) Estoppel by judgment
(d) Estoppel by laches
Requisites of estoppel in pais
A. As related to the party to be estopped
(CIK)
1. Conduct which amounts to a false
representation or concealment of
material facts, or at least which is
calculated to convey the impression that
the facts are otherwise than, and
inconsistent with those which the party
subsequently attempts to assert;
CIVIL LAW (AND PRACTICAL EXERCISES)
2. Intention or at least the expectation, that
such conduct shall be acted upon, or
influence, the other party or other
persons;
3. Knowledge, actual or constructive, of the
real facts
B. As related to the party claiming the
estoppel (IRA)
1. Ignorance or lack of knowledge and of
the means of knowledge of the truth as to
the facts in question
2. Reliance in good faith, upon the conduct
or statement of the party to be estopped;
and
3. Action or inaction based thereon of such
a character as to change the position or
status of the party claiming the estoppel,
to his injury, detriment, or prejudice.
(Manila International Airport Authority v.
Ding Velayo Sports Center, Inc., G.R.
No. 161718, Dec. 14, 2011)
Requisites of estoppel by laches (CLID)
1. Conduct on the part of the defendant, or of
one under whom he claims, giving rise to the
situation of which complaint is made;
2. Delay in asserting the complainant’s right, the
complainant having had knowledge or notice
of the defendant’s conduct and having been
afforded an opportunity to sue; actual
knowledge of the commission of the adverse
act is not necessary, it being enough that
such knowledge may be imputed to the
complainant because of circumstances of
which he was cognizant;
3. Lack of knowledge or notice on the part of the
defendant that the complainant would assert
the right on which he bases his suit; and
4. Injury or prejudice to the defendant in the
event relief is accorded to the complainant, or
the suit is not held to be barred. (Cimafranca
v. IAC, G.R. No. L-68687, Jan. 31, 1987)
E. TRUSTS
Definition
A fiduciary relationship between a person who
establishes a trust (trustor), one in whom confidence
is reposed as regards property for the benefit of
another person (trustee), and a person for whose
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benefit the trust has been created (beneficiary).
(CIVIL
CODE,
Art.
1440)
the Code of Commerce, the Rules of Court and
special laws applies. (CIVIL CODE, Art. 1442)
It is a legal relationship between one person who
has equitable ownership of the property and
another who owns the legal title to the property.
(Oco v. Limbaring, G.R. No. 161298)
KINDS OF TRUST
Characteristics of a Trust
1. It is a relationship;
2. Fiduciary;
3. Created by law or agreement
4. Involves property, not merely personal duties;
5. Where the legal title is held by one, the
equitable title or beneficial title is held by
another;
6. Involves the existence of equitable duties
imposed upon the holder of the title to the
property to deal with it for the benefit of another;
and
7. Arises as a result of a manifestation of intention
to create the relationship. (Morales v. CA, G.R.
No. 117228)
Parties to a Trust
1. Trustor – The person who establishes the trust.
2. Trustee – The person in whom confidence is
reposed as regards property for the benefit of
another.
3. Beneficiary – The person for whose benefit the
trust has been created. (Penalber v. Ramos,
G.R. No. 178645)
TRUST (CIVIL CODE,
Art. 1441)
Arises either by virtue
of a contract or by
operation of law
Either
express
or
implied
Continues to exist
unless repudiated
STIPULATION
POUR AUTRUI
(Mamaril v. BSP,
G.R. No. 179382,
Jan. 14, 2013.)
Arises only by virtue
of a contract
Always express
Third person must
have
communicated
his acceptance to the
obligor
before
its
revocation
by
the
obligee or the original
parties
Trustees Cannot Donate Property in Trust
Trustees cannot donate the property entrusted to
them.
(CIVIL
CODE,
Art.
736)
NOTE: The principles of the general law of trusts,
insofar as they are not in conflict with the Civil Code,
1. EXPRESS TRUST
Definition
Created by express agreement of the parties, or by
intention of trustor. (CIVIL CODE, Art. 1441)
Express trusts are those which are created by the
direct and positive acts of the parties, by some
writing or deed, or will, or by words either expressly
or impliedly evincing an intention to create a trust.
(Ramos v. Ramos, G.R. No. L-19872)
Requisites in Creating an Express Trust
a. Clear intent to establish trust; (Art.
1444)
b. Direct and positive acts of the parties
evidence the intention to create trust
by means of:
i. Writing;
ii. Deed;
iii. Will;
iv. Words. (Canezo v. Rojas,
G.R. No. 148788)
NOTE: No particular words are required for the
creation of an express trust, it being sufficient that a
trust is clearly intended. (CIVIL CODE, Art. 1444)
Proof Required for Express Trusts Concerning
Immovables
No express trust concerning an immovable or any
interest therein may be proved by parol evidence.
(CIVIL CODE, Art. 1443)
However, when oppositors failed to timely object
when the petitioner tried to prove by parol evidence
the existence of an express trust over immovable,
in the nature of a statute of frauds. (Penalber v.
Ramos, G.R. No. 178645).
NOTE: To prove an express trust over an
immovable or any interest therein, there must
always be a showing of some documents proving
the same. (Pascual v. Meneses, G.R. No. L-18838)
Requisites for Creating a Testamentary Trust
a. Sufficient words to raise a trust;
b. Definite subject;
c. Certain or ascertained object. (Lorenzo v.
Posadas, Jr., G.R. No. L-43082)
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On Declining Trustees
General Rule: No trust shall fail because the
trustee appointed declines the designation. (CIVIL
CODE, Art. 1445)
NOTE: In case of refusal to accept an express trust,
the court will appoint a trustee.
Exception: When the contrary appears in the
instrument constituting the trust. (CIVIL CODE, Art.
1445)
Acceptance by Beneficiary
Acceptance by the beneficiary is necessary. If he
repudiates or declines, the trust does not become
effective. (CIVIL CODE, Art. 1446)
CIVIL LAW (AND PRACTICAL EXERCISES)
Implied trusts are remedies against unjust
enrichment. Under the general principles on trust,
equity converts the holder of property right as
trustee for the benefit of another if the
circumstances of its acquisition makes the holder
ineligible in good conscience to hold and enjoy it.
(Juan v. Yap, Sr., G.R. No. 182177).
Chapter on Implied Trusts is not an exclusive
list
The chapter on implied trust does not exclude others
established by the general law of trust which do not
violate our rules and laws. (CIVIL CODE, Art. 1447)
NOTE: The beneficiary’s acceptance shall be
presumed if the trust imposes no onerous
condition upon the beneficiary and if there is no
proof to the contrary. (CIVIL CODE, Art. 1446)
When there is no trust
A trust will not be created when for the purpose of
evading the law prohibiting one from taking or
holding real property, one takes conveyance thereof
in the name of a third person. (Kiel v. Estate of
Sabert, G.R. No. 21639.)
On Acquisitive Prescription
General Rule: A trustee cannot acquire ownership
of property entrusted to him through prescription, as
possession of a trustee is not adverse. (Canezo v.
Rojas, G.R. No. 148788.)
If there is an express intention to create a trust, the
trust is express and not implied, even if the
situations falls under any of the provisions in this
chapter. (Cuaycong v. Cuaycong, G.R. No. L21616.)
Exception: (REKA)
a. Trustee performed unequivocal acts of
Repudiation amounting to an ouster of the
cestui que trust;
b. Positive acts of repudiation have been made
Known to the cestui que trust;
c. Evidence is clear and conclusive; and
d. Adverse possession of the trustee must be
at least 10 years in the concept of an owner.
(Canezo v. Rojas, G.R. No. 148788.)
NOTE: Above elements must concur.
There can be no implied trust created over land in
favor of a foreigner that would amount to a violation
of the constitution. (Encarnacion v. Johnson, G.R.
No. 192285.)
Extinguishment of an Express Trust
a. Accomplishment of the aims of the trust;
b. Expiration of the agreed term;
c. Mutual agreement of all parties;
d. Happening of a resolutory condition;
e. Total loss of the object of the trust;
f. Annulment or rescission of the trust;
g. Decision of the court declaring termination;
h. Merger of the rights of the trustor and the
trustee;
i. Prescription; and
j. Upon the trustee's death (Canezo v. Rojas,
G.R. No. 148788.)
2. IMPLIED TRUST
Basis of implied trust is equity
Resulting Trust vs. Constructive Trust
RESULTING TRUSTS
CONSTRUCTIVE
TRUSTS
Based on the equitable Created
by
the
doctrine that valuable construction of equity
consideration & not in order to satisfy the
legal title determines demands of justice &
equitable
title
or prevent
unjust
interest; presumed to enrichment
always have been
contemplated by the
parties
Arise from the nature Arise
contrary
to
or
intention against one
circumstances of the who, by fraud, duress
consideration involved or abuse of confidence,
in
a
transaction obtains or hold the
whereby one person legal right to property,
thereby
becomes which he ought not, in
invested with legal title equity,
&
good
but is obligated in conscience, to hold
equity to hold his legal
title for the benefit of
another
(O’Laco v. Co Cho Chit, G.R. No. 58010.)
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Constructive Trust
Article 1450 is an illustration of an implied trust
which is constructive. It presupposes a situation
where a person, using his own funds, purchases a
certain piece of land in behalf of another who, in the
meantime, may not have sufficient funds to
purchase the land. The property is then transferred
in the name of the trustee, the person who paid for
the land, until he is reimbursed by the beneficiary,
the person for whom the land is purchased. It is only
after the beneficiary reimburses the trustee of the
purchase price that the former can compel
conveyance of the purchased property from the
latter. (Nakpil v. IAC, G.R. No. 74449.)
A constructive trust does not arise on every moral
wrong in acquiring or holding property or on every
abuse of confidence in business or other affairs;
such a trust arises & will be declared only on
wrongful acquisitions or retentions of property of
which equity takes cognizance. It has been broadly
ruled that a breach of confidence although in
business or social relations, rendering an acquisition
or retention of property by one person
unconscionable against another, raises a
constructive trust. (Policarpio v. CA, G.R. No.
116211.)
Resulting Trust
Resulting trusts are species of implied trusts that are
presumed always to have been intended by the
parties (Ossorio Pension Foundation v. Court of
Appeals, G.R. No. 162175.)
a. Implied Trust When Property is
Granted to One/Trustee But
Price is Paid by Another for the
Interest of Beneficiary
CIVIL LAW (AND PRACTICAL EXERCISES)
Burden of proof
The burden of proving the existence of a trust is on
the party asserting existence of trust, and such proof
must be clearly and satisfactorily show the existence
of the trust and its elements. (Jarantilla, Jr. v.
Jarantilla, G.R. No. 154486.)
NOTE: Presumption is that he who pays for a thing
intends a beneficial interest for himself. (e.g. where
the club share was bought and paid for by A and
placed in the name of its officer B, a resulting trust
is presumed as a matter of law in favor of A. The
burden shifts to show otherwise) (Sime Darby
Pilipinas v. Mendoza, G.R. No. 20227.)
b. Implied Trust in Donation
There is also an implied trust when a donation is
made to a person but it appears that although the
legal estate is transmitted to the donee, he
nevertheless is either to have no beneficial interest
or only a part thereof. (CIVIL CODE, Art. 1449)
c. Implied Trust
Property
in
Sale
of
If the price of a sale of property is loaned or paid by
one person for the benefit of another & the
conveyance is made to the lender or payor to secure
the payment of the debt, a trust arises by operation
of law in favor of the person to whom the money is
loaned or for whom it is paid. The latter may redeem
the property & compel a conveyance thereof to him.
(CIVIL CODE, Art. 1450)
d. Implied Trust in Co-Ownership
There is an implied trust when property is sold, & the
legal estate is granted to one party but the price is
paid by another for the purpose of having the
beneficial interest of the property. The former is the
trustee, while the latter is the beneficiary.
If two or more persons agree to purchase property
& by common consent the legal title is taken in the
name of one of them for the benefit of all, a trust is
created by force of law in favor of the others in
proportion to the interest of each. (CIVIL CODE, Art.
1452)
However, if the person to whom the title is conveyed
is a child, legitimate or illegitimate, of the one paying
the price of the sale, no trust is implied by law, it
being disputably presumed that there is a gift in
favor of the child. (CIVIL CODE, Art. 1448)
A resulting trust arises in the situation, because of
the intention to create one. Purchasers are coowners of the property. In the absence of any
specific agreement to the contrary, their shares are
presumed equal.
Elements of purchase money resulting trust
1. Actual payment of money, property, or service,
or an equivalent valuable consideration; and
2. Such consideration must be furnished by the
alleged beneficiary of a resulting trust. (Trinidad
v. Imson, G.R. No. 197728.)
e. Implied Trust in Succession
When land passes by succession to any person and
he causes the legal title to be put in the name of
another, a trust is established by implication of law
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for the benefit of the true owner. (CIVIL CODE, Art.
1451)
This article provides for a resulting trust there being
a clear intention to establish a trust. The refers to
inherited land. There is no good reason why the
principle cannot apply to personal properties.
f.
Property Conveyed in Reliance
upon His Declared Intention to
Hold it For Another
When property is conveyed to a person in reliance
upon his declared intention to hold it for, or transfer
it to another or the grantor, there is an implied trust
in favor of the person whose benefit is
contemplated. (CIVIL CODE, Art. 1453)
An implied resulting trust is created because of the
declared intention of the grantee to hold or transfer
the property to the grantor or to another person.
g. An Absolute Conveyance to
Secure
Performance
of
Obligation
If an absolute conveyance of property is made in
order to secure the performance of an obligation of
the grantor toward the grantee, a trust by virtue of
law is established. If the fulfillment of the obligation
is offered by the grantor when it becomes due, he
may demand the reconveyance of the property to
him. (CIVIL CODE, Art. 1454)
A resulting trust is one that arises by implication of
law and presumed always to have been
contemplated by the parties, the intention as to
which can be found in the nature of their transaction
although not expressed in a deed or instrument of
conveyance. (Heirs of Yap v. CA, G.R. No. 133047.)
There is an intention to create trust, although it was
not reflected in the deed of reconveyance, therefore,
an implied resulting trust is created.
h. Trustee’s Use of Funds Held in
Trust
When any trustee, guardian or other person holding
a fiduciary relationship uses trust funds for the
purchase of property & causes the conveyance to
be made to him or to a third person, a trust is
established by operation of law in favor of the
person to whom the funds belong. (CIVIL CODE,
Art. 1455)
CIVIL LAW (AND PRACTICAL EXERCISES)
In order to prevent unjust enrichment on the part of
the fiduciary, an implied constructive trust is created
in this circumstance.
Persons covered
Any person holding a fiduciary position such as a
trustee, guardian, agent, partner, or a confidential
employee, among others.
Rationale of rule
To prevent fiduciary from temptation of putting his
own self-interest above that of his principal whom he
is supposed to protect. It also is intended to keep
and encourage the fiduciary to remain honest and
loyal to his principal.
i.
Property Acquired
Mistake or Fraud
Through
If property is acquired through mistake or fraud, the
person obtaining it is, by force of law, considered a
trustee of an implied trust for the benefit of the
person from whom the property comes. (CIVIL
CODE, Art. 1456)
This trust is created by law to prevent unjust
enrichment on the part of the acquirer to the
prejudice of the true owner. The mistake must be
committed by a third person. If made by a party,
there is no trust.
E.g. Conveyance made by seller of a property
acquired through pactum commisorium is void, and
thus not vest title to the buyer. Such a situation falls
squarely under Art. 1456, where the buyer is
deemed to have acquired the property by mistake or
through ineffectual transfer (Home Guaranty Corp.
v. La Savoie Dev. Corp G.R. No. 168616.).
Violation of a condition in donation
No trust is created if a condition in a valid donation
has been breached by the donee. The property
remains in ownership of the done subject to proper
action for revocation. If the action has prescribed
however, the donee will remain as the rightful
owner.
Oral Evidence
An implied trust may be proved by oral evidence.
(CIVIL CODE, Art. 1457)
It is deducible from the nature of the transactions as
matters of intent or which are super-induced on the
transaction by operation of law, independently of the
particular intention of the parties.
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When an immovable or an interest therein is
involved in an express trust, parol evidence is not
allowed. But, when trust is implied, parol evidence is
allowed to prove its existence.
Consequently, if property involved in express trust is
movable, parol evidence is allowed.
Proof needed to prove trust by parol evidence
It must be trustworthy and received by the courts
with caution, and should not be made to rest on
loose, equivocal or indefinite declarations.
Trustworthy evidence is required because oral
evidence can easily be fabricated. (Herbon v. Palad,
G.R. No. 149542.). Further, it must be clear,
satisfactory, and convincing, as intent to establish
trust cannot rest on vague, uncertain evidence, or
on loose, equivocal, or indefinite declaration. (Heirs
of Narvasa Sr. v. Imbornal, G.R. 182908.)
CIVIL LAW (AND PRACTICAL EXERCISES)
3.
Kinds of quasi-contract
1. Negotiorum Gestio
is the voluntary
management of the property or affairs of
another in times of emergency without the
owner’s authority. (CIVIL CODE, art. 2144)
Obligation created: Return of the property by
the officious manager to the owner once the
emergency ceases, and for the owner to
reimburse expenses incurred by the officious
manager. (CIVIL CODE, art. 2150)
2.
Solutio Indebiti is the juridical relation, which
is created when something is received when
there is no right to demand it and it was unduly
delivered through mistake. (CIVIL CODE, art.
2154)
Q: What is the applicable prescriptive period
for actions for the reconveyance of real
property based on implied trust?
Obligation created: Recipient to return the
property delivered through mistake.
A: 10 years, reckoned from the time the cause of
action accrues. (CIVIL CODE, Art. 1144; Sps. Dico
v. Vizcaya Management Corporation, G.R. No.
161211.)
In arguing that the action for reconveyance had
prescribed, the petitioners claimed that the cause of
action of the respondent should be based on the
latter's Deed of Sale and thus the respondent's right
of action should have accrued from its
execution.110 This Court, however, ruled that the
right of action accrued from the time the property
was registered because registration is the act that
signifies that the adverse party repudiates the
implied trust: (Sps. Roberto Aboitiz And Maria
Cristina Cabarrus v. Sps. Peter Po and Victoria Po,
G.R. No. 208450 and 208497)
The act must be Unilateral distinguishing it from
contract which is based on agreement.
(PINEDA 15 (2009))
SOLUTIO INDEBITI
NATURAL
OBLIGATIONS
In solutio indebiti, the
payment or delivery is
made on the basis of a
mistake, hence the
recipient has the legal
obligation to return.
(CIVIL CODE, art.
2154)
The person making the
payment or delivery
knows that he has no
legal obligation to pay
or to deliver but still
voluntarily makes such
payment or delivery.
For this reason, once
payment or delivery
has been made, there
is no right to ask for the
return. (CIVIL CODE,
art. 1423)
F. QUASI-CONTRACTS
Definition
Quasi-contracts are juridical relations resulting from
lawful, voluntary and unilateral acts, which has for
its purpose, the payment of indemnity to the end that
no one shall be unjustly enriched or benefited at the
expense of another. (CIVIL CODE, art. 2142)
Distinguished from other Sources (LUV)
1.
The act giving rise to a quasi-contract must be
Lawful distinguishing it from delict;
2. The act must be Voluntary distinguishing it from
a quasi-delict which is based on fault or
negligence; and
3.
Other cases of quasi-contracts (CIVIL CODE,
art. 2164-2175)
When, without the knowledge of the person
obliged to give support, it is given by a
stranger, the latter shall have a right to claim
the same from the former, unless it appears
that he gave it out of piety and without
intention of being repaid. (CIVIL CODE, art.
2164)
When funeral expenses are borne by a third
person, without the knowledge of those
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relatives who were obliged to give support to
the deceased, said relatives shall reimburse
the third person, should the latter claim
reimbursement. (CIVIL CODE, art. 2165)
When the person obliged to support an
orphan, or an insane or other indigent person
unjustly refuses to give support to the latter,
any third person may furnish support to the
needy individual, with right of reimbursement
from the person obliged to give support. The
provisions of this article apply when the father
or mother of a child under eighteen years of
age unjustly refuses to support him. (CIVIL
CODE, art. 2166)
When through an accident or other cause a
person is injured or becomes seriously ill, and he
is treated or helped while he is not in a condition
to give consent to a contract, he shall be liable to
pay for the services of the physician or other
person aiding him, unless the service has been
rendered out of pure generosity. (CIVIL CODE,
CIVIL LAW (AND PRACTICAL EXERCISES)
are governed by articles 1236 and 1237. (CIVIL
CODE, art. 2173)
When in a small community a majority of the
inhabitants of age decide upon a measure for
protection against lawlessness, fire, flood, storm
or other calamity, any one who objects to the plan
and refuses to contribute to the expenses but is
benefited by the project as executed shall be
liable to pay his share of said expenses. (CIVIL
CODE, art. 2174)
Any person who is constrained to pay the taxes
of another shall be entitled to reimbursement from
the latter. (CIVIL CODE, art. 2175)
The
Civil
Code
provides
[the
NOTE:
abovementioned] enumeration of quasi-contracts,
but the list is not exhaustive and merely provides
examples. (Metrobank v. AMC, G.R. No. 170498)
art. 2167)
When during a fire, flood, storm, or other calamity,
property is saved from destruction by another
person without the knowledge of the owner, the
latter is bound to pay the former just
compensation. (CIVIL CODE, art. 2168)
When the government, upon the failure of any
person to comply with health or safety regulations
concerning property, undertakes to do the
necessary work, even over his objection, he shall
be liable to pay the expenses. (CIVIL CODE, art.
2169)
When by accident or other fortuitous event,
movables separately pertaining to two or more
persons are commingled or confused, the rules
on co-ownership shall be applicable. (CIVIL
CODE, art. 2170)
The rights and obligations of the finder of lost
personal property shall be governed by articles
719 and 720. (CIVIL CODE, art. 2171)
The right of every possessor in good faith to
reimbursement for necessary and useful
expenses is governed by article 546. (CIVIL
CODE, art. 2172)
When a third person, without the knowledge of
the debtor, pays the debt, the rights of the former
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CIVIL LAW (AND PRACTICAL EXERCISES)
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V.
SALES
TOPIC OUTLINE UNDER THE SYLLABUS
A. NATURE AND FORM
1. Essential requisites
a. Elements of a contract of sale
b. Requisites of a valid subject matter
c. Requisites for a valid price
2. Perfection
a. Requirements of a perfection of a sale
3. Contract of sale v. contract to sell
B. CAPACITY TO BUY OR SELL
1. Absolute incapacity
2. Relative incapacity
C. EFFECTS OF THE CONTRACT WHEN THE
THING SOLD HAS BEEN LOST
D. OBLIGATIONS OF VENDOR
E. OBLIGATIONS OF VENDEE
F. BREACH OF CONTRACT
1. Remedies
a. Remedies of seller in case of sale of
movables
b. Remedies of seller in case of sale of
immovables
c. Remedies of buyer
2. Recto Law and Maceda Law
a. Recto Law: Sale of movables on
installment (Arts. 1484-1486)
b. Maceda Law (R.A. 6552)
3. Other Remedies
a. Remedies in double sale
b. Remedy of rescission in contracts
covering immovables
G. EXTINGUISHMENT
1. In general
2. Pacto de retro sale
3. Equitable Mortgage
4. Legal Redemption
H. ASSIGNMENT OF CREDITS
A. NATURE AND FORM
Contract of Sale
It is a contract where one of the contracting parties
(Seller) obligates himself to transfer the ownership
and to deliver a determinate thing, and the other
party (Buyer) to pay a price certain in money or its
equivalent. A contract of sale may be absolute or
conditional. (Art. 1458)
1. ESSENTIAL REQUISITES
a. Elements of a Contract of Sale:
(CSP)
1. Consent
2. Determinate or Determinable Subject Matter
3. Price certain in money or its equivalent (Coronel
v. CA, G.R. No. 103577, 1996)
The absence of any essential elements negates
the existence of a perfected contract of sale.
(Dizon v. CA, G.R. 122544, 1999)
Characteristics of Contract of Sale: (NOCPCBR)
1.
Nominate
2.
Onerous
3.
Consensual
4.
Principal
5.
Commutative
6.
Bilateral
7.
Reciprocal
In Suntay v. Court of Appeals, SC held that “[t]hough
the notarization of the deed of sale in question vests
in its favor the presumption of regularity, it is not the
intention nor the function of the notary public to
validate and make binding an instrument never, in
the first place, intended to have any binding legal
effect upon the parties thereto. The intention of the
parties still and always is the primary consideration
in determining the true nature of a contract” and
“even an apparently valid notarization of a document
does not guarantee its validity”. (Dizon v. Matti, Jr.,
G.R. No. 215614 (Resolution), March 27, 2019)
Article 1354 of the Civil Code provides that there is
a presumption that even though the contract did not
state a case, a lawful one exists and it is incumbent
upon the party impugning the contract to prove the
contrary. In the case at hand, since both the DOS
(deed of sale) and COS (contract of sale) were
public documents, the oral evidence of lack of
consideration were not sufficient to overthrow the
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presumption of the existence of a valid
consideration. (Sepe v. Heirs of Kilang, G.R. No.
199766, April 10, 2019)
FORMALITIES OF CONTRACT
Form not important for validity of sale
GR: Contract of sale is consensual, i.e., perfected
by mere consent as to price and subject matter (or
object of the contract). (Art. 1475)
Non-compliance with the formal requirements does
not affect the validity of sale. (Fule v. CA, G.R. No.
L-40502 & L-42607, 1976)
When form is important for validity; exception
by specific provision of law;
1. Donations and wills (Arts. 749, 804);
2. Power to sell a piece of land granted to an agent
must be in writing– otherwise sale is VOID (Art.
1874);
3. Sale of large cattle; must also be registered with
Municipal treasurer – otherwise VOID (Art.
1581; Revised Administrative Code, Sec. 529);
4. Sale of land by non-Christian if not approved by
Governor – VOID (Tac-an v. CA, G.R. No. L38736, 1984).
Article 1358, which requires the embodiment of
certain contracts in a public instrument, is only for
convenience, and registration of the instrument only
adversely affects third parties. Formal requirements
are, therefore, for the benefit of third parties; and
non-compliance therewith does not adversely affect
the validity of the contract and the rights and
obligations of the parties thereunder. (Dalion v. CA,
182 SCRA 872,1990)
Statute of Frauds
Note that if particular form is required under the
statute of frauds and the same is not followed:
While the sale is valid, it is UNENFORCEABLE
even as to the parties to the contract of sale.
When form (should be in writing and not merely
verbal) is important for enforceability [Statute of
Frauds](Art. 1403 [2])
1. A contract not to be performed in 1 year: A sale
agreement which by its terms is not to be
performed within a year from the making
thereof;
2. Php 500 and above: An agreement for the sale
of goods, chattels or things in action, at a price
not less than PhP500
CIVIL LAW (AND PRACTICAL EXERCISES)
3.
Sale of land: A sale of real property or of an
interest therein.
Exceptions to coverage of statute of frauds in
sales contracts:
1. Written: When there is a note or memorandum
in writing and subscribed to by party or his agent
(contains essential terms of the contract) (Art.
1403)
2. Partial execution: When there has been partial
performance/execution (seller delivers with
intent to transfer title/receives price; or when
buyer partially pays the price) (Art. 1405)
3. Failure to object: When there has been failure
to object to presentation of evidence (oral) (Art.
1405)
4. E-commerce: When sales are effected through
electronic commerce through electronic
documents which are the functional equivalent
of the written documents for validity,
enforceability and evidentiary purposes. (R.A.
8792, Secs. 7 and 12)
While a sale of land appearing in a private deed is
binding between the parties, it cannot be considered
binding on third persons if not embodied in a public
instrument and recorded in the Registry of Deeds.
(Secuya v. Vda. De Selma, G.R. No. 136021, 2000)
Although the execution of a deed of sale is
absolutely unnecessary for validity, it is
nevertheless important for 1) the enforceability of
executory contracts under Article 1403 of the Civil
Code, 2) the convenience of the parties under
Article 1358 of the same Code, and 3) the eventual
registration of the sale with the land registration
authority under P.D. 1529. A sale would be perfectly
valid even if no deed whatsoever had been
executed, subject only to the requirements of the
Statute of Frauds. As such, the parties may prove
the existence of a perfected or performed contract
of sale through any competent evidence available,
be it an original deed, a copy thereof, a
memorandum, or even testimony on the prior,
subsequent, and contemporaneous acts of the
parties. (Tamayao v. Lacambra, G.R. No. 244232,
November 3, 2020)
FORMATION OF THE CONTRACT
Three Stages in Life of a Contract of Sale
1. Policitacion/Negotiation Stage – offer floated,
acceptance is floated but they do not meet;
covers the period when parties indicate their
interest but no concurrence of offer and
acceptance.
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2.
3.
Perfection – the “birth” of the contract,
concurrence of all requisites; meeting of the
minds upon the object and price.
Consummation – the “death” of the contract,
parties perform their respective undertakings
(Arts. 1475, 1479, 1493-1506; Villanueva &
Tiansay, Law on Sales, 118-119, 2016)
Rules:
1. Offer is floated
2. Offer floated
with a period
3. Offer floated
w/ condition
4. Offer floated
without period/
without condition
5. Offer is floated
and there is
counteroffer
6. Offer is floated
7. Offer accepted
absolutely
Prior to acceptance, may be
withdrawn at will by offeror
Without
acceptance,
extinguished when period
has ended and may be
withdrawn at will by offeror;
right to withdraw must not be
arbitrary otherwise, liable to
damage under Art. 19, 20, 21
of Civil Code
Extinguished
by
happening/non-happening of
condition
Continue
to
be
valid
depending
upon
circumstances of time, place
and person
Original offer is destroyed,
there is a new offer; cannot
go back to original offer
No authority of offeror to
modify offer
Proceed to perfected stage
OPTION CONTRACT
A contract granting an exclusive right in one person,
for which he has paid a separate consideration, to
buy a certain object within an agreed period of time.
(Art. 1479) (Note: an option can be in an
independent/standalone
contract
or
simply
embedded as a provision within a contract that gives
the option holder the right, but not the obligation, to
exercise an option to buy or sell a subject matter.)
NOTE: There is no presumption of consideration, it
needs to be proven (Sanchez v. Rigos, G.R. No. L25494, 1972)
Option - an unaccepted or unexercised contractual
offer (Adelfa Properties v. CA, G.R. No. 111238,
1995)
Elements of Valid Option Contract:
1. Consent – meeting of the minds
CIVIL LAW (AND PRACTICAL EXERCISES)
2.
3.
Subject matter – an option right to an
“unaccepted unilateral offer to buy or sell”, or an
“accepted promise to sell, or to buy”:
(a) A determinate or determinable object
(b) For a price certain (including manner of
payment)
Prestation – a consideration separate from
purchase price for option given, i.e., Option
(Villanueva & Tiansay, Law on Sales, 126,
2016)
Characteristics of Option Contract: (SPNOCUUP)
1. Not the contract of sale by itself, Separate
and distinct
2. Nominate
3. Principal - but can be attached to other principal
contracts
4. Onerous
5. Commutative
6. Unilateral – versus contract of sale which is
bilateral
7. Preparatory
8. Unaccepted or unexercised contractual offer
Consideration in an option contract may be anything
of value, unlike in sale where it must be price certain
in money. (San Miguel Philippines v. Huang, G.R.
No. 137290, 2000) However, when the
consideration is not monetary, the consideration
must be clearly specified as such in the option
contract or clause. When the written agreement
itself does not state the consideration for the option
contract, the offeree bears the burden of proving the
existence of a separate consideration for the option.
(PNOC v. Keppel Phils. Holdings, Inc., G.R. No.
202050, 2016)
How Exercised: Notice of acceptance should be
communicated to offeror even without actual
payment of the option money as long as there is
delivery of payment in consummation stage. (Nietes
v. CA, G.R. No. L-32873, 1972)
Situations in an Option Contract:
1. With separate consideration
Option contract is valid
Offeror cannot withdraw offer until after expiry
period
Subject to damages for breach of option
contract if offeror withdraws during the time
stipulated but not to specific performance
because an option contract does not create an
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obligation to give (Tuazon v. Del RosarioSuares, G.R. No. 168325, 2010)
2. Without separate consideration
Even if the option without separate consideration
constitute a certain offer, still it must still be
exercised within the option period and the
acceptance must still be absolute. (Tuazon v. Del
Rosario-Suares, G.R. No. 168325, 2010)
Important rules on options:
1. If the period for the exercise of the option is not
supported by a separate consideration, the
offeror is still free and has the right to withdraw
the offer before its acceptance, or, if an
acceptance has been made, before the offeror’s
coming to know of such fact, by communicating
that withdrawal to the offeree.
2. The right to withdraw, however, must not be
exercised whimsically or arbitrarily; otherwise, it
could give rise to a damage claim under Article
19 (Abuse of Rights).
3. If the period has a separate consideration, a
contract of “option” is deemed perfected, and it
would be a breach of contract to withdraw the
offer during the agreed period.
4. The option is an independent contract in itself,
and it is to be distinguished from the proposed
sales contract. If the optioner-offeror withdraws
the offer before its acceptance by the optioneeofferee, the optionee-offeree may not sue for
specific performance on the proposed contract
since it has not been perfected; however, the
optioner-offeror is liable for damages for breach
of the option.
5. In these cases, if the consideration is intended
to be part of the consideration for the main
contract with a right of withdrawal on the part of
the optionee, the main contract could be
deemed perfected; a similar instance would be
an “earnest money” in sale that can evidence its
perfection. (Ang Yu Asuncion v. CA, G.R. No.
109125, 1994)
RIGHT OF FIRST REFUSAL
A right of first refusal (“RFR”) covers a situation
wherein a promise on the part of the owner of a
property is made that if he decides to sell the
property in the future, he will first offer the same to
the promisee.
It creates a promise to enter into a contract of sale
in the event the seller decides to sell his/her property
CIVIL LAW (AND PRACTICAL EXERCISES)
and it has no separate consideration. It is not subject
to specific performance because there is no
contractual relationship here and it is not an
obligation to give (not a real contract).
New doctrine: May be subject
performance in a specific instance.
to
specific
The RFR is only subject to specific performance
insofar as it is attached to a valid written principal
contract (e.g., lease). RFR becomes one of the
considerations in the contract. If RFR is violated,
and property sold to another buyer in bad faith, the
sale to the 3rd party buyer is rescissible. The price
for the 3rd party buyer is to be the basis for the price
of the sale back to the one with the RFR. Lessee
can exercise the right of first refusal once the sale to
the third party is set aside or rescinded. (Equatorial
Dev’t v. Mayfair Theater, G.R. No. 106063, 2006)
Effect of new doctrine: While valid option contract
is not subject to specific performance, right of first
refusal, may be subject to specific performance. It
recognizes recovery of damages based on abuse of
rights doctrine. The consideration for the RFR is
technically the consideration for the mother contract
as the RFR has value to the party in whose favor it
is granted. In practice, the RFR may result in the
lease rentals being adjusted downwards to account
for the value of the RFR.
Only after the optionee fails to exercise his right of
first priority under the same terms and within the
period contemplated, could the owner validly offer to
sell the property to a third person under the same
terms as offered to the optionee. (Parañaque Kings
v. CA, G.R. No. 111538, 1997)
Option Contract Distinguished from Right of
First Refusal
OPTION CONTRACT
RIGHT OF FIRST
REFUSAL
Principal contract;
Accessory; cannot
stands on its own
stand on its own
Needs separate
Does not need
consideration
separate
consideration
Subject matter and
There must be
price must be valid
subject matter but
price not important
Not conditional
Conditional
Not subject to specific
Subject to specific
performance
performance
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CIVIL LAW (AND PRACTICAL EXERCISES)
Mutual promise to buy and sell (Art. 1479)
1. Promise to buy and sell a determinate thing for
a price certain: reciprocally demandable;
2. Accepted unilateral promise to buy or to sell:
binding upon the promissor if promise
supported by a consideration distinct from the
price.
EMPTIO REI
SPERATAE
“The purchase of what
we hope”
Sale of an expected
thing/ future thing
Implied renewals do not include the option to buy,
as it is not germane to the lessee's continued use of
the property. Based on Article 1643, the lessee's
main obligation is to allow the lessee to enjoy the
use of the thing leased. Other contract stipulations
unrelated to this —
refusal — cannot be presumed included in the
implied contract renewal. The law itself limits the
terms that are included in implied renewals. One
cannot simply presume that all conditions in the
original contract are also revived; after all, a contract
is based on the meeting of the minds between
parties. (Spouses Manas v Nicolasora, G.R. No.
208845, February 3, 2020).
Sale is subject to a
suspensive
condition—that the
thing will exist; if it
does not, there is no
contract
SUBJECT MATTER OF SALE
b. Requisites of a valid subject
matter (Arts. 1459-1465)
1.
2.
3.
1. Existing and future things
Existing, having potential of existence, future, or
contingent (Arts. 1347, 1348, 1462)
(a) Existing goods – goods owned or possessed
by the seller at the time of perfection
(b) Future goods – goods to be manufactured,
raise, or acquired by the seller after the
perfection of the contract (forward contracts)
Whether the subject matter is of a type and nature
that exists or could be made to exist to allow the
seller reasonable certainty of being able to comply
with his obligations.
Minimum requirement of potential existence: taking
into consideration the state of science and
technology at the time of perfection of the contract.
“Purchase of hope”
Sale of a hope or
expectancy that the
thing will come to
existence; sale of the
hope itself
Sale is effective even
if the thing does not
come into existence,
unless it is a vain hope
(Art. 1461 Sale of a
vain hope or
expectancy is void)
Uncertainty is with
regard to the existence
of the thing
Uncertainty is with
regard to the quantity
and quality of the thing
and not the existence
of the thing
Object is a future
Object is a present
thing, which must be
thing which is the hope
determinate or specific
or expectancy
(not generic)
E.g. growing crops
E.g., lottery ticket
(Villanueva & Tiansay, Law on Sales, 67-68, 2016)
2.
Existing and future things
Licit
Determinate or Determinable
If requisite not present, resulting contract is
VOID.
EMPTIO SPEI
Licit
Not outside the commerce of man (Art. 1459)
If illicit, contract is void
Sale declared illegal by law (i.e., narcotics, wild
birds and mammals, rare wild plants, etc.)
Prohibited:
(a) Narcotics (RA 6425);
(b) Wild Birds or mammals (R.A. No. 2590); rare
wild plants (R.A. No. 3983); poisonous plants
or fruits (R.A. No. 1288); dynamited fish (R.A.
428);
(c) Gunpowder and explosives (Act No. 2255);
and firearms and ammunitions (P.D. No, 9);
(d) Sale of land by non-Christians (Sec. 145,
Administrative Code of 1987)
(e) Animals with contagious diseases (Art. 1575)
(f) Sale of animals unfit for the use or service for
which they were acquired (Art. 1575)
(g) Sale of future inheritance and other rights that
are not transmissible (Art. 1347)
3.
Determinate or Determinable
Determinate: always specific
particularly designated or physically segregated
from all others of the same class; (Art. 1460)
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Determinable: always generic
Thing is capable of being made determinate
(Capacity to Segregate Test)
Without the necessity of a new or further contract
between the parties (No Further Agreement
Test). (Art. 1460)
NOTE: Subject matter CANNOT be DETERMINED
BY a 3rd PARTY. (Villanueva & Tiansay, Law on
Sales, 102, 2016)
When subject matter is a right: It must be
transmissible. (Art. 1311)
Future inheritance cannot be sold (Art. 1347)
Service cannot be sold (Art. 1348)
Quantity of subject matter is not essential for
perfection, but quantity is essential if it goes into the
determinability of the subject matter and the price or
consideration in the contract; Determine the nature
and quality of subject matter (National Grains
Authority v. IAC, G.R. No. 74470, 1989)
Generic things may be the object of a sale, but the
obligation to deliver the subject matter can only be
complied with when the subject matter has been
made determinate (either by physical segregation or
particular designation) (Yu Tek & Co. v. Gonzales,
G.R. No. L-9935, 1915)
PRICE
Price
The sum stipulated as the equivalent of the thing
sold and also every incident taken into consideration
for the fixing of the price, put to the debit of the
vendee and agreed to by him. (Inchausti & Co. v.
Cromwell, G.R. No. L-6584, 1991)
NOTE: Sale is valid when consideration is partly in
money and partly in another thing. (Art. 1468).
c. Requisites for a valid price (ReM-C)
1.
2.
3.
Real
In Money or its equivalent
Certain or ascertainable (Francisco v.
Desierto, G.R. No. 154117, 2009)
1. Real, not simulated
When at the perfection of the contract of sale, there
is every intention on the buyer to pay the price, and
every expectation on the part of the seller to receive
CIVIL LAW (AND PRACTICAL EXERCISES)
such price as the value of the subject matter he
obligates himself to deliver. (Test of intention)
(Rongavilla v. CA, G.R No. 83974, 1998)
Effect Where Price is Simulated
i. The act may be shown to have been in reality a
donation, or some other act or contract. (Art.
1471)
ii. If not, and neither party had any intention
whatsoever that the amount will be paid
(absolutely simulated): the sale is void
(Rongavilla v. CA, G.R. No. 83974, 1998)
iii. If there is a real price but what is stated in the
contract is not the one intended to be paid (only
relatively simulated or what is called a
“False Price”): the ostensible contract of sale
is valid but subject to reformation. (Macapagal
v. Remorin, G.R. No. 158380, 2005)
2. In money or its equivalent
Consideration for a valid contract of sale can be the
price and other valuable consideration; at the very
least, a true contract of sale must have price, which
consist of valuable consideration (i.e., something
that can be quantifiable by pesos and centavos) as
part of its consideration (Test of value
consideration). (Republic v. Phil. Resources Dev.,
G.R. No. L-10141, 1958)
3.
Certain or ascertainable
Certain: expressed and agreed in terms of specific
pesos and/or centavos (Art. 1469)
Ascertainable:
i. Set by third persons (Art. 1469)
ii. Set by the courts – only in cases where the
third person designated to fix the price, fixes
the same in bad faith or by mistake (Art. 1469)
iii. Set by reference to a definite day, particular
exchange or market (Art. 1472)
iv. Set by reference to another thing certain (Art.
1472)
v. But never by only one party to the contract of
sale as it amounts to a potestative condition
(unless the price is accepted by the other party)
(Art. 1473)
NOTE: When the 3rd party is unwilling to set the
price, the parties may not ask the court to fix the
price because the condition imposed on the contract
has not happened yet and thus, no enforceable
contract has arisen. (Art. 1474)
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IF PRICE IS NEITHER CERTAIN NOR
ASCERTAINABLE: The contract of sale is
inefficacious (Art. 1474).
Effect of Non-Payment of Price
Non-payment of price does not cancel or avoid the
sale, as the sale is still considered perfected. But it
is a cause for either:
(a) Specific performance or
(b) Rescission. (Heirs of Escanlar v. CA, G.R. No.
119777, 1997)
HOW PRICE IS DETERMINED
Price is determined by the contracting parties. (Art.
1473)
INADEQUACY OF PRICE
Effect of Gross Inadequacy of Price
General Rule: Mere inadequacy of the price does
not affect the validity of the sale. (Bautista v. CA,
G.R. No. 158015, 2004)
Exceptions:
1. When there is fraud, mistake, or undue
influence indicative of a defect in consent
thereby making the contract voidable. (Art.
1470)
NOTE: Art. 1456 of the CIVIL CODE provides that a
person acquiring a property through fraud becomes
an implied trustee of the property’s true and lawful
owner. This case involved constructive trust. The
action for reconveyance of the title to the rightful
owner prescribes in 10 years from the issuance of
the title. This ten-year prescriptive period begins to
run from the date the adverse party repudiates the
implied trust, which repudiation takes place when
the adverse party registers the land. (Spouses
Aboitiz v. Spouses Po, G.R. Nos. 208450 & 208497,
2017)
2.
3.
When it shows that the parties really intended a
donation or some other act or contract thereby
making the contract of sale void but may be
valid as a contract of donation or some other
contract. (Art. 1470)
In Judicial Sale, where the inadequacy is
shocking to the conscience of man (Pascua v.
Heirs of Simeon, G.R. No. L-47717, 1988) and
there is showing that, in the event of resale, a
CIVIL LAW (AND PRACTICAL EXERCISES)
better price can be obtained, the contract of sale
is void. (Bie v. CA, G.R. No. L-17294, 1965)
NOTE: If there was a failure of the contract to set a
price but the buyer has already appropriated it,
then the buyer must pay a reasonable price. (Art.
1474)
MANNER OF PAYMENT MUST BE AGREED
UPON
The manner of payment must be agreed upon.
(Marnelego v. Banco Filipino Savings and Mortgage
Bank, G.R. No. 161524, 2006)
It is an essential ingredient before a valid and
binding contract of sale can be said to exist,
because it is part of the prestation of the contract.
(Sps. Navarra v. Planters Development Bank, G.R.
No. 172674, 2007)
EARNEST v. OPTION MONEY
Earnest Money (Art. 1482)
Money given as part of purchase price
Acceptance is the proof that contract of sale
exists
Nothing in law prevents parties from treating
earnest money differently
Absent proof of a clear agreement to the contrary, it
is intended to be forfeited if the sale does not
happen without the seller's fault. The potential buyer
bears the burden of proving that the earnest money
was intended other than as part of the purchase
price and to be forfeited if the sale does not occur
without the fault of the seller. (Racelis v. Spouses
Javier, G.R. No. 189609, January 29, 2018).
Qualification: if old concept is stipulated – valid
Presumption of perfection of contract of sale
and such earnest money as part of purchase
price is disputable
Option Money Distinguished from Earnest
Money
OPTION MONEY
EARNEST MONEY
Given as distinct
Given as part of the
consideration for an
purchase price
option contract
Applies to a sale that is Applies when there is
not perfected while the already a sale
option is not exercised
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When given, the option When given, buyer is
holder is not required bound to pay the
to exercise the option balance
(either to buy or sell).
(Oesmer v. Paraiso Development Corporation, G.R.
No. 157493, 2007)
2. PERFECTION OF SALES
General Rule: A contract of sale is perfected at the
moment there is a meeting of the minds upon the
thing which is the object of the contract and upon the
price; consensual contract (Art. 1475)
Exception: When the sale is subject to a
suspensive condition. (People’s Homesite v. CA,
G.R. No. L-61623, 1984)
REQUIREMENTS FOR PERFECTION OF A
SALE
1. When parties are face to face – when there is
absolute acceptance of an offer that is certain
2. When thru correspondence or telegram –
when the offeror receives or had knowledge of
the acceptance (Art. 1319)
3. When the sale is subject to a suspensive
condition – from the moment the condition is
fulfilled (People’s Homesite v. CA, G.R. No. L61623, 1984)
NOTE: Qualified acceptance is a mere counteroffer
which needs to be absolutely accepted to give rise
to perfected contract of sale. (Art. 1319; Manila
Metal Container v. PNB, G.R. No. 166862, 2006)
Business ads are mere invitations to make an offer
except when it appears to be otherwise. (Art. 1325)
A contract of sale is a consensual contract. Under
Article 1475 of the Civil Code, the contract of sale is
perfected at the moment there is a meeting of minds
upon the thing which is the object of the contract and
upon the price. Based on the testimony of the heir
of Y, there was no meeting of the minds regarding
the sale of the property as X did not offer the lot for
sale, and the heirs of Y never consented to any such
purchase. The heirs were simply summoned and
were handed the Deed of Absolute Sale by their
grandmother without any agreement as regards the
sale of any property. (Uy v. Heirs of Uy-Renales,
G.R. No. 227460, December 05, 2019)
CIVIL LAW (AND PRACTICAL EXERCISES)
Rules Governing Auction Sales
Sale is perfected by the fall of the hammer
Seller has the right to bid at the auction provided
such right was reserved and notice was given
to that effect. (Art. 1476)
In bidding contracts, the award of the contract to the
bidder is an acceptance of the bidder's offer. Its
effect is to perfect a contract between the bidder and
the contractor upon notice of the award to the
bidder. Failure to sign the physical contract does not
affect the contract's existence or the obligations
arising. (Metro Rail Transit Development Corp v.
Gammon Phil, G.R. No. 200401, 2018.)
3. CONTRACT OF SALE V.
CONTRACT TO SELL
CONTRACT OF
CONTRACT TO SELL
SALE
TRANSFER OF TITLE
Title passes to the Ownership is reserved in
buyer upon delivery the seller and shall not
of the thing sold (Art. pass to the purchaser
1477)
until fulfillment of certain
conditions, such as full
payment of the purchase
price. (Art. 1478)
OWNERSHIP OF THE SELLER
The seller has lost Title remains in the seller
and cannot recover if the buyer does not
ownership of the comply with the condition
thing
sold
and precedent,
which
delivered
(Arts. payment of the price at
1477, 1496) until the time specified in the
and
unless
the contract.
(Tuazon
v.
contract of sale itself Garilao,
G.R.
No.
is resolved and set 143673, 2001)
aside.
NOTE: It
must be
stipulated that ownership
in the thing shall not pass
to the buyer until full
payment of the price. (Art.
1478)
PAYMENT OF THE PRICE
Non-payment of the Full payment of the price
price is a negative is a positive suspensive
resolutory condition. condition, the failure of
which is not a breach of
(Art. 1179)
contract but simply an
event that prevents the
obligation of the seller to
convey title to the buyer.
(Uy& Sons, Inc. v.
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Valbueco Inc., G.R. No.
179594, 2013)
The non-payment of the
purchase price renders
the contract to sell without
force and effect. (Tumibay
v. Lopez, G.R. No.
171692, 2013)
REMEDIES
Specific
Specific
performance
performance
or cannot be availed of when
rescission
under the contract to sell has
Articles 1191, 1592, been cancelled due to the
and 1593.
non-payment
of
the
purchase price. The buyer
cannot demand the seller
to convey title when such
buyer did not pay the
price, and the seller
cannot demand the buyer
to pay the price, since
failure to pay resulted in
the cancellation of the
contract to sell. (Pilipino
Telephone Corporation v.
Radiomarine
Network
Phils. Inc., G.R. No.
160322, 2011)
Remedy of rescission is
not available because the
breach contemplated in
rescission of contracts is
the obligor’s failure to
comply with an obligation
already extant, not a
failure of a condition to
render
binding
that
obligation. A non-existent
obligation
cannot
be
subject of rescission.
(Diego v. Diego, G.R. No.
179965, 2013)
(De Leon, Comments and Cases on Sales and
Lease, 21-23, 2014)
B. CAPACITY TO BUY OR SELL
CAPACITY OF PARTIES
General rule: All persons who are authorized in
this Code to obligate themselves may enter into a
contract of sale (Art. 1489); as long as these
persons are with civil capacity.
CIVIL LAW (AND PRACTICAL EXERCISES)
When one of the parties is incapable of giving
consent, the contract of sale is voidable (Art.
1390), subject to annulment or ratification. (Art.
1393)
1. ABSOLUTE INCAPACITY
Parties Disqualified to Enter into Sale
Contract:
1. Minors (Art. 1327)
2. Insane and Demented Persons (Art. 1327)
3. Deaf-Mutes who do not know how to write
(Art. 1327)
Also includes state of drunkenness and
hypnotic spell (Art. 1328)
GR: Status of Contract: Voidable, BUT it is
subject to annulment or ratification.
Exception: Where necessaries are sold and
delivered to minors or other persons without
capacity to act, he must still pay a reasonable
price therefore, thus, the resulting contract is valid
and not voidable. (Art. 1489)
2. RELATIVE INCAPACITY
1. Spouses - A spouse may, without the consent
of the other spouse, enter into sales transactions
in the regular pursuit of their profession, vocation,
or trade. (Family Code, Arts. 73, 96, 124)
General Rule: The husband and the wife cannot
sell property to each other. The contract is void.
There is no transfer of ownership, thus the
creditors may go after the property. (Modina v.
CA, G.R. No. 109355, 1999)
Exceptions:
(a) When a separation of property was agreed
upon in the marriage settlement (Art. 1490)
(b) When there has been a judicial separation
of property under Art. 191 (Art. 1490)
NOTE: Prohibition likewise applies to commonlaw spouses (Matabuena v. Cervantes, G.R. No.
L-28771, 1971)
New doctrine: A sale made by a husband without
the consent of the wife is merely voidable. It cannot
be a void contract since it is not a matter of "lack of
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consent," which gives rise to a "no contract"
situation under Article 1318 of the Civil Code.
Neither it is mentioned as a void contract under
Article 1409 of the Civil Code. Article 173 reveals the
legislative intent to make such contracts as valid
until annulled. (Spouses Cueno v. Spouses
Bautista, G.R. No. 246445, March 2, 2021)
Q: Spouses X and Y, married prior the effectivity
of the Family Code, are owners of a pro-indiviso
share of a parcel of land. This property belonged
to the conjugal partnership. Subsequently,
husband X sold his and Y’s share of the lot to
their other co-owner K (Y’s father) without his
wife’s consent. K in turn sold the subject
property to Spouses L and M. After more than 40
years from the sale to K, Spouses X and Y filed
a complaint for recovery of the subject property
on the ground that the sale to their co-owner K
was void since the wife’s consent was lacking.
Was the sale of the husband without the wife’s
consent of a conjugal property void?
A: No. The sale is voidable. Articles 166 in relation
to Article 173 of the Civil Code will apply since the
subject property belonged to the conjugal
partnership of spouses X and Y and was acquired in
1963 during the effectivity of the Civil Code. Article
166 provides that “… the husband cannot alienate
or encumber any real property of the conjugal
partnership without the wife's consent…” Article
173 on the other hand provides that “the wife may,
during the marriage and within ten years from the
transaction questioned ask the courts for the
annulment of any contract of the husband entered
into without her consent…”
Previously the Court had conflicting views on the
status of a sale made by a husband without the
consent of the wife under the Civil Code. Now the
Court adopts the view that transactions of such
nature are merely voidable. It cannot be a void
contract since it is not a matter of "lack of
consent," which gives rise to a "no contract"
situation under Article 1318 of the Civil Code.
Neither it is mentioned as a void contract under
Article 1409 of the Civil Code. Article 173 reveals
the legislative intent to make such contracts as
valid until annulled.
A contract is voidable if the consent is vitiated by
lack of legal capacity of one of the contracting
parties. It may be ratified and may be barred by
prescription. Here, the sale was questioned after
more than ten years. Therefore, the sale which was
initially voidable cannot be questioned. (Spouses
Cueno v. Spouses Bautista, G.R. No. 246445,
March 2, 2021)
2. Others - Trust Relationships
CIVIL LAW (AND PRACTICAL EXERCISES)
Two groups of parties prohibited from
acquiring by purchase certain properties:
(GAAE - PEJJOL) (Art. 1491)
1. Guardian/Agent/Executors and
Administrators
Direct or indirect
May be “ratified” since only private
wrong is involved, i.e., really in the
form of entering into a new contract
2. Public Officers and Employees/ Justices
and Judges/ Officers of Court/ Lawyers
Cannot be ratified since public wrong
is involved
Requisites for the prohibition to apply to
attorneys and their clients’ properties:
1. Existence of attorney client relationship;
2. Property is the subject matter in litigation;
3. While in litigation (from filing of complaint to
final judgment)
NOTE: Exception to the prohibition against
attorneys: contingent fee arrangement where
the amount of legal fees is based on a value of
property involved in litigation (rationale: the
transfer or assignment of the property takes effect
only after the finality of a favorable judgment and
is always subject to supervision by the court)
(Fabillo v. IAC, G.R. No. L-68838, 1991)
Legal Status of Contract
Void (case law) – guardian/executor/public
officers/officers of the court. (Rubias v. Batiller,
G.R. No. L-35702, 1973)
Unenforceable (civil code) – agent; VALID if with
consent (Art. 1491)
SPECIAL DISQUALIFICATIONS
Any others specially disqualified by law (Art. 1491
[6])
NOTE: These contracts are void for public policy.
They cannot be ratified neither can the right to set
up the defense of illegality be waived. (Rubias v.
Batiller, G.R. No. L-35702, 1973)
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CIVIL LAW (AND PRACTICAL EXERCISES)
1. OBJECTS THAT THE VENDOR HAS
TO DELIVER: (THI-F-A)
C. EFFECTS OF THE CONTRACT WHEN
THE THING SOLD HAS BEEN LOST
GENERAL RULE
Legal consequences from point of perfection are the
same in both legal systems: upon perfection of an
unconditional contract of sale involving specific or
determinate subject matter, the risk of loss
deterioration and the benefits of fruits and
improvements, were for the account of the buyer.
1. The thing sold (Art. 1495)
2. Fruits, belong to the buyer from the day the
contract of sale is perfected (Art. 1537)
3. Accessions and accessories, in the condition in
which they were upon the perfection of the sale
(Art. 1537)
2. OBLIGATIONS OF THE VENDOR
If the subject matter is generic, simply replace item.
(Art. 1263)
WHO BEARS RISK OF LOSS/ DETERIORATION/
FRUITS BEFORE PERFECTION
Res perit domino
The seller is the owner, so he bears risk of loss.
(Art. 1504)
1.
2.
3.
4.
WHO
BEARS
RISK
OF
LOSS/
DETERIORATION/FRUITS AT PERFECTION
Res perit domino
Contract is merely inefficacious because loss of
the subject matter does not affect the validity of
the sale
Seller cannot anymore comply with obligation
so buyer cannot anymore be compelled to pay
the price. (Arts. 1493, 1494)
WHO BEARS RISK OF LOSS/ DETERIORATION/
FRUITS AFTER PERFECTION BUT BEFORE
DELIVERY
Loss – confused state
o Paras: BUYER
o Tolentino: SELLER
Deterioration and fruits - Buyer bears loss and
claims the fruits. (Art. 1538, 1189)
AFTER DELIVERY
Res perit domino
Delivery extinguishes ownership of the seller
and creates a new one in favor of the buyer and,
therefore, buyer bears risk of loss. (Art. 1504)
D. OBLIGATIONS OF VENDOR
Obligation of the Vendor
The vendor (seller) is bound to transfer the
ownership of and deliver, as well as warrant the
thing which is the object of the sale. (Art. 1495)
Preserve the subject matter – proper diligence
of a good father of a family unless law or parties
stipulate another standard (Art. 1163)
Deliver – transfer ownership and deliver object
(Art. 1495)
Deliver fruits and accessories existing from the
time of perfection (Arts. 1164, 1166, 1537)
Warrant subject matter against eviction and
hidden defects (Arts. 1546-1581)
General Rule: Seller need not be the owner of the
subject matter at the time of perfection: sufficient
that he is the owner at the time of delivery. (Art.
1459)
Exception: Foreclosure sale (mortgagor must be
absolute owner) (Art. 2085)
NOTE: A perfected contract of sale cannot be
challenged on the ground of the seller’s nonownership of the thing sold at the time of the
perfection of the contract. It is at delivery that the law
requires the seller to have right to transfer
ownership of the thing sold. (Cavite Development
Bank v. Sps. Lim, G.R. No. 131679, 2000)
DELIVERY OF SUBJECT MATTER
Delivery- “the absolute giving-up of the control and
custody of the property on the part of the vendor,
and the assumption of the same by the vendee”
(Equatorial Realty Dev. v. Mayfair Theater, G.R. No.
133879, 2001)
Two Types of Delivery:
1. Actual - physical delivery
2. Constructive
a. Execution of Public Instrument (Art. 1498)
only produces the effect of delivery when:
i. The thing sold is subject to control of seller
at the time of execution of instrument.
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(Addison v. Felix, G.R. No. L-12342,
1918); and
ii. Such control should remain for a
reasonable period after execution of the
Instrument. (Power Commercial and
Industrial Corp. v. CA, G.R. No. 119745,
1997)
b. Constitutum Possessorium (Art. 1500) – the
seller held possession of the subject matter
(real property) in the concept of owner, and
pursuant to the sale, the seller continues to
hold physical possession but no longer in the
concept of the owner (owner to lessee)
c. Traditio Brevi Manu – the would-be buyer was
already in the possession (i.e., as lessee) of
the subject matter (real property) and
pursuant to the sale, he would now hold
possession as owner
d. Traditio Longa Manu – delivery by mere
consent or agreement.
The essential requisites of a contract under Article
1318 of the New Civil Code are: (1) consent of the
contracting parties; (2) object certain which is the
subject matter of the contract; and (3) cause of the
obligation which is established. Thus, contracts,
other than real contracts are perfected by mere
consent which is manifested by the meeting of the
offer and the acceptance upon the thing and the
cause which are to constitute the contract.
Furthermore, under Article 1475 of the Civil Code,
from the moment of perfection of the sale, the
parties may reciprocally demand performance, even
when the parties have not affixed their signatures to
the written form of such sale. Consequently, the
actual delivery of the subject matter or payment of
the price agreed upon are not necessary
components to establish the existence of a valid
sale; and their non-performance do not also
invalidate or render "void" a sale that has begun to
exist as a valid contract at perfection. (Selerio v.
Bancasan, G.R. No. 222442, June 23, 2020)
SALE BY A PERSON NOT THE OWNER AT THE
TIME OF DELIVERY (Arts. 1462, 1505, 1459)
CIVIL LAW (AND PRACTICAL EXERCISES)
2.
3.
4.
Contrary is provided for in recording laws
(Art. 1505; P.D. 1529)
Sale is made under statutory power of sale
or under order of a court of competent
jurisdiction (Art. 1505)
Sale is made in a merchant’s store in
accordance with code of commerce and
special laws. (Art. 1505)
2. Title as to Movable Properties
General Rule: Possession is equivalent to title
(Art. 559)
Requisites:(PG)
1. Possession of movable
2. Made in Good faith (Art. 559)
Exceptions:
1. Owner lost movable – owner can recover
by reimbursing price, including those
acquired in public sale or auction, provided
in good faith (not a fencer) (Art. 559)
2. Owner is unlawfully deprived (stolen or
delivered
without
intention
of
transferring title) – owner can recover w/o
reimbursing price (Art. 559)
3. Bought in a merchant store – owner cannot
recover even if unlawfully deprived (Art.
1505)
Exceptions to the Exceptions:
1. Movable is bought at public sale – owner
can only recover after reimbursing price
2. Acquired in good faith and for value from
auction
SALE BY NON-OWNER OR BY ONE HAVING
VOIDABLE TITLE
1.
Perfection Stage
Sale by owner – VALID
Sale by non-owner – VALID (Arts. 1459,
1475)
1. Rules on Legal Effects of Sale by a Non-owner
General Rule: If sale is by a non-owner, buyer
acquires no better title than seller had. (Art. 1505)
Reason why both sales are valid: ownership is
necessary only at time of delivery; at perfection
stage, no obligation on part of seller to transfer
ownership (Villanueva, Law on Sales, 294, 2016)
Exceptions:
1. Owner by his conduct is precluded from
denying seller’s authority (Estoppel) (Art.
1434)
Law on estoppel further bolsters it: title passes by
operation of law to grantee when person who is not
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owner of the goods sold delivers it and later on
acquires title thereto (Art. 1434)
Since valid, action to annul is improper; there is
already a perfected contract.
2. Consummation Stage
Contract of sale is valid because it has passed
perfected stage, despite seller not being the owner
or seller having no authority to sell
What is void is the transfer of title -- ownership
did not pass
Effect: buyer acquired no better right than
transferor (Art. 1505)
Legal effect: CAVEAT EMPTOR – BUYER
BEWARE but Buyer always has cause of action
against the Seller
SALE OF CO-OWNER OF WHOLE PROPERTY
OR DEFINITE PORTION
General Rule:
1. Co-owner sells whole property prior to
partition – sale of property itself is void but
valid as to his spiritual share (Panganiban v.
Oamil, G.R. No. 149313, 2008)
2. Co-owner sells definite portion prior to
partition – sale is void as to other co-owner but
valid as to his spiritual share if the buyer would
have still bought such spiritual share had he
known that he would not acquire the definite
portion sold. (Lopez v. Cuaycong, G.R. No. L46079, 1944)
Exceptions to the rule on the effect of sale of a
definite portion by a co-owner
1. Subject matter is indivisible in nature or by
intent, hence, entire sale is void; (Mindanao
Academy, Inc. v. Yap, G.R. No. L-17681, 1965)
2. Sale of a particular portion of a property is with
consent of other co-owners, sale of entire
property is valid; (Pamplona v. Moreto, G.R.
No. L-33187, 1980)
3. Co-owner sells 1 of 2 commonly owned lands
and does not turn over ½ of the proceeds, other
co-owner, by law and equity, has exclusive
claim over remaining land. (Imperial v. CA,
G.R. No. 102037, 1996)
CIVIL LAW (AND PRACTICAL EXERCISES)
SALE BY SELLER WITH VOIDABLE TITLE IN
GOOD FAITH and WITHOUT NOTICE OF THE
DEFECT
1. Perfection stage
Valid sale – buyer acquires title of goods
2. Consummation stage
Valid sale – if title has not yet been avoided, buyer
becomes owner of the goods under the condition
that the sale:
a. was made in good faith
b. is for value
c. is without notice of seller’s defect of title (Art.
1506)
E. OBLIGATIONS OF VENDEE
There is real or actual delivery of the thing sold
when it is placed in the control and possession of
the vendee. (Art. 1497)
Obligations of Vendee (Buyer)
1. Pay the price
Buyer is obligated to pay the price according to
the terms agreed upon regarding time, place and
amount (Art. 1582)
i. If payment of interest is stipulated – must
pay; if amount of interest not mentioned
– apply legal rate
ii. When buyer defaults – constitutes
breach;
subject
to
specific
performance/rescission and damages;
interest to be paid also from default
The full payment of the purchase price is the buyer's
prestation. The non-payment of the purchase price
by the buyer after the seller has delivered the object
of the sale to the buyer constitutes a breach of the
buyer's prestation in a contract of sale. The buyer
has contravened the very tenor of the contract.
(Nuñez et al. v. Moises-Palma, G.R. No. 224466,
March 27, 2019)
2. Accept delivery of thing sold
Where to accept:
(a) at time and place stipulated in the contract
(b) if none specified – at the time and place of
delivery goods (Art. 1582)
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There is acceptance when:
(a) He intimates to seller that he has accepted
(b) When delivered and buyer does any act
inconsistent with ownership of seller
(c) Retains without intimating to seller that he
has rejected (Art. 1585)
3. Sale of Goods on installment
Goods must be delivered in full, except when
stipulated (Art. 1583)
When not examined by buyer – not accepted until
examined or at least had reasonable time to
examine (Art. 1584)
Acceptance of goods in general, absent contrary
express stipulation, does not discharge seller
from liability in case of breach of warranties
(unless no notice or failure to give it within
reasonable time) (Art. 1586)
When buyer has a right to refuse goods, no need
to return; shall be considered as depositary;
unless there is stipulation to the contrary (Art.
1587)
F. BREACH OF CONTRACT
1. REMEDIES
a. Remedies of seller in case of
movables
General Remedies:
1. Specific Performance with damages; OR
2. Rescission with damages
(a) When ownership is transferred to the buyer –
the seller may maintain an action against him
for the price of the goods, i.e., specific
performance (Art. 1595)
(b) When there is no transfer of ownership to the
buyer
i. If the goods can be resold for a
reasonable price – seller may resell
ii.
If the goods cannot be resold – the seller
can deliver the goods and if buyer
refuses, then the seller may notify the
buyer that the same is being held by the
seller as bailee for the buyer then
CIVIL LAW (AND PRACTICAL EXERCISES)
maintain an action for the price, i.e.,
specific performance.(Art. 1595)
(c) When price is Payable on Certain Day and
Buyer Fails to Pay on the Day Set – the seller
can maintain action for the price, i.e., specific
performance (Art. 1595)
NOTE: Read Articles 1595-1596 of the Civil Code
UNPAID SELLER
A seller of the goods is deemed to be an unpaid
seller either:
(a) When the whole of the price has not been paid
or tendered; or
(b) When the seller received bill of exchange or
negotiable instrument as a condition for
payment and the condition has been broken by
reason of the dishonor of instrument, the
insolvency of the buyer, or otherwise. (Art.
1592)
Requisites of Unpaid Seller: (PUG)
1. Physical possession is with seller
2. Seller is Unpaid
3. Subject matter – Goods
Special remedies of unpaid seller: (PSRR)
1. Possessory lien
2. Stoppage in Transitu
3. Special right of Re-sale
4. Special right to Rescind (Art. 1526)
NOTE: Hierarchical Application – only when unpaid
seller has exercised possessory lien or stoppage in
transitu can the seller proceed with his other special
rights of resale or to rescind. (Villanueva & Tiansay,
Law on Sales, 335, 2016)
1. Possessory lien
Seller is not bound to deliver if buyer has not paid
him the price. (Art. 1524)
Right to retain cannot be availed when seller does
not have custody (Art. 1526)
Exercisable
only
in
following
circumstances:(CCI)
(a) Goods sold without stipulation as to
Credit
(b) Goods sold on Credit but term of credit
has expired
(c) Buyer becomes Insolvent (Art. 1527)
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When part of goods delivered, may still
exercise right on goods undelivered
Instances when possessory lien is lost:
1. Seller delivers goods to carrier for transmission
to buyer without reserving ownership in goods
or right to possess them
2. Buyer or his agent lawfully obtains possession
of goods
3. Waiver (Art. 1529)
4. When he parts with goods (still has stoppage in
transitu)
CIVIL LAW (AND PRACTICAL EXERCISES)
Why ‘special’? There are things which seller
cannot do in ordinary sale:
1. Ownership is with buyer but seller can sell
goods
2. Title accorded to buyer is destroyed even
without court intervention (Villanueva &
Tiansay, Law on Sales, 342, 2016)
NOTE: In ordinary sale, need to go to court to
destroy transfer of ownership.
4. Special Right to Rescind
NOTE: Notice by seller to buyer not essential
2. Stoppage in transitu
Goods are in transit
Remedy is available only when buyer is
insolvent (Art. 1526)
Requisites when goods are in transit (DR)
1. From the time goods are Delivered to carrier for
purpose of transmission to buyer
2. Goods Rejected by buyer and carrier continues
to possess them (Art. 1531)
When goods no longer in transit
(a) Reached point of destination;
(b) Before reaching destination, buyer or his agent
obtains delivery of the goods;
(c) Goods are supposed to have been delivered to
buyer but carrier refused;
(d) Bailee or carrier acknowledges that he is
holding the goods for the buyer or his agent.
(Art. 1531)
How is right exercised
1. Obtain actual possession of goods
2. Give notice of claim to carrier/bailee in
possession thereof
NOTE: Notice by seller to buyer is not required;
notice to carrier is what is essential (Art. 1532)
3. Special Right to Resell the Goods
Can be exercised under the following instances:
(a) Goods are perishable;
(b) Stipulated the right of resale in case buyer
defaults in payment;
(c) Buyer in default on payment of price for
unreasonable time. (Art. 1533)
Can be exercised under the following instances:
1. Expressly stipulated
2. Buyer is in default for unreasonable time (Art.
1534)
NOTE: Notice needed to be given by seller to buyer.
b. Remedies of seller in case of sale
of immovables
General Remedies
1. Specific Performance with damages; or
2. Rescission with damages
Q: What are the remedies of an unpaid seller
involving a real property as the subject matter,
not covered by the Maceda Law?
A: 1. To compel specific performance by filing an
action against the buyer for the agreed purchase
price; or
2. To rescind or resolve the contract of sale either
judicially or by a notarial act; and
3. In either (1) or (2), to recover damages for the
breach of the contract.
(Nuñez et al. v. Moises-Palma, G.R. No. 224466,
March 27, 2019)
Anticipatory Breach
1. Seller has reasonable grounds to fear loss of
immovable sold and its price, sue for
Rescission
2. Non–payment of price, sue for Rescission (Art.
1591)
c. Remedies of buyer
Suspension of Payment
General Rule: Buyer may suspend payment in
case:
NOTE: Notice by seller to buyer not essential
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1.
2.
He is disturbed in the possession or ownership
of the thing acquired;
He has reasonable grounds to fear such
disturbance. (Art. 1590)
Exception: No right to suspension of payment if the
seller gives security for the return of the price. (Art.
1590)
In case of subdivision or condominium projects, the
buyer may rescind the contract or suspend payment
if real estate developer fails to comply with
obligation according to approved plan. (P.D. 957,
Sec. 23)
2. RECTO LAW AND MACEDA LAW
CIVIL LAW (AND PRACTICAL EXERCISES)
3.
Foreclose the chattel mortgage, if one is
constituted, should the buyer’s failure to pay
cover two or more installments (Art. 1484)
NOTE: This also applies to contracts purporting to
be leases of personal property with option to buy,
when the lessor has deprived the lessee of the
possession or enjoyment. (Art. 1485)
Sale on installment: Payment by several partial
payments (two or more) in small amount (Levy
Hermanos, Inc. v. Gervacio, G.R. No. L-46306,
1939)
Rationale of the law: Buyer is lulled into thinking
that he could afford because of small amounts per
installment and at the same time to remedy abuse
of commercial houses. (Manila Trading and Supply
Co. v. Reyes, G.R. No. L-43263, 1935)
a. Recto Law: Sale of movables
on installment (Arts. 14841486)
Nature of remedies: Alternative, not cumulative
(Nonato v. IAC, G.R. No. L-67181, 1985)
Coverage: Sale on installment (two or more
installments required) and financing transaction
(Equitable Savings Bank v. Palces, G.R. No.
214752, 2016) on movable property and contracts
of lease of movable property with option to purchase
(PCI Leasing and Finance v. Giraffe-X Creative
Imaging, G.R. No. 142618, 2007)
The fact that the seller did not foreclose the chattel
mortgage constituted on the movable purchased on
credit, but opted specific performance, with a plea
for a writ of replevin, does not amount to a
foreclosure of the chattel mortgage to be covered by
Art. 1484. (Tajanglangit v. Southern Motors, G.R.
No. L-10789, 1957)
Contract to sell is not covered. (Visayan Sawmill Co.
v. CA, G.R. No. 83851, 1993).
REMEDIES are NOT CUMULATIVE but are
ALTERNATIVE and EXCLUSIVE
Rule on Forfeiture of Partial Payments in a
Contract to Sell
In a contract to sell, the forfeiture of partial payments
may only be valid if there is a stipulation to that
effect, subject to payments of reasonable rents. In a
contract to sell, failure to fully pay the purchase price
results in the cancellation of the contract, and the
parties shall stand as if the obligation to sell never
existed." (Spouses Godinez v. Spouses Norman,
GR No. 225449, February 26, 2020, citing Olivarez
Realty Corporation v. Castillo)
1. Specific Performance
General Rule: Once chosen, can no longer rescind
nor foreclose mortgage.
Remedies available under the Recto Law:
In a sale of personal property, the price of which is
payable in installments, the seller may exercise the
following remedies: (REF)
1. Exact fulfillment of the obligation, should the
buyer fail to pay any installment;
2. Rescind the sale, should the buyer’s failure to
pay cover two or more installments;
Exception: After choosing specific performance but
the same becomes impossible, rescission may be
pursued subsequently. (Villanueva & Tiansay, Law
on Sales, 352-353, 2016
2. Rescission
When chosen, there is a correlative obligation to
restitute.
Stipulations that installments paid are forfeited are
valid if not unconscionable.
Deemed chosen when:
1. Notice of rescission is sent;
2. Takes possession of subject matter of sale;
3. Files action for rescission;
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4.
Barring effect on recovery of balance.
(Villanueva & Tiansay, Law on Sales, 353-356,
2016)
3. Foreclosure
Once there has been foreclosure sale, the seller can
no longer claim for remaining balance on the
purchase price. (Northern Motors v. Sapinoso, G.R.
No. L-28074, 1970)
GR: When foreclosure is chosen, seller can no
longer claim all amounts due from the sale, including
damages and attorney’s fees. (Macondray & Co. v.
Eustaquio, G.R. No. 43683, 1937)
E: In case of Perverse Buyer-Mortgagor, if
mortgagor refuses to deliver property to effect
foreclosure, expenses incurred in recovering the
property may also be recovered, i.e., attorney’s
fees, etc. (Filipinas Investment & Finance Corp. v.
Ridad, G.R. No. L-27645, 1969)
b. Maceda Law (R.A. 6552)
Rationale of the Law
Public policy to protect buyers of real estate on
installment payments against onerous and
oppressive conditions.
Covered transactions
Applies to all sale of residential real estate on
installments including Contracts to Sell and those
financed through banking institutions (R.A. 6552,
Sec. 3)
Excluded:
1. Industrial real estate
2. Commercial real estate
3. Sale to tenants under agrarian laws (R.A. 6552,
Sec. 3)
Requisites of Sec. 3 of Maceda Law: (FReT)
1. Failure to pay installments was due to reasons,
other than failure of the developer to develop
the subdivision or condominium according to
the approved plan and to comply with such
within the time limit;
2. Only covers Residential lots including
condominium units, excluding, sales to tenants;
3. The buyer has paid at least Two years of
installments. (R.A. 6552, Sec. 3)
CIVIL LAW (AND PRACTICAL EXERCISES)
Rights of the Buyer under Maceda Law with at
least two (2) years of Installment: (R.A. 6552,
Sec. 3)
1. To pay, without additional interest, the unpaid
installments due within the total grace period
earned by him. Said grace period is fixed at the
rate of one-month grace period for every one
year of installments payments made. Thus,
here the buyer has at least two months grace
period for he should have paid at least two
years of installments to avail of the rights under
this section.
NOTE: This right can be exercised only once in
every five (5) years of the life of the contract and
its extensions, if any.
2. To be refunded the cash surrender value of his
payments equal to 50% of his total payments if
the contract is cancelled. But if he has paid five
years or more, he is entitled to an increase of
5% every year and so on but the cash surrender
value shall not exceed 90% of his total
payments. (McLaughlin v. CA, G.R. No. L57552, 1986)
The actual cancellation of the contract referred
to above shall take place only:
1. After 30 days from receipt by the buyer of the
notarial notice of cancellation or demand for
rescission, AND
2. Upon full payment to the buyer of the cash
surrender value (R.A. 6552, Sec. 3)
NOTE: Buyer may update payment during the 30
day waiting period which will render the
cancellation ineffective.
In the computation of the total number of installment
payments the following are included:
1. Down payment and
2. Deposit or option money (R.A. 6552, Sec. 3)
Rights of the Buyer under Maceda Law with less
than two (2) years of installments: (R.A. 6552,
Sec. 4)
1. Still has the right to pay within a grace period
of not less than sixty (60) days from the date
the installment became due.
2. If the buyer fails to pay the installment due at
the expiration of the grace period, i.e. 60 days,
the seller may cancel the contract after 30 days
from receipt by the buyer of the notice of
cancellation or demand for rescission of the
contract by a notarial act.
NOTE: Here, the buyer is not entitled to any
refund
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Other rights granted under the Maceda Law:
(R.A. 6552, Sec. 5 & 6)
1. Sell rights to another;
2. Assign the same to another person;
3. Reinstate contract by updating during grace
period and before actual cancellation;
4. Deed of Sale to be done by notarial act;
5. To pay in advance any installment or the full
balance of price anytime without interest and
have such full payment annotated in certificate
of title.
Purpose of the law: Protect buyers in installments
against oppressive conditions. Applies to contracts
even before the law was enacted. (R.A. 6552, Sec.
2; Siska Dev. Corp. v. Office of the President, G.R.
No. 93176, 1994)
NOTE: Stipulations contrary to the provisions of
Sections 3, 4, 5 and 6 are null and void. (R.A. 6552,
Sec. 7) Waiver of the required notice is oppressive.
3. OTHER REMEDIES
a. Remedies in double sales
General Rule: FIRST IN TIME, PRIORITY IN
RIGHT (Art. 1544)
When general rule does not apply: when not all
requisites embodied in Art. 1544 concur.
Requisites for Double Sales to Exist (VOCS)
1. That two (or more) sales transactions in the
issue must pertain to exactly the same subject
matter, and must be valid sales transactions.
2. That two (or more) buyers at odds over the
rightful ownership of the subject matter must
each represent conflicting interests; and
3. That two (or more) buyers at odds over the
rightful ownership of the subject matter must
each have bought from the very same seller.
(Spouses German v. Spouses Santuyo, G.R.
No. 210845, January 22, 2020)
If not all the elements are present for Art. 1544 to
apply, the principle of prior tempore, potior jure or
simply “he who is first in time is preferred in right”
should apply. Indisputably, he is a purchaser in good
faith because at the time he bought the real
property, there was still no sale to as a second
vendee. (Consolidated Rural Bank v. CA, G.R. No.
132161, 2005)
CIVIL LAW (AND PRACTICAL EXERCISES)
NOTE: If the two contracts involved are not both
contracts of sale, as when one is a contract to sell,
and the other one a contract of sale, Art. 1544 does
not apply. This follows the principle that in a contract
to sell, the seller has no obligation to deliver title until
there is full payment of the purchase price. Thus, for
as long as the condition of full payment has not been
fulfilled, a subsequent sale of the same property will
be valid since the seller still has title to the property.
With more reason, if the seller in a contract to sell
has defaulted, the breach in the condition entitles
the seller to sell the same property for full
consideration. Even if the buyer in the contract to
sell annotates his right in the title, the buyer in the
contract of sale is not in bad faith. (Sps. Domingo v.
Sps. Manzano, G.R. No. 201883, 2016)
Note that the Court applied this in this case even if
the buyer in the contract to sell was not in default
since the seller accepted payment after due date.
Seller however must reimburse payments made to
the buyer even if he has only paid less than 2 years
of installments because he was not in default. Court
distinguished this from earlier case of Abarquez v.
CA even if in that case, one also involved a contract
to sell – because in Abarquez, the seller already
delivered to the buyer who accepted and took
possession, and even constructed a house on the
land under installment sale. (Sps. Domingo v. Sps.
Manzano, G.R. No. 201883, 2016)
Double Sales Rules according to Art. 1544:
1. Movable
First to possess in good faith shall prevail (Art. 1544)
2. Immovable
(a) First to register in good faith shall prevail;
(b) In case no registration is made, then first to
possess in good faith shall prevail;
(c) No registration and no possession in good
faith, then the person who presents oldest title
in good faith, shall prevail. (Art. 1544)
NOTE: The FIRST BUYER is always in good faith
and will always prevail if he registers his sale first.
His good faith is not destroyed by the subsequent
knowledge of the second sale. The reason behind
this is that at the time of perfection of his contract of
sale, he was the only buyer. (Carbonell v. CA, G.R.
No. L-29972, 1976) But the knowledge gained by
the 2nd buyer of the first sale defeats his rights even
if he is first to register, since such knowledge taints
his registration with bad faith. (Ordua v. Fuentebella,
G.R. No. 176841, 2010)
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Buyer in Good Faith – one who purchases and
pays a fair price for a property without notice that
another has an interest or right to it. (Amoguis v.
Ballado, G.R. No. 189626, 2018.)
If a land is registered and is covered by a certificate
of title, any person may rely on the correctness of
the certificate of title. However, this does not apply
where the party has actual knowledge of facts and
circumstances that would impel a reasonably
cautious man to make such inquiry or when the
purchaser has knowledge of a defect or the lack of
title in his vendor or of sufficient facts to induce a
reasonably prudent man to inquire into the status of
the title of the property in litigation. It is incumbent
upon a buyer to prove good faith should he or she
assert this status. (Amoguis v. Ballado, G.R. No.
189626, 2018.)
Lis pendens – notice that subject matter is in
litigation (Sps. Lim v. Vera Cruz, G.R. No. 143646,
2001) is a form of registration accorded priority right.
A buyer cannot be considered a transferee in good
faith if it was aware of the title’s notices of lis
pendens. (Register of Deeds of Negros Occidental
v. Anglo, Sr., G.R. No. 171804, 2015)
Adverse claim – notice that somebody is claiming
better right (Gardner v. CA, G.R. No. L-59952, 1984)
is a form of registration accorded priority right.
Possession – both actual and constructive (Roman
Catholic Church v. Pante, G.R. No. 174118, 2012)
Registration – any entry made in the books of the
registry, including both registration in its ordinary
and strict sense, and cancellation, annotation, and
even marginal notes. It is the entry made in the
registry which records solemnly and permanently
the right of ownership and other real rights. (Cheng
v. Genato, G.R. No. 129760, 1998)
Registered under Torrens system – 1544
applies
Not registered under the Torrens system – 1544
still applies
If 2nd sale is a judicial sale (made by way of levy on
execution), buyer merely steps into the shoes of the
judgment debtor. Outside of such situation – must
apply to conflicting sales over the same
unregistered parcel of land. If sale 1 occurs when
land is not yet registered and sale 2 is done when
CIVIL LAW (AND PRACTICAL EXERCISES)
land is already registered – apply first in time,
priority in right.
Good faith must concur with registration. To be
entitled to priority, the second purchaser must not
only establish prior recording of his deed, but must
have acted in good faith. (Gabriel v. Mabanta, G.R.
No. 142403, 2003)
Under the Torrens system, a sale of property that is
not registered under the Torrens system is binding
only between the buyer and the seller and does not
affect innocent third persons. (Evy Construction and
Development Corp. v. Valiant Roll Forming Sales
Corp., G.R. No. 207938, 2017)
As an exception, “knowledge of an unregistered sale
is equivalent to registration.” (Evy Construction and
Development Corp. v. Valiant Roll Forming Sales
Corp., G.R. No. 207938, 2017)
Requisite Diligence for Buyer in Good Faith:
1. Diligence in verifying the validity of the title of
the property;
2. Diligence in inquiring into the authority of the
transacting spouse to sell conjugal property in
behalf of the other spouse. (Aggabao v.
Parulan, G.R. No. 165803, 2010).
b. Remedy of rescission in contracts
covering immovables (Arts. 1191 &
1592)
General Rule: Judicial Rescission (Art. 1191)
Exception: Extrajudicial Rescission allowed but
SUBJECT to COURT Confirmation.
Allowed if stipulated; burden to sue shifts to
party who does not like rescission
Court still has final say as to propriety of
rescission (Iriñgan v. CA, G.R. No. 129107,
2001)
Forfeiture of amounts valid being in nature of
penal clause
Contract of Sale – Rescission is applicable
Contract to Sell – Rescission not applicable
(Roque v. Lapuz, G.R. No. L-32811, 1980)
Nonpayment of purchase price would automatically
cancel even without further action for rescission.
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Exception: If subject matter is residential
lots, the law on rescission applies when
there is substantial breach as Maceda law
applies.
G. EXTINGUISHMENT
1. IN GENERAL
Causes
Grounds (same grounds by which obligations in
general are extinguished) (PLCCC - PNARF)
1. Payment or performance
2. Loss of the subject matter
3. Condonation or remission
4. Confusion or merger of rights of creditor and
debtor
5. Compensation
6. Novation
7. Annulment
8. Rescission
9. Fulfillment of a resolutory condition
10. Prescription
11. Conventional Redemption
12. Legal Redemption (Art. 1231)
2. PACTO DE
RETRO/CONVENTIONAL
REDEMPTION (SALE WITH RIGHT
TO REPURCHASE)
There is conventional redemption when the seller
reserved for himself the right to repurchase the thing
sold, with the obligation to return:
1. The price of the sale;
2. The expenses of contract,
3. Other legitimate payments,
4. The necessary and useful expenses made on
the thing sold (Art. 1601)
NOTE: This only extinguishes obligations pertaining
to contract of sale. It does not extinguish contract
itself.
The right is exercised only by the seller in whom
right is recognized in the contract or by any person
to whom right was transferred; It must be in the
same contract. (Villanueva & Tiansay, Law on
Sales, 474-475, 2016)
Period to redeem:
(a) No period agreed upon – 4 years from date of
contract
CIVIL LAW (AND PRACTICAL EXERCISES)
(b) Period agreed upon – should not exceed 10
years; if it exceeded, valid only for the first 10
years.
(c) When period to redeem has expired and there
has been a previous suit on the nature of the
contract – seller still has 30 days from final
judgment on the basis that contract was a sale
with pacto de retro. (Art. 1606)
Rationale: No redemption due to erroneous belief
that it is equitable mortgage which can be
extinguished by paying the loan.
This refers to cases involving a transaction where
one of the parties contests or denies that the true
agreement is one of sale with the right to
repurchase; not to cases where the transaction is
conclusively a pacto de retro sale. (Villanueva &
Tiansay, Law on Sales, 486, 2016)
Example: Where a buyer a retro honestly believed
that he entered merely into an equitable mortgage,
not a pacto de retro transaction, and because of
such belief he had not redeemed within the proper
period. (Leonardo v. CA, G.R. No. 82457, 1993)
NOTE: When period has expired, and seller has
allowed the period of redemption to expire – seller
is at fault for not having exercised his rights so he
should not be granted a new period.
Tender of payment is SUFFICIENT to compel
redemption but is not in itself a payment that relieves
the vendor from his liability to pay the redemption
price. (Paez v. Magno, G.R. No. L-793, 1949)
Effect When There is No Redemption Made
Jurisprudence before the NCC: buyer a retro
automatically acquires full ownership
Under present Art. 1607: there must be judicial
order before ownership of real property is
consolidated in the buyer a retro
The seller who is given the right to repurchase may
exercise his right of redemption by paying the buyer:
1) the price of the sale; 2) the expenses of the
contract; 3) legitimate payments made by reason of
the sale; and 4) the necessary and useful expenses
made on the thing sold. The repurchase was
exercised because from the P10M purchase price
directly paid to B, he deducted the P2M purchase
price, his expenses, interest, and the price of the
loan paid to DBP. He returned the remaining amount
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and one of the tractors. This is a tacit
acknowledgment of the A’s exercise of his right to
repurchase. (David v. David, G.R. No. 162365,
2014)
How is Redemption Effected
Seller a retro must first pay the following: (PENT)
1. The Price of the thing sold
2. Expenses of the contract and other legitimate
payments made by reason of the sale
3. Necessary and useful expenses made on the
thing sold (Art. 1616)
4. Valid Tender of payment is sufficient (Legaspi
v. CA, G.R. No. L-45510, 1986)
Mere sending of notice without valid tender
is insufficient.
Failure to pay useful and unnecessary
expenses entitles vendee to retain land
unless actual reimbursement is made
In Case of Multi-Parties
(a) When an undivided thing is sold because coowners cannot agree that it be allotted to one of
them – vendee a retro may compel the vendor to
redeem the whole thing (Art. 1611)
(b) When an undivided thing is sold by coowners/co-heirs, vendors a retro may only
exercise his right over his respective share;
vendee a retro may demand that they must come
to an agreement first and may not be compelled
to consent to a partial redemption (Art. 1612)
(c) When rights of co-owners over an undivided
thing is sold as regards to their own share –
vendee retro cannot compel one to redeem the
whole property
(d) Should one of the co-heirs/co-owners succeed in
redeeming the property – such vendor a retro
shall be considered as trustee with respect to the
share of the other co-owners/co-heirs. (De
Guzman v. CA, G.R. No. L-47378, 1987)
NOTE: A Seller can only sell what he or she owns,
or that which he or she does not own but has
authority to transfer, and a buyer can only acquire
what the seller can legally transfer. Before the
property is partitioned, the heirs are co-owners of
the property. The heirs cannot alienate the shares
that do not belong to them. Any sale by one heir of
the rest of the property will not affect the rights of the
other heirs who did not consent to the sale. Such
sale is void with respect to the shares of the other
heirs. Issuance of a certificate of title is not a grant
of title over petitioners' undivided portions of the
CIVIL LAW (AND PRACTICAL EXERCISES)
property. Nevertheless, a buyer could acquire valid
title over the whole property if the buyer were an
innocent purchaser for value. (Heirs of Gregorio
Lopez v. Development Bank of the Phils., G.R. No.
193551, 2014.)
NOTE: A co-owner has “no right to sell or alienate a
concrete, specific or determinate part of the thing
owned in common, because his right over the thing
is represented by quota or ideal portion without any
physical adjudication.” (Cabrera v. Ysaac, G.R. No.
166790, 2014)
Fruits
What controls is the stipulation between parties as
regards the fruits.
If none:
1. At time of execution of the sale a retro, there are
visible or growing fruits – there shall be no prorating at time of redemption if no indemnity was
paid by the vendee a retro.
2. At time of execution sale a retro, there be no
fruits but there are fruits at time of redemption –
pro-rated between vendor a retro and vendee a
retro giving the vendee a retro a part
corresponding to the time he possessed the
land. (Art. 1617)
PRE-EMPTION
Arises before sale
No rescission
because no sale
exists yet
Action is directed
against prospective
seller
REDEMPTION
Arises after sale
There can be rescission
of the original sale
Action is directed
against buyer
3. EQUITABLE MORTGAGE
One which lacks the proper formalities, form of
words, or other requisites prescribed by law for a
mortgage, but shows the intention of the parties to
make the property subject of the contract as security
for a debt and contains nothing impossible contrary
to law. (Cachola v. CA, G.R. No. 97822, 1992)
Any money, fruits, or other benefit to be received by
the vendee as rent or otherwise shall be considered
as interest and is subject to usury laws.
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CIVIL LAW (AND PRACTICAL EXERCISES)
The essential requisites of an equitable mortgage
are:
1. The parties entered into a contract denominated
as a contract of sale; and
2. Their intention was to secure an existing debt by
way of a mortgage. (Molina vs. CA, G.R. No.
125755, 2003)
property in controversy. (Spouses Sy v. De VeraNavarro, G.R. No. 239088, April 3, 2019)
A contract with right to repurchase may be deemed
to be an equitable mortgage under the following
conditions (IPERTI):
1. Price of sale with right to repurchase is
unusually Inadequate
2. Seller remains in Possession as lessee or
otherwise
3. Upon or after expiration of right to repurchase,
another instrument Extending the period of
redemption or granting new period is executed
4. Buyer Retains for himself a part of the purchase
price
5. Seller binds himself to pay Taxes on thing sold
6. Any other case where the real Intention of
parties is to secure the payment of a debt or
performance of other obligation (Art. 1602)
Remedies available to the vendor:
1. Reformation of contract (Art. 1359)
2. Action for declaration of nullity of deed of sale
3. Action for specific performance (Tolentino v.
CA, G.R. No. 128759, 2002); or
4. Foreclosure of the mortgage in equity (BrionesVasquez v. CA, G.R. No. 144882, 2005)
NOTE: In case of doubt – in determining whether it
is an equitable mortgage or a sale a retro, the sale
shall be construed as an equitable mortgage. (Art.
1603). Note that in the realm of securities such as
shares of stocks, the parties can enter in to a
repurchase agreement which essentially is a
collateralized or secured loan structured as a sale.
The seller is actually a borrower while the buyer is,
in reality, a creditor. The shares of stock “bought”
are actually collateral.
In case of doubt, a contract purporting to be a sale
with right to repurchase shall be considered as an
equitable mortgage. The nomenclature given by the
parties to the contract is not conclusive of its nature.
(Saclolo v. Marquito, G.R. No. 229243, June 26,
2019)
Article 1602 of the Civil Code provides
circumstances where a contract shall be presumed
to be an equitable mortgage. Jurisprudence
consistently showed that the presence of even one
of these circumstances suffices to convert a
purported contract of sale into an equitable
mortgage. Furthermore, courts are generally
inclined to construe a transaction purporting to be a
sale as an equitable mortgage, which involves a
lesser transmission of rights and interests over the
What to Look for in Determining Nature of
Contract
1. Language of the contract
2. Conduct of parties – to reveal real intent
Rationale Behind Provision on Equitable
Mortgage:
1. Circumvention of usury law
2. Circumvention of prohibition against pactum
commissorium – creditor cannot appropriate the
things given by way of pledge or mortgage;
remedy here is foreclosure. The real intention of
parties is that the pretended purchase price is
money loaned and to secure payment of the
loan, sale with pacto de retro is drawn up. (Heirs
of Reyes, Jr. v. Reyes, G.R. No. 158377, 2010)
4. LEGAL REDEMPTION
The right to be subrogated upon the same terms and
conditions stipulated in the contract, in the place of
one who acquires the thing by (1) purchase OR (2)
by dation in payment OR (3) by other transaction
whereby ownership is transmitted by onerous title.
(Art. 1619)
NOTE: Only applies to contracts of sale.
Types of Legal Redemption:
1. Among co-heirs
Any of the heirs sells his hereditary rights to a
stranger before partition:
Any of the co-heirs may be subrogated to the
rights of the purchaser by redeeming said
hereditary right: reimburse the buyer of the price
of the sale
Co-heirs have 1 month from receipt of notice in
writing (Art. 1088)
2. Among co-owners
Any or all of co-owners sell their shares to 3rd
person:
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Any co-owner may exercise the right of
redemption by paying reasonable price of
property to the buyer
If 2 or more co-owners desire to exercise right of
redemption, they may only do so in proportion to
the share they respectively have in thing owned
in common (Art. 1620)
3. Among adjoining owners
Rural land
(a) Where piece of rural land has an area not
exceeding 1-hectare, adjoining owner has right
to redeem unless grantee does not own a rural
land
(b) If two or more adjacent lot owners desire to
exercise right to redeem, owner of adjoining lot
with smaller area shall be preferred
(c) If two or more adjacent lot owners desire to
exercise right to redeem and both have same
lot area, one who first requested shall be
granted (Art. 1621)
Urban land
(a) When piece of land is small and cannot be
used for any practical purpose and bought
merely for speculation, owner of adjoining land
can redeem
(b) When 2 or more owners of adjoining lot desire
to exercise right to redeem, owner whose
intended use is best justified shall be preferred.
(Art. 1622)
4. Sale of credit in litigation
When a credit or other incorporeal right in litigation
is sold, debtor shall have a right to extinguish it by
reimbursing the assignee for the price the latter paid
therefor plus judicial costs, interest; except when the
assignment or sale is made: (a) to a co-heir or coowner of the right assigned; (b) to a creditor in
payment of his credit; or (c) to the possessor of a
tenement or piece of land which is subject to the
right in litigation assigned. (Arts. 1634, 1635)
Debtor may exercise right within 30 days from the
date assignee demands payment from him (Art.
1634)
Other Instances When Right of Legal
Redemption is Granted:
1. Redemption of homesteads
2. Public Land Act
3. Land acquired under free patent homestead
subject to repurchase by wife, legal heirs within
CIVIL LAW (AND PRACTICAL EXERCISES)
5 years from date of conveyance granted by
law, need not be stipulated
Redemption in tax sales
In case of tax delinquency/failure to pay tax
assessments, property shall be foreclosed.
Delinquent payer has 1 year from date of sale to
redeem by paying to the revenue District Officer the
amount of tax delinquencies, and interest or
purchase price. (National Internal Revenue Code,
Sec. 214)
Redemption by judgment debtor: 1 year from
date of registration of certificate of sale to redeem
by paying purchaser at public auction with interest
(Rules of Court, Rule 39, Secs. 27, 28)
Redemption in extrajudicial foreclosure: 1 year
from date of sale and registration (Act No. 3135,
Sec. 6)
Redemption in judicial foreclosure of mortgage:
right to redeem is granted to debtor mortgagor
except when mortgagee is bank of a banking
institution 90 days after finality of judgment. (GSIS
v. CFI, G.R. No. 45322, 1989)
When Period of Redemption Begins to Run:
Right of legal pre-emption of redemption shall be
exercised within 30 days from notice by the seller.
(Art. 1623)
How exercised: Tender of payment is not
necessary; offer to redeem is enough. (Vda. de
Panaligan v. CA, G.R. No. 112611, 1996)
NOTE: Written notice under Art. 1623 is mandatory
for the right of redemption to commence. (PSC vs.
Sps. Valencia, G.R. No. 150060, 2003)
General Rule: Actual knowledge notwithstanding,
written notice is still required. (Verdad v. CA,
G.R. No. 109972, 1996)
Exception: When actual knowledge is acquired by
co-heirs living in same land with purchaser (Alonzo
v. IAC, G.R. No. L-72873, 1987) or co-owner was
middleman in sale to 3rd party (Disitro v. CA, G.R.
No. 95256, 1991)
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Art. 1623 does not prescribe any distinctive method
for notifying the redemptioner. (Etcuban v. CA, G.R.
No. L-45164, 1987)
H. ASSIGNMENT OF CREDITS
Transfer of ownership
1. By tradition or delivery and not by perfection;
2. By execution of public instrument because
intangibles cannot be physically transferred;
3. Without necessity of delivering the document
evidencing the credit.
NOTE: This rule does not apply to negotiable
documents and documents of title which are
governed by special laws.
Assignment
The owner of a credit transfers to another his rights
and actions in consideration of a price certain in
money or its equivalent
1. Transfers the right to collect the full value of the
credit, even if he paid a price less than such
value;
2. Transfers all the accessory rights (e.g.
guaranty, mortgage, pledge, preference) (Art.
1427);
3. Debtor can set up against the assignee all the
defenses he could have set up against the
assignor.
Difference from sale
Technical term but basically a sale
Sale of credits and other incorporeal things
(Villanueva, Law on Sales, 524-526, 2016)
Effects of assignment
Lack of knowledge or consent of debtor not
essential for validity but has legal effects (“meeting
of minds” in assignment contemplates that between
assignor of the credit and his assignee) (Rodriguez
v. CA, G.R. No. 84220, 1992)
Assignment of rights made w/o knowledge of
debtor: Debtor may set up against assignee the
compensation which would pertain to him against
assignor of all credits prior to assignment and of
later ones until he had knowledge of the
assignment.
Debtor has consented to assignment: Cannot set
up against assignee the compensation which would
CIVIL LAW (AND PRACTICAL EXERCISES)
pertain to him against assignor of all credits prior to
assignment and of later ones until he had
knowledge of the assignment
Compensation unless assignor was notified by
debtor that he reserved his right to the
compensation
Debtor has knowledge but no consent: may still
set up compensation of debts previous to
assignment but not the subsequent ones. (Art.
1285)
Effect of payment of debtor after assignment of
credits
1. Before Notice of the Assignment – Payment to
the original creditor is valid and debtor shall be
released from his obligation
2. After Notice – Payment to the original creditor
is not valid as against the assignee. He may be
made to pay again by the assignee (Art. 1626)
Warranties of the assignor
1. NO warranty against hidden defect - N/A
because intangibles have no physical existence
(Villanueva & Tiansay, Law on Sales, 532,
2016)
2. He warrants the existence and legality of credit
– there is warranty except when expressly sold
as a doubtful account
3. NO warranty as to the solvency of debtor unless
it is expressly stipulated OR unless the
insolvency was already existing and of public
knowledge at the time of the assignment (Art.
1628)
NOTES:
Warranty shall last for 1 year only (Art. 1629)
One who assigns inheritance right w/o enumerating
rights shall be answerable for his character as an
heir (Art. 1630)
One who sells whole of certain rights for a lump sum,
shall be answerable for legitimacy of the whole in
general but not for each of the various parts (Art.
1631)
Breach of warranty: liabilities of the assignor of
credit for violation of his warranties
Assignor in good faith – Liability is limited to price
received, expenses of the contract and other
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legitimate payments made by reason of the
assessment
Assignor in bad faith – Liable ALSO for (expenses
of contract and other legitimate payments plus
useful and necessary expenses) damages (Art.
1628)
ASSIGNMENT OF CREDIT OR INCORPOREAL
RIGHT IN LITIGATION
Requisites (SPA)
1. There must be a Sale or assignment of credit
2. There must be a Pending litigation
3. The debtor must pay the Assignee:
i. Price paid by him AND
ii. Judicial costs incurred by him AND
iii. Interest on the price from the date of
payment (Art. 1634)
The right must be exercised by the debtor within 30
days from the date the assignee demands (judicially
or extra-judicially) payment from him. (Art. 1634)
NOTES:
Presumption: buyer’s purpose is speculation and
law would rather benefit the debtor of such credits
rather than the one who merely speculates for profit.
(Villanueva, Law on Sales, 533, 2016)
When credit or incorporeal right in litigation is
assigned or sold, debtor has a right to extinguish it
by reimbursing the assignee for the price the buyer
paid plus interest (Art. 1634)
Right to redeem by debtor not available in the
following instances (not considered speculative
(Art. 1635)
1. Assignment of credit/incorporeal right to co-heir
or co-owner; the law does not favor coownership
2. Assignment to creditor in payment for his credit
o Presumption is that the assignment is
above suspicion; assignment is in the form
of dacion en pago, thus perfectly legal
3. Assignment to possessor of tenement or piece
of land which is subject to the right in litigation
assigned
o Purpose is to presumably preserve the
tenement
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VI.
LEASE
A. GENERAL PROVISIONS
TOPIC OUTLINE UNDER THE SYLLABUS
A. GENERAL PROVISIONS
1. Lease of Things
2. Lease of Work and Services
B. RIGHTS AND OBLIGATIONS
LESSOR AND OF THE LESSEE
1. Obligations of the lessor
2. Obligations of the lessee
OF
THE
Contract of Lease is a contract by which one
agrees to give to the other for a fixed time and price
the use or profit of a thing, or of his services. (The
Employees’ Club, Inc. v. China Banking
Corporation, G.R. No. L-40188, 1934)
Characteristics of Lease of things (CLONS-PEPTP)
(a) Consensual
(b) Lessor need not be the owner
(c) Onerous
(d) Nominate
(e) Subject matter must be within the commerce of
man (i.e. not belonging to public domain)
(f) Principal contract
(g) Purpose is to allow enjoyment or use of a thing
(h) Purpose to which the thing will be devoted
should not be immoral
(i) Period is temporary
(j) Period may be definite or indefinite
NOTE: Persons disqualified to buy under Arts. 1490
and 1491 of the Civil Code are also disqualified to
become lessees of the things mentioned therein.
(Art. 1646)
Kinds of Leases
1. LEASE OF THINGS
Concerns movable or immovable property
One of the parties binds himself to give to
another the enjoyment or use of a thing
For a price certain and
For a period which may be definite or indefinite
NOTE: However, no lease for more than 99 years
shall be valid.
General Rule: The contract of lease may be made
orally.
Exception: Lease of real property for more than 1
year (must be in writing to comply with Statute of
Frauds).
2. LEASE OF WORK AND SERVICES
One of the parties binds himself to execute a
piece of work or to render to the other some
service for a price certain
The relation of principal and agent does not
exist between them
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CONTRACT OF
LEASE OF SERVICE
The object of contract
is the service itself and
not the result which it
generates
Lessor’s services must
still be paid even if the
result intended is not
attained.
In case of breach, no
action for specific
performance
CONTRACT OF
LEASE OF THING
The object of contract
is a thing
Lessor has to deliver
the thing leased.
In case of breach,
there may be an action
for specific
performance
B. RIGHTS AND OBLIGATIONS OF THE
LESSOR AND OF THE LESSEE
1. OBLIGATIONS OF THE LESSOR
(Art. 1654) (DNM)
1.
2.
3.
To Deliver the thing which is the object of the
contract in such condition as to render it fit for
the use intended.
To make on the same during the lease all the
Necessary repairs in order to keep it suitable for
the use to which it has been devoted unless
there is a stipulation to the contrary.
To Maintain the lessee in the peaceful and
adequate enjoyment of the lease for the entire
duration of the contract.
This is true only if the contract is valid.
Where the contract is void, for having an
existent contract of lease, the lessor has no
right to lease the same property. (Bercero
v. Capitol Development Corporation, G.R.
No. 154765, 2007)
Nature of the duty of the Lessor to maintain
peaceful possession of the premises by the
Lessor
This is merely a warranty that the lessee shall not
be disturbed in his legal, and not physical,
possession. (Chua Tee Dee v. Court of Appeals,
G.R. No. 135721, 2004)
2. OBLIGATIONS OF THE LESSEE
(Art. 1657) (PUP)
1.
2.
Pay the price of the lease according to the terms
stipulated.
Use the thing leased as a diligent father of a
family devoting it to the use stipulated, and in
the absence of stipulation, to that which may be
3.
inferred from the nature of the thing leased,
according to the custom of the place.
Pay the expenses for the deed of lease.
Rights of the Lessee
1. Right to be respected in his possession.
2. Right to be restored to said possession by the
means established by law or by the Rules of
Court, should he be disturbed therein.
Remedies when lessor or lessee does not
comply with their obligations
(a) Rescission and damages; or
(b) Damages while allowing the contract to remain
in force.
Remedy of lessee if lessor refuses to accept the
rentals
To make a proper tender of payment and
consignation in order to extinguish the debt.
Rules on changing the form of the lease
The lessor can alter the thing leased provided
there is no impairment of the use to which the
thing is devoted under the terms of the lease.
The lessee can also make alterations so long as
the value of the property is not substantially
impaired.
The lessee can also make alterations so long as
the value of the property is not substantially
impaired.
Rules in case of urgent repairs
If the repairs last for not more than 40 days, the
lessee is obliged to tolerate the work even
though the work may annoy him or he may be
deprived of a part of the premises if repairs last
for not more than 40 days.
If repairs last for 40 days or more, lessee can
ask for reduction of the rent in proportion to the
time – including the 1st 40 days – and the part
of the property of which he is deprived.
NOTE: In either case, rescission may be availed of
if the main purpose of the lease is to provide a
dwelling place and the property becomes
uninhabitable.
Effects if lessor fails to make urgent repairs
The lessee may (ROSS):
(a) Ask for Rescission, in case of substantial
damage to him.
(b) Order repairs at the lessor’s cost;
(c) Sue for damages; or
(d) Suspend the payment of the rent;
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Effect of destruction of the subject matter with
respect to the lease
IF TOTALLY
DESTROYED
Lease is extinguished
Lease will be for the said period and it ends
on the day fixed without need of a demand.
(b) Lease may be without a fixed period
IF ONLY PARTIALLY
DESTROYED
Lessee can choose
between reduction of
the rent and rescission
i. For rural lands (Art. 1682) - It shall be for all
time necessary for the gathering of fruits
which the whole estate may yield in 1 year,
or which it may yield once.
ii. For urban lands (Art. 1687)
(i) If rent is paid daily, lease is from day to
day.
(ii) If rent is paid weekly, lease is from
week to week.
(iii) If rent is paid monthly, lease is from
month to month.
(iv) If rent is paid yearly, lease is from year
to year.
Rules upon Termination of Lease governing
useful improvements caused by the lessee
(OAR)
If made in good faith and suitable to the use for
which the lease is intended, without altering the form
or substance of the property:
1.
2.
3.
Lessor may Appropriate the improvements
provided he pays the lessee ½ of its value at
that time;
If lessor does not appropriate, lessee may
Remove the improvements even if the principal
thing may suffer damage;
If improvement is Ornamental, no right of
reimbursement, but lessee may remove them
provided no damage is caused to the principal
thing.
NOTE: Lessee has no right of retention of the
premises if the lessor does not pay. His only right is
right of removal if lessor does opt not to pay and
appropriate.
The general rule is lease contracts survive the death
of the parties and continue to bind the heirs except
if the contract states otherwise. (Inocencio vs.
Hospicio de San Jose, G.R. No. 201787, 2013)
The well-entrenched principle is that a lease from
month-to-month is with a definite period and expires
at the end of each month upon the demand to
vacate by the lessor. (Cebu Bionic Builders Supply,
Inc. vs. Development Bank of the Philippines, G.R.
No. 154366, 2010)
Rules on Extension of the Lease Period
1.
Kinds of Trespass in Lease
(a) Trespass in fact (perturbacion de mere
hecho):
Lessor is not liable for the mere fact of a
trespass or trespass in fact made by a third
person of a leased property.
Mere fact or mere act of trespass is when
the third person claims no right whatever.
Physical enjoyment is reduced.
(b) Trespass in law (perturbacion de derecho):
A third person claims legal right to enjoy the
premises
Lessor will be held liable
Duration of Lease
2.
3.
4.
5.
If a lease contract for a definite term allows
lessee to extend the term, there is no necessity
for lessee to duly notify lessor of his desire to so
extend the term, unless the contrary is
stipulated.
“May be extended” as stipulation: lessee can
extend without lessor’s consent but lessee must
notify lessor.
“May be extended for 6 years, agreed upon by
both parties” as stipulation: this must be
interpreted in favor of the lessee. Hence,
ordinarily the lessee, at the end of the original
period, may either:
(a) Leave the premises
(b) Remain in possession
In co-ownership, assent of co-owner is needed;
otherwise, it is void or ineffective as against
non-consenting co-owners.
Where according to the terms of the contract,
the lease can be extended only by the written
consent of the parties thereto, no right of
extension can rise without such written consent.
(a) Lease may be for a determinate time or
fixed period
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Implied new lease (Tacita Reconducion)
Lease that arises if at the end of the contract the
lessee should continue enjoying the thing
leased for 15 days with the acquiescence of the
lessor, unless a notice to the contrary had
previously been given by either party.
Period of the implied new lease is not that of the
original contract but the time established in
Arts.1682 and 1687 (see Duration of Lease
above).
Other terms of the original contract are revived
except option to purchase in case such was in
the original contract.
NOTE: Terms that are revived are only those which
are germane to the enjoyment of possession, but
not those with respect to special agreements which
are by nature foreign to the right of occupancy or
enjoyment inherent in a contract of lease – such as
an option to purchase the leased premises. (Dizon
v. Magsaysay, G.R. No. 23399, 1974)
enjoyment of leasehold rights to the sole and
exclusive will of the lessee.
Sublease
A lessee may sublease the thing leased unless
there is an express prohibition to do so.
Remedy of lessor if lessee violates prohibition:
action for rescission of the lease and damages.
If the prohibition to sublease is not express but
only implied, the sublease will still be allowed.
Duration of sublease cannot be longer than that
of the lease to which it is dependent.
The prohibition against subleasing may not
embrace the taking in of boarders. (Mallare v.
Court of Appeals, G.R. No. 85108, 1989)
In a sublease arrangement, there are two
distinct leases: the principal lease and the
sublease.
ASSIGNMENT OF
LEASE
SUBLEASE
Lessee remains a
party in the contract.
Requisites for Implied New Lease (ENC)
1.
2.
3.
The term of the original contract has Expired;
The lessor has Not given the lessee a notice to
vacate;
The lessee Continued enjoying the thing leased
for at least 15 days with the acquiescence of the
lessor;
When there is no implied new lease
(a) When before or after the expiration of the term,
there is a notice to vacate given by either
party.
(b) When there is no definite fixed period in the
original lease contract as in the case of
successive renewals.
EXTENSION OF
LEASE CONTRACT
Original contract
subsists
Creates additional
term
RENEWAL OF
LEASE CONTRACT
Original contract
ceases to exist
Creates a new
contract
Perpetual Lease
A lease contract providing that the lessee can
stay in the premises for as long as he wants and
for as long as he can pay the rentals and its
increases.
This is not permissible; it is a purely potestative
condition because it leaves the effectivity and
Two leases and two
distinct juridical
relationship (lessorlessee and sublessorsublessee)
Sublessee does not
have any direct action
against the lessor
Subleasing is allowed
unless there is an
express prohibition
Lessee is
disassociated from the
original contract of
lease.
Only one (lessorassignee who
becomes the lessee)
because lessee
transmits absolutely
his rights and his
personality disappears
Assignee has a direct
action against the
lessor, there being
novation
Assignment is not
allowed unless the
lessor gives his
consent
NOTE: The sub-lessee is primarily liable to his sublessor and only a court can extinguish or modify this
primary liability if the sub-lessor contests the pretermination of the principal lease by the lessor.
(Tamio v. Ticson, G.R. No. 154895, 2004)
Circumstances when a sub-lessee is made liable to
the lessor:
i. For all acts which affect the use and preservation
of the thing leased in the manner stipulated
between the lessor and the lessee.
ii. For any rent due to the lessor from the lessee
which the latter failed to pay:
Sublessee is subsidiarily liable
Sublessee shall not be responsible beyond
amount of rent due from him, in accordance
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with the terms of the sublease, at the time
of the extrajudicial demand by the lessor
Grounds for Ejectment
(a) When the period agreed upon or that which is
fixed for the duration of leases (Arts.1682 and
1687) has expired (see Duration of Lease).
(b) Lack of payment of the price stipulated.
In case lessor refuses to accept rentals,
lessee should make tender of payment,
and consignation otherwise there is no
payment.
Willingness to pay is not payment.
(c) Violation of any of the conditions agreed upon
in the contract.
(d) When the lessee devotes thing leased to any
use or service not stipulated which causes the
deterioration thereof, or if he does not observe
the requirement in Art. 1657.
In a contract of lease, the twin remedies of
rescission and judicial ejectment become available
after either the failure to pay rent or to comply with
the conditions of the lease.
Technically, no extrajudicial rescission effectively
takes place as a result of the violations until the
demand to pay or comply is duly served and is
rejected or disregarded by the lessee.
The tenant's refusal to heed the demand to vacate,
coming after the demand to pay or to comply
similarly went unheeded, renders unlawful the
continued possession of the leased premises.
(Cebu Automatic Motors, Inc. vs. General Milling
Corporations, G.R. No. 151168, 2010)
The lessor may judicially eject the lessee for any
of the following causes: (EPCU)
1.
2.
3.
When the period agreed upon, or that which
is fixed for the duration of leases under
Articles 1682 and 1687, has Expired;
Lack of Payment of the price stipulated;
Violation of any of the Conditions agreed
upon in the contract;
Lessee devotes the thing leased to any Use or
service not stipulated which causes the deterioration
thereof; or if he does not observe the requirement in
No. 2 of Article 1657.
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VII. PARTNERSHIP
TOPIC OUTLINE UNDER THE SYLLABUS
A. GENERAL PROVISIONS
1. Definition
2. Elements
3. Characteristics
4. Rules to determine existence
5. Partnership term
6. Partnership by estoppel
7. Partnership as distinguished from joint
venture
8. Professional partnership
9. Management
B. OBLIGATIONS OF THE PARTNERS
1. Rights and obligations of the partnership
2. Obligations of partners among themselves
3. Obligations of partners to third persons
C. DISSOLUTION AND WINDING UP
D. LIMITED PARTNERSHIP
CIVIL LAW (AND PRACTICAL EXERCISES)
A. GENERAL PROVISIONS
1. DEFINITION
Partnership is a contract whereby two or more
persons bind themselves to contribute money,
property, or industry to a common fund, with the
intention of dividing the profits among themselves.
Two or more persons may also form a partnership
for the exercise of a profession (CIVIL CODE, Art.
1767)
2. ELEMENTS
Elements of a Partnership (ACD)
1. Meeting of minds (Agreement)
2. To Contribute money, property, or industry to a
common fund; and
3. Intent to Divide profits (and losses) among the
contracting parties (Jarantilla, Jr. v. Jarantilla,
G.R. No. 154486)
Essential Features of Partnership (VaLeCLO)
1. There must be a Valid contract.
2. The parties must have Legal capacity to enter
into the contract.
3. There must be a mutual Contribution of money,
property or industry to a common fund. (CIVIL
CODE, Art. 1767)
4. There must be a Lawful object. (CIVIL CODE, Art.
1770)
5. The purpose or primary purpose must be to
Obtain profits and divide the same among the
parties. (CIVIL CODE, Art. 1767)
Additional Requirement for Juridical
Personality
1. It is also required that the articles of partnership
must not be kept secret among the members
and the partners do not contract in their own
name; otherwise, the association shall have no
legal personality and shall be governed by the
provisions on Co-ownership. (CIVIL CODE, Art.
1775)
2. "Kept secret among the members" where
secrecy is directed not to third persons but to
some of the partners. (CIVIL CODE, Art. 1775)
3. This does not mean that there could be no
contractual relations amongst the parties; there
is only no partnership or association with
distinct legal personality.
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3. CHARACTERISTICS
Characteristics of a Partnership
1. Essentially contractual in nature (CIVIL CODE,
Arts. 1767, 1784)
2. Separate juridical personality (CIVIL CODE, Art.
1768)
3. Delectus personae (CIVIL CODE, Arts. 1804,
1813)
4. Mutual Agency (CIVIL CODE, Art. 1803)
5. Personal liability of partners for partnership
debts (CIVIL CODE, Arts. 1816, 1817)
4. RULES TO DETERMINE EXISTENCE
General Rule
Persons who are not partners as between
themselves, cannot be partners as to third persons
(CIVIL CODE, Art. 1769[1])
Exception
Partnership by estoppel (CIVIL CODE, Art. 1825) [see
Section (6) below]
Other rules to determine whether a partnership
exists (CIVIL CODE, Art. 1769)
The following, alone, do not establish a partnership:
1. Co-ownership or co-possession;
2. Sharing of gross returns, whether or not the
persons sharing them have a joint or common
right or interest in any property from which the
returns are derived;;
3. Receipt by a person of a share of the profits of
a business is prima facie evidence that he is a
partner in the business, unless such were
received in payment as:
i. Debt by installments or otherwise;
ii. Wages or rent;
iii. Annuity;
iv. Interest on loan (even if the interest is
based on the profits of the business);
v. Consideration for sale of goodwill of
business or other property by installments
or otherwise.
A partnership must have a lawful object or purpose,
and must be established for the common benefit or
interest of the partners. (CIVIL CODE, Art. 1770)
Effects of an Unlawful Partnership (i.e.,
established for an unlawful object or purpose)
1. Void ab initio such that it never existed in the
eyes of the law (CIVIL CODE, Art. 1409[1])
2. Profits shall be confiscated in favor of the
government (CIVIL CODE, Art. 1770)
3. Instruments or tools and proceeds of the crime
shall also be forfeited in favor of the government
4.
(CIVIL CODE, Art. 1770; REVISED PENAL CODE,
Art. 45)
The contributions of the partners shall not be
confiscated unless they fall under (c) (CIVIL
CODE, Arts. 1411 and 1412)
Judicial decree is not necessary to dissolve an
unlawful partnership. (De Leon, 2019)
That there is no legally constituted partnership does
not mean that there are no contractual or legal
relations among the parties.
Effect of Partial Illegality
Where a part of the business of a partnership is legal
and a part illegal, an account of that which is legal
may be had.
Where, without the knowledge or participation of the
partners, the firm's profits in a lawful business have
been increased by wrongful acts, the innocent
partners are not precluded as against the guilty
partners from recovering their share of the profits.
Formation of Partnership
a. How Partnership is Formed
General Rule: A partnership may be
constituted in any form, except where
immovable property or real rights are
contributed thereto, in which case a public
instrument shall be necessary.. (CIVIL CODE, Art.
1771)
b. Burden of Proof and Presumption
The existence of a partnership must be proven, not
presumed. Persons acting as partners are
presumed to have entered into a contract of
partnership. The burden of proof is shifted to the
party denying its existence.
An extant partnership is presumed to exist until
proven terminated.
Use of the term “partner” does not necessarily show
existence of partnership. Non-use of the terms
“partnership” or “partners” are not conclusive as to
non-existence or partnership, but entitled to weight.
5. PARTNERSHIP TERM
Partnership at will
One in which no fixed term is specified and is not
formed for a particular undertaking or venture which
may be terminated anytime by mutual agreement.
Partnership with a fixed term
One in which the partners agree to themselves the
term of which the partnership is to subsist.
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Common Types of Partnership
1. Universal v. Particular Partnership
a. Universal Partnership
i) Universal Partnership of All Present
Property (CIVIL CODE, Art. 1779)
Comprises the following:
o Property which belonged to each
of the partners at the time of the
constitution of the partnership
o Profits which they may acquire
from all property contributed
ii) Universal Partnership of Profits
Comprises all that the partners may
acquire by their industry or work during
the existence of the partnership (CIVIL
CODE, Art. 1780).
But persons who are prohibited from
giving donations or advantage to each
other cannot enter into a universal
partnership (CIVIL CODE, Art. 1782).
o
o
o
o
b.
2.
Those made between persons
who were guilty of adultery or
concubinage at the time of the
donation;
Those made between persons
found guilty of the same criminal
offense, in consideration thereof;
and
Those made to a public officer or
his
wife,
descendants
and
ascendants, by reason of his
office. (CIVIL CODE, Art. 739)
Those between spouses, direct or
indirect, including those persons
living together as husband and
wife without a valid marriage.
(FAMILY CODE, Art. 87)
Particular Partnership (CIVIL CODE, Art.
1783)A particular partnership has for its
objects:
i) Determinate things
ii) Their use or fruits
iii) Specific undertaking
iv) Exercise of profession or vocation
General v. Limited Partnership
a. General Partnership
Consists of general partners who are liable
pro rata and subsidiarily and sometimes
solidarily with their separate property for
partnership debts
b. Limited Partnership
One formed by two or more persons having
as members one or more general partners
CIVIL LAW (AND PRACTICAL EXERCISES)
and one or more limited partners, the latter
not being personally liable for the
obligations of the partnership.
6. PARTNERSHIP BY ESTOPPEL
Definition of Partnership by estoppel
Either by words or conduct, a person does any of
the following:
1. Directly represents himself to anyone as a
partner in an existing partnership or in a nonexisting partnership
2. Indirectly represents himself by consenting to
another representing him as a partner in an
existing partnership or in a non-existing
partnership
When a person has been thus represented to be a
partner in an existing partnership, or with one or
more persons who are not actually partners, he is
an agent of the persons consenting to such
representation in order to bind them to the same
extent and in the same manner as though he were
a partner in fact (CIVIL CODE, Art. 1825).
Elements to establish liability as a partner on the
ground of estoppel:
1. Defendant represented himself as partner or
represented by others as such;
2. Not denied or refuted by defendant; and
3. Plaintiff relied on such representation. (De
Leon, 2019)
LIABILITIES IN ESTOPPEL
When all the
members of an
existing
partnership
consent to the
representation
Other cases
LIABILITY
A partnership act or
obligation results, therefore
the partnership is liable
It is the joint act or
obligation of the person
acting
and
persons
consenting
to
the
representation.
Person
who represented himself &
all those who made
representation liable prorata/ jointly
7. PARTNERSHIP AS DISTINGUISHED
FROM JOINT VENTURE
The observation that a joint venture is for a single
transaction while a partnership entails a continuing
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business is not entirely accurate in Philippine law. A
partnership may be universal or particular and a
particular partnership has for its object a specific
undertaking (Roque, Jr. v. COMELEC, G.R. No.
188456).
When there has been duly registered articles of
partnership, and subsequently the original
partners accept an industrial partner but do not
register a new partnership, and thereafter the
industrial partner retires from the business, and
the original partners continue under the same
set-up as the original partnership, then although
the second partnership was dissolved with the
withdrawal of the industrial partner, there
resulted a reversion back into the original
partnership under the terms of the registered
articles of partnership. There is not constituted
a new partnership at will. (Rojas v. Maglana,
G.R. No. 30616)
Generally understood to mean an organization
formed for some temporary purpose, a joint venture
is likened to a particular partnership or one which
“has for its object determinate things, their use or
fruits, or a specific undertaking, or the exercise of a
profession or vocation. (Realubit v. Jaso, G.R. No.
178782)
Joint Venture
A joint venture is a form of partnership, and thus, to
be governed by the laws on partnership. (Marsman
Drysdale Land, Inc. v. Philippine Geoanalytics, G.R.
No. 183374)
As a rule, corporations are prohibited from entering
into partnership agreements; consequently,
corporations can enter into joint venture agreements
with other corporations or partnerships for certain
transactions in order to form “pseudo partnerships.”
A joint venture agreement between and among
corporations may be seen as similar to partnerships
since the elements of partnership are present.
(Narra Nickel Mining and Dev’t Corp. v. Redmont
Consolidated Mines Corp., G.R. No. 195580)
b.
As to purpose
1. Commercial or trading partnership- one
formed for the transaction of business
2. Professional
or
non-trading
partnership- one formed for the exercise
of a profession
NOTE: Section 35(h) of the Revised Corporation
Code now expressly allows corporations to form
partnerships with both natural and juridical persons.
A verbal agreement to form a joint venture company
is valid and binding. The failure to reduce the
agreement to writing does not affect its validity or
enforceability as there is no law or regulation which
provides that an agreement to incorporate must be
in writing. (Fong v. Dueñas, G.R. No. 185592)
8. PROFESSIONAL PARTNERSHIP
General professional partnership
A general professional partnership exists when two
or more persons may also form a partnership for the
exercise of a profession (CIVIL CODE, Art. 1767 [2]).
Other Classifications of Partnership
a. As to Legality of Existence
1. De jure partnership- one which has
complied with all the legal requirements for
its establishment
2. De facto- one which has failed to comply
with all the legal requirements for its
establishment
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9. MANAGEMENT
POWERS OF THE PARTNER/S APPOINTED
AS MANAGER
Partner
is Power
of Vote
of
appointed
managing
partners
manager in partner
is representing
the Articles irrevocable
controlling
of
without
interest
is
partnership
just/lawful
necessary to
(CIVIL CODE, cause;
revoke power
Art. 1800)
(CIVIL CODE,
Revocable
only when in Art. 1800)
bad
faith
(CIVIL CODE,
Art. 1800)
Partner
is Power
is
appointed
revocable any
time
by the
manager
vote of the
after
partners (Art.
constitution
of
1800)
partnership
(CIVIL CODE,
Art. 1800)
Two or more Each
may In case of
persons
execute
all opposition by
entrusted
acts
of any of the
with
administration partners,
management (CIVIL CODE, decision
of
of
Art. 1801)
majority of all
the partners
partnership
shall prevail;
without
specification
of
duties/
In case of tie,
stipulation
decision
of
that
each
partners
shall not act
owning
w/o
the
controlling
other's
interest shall
prevail (CIVIL
consent
CODE,
Art.
(CIVIL CODE,
Art. 1801)
1801)
Stipulated
Concurrence
Absence
or
that none of of
all disability
of
the managing necessary for any
one
partners
the validity of cannot
be
shall act w/o acts
(CIVIL alleged unless
the consent CODE,
Art. there
is
of
others 1802)
imminent
(CIVIL CODE,
danger
of
Art. 1802)
grave
or
irreparable
injury
to
partnership
(CIVIL CODE,
Art. 1802)
CIVIL LAW (AND PRACTICAL EXERCISES)
Manner
of
management
not
agreed
upon
(CIVIL
CODE,
Art.
1803)
All
partners
are agents of
the
partnership
(i.e.,
any
partner
can
bind
the
partnership,
subject to Art.
1801 above).
Unanimous
consent
required
for
alteration of
immovable
property (CIVIL
CODE,
Art.
1803(1))
If refusal of
partner
is
manifestly
prejudicial to
interest
of
partnership,
court's
intervention
may
be
sought (CIVIL
CODE,
Art.
1803(2))
B. OBLIGATIONS OF THE PARTNERS
1. RIGHTS AND OBLIGATIONS OF
THE PARTNERSHIP
All partners, including industrial ones, shall be liable
pro rata with all their property and after all the
partnership assets have been exhausted, for the
contracts which may be entered into in the name
and for the account of the partnership, under its
signature and by a person authorized to act for the
partnership. However, any partner may enter into a
separate obligation to perform a partnership
contract. (CIVIL CODE, Art. 1816)
NOTE: Except limited liability partners
Any stipulation against personal liability of partners
for partnership debts is void, except as among them.
(CIVIL CODE, Art. 1817)
Partners are liable solidarily with the partnership for
everything chargeable to the partnership when
caused by the wrongful act or omission of any
partner acting in the ordinary course of business of
the partnership or with authority from the other
partners and for partner's act or misapplication of
properties. (CIVIL CODE, Art. 1824)
Unless there is a stipulation to the contrary, a newly
admitted partner into an existing partnership is liable
for all the obligations of the partnership arising
before his admission but out of partnership property
shares. (CIVIL CODE, Art. 1826) This means that his
liability for obligations arising prior to his admission
is only to the extent of his partnership share (i.e., he
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CIVIL LAW (AND PRACTICAL EXERCISES)
cannot be held personally liable for obligations
arising prior to his admission).
consideration of share in the profits; hence,
as generally, partners are not entitled to
charge each other. (Marsh’s Appeal, 69 Pa.
St. 30)
Partnership creditors are preferred to those of each
of the partners as regards the partnership property.
(CIVIL CODE, Art. 1827)
Every partner is bound to work to the extent
of his ability for the benefit of the whole,
without regard to the services of his copartners, and without comparison of value;
for services to the firm cannot, from their
very nature, be estimated and equalized by
compensation of differences. (Beatty v.
Wray, 7 Harris 519)
Upon dissolution of the partnership, the partners
shall contribute the amounts necessary to satisfy the
partnership liabilities. (CIVIL CODE, Art. 1839(4), (7))
A partner’s personal obligation for partnership
liabilities is subsidiary in nature - they shall only be
liable with their property after all partnership
properties have been exhausted. (Co-Pitco v. Yulo,
G.R. No. L-3146)
But: A partner who has agreed to render
special service to the partnership, for the
performance of which he is qualified, and
which is one of the inducements for the
other members to enter the partnership,
was found liable civilly to account for the
value of such service upon a finding that he
wrongfully refused to perform such service.
2. OBLIGATIONS OF PARTNERS
AMONG THEMSELVES
Obligation to Contribute to the Common Fund
1.
What May Be Contributed
Contribution must be in equal shares unless
otherwise stipulated. (CIVIL CODE, Art. 1790)
a.
But then again: Specific performance not
available due to constitutional prohibition
against involuntary servitude.
Money
Failure to contribute promised money
makes the promissory-partner liable for the
amount promised including the interest due
and damages arising from the time he
should have complied with his or her
undertaking. (CIVIL CODE, Art. 1786, Par. 1)
A limited partner is not allowed to
contribute services, only “cash or other
property” (CIVIL CODE, Art. 1845);
otherwise, he is considered an “industrial
and general partner” and thus, not
exempted from personal liability.
2.
b.
Property
May include intangible or incorporeal (e.g.,
credit). (Lim Tong Lim v. Phil. Fishing
Gear, G.R. No. 136448)
Liable for fruits from the time property
should have been delivered without need of
demand; also include obligation to preserve
the promised property with the diligence of
a good father of a family pending delivery.
(CIVIL CODE, Art. 1786 [1] and [2])
c.
Industry
An industrial partner is one who contributes
his industry, labor, or services to the
partnership. He is considered the owner of
his services, which is contribution to the
common fund. (Limuco v. Calina, [C.A.] No.
10099-R)
May concur with any or both of the first two
or in the absence of any one or both of
them; manual and/or intellectual in
When
Immovables
or
Real
Rights
Contributed
If immovables are not contributed, even if the capital
is at least PhP3,000, failure to comply with the
requirement of appearance in public instrument and
SEC Registration will not affect the liability of the
partnership and the members thereof to third
persons. (CIVIL CODE, Art. 1772, [2])
When immovable property are contributed, (1) the
Articles of Partnership must appear in a public
instrument, and (2) there must be an inventory of the
property contributed signed by the parties and
attached to the public instrument. (CIVIL CODE,
Arts.1771 and 1773)
EFFECT OF ABSENCE OF REQUIREMENTS
UNDER ARTICLES 1771 AND 1773
Not in Public Instrument, No
Inventory
Void
In a Public Instrument, No Inventory
Void
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Not in Public Instrument, With
Inventory
Void
In a Public Instrument, With Inventory
Valid
NOTE: Partnerships void under Art.1773, in relation
to Art. 1771, may still be considered either de facto
or estoppel partnerships vis-à-vis third persons; may
even be treated as an ordinary contract from which
rights and obligations may validly arise, although not
exactly a partnership under the Civil Code. (Torres
v. CA, G.R. No. 134559)
Failure to prepare an inventory of the immovable
property contributed, in spite of Art. 1773 declaring
the partnership void would not render the
partnership void when:
No third party is involved (since Art. 1773
was intended for the protection of 3rd
parties);
Partners have made a claim on the
partnership agreement.
3.
Consequence of Failure to Contribute
Each partner has the obligation:
a. To contribute at the beginning of the
partnership or at the stipulated time the
money, property or industry which he may
have promised to contribute. (CIVIL CODE,
Art. 1786)
b. To answer for eviction in case the
partnership is deprived of the determinate
property contributed (CIVIL CODE, Art. 1786)
c. To answer to the partnership for the fruits
of the property the contribution of which he
delayed, from the date they should have
been contributed up to the time of actual
delivery (CIVIL CODE, Art. 1786)
d. To preserve said property with the diligence
of a good father of a family pending delivery
to partnership (CIVIL CODE, Art. 1163)
e. To indemnify partnership for any damage
caused to it by the retention of the same or
by the delay in its contribution (CIVIL CODE,
Arts.1788, 1170)
In the event that there is a failure to contribute
property promised:
Partners become ipso jure a debtor of the
partnership even in the absence of any
demand (CIVIL CODE, Art. 1169[1])
Remedy of the other partner is not
rescission but specific performance with
damages from defaulting partner (CIVIL
CODE, Art. 1788)
The partner shall be liable as a debtor of the
partnership in two instances:
when he fails to contribute money, on the
date he undertook to do so;
when he converts partnership funds for his
own use, on the date he does so.
In both instances, the partner becomes a
partnership debtor and is liable for interest and
damages. (CIVIL CODE, Art. 1788)
A partner who promises to contribute to partnership
becomes a promissory debtor of the partnership,
including liability for interests and damages caused
for failure to pay, and which amounts may be
deducted upon dissolution of the partnership from
his share in the profits and net assets. (Rojas v.
Maglana, G.R. No. 30616)
4.
Obligations with respect to Contribution to
Partnership Capital
Partners must contribute equal shares to the capital
of the partnership unless there is stipulation to
contrary. (CIVIL CODE, Art. 1790)
Capitalist partners must contribute additional capital
in case of imminent loss to the business of the
partnership and there is no stipulation otherwise;
refusal to do so shall create an obligation on his part
to sell his interest to the other partners. (CIVIL CODE,
Art. 1791)
a.
Requisites:
i) There is an imminent loss of the
business of the partnership
ii) The majority of the capitalist partners
are of the opinion that an additional
contribution to the common fund would
save the business
iii) The
capitalist
partner
refuses
deliberately to contribute (not due to
financial inability)
iv) There is no agreement to the contrary
(De Leon, 2019)
b.
Fiduciary Duty
A partnership is a fiduciary relation—one
entered into and to be maintained on the
basis of trust and confidence. With that, a
partner must observe the utmost good faith,
fairness, and integrity in his dealings with
the others:
i) He cannot directly or indirectly use
partnership assets for his own benefit;
ii) He cannot carry on a business of the
partnership for his private advantage;
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iii) He cannot, in conducting the business
of the partnership, take any profit
clandestinely;
iv) He cannot obtain for himself that which
he should have obtained for the
partnership
(e.g.,
business
opportunity)
v) He cannot carry on another business in
competition with the partnership; and
vi) He cannot avail himself of knowledge
or information, which may be properly
regarded as the property of the
partnership.
A. Prohibition
Business
1.
2.
to
Engage
in
Competitive
If an industrial partner engages in any
business without the consent of the
partnership:
i. He can be excluded from the partnership;
or
ii. The capitalist partners can avail of the
benefit he obtained from the business.
NOTE: The capitalist partners have the right to
file an action for damages against the industrial
partner in either case. (CIVIL CODE, Art. 1789)
If the capitalist partner engages in a
business that competes with the business of
the partnership
i. He may be required to bring to the common
fund the profits he derived from the
competing business; and
ii. He shall personally bear the losses. (CIVIL
CODE, Art. 1808)
iii. He may be ousted form the partnership,
especially if there was a warning. (De Leon,
2019)
INDUSTRIAL
PARTNER
Cannot engage in any
business
unless
partnership expressly
permits him to do so.
(CIVIL CODE, Art. 1789)
CAPITALIST
PARTNER
Cannot engage in
business (with same
kind of business with
the partnership) for his
own account, unless
there is a stipulation to
the contrary. (CIVIL
CODE, Art. 1808)
As a rule, an industrial partner may not engage in
any business during the existence of the
partnership, unless the capitalist partners expressly
permit him to do so (CIVIL CODE, Art. 1789). The
reason is that his industry must be given only to the
partnership. This is true even if the business is not
competitive. (Albano Civil Law Reviewer, p. 822,
2008 ed.)
When a partner engages in a separate business
enterprise that is competitive with that of the
partnership, the other partner’s withdrawal becomes
thereby justified and for which the latter cannot be
held for damages. (Rojas v. Maglana, G.R. No
30616)
B. Managing Partner who Collects Debt from
Third Party
Obligation of a managing partner who collects
debt from person who owed him and the
partnership (CIVIL CODE, Art. 1792):
i. Apply sum collected to the two credits (i.e.,
amount owed to the managing partner in
his personal capacity and amount owed to
the partnership) in proportion to their
amounts.
ii. If he received it for the account of
partnership, the whole sum shall be applied
to partnership credit.
Requisites:
1. There exist at least two debts, one where the
collecting partner is creditor and the other,
where the partnership is the creditor
2. Both debts are demandable
3. The partner who collects is authorized to
manage and actually manages the partnership
C. Partner who Receives Share of Partnership
Credit
Obligation of partner who receives share of
partnership credit from a debtor who becomes
insolvent:
Bring to the partnership capital what he has received
even though he may have given receipt for his share
only (CIVIL CODE, Art. 1793)
Requisites:
1. A partner has received, in whole or in part, his
share of the partnership credit
2. The other partners have not collected their
shares
3. The partnership debtor has become insolvent
BEARING THE RISK OF LOSS OF THINGS
CONTRIBUTED (Art. 1795)
Specific
and Risk is borne by
determinate
things partner
which are not fungible
where only the use is
contributed
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Specific
and
determinate things the
ownership of which is
transferred to the
partnership
Fungible
things
(consumable)
Risk is borne
partnership
by
Risk is borne
partnership
by
Things contributed to
be sold
Risk is borne
partnership
by
Things brought and
appraised
in
the
inventory
Specific
and
determinate
things
which are not fungible
where only the use is
contributed
Risk is borne
partnership
by
NOTE: A stipulation which excludes one or more
partners from any share in the profits and losses is
void. (CIVIL CODE, Art. 1799)
Risk is
partner
by
5.
Other Rights and Obligations of Partners
a. Right to associate another person with him
in his share without consent of other
partners (sub-partnership) (CIVIL CODE, Art.
1804)
b. Right to inspect and copy partnership
books at any reasonable hour (CIVIL CODE,
Art. 1805)
c. Right to a formal account as to partnership
affairs (even during existence of
partnership): (CIVIL CODE, Art. 1809)
i) If he is wrongfully excluded from
partnership business or possession of
its property by his copartners
ii) If right exists under the terms of any
agreement
iii) As provided by Art. 1807
iv) Whenever other circumstances render
it just and reasonable
d. Duty to render on demand true and full
information affecting partnership to any
partner or legal representative of any
deceased partner or of any partner under
legal disability (CIVIL CODE, Art. 1806)
e. Duty to account to the partnership as
fiduciary (CIVIL CODE, Art. 1807)
6.
Responsibility of Partnership to Partners
a. To refund the amounts disbursed by
partner in behalf of the partnership plus
corresponding interest from the time the
expenses are made (loans and advances
made by a partner to the partnership aside
from capital contribution)
b. To answer for obligations partner may have
contracted in good faith in the interest of the
partnership business
c. To answer for risks in consequence of its
management
c.
borne
their
property
after all the
partnership
assets
have
been
exhausted.
(CIVIL CODE, Art.
1816)
Rules for Distribution of Profits and
Losses (CIVIL CODE, Art. 1797)
PROFITS
LOSSES
With
agreement
According
agreement
to
Without
agreement
Share
of
capitalist
partner is in
proportion
to
his
capital
contribution
Share
of
industrial
partner - as
may be just and
equitable under
the
circumstances
According
agreement
to
If sharing of
profits
is
stipulated
apply to sharing
of losses
If
no
profit
sharing
stipulated
losses shall be
borne according
to
capital
contribution
Purely industrial
partner
not
liable for losses.
NOTE: This is
only
with
respect to the
obligation of the
partners among
each
other.
Insofar as third
parties
are
concerned, all
partners,
including
industrial ones,
shall be liable
pro rata with all
3. OBLIGATIONS OF PARTNERS TO
THIRD PERSONS
Every partnership shall operate under a firm name.
Persons who include their names in the partnership
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name even if they are not members shall be liable
as a partner. (CIVIL CODE, Art. 1815)
All partners shall be liable for contractual obligations
of the partnership with their property, after all
partnership assets have been exhausted:
1. Pro rata
2. Subsidiary (CIVIL CODE, Art. 1816)
Admission or representation made by any partner
concerning partnership affairs within scope of his
authority is evidence against the partnership. (CIVIL
CODE, Art. 1820)
General rule: Notice to partner of any matter
relating to partnership affairs operate as notice to
partnership.
Exception: Except in case of fraud.
Cases of Knowledge of a Partner
Knowledge of partner acting in the
particular matter, acquired while a partner
Knowledge of the partner acting in the
particular matter then present to his mind
Knowledge of any other partner who
reasonably could and should have
communicated it to the acting partner (CIVIL
CODE, Art.1821)
Partners and the partnership are solidarily liable to
third persons for the partner's tort or breach of trust.
(CIVIL CODE, Art. 1824)
Liability of incoming partner is limited to:
1. For partnership obligations arising before his
admission - his share in the partnership
property
2. For partnership obligations arising upon his
admission - his share in the partnership
property and his separate property (CIVIL CODE,
Art. 1826)
Creditors of partnership preferred in partnership
property & may attach partner's share in partnership
assets. (CIVIL CODE, Art. 1827)
Power of Partner as an Agent of the
Partnership (Art. 1818)
ACTS
EFFECT
Acts for carrying on in Every partner is an
the usual way the agent
and
may
business
of
the execute acts with
partnership
binding effect
Except: when he has
no authority and 3rd
person has knowledge
of lack of authority
Act which is not
apparently for the
carrying of business in
the usual way
Acts of strict dominion
or ownership:
Assign
partnership
property in trust for
creditors
Dispose of good-will
of business
Do an act which would
make it impossible to
carry
on
ordinary
business
of
partnership
Confess a judgment
Enter
into
compromise
concerning
a
partnership claim or
liability
Submit
partnership
claim or liability to
arbitration
Renounce claim of
partnership
Acts in contravention
of a restriction on
authority
Does
not
bind
partnership
unless
authorized by other
partners
Partnership is not
liable to 3rd persons
having
actual
or
presumptive
knowledge of the
restrictions
Admission or representation made by any partner
concerning partnership affairs within scope of his
authority is evidence against the partnership. (CIVIL
CODE, Art. 1820)
Effects of Conveyance of Real Property
Belonging to Partnership (CIVIL CODE, Art. 1819)
TITLE
EFFECT
Title in partnership Conveyance passes
name, Conveyance in title but partnership
can recover if:
partnership name
Conveyance was not
in the usual way of
business, or
Buyer had knowledge
of lack of authority
In no case may the
partnership recover if
title was passed to a
third person as a
transferee in good
faith. (De Leon, 2019)
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Title in partnership
name, Conveyance in
partner's name
Title in name of 1 or
more
partners,
Conveyance in name if
partner/partners
in
whose
name
title
stands
Title in name of
1/more/all partners or
3rd person in trust for
partnership,
Conveyance executed
in partnership name if
in name of partners
Title in name of all
partners, Conveyance
in name of all partners
Conveyance does not
pass title but only
equitable
interest,
unless:
Conveyance was not
in the usual way of
business, or
Buyer had knowledge
of lack of authority
Conveyance passes
title but partnership
can recover if:
Conveyance was not
in the usual way of
business, or
Buyer had knowledge
of lack of authority
Although the parcel of
land really belongs to
the partnership, it is
registered in the name
of a partner and the
record
does
not
disclose the right of
the partnership. In
such a case, the title is
conveyed
if
the
partner sold the land in
his own name to a
third person, to the
same effect as in
paragraph 1. (De
Leon, 2019)
Conveyance will only
pass equitable interest
Conveyance will pass
title
C. DISSOLUTION AND WINDING UP
Dissolution is the change in the relation of the
partners caused by any partner ceasing to be
associated in the carrying on of the business;
partnership is not terminated but continues until the
winding up of partnership affairs is completed. (CIVIL
CODE, Art. 1828)
Winding up is the process of settling the business
or partnership affairs after dissolution, which
includes the paying of previous obligations,
collecting of assets previously demandable. (Idos v.
Court of Appeals, G.R. No. 110782)
Termination is that point when all partnership
affairs are completely wound up and finally settled.
It signifies the end of the partnership life. (Idos v.
Court of Appeals, G.R. No. 110782)
1. CAUSES OF DISSOLUTION (CIVIL
CODE, Art. 1830)
Causes of Dissolution
i. Without violation of the agreement between the
partners
a. By the termination of the definite term/
particular undertaking specified in the
agreement
b. By the express will of any partner, who
must act in good faith, when no definite
term or particular undertaking is specified
c. By the express will of all the partners who
have not assigned their interests to be
charged for their separate debts, either
before or after the termination of any
specified term or particular undertaking
d. By the bona fide expulsion of any partner
from the business in accordance with
power conferred by the agreement
ii. In contravention of the agreement between the
partners, where the circumstances do not
permit a dissolution under any other provision
of Article 1830, by the express will of any
partner at any time
iii. By any event which makes it unlawful for
business to be carried on/for the members to
carry it on for the partnership
iv. Loss of specific thing promised by partner
before its delivery
v. Death of any partner
vi. Insolvency of a partner/partnership
vii. Civil interdiction of any partner
viii. Decree of court under Art. 1831.
If a partnership has no fixed term, then it is a
partnership at will and can be dissolved by the
will of any partner. However, such partner must be
in good faith, otherwise, he will be liable for
damages. Among partners, mutual agency arises
and the doctrine of delectus personae allows them
to have the power, but not necessarily the right, to
dissolve the partnership (Ortega v. Court of
Appeals, G.R. 109248).
Grounds for dissolution by decree of court
(CIVIL CODE, Art. 1831):
i. Partner declared insane in any judicial
proceeding or shown to be of unsound mind
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ii.
iii.
iv.
v.
vi.
vii.
Incapacity of partner to perform his part of the
partnership contract
Partner guilty of conduct prejudicial to business
of partnership
Willful or persistent breach of partnership
agreement or conduct which makes it
reasonably impracticable to carry on
partnership with him
Business can only be carried on at a loss
Other circumstances which render dissolution
equitable
Upon application by purchaser of partner's
interest:
a. After
termination
of
specified
term/particular undertaking
b. Anytime if partnership at will when interest
was assigned/charging order issued
2. EFFECTS OF DISSOLUTION
a. Authority of Partner to Bind
Partnership
General rule: Authority of partners to bind
partnership is terminated. (CIVIL CODE, Art. 1832)
Exceptions:
1. To wind up partnership affairs
2. Complete transactions not finished (CIVIL CODE,
Art. 1834)
b. Qualifications
1.
With respect to Partners (CIVIL CODE, Art.
1833)
Authority of partners to bind partnership by new
contract is immediately terminated when
dissolution is not due to act, death, or
insolvency (ADI) of a partner.
If due to ADI, partners are liable as if
partnership not dissolved, when the following
concur:
a. If cause is act of partner, acting partner
must have knowledge of such dissolution;
and
b. If cause is death or insolvency, acting
partner must have knowledge/ notice.
2.
With respect to Persons not Partners (CIVIL
CODE, Art. 1834)
Partner continues to bind partnership even after
dissolution in following cases:
a. Transactions in connection to winding up
partnership affairs/completing unfinished
transactions
b. Transactions which would bind partnership
if not dissolved, when the other party:
CIVIL LAW (AND PRACTICAL EXERCISES)
Situation 1
(1) Had extended credit to partnership
prior to dissolution; and
(2) Had no knowledge/notice of
dissolution
Situation 2
(1) Did
not
extend
credit
to
partnership;
(2) Had known partnership prior to
dissolution; and
(3) Had no knowledge/notice of
dissolution/fact of dissolution not
advertised in a newspaper of
general circulation in the place
where partnership is regularly
carried on
c. Post Dissolution (CIVIL CODE,
Art. 1834)
Partner cannot bind the partnership anymore
after dissolution:
i. Where dissolution is due to unlawfulness to
carry on with business (except: winding up of
partnership affairs)
ii. Where partner has become insolvent
iii. Where partner unauthorized to wind up
partnership affairs, except by transaction with
one who:
Situation 1
i) Had extended credit to partnership
prior to dissolution, and
ii) Had
no
knowledge/notice
of
dissolution; or
Situation 2
i) Did not extend credit to partnership
prior to dissolution
ii) Had known partnership prior to
dissolution
iii) Had
no
knowledge/notice
of
dissolution/fact of dissolution not
advertised in a newspaper of general
circulation in the place where
partnership is regularly carried on
3. RIGHTS OF PARTNERS UPON
DISSOLUTION
General rule: Dissolution does not discharge
existing liability of partner
Exceptions: Except by agreement between:
1. The partner and himself
2. The person/partnership continuing the business
3. Partnership creditors (CIVIL CODE, Art. 1835)
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CIVIL LAW (AND PRACTICAL EXERCISES)
a. Rights of Partner where
Dissolution
not
in
Contravention of Agreement
(CIVIL CODE, Art. 1837)
1.
2.
Apply partnership property to discharge
liabilities of partnership
Apply surplus, if any, to pay in cash the net
amount owed to partners
b. Rights of Partner where
Dissolution in Contravention of
Agreement
(CIVIL CODE, Art. 1837)
A. Partner who did not cause dissolution
wrongfully
i. Apply partnership property to discharge
liabilities of partnership
ii. Apply surplus, if any to pay in cash the net
amount owed to partners
iii. Indemnity for damages caused by partner
guilty of wrongful dissolution
iv. Continue business in same name during
agreed term
v. Possess partnership property if business is
continued
B. Partner who wrongly caused dissolution
i. If business not continued by others
a. Apply
partnership
property
to
discharge liabilities of partnership
b. Receive in cash his share of surplus
less damages caused by his wrongful
dissolution
ii. If business continued by others
a. Have the value of his interest at time of
dissolution ascertained and paid in
cash/secured by bond
b. Be released from all existing/future
partnership liabilities
d. Settlement
of
between Partners
Assets of the partnership
1. Partnership property (including goodwill)
2. Contributions of the partners (CIVIL CODE, Art.
1839 [1])
Order of Application of Assets
1. Partnership creditors
2. Partners as creditors
3. Partners as investors—return of capital
contribution
4. Partners as investors—share of profits if any
(CIVIL CODE, Art. 1839 [2])
The partners will contribute the amount necessary
to satisfy the liabilities based on the rules for
distribution of profits and losses in Art. 1797 (CIVIL
CODE, Art. 1839 [4]). Even the individual property of
a deceased partner shall be liable for such
contributions (CIVIL CODE, Art. 1839 [7]).
4. WHEN BUSINESS OF DISSOLVED
PARTNERSHIP IS CONTINUED
Effects:
1. Creditors of old partnership are also creditors of
the new partnership, which continues the
business of the old one w/o liquidation of the
partnership affairs (CIVIL CODE, Art.1840)
2. Creditors have an equitable lien on the
consideration paid to the retiring /deceased
partner
by
the
purchaser
when
retiring/deceased partner sold his interest w/o
final settlement with creditors (CIVIL CODE, Art.
1840)
The retired or deceased partner or his legal
representatives may
a. Have the value of his interest ascertained
as of the date of dissolution
b. May receive as ordinary creditor the value
of his share in the dissolved partnership
with interest or profits attributable to use of
his right, at his option (CIVIL CODE, Art.
1841)
c. Rights of Injured Partner where
Partnership
Contract
is
Rescinded on Ground of
Fraud/Misrepresentation
by
C
,
Art.
1838)
IVIL
ODE
One Party (C
1.
2.
3.
Right to lien on surplus of partnership property
after satisfying partnership liabilities
Right to subrogation in place of creditors after
payment of partnership liabilities
Right of indemnification by guilty partner
against all partnership debts & liabilities
Accounts
5. PERSONS AUTHORIZED TO WIND
UP
1.
2.
3.
Partners designated by the agreement
In absence of agreement, all partners who have
not wrongfully dissolved the partnership
Legal representative of last surviving partner
(CIVIL CODE, Art. 1836)
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Unless otherwise agreed, the partners who have not
wrongfully dissolved the partnership or the legal
representative of the last surviving partner, not
insolvent, has the right to wind up the partnership
affairs, provided, however, that any partner, his legal
representative or his assignee, upon cause shown,
may obtain winding up by the court (Primelink
Properties and Development Corp. v. LazatinMagat, G.R. No. 167379).
A partner’s share cannot be returned without first
dissolving and liquidating the business for the
partnership’s outside creditors have preference over
the enterprise’s assets. The firm’s property cannot
be diminished to their prejudice. (Magdusa v.
Albaran, G.R. No. L-17526)
Due to its separate juridical personality from the
individual partners, it is thus the partnership –
having been the recipient of the capital contributions
– which must refund the equity of retiring partners.
Such duty does not pertain to partners who
managed the business. The amount to be refunded
consistent with the partnership being a separate and
distinct entity, must necessarily be limited to the
firm’s total resources. It can only pay out what it has
for its total assets. But this is subject to the priority
enjoyed by outside creditors. After all the (said)
creditors have been paid, whatever is left of the
partnership assets becomes available for the
payment of partners’ shares. (Villareal v. Ramirez,
G.R. No. 144214)
D. LIMITED PARTNERSHIP
1. CHARACTERISTICS OF LIMITED
PARTNERSHIP
a.
b.
c.
d.
e.
Formed by compliance with statutory
requirements (CIVIL CODE, Art. 1843)
One or more general partners control the
business (CIVIL CODE, Art. 1843)
One or more general partners and one or more
limited partners. (CIVIL CODE, Art. 1843) Limited
partners (i) contribute cash or other property,
but not services (CIVIL CODE, Art. 1845); (ii)
share in the profits but do not participate in the
management of the business (CIVIL CODE, Art.
1848); and (iii) are not personally liable for
partnership obligations beyond their capital
contributions
May ask for the return of their capital
contributions under conditions prescribed by
law (CIVIL CODE, Art. 1857)
Partnership debts are paid out of common fund
and the individual properties of general partners
(CIVIL CODE, Art. 1857)
CIVIL LAW (AND PRACTICAL EXERCISES)
2. GENERAL PARTNERS V. LIMITED
PARTNERS
GENERAL
Personally liable for
partnership
obligations
(CIVIL
CODE, Art. 1816)
When
manner
of
management
not
agreed upon, all have
an equal right in the
management of the
business (CIVIL CODE,
Art. 1803)
Contribute
cash,
property or industry
(CIVIL CODE, Art. 1767)
Proper
party
to
proceedings
by/
against
partnership
(CIVIL CODE, Art. 1866)
Interest not assignable
w/o consent of other
partners (CIVIL CODE,
Art. 1804)
Name may appear in
firm name (CIVIL CODE,
Art. 1815)
Prohibition
against
engaging in business
(CIVIL CODE, Art. 1789,
Art. 1808)
Retirement,
death,
insolvency,
insanity
dissolves partnership
(CIVIL CODE, Art. 1830)
LIMITED
Liability extends only
to
his
capital
contributions
(CIVIL
CODE, Art. 1843)
No participation in
management
(CIVIL
CODE, Art. 1848)
Contribute cash or
property only, not
industry (CIVIL CODE,
Art. 1845)
Not proper party to
proceedings
by/
against
partnership
(CIVIL CODE, Art. 1866)
Interest
is
freely
assignable
(CIVIL
CODE, Art. 1859)
Name
must
not
appear in firm name
(CIVIL CODE, Art. 1846)
No prohibition against
engaging in business
Does not have same
effect;
rights
transferred to legal
representative (CIVIL
CODE, Art. 1861)
3. REQUIREMENTS FOR FORMATION
OF LIMITED PARTNERSHIP
Certificate/Articles of Limited Partnership, which
must be signed and sworn by the parties, must state
the following matters:
a. Name of partnership plus the word "Limited" (or
“Ltd.” – SEC Memorandum Circular 13-2019)
b. Character of business
c. Location of principal place of business
d. Name/place of residence of members
e. Term for partnership is to exist
f. Amount of cash/value of property contributed by
limited partners
g. Additional contributions, if any, to be made by
limited partner
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h.
i.
Time, if agreed upon, to return contribution of
limited partner
Sharing of profits/other compensation (CIVIL
CODE, Art. 1844)
CIVIL LAW (AND PRACTICAL EXERCISES)
ii.
iii.
iv.
NOTE: If given, the following must also appear in the
Certificate/Articles of Limited Partnership:
a. Right of limited partner to substitute an
assignee as contributor and the terms of
substitution
b. Right of partners to admit additional limited
partners
c. Right of one or more limited partners to priority
over other limited partners as to contributions
and compensation
d. Right of remaining partners to continue the
business on death, retirement, civil interdiction,
insanity, or insolvency of a general partner
e. Right of limited partner to demand and receive
property other than cash in return for his
contribution
Certificate must be filed with the SEC.
NOTE: To validly form a limited partnership, all that
is required is substantial compliance in good faith
with all the requirements under Art. 1844 as
enumerated above. If no substantial compliance,
then the firm becomes a general partnership as far
as third persons are concerned (but as amongst the
partners, still limited) (Jo Chung Cang v. Pacific
Commercial Co., 45 Phil 142)
4. CONSENT/RATIFICATION OF ALL
LIMITED PARTNERS NEEDED
i.
ii.
iii.
iv.
v.
vi.
vii.
Any act in contravention of the certificate
Any act which would make it impossible to
carry on the ordinary business of the
partnership
Confess judgment against partnership
Possess partnership property/assign rights
in specific partnership property other than
for partnership purposes
Admit person as general partner
Admit person as limited partner - unless
authorized in certificate
Continue business with partnership
property on death, retirement, civil
interdiction, insanity, or insolvency of gen
partner unless authorized in certificate
(CIVIL CODE, Art.1850)
5. RIGHTS OF LIMITED PARTNERS
i.
v.
vi.
vii.
Right to inspect/copy books at reasonable
hour
Right to have on demand true and full info
of all things affecting partnership
Right to have formal account of partnership
affairs whenever circumstances render it
just and reasonable
Right to ask for dissolution and winding up
by decree of court
Right to receive share of profits/other
compensation by way of income
Right to receive return of contributions
provided the partnership assets are in
excess of all its liabilities (CIVIL CODE, Art.
1851)
6. REQUISITES FOR RETURN OF
CONTRIBUTION OF LIMITED
PARTNER
i.
ii.
All liabilities of partnership have been
paid/if not yet paid, at least sufficient to
cover them
Consent of all members has been obtained
Exception: The return of the contribution
may be rightfully demanded.
iii. Certificate is cancelled/amended as to set
forth withdrawal /reduction of contribution
(CIVIL CODE, Art. 1857)
7. LIABILITIES OF A LIMITED
PARTNER
a.
b.
To the Partnership
1. For the difference between his
contribution as actually made and
that stated in the certificate as
having been made, and
2. For any unpaid contribution which
he agreed in the certificate to
make in the future time (CIVIL
CODE, Art. 1858)
As a Trustee for the Partnership
1. For the specific property stated in
the certificate as contributed by
him but which he had not
contributed;
2. For the specific property of the
partnership which had been
wrongfully returned to him; and
3. Money or other property wrongfully
paid or
conveyed to him on
account of his contribution. (CIVIL
CODE, Art. 1858)
Right to have partnership books kept at
principal place of business
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CIVIL LAW (AND PRACTICAL EXERCISES)
j.
8. DISSOLUTION OF LIMITED
PARTNERSHIP
Priority in Distribution of Assets
a. Those due to creditors, including
limited partners
b. Those due to limited partners in
respect
of
their
share
in
profits/compensation
c. Those due to limited partners of return
of capital contributed
d. Those due to general partner other
than capital and profits
e. Those due to general partner in respect
to profits
f. Those due to general partner for return
of capital contributed (CIVIL CODE, Art.
1863)
9. AMENDMENT OF CERTIFICATE OF
PARTNERSHIP
Certificate Must Be Cancelled When:
a. Partnership is dissolved
b. There cease to be limited Partners (
CIVIL CODE, Arts.1864 & 1865)
Certificate of Partnership Must Be
Amended When:
a. There is a change in the name of the
partnership or in the amount or
character of the contribution of any
limited partner;
b. A person is substituted as a limited
partner;
c. An additional limited partner is
admitted;
d. A person is admitted as a general
partner;
e. A general partner retires, dies,
becomes insolvent or insane, or is
sentenced to civil interdiction and the
business is continued under Article
1860;
f. There is a change in the character of
the business of the partnership;
g. There is a false or erroneous statement
in the certificate;
h. There is a change in the time as stated
in the certificate for the dissolution of
the partnership or for the return of a
contribution;
i. A time is fixed for the dissolution of the
partnership, or the return of a
contribution, no time having been
specified in the certificate, or
The members desire to make a change
in any other statement in the certificate
in order that it shall accurately
represent the agreement among them.
.(CIVIL CODE, Art. 1864)
The writing to amend a certificate:
a. Shall conform to the requirements of Article
1844 as far as necessary to set forth clearly
the change in the certificate which it is
desired to make; and
b. Must be signed and sworn to by all the
members including the new members if
some are added; in case of substitution, the
assigning limited partner must also signed
by the assigning limited partner.
The cancellation or amendment must be recorded in
the SEC.( CIVIL CODE, Art.1864)
NOTE: Any person who suffers loss by reliance on
false statement in certificate may hold liable for
damages any party to the certificate who knew the
statement to be false at the time the latter signed the
certificate or came to know such falsity
subsequently but within sufficient time before
reliance to enable such party to cancel or amend the
certificate or file the proper petition for such purpose
(under Art. 1865). (CIVIL CODE, Art. 1847; Walraven
v. Ramsay, 55 N.W.d 853)
A general partner’s DIIC (Death, Insolvency,
Insanity, or Civil interdiction) dissolves the
partnership unless the business is continued by the
surviving general partners under a right stated in the
certificate or with their common (i.e., all) consent
(CIVIL CODE, Art. 1860). Still, even if allowed under
the certificate or consented to by all, there must be
an amendment further to Arts. 1864 and 1865.
Otherwise, limited partners will not be able to avail
of the protection of the law as regards liability. The
partnership will be considered general. (Lowe v.
Arizona Power & Light Co., 427 P. d. 366)
A limited partner shall not become liable as a
general partner, unless in addition to the exercise of
his rights and powers as a limited one, he takes part
in the control (and management) of the business
(CIVIL CODE, Art. 1848; Holzman v. Escamilla, 195
P. d. 833, 1948)
A person may be general and limited at the same
time provided it is stated in the certificate. He shall
have all the powers, rights, and restrictions of a
general partner; but with respect to his capital
contribution, his right against the other members of
the firm would be that of a limited partner (Art. 1853).
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CIVIL LAW (AND PRACTICAL EXERCISES)
General rule: A limited partner may also loan
money to and transact other business with the firm.
Exceptions: Except that he cannot:
1. Receive or hold as collateral any
partnership property; or
2. Receive from a general partner or from the
firm any payment, conveyance, release if at
that time assets of the firm are not sufficient
to discharge liabilities to outside creditors.
Any violation would be fraud on such creditors (CIVIL
CODE, Art. 1854).
Liability of a Limited Partner Whose Surname
Appears in the Partnership Name
General Rule: A limited partner whose surname
appears in the partnership name is liable as a
general partner to the partnership creditors who
extended credit without actual knowledge that he is
not a general partner.
Exceptions:
1. If the surname is also the surname of a
general partner; or
2. If prior to the time the partner became a
limited partner, the business has been
carried under such name. (CIVIL CODE, Art.
1846)
-- end of topic --
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CIVIL LAW (AND PRACTICAL EXERCISES)
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VIII. AGENCY
TOPIC OUTLINE UNDER THE SYLLABUS
A. DEFINITION OF AGENCY
1. Characteristics
2. Essential Elements
B. NATURE, FORMS AND KINDS OF AGENCY
1. Nature of Relationship
2. Other Classifications
3. Forms of Agency
4. Kinds of Agency
5. How Agency is Revoked
C. OBLIGATIONS OF THE AGENT
1. General Obligations
2. Effects of Agent’s Acts to Principal’s
Liability
3. Appointment of Sub-Agent
4. Responsibility of Two (2) or More Agents
Appointed Simultaneously
5. Obligation Rules for Commission Agents
D. OBLIGATIONS OF THE PRINCIPAL
1. Obligations of the Principal to the Agent
2. Rules on Liability of Two (2) or more
Principals
3. Principal’s Liabilities for Expenses
4. Agency by Estoppel
5. Principal's Revocation of the Agency
6. Principal’s Liability for Damages despite
Revocation
E. MODES OF EXTINGUISHMENT
1. How Agency is Extinguished
2. Other Modes
3. Exceptions to Extinguishment by Death
CIVIL LAW (AND PRACTICAL EXERCISES)
A. DEFINITION OF AGENCY
By the Contract of Agency, a person binds himself
to render some service or to do something in
representation or on behalf of another, with the
consent or authority of the latter.
(CIVIL CODE, ART. 1868)
1. CHARACTERISTICS
a.
b.
c.
d.
e.
Consensual: perfected by mere
consent; (CIVIL CODE, Art. 1869, Art.
1870) The basis for agency is
representation; on principal’s part,
there must be an intention to appoint,
or such intention is naturally inferable
from words or actions; on part of the
agent, there must be an intent to
accept the appointment and act on it; in
the absence of either, there is no
agency. (Dominion Insurance Corp. v.
CA, 376 SCRA 239)
Nominate: it has its own name and the
rules provided in Title X, Book IV of the
Civil Code will find preferential
application against the general
provisions
on
Obligations
and
Contracts; it will be an agency whether
or not parties understood the exact
nature of the relation. (Doles v.
Angeles, G.R. No. 149353)
Preparatory: The object of agency is for
the agent to enter on behalf of the
principal and within the scope of his
authority into juridical acts with third
parties (Rallos v. Felix Go Chan &
Sons Realty Corp., G.R. No. L-24332)
Principal: it does not depend on
another contract for its existence and
validity; (Doles v. Angeles, G.R. No.
149353)
Unilateral/Bilateral
and
Primarily
Onerous:
1. Unilateral: if contract is gratuitous
or it creates obligations for only
one party (i.e., the agent) (Urban
Bank, Inc. v. Peña, G.R. No.
145817, 145822, 162562)
2. Bilateral: if contract is for
compensation or gives rise to
reciprocal rights and obligations
(Urban Bank, Inc. v. Peña, G.R.
No. 145817, 145822, 162562)
NOTE: Agency is presumed to be for compensation,
unless there is proof to the contrary. (CIVIL CODE,
Art. 1875)
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Basis: Representation
The acts of the agent on behalf of the principal within
the scope of his authority produce the same legal
and binding effects as if they were personally done
by the principal. (Litonjua, Jr. v. Eternit Corp., G.R.
No. 144805)
The distinguishing features of agency are its
representative character & its derivative authority.
(Rallos v. Felix Go Chan & Sons Realty Corp., Gr.
No. L-24332)
Purpose
Extend the personality of the principal through the
facility of the agent. (Litonjua, Jr. v. Eternit Corp.,
G.R. No. 144805)
Parties to the Contract of Agency
1. Principal
i. May be a natural or a juridical person
ii. Must be capacitated. (CIVIL CODE, Art.
1327)
General rule: If a person is capacitated to
act in his own right, he can act through an
agent.
NOTE: The agent is not liable where he
was ignorant of the principal’s incapacity.
(CIVIL CODE, Arts. 1897 & 1899 )
2. Agent
i. Like the principal, the agent may be either
a natural or juridical person, and must be
capacitated.
ii. One who is absolutely incapacitated (e.g.,
insane persons) cannot be an agent.
NOTE: From the time the agent acts or transacts the
business for which he has been employed in
representation of another, a third party is added to
the agency relationship – the party with whom the
business is transacted (De Leon, 2010).
2. ESSENTIAL ELEMENTS (CROW)
a.
b.
c.
d.
Consent of the parties to establish the
relationship;
Object or subject matter of the contract
is the execution of a juridical act in
relation to third persons;
Agent acts as a Representative and not
for himself; and
Agent acts Within the scope of his
authority. (Rallos v. Felix Go Chan &
Sons Realty Corp., Gr. No. L-24332)
CIVIL LAW (AND PRACTICAL EXERCISES)
B. NATURE, FORMS, AND KINDS OF
AGENCY
1. NATURE OF RELATIONSHIP
Since it is a contract, there must be a meeting of the
minds (i.e., consent) as to object and cause. (CIVIL
CODE, Art. 1868)
Exception to Contractual Nature
When the agency is created by operation of law
(See Part VIII on “Agency by Operation of Law”)
NOTE: An illegal termination of agency does not
justify reinstatement of the agent. The agency
cannot be compelled by the courts to be reinstated
because such relationship can only be given effect
with the consent of the principal (Orient Air Services
v. CA, G.R. No. 76931). At most, the principal may
be held liable for damages.
Acts that cannot be done through an agent
1. Personal Acts (making of a will; exercise of
right of suffrage; statements required to be
made under oath)
2. Criminal Acts or Acts Not Allowed by Law
(ownership of private agricultural lands by
aliens through an agent; persons prohibited to
acquire a property by reason of position or
relation to the person cannot do the same
through the mediation of another; participation
in the commission of a crime – a person cannot
escape punishment on the ground that he was
merely an agent; attending meetings of board of
directors/trustees of a corporation)
Nature of Relationship between Principal and
Agent
Fiduciary – based on trust & confidence
i. Agent is estopped from asserting an
interest adverse to his principal’s, whether
his own or that of an adverse party
(Severino v. Severino, G.R. No. 18058;
CIVIL CODE, Art. 1435)
ii. Agent must not use or disclose secret
information (CIVIL CODE, Art. 1889)
iii. Agent must give notice of material facts
(CIVIL CODE, Art. 1889)
NOTE: Theory of Imputed Knowledge
General Rule: Knowledge of the agent is imputed
to the principal even though the agent never
communicated it to his principal (Sunace
International Management Services, Inc. v. NLRC,
G.R. No. 161757)
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Exceptions:
1. Where the interests of the agent are adverse to
those of the principal;
2. The agent’s duty is not to disclose the
information, as where he is informed by way of
confidential information.
3. Agent acts in bad faith or where the person
claiming the benefit of the rule colludes with the
agent to defraud the principal (CIVIL CODE, Art.
1898)
Distinction between Agency and Guardianship
AGENCY
Agent represents a
capacitated person
Agent is appointed by
the principal and can
be removed by the
latter.
Agent is subject to the
directions of the
principal.
Agent can make the
principal personally
liable.
GUARDIANSHIP
A guardian represents
an incapacitated
person.
Guardian is appointed
by the court and stands
in loco parentis.
Guardian is not subject
to the directions of the
ward but must act for
the benefit of the latter
Guardian has no power
to impose personal
liability on the ward.
Distinction between Agency and Judicial
Administration
AGENCY
Agent is appointed by
the principal.
Agent represents the
principal.
Agent does not file a
bond.
Agent is controlled by
the principal through
the arrangement.
JUDICIAL
ADMINISTRATION
Judicial administrator is
appointed by the court.
Judicial administrator
not only represents the
court but also the heirs
and creditors of the
estate.
Judicial administrator
files a bond.
Judicial administrator’s
acts are subject to
specific orders from the
court.
Distinction between Agency and Lease
AGENCY
Agent is controlled by
the principal.
Agency may involve
things other than
property.
Agent can bind the
principal.
LEASE OF
PROPERTY
Lessee is not
controlled by the
lessor.
Lease of property
involves property.
Distinction between Agency to Sell and Sale
(Quiroga v. Parsons, G.R. No. 11491; Spouses
Viloria v. Continental Airlines, G.R. No. 188288)
AGENCY TO SELL
Agent receives the
goods as the principal’s
goods
Agent delivers the
proceeds of the sale
Agent can return the
object in case he is
unable to sell the same
to a third person
Agent in dealing with
the thing received is
bound to act according
to the instructions of his
principal
SALE
Buyer receives the
goods as owner
Buyer pays the price
Buyer, as a general
rule, cannot return the
object sold
Buyer can deal with the
thing as he pleases,
being the owner
Distinction between Agency and Contractor
(Shell v. Firemen’s Ins. Co., G.R. No. L-8169)
AGENT
Represents his
principal
Acts under the
principal’s control and
instruction
Principal is liable for
torts committed by the
agent within the scope
of his authority (Civil
Code, Art. 1897, Art.
1899)
INDEPENDENT
CONTRACTOR
Employed by the
employer
Acts according to his
own method
Employer not liable for
torts committed by the
independent
contractor. (Rule VIII,
Sec. 9(b), Omnibus
Implementing Rules of
the Labor Code of the
Philippines)
Distinction between Agency and Partnership
AGENCY
An agent must submit
to the principal’s right
to control
The agent assumes no
personal liability where
he acts within the
scope of his authority
(CIVIL CODE, Art. 1897)
The agent takes his
agreed share of profits
not as owner but as an
agreed measure of
compensation for his
services
PARTNERSHIP
A co-partner is not
subject to co-partner’s
right to control, unless
there is an agreement
to that effect
The partner binds not
only the firm members
but himself as well
The profits belong to all
the partners as
common proprietors in
agreed proportions
Lessee cannot bind the
lessor.
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2. OTHER CLASSIFICATIONS OF
AGENCY
a. As to Manner of Creation
1.
2.
Express – agent has been explicitly authorized
by the principal, either orally or in writing. (CIVIL
CODE, Art. 1869)
Implied – agency is implied from the acts of the
principal, from his silence, or lack of action, or
his failure to repudiate the agency knowing that
another person is acting on his behalf without
authority, or from the acts of the agent which
carry out the agency. (CIVIL CODE, Art. 1869)
b. As to Character
1.
2.
Gratuitous – agent receives no compensation
for his services (CIVIL CODE, Art. 1875)
Onerous – agent receives compensation for his
services (CIVIL CODE, Art. 1875)
c. As to Extent of Business of the
Principal
1.
2.
General – agency comprises all the business of
the principal (CIVIL CODE, Art. 1876)
Special – agency comprises one or more
specific transactions (CIVIL CODE, Art. 1876)
d. As to Authority Conferred
1.
2.
Couched in general terms – only acts of
administration (CIVIL CODE, Art. 1877)
Couched in specific terms – only the
performance of a specific act/s (CIVIL CODE, Art.
1876). If a special power of attorney is granted,
it will empower the agent to render acts of
dominion to the extent granted (CIVIL CODE, Art.
1878_
e. As to Nature and Effects
1.
2.
Ostensible or Representative – agent acts in
the name and representation of the principal
Simple or Commission – agent acts in his own
name but for the account of the principal. (De
Leon, 2019)
3. FORMS OF AGENCY
General Rule: Appointment of an agent may be oral
or written; no formal requirement (CIVIL CODE, Art.
1869)
Exception: When the law requires a specific form
(e.g., sale of a piece of land or any interest therein
CIVIL LAW (AND PRACTICAL EXERCISES)
through an agent – the agent’s authority must be in
writing, otherwise the sale is void) (CIVIL CODE, Art.
1874)
How Agency May be Constituted from Side of
Third Parties:
1. Agency is not presumed to exist – persons
dealing with an agent must ascertain not only
the fact of agency, but also the nature and
extent of his authority – he must require the
presentation of the power of attorney, or the
instructions as regards the agency. (Salvador v.
Rabaja , G.R. No. 199990)
2. Agency by Estoppel with Respect to Third
Parties – one who clothes another with
apparent authority as his agent, and holds him
out to the public as such, cannot be permitted
to deny the authority of such person to act as
his agent, to the prejudice of innocent third
parties dealing with such person in good faith
and in the following pre-assumptions or
deductions, which the law expressly directs to
be made from particular facts, are deemed
conclusive. (Macke v. Camps, G.R. No. 2962)
Compensation
General Rule: Agency is presumed to be for
compensation, unless there is proof to the contrary.
(CIVIL CODE, Art. 1875)
The agent does not have to prove that the agency is
for compensation.
Exception: The presumption that the agency is for
compensation is prima facie, meaning it may be
disproved by contrary evidence. (CIVIL CODE, Art.
1875)
Broker
Negotiates contracts relative to property in behalf of
others and for a compensation/fee. (Litonjua v.
Eternit Corp., G.R. No. 144805)
Difference from a Broker
A broker brings parties together and parties agree
to enter into a contract. A broker is not necessarily
an agent of either party, and negotiate contracts
relative to property in behalf of others and for a
compensation/fee. He is described merely as a “gobetween” between the parties in Litonjua v. Eternit
Corp. (G.R. No. 144805), and does not have
authority to bind the parties.
Thus, in Litonjua, the Court said that a real estate
broker (not an agent) is one who negotiates the sale
of real properties – his authority is to find a buyer (or
seller) who wishes to purchase (or sell) a property
on terms agreed upon by the parties. He has no
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authority to bind the parties in the contract of sale.
His authority is to find a buyer (or seller) and not to
sell the property. Thus, there is no need of a special
power of attorney under Art 1878.
When Broker Entitled to Compensation:
1. Whenever he brings to his principal a party who
is able and willing to take the property, and
enter into a valid contract upon the terms
named by the principal, although the particulars
may be arranged and the matter negotiated and
completed between the principal and the
purchaser directly (Macondray & Co., Inc. v.
Sellner, G.R. No. 9184)
2. A broker is not entitled to commission for
unsuccessful efforts. (Guardex Enterprises v.
NLRC, G.R. No. 66541)
3. The broker should be paid his commission
where he is the efficient procuring cause in
bringing the sale. (Prats v. CA, G.R. No. L39822; Manotok Brothers v. CA, G.R. No.
94753)
CIVIL LAW (AND PRACTICAL EXERCISES)
Requisites for Principal to be bound by act of
Agent (CIVIL CODE, Art. 1897)
1. The agent must act on behalf of the principal
2. The agent must act within the scope of his
authority
When Principal is not bound by act of Agent
General Rule: The agent acts without or beyond the
scope of his authority in the principal’s name (CIVIL
CODE, Art. 1897, 1910, Art. 1403 (1))
Exceptions:
1. So far as third persons are concerned, an act is
deemed to be within the scope of the agent's
authority, if such act is within the terms of the
power of attorney, as written, even if the agent
has in fact exceeded the limits of his authority
according to an understanding between the
principal and the agent; (CIVIL CODE, Art. 1900)
2. Where the principal has ratified the acts of the
agent, expressly or impliedly (CIVIL CODE, Art.
1910)
Efficient Procuring Cause
When there is a close proximate and causal
connection between the efforts and labor of the
agent and the principal’s sale of property. (Manotok
Brothers v. CA, G.R. No. 94753)
If an agent acts in his own name, he (and not the
principal) is the one bound to the third person. The
principal would not have a right of action in such
case, unless the transaction involves things
belonging to him (CIVIL CODE, Art. 1883)
Q: Will a broker be paid if the transaction was
effected after the expiration of his authority?
NOTE: The agent is not deemed to have exceeded
his authority should he perform the agency in a
manner more advantageous to the principal than
that indicated by him, since he is authorized to do
such acts as may be conducive to the
accomplishment of the purpose of the agency. (CIVIL
CODE, Art. 1882)
A: The broker should be paid his commission where
he is the efficient procuring cause in bringing the
sale. He is the efficient procuring cause when there
is a close proximate and causal connection between
the efforts and labor of the agent and the principal’s
sale of property. (Manotok Brothers v. CA, G.R. No.
94753)
NOTE: “Procuring cause” refers to a cause
originating a series of events which, without break in
their continuity, resulting in the accomplishment of
the prime objective of the broker’s employment, i.e.
to produce a purchaser ready, willing, and able to
buy on the owner’s terms. To be regarded as the
“procuring cause” to be entitled to a commission, a
broker’s efforts must have been the foundation on
which the negotiations resulting in a sale began.
(Medrano v. CA, G.R. No. 150678)
Law on Double Agency
If two or more persons have appointed an agent for
a common transaction or undertaking, they shall be
solidarily liable to the agent for all the consequences
of the agency (CIVIL CODE, Art. 1915).
In the absence of an agreement to the contrary, a
managing agent (i.e., one entrusted with the care
and management of a business) may enter into
contracts that he deems reasonably necessary or
requisite for the protection of the interests of his
principal entrusted to his management. (Eurotech v.
Cuizon, G.R. No. 167552)
Forms of Acceptance by Agent
1. Express - when it is oral or written (CIVIL CODE,
Art. 1870)
2. Implied - when it can be inferred from the acts
of the agent which carry out the agency, or from
his silence or inaction according to the
circumstances (CIVIL CODE, Art. 1870)
Between persons who are present – there is
implied acceptance if the principal delivers his
power of attorney to the agent and the latter
receives it without any objection (CIVIL CODE, Art.
1871)
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Between persons who are absent
General rule: Acceptance not deemed implied from
the silence of the agent. (CIVIL CODE, Art.1872)
Exceptions:
1. When the principal transmits his power of
attorney to the agent who receives it without any
objection
2. When the principal entrusts to him by letter or
telegram a power of attorney with respect to the
business in which he is habitually engaged as
an agent, and he did not reply to the letter or
telegram (CIVIL CODE,Art.1872)
“Present”
Generally, “face to face”, but includes people
conversing directly through technology (e.g., over
the telephone or through a videoconference).
Q: How is implied acceptance manifested as
between persons who are present and those
who are absent?
A: As between persons who are present, the
acceptance of the agency may be implied if the
principal delivers his power of attorney to the agent
and the latter receives it without any objection. (CIVIL
CODE, Art. 1871). Meanwhile, as to those who are
absent, the acceptance of the agency cannot be
implied from the silence of the agent, except when
the principal delivers his power of attorney to the
agent, who receives it without any objection; or
when the principal entrusts to him by letter or
telegram a power of attorney in which he is
habitually engaged as an agent, and he did not reply
to the letter or telegram. (CIVIL CODE, Art. 1872)
4. KINDS OF AGENCY
a. Based
on
business
or
transactions encompassed
General vs Special Agency
BASIS
Scope
Authority
of
GENERAL
AGENT
SPECIAL
AGENT
All
acts
connected
with
the
business
or
employment
in which he is
engaged
(CIVIL CODE,,
Art. 1876)
Specific acts
in pursuance
of particular
instructions or
with
restrictions
necessarily
implied from
the act to be
done
(CIVIL
CODE,
1876)
Nature
of
Service
Authorized
Extent
to
Which Agent
May Bind the
Principal
Construction
of Principal’s
Instructions
Involves
continuity of
service
May bind his
principal by an
act within the
scope of his
authority,
although
it
may not have
been
the
subject of any
specific
instruction
Generally
considered as
advisory
in
nature
Art.
No continuity
of service
Cannot bind
his principal in
a
manner
beyond
or
outside
the
specific acts
which he is
authorized to
perform
Strictly
construed as
they limit the
agent’s
authority
NOTE: Universal Agent – one employed to do all
acts which the principal may personally do, and
which he can lawfully delegate to another the power
of doing. (Siasat v. IAC, G. R. No. L-67889)
b. Whether it covers legal matters
Attorney-at-Law vs. Attorney-in-Fact
ATTORNEY-AT-LAW ATTORNEY-IN-FACT
A practitioner in a “An attorney-in-fact is
court of law who is simply
an
agent
legally qualified to whose authority is
prosecute and defend strictly limited by the
instrument appointing
actions in such court.
him, though he may do
things not mentioned
in his appointment
necessary
to
the
performance of the
duties
specifically
required of him by the
power of attorney
appointing him, such
authority necessarily
being
implied
(Philippine
Legal
Encyclopedia, p. 66)
NOTE: “His authority is provided in a special power
of attorney or general power of attorney or letter of
attorney. An attorney-in-fact is not necessarily a
lawyer.” (Pineda, Legal Ethics, p. 8)
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c. Whether it covers acts of
administration or acts of
dominion – General Power vs.
Special Power of Attorney
Power of Attorney
Instrument in writing by which the principal appoints
his agent and confers authority to do specific acts
on behalf of the principal. Its primary purpose is to
evidence the agent’s authority to third parties with
whom the agent deals (Wee v. De Castro, G.R. No.
176405)
NOTE: Article 1878 does not state that the authority
be in writing. As long as the mandate is express,
such authority may either be oral or written. The
requirement under Article 1878 refers to the nature
of authorization and not to its form (Patrimonio v.
Gutierrez, G.R. No. 187769).
Construction of Power of Attorney (Olaguer v.
Purugganan, Jr., G.R. No. 158907)
General rule: Strictly construed to grant only those
specified powers.
Exception: When strict construction will defeat the
very purpose of the power
Ways of Giving Notice of Agency and its Effect
1. By special information - the person appointed
as agent is considered as such with respect to
the person to whom it was given. (CIVIL CODE,
Art. 1873)
2. By public advertisement - the agent is
considered as such with regard to any person.
(CIVIL CODE, Art. 1873)
Agency Couched in General Terms
Covers only mere acts of administration (not acts of
dominion) even if:
1. The principal should state that he withholds no
power
2. The agent may execute such acts as he may
consider appropriate
3. The agency should authorize a general and
unlimited management (CIVIL CODE, Art.1877)
How to Construe Contracts of Agency
Contracts of agency, as well as general powers of
attorney, must be interpreted in accordance with the
language used by the parties.
The real intention of the parties is primarily
determined from the language used and
gathered from the whole instrument.
In case of doubt, resort must be had to the
situation, context, and relations of the
parties. The intention of the parties must
be sustained, not defeated.
CIVIL LAW (AND PRACTICAL EXERCISES)
If the contract is open to two (2)
constructions, one of which would uphold
the intention while the other would
overthrow it, the former is to be chosen.
(Liñan v. Puno, G.R. No. L-9608)
Cases Where Special Power of Attorney is
Necessary
1. To make such Payments as are not usually
considered as acts of administration;
2. To Effect novations which put an end to
obligations already in existence at the time the
agency was constituted;
3. To Compromise, to submit questions to
arbitration, to renounce the right to appeal from
a judgment, to waive objections to the venue of
an action, or to abandon a prescription already
acquired;
4. To Waive any obligation gratuitously;
5. To Enter into any contract by which the
ownership of an immovable is transmitted or
acquired either gratuitously or for a valuable
consideration;
6. To Make gifts, except customary ones for
charity or those made to employees in the
business managed by the agent;
7. To Loan or borrow money, unless the latter act
be urgent and indispensable for the
preservation of the things which are under
administration;
8. To Lease any real property to another person
for more than one year;
9. To Bind the principal to render some service
without compensation;
10. To Bind the principal in a contract of
partnership;
11. To Obligate the principal as a guarantor or
surety;
12. To Create or convey real rights over immovable
property;
13. To Accept or repudiate an inheritance;
14. To Ratify or recognize obligations contracted
before the agency;
15. Any Other act of strict dominion. (CIVIL CODE,
Art. 1878)
NOTE: A Special Power of Attorney is not required
to execute a Deed of Partition because partition is a
conveyance of real property. (Heirs of Ureta v. Heirs
of Ureta, G.R. No. 165748)
NOTE: A Special Power of Attorney is strictly
construed. Hence, the act under Article 1878 sought
to be authorized must be clearly stated.
Accordingly, the power of administration does not
include acts of disposition or encumbrance, which
are acts of strict ownership. Similarly, an authority to
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sell or dispose does not include the authority to
administer. (Aggabao v. Parulan, G.R. No. 165803)
NOTE: A Special Power of Attorney must express
the powers of the agent in clear and unmistakable
language for the principal to confer the right upon an
agent (Yoshizaki v. Joy Training Center of Aurora,
Inc., G.R. No. 174978)
However, Article 1878 does not state that the
authority be in writing. As long as the mandate is
express, such authority may either be oral or written.
The requirement under Article 1878 refers to the
nature of authorization and not to its form
(Patrimonio v. Gutierrez, G.R. No. 187769).
The special power of attorney can be included in the
general power when it specifies therein the act or
transaction for which the special power is required.
Q: A borrowed money from C on behalf of B
without B’s knowledge. C sought to recover
from A, but to no avail. He thereafter sent several
demand letters to B asking for the payment. B
now contends that he should not be held liable
because there was no loan between him and C
since he did not give a special power of attorney
for the borrowing of money. Is B correct?
A: Yes. Art. 1878 of the NCC provides that a special
power of attorney is necessary in order to loan or
borrow money, unless the latter act be urgent and
indispensable for the preservation of the things
which are under administration.
CIVIL LAW (AND PRACTICAL EXERCISES)
Agency by Estoppel
There is really no agency at all, but the alleged
agent seemed to have apparent or ostensible,
although not real, authority to represent another.
(Country Bankers Insurance Corporation v. Keppel
Cebu Shipyard, et. al., G.R. No. 166044)
NOTE:
If a person specially informs another or
states by public advertisement that he has
given a power of attorney to a third person,
the latter thereby becomes a duly
authorized agent, in the former case with
respect to the person who received the
special information, and in the latter case
with regard to any person (CIVIL CODE,
Art.1873).
Even when the agent has exceeded his
authority, the principal is solidarily liable
with the agent if the former allowed the
latter to act as though he had full powers
(CIVIL CODE, Art. 1911)
Requisites of Agency by Estoppel
1. The principal manifested a representation of the
agent’s authority or knowingly allowed the
agent to assume such authority;
2. The third person, in good faith, relied upon such
representation; and
3. Relying upon such representation, such third
person has changed his position to his
detriment
(Country
Bankers
Insurance
Corporation v. Keppel Cebu Shipyard, et. al.,
G.R. No. 166044)
Powers not included in the power to mortgage
1. To sell (CIVIL CODE, Art. 1879)
2. To execute a second mortgage
3. To mortgage for the agent or any 3rd person’s
benefit, unless clearly indicated
Powers not included in the power to
compromise
Submission to arbitration (CIVIL CODE, Art. 1880)
Rationale:
1. A principal may authorize his agent to
compromise because of his confidence in the
latter’s discretion to protect his rights and obtain
for him the best deal.
2. If the transaction were left in the hands of an
arbitrator, said arbitrator may not enjoy the trust
of the principal.
3. The agent must act within the scope of his
authority. He may do such acts as may be
conducive to the accomplishment of the
purpose of the agency. (CIVIL CODE, Art. 1881)
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Distinction between Agency by Estoppel and
Implied Agency
AGENCY BY
IMPLIED
BASIS
ESTOPPEL
AGENCY
Existence of No agency at There is an
actual
all
actual agency
agency
Reliance by Can
be Such reliance
3rd persons
invoked only is not needed,
by
a
3rd since
the
person who in agent is a real
good
faith agent
relied on the
conduct of the
principal
in
holding
the
agent out as
being
authorized
Nature
of An agent by An agent by
Authority
estoppel has implied
none of the appointment
rights of an has all the
agent, except rights
and
where
the liabilities of an
principal’s
agent,
i.e.,
actual
conduct
is has
such that the authority
to
agent
act on behalf
of the principal
reasonably
believed that
the principal
intended him
to act as an
agent
CIVIL LAW (AND PRACTICAL EXERCISES)
5.
5. HOW AGENCY IS REVOKED
1.
2.
3.
4.
5.
6.
NOTE: An authority embodied in a letter is sufficient.
(Jimenez v. Rabot, G.R. No. 12579)
Instances creating an Agency by Operation of
Law
1. The agent must finish the business already
begun on the death of the principal, should
delay entail any danger (CIVIL CODE, Art. 1884,
par. 2)
2. In case a person declines an agency, he is
bound to observe the diligence of a good father
of a family in the custody and preservation of
the goods forwarded to him by the owner until
the latter should appoint an agent (CIVIL CODE,
Art. 1885)
3. The agent, even if he should withdraw from the
agency for a valid reason, must continue to act
until the principal has had reasonable
opportunity to take the necessary steps to meet
the situation (CIVIL CODE, Art. 1929).
4. Anything done by the agent, without knowledge
of the death of the principal or of any other
cause which extinguishes the agency, is valid
and shall be fully effective with respect to third
persons who may have contracted with him in
good faith (CIVIL CODE, , Art. 1931).
If the agent dies, the heirs must notify the
principal thereof, and in the meantime adopt
such measures as the circumstances may
demand in the interest of the latter (CIVIL CODE,
Art. 1932)
7.
8.
Principal may revoke the agency (express or
implied) at will and compel agent to return the
document evidencing the agency. (CIVIL CODE,
Art. 1920)
Agency has been entrusted for purpose of
contracting with specified persons – revocation
will not prejudice specified persons if they were
not notified. (CIVIL CODE, Art. 1921)
If the agent had general powers – revocation
does not prejudice third persons who acted in
good faith and without knowledge of the
revocation. Notice of revocation in a newspaper
of general circulation is a sufficient warning.
(CIVIL CODE, Art. 1922)
The appointment of a new agent for the same
business or transaction revokes the previous
agency from the day on which notice was given
to the former agent. (CIVIL CODE, Art. 1923)
Agency is revoked if principal directly manages
the business entrusted to the agent, dealing
directly with third persons (CIVIL CODE, Art.
1924)
When two or more principals have granted a
power of attorney for a common transaction,
any one of them may revoke the same without
the consent of the others. (CIVIL CODE, Art.
1925)
A general power of attorney is revoked by a
special one granted to another agent, as
regards the special matter involved in the latter.
(CIVIL CODE, Art. 1926)
The power shall continue to be in full force until
the notice is rescinded in the same manner as
it was constituted. (CIVIL CODE, Art. 1873).
However, constitution by Special Information
may be revoked by notice in a daily newspaper,
provided it can be proven that 3rd persons in
question read the revocation (Lustan v. Court of
Appeals, G.R. No. 111924)
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C. OBLIGATIONS OF THE AGENT
1. GENERAL OBLIGATIONS
General Obligations of the Agent to the
Principal (GOC)
1. Act with utmost Good faith & loyalty for the
furtherance of principal’s interests
2. Obey principal’s instructions
3. Exercise reasonable Care
General Obligation of Agent who accepts the
Agency
NOTE: The agent is bound by his acceptance to
carry out the agency and is liable for the damages
which, through his non-performance, the principal
may suffer.
He must also finish the business already begun on
the death of the principal, should delay entail any
danger. (CIVIL CODE, Art. 1884)
Specific Obligations of the Agent (FADI –
CALAMARI)
1. Carry out the agency (CIVIL CODE, Art. 1884);
2. Answer for damages which through his nonperformance the principal may suffer;
3. Finish the business already begun on the death
of the principal should delay entail any danger
(exception to the rule that death extinguishes
agency) (CIVIL CODE, Art. 1884);
4. Observe the Diligence of a good father of a
family in the custody and preservation of the
goods forwarded to him by the owner in case he
declines an agency, until an agent is appointed
(CIVIL CODE, Art. 1885);
5. Advance necessary funds if there be a
stipulation to do so (except when the principal
is insolvent) (CIVIL CODE, Art. 1886);
6. Act in accordance with the Instructions of the
principal, and in default thereof, to do all that a
good father of a family would do (CIVIL CODE,
Art. 1887);
Exceptions (to the rule that the agent must not
depart from the instructions of principal) (SAI):
i. There’s a Sudden emergency
ii. If the instructions are Ambiguous
iii. If the Departure is so Insubstantial that it
does not affect the result and the principal
suffers no damage thereby (De Leon,
2010)
7. Not to carry out the agency if it would Manifestly
result in loss or damage to the principal (CIVIL
CODE, Art. 1888);
8. Answer for damages if there being a conflict
between his & his principal’s interests, he
prefers his own (CIVIL CODE, Art. 1889);
CIVIL LAW (AND PRACTICAL EXERCISES)
9.
Not to borrow money for himself even if he has
been authorized to Loan money on behalf of the
principal.
NOTE: The agent can loan money to the
principal at the current rate of interest if he has
been authorized to borrow money for the
principal. (CIVIL CODE, Art. 1890)
10. Render an Account of his transactions and
deliver to the principal whatever he may have
received by virtue of the agency (If the agent
fails to deliver and instead converts or
appropriates for his own use the money or
property belonging to his principal, he may be
charged with ESTAFA.) (CIVIL CODE, Art. 1891)
11. Be Responsible in certain cases for the act of
the substitute appointed by him (CIVIL CODE,
Art. 1892)
12. Pay Interest on funds he has applied to his own
use (CIVIL CODE, Art. 1896)
Obligation of Agent who declines Agency
In case a person declines an agency, he is bound to
observe the diligence of a good father of a family in
the custody and preservation of the goods
forwarded to him by the owner until the latter should
appoint an agent. The owner shall as soon as
practicable either appoint an agent or take charge of
the goods. (CIVIL CODE, Art. 1885)
2. EFFECTS OF AGENT’S ACTS TO
PRINCIPAL’S LIABILITY
Effects of Agent’s Acts to Principal’s Liability
LIABILITY OF
ACT OF AGENT
PRINCIPAL
Mismanagement
of Principal
still
the business by the responsible for the
agent
acts contracted by the
agent with respect to
3rd persons; Principal,
however, may seek
recourse against the
agent
Tort committed by the Principal civilly liable
agent
so long as the tort is
committed by the
agent
while
performing his duties
in furtherance of the
principal’s business
Agent in good faith but Principal is liable for
prejudices 3rdparties
damages
Agent in bad faith and
prejudices 3rd persons
Only the agent is liable
for damages
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When Agent has a right to disobey the
Principal’s instructions
1. When the instruction calls for the performance
of illegal acts
2. Where he is privileged to do so to protect his
security in the subject matter of the agency
When obligation to account not applicable
1. If the agent acted only as a middleman with the
task of merely bringing together the vendor and
the vendees.
2. If the agent had informed the principal of the
gift/bonus/profit he received from the purchaser
and his principal did not object.
3. Where a right of lien exists in favor of the agent.
(De Leon, 2019)
When Agent may incur Personal Liability
1. When the agent expressly binds himself (CIVIL
CODE, Art. 1897)
2. When the agent exceeds his authority (CIVIL
CODE, Art. 1897, 1898)
3. When an agent by his act prevents performance
on the part of the principal
4. When a person acts as an agent without
authority or without a principal
5. A person who purports to act as agent of an
incapacitated principal
3. APPOINTMENT OF SUB-AGENT
Appointment of Sub-Agent
1. If the principal has not prohibited the agent from
appointing a substitute, the Principal will be
liable to 3rd persons for the acts of the subagent within the scope of his authority
2. If there is a prohibition but nevertheless the
agent appoints a sub-agent, all the sub-agent’s
acts are void as to the principal and the agent
will be personally liable as to third parties.
3. If there is authority to appoint and sub-agent is
not designated by the principal, the agent will be
liable for all the acts of the sub-agent if the subagent is notoriously incompetent or insolvent.
4. If there is authority to appoint and sub-agent is
designated by the principal, the agent is
released from any liability from the acts of the
sub-agent and the principal shall be liable.
5. If the appointment of a sub-agent is not
prohibited, it shall be valid if it is beneficial to the
principal. But, should the principal incur
damage due to such appointment, the agent
shall be primarily responsible for the acts of the
sub-agent. (De Leon, 2019)
CIVIL LAW (AND PRACTICAL EXERCISES)
Q: A constituted B as his agent. Can B appoint
a substitute?
A: Yes. The agent may appoint a substitute or subagent if the principal has not prohibited him from
doing so, but he shall be responsible for the acts of
the substitute:
a. When he was not given the power to
appoint one;
b. When he was given such power, but
without designating the person, and the
person
appointed
was
notoriously
incompetent or insolvent. (CIVIL CODE, Art.
1892)
If there is a prohibition, B cannot do so, unless he
seeks the consent of the principal.
4. RESPONSIBILITY OF TWO (2) OR
MORE AGENTS APPOINTED
SIMULTANEOUSLY
General rule: Joint liability
Exception: When solidarity has been expressly
stipulated, in which case, each of the agents
becomes solidarily liable for (1) the non-fulfillment of
the agency; and for (2) the fault or negligence of his
fellow agent(s) (CIVIL CODE, Arts.1894 & 1895)
Exception to the Exception: when one of the other
agent/s acts beyond the scope of his authority –
innocent agent is not liable. (CIVIL CODE, Art. 1895)
Doctrine of Agency by Necessity
An agency can never be created by necessity; what
is actually created is additional authority in an agent
appointed and authorized before the emergency
arose.
The existence of emergency or other unusual
conditions may operate to invest in an agent
authority to meet the emergency, provided (PURE):
1. The agent’s enlarged authority is exercised for
the principal’s Protection
2. The agent is Unable to communicate with
principal;
3. The means adopted are Reasonable under the
circumstances; and
4. The emergency really Exists.
Effect where 3rd Person aware of limits of
agent’s power
If the agent exceeds his authority, it shall not bind
the principal unless the principal ratifies it.
(Cervantes v. CA, G.R. No. 125138)
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When third persons can repudiate the contract
Before actual ratification by the principal, or before
the principal has signified his willingness to ratify the
agent’s acts. (CIVIL CODE, Arts. 1317 & 1901)
Effect of the principal receiving the benefits of
the transaction
He is deemed to have ratified it. A principal may not
accept the benefits of a transaction and at the same
time repudiate its burdens.
Conditions for Ratification
1. The principal must have capacity and power to
ratify
2. He must have had knowledge of material facts
3. He must ratify the acts in its entirety
4. The act must be capable of ratification
5. The act must be done on behalf of the principal
6. To be effective, ratification need not be
communicated or made known to the agent or
the third party. The act or conduct of the
principal rather than his communication is the
key. But before ratification, the third party is free
to revoke the unauthorized contract.
Effects of Ratification
1. With respect to agent - relieves the agent from
liability to the third party for the unauthorized
CIVIL LAW (AND PRACTICAL EXERCISES)
2.
3.
transaction, and to his principal for acting
without authority; may recover compensation
With respect to principal - assumes
responsibility for the unauthorized act, as if the
agent had acted under original authority but not
liable for acts outside the authority approved by
his ratification
With respect to 3rd persons - bound by
ratification to the same extent as if the ratified
act had been authorized; cannot raise the
question of the agent’s authority to do the
ratified act
NOTE: There is ratification when the principal sues
to enforce the contract entered into by the
unauthorized agent. However, there is no such
ratification if the principal’s action is brought to avert
a greater loss rather than to assert a gain.
(Robinson Machine Works v. Borse)
NOTE: The agent is responsible not only for fraud,
but also for negligence, which shall be judged with
more or less rigor by the courts, according to
whether the agency was or was not for
compensation. (CIVIL CODE, Art. 1909)
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ACTS OF THE
AGENT
On behalf of the
principal, within the
scope of authority
Without or beyond
scope of authority
Within the scope of
authority but in the
agent’s name
Within the scope of the
written
power
of
attorney but agent has
actually exceeded his
authority according to
an
understanding
between him & the
principal
With improper motives
EFFECT
Binds the principal
Agent not personally liable (CIVIL
CODE, Art. 1881)
Contract is unenforceable as
against the principal but binds the
agent to the third person (CIVIL
CODE, Arts. 1317, 1403 and 1898)
Not binding on the principal.
Principal has no cause of action
against the 3rd parties and vice versa
EXCEPTION(S)
Agent liable if he:
i. Expressly makes himself liable
Binding on the principal when:
i. Ratified or
ii. The principal allowed the agent to
act as though he had full powers
When the transaction involves things
belonging to the principal:
Remedy of the principal - damages for
agent’s failure to comply with the
agency.
Remedies of the third person in case of
non-performance:
i. If the case falls under the general
rule, he can sue the agent.
ii. But when the contract involves
things belonging to the principal, he
can sue the principal.
iii. But if it cannot be determined
without litigation who is liable, he
can sue both.
Insofar as 3rd persons are
concerned, not required to inquire
further than the terms of the written
power, agent acted within scope of
his authority;
Principal is estopped
Motive is immaterial; as long as
within the scope of authority, valid
Third person knew agent was acting for his
own benefit: principal is not liable to 3rd
person
Authorized - principal still liable
Beyond the scope of the agent’s
authority
General Rule: Principal not liable
Exception:
principal
takes
advantage of a contract or receives
benefits
made
under
false
representation of his agent
For the agent’s own benefit –
principal still liable; agent’s motive
immaterial
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5. OBLIGATION RULES FOR
COMMISSION AGENTS
Commission Agent - one whose business is to
receive and sell goods for a commission and who is
entrusted by the principal with the possession of
goods to be sold, and usually selling in his own
name.
Distinction between Commission Agent and
Broker
COMMISSION
BROKER
AGENT
Engaged
in
the No
custody
or
purchase and sale for possession of the
a principal of personal thing he disposes;
property which has to merely a go-between,
be placed in his an
intermediary
possession
and between the seller and
disposal
the buyer
Has a relation with Maintains no relation
principal, buyer or with the thing which he
seller, and property purchases or sells
which is the object of
the transaction
Distinction between Ordinary Agent and
Commission Agent
COMMISSION
ORDINARY AGENT
AGENT
Acts for and in behalf May act in his own
of his principal
name or in that of the
principal
Need
not
have Must be in possession
possession of the of the thing he
principal’s goods
disposes
Obligations of a Commission Agent (RMCB)
1. Responsible for the goods received by him, as
described in the consignment, unless upon
receiving them he should make a written
statement of the damage and deterioration
suffered by the same (CIVIL CODE, Art. 1903)
2. If goods are of the same kind and mark but
belonging to different owners, make a
distinction by counter Marks and designate the
merchandise respectively belonging to each
principal (CIVIL CODE, Art. 1904)
3. He cannot, without consent of the principal, sell
on Credit; should he do, principal may demand
payment in cash, but the commission agent
entitled to any interest/benefit which may result
from such sale (CIVIL CODE, Art.1905)
4. If an agent receives guarantee commission (a
del credere agent), he shall Bear the risk of
collection and shall pay the principal the
proceeds of the sale on the same terms agreed
CIVIL LAW (AND PRACTICAL EXERCISES)
upon with the purchaser. The agent shall be
liable for damages if he does not collect the
credits of his principal at the time when they
become due and demandable, unless he
proves, that he exercised due diligence for that
purpose. (CIVIL CODE, Art. 1907)
D. OBLIGATIONS OF THE PRINCIPAL
1. OBLIGATIONS OF THE PRINCIPAL
TO THE AGENT
Obligations of the Principal to the Agent
(CARIP)
1. Comply with all the obligations agent contracted
in representation of the principal (CIVIL CODE,
Art. 1910)
2. Advance sums necessary for the execution of
the agency, when agent so requests; liable for
reimbursement regardless of the undertaking’s
success whenever agent had advanced & has
no fault; includes interest (CIVIL CODE, Art.
1912)
3. Reimburse the agent for all advances made by
him provided the agent is free from fault (CIVIL
CODE, Art. 1912)
4. Indemnify the agent for all the damages which
the execution of the agency may have caused
the latter without fault or negligence on his part
(CIVIL CODE, Art. 1913)
5. Pay the agent the compensation agreed upon
or the reasonable value of the latter’s services
(CIVIL CODE, Art. 1875)
Liability of 3rd Persons to the Principal
1. In Contract – a 3rd person is liable to the
principal upon contracts entered into by his
agent, as if the contract has been entered into
by the principal. (CIVIL CODE, Art. 1897)
2. In Tort – the 3rd person’s tort liability to the
principal, insofar as the agent is involved in the
tort, arises in 3 situations:
i. Where the 3rd person damages or injures
property or interest of the principal in the
possession of the agent
ii. Where the 3rd person colludes with the
agent to injure/defraud the principal
iii. Where the 3rd person induces the agent to
violate his contract with the principal to
betray the trust reposed upon him by the
principal.
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CIVIL LAW (AND PRACTICAL EXERCISES)
2. RULES ON LIABILITY OF TWO (2)
OR MORE PRINCIPALS
Requisites for Solidary Liability of Principals
1. There are two (2) or more principals
2. The principals have all concurred in the
appointment of the same agent
3. The agent is appointed for a common
transaction or undertaking (CIVIL CODE, Art.
1915)
NOTE: The rule in Art. 1915 applies even when the
appointments were made by the principals in
separate acts, provided that they are for the same
transaction. The solidarity arises from the
common interest of the principals and not from
the act of constituting the agency.
The principal is not bound by the acts of the
authorized agent where the latter failed to indicate
in the mortgage that she was acting for and in behalf
of her principal, and the REM explicitly shows on its
face that it was signed by agent in her own name
and personal capacity. The third-party bank has no
one to blame but itself. Not only did it act with undue
haste when it granted and released the loan, but it
also acted negligently in preparing the REM as it
failed to indicate that the agent was signing it for and
on behalf of the principal. (Bucton v. Rural Bank of
El Salvador, Inc., G.R. No. 179625)
Rule where two persons contract separately
with Agent and Principal
Two persons may contract separately with the agent
and the principal with regard to the same thing. If the
two contracts are incompatible with each other, the
one of prior date shall be preferred. This is
subject, however, to the rules on Double Sales
under Art. 1544 of the Civil Code (i.e., for movables:
first in possession, first in right; for immovables: first
to register in good faith, first in right; absent any
inscription: first in possession or party who presents
oldest title acquires ownership). (CIVIL CODE, Art.
1916)
Agent’s Right of Retention
1. Specific (only for those goods connected with
the agency); and
2. Until the principal effects the reimbursement
and pays the indemnity (CIVIL CODE, Art. 1914)
NOTE: The right of retention is limited to two
instances: (a) reimbursement of sums
advanced by the agent; and (b) indemnification
of damages for all damages arising from the
execution of the agency without fault or
negligence. (CIVIL CODE, Arts. 1912, 1913, and
1914)
3. PRINCIPAL’S LIABILITIES FOR
EXPENSES
General rule: Principal is liable for the expenses
incurred by the agent.
Exceptions (AFUS):
1. If the agent Acted in contravention of the
principal's instructions, unless the latter should
wish to avail himself of the benefits derived from
the contract.
2. When the expenses were due to the Fault of the
agent.
3. When the agent incurred them with knowledge
that an Unfavorable result would ensue, if the
principal was not aware thereof.
4. When it was Stipulated that the expenses would
be borne by the agent, or that the latter would
be allowed only a certain sum. (CIVIL CODE,
Art.1918)
4. AGENCY BY ESTOPPEL
Who can be estopped to deny Agency?
1. Estoppel of Agent - one professing to act as
agent is estopped to deny his agency both as
against his asserted principal and the third
persons interested in the transaction in which
he is engaged
2.
Estoppel by the Principal
i. As to agent – one knowing another is acting
as his agent and fails to repudiate his acts,
or accept the benefits of them, will be
estopped to deny the agency as against
such other
ii. As to third persons – one who knows that
another is acting as his agent or permitted
another to appear as his agent, to the injury
of third persons who have dealt with the
apparent agent as such in good faith and in
the exercise of reasonable prudence, is
estopped to deny the agency (Litonjua, Jr.
v. Eternit Corp., G.R. No. 144805)
3.
Estoppel of Third Persons – a third person,
having dealt with one as an agent may be
estopped to deny the agency as against the
principal, agent or 3rd persons in interest.
4.
Estoppel of the Government - government
neither estopped by the mistake/error of its
agents; may be estopped through affirmative
acts of its officers acting within the scope of their
authority. (Heirs of Atty. Jose Reyes v.
Philippines, G.R. No. 150862)
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Distinction between Ratification and Estoppel
RATIFICATION
ESTOPPEL
Rests on intention
Rests on prejudice
Affects
the
entire
transaction from the
beginning
Substance
of
ratification
is
confirmation of an
authorized
act
or
conduct after it has
been done
Affects only relevant
parts
of
the
transaction
Substance of estoppel
is
the
principal’s
inducement to another
to act to his prejudice
Distinction between Apparent Authority and
Authority by Estoppel
APPARENT
AUTHORITY BY
AUTHORITY
ESTOPPEL
Though not actually Where the principal,
granted,
principal by his negligence,
knowingly
permits his agent to
permits/holds out the exercise powers not
agent as possessing granted to him, even
the necessary powers though the principal
to act in a certain way may have no notice or
knowledge of the
conduct of the agent
A principal may be held liable under the Doctrine of
Apparent Authority when the principal’s liability
arises from: (a) his manifestations of the existence
of the agency which need not be expressed, but
may be general and implied, or acts of the agent
which suggest the existence of a principal-agency
relationship which are known to the principal and
which the principal does not deny; and (b) the
reliance of third persons upon the conduct of the
principal or agent. (Professional Services, Inc. v.
CA, G.R. No. 126297)
5. PRINCIPAL'S REVOCATION OF THE
AGENCY
General Rule: The principal may revoke the agency
at will, and compel the agent to return the document
evidencing the agency. Such revocation may be
express or implied. (CIVIL CODE, Art. 1920)
Exception: Agency coupled with interest
1. When a bilateral contract depends upon the
agency.
2. When the agency is the means of fulfilling an
obligation already contracted
3. When a partner is appointed as manager of a
partnership in the contract of partnership and
his removal from the management is
unjustifiable. (CIVIL CODE, Art. 1927)
Implied Revocation of Agency
1. Principal appoints a new agent for the same
business or transaction (only if there is
incompatibility); effective as between the
principal and the agent only if communicated to
the agent; does not prejudice rights of third
persons acting in good faith without knowledge
of the revocation (CIVIL CODE, Art. 1923)
2. Principal directly manages the business
entrusted to the agent, or deals directly with 3rd
persons (CIVIL CODE, Art. 1924)
Effect of Issuance of a Special Power of Attorney
The general power is impliedly revoked as to
matters covered by the special power because a
special power naturally prevails over a general
power (CIVIL CODE, Art. 1926)
6. PRINCIPAL’S LIABILITY FOR
DAMAGES DESPITE REVOCATION
Principal’s Liability for Damages despite
Revocation
1. If the agency was constituted for a fixed period,
the principal shall be liable for damages
occasioned by the wrongful discharge of the
agent before the expiration of the period fixed
2. Even if there was no time fixed for the
continuance of the agency, but the agent can
prove that the principal acted in bad faith by
revoking the agency in order to avoid the
payment of commission about to be earned, the
principal can be held liable for damages
(Villanueva supra at 209-210 (citing Diolosa v.
CA, 130 SCRA 350 & Valenzuela v. CA, 191
SCRA 1)).
Necessity of Notice of Revocation
1. As to the agent – notice is always necessary;
sufficient notice if the party to be notified
actually knows, or has reason to know, a fact
indicating that his authority has been terminated
or suspended; revocation without notice to the
agent will not render invalid an act done in
pursuance of the authority
2. As to 3rd persons – notice necessary
3. As to former customers - notice must be given
to them because they always assume the
continuance of the agency relationship
4. As to other persons - notice by publication is
enough (CIVIL CODE, Art. 1922)
Effect of Extinguishment without Notice
Act of agent deemed valid insofar as third parties
acting in good faith and without knowledge of
revocation. (CIVIL CODE, Art. 1922; Bitte v. Jones,
G.R. No. 212256)
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E. MODES OF EXTINGUISHMENT
1. HOW AGENCY IS EXTINGUISHED
How Agency is Extinguished (EDWARD)
1. By the Expiration of the period for which the
agency was constituted.
2. By the Death, civil interdiction, insanity or
insolvency of the principal or of the agent;
3. By the Withdrawal of the agent;
4. By the Accomplishment of the object or purpose
of the agency;
5. By its Revocation;
6. By the Dissolution of the firm or corporation
which entrusted or accepted the agency (CIVIL
CODE, Art. 1919)
2. OTHER MODES
Other Modes
1. Mutual withdrawal from the relationship by the
principal and agent;
2. By the happening of a supervening event that
makes illegal or impossible the objective or
purpose for which the agency was constituted,
like the destruction of the subject matter which
is the object of the agency.
NOTE: The list is not exclusive; causes are
particular only to agency; may be extinguished by
the modes of extinguishment of obligations in
general whenever they are applicable, like loss of
the thing and novation.
Presumption of Continuance of Agency
When once shown to have existed, an agency
relation will be presumed to have continued, in the
absence of anything to show its termination.
Continuance of Agency
Parties must be:
1. Present;
2. Capacitated; and
3. Solvent.
Modes of Extinguishing an Agency, Generally
(ASO)
1. Agreement
2. Subsequent acts of the parties which may be
either:
i. By the act of both parties or by mutual
consent
ii. By the unilateral act of one of them
3. By Operation of Law
NOTE: Even if the reason for extinguishing the
agency is not true, the agent cannot insist on
CIVIL LAW (AND PRACTICAL EXERCISES)
reinstatement.
The agent can only demand
damages. (Orient Air Services v. Court of Appeals,
G.R. No. 76931)
What happens if the subject matter of the
agency is lost or destroyed?
General rule: In the absence of any agreement by
the parties to the contrary, the loss or destruction of
the subject matter of the agency terminates the
agent‘s authority to deal with reference to it.
Exceptions:
1. If it is possible to substitute other material for
that which was destroyed without substantial
detriment to either party
2. If the destroyed subject matter was not in fact
essential to the contract
3. A partial loss or destruction (agency may
continue in existence as to other property not
affected). (De Leon, 2019)
If the loss is due to a breach or wrongful act of the
principal, he liable for damages.
Form of Renunciation
It is not always necessary for the agent to renounce
the agency expressly. He can do so impliedly, such
as:
1. Where he has conducted himself in a manner
incompatible with his duties as agent
2. When he abandons the object of his agency and
acts for himself in committing a fraud upon his
principals
3. When he files a complaint against the principal
and adopts an antagonistic attitude towards him
(De Leon, 2019)
3. EXCEPTIONS TO
EXTINGUISHMENT BY DEATH
Exceptions to Extinguishment by Death (KID-C)
1.
2.
3.
4.
If the act of the agent was executed without the
Knowledge of the death of the principal and the
third person who contracted with the agent
acted in good faith. (Rallos v. Go Chan, G.R.
No. L-24332)
To avoid Damage upon the agent’s death (CIVIL
CODE, Art. 1932)
The act of the agent was executed without
knowledge of the death of the principal and the
third person who contracted with the agent
acted in good faith (CIVIL CODE, Art. 1931)
If it has been constituted in the Common
interest of the principal and of the agent, or in
the interest of a third person who has accepted
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CIVIL LAW (AND PRACTICAL EXERCISES)
the stipulation in his favor (CIVIL CODE, Art.
1930)
Can the heirs continue the agency?
General rule: Agency calls for personal services on
the part of the agent; rights & obligations are not
transmissible
Exceptions:
1. Agency by operation of law, or a presumed or
tacit agency
2. Agency is coupled with an interest in the subject
matter of the agency (e.g. power of sale in a
mortgage). (De Leon, 2019)
Revocation
Termination of the agency by the subsequent act of
the principal
Renunciation/Withdrawal
Termination of the agency by the subsequent act of
the agent
May the agent withdraw from the agency at
will?
Agent may do so but subject to the contractual
obligations owing to the principal (i.e., fixed period
of time for the agency or purpose not yet
accomplished).
NOTE: The mere fact that the agent violates the
principal’s instructions does not amount to
renunciation, but that may render him liable for
damages.
-- end of topic --
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CIVIL LAW (AND PRACTICAL EXERCISES)
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IX.
CREDIT TRANSACTIONS
CIVIL LAW (AND PRACTICAL EXERCISES)
A. LOAN
TOPIC OUTLINE UNDER THE SYLLABUS
PART I: CREDIT TRANSACTIONS
A. LOAN
1. In General
2. Commodatum
3. Simple Loan
4. Interests Loan
B. DEPOSIT
C. GUARANTY AND SURETYSHIP
D. QUASI-CONTRACTS
1. Negotiorium Gestio
2. Solutio Indebti
1. IN GENERAL
Credit Transactions include all transactions
involving the purchase or loan of goods, services or
money in the present with a promise to pay or deliver
in the future (contract of security).
2 Types of Credit Transactions
Secured transactions – those supported by a
collateral or an encumbrance of property.
Unsecured transactions – those supported only by
a promise to pay or the personal commitment of
another such as a guarantor or surety.
Security is something given, deposited or serving
as a means to ensure the fulfillment or enforcement
of an obligation or of protecting some interest in the
property.
2 Types of Security
Personal – when an individual becomes a surety or
a guarantor
Real or Property – when an encumbrance is made
on property (e.g. real estate mortgage, chattel
mortgage over vessels or aircrafts or security
interest over movables)
Characteristics of Loans
1.
2.
Real Contract – delivery is essential for
perfection of the loan (BUT a promise to lend,
being consensual, is binding upon the parties)
Unilateral Contract - only the borrower has
the obligation once the subject matter has
been delivered
Art. 1933 (06, 04, BAR): If the bailor delivers to the
bailee a non-consumable thing so that bailee may
use the same for a certain time and return the
identical thing, the contract perfected is a contract
of commodatum. There is NO TRANSFER OF
OWNERSHIP.
In mutuum, the object borrowed must be a
consumable thing the OWNERSHIP OF WHICH IS
TRANSFERRED to the borrower who incurs the
obligation to return the same consumable to the
lender in an equal amount, and of the same kind and
quality.
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CIVIL LAW (AND PRACTICAL EXERCISES)
BAR OPERATIONS 2022
COMMODATUM
MUTUUM
As to object
Ordinarily involves
something not
consumable except
when the purpose of
consumable goods is
merely for exhibition.
(Art. 1936)
The subject matter is
money or other
consumable thing.
2. COMMODATUM
As to cause
Essentially gratuitous.
(Art. 1933) Otherwise,
it ceases to be
commodatum.
May be gratuitous or
onerous (with a
stipulation to pay
interest).
As to purpose
Use or temporary
possession.
Consumption
As to subject matter
Real or personal
property
Personal property
As to ownership of the thing
Retained by the bailor
of the term in case of
urgent need (Art.
1946), or when the
contract is precarium,
in which case, the
bailor may demand
the return of the thing
at will. (Art. 1947)
Passes to the debtor
Bailment - is the delivery of property of one person
to another in trust for a specific purpose, with a
contract, express or implied, that the trust shall be
faithfully executed and the property returned or duly
accounted for when a special purpose is
accomplished or kept until the bailor reclaims it.
Generally, it is contractual, but may also be created
by operation of law.
Parties in Bailment
Bailor– The lender/giver; the party who delivers
possession/custody of the thing bailed
Bailee – The recipient; the party who receives the
possession/custody of the thing delivered
Commodatum – bailor delivers to bailee a nonconsumable thing so that the latter may use it for
a certain time and return the identical thing
Exception to the object: may be a consumable
thing if the purpose is merely exhibition.
COMMODATUM
As to return of the thing
Same thing loaned
Pay the same amount of
the same kind and
quality
As to risk of loss
Bailor since he is the
owner
Debtor/Bailee (even if
the thing is lost through
a fortuitous event)
As to time of return
Upon the lapse of the
term agreed upon.
Upon the lapse of the
term agreed upon.
However, Bailor may
demand the return of
the thing loaned
before the expiration
Exception: Art. 1198
when the debtor loses
every right to make use
of the period
The
bailee
only
acquires the use of the
thing loaned but not its
fruits. (Art. 1935)
It creates only a purely
personal right to use
another’s property, and
requires a stipulation to
enable the bailee to
“make use” of the fruits.
(Arts. 1939-1940)
Real
contract;
perfected
only
by
delivery of the subject
matter thereof. (Art.
1934)
USUFRUCT
The usufructuary gets
the right to the use and
to the fruits of the
usufruct. (Art. 564)
It creates a real right
to the fruits of another’s
property. (Art. 564)
Consensual contract
Elements of commodatum
1. Delivery of non-consumable thing;
2. Obligation to return it (Art. 1933).
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Kinds of commodatum
(a) Ordinary commodatum – bailee uses the
thing for a certain period of time
(b) Precarium – bailor may demand the thing
loaned at will; exists in cases where:
i. There is no stipulation as to the
duration of the contract or use of the
thing loaned
ii. Use of the thing is merely tolerated by
the owner(Art. 1947).
Principal Obligations of a Bailee in a
Commodatum
1. Take good care of the thing with the
diligence of a good father of a family. (Art.
1163)
2. Use the thing loaned only for the purpose
for which it was loaned and for no other
purpose. (Art. 1935)
3. Payment of the ordinary expenses for the
use and preservation of the thing loaned.
(Art. 1941)
4. Payment of a 50% portion (unless
otherwise stipulated) of extraordinary
expenses arising from the actual use of the
thing, which shall be borne by both the
bailor and the bailee, even though the
bailee acted without fault, unless there is a
stipulation to the contrary. (Art. 1949, par.
2)
5. Return and to not retain the thing loaned
except for damages mentioned in Art.
1951.
When is the bailee in a commodatum liable for
the loss of the thing which is the object of the
contract, even if such loss is due to a fortuitous
event?
1. If he devotes the thing to any purpose
different from that for which it has been
loaned.
2. If he keeps it longer than the period
stipulated, or after the accomplishment of
the use which the commodatum has been
constituted.
3. If the thing loaned has been delivered with
the appraisal of its value, unless there is a
stipulation exempting the bailee from
responsibility in case of a fortuitous event.
4. If he lends or leases the thing to a third
person, who is not a member of his
household.
5. If, being able to save either the thing to a
third person or his own thing, he chose to
save the latter. (Art. 1942)
CIVIL LAW (AND PRACTICAL EXERCISES)
Art. 1951 (05, BAR):
General Rule: Bailee has no right of retention on
the ground that the bailor owes him something.
Exception: Art. 1951 on hidden defects (Bailor who
knows flaws but does not advise bailee is liable to
bailee for damages suffered because of flaws).
What are the obligations of a bailor in
commodatum?
1. Respect the duration of the loan. Bailor
cannot demand return until after (a)
expiration of period stipulated, or (b)
accomplishment of use for which
commodatum was constituted. (Art. 1946)
a. Exceptions:
i. If urgently need thing (may demand
return/temporary use); or
ii. If the bailor may demand immediate
return of the thing if the bailee
commits any acts of ingratitude. (Art.
1948)
1. If the bailee should commit
some offense against the
person, the honor or the
property of the bailor, or of his
wife or children under his
parental authority;
2. If the bailee imputes to the
bailor any criminal offense, or
any
act
involving moral
turpitude, even though he
should prove it, unless the
crime or the act has been
committed against the bailee
himself, his wife or children
under his authority;
3. If he unduly refuses him
support when the bailee is
legally or morally bound to give
support to the bailor.
2. Refund to the bailee extraordinary
expenses incurred for the preservation of
the thing, provided the bailee brings the
same to the knowledge of the bailor before
incurring them, except when the reply to the
notification cannot be awaited without
danger. (Art. 1949, par. 1) However, if the
extraordinary expenses arise on the
occasion of the actual use by the bailee,
even though he acted without fault, they
shall be borne equally by both the bailor
and the bailee, unless there is a stipulation
to the contrary. (Art. 1949, par. 2)
3. Be liable for damages which the bailee may
suffer for failure of the bailor to advise the
former of flaws (hidden defects) of the thing
loaned which are known to him. (Art. 1951)
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3. SIMPLE LOAN
Mutuum or Simple Loan - lender delivers to the
borrower money or other consumable thing upon the
condition that the latter will pay the same amount of
the same kind and quality(Art. 1953)
Obligations of a borrower in a simple loan or
mutuum
1. Pay the creditor an equal amount of the
same kind and quality. (Art. 1953)
2. Pay interest, if stipulated in writing. (Art.
1956)
Obligation of the Borrower to Pay
1. What?
a. Money
i.
General Rule: Same amount
ii.
Exception: may change under
certain circumstances, such as
when there is an extraordinary
inflation or deflation of the
currency stipulated.
b. Fungible thing other than money:
another thing of the same kind, quantity
and quality. In case it is impossible, its
value at the time of perfection of the
loan.
2. When?
a. If one is provided, the period agreed
upon.
b. If
none
is
provided,
payable
immediately; if the parties intended a
period but the same was not specified,
the court may fix the period. (Art. 1197)
c. Payable immediately when the debtor
loses the right to make use of the period
under Article 1198
i.
When after the obligation has been
contracted, he becomes insolvent,
unless he gives a guaranty or
security for the debt;
ii.
When he does not furnish to the
creditor
the
guaranties
or
securities which he has promised;
iii.
When by his own acts he has
impaired said guaranties or
securities after their establishment,
and when through a fortuitous
event they disappear, unless he
immediately gives new ones
equally satisfactory;
iv.
When the debtor violates any
undertaking, in consideration of
which the creditor agreed to the
period;
v. When the debtor attempts to
abscond.
CIVIL LAW (AND PRACTICAL EXERCISES)
4. INTERESTS ON LOAN
The two types of interest are the following:
1. Monetary or conventional interest –
refers to the compensation set by the
parties for the use or forbearance of money;
and
2. Compensatory interest – interest that
may be imposed by law or by courts as
penalty for damages. (Hun Hyung Park v.
Eung Won Choi, G.R. No. 220826, March
27, 2019)
Note: Compensatory/penalty/indemnity interest
refers to damages paid arising from delay in paying
a fixed sum of money or delay in assessing and
paying damages. (Sps. Abella v. Sps. Abella, G.R.
No. 195165, July 08, 2015)
Q: Company A contracted Company B to apply
a granite wash-out finish on the exterior walls of
one of its buildings. However, the finish began
peeling off and falling from the walls. Company
A got Company B to do minor repairs. Company
A also got Company C to redo the entire finish
after Company B manifested that it was not in a
position to do new finishing work. Although,
Company B expressed that it was willing to
share part of the cost.
The
Construction
Industry
Arbitration
Commission (CIAC) decided that Company B
was entitled to recover from Company A
representing the cost of repairs done by another
contractor. Company A assailed the portion on
its liability for construction defects. The SC held
that Company A was not liable for the amount
claimed by Company B.
Company B moved for reconsideration arguing
that its liability for interest should commence on
the date on which the SC’s decision that granted
Company A’s appeal became final and not on
when the CIAC decision was issued.
What interest
compensatory?
is
involved,
monetary
or
A: The interest is compensatory.
Monetary interest under Article 1956 of the Civil
Code serves as compensation fixed by the parties
for the use or forbearance of money. As can be
gleaned from the foregoing provision, payment of
monetary interest is allowed only if: (i) there was an
express stipulation for the payment of interest; and
(ii) the agreement for the payment of interest was
reduced in writing. The concurrence of the two
conditions is required for the payment of monetary
interest.
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Compensatory interest (i.e., interest awarded as
damages under Articles 2209 to 2213 of the Civil
Code) is that which is "allowed in actions for breach
of contract or tort for the unlawful detention of
money already due." As the governing provisions
indicate, compensatory interest may be imposed by
law or by the courts as penalty or indemnity for
damages.
In the present case, the principal award represents
the material cost adjustment incurred by Company
A which Company B failed to pay. The award
proceeds from Company B's breach of its
construction contract with Company A — a contract
which does not constitute a loan or forbearance of
money. Accordingly, the interest disputed herein
constitutes
compensatory
interest
awarded
pursuant to Article 2210 of the Civil Code.
(Philippine Commercial and International Bank v.
William Golangco Construction Corp. G.R. No.
195372, April 10, 2019)
When will interest due and unpaid earn interest?
Generally, interest due and unpaid shall not earn
interest, except:
1. Interest due shall earn legal interest at the
rate of 6% per annum from the time it is
judicially demanded until fully paid,
although the obligation may be silent upon
this point. (Art. 2212)
2. If there is agreement to this effect. (Art.
1959)
Note: Interest on interest refers to interest due on
conventional interest. (Sps. Abella v. Sps. Abella,
G.R. No. 195165, July 08, 2015)
When will the debtor be liable for interest even
in the absence of stipulation to pay interest?
Generally, no interest shall be due unless it has
been expressly stipulated in writing. (Art. 1956)
In the following instances, interest is due even if not
expressly stipulated:
1. If the obligation consists in the payment of
a sum of money, and the debtor incurs in
delay, the indemnity for damages, there
being no stipulation to the contrary, shall be
the payment of the interest agreed upon,
and in the absence of stipulation, the legal
interest, which is six per cent per annum
(Art. 2209); or
2. Interest due shall earn legal interest from
the time it is judicially demanded, although
the obligation may be silent upon this point.
(Art. 2212)
CIVIL LAW (AND PRACTICAL EXERCISES)
What is the legal interest rate?
Beginning July 1, 2013, the rate of interest on the
loan or forbearance on money, goods, or credits and
the rate allowed in judgments, in the absence of
stipulation, shall be 6% per annum (BSP Circular
No. 799).
However, judgments that became final and
executory before July 1, 2013 shall continue to
apply the previous legal rate of 12% per annum
(NACAR v. Gallery Frames Inc., G.R. No. 189871,
2013).
NOTE: The computation of the amount due must
take into consideration the legal rate or rates (6%
and/or 12% per annum) applicable throughout the
duration of the period in which interest runs. (DPWH
Secretary vs. Spouses Tecson, G.R. No. 179334,
2015)
What are the rules in the computation of legal
interest? (Lara’s Gifts & Decors v. Midtown
Industrial Sales, G.R. No. 225433, 2019)
1. When the obligation is breached, and it
consists in the payment of a sum of
money, i.e., a loan or forbearance of
money, goods, credits or judgments, the
interest due shall be that which is
stipulated by the parties in writing,
provided it is not excessive and
unconscionable, which, in the absence of a
stipulated reckoning date, shall be
computed from default, i.e., from
extrajudicial or judicial demand in
accordance with Article 1169 of the Civil
Code, UNTIL FULL PAYMENT, without
compounding any interest unless
compounded
interest
is
expressly
stipulated by the parties, by law or
regulation.
a. Interest due on the principal
amount accruing as of judicial
demand shall SEPARATELY
earn legal interest at the
prevailing rate prescribed by the
Bangko Sentral ng Pilipinas,
from the time of judicial demand
UNTIL FULL PAYMENT.
2. In the absence of stipulated interest, in a
loan or forbearance of money, goods,
credits or judgments, the rate of interest
on the principal amount shall be the
prevailing legal interest prescribed by
the Bangko Sentral ng Pilipinas, which
shall be computed from default, i.e., from
extrajudicial or judicial demand in
accordance with Article 1169 of the Civil
Code, UNTIL FULL PAYMENT, without
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3.
4.
5.
compounding
any
interest
unless
compounded
interest
is
expressly
stipulated by law or regulation.
a. Interest due on the principal
amount accruing as of judicial
demand shall SEPARATELY earn
legal interest at the prevailing
rate prescribed by the Bangko
Sentral ng Pilipinas, from the
time of judicial demand UNTIL
FULL PAYMENT.
When the obligation, not constituting a
loan or forbearance of money, goods,
credits or judgments, is breached, an
interest on the amount of damages
awarded may be imposed in the
discretion of the court at the prevailing
legal interest prescribed by the Bangko
Sentral ng Pilipinas, pursuant to Articles
2210 and 2011 of the Civil Code. No
interest, however, shall be adjudged on
unliquidated claims or damages until the
demand can be established with
reasonable certainty.
Accordingly, where the amount of the claim
or damages is established with
reasonable certainty, the prevailing legal
interest shall begin to run from the time
the claim is made extrajudicially or
judicially (Art. 1169, Civil Code) UNTIL
FULL PAYMENT, but when such certainty
cannot be so reasonably established at
the time the demand is made, the interest
shall begin to run only from the date of the
judgment of the trial court (at which time
the quantification of damages may be
deemed to have been reasonably
ascertained) UNTIL FULL PAYMENT.
The actual base for the computation of
the interest shall, in any case, be on the
principal amount finally adjudged,
without compounding any interest unless
compounded
interest
is
expressly
stipulated by law or regulation.
Must the manner of compounding the interest
also be in writing?
In a loan agreement, compounding of interest has to
be in writing to be valid. Payment of monetary
interest shall be due only if: (1) there was an express
stipulation for the payment of interest; and (2) the
agreement for such payment was in writing. The first
requirement does not only entail reducing in writing
the interest rate to be earned but also the manner of
earning the same, if it is to be compounded. (Albos
v. Embisan, G.R. No. 210831, 2014)
CIVIL LAW (AND PRACTICAL EXERCISES)
Can the stipulated interest be modified?
Any modification of stipulated interest (e.g., allowing
the creditor to unilaterally increase or decrease the
interest rate at any time) must be mutually agreed
upon, otherwise, it has no binding effect. Further, a
borrower may not be required to prepay the loan if
he is not agreeable to the arbitrary interest rates
being imposed. (Spouses Silos v. PNB, G.R. No.
181045, 2014)
What is a usury?
It may be defined as contracting for or receiving
something in excess of the amount allowed by law
for the loan or forbearance of money, goods or
chattels. (De Leon, citing Tolentino v. Gonzales, 50
Phil. 558 (1927)).
When is the Usury Law’s effectivity suspended?
The Monetary Board of Central Bank issued CB
Circular 905, effective January 1, 1983, removed the
ceilings on interest rate on loans or forbearance of
money, goods, or credit. The Circular did not repeal
nor in any way amend the Usury Law but simply
suspended the latter’s effectivity. Interest can now
be charged as lender and borrower may agree
upon. (Medel v. Court of Appeals, G.R. No. 131622,
November 27, 1998)
While it is true that the interest ceilings set by the
Usury Law are no longer in force, it has been held
that PD 1684 and CB Circular 905 merely allow
contracting parties to stipulate freely on any
adjustment in the interest rate on a loan by
forbearance of money but do not authorize a
unilateral increase of the interest rate by one party
without the other's consent (PNB v. CA, G.R. No. L26001, 1968). To be valid, therefore, any change of
interest must be mutually agreed upon by the parties
(Dizon v. Magsaysay, G.R. No. L-23399, 1974)
Q: Is the interest payment of 5% per month
excessive?
A: YES. 5% per month or 60% per annum interest
rate is void for being unconscionable, the interest
rate prescribed by the Bangko Sentral ng Pilipinas
(BSP) for loans or forbearances of money, credits
or goods will be the surrogate or substitute rate not
only for the one-year interest period agreed upon
but for the entire period that the loan of Zenaida
remains unpaid. (Bulatao v. Estonactoc, G.R. No.
235020, 2019)
What is the consequence of having usurious
interest?
In usurious loans, the entire obligation does not
become void because of an agreement for usurious
interest; the unpaid principal debt still stands and
remains valid but the stipulation as to the
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usurious interest is void. Consequently, the debt
is to be considered without stipulation as to the
interest. (First Metro Investment Corp. v. Este Del
Sol Mountain Reserve, Inc., G.R. No. 141811, 2001)
The principal debt remaining with stipulation for
payment of interest can thus be recovered. In case
of judicial or extrajudicial demand, and the debtor
incurs in delay, the debt earns legal interest from the
date of the demand. Such interest is not due to
stipulation, for there was none, the same being void.
Rather, it is due to the general provision of law that
in obligations to pay money, where the debtor incurs
in delay, he has to pay interest by way of damages
(Art. 2209, Civil Code)
Distinguish escalation clauses from floating rate
of interest clauses. (Security Bank Corp. v.
Spouses Mercado, 2018)
ESCALATION
FLOATING RATE OF
CLAUSES
INTEREST
These are stipulations It refers to the variable
which allow for the interest rate stated on
increase (as well as the a
market-based
mandatory decrease) of reference rate agreed
the original fixed interest upon by the parties.
rate.
This pertains to the
It is the method by which interest rate itself that
fixed rates may be is not fixed.
increased
Q: Petitioner X was granted a loan by Bank A
secured by a real estate mortgage. The interest
rate agreed upon by the parties was 17% per
annum. When X failed to pay some
amortizations, Bank A unilaterally escalated the
interest rate from 17% to 24% without the
knowledge of X or even an explanation as to why
the interest rates were increased. X filed a
complaint against Bank A. Bank A defended the
escalation, saying it was based on a stipulation
in the loan agreement that the interest rate
would be subjected to escalations. Was the
escalation of interest rate made by Bank A
valid?
A: No. Even though there was a stipulation in the
loan agreement that the in the loan agreement that
the interest rate would be subjected to escalations,
Bank A failed to explain how it arrived to such
interest rates. While escalation clauses are not
wrong, they must not be solely potestative and
should be based on reasonable grounds. Further,
the interest rate imposed upon Petitioner X is
violative of the principle of mutuality of contracts.
Art. 1308 of the Civil Code provides that a contract
must bind both parties; its validity or compliance
CIVIL LAW (AND PRACTICAL EXERCISES)
cannot be left to the will of one of them. (Vasquez v.
PNB, G.R. Nos. 228355 & 228397, August 28,
2019)
B. DEPOSIT
Deposit is constituted from the moment a person
receives a thing belonging to another, with the
obligation of safely keeping it and of returning the
same (Art. 1962).
NOTE: Safekeeping must be the principal purpose
of the contract. Otherwise, it is not a deposit.
Characteristics
1. Real - because it is perfected only by the delivery
of the subject matter
a. BUT: An agreement to constitute a deposit
is binding and enforceable, since it is
merely consensual
2. Unilateral - if gratuitous
3. Bilateral - if with compensation
Creation of deposit (Art. 1964)
1. By virtue of a court order; or
2. By law
3. By the will of the parties
Kinds of Deposit
1. Judicial - when an attachment or seizure of
property in litigation is ordered
2. Extrajudicial (Art. 1967)
a. Voluntary - delivery is made by the will of
the depositor or by two or more persons
each of whom believes himself entitled to
the thing deposited
b. Necessary - made in compliance with a
legal obligation, or on the occasion of any
calamity, or by travelers in hotels and inns
or by travelers with common carriers. There
is lack of free choice in the depositor.
General Rule: A deposit is generally gratuitous (Art.
1965).
Exceptions: [JESS]
1.
2.
3.
4.
When there is a contrary Stipulation
Where depositary is Engaged in the business of
storing goods
Where property is Saved from destruction
without knowledge of the owner
Judicial deposit
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CIVIL LAW (AND PRACTICAL EXERCISES)
BAR OPERATIONS 2022
JUDICIAL
EXTRAJUDICIAL
Creation
Will of
court
Purpose
Security or to
ensure
the
right of a party
to the property
or to recover
in case of
favorable
judgment
Movable
or
immovable
property, but
generally
immovable
Always
onerous
Subject
Matter
Cause
Return
thing
of
In
whose
behalf it is
held
the
Upon order of
the court / end
of litigation
Person who
has a right
Will of the
contracting
parties
Custody and
safekeeping
Movables only
May
be
compensated
but generally
gratuitous
Gratuitous:
demand
of
depositor
(Art. 1988) or
return
by
depositary for
justifiable
reasons (Art.
1989)
Compensated:
The
depositary
may retain the
thing in pledge
until
full
payment
of
what may be
due him by
reason
of
deposit (Art.
1994)
Depositor or
3rd
person
designated
Subject Matter of Deposit (Art. 1966)
1. As to the thing itself
a. General rule: Only movable or personal
property may be the object of deposit
(whether voluntary or necessary);
however, deposit does not include
incorporeal/intangible property, such
as rights and actions, for it follows the
2.
owner, wherever he goes and not
susceptible of custody
b. Exception: In judicial deposit, it may
cover both movable and immovable
property
As to ownership
a. General rule: The depositor must be
the owner of the thing deposited
b. Exceptions: It may belong to another
person than the depositor
i. When two or more persons claiming
to be entitled to a thing may deposit
the same with a third person. In such
case, the third person assumes the
obligation to deliver to the one to
whom it belongs.
ii. Interpleader – the action to compel
the depositors to settle their
conflicting claims. Here, one of the
depositors is not the owner.
Form of Contract of Deposit
General rule: A contract of deposit may be entered
into (but not perfected) orally or in writing (Art. 1969)
However: Delivery of the thing deposited is needed
for perfection.
DEPOSITARY
CAPACITATED,
DEPOSITOR
INCAPACITATED
Depositary is subject to
ALL the obligations of a
depositary
Depositary must return
the property either to:
a) The
legal
representative
of
the
incapacitated;
OR
b) The depositor
himself if he
should acquire
capacity
DEPOSITARY
INCAPACITATED,
DEPOSITOR
CAPACITATED
Depositary does not
incur the obligations of
a depositary
Depositary, however,
is liable to:
a) Return
the
thing
deposited
while still in
his
possession;
AND
the
b) Pay
depositor the
amount
by
which he may
have
benefited
himself with
the thing or its
price (subject
to the right of
any 3rd person
who acquires
the thing in
good faith)
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Conversion of Deposit to Mutuum
If the thing deposited is money or other consumable
thing, the permission to use it will result in its
consumption and converts the contract into a simple
loan or mutuum. However, if safekeeping is still the
principal purpose of the contract, it is still a deposit
but an irregular one; hence, an Irregular Deposit.
Example: Bank deposit (De Leon)
BASIS
IRREGULAR
DEPOSIT
MUTUUM
Demandability
Demandable
at will of the
irregular
depositor for
whose benefit
the
deposit
has
been
constituted
Lender
is
bound by the
provisions of
the contract
and cannot
seek
restitution
until the time
of payment
as provided in
the contract
has
arisen
(except under
Art. 1198)
If
with
interest,
benefit
of
both parties
Benefit
Benefit
accrues to the
depositor
Obligations of the Depositary
1. Safekeep the thing deposited
2. Return the thing on the date stipulated or
when depositor claims it
3. Not to transfer deposit
4. Not to change the way of deposit
5. To collect on the choses in action deposited
6. Not to commingle things if so stipulated
7. Not to make use of the things so deposited
8. Liability for loss through fortuitous event in
certain cases
9. Obligation when the thing is closed and
sealed
10. To return products, accessories and
accessions
11. To pay interest on sums converted to
personal use
12. Cannot require that the depositor prove his
ownership over the thing
13. Obligation when third person appears to be
the owner
14. Obligation when there are two or more
depositors
15. To return to the person to whom return
must be made
16. Liability in case of loss by force majeure or
government order
17. Liability in case of alienation of depositary’s
heir
Two primary obligations (Art. 1972)
1. Safekeeping of the object
a. Degree of Care – same diligence as he
would exercise over his property
(ordinary diligence)
b. NOTE: The depositary cannot excuse
himself from liability, in the event of loss,
by claiming that he exercised the same
amount of care toward the thing
deposited as he would towards his own
if such care is less than that required by
the circumstances.
2. Return of the thing
Obligation not to Transfer deposit (Art. 1973)
1. General rule: The depositary is not allowed
to deposit the thing with a third person.
a. Reason: A deposit is founded on trust
and confidence and it can be supposed
that the depositor, in choosing the
depositary, has taken into consideration
the latter’s qualification
2. Exception: The depositary is authorized by
express stipulation
Liabilities: Depositary is liable for loss of the thing
deposited when:
a) He transfers the deposit with a third person
without being authorized to do so although
there is no negligence on his part and the
third person;
b) He deposits the thing with a third person
who is manifestly careless or unfit although
authorized, even in the absence of
negligence; or
c) The thing is lost through the negligence of
his employees whether the latter are
manifestly careless or not.
Exemption from liability: The thing is lost without
the negligence of the third person with whom he was
allowed to deposit the thing if such third person is
not “manifestly careless or unfit” (e.g., minor).
Obligation not to change the way of deposit
a) General rule: Depositary may not change
the way of the deposit. (Art. 1974)
b) Exception: If there are circumstances
indicating that the depositor would consent
to the change. This is a situation wherein
the depositary would reasonably presume
that the depositor would agree to the
change if he knows of the facts of the
situation (Art. 1974)
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Requisites:
a) The depositary must notify the depositor of
such change; and
b) Must wait for the reply of the depositor to
such change.
NOTE: These requisites may not be dispensed with
unless delay would cause danger.
Obligation to Collect Interest on the choses in
action deposited (Art. 1975)
a) If the thing deposited should earn interest,
the depositary is under the obligation to:
i. Collect the interest as it becomes due.
ii. Take such steps as may be necessary
to preserve its value and the right
corresponding to it.
b) The depositary is bound to collect the
capital, as well as the interest, when due.
NOTE: The obligation to collect in the choses in
action does not apply to contracts for the rent of
safety deposit boxes.
Contract of rent of safety deposit boxes (Art.
1975)
A contract for the rent of safety deposit
boxes is not an ordinary contract of lease of
things, but a special kind of deposit; hence,
it is not to be strictly governed by the
provisions on deposit.
The prevailing rule in the US is that the
relation between a bank renting out safety
deposit boxes and its customer with
respect to the contents of the box is that of
bailor and bailee.
Obligation not to Commingle things if so
stipulated (Art. 1976)
General rule: The depositary is permitted to
commingle grain or other articles of the same kind
and quality
Effects:
a) The various depositors of the mingled
goods shall own the entire mass in
common
b) Each depositor shall be entitled to such
portion of the entire mass as the amount
deposited by him bears the whole
Exception: When there is a stipulation to the
contrary
Obligation not to make Use of the things
deposited (Art. 1977)
General rule: Deposit is for safekeeping of the
subject matter and not for its use
Exceptions:
1. Expressly authorized by the depositor
2. Such use is necessary for its preservation
but limited for the purpose only
CIVIL LAW (AND PRACTICAL EXERCISES)
A. Effect of unauthorized use: Liability for
damages
B. Effects of authorized use: (Art. 1978)
I. If the thing deposited is non-
consumable
1. General rule: The contract
loses the character of a
deposit and acquires that of a
commodatum, despite the
fact that the parties may have
denominated it as a deposit
2. Exception: Safekeeping is
still the principal purpose of
the contract
II. If the thing deposited is money or
other consumable thing:
1. General rule: Converts the
contract into a simple loan or
mutuum
2. Exception: Safekeeping is
still the principal purpose of
the contract, but it becomes
an irregular deposit. Bank
deposits are in the nature of
irregular deposits, but they
are really loans governed by
the law on loans.
An instrument acknowledging receipt of a sum of
money as a deposit returnable two months after
notice with interest is evidence of a contract of loan
and not of deposit. (Gavieres v. Pardo de Tavera,
G.R. No. 6, [November 14, 1901], 1 PHIL 71-73)
Liability for Loss through fortuitous event (Art.
1979)
General rule: Depositary is not liable for loss of the
thing deposited through a fortuitous event without
his fault (Art. 1174)
Exceptions: (USDA)
a) If it is so Stipulated
b) If he Uses the thing without the depositor’s
permission
c) If he Delays in its return
d) If he Allows others to use it, even though
he himself may have been authorized to
use the same
NOTE: Liability for loss without fortuitous event:
Depositary presumed at fault since he is in
possession (Art. 1265)
Relation between bank and depositor (Art. 1980)
Fixed, savings, and current deposits of money in
banks and similar institutions shall be governed by
the provisions concerning simple loan.
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a)
b)
CIVIL LAW (AND PRACTICAL EXERCISES)
Contract of loan – deposits in banks are
really loans because the bank can use the
same for its ordinary transactions
Relation of creditor and debtor – the
relation between a depositor and a bank is
that of a creditor and a debtor.
[A] bank has a right of set off of the deposit in its
hands for the payment of any indebtedness to it on
the part of the depositor. (Gullas v. Philippine
National Bank, G.R. No. 43191, [November 13,
1935], 62 PHIL 519-523)
Obligation when the thing deposited is Closed
and Sealed (Art. 1981)
The depositary has the obligation to:
a) Return the thing deposited when delivered
closed and sealed in the same condition.
b) Pay for damages should the seal or lock be
broken through his fault, which is presumed
unless proven otherwise.
c) Keep the secret of the deposit when the
seal or lock is broken, with or without his
fault.
When depositary justified in opening closed and
sealed subject matter (Art. 1982):
a) The depositary is presumed authorized to
do so if the key has been delivered to him.
b) When the instructions of the depositor as
regards the deposit cannot be executed
without opening the box or receptacle
(Necessity).
Where Third person appears to be the owner
(Art. 1984)
The depositary may be relieved from liability
when:
a) He advised the true owner of the thing of
the deposit
b) If the owner, in spite of such information,
does not claim it within the period of one
month (30 days), and the depositary
returns the thing deposited to the depositor.
Obligation of the depositary when there are two
or more depositors (Art. 1985)
1. Divisible thing and joint depositors – each
one of the depositors can demand only his
share proportionate thereto
a. General rule: Each one of the
depositors may do whatever may
be useful to the others (Art. 1212)
b. Exception: Anything which may
be prejudicial to the other
depositors
2. Indivisible thing or solidary depositors –
rules on active solidarity
a.
3.
General rule: The depositary may
return the thing to any one of the
solidary depositors
b. Exception: When a demand,
judicial or extrajudicial, for its
return has been made by one of
them in which case delivery should
be made to him
Return to one of the depositors stipulated
a. If by stipulation, the thing should
be returned to one of the
depositors, the depositary is
bound to return it only to the
person designated, although he
has not made any demand for its
return
Obligation to Return to the person to whom
return must be made (Art. 1986)
1. The depositary is obliged to return the thing
deposited, when required, to:
a. The depositor;
b. To his heirs or successors; or
c. To the person who may have been
designated in the contract.
2. If the depositor was incapacitated at the
time of making the deposit, the property
must be returned to:
a. His guardian or administrator
b. To the depositor himself should he
acquire capacity
3. Even if the depositor had capacity at the
time of making the deposit, but he
subsequently loses his capacity during the
deposit, the thing must be returned to his
legal representative.
Obligation to return at the Place of return
General rule: At the place agreed upon by the
parties, transportation expenses shall be borne by
the depositor (Art. 1987)
Exception: In the absence of stipulation, at the
place where the thing deposited might be even if it
should not be the same place where the original
deposit was made
NOTE: Same as the general rule of law regarding
the place of payment (Art. 1251)
Obligation to return upon the Time of return (Art.
1988)
General rule: The thing deposited must be returned
to the depositor upon demand, even though a
specified period of time for such return may have
been fixed
Exceptions:
a) When the thing is judicially attached while
in the depositary’s possession
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b)
CIVIL LAW (AND PRACTICAL EXERCISES)
When notified of the opposition of a third
person to the return or the removal of the
thing deposited
Right of the depositary to return the Thing
deposited (Art. 1989)
NOTE: In this case, it is the depositary returning the
deposit with or without the demand of the
depositor.
General rule: The depositary may return the thing
deposited, notwithstanding that a period has been
fixed for the deposit, if:
a) The deposit is gratuitous
b) The reason is justifiable
Remedy if depositor refuses to receive the
thing: The depositary may deposit the thing
at the disposal of the judicial authority.
pledge. However, after payment of the debt
and expenses, the remainder of the price of
the sale shall be delivered to the obligor.
(Art. 2121)
2. These may be sold only after demand of the
amount for which the thing is retained. The
public auction shall take place within one
month after such demand. If, without just
grounds, the creditor does not cause the
public sale to be held within such period,
the debtor may require the return of the
thing. (Art. 2122)
Obligations of the Depositor (PLD)
1. Obligation to Pay expenses of preservation (Art.
1992)
Applies only when the deposit is gratuitous
2.
Exception: When the deposit is for a valuable
consideration, the depositary has no right to return
the thing before the expiration of the time
designated even if he should suffer inconvenience
as a consequence.
Depositary’s liability in case of Loss by force
majeure or government order (Art. 1990)
Depositary is not liable in cases of loss by force
majeure or by government order. However, he has
the duty to deliver to the depositor money or another
thing he receives in place of the thing.
Liability in case of alienation by the depositary’s
Heir (Art. 1991)
When alienation is done in good faith:
a) Return the value of the thing deposited;
or
b) Assign the right to collect from the
buyer
The heir does not need to pay the
actual price of the thing deposited.
When alienation is done in BAD FAITH:
a) Liable for damages; and
b) Pay the actual price of the thing
deposited
Depositary may retain the thing in his
possession until the full payment of what may
be due him by reason of the deposit (Art. 1994)
The thing retained serves as security for the
payment of what may be due to the depositary by
reason of the deposit (see Arts. 1965, 1992 &
1993).
Pledges created by operation of law (Art.
2121)
1. These are governed by the foregoing articles
on the possession, care and sale of the
thing as well as on the termination of the
3.
Obligation to pay Losses incurred due to
character of thing deposited (Art. 1993)
General rule: The depositary must be
reimbursed for loss suffered by him because of
the character of the thing deposited.
Exceptions:
a. Depositor was not aware of the danger.
b. Depositor was not expected to know the
dangerous character of the thing.
c. Depositor notified the depositary of such
dangerous character.
d. Depositary was aware of the danger
without advice from the depositor.
Effect of Death of depositor or depositary(Art.
1995)
a. Deposit gratuitous – death of either of the
depositor or depositary extinguishes the
deposit (personal in nature). By the word
“extinguished,” the law really means that
the depositary is not obliged to continue
with the contract of deposit.
b. Deposit for compensation – not
extinguished by the death of either party
Extinguishment of Deposit
1. Upon the loss or deterioration of the thing
deposited;
2. Upon the death of the depositary, only in
gratuitous deposits;
3. Other provisions in the Civil Code
(novation, merger, etc.)
Extrajudicial Deposit: Necessary Deposit
When deposit is Necessary: (PLCT)
1. It is made in compliance with a Legal
obligation
2. It takes place on the occasion of any
Calamity, such as fire, storm, flood, pillage,
shipwreck, or other similar events
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a.
3.
4.
There must be a causal relation
between the calamity and the
constitution of the deposit.
Made by Passengers with common carriers
a. As to baggage the passengers or
their agents carry
Made by Travelers in hotels or inns (Art.
1998)
a. Before keepers of hotels or inns
may be held responsible as
depositaries with regard to the
effects of their guests, the
following must concur:
Elements:
a. They have been previously informed about the
effects brought by the guests; and
Is notification required before the common
carrier becomes liable for lost belongings
that remained in the custody of the
passenger? NO.
Actual delivery of the goods to the
innkeepers or their employees is
unnecessary before liability could attach to
the hotelkeepers in the event of loss of
personal belongings of their guests
considering that the personal effects were
inside the hotel or inn because the
hotelkeeper shall remain accountable.
Accordingly, actual notification was not
necessary to render the petitioner as the
common carrier liable for the lost personal
belongings of Sesante. By allowing him to
board the vessel with his belongings
without any protest, the petitioner became
sufficiently notified of such belongings. So
long as the belongings were brought inside
the premises of the vessel, the petitioner
was thereby effectively notified and
consequently duty-bound to observe the
required diligence in ensuring the safety of
the belongings during the voyage. Applying
Article 2000 of the Civil Code, the petitioner
assumed the liability for loss of the
belongings caused by the negligence of its
officers or crew. In view of our finding that
the negligence of the officers and crew of
the petitioner was the immediate and
proximate cause of the sinking of the M/V
Princess of the Orient, its liability for
Sesante's lost personal belongings was
beyond question. (Sulpicio Lines v.
Sesante, 2016)
b. The guests have taken the precautions
prescribed regarding their safekeeping.
CIVIL LAW (AND PRACTICAL EXERCISES)
Extent of liability:
a) Liability in hotel rooms which come
under the term “baggage” or articles
such as clothing as are ordinarily used
by travelers
b) Include those lost or damages in hotel
annexes such as vehicles in the hotel’s
garage.
When the traveler avails of the valet service of
hotels. The contract of deposit is perfected from the
traveler’s delivery of the keys to the vehicle to the
hotel, who has the obligation to safely keep and
return it to the owner. Loss of the vehicle on the
hotel’s premises or annexes may give rise to a claim
of damages (Durban Apartments v. Pioneer
Insurance, G.R. No. 179419, 2011).
When hotelkeeper liable: (Arts. 2000 – 2002)
NOTE: In the following cases, the hotel-keeper is
liable regardless of the amount of care exercised:
a) The loss or injury to personal property is
caused by his servants or employees as
well as by strangers (Art. 2000)
b) The loss is caused by the act of a thief or
robber done without the use of arms or
irresistible force (Id., Art. 2001)
Reason: Hotelkeeper is apparently negligent.
When hotelkeeper not liable:
a) The loss or injury is caused by force
majeure, like flood, fire, theft or robbery by
a stranger (not the hotel-keeper’s servant
or employee) with the use of firearms or
irresistible force
a. Exception: Unless the hotelkeeper is guilty of fault or
negligence in failing to provide
against the loss or injury from his
cause
b) The loss is due to the acts of the guests, his
family, servants, visitors
c) The loss arises from the character of the
things brought into the hotel
Exemption or diminution of liability:
The hotelkeeper cannot free himself from
responsibility by posting notices to the effect that he
is not liable for the articles brought by the guest (Art.
2003)
Effect: Any stipulation between the hotel-keeper
and the guest whereby the responsibility of the
former (as set forth in Arts. 1998-2001) is
suppressed or diminished shall be void.
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Hotel-keeper’s right to retain
The hotel-keeper has a right to retain the things in
pledge brought into the hotel by the guest, as a
security for credits on account of:
a) Lodging
b) Supplies usually furnished to hotel guests
Reason: It is given to hotel-keepers to compensate
them for the liabilities imposed upon them by law.
The right of retention recognized in this Article is in
the nature of a pledge created by operation of law.
In compliance with a legal obligation (governed
by the law establishing it, and in case of
deficiency, the rules on voluntary deposit e.g.
Arts. 538, 586 and 2104).
Made on the occasion of any calamity
(governed by the rules on voluntary deposit and
Art. 2168).
Hotel-keeper’s right to sell
A thing under a pledge by operation of law may be
sold only after demand of the amount for which the
thing is retained. The public auction shall take place
within one month after such demand. If, without just
grounds, the creditor does not cause the public sale
to be held within such period, the debtor may require
the return of the thing. (Art. 2122)
Sequestration or judicial deposit
When judicial deposit takes place: When an
attachment or seizure of property in litigation is
ordered by a court. (Art. 2005)
Nature: Auxiliary to a case pending in court.
Purpose: To maintain the status quo during the
pendency of the litigation or to insure the right of the
parties to the property in case of a favorable
judgment
CIVIL LAW (AND PRACTICAL EXERCISES)
BASIS
Cause
origin
or
Purpose.
Subject
Matter
Remuneration
In
whose
behalf it is
held
JUDICIAL
DEPOSIT
EXTRAJUDICIAL
DEPOSIT
By will of the
courts
By will of the
parties.
Hence, there
is a contract
Custody;
Safekeeping
of the thing
Security;
Secure
the
right of a party
to recover in
case
of
favorable
judgment.
Either
movable
or
immovable
property but
generally,
immovable
Always
remunerated
(onerous)
In behalf of
the
person
who, by the
judgment, has
a right
Only movable
property
Generally
gratuitous, but
may
be
compensated
In behalf of
the depositor
or
third
person
designated
Depositary of sequestered property: person
appointed by the court. (Art. 2007)
Obligations:
1. To take care of the property with the
diligence of a good father of the family. (Art.
2008)
2. He may not be relieved of his responsibility
until the litigation is ended or the court so
orders. (Art. 2007)
Applicable law: The law on judicial deposit is
remedial or procedural in nature. Hence, the Rules
of Court are applicable. (Art. 2009)
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COMMODATUM
Non-consumable
(movable
or
immovable)
Object
Except: consumable
if used for exhibition
purposes only
Temporary use of the
thing
Purpose
MUTUUM
DEPOSIT
Fungible
consumable
(e.g., money)
/
Consumption
Status
Ownership
Return the thing upon
expiration of period or
purpose
of
Ability
to
demand return
Retained by bailor
Anytime, if no period
or purpose has been
agreed upon or if by
mere tolerance only
(precarium)
If there is an urgent
necessity
Movable / personal
property
Non-consumable
consumable
Safekeeping
Exchange (sale)
or
Take care of the thing
Take care of the thing
with due diligence
Obligation
BARTER
Return a thing of the
same kind and quality
Do not use the thing
deposited
unless
authorized
or
is
required
for
its
preservation
Passes to bailee
Retained
depositor
by
the
Only
after
the
expiration
of
the
period
Exception: when the
debtor loses every
right to make use of
the period (Art. 1198)
Anytime
Exception:
for
compensation
(depositary has right
of retention)
Deliver another thing
in exchange
Passes to the other
party
(mutual
exchange)
Cannot
demand
return
because
contract is already
extinguished
Rescission only
grounds exist
if
Acts of ingratitude by
the bailee
b. It may be entered into even without the
intervention of the principal debtor.
C. GUARANTY AND SURETYSHIP
NATURE AND EXTENT OF GUARANTY
Guaranty – By guaranty, a person called the
guarantor, binds himself to the creditor, to fulfill the
obligation of the principal debtor in case the latter
should fail to do so. It is a contract between the
guarantor and the creditor. (Art. 2047)
Characteristics of the contract
1. Accessory – dependent for its existence upon
the principal obligation guaranteed by it hence if
principal contract is void, then guaranty is also
void
2. Subsidiary and Conditional – takes effect only
when the principal debtor fails in his obligation
subject to limitation
3. Unilateral –
a. It gives rise only to a duty on the part of the
guarantor in relation to the creditor and not
vice versa
4.
Distinct Person – a person cannot be the
personal guarantor of himself
The liability of a guarantor is only subsidiary,
and all the properties of the principal debtor
must first be exhausted before the guarantor
may be held answerable for the debt. Thus,
the creditor may hold the guarantor liable
only after judgment has been obtained
against the principal debtor and the latter is
unable to pay. (Aglibot vs. Santia, G.R. No.
185945, 2012)
Cause of Contract of Guaranty
1. Presence of cause which supports principal
obligation: Cause of the contract is the same
cause which supports the obligation as to the
principal debtor. The consideration which
supports the obligation as to the principal debtor
is a sufficient consideration to support the
obligation of a guarantor or surety.
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2.
Absence of direct consideration or benefit to
guarantor: Guaranty or surety agreement is
regarded valid despite the absence of any direct
consideration received by the guarantor or
surety, such consideration need not pass directly
to the guarantor or surety; a consideration
moving to the principal will suffice.
EFFECTS OF GUARANTY
Married woman as Guarantor (Art. 2049)
General rule: Married woman binds only her
separate property
Exceptions:
1. With her husband’s consent, binds the
community or conjugal partnership property
2. Without husband’s consent, in cases provided
by law, such as when the guaranty has
redounded to the benefit of the family
Guaranty Undertaken Without Knowledge of
Debtor (Art. 2050)
Rights of third persons who pay:
1. Payment without the knowledge or against
the will of the debtor:
a. Guarantor can recover only insofar as the
payment has been beneficial to the debtor
(Art. 1236)
b. Guarantor cannot compel the creditor to
subrogate him in his rights (Art. 1237)
2. Payment with knowledge or consent of the
debtor: Subrogated to all the rights which the
creditor had against the debtor (Art. 2067)
Double or Sub-Guaranty (Art. 2051(2))
One constituted to guarantee the obligation of a
guarantor. It should not be confounded with
guaranty wherein several guarantors concur.
Guaranty of Voidable, Unenforceable, And
Natural Obligations (Art. 2052(2))
A guaranty may secure the performance of:
1. Voidable contract – such contract is binding,
unless it is annulled by a proper court action
2. Unenforceable contract – because such
contract is not void
3. Natural obligation – the creditor may proceed
against the guarantor although he has no right
of action against the principal debtor for the
reason that the latter’s obligation is not civilly
enforceable.
When the debtor himself offers a guaranty
for his natural obligation, he impliedly
recognizes
his
liability,
thereby
transforming the obligation from a natural
into a civil one.
CIVIL LAW (AND PRACTICAL EXERCISES)
Guaranty of Future Debts (Art. 2053)
Continuing Guaranty or Suretyship:
1. Not limited to a single transaction but which
contemplates a future course of dealings,
covering a series of transactions generally for
an indefinite time or until revoked.
2. It is prospective in its operation and is generally
intended to provide security with respect to
future transactions.
3. Future debts, even if the amount is not yet
known, may be guaranteed but there can be no
claim against the guarantor until the amount of
the debt is ascertained or fixed and
demandable.
Examples:
a. To secure the payment of a loan at maturity
– guarantee of the punctual payment of a loan
at maturity and all other obligations of
indebtedness
b. To secure payment of any debt to be
subsequently incurred –construed as
continuing when it is evident from the terms that
the object is to give a standing credit to the
principal debtor to be used from time to time
either indefinitely or until a certain period,
especially if the right to recall the guaranty is
expressly reserved.
Guaranty of Conditional Obligations
A guaranty may secure all kinds of obligations, be
they pure or subject to a suspensive or resolutory
condition.
1. Principal obligation subject to a suspensive
condition – the guarantor is liable only after the
fulfillment of the condition.
2. Principal obligation subject to a resolutory
condition – the happening of the condition
extinguishes both the principal obligation and
the guaranty
Guarantor’s Liability Cannot Exceed Principal
Obligation (Art. 2054)
General rule: Guaranty is a subsidiary and
accessory contract – guarantor cannot bind
himself for more than the principal debtor, both as
regards the amount and the onerous nature of
contract
If he does, his liability shall be reduced to the
limits of that of the debtor.
But the guarantor may bind himself for less
than that of the principal.
Exceptions:
1. Interest, judicial costs, and attorney’s fees
as part of damages may be recovered –
creditors may recover from the surety as part of
their damages the abovementioned fees even
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without stipulation and even if the surety would
thereby become liable to pay more than the
total amount stipulated in the bond.
Reason: Surety is made to pay, not by reason
of the contract, but by reason of his failure to
pay when demanded and for having
compelled the creditor to resort to the
courts to obtain payment.
Interest runs from (demand):
a.
2.
Filing of the complaint (upon judicial
demand); or
b. The time demand was made upon the
surety until the principal obligation is fully
paid (upon extra-judicial demand)
Penalty may be provided – surety may be held
liable for the penalty provided for in a bond for
violation of the condition therein.
Principal’s Liability May Exceed Guarantor’s
Obligations
The amount specified in a surety bond as the
surety’s obligation does not limit the extent of the
damages that may be recovered from the principal,
the latter’s liability being governed by the obligations
he assumed under his contract.
Guaranty Not Presumed (Art. 2055)
The assumption of guaranty must be expressed. It
cannot extend to more than what is stipulated
therein.
Guaranty Covered by the Statute of Frauds
Guaranty must not only be expressed but must
so be reduced into writing.
Hence, it shall be unenforceable by action,
unless the same or some note or memorandum
thereof be in writing, and subscribed by the
party charged, or by his agent; evidence,
therefore, of the agreement cannot be received
without the writing, or secondary evidence of its
contents. (Macondray & Co., Inc. v. Piñon, G.R.
No. L-13817, 1961)
It need not appear in a public document.
Guaranty Strictly Construed
Strictly construed against the creditor in favor of
the guarantor and is not to be extended beyond its
terms or specified limits. Doubt in the terms and
conditions of the guaranty or suretyship agreement
should be resolved in favor of the guarantor or
surety.
1. Liability for obligation stipulated – guarantor
is not liable for obligations assumed previous
to the execution of the guaranty unless an
intent to be so liable is clearly indicated.
2. Liability of surety limited to a fixed period –
the surety must only be bound in the manner
and to the extent, and under the circumstances
CIVIL LAW (AND PRACTICAL EXERCISES)
3.
which are set forth or which may be inferred
from the contract of guaranty or suretyship, and
no further.
Liability of surety to expire on maturity of
principal obligation – such stipulation is unfair
and unreasonable for it practically nullifies the
nature of the undertaking it had assumed.
Remedy of surety: Foreclose the counter-bond put
up by the principal debtor (if there is any)
Guaranty Distinguished from Suretyship
GUARANTY
SURETYSHIP
Liability depends upon Assumes liability as a
an
independent regular party to the
agreement to pay the undertaking
obligation
if
the
principal debtor fails
to do so
Engagement
is
a Charged as an original
collateral undertaking
promisor
Secondarily liable – Primarily liable –
he contracts to pay if, undertakes directly for
by the use of due the payment without
diligence, the debt reference
to
the
cannot be paid
solvency
of
the
principal, and is so
responsible at once the
latter makes default,
without any demand by
the creditor upon the
principal whatsoever or
any notice of default
Only binds himself to Undertakes to pay if
pay if the principal the principal does not
cannot or is unable to pay, without regard to
pay
his ability to do so
Insurer
of
the Insurer of the debt
solvency of the debtor
Does not contract that Pay
the
creditor
the principal will pay, without qualification
but simply that he is if the principal debtor
does not pay. Hence,
able to do so
the responsibility or
obligation assumed by
the surety is greater or
more onerous than that
of a guarantor
Guarantor can avail of Surety cannot avail the
the
benefit
of benefit of excussion
excussion and division and division.
in case the creditor
proceeds against him.
Not bound to take Held to know every
notice of the non- default of the principal.
performance of the
principle
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Q: Corp A secured a Performance Bond from
Corp B wherein the latter would become the
surety of the former, guaranteeing the
performance of Corp A’s obligations in favor of
a contract with Corp C. However, Corp A showed
poor progress, which led to Corp C demanding
Corp B to liquidate the Performance Bond,
without specifying the exact amount claimed.
Subsequently, Corp C terminated the contract
with Corp A. When negotiations for amicable
settlement fell through, Corp B denied Corp C’s
claim. This prompted Corp C to file a complaint
with the CIAC to collect a sum of money against
Corp A and Corp B. The CIAC dismissed the
Complaint because it was not within a
reasonable period and such delay had released
Corp B from its liability as per Article 2080 of the
Civil Code. This was reversed by the CA on the
ground that Corp A had long been in default of
its obligations even before the first demand of
Corp C, which meant that the liability of Corp B
as surety had already arisen. Was the CA correct
in saying that Corp B was liable?
A: Yes. A contract stands as the law between the
parties for as long as it is not contrary to law, morals,
good customs, public order, or public policy. The
Performance Bond provides that upon Corp C’s first
demand, Corp B as surety shall indemnify the
former notwithstanding any dispute with regard to
whether the principal has complied with his
obligation. The Performance Bond thus stands as a
contract of surety contemplated under Article 2047
of the Civil Code which defines a surety wherein a
person binds himself solidarily with the principal
debtor. As a result, the surety is considered in law
as being the same party as the debtor in relation to
whatever is adjudged touching upon the obligation
of the latter, and their liabilities are interwoven as to
be inseparable. While the contract of surety stands
secondary to the principal obligation, the surety's
liability is direct, primary and absolute, albeit limited
to the amount for which the contract of surety is
issued. The surety's liability attaches the moment a
demand for payment is made by the creditor.
Furthermore, Article 2080 does not apply in this
case because it is only applicable to the liability of a
guarantor. (The Mercantile Insurance Co., Inc., v.
DMCI-Laing Construction, Inc., G.R. No. 205007,
September 16, 2019.)
Qualifications of an Individual Guarantor
(Arts.2056-2057) (CSI)
1. He possesses Integrity
2. He has the Capacity to bind himself
3. He has Sufficient property to answer for the
obligation which he guarantees
CIVIL LAW (AND PRACTICAL EXERCISES)
Exception: When
requirements.
the
creditor
waives
the
Effect of Subsequent Loss of Required
Qualifications
The qualifications need only be present at the time
of the perfection of the contract. The subsequent
loss of the qualifications would not extinguish the
liability of the guarantor, nor will it extinguish the
contract of guaranty.
Remedy of creditor: Demand another guarantor
with the proper qualifications.
Exception: Creditor may waive it if he chooses and
hold the guarantor to his bargain.
Guarantor Convicted of a Crime Involving
Dishonesty or Became Insolvent (Art. 2057):
1. Requires conviction in the first instance of a
crime involving dishonesty to have the right to
demand another.
2. Judicial declaration of insolvency is not
necessary in order for the creditor to have a
right to demand another guarantor.
The supervening incapacity of a guarantor does not
terminate the guaranty for it merely gives the
creditor the option to demand another guarantor. He
is not bound to substitute the guarantor. (Estate of
Hemady v. Luzon Surety, G.R. No. L-8437, 1956)
Selection of Guarantor
1. Specified person stipulated as guarantor:
Substitution of guarantor may not be demanded
Reason: The selection of the guarantor is:
a. A term of the agreement;
b. As a party, the creditor is, therefore, bound
thereby.
2. Guarantor selected by the principal debtor:
Debtor answers for the integrity, capacity, and
solvency of the guarantor.
3. Guarantor personally designated by the
creditor: Responsibility for
the selection
should fall upon the creditor because he
considered the guarantor to have the
qualifications for the purpose.
Right of Guarantor to Benefit Of Excussion Or
Exhaustion (Art. 2058)
1. Guarantor only secondarily liable –
guarantor binds himself to pay only in case the
principal debtor should fail to do so. If the
principal
debtor
fulfills
the
obligation
guaranteed, the guarantor is discharged from
any responsibility.
2. All legal remedies against the debtor to be
first exhausted – to warrant recourse against
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CIVIL LAW (AND PRACTICAL EXERCISES)
the guarantor for payment, it may not be
sufficient that the debtor appears insolvent.
Such insolvency may be simulated.
NOTE: Art. 2058 is not applicable to a contract of
suretyship.
i.
Right of Creditor to secure Judgment against
Guarantor prior to exhaustion
General rule: An ordinary personal guarantor (NOT
a pledgor or mortgagor who is at the same time a
guarantor), may demand exhaustion of all the
property of the debtor before he can be compelled
to pay.
Exception: The creditor may secure a judgment
against the guarantor, who shall be entitled to a
deferment of the execution of said judgment against
him, until after the properties of the principal debtor
shall have been exhausted, to satisfy the latter’s
obligation.
Exceptions to the Benefit of Excussion (Art.
2059) (JAWS-IS-FUN)
1. If the guarantor has expressly Waived it.
a. Waiver is valid but it must be made in
express terms.
2. If he has bound himself Solidarily with the
debtor – liability assumed that of a surety
Guarantor becomes primarily liable as a
solidary co-debtor. In effect, he renounces
in the contract itself the benefit of
exhaustion.
3. In case of Insolvency of the debtor – guarantor
guarantees the solvency of the debtor
If the debtor becomes insolvent, the liability
of the guarantor arises as the debtor cannot
fulfill his obligation
4. When he (debtor) has Absconded, or cannot be
sued within the Philippines – the creditor is not
required to go after a debtor who is hiding or
cannot be sued in our courts
a. Exception: Debtor has left a
manager or representative
5. If it may be presumed that a judicial action
including execution on the property of the
principal debtor would not result in the
satisfaction of the obligation – if such is the
case, the guarantor can no longer require the
creditor to resort to all such remedies against
the debtor as the same would be but a Useless
formality. It is not necessary that the debtor be
judicially declared insolvent.
6. If he does Not comply with Art. 2060: In order
that the guarantor may make use of the benefit
of excussion, he must:
a. Set it up against the creditor upon the
latter’s demand for payment from him;
b. Point out to the creditor:
7.
8.
Available property of the debtor– the
guarantor
should
facilitate
the
realization of the excussion since he is
the most interested in its benefit.
ii. Within the Philippine territory –
excussion of property located abroad
would be a lengthy and extremely
difficult proceeding and would not
conform with the purpose of the
guaranty to provide the creditor with
the means of obtaining the fulfillment of
the obligation.
Sufficient to cover the amount of the
debt.
If he is a Judicial bondsman and sub-surety
(Art. 2084) – because he is solidarily liable.
Where he has given a pledge or mortgage as a
Special security.
NOTE: Article 2062 of the Civil Code provides
that in every action by the creditor, which must be
against the principal debtor alone, except in the
cases mentioned in Article 2059, the former shall
ask the court to notify the guarantor of the action.
The guarantor may appear so that he may, if he
so desire, set up such defenses as are granted
him by law. The benefit of excussion mentioned
in article 2058 shall always be unimpaired, even
if judgment should be rendered against the
principal debtor and the guarantor in case of
appearance by the latter.
Duty of Creditor to Make Prior Demand for
Payment From Guarantor (Art. 2060)
1. When demand to be made – only after
judgment on the debt for obviously the
exhaustion of the principal’s property cannot
even begin to take place before judgment has
been obtained.
2.
Actual demand to be made – joining the
guarantor in the suit against the principal debtor
is not the demand intended by law. There must
be an actual demand and not judicial demand.
(Vda. De Syquia v. Jacinto, G.R. No. 41320
(1934).
Duty of The Guarantor To Set Up Benefit Of
Excussion (Art. 2060)
As soon as he is required to pay, guarantor must
also point out to the creditor available property
(not in litigation or encumbered) of the debtor within
the Philippines.
If a party in a contract waives his right to excussion,
the contract has ceases to be a guaranty and is now
a suretyship under Article 2047 of the Civil Code.
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(Trade and Investment Development Corporation of
the Philippines v. Philippine Veterans Bank, G.R.
No. 233850, 2019)
Duty of The Creditor To Resort To All Legal
Remedies (Art. 2061)
After the guarantor has fulfilled the conditions
required for making use of the benefit of
exhaustion, it becomes the duty of the creditor
to exhaust all the property of the debtor pointed
out by the guarantor
If he fails to do so, he shall suffer the loss but
only to the extent of the value of the said
property, for the insolvency of the debtor.
Resort to all legal remedies includes accion
pauliana and accion subrogatoria, among
others.
Joinder of Guarantor and Principal As Parties
Defendant
General rule: The guarantor, not being a joint
contractor with his principal, cannot be sued with
his principal.
Exception: Where it would serve merely to delay
the ultimate accounting of the guarantor or if no
different result would be attained if the plaintiff were
forced to institute separate actions against the
principal and the guarantors.
Procedure When Creditor Sues (Art. 2062)
1. Sent against the principal – The guarantor
cannot be sued with his principal, much less
alone, except in the cases mentioned in Art.
2059 where the guarantor is not entitled to the
benefit of excussion.
2. Notice to guarantor of the action – guarantor
must be notified so that he may appear, if he so
desires, and set up defenses he may want to
offer
a. Guarantor
appears – voluntary
appearance does not constitute a
renunciation of his right to excussion.
b. Guarantor does not appear –
i. He cannot set up the defenses which,
by appearing are allowed to him by
law; and
ii. It may no longer be possible for him to
question the validity of the judgment
rendered against the debtor
iii. But he may still invoke the benefit of
excussion
3. Hearing before execution can be issued
against the guarantor – a guarantor is entitled
to be heard before an execution can be issued
against him where he is not a party in the case
involving his principal.
CIVIL LAW (AND PRACTICAL EXERCISES)
Effects of Compromise (Art. 2063)
Compromise – a contract whereby the parties, by
making reciprocal concessions, avoid a litigation or
put an end to one already commenced.
1. Compromise between creditor and principal
debtor benefits the guarantor but does not
prejudice him.
2. Compromise between guarantor and the
creditor benefits but does not prejudice the
principal debtor.
Reason: A compromise binds only the parties
thereto and not third persons. Thus, it cannot
prejudice the guarantor or debtor who was not party
to the compromise. But if it benefits a third person,
then the compromise may bind that third person.
Sub-Guarantor’s Right To Excussion (Art. 2064)
Sub-guarantor enjoys the benefit of excussion with
respect to:
1. Principal debtor; and
2. Guarantor
Reason: He stands with respect to the guarantor on
the same footing as the latter does with respect to
the principal debtor.
Benefit of Division Among Several Guarantors
(Art. 2065)
1. In whose favor applicable - should there
be several guarantors of only one debtor
and for the same debt, the obligation to
answer for the same is divided among all.
2. Cannot be availed of if there are:
a. Two or more debtors of one debt,
even if they be bound solidarily,
each with different guarantors; or
b. Two or more guarantors of the
same debtor but for different debts
c. If any of the circumstances
enumerated in Art. 2059 should
take place, as would the benefit
of exhaustion of the debtor’s
property.
3. Extent of liability of several guarantors
– joint obligation
a. General rule: The obligation to
answer for the debt is divided
among all of them. The
guarantors are not liable to the
creditor beyond the shares which
they are respectively bound to
pay.
b. Exception: Solidarity has been
expressly stipulated.
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Benefit of Division among Several Guarantors:
In order that the guarantor may be entitled to the
benefit of division, it is not required that he point out
the property of his co-guarantors.
Reason: Obligation of the guarantor with respect to
his co-guarantors is not subsidiary but direct and
does not depend as to its origin on the solvency or
insolvency of the latter.
No benefit of division when payment is made: (Art.
2073)
1. In virtue of a judicial demand
2. Principal debtor is insolvent
Right to Reimbursement: The guarantor who
pays for a debtor must be indemnified by the
latter.
What Comprises the Right of the Guarantor to
Demand Indemnity or Reimbursement from the
Principal Debtor (Art. 2066) (DELT)
1. Total amount of the debt - The guarantor
has no right to demand reimbursement until
he has actually paid the debt, unless by the
terms of the contract, he is given the right
before making payment.
2. Legal interest - It is immaterial that the debt
did not earn interest for the creditor,
because the guarantor’s right to legal
interest is granted by law by virtue of the
payment he has made, and is independent
of the creditor’s right to claim interest which
was necessarily regulated by the
stipulations between him and the debtor.
3. Expenses incurred by the guarantor - The
expenses referred to are only those that the
guarantor has to satisfy in accordance with
law as a consequence of the guaranty.
These expenses are limited to those
incurred by the guarantor after having
notified the debtor that payment has been
demanded of him by the creditor.
a. Exception: The guarantor cannot
demand for reimbursement for
litigation expenses, when such
expenses are due to its failure to
fulfill its obligation to pay upon
demand. (Tuason v. Machuca,
G.R. No. L-22177, 1924)
4. Damages, if they are due.
Exceptions to Right to Indemnity or
Reimbursement
1. Where the guaranty is constituted without
the knowledge or against the will of the
principal debtor, the guarantor can recover
CIVIL LAW (AND PRACTICAL EXERCISES)
2.
3.
only insofar as the payment had been
beneficial to the debtor
Payment by a third person who does not
intend to be reimbursed by the debtor is
deemed to be a donation, which, however,
requires the debtor’s consent. But the
payment is in any case valid as to the
creditor who has accepted it (Art. 1238)
Waiver
Guarantor’s Right to Subrogation (Art. 2067)
Subrogation transfers to the person subrogated,
the credit with all the rights thereto appertaining
either against the debtor or against third persons, be
they guarantors or possessors of mortgages,
subject to stipulation in conventional subrogation.
1. Accrual, basis, and nature of right – right of
subrogation is necessary to enable the
guarantor to enforce the indemnity given in Art.
2066
a. Arises by operation of law upon payment by
the guarantor
b. It is not a contractual right
c. The guarantor is subrogated, by virtue of
the payment, to the right of the creditor, not
those of the debtor.
2. When right not available – since subrogation
is the means of effectuating the right of the
guarantor to be reimbursed, it cannot therefore
be invoked in those cases where the
guarantor has no right to be reimbursed.
Effect of Payment by Guarantor Without Notice
to Debtor (Art. 2068)
When the guarantor pays the creditor, but the
debtor has already paid the latter, then the
debtor can set up against the guarantor the
defense of previous extinguishments of the
obligation by payment.
Hence, guarantor must notify the debtor before
making payment.
Reason: The guarantor cannot be allowed, through
his own fault or negligence to prejudice or impair the
rights or interests of the debtor.
NOTE: In case of an unenforceable contract, if the
debtor consents to the guarantor paying, the
guarantor can seek reimbursement from the debtor.
If the debtor did not consent to the guarantor paying,
the guarantor cannot seek reimbursement from the
guarantor.
Effect of Payment by Guarantor before maturity
(Art. 2069)
Debtor’s obligation with a period – demandable
only when the day fixed comes.
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1.
2.
The guarantor who pays before maturity is not
entitled to reimbursement since there is no
necessity for accelerating payment.
A contract of guaranty being subsidiary in
character, the guarantor is not liable for the
debt before it becomes due.
Exception: The debtor will be liable if the
payment was made:
a. With his consent; or
b. Subsequently ratified (express or implied)
by him
Effect of Repeat Payment by the Debtor (Art.
2070)
a) General rule: Before the guarantor pays
the creditor, he must first notify the debtor.
a. If he fails to give notice and the
debtor repeats payment, the
guarantor’s remedy is to collect
from the creditor
b. No cause of action against the
debtor for the return of the amount
paid by him.
b) Exception: The guarantor may still claim
reimbursement from the debtor in spite of
lack of notice if the following conditions are
present:
a. The creditor becomes insolvent
b. That guarantor was prevented by
a fortuitous event to advise the
debtor of the payment
c. The guaranty is gratuitous
Right of Guarantor to Proceed Against Debtor
Before Payment (Art. 2071)
General rule: Guarantor has no cause of action
against the debtor until after the former has paid the
obligation.
Exceptions: Art. 2071 enumerates instances when
the guarantor may proceed against the debtor even
before the payment (ITS-PAID):
1. When he is Sued for the payment;
2. In case of Insolvency of the principal
debtor;
3. When the debtor has bound himself to
relieve him from the guaranty within a
specified period, and this Period has
expired;
4. When the debt has become Demandable,
by reason of the expiration of the period for
payment;
5. After the lapse of Ten (10) years, when the
principal obligation has no fixed period for
its maturity, unless it be of such nature that
it cannot be extinguished except within a
period longer than ten years;
6. If there are reasonable grounds to fear that
the principal debtor intends to Abscond;
CIVIL LAW (AND PRACTICAL EXERCISES)
7.
If the principal debtor is in imminent danger
of becoming Insolvent.
Purpose: To enable the guarantor to take
measures for the protection of his interest in view of
the probability that he would be called upon to pay
the debt.
Remedy to which the Guarantor is Entitled
The guarantor cannot demand reimbursement for
indemnity when he has not paid the obligation.
Remedies Available:
1. To obtain release from the guaranty; or
2. To demand security that shall protect him
from:
a. Any proceedings by the creditor; and
b. Against the insolvency of the debtor.
NOTE: Guarantor’s remedies are alternative. He
has the right to choose the action to bring.
Suit by Guarantor against Creditor Before
Payment
The guarantor’s or surety’s action for release can
only be exercised against the principal debtor and
not against the creditor.
Reason: The creditor cannot be compelled to
release the guarantor before payment of his credit.
Release of the guarantor imports an extinction of his
obligation to the creditor, connoting remission or a
novation by subrogation which requires the
creditor’s assent.
ART. 2066
(RIGHT
OF
GUARANTOR
TO
REIMBURSEMENT
AFTER PAYMENT)
Provides
for
the
enforcement of the
rights of the guarantor
against the debtor after
he has paid the debt –
gives a right of action
after payment
Substantive right
Gives a right of action,
which, without the
provisions of the other
might be worthless
ART. 2071
(RIGHT
OF
GUARANTOR
TO
PROCEED AGAINST
DEBTOR
EVEN
BEFORE PAYMENT)
Provides
for
the
protection before he
has paid but after he
has become liable –
gives
a protective
remedy
before
payment
Preliminary remedy
Remedy given seeks to
obtain
from
the
guarantor
“release
from the guaranty or to
demand a security that
shall protect him from
any proceedings by the
creditor and from the
danger of insolvency of
the debtor.”
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Recovery of Surety against Indemnitor (i.e.,
principal debtor) Even Before Payment
1. Indemnity agreement is for the benefit of
surety – not for the benefit of the creditor
2. Indemnity agreement may be against actual
loss as well as potential liability – such
agreement is enforceable and not violative of
any public policy
a. Indemnity against loss – indemnitor will
not be liable until the person to be
indemnified makes payment or sustains
loss
b. Indemnity against liability – indemnitor’s
liability arises as soon as the liability of the
person to be indemnified has arisen without
regard to whether or not he has suffered
actual loss
c. Such agreement valid - A stipulation in an
indemnity agreement providing that the
indemnitor shall pay the surety as soon as
the latter becomes liable to make payment
to the creditor under the terms of the bond,
regardless of whether the surety has made
payment actually or not, is valid and
enforceable, and in accordance therewith,
the surety may demand from the indemnitor
even before the creditor has paid.
Where
the
principal
debtors
are
simultaneously the same persons who
executed the indemnity agreement, the
position occupied by them is that of a
principal debtor and indemnitor at the
same, and their liability being joint and
several.
The liabilities of an insurer under the surety bond are
not extinguished when the modifications in the
principal contract do not substantially or materially
alter the principal's obligations. The surety is jointly
and severally liable with its principal when the latter
defaults from its obligations under the principal
contract. (People's Trans-East Asia Insurance
Corporation v. Doctors of New Millennium Holdings,
Inc., G.R. No. 172404, 2014)
Guarantor of a Third Person at Request of
Another (Art. 2072)
The guarantor who guarantees the debt of an
absentee at the request of another has a right to
claim reimbursement, after satisfying the debt from:
1. The person who requested him to be a
guarantor;
2. The debtor
CIVIL LAW (AND PRACTICAL EXERCISES)
Rights
(SICS)
1.
2.
3.
4.
of the Guarantor against The Debtor
Indemnification
Benefit of Subrogation
Benefit of Compromise
Right to obtain or demand a Security under
(Art. 2071)
Between Co-Guarantors Right to Contribution of
Guarantor Who Pays (Art. 2073)
Presumption of joint liability of several
guarantors when there are:
1. Two or more guarantors
2. Same debtor
3. Same debt
Effect: Each is bound to pay only his proportionate
share.
Co-Guarantor has Right to Contribution When:
1. One guarantor has paid the debt to the
creditor
2. Payment was made
a. In virtue of judicial demand
(benefit of division has ceased); or
b. Because principal debtor is
insolvent
3. Guarantor
who
paid
is
seeking
reimbursement from each of his coguarantors
the
share
which
is
proportionately owing him.
Effect: The co-guarantor who has paid may
demand of each of the others the share which is
proportionally owing from him.
Effect of Insolvency of any Guarantor
Follow the rule on solidary obligations: The
share of the insolvent guarantor shall be borne by
the others including the paying guarantor in the
same joint proportion.
Accrual and Basis of Right:
The right of reimbursement is acquired ipso jure
without need of any prior cession from the creditor
by the guarantor.
Defenses Available to Co-Guarantors (Art. 2074)
a) General rule: All defenses which the
debtor would have interposed against the
creditor (i.e. fraud, prescription, remission,
illegality, etc.).
b) Exception: Those which cannot be
transmitted for being purely personal to the
debtor.
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Liability of Sub-Guarantor in case of Insolvency
of Guarantor (Art. 2075)
Sub-guarantor is liable to the co-guarantors in the
same manner as the guarantor whom he
guaranteed in case of the insolvency of the
guarantor for whom he bound himself as subguarantor.
EXTINGUISHMENT OF GUARANTY
Causes of Extinguishment of Guaranty (PaNoCoCo-LoCo-FRAP) (Art. 2076)
General rule: Guaranty being accessory, it is
extinguished
when
principal
obligation
is
extinguished, the causes of which are:
1. Payment or performance;
2. Loss of the thing due;
3. Condonation or remission of the debt;
4. Confusion or merger of the rights of the
creditor and debtor;
5. Compensation; and
6. Novation
7. Other causes:
a. Annulment;
b. Rescission;
c. Fulfillment
of
a
resolutory
condition;
d. Prescription
Exception: The guaranty itself may be directly
extinguished although the principal obligation still
remains such as in the case of the release of the
guarantor made by the creditor.
Material Alteration of Principal Contract
Any agreement between the creditor and the
principal debtor which essentially varies the terms of
the principal contract without the consent of the
surety, will release the surety from liability.
Such material alteration would constitute a novation
or change of the principal contract, which is
consequently
extinguished.
Upon
such
extinguishments, the accessory contract to guaranty
is also terminated and the guarantor cannot be held
liable on the new contract to which he has not given
his consent.
When Alteration Material
Where such change will have the effect of making
the obligation more onerous.
1. Imposes a new obligation or added
burden on the party promising; or
2. Takes away some obligation already
imposed, changing the legal effect of the
original contract and not merely the form
thereof.
CIVIL LAW (AND PRACTICAL EXERCISES)
Release by Conveyance of Property (Art. 2077)
General rule: Payment is made in money.
Exception: Any substitute paid in lieu of money
which is accepted by the creditor extinguishes the
obligation and in consequence, the guaranty.
If the creditor accepts property in payment of a
debt from the debtor, the guarantor is relieved
from responsibility. This is also true even in
case the creditor is subsequently evicted from
the property.
In case of eviction: Eviction revives the principal
obligation but not the guaranty.
Reason: The creditor’s action against the debtor is
for eviction and this is different from what the
guarantor guaranteed.
Release of Guarantor without Consent of Others
(Art. 2078)
Effect: The release benefits all to the extent of the
share of the guarantor released.
Reason: A release made by the creditor in favor of
one of the guarantors without the consent of the
others may prejudice the others should a guarantor
become insolvent.
Release by Extension of Term Granted by
Creditor to Debtor (Art. 2079)
Release Without Consent of Guarantor: Creditor
grants an extension of time to the debtor without the
consent of the guarantor.
Effect: Guarantor is discharged from his
undertaking.
Reason: To avoid prejudice to the guarantor. The
debtor may become insolvent during the extension,
thus depriving the guarantor of his right to
reimbursement.
It doesn’t matter if the extension is:
a) Prejudicial or not; or
b) For a long or short period of time.
NOTE: Consent of the Guarantor is a must.
Extension must be based on some new agreement
between the creditor and the principal debtor by
virtue of which the creditor deprives him of his claim.
obligation
payable
in
1. Where
installments: Where a guarantor is liable
for different payments.
a. General rule: An extension of
time to one or more will not affect
the liability of the surety for the
others.
b. Exception: When the unpaid
balance has become automatically
due by virtue of an acceleration
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2.
clause for failure to pay an
installment.
i. Effect of exception: The act
of the creditor extending the
payment of said installment,
without
the
guarantor’s
consent,
discharges
the
guarantor.
c. Reason:
The
extension
constitutes an extension of the
payment of the whole amount of
the indebtedness
Where consent to an extension is
waived in advance by the guarantor or
surety: Such waiver is not contrary to law,
nor to public policy
a. Effect: Amounts to the guarantor’s
or surety’s consent to all the
extensions granted.
NOTE: The mere failure or neglect on the part of the
creditor to enforce payment or to bring an action
upon a credit, as soon as the same or any part of it
matures, does not constitute an extension of the
term of the obligation, and therefore, the liability of
the guarantor is not extinguished
In order to constitute an extension discharging a
surety, it should appear that the extension was:
(DEW)
1. For a Definite period
2. Pursuant to an Enforceable agreement
between the principal and the creditor
3. Made Without the consent of the surety or
with a reservation of rights with respect to
him.
The contract must be one which precludes the
creditor from, or at least hinders him in,
enforcing the principal contract within the
period during which he could otherwise have
enforced it, and precludes the surety from
paying the debt.
The law does not even grant the surety the
right to sue the creditor for delay, as protection
against the risks of possible insolvency of the
debtor; but in view of the efficacy of the action
on the contract against the surety, beginning
with the date the obligation becomes due, his
vigilance must be exercised rather against the
principal debtor.
That an extension granted to the debtor by the
creditor without the consent of the guarantor
extinguishes the guaranty, also applies to
suretyship. The theory behind Art. 2079 is that an
extension of time given to the debtor by the creditor
without the surety’s consent would deprive the
surety of his right to pay the creditor and to be
immediately subrogated to the creditor’s remedies
CIVIL LAW (AND PRACTICAL EXERCISES)
against the debtor upon the maturity date. The
surety is entitled to protect himself against the
debtor’s insolvency during the extension. However,
it must be stressed that Art. 2079 will apply only if
the extension is granted by the creditor in favor of
the debtor without the guarantor’s/surety’s consent.
(TIDC v. APC, 2014)
Release when Guarantor cannot be Subrogated
(Art. 2080)
If there can be no subrogation because of the
fault of the creditor, the guarantors are
thereby released, even if the guarantors are
solidary.
If the creditor has acquired a lien upon the
property of a principal debtor, the creditor at
once becomes charged with the duty of
retaining such security, or maintaining such lien
in the interest of the surety, and any release or
impairment of this security as a primary
resource of payment of a debt, will discharge
the surety to the extent of the value of the
property or lien released for there immediately
arises a trust relation between the parties, and
the creditor as trustee is bound to account to the
surety for the value of the security in his hands.
Reason: The act of one cannot prejudice another. It
also avoids collusion between the creditor and the
debtor or a third person.
Defenses Available to Guarantor against
Creditor (Art. 2081)
General rule: All defenses, which pertain to the
principal debtor and are inherent in the debt.
Exception: Those which are purely personal to the
debtor.
D. QUASI-CONTRACTS
NEGOTIORIUM GESTIO
One who voluntarily takes charge of the
agency/management of the business or property of
another (without any power from the latter), is
obliged to continue such agency or management
until:
1. The termination of the affair or its incidents; or
2. He has required the person concerned to
substitute him (if the owner is in a position to
do so).
However, this juridical relation does not arise in the
following:
1. When the property or business is NOT
neglected or abandoned.
2. If the manager has been impliedly authorized
by the owner.(Art. 2144)
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CIVIL LAW (AND PRACTICAL EXERCISES)
SOLUTIO INDEBITI
The principle of solutio indebiti provides that if
something is received when there is no right to
demand it, and it was unduly delivered through
mistake, the obligation to return it arises.
In such a case, a creditor-debtor relationship is
created under a quasi-contract whereby the payor
becomes the creditor who then has the right to
demand the return of payment made by mistake,
and the person who has no right to receive such
payment becomes obligated to return the same.
The principle of solutio indebiti applies where:
1. A payment is made when there exists no
binding relation between the payor, who has no
duty to pay, and the person who received the
payment;
2. The payment is made through mistake, and not
through liberality or some other cause. (SigaAn v. Villanueva, GR 173227, 2009)
-------- end of topic --------
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CIVIL LAW (AND PRACTICAL EXERCISES)
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X.
TORTS AND DAMAGES
TOPIC OUTLINE UNDER THE SYLLABUS
A. TORTS
1. Elements
2. Culpa aquiliana v. culpa contractual v.
culpa criminal
3. Vicarious liability
4. Res ipsa loquitur
5. Last clear chance
6. Damnum absque injuria
B. PROXIMATE CAUSE
C. NEGLIGENCE
1. Standard of care
2. Presumptions
D. DAMAGES
1. General provisions
2. Kinds of damages
3. In case of death
CIVIL LAW (AND PRACTICAL EXERCISES)
A. TORTS
Definition
Acts that give rise to civil liability but are not
necessarily the consequences of crimes or
contractual
obligations.
(Paras,
Pre-week
Handbook in Civil Law, p. 588, 2012)
An unlawful violation of a private right, not created
by contract, and which gives rise to an action for
damages. It is a wrongful act or omission resulting
in breach of a private legal duty, as distinguished
from a mere breach of contractual duty, and damage
from said breach of duty of such a character as to
afford a right of redress at law in favor of the injured
party against the wrongdoer. (Aquino, Torts and
Damages, p.1, 2013)
1. ELEMENTS
Based on Article 2176, the following are the
essential elements of a quasi-delict:
1. Culpable act or negligence;
2. Damage to another; and
3. Causal relation between the culpable act or
negligence and the damage to another.
(Vitug, Civil Law: Volume IV, pp. 327-328,
2006)
2. CULPA AQUILIANA v. CULPA
CONTRACTUAL v. CULPA
CRIMINAL
The obligation imposed by Article 2176 of the Civil
Code on quasi-delicts is demandable not only for
one’s own acts or omissions, but also for those of
persons for whom one is responsible (Art. 2180).
A person is liable not only for his own torts, but also
for those committed by others with whom he has a
certain relationship, or for whom he is responsible.
The basis of liability is pater familias or the failure of
the persons mentioned therein to exercise due care
and vigilance over the acts of subordinates to
prevent the damage.
(Filcar Transport Services v. Espinas, G.R. No.
174156, 2012)
NOTE: Vicarious liability is not governed by the
doctrine of respondeat superior. Under the doctrine
of respondeat superior, the master is liable in every
case and unconditionally; the negligence of the
servant is conclusively presumed to be the
negligence of the master.
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However, in vicarious liability, persons are made
vicariously liable not because of the negligent or
wrongful act of the person for whom they are
responsible, but because of their own negligence
(i.e. liability is imposed on the employer because he
failed to exercise due diligence in the selection and
supervision of his employees).
Whenever an employee’s negligence causes
damage or injury to another, there instantly arises a
presumption juristantum that the employer failed to
exercise diligentissimi patris families in the selection
(culpa in eligiendo) or supervision (culpa in
vigilando) of its employees. To avoid liability for a
quasi-delict committed by its employee, an
employer must overcome the presumption by
presenting convincing proof that he exercised the
care and diligence of a good father of a family in the
selection and supervision of his employee.
(Delsan Transport v. C&A Construction, G.R. No.
156034, 2003; Light Rail Transit Association v.
Navidad, G.R. No. 145804, 2003)
Exception
The doctrine of respondeat superior is applicable in:
1. Liability of employers under Art. 103 of the
Revised Penal Code
2. Liability of a partnership for the tort
committed by a partner.
Primary Liability Under Article 2180
The Supreme Court held that an employee-driver
was neither an indispensable nor a necessary party
in an action for damages filed against the employers
under Article 2176 in relation to Article 2180 to hold
the employer vicariously liable. Thus, it was not
necessary for the court to acquire jurisdiction over
the employee-driver to hold the employers liable for
damages.
(Cerezo v. Tuazon, G.R. No. 141538, 2004)
3. VICARIOUS LIABILITY
Joint Tortfeasors vs. Persons Vicariously
Liable
JOINT
PERSONS
TORTFEASORS
VICARIOUSLY
LIABLE
AS TO LIABILITY
Tortfeasor (under Art.
2176) and the person
Solidarily liable
vicariously liable
(Art. 2194)
(under Art. 2180) are
solidarily liable.
AS TO AMOUNT PAID
The solidary debtor
If the person
who pays the injured
vicariously liable pays
party may recover
the injured party, he
CIVIL LAW (AND PRACTICAL EXERCISES)
from the other debtor
his corresponding
share in the amount
paid. (Art.1217)
may recover the
entire amount he
paid from the actual
tortfeasor (Art.2182)
Persons Vicariously Liable
The following are the persons vicariously liable:
a. Father/Mother for their minor
children.
Reason
The liability is a necessary consequence of the
parental authority they exercise over them. The
liability under Article 2180 also extends to other
persons exercising parental authority like judicially
appointed guardians and adopters (AQUINO, Torts
and Damages, 730-31).
Adopters
The Court does not consider that retroactive effect
may be given to the decree of adoption so as to
impose a liability under the adopting parents.
(Tamago v. Court of Appeals, G.R. No. 85044,
1992).
b. Guardians are liable for the
minors
and
incapacitated
persons under their authority.
Incompetent includes persons suffering the penalty
of civil interdiction or who are hospitalized lepers,
prodigals, deaf and dumb who are unable to read
and write, those who are of unsound mind, even
though they have lucid intervals, and person’s not
being of unsound mind by reason of age, disease,
weak mind and other similar causes, cannot, without
outside aid, take care of themselves and manage
their property, becoming thereby an easy prey for
deceit and exploitation. (RULES OF COURT, Rule
92, Sec. 2)
c. Schools, administrators and
teachers,
and
individuals,
entities or institutions engaged
in child care having special
parental
authority
over
children.
Extent of Special Parental Authority
It can be exercised only over minors while under
their supervision, instruction or custody, including
while in authorized activities, whether inside or
outside premises of the school, entity or institution.
(AQUINO, Torts and Damages, 665)
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Custody
The protective and supervisory custody that the
school and its heads and teachers exercise over the
pupils and students for as long as they are in
attendance in school, including recess time.
(Palisoc v. Brillantes, G.R. No. L-29025, 1971)
As long as it can be shown that the student is in the
school premises in pursuance of a legitimate
student objective, in the exercise of a legitimate
right, and even in the enjoyment of a legitimate
student privilege, the responsibility of the school
authorities over the student continues.
(Amadora v. Court of Appeals, G.R. No. L-47745,
1988)
d. Owners/managers
of
establishment or enterprise for
their employees.
They are liable for damages caused by their
employees in the service of the branches in which
they are employed, or on the occasion of their
functions. It does not extend to acts of strangers
who committed unauthorized acts and in doing so,
caused damage to others. (Art. 2180, par. 4)
Managers
In Article 2180, “managers” is used in the sense of
an employer. A managerial employee within the
contemplation of the Labor Code is not a manager
under Article 2180 because he himself may be
regarded as an employee or dependiente of the
employer.
(Philippine Rabbit Bus Lines, Inc. v. Phil. American
Forwarders, Inc., G.R. No. L-25142, 1975)
NOTE: Co-employees are not liable even if they
supervise the employee.
e. Employers for their employees
and household helpers.
Although the employer is not the actual tortfeasor,
the law makes him vicariously liable on the basis of
the civil law principle of pater familias for failure to
exercise due care and vigilance over the acts of
one’s subordinates to prevent damage to another.
(Filcar Transport Service v. Espinas, supra)
f.
State for their special agents.
It is a basic constitutional rule that the State cannot
be sued without its consent. Consent of the State to
be sued can be manifested through a special law or
general law allowing the State to be sued.
(AQUINO, Torts and Damages, 718)
CIVIL LAW (AND PRACTICAL EXERCISES)
Special Agent
A special agent is one who receives a definite and
fixed order or commission, foreign to the exercise of
the duties of his office; task assigned must be
foreign from/to his usual government functions.
o If agent is not a public official and is
commissioned
to
perform
nongovernmental work, state is liable as
ordinary employer.
o
If government commissions a private
individual for a special government task, it
is acting through a special agent and will be
liable for tort under Article 2180.
g. Teachers/Heads
of
establishment of arts and
trades
for
their
pupils/
students/apprentices
(Art.
2180, NCC).
4. RES IPSA LOQUITUR
Definition
Where the thing which causes injury is shown to be
under the management of the defendant, and the
accident is such as in the ordinary course of things
does not happen if those who have the
management use proper care, it affords reasonable
evidence, in the absence of an explanation by the
defendant, that the accident arose from want of
care.
(Layugan v. IAC, G.R. 73998, 1998)
Elements of Res Ipsa Loquitur
1. The accident was of a kind which does not
ordinarily occur unless someone is
negligent;
2. The instrumentality or agency which
caused the injury was under the exclusive
control of the person charged with
negligence;
3. Injury suffered must have not been due to
any voluntary action or contribution on the
person injured
(D.M. Consunji v. Court of Appeals, G.R.
No. 137873, 2001);
4. It must appear that the injured party had no
knowledge or means of knowledge as to
the cause of the accident, or that the party
to be charged with negligence has superior
knowledge or opportunity for explanation of
the accident.
(Malayan Insurance Co. vs. Rodelio Alberto
and Enrico Reyes, G.R. No. 194320)
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The doctrine of res ipsa loquitur finds no application
if there is direct proof of absence or presence of
negligence. If there is sufficient proof showing the
conditions and circumstances under which the injury
occurred, then the creative reason for the said
doctrine disappears. (Huang v. Philippine Hoteliers
Inc., G.R. No. 180440, 2012)
Medical Malpractice; Doctrine of Common
Knowledge
The general rule on the necessity of expert
testimony applies only to such matters clearly within
the domain of medical science, and not to matters
of common knowledge. Ordinarily, only experienced
physicians and surgeons are competent to testify on
whether a patient has been treated with reasonable
care. However, where common knowledge and
experience teach that a resulting injury would not
have occurred if due care had been exercised (e.g.
leaving gauzes inside the body of the patient after
an operation, operating on the wrong part of the
body, etc.), an inference of negligence may be
drawn giving rise to an application of the doctrine of
res ipsa loquitur without medical evidence.
(Ramos v. Court of Appeals, G.R. No. 124354,
1999)
Standard of Care required from the Medical
Profession
Given these safeguards, there is no need to
expressly require of doctors the observance of
“extraordinary” diligence. As it is now, the practice
of medicine is already conditioned upon the highest
degree of diligence. The standard contemplated for
doctors is simply the reasonable average merit
among ordinarily good physicians. That is
reasonable diligence for doctors or, the reasonable
skill and competence that a physician in the same
or similar locality should apply.
Liability of Hospital in Cases of Medical
Negligence
The Court has applied the doctrine of agency by
estoppel to hold hospitals liable for the negligent
acts of physicians based on:
1. The patient accepts the services of the
physician; and
2. The patient believes that the physicians are
agents of the hospital.
Doctrine of Informed Consent
The doctrine of informed consent requires a doctor
to inform his patient of the material risks associated
with a medical procedure.
CIVIL LAW (AND PRACTICAL EXERCISES)
Elements of a malpractice claim based on the
doctrine of informed consent
1. The physician had a duty to disclose
material risks;
2. He failed to disclose or inadequately
disclosed those risks;
3. As a direct and proximate result of the
failure to disclose, the patient consented to
the treatment, which he or she would
otherwise not have consented to; and
4. The patient was injured by the proposed
treatment.
(Li v. Soliman, G.R. No. 165279, 2011)
5. LAST CLEAR CHANCE
Also known as the “Doctrine of Discovered Peril.”
Even though a person’s own acts may have placed
him in a position of peril and an injury results, the
injured is entitled to recover if the defendant through
the exercise of reasonable care and prudence might
have avoided injurious consequences to the
plaintiff.
Requisites
1. Plaintiff was in a position of danger by his
own negligence;
2. Defendant knew of such position of the
plaintiff;
3. Defendant had the last clear chance to
avoid the accident by exercise of ordinary
care but failed to exercise such last clear
chance and;
4. Accident occurred as proximate cause of
such failure.
Who may invoke:
Plaintiff
When the doctrine is not applicable
1. Joint Tortfeasors;
2. Defendants concurrently negligent;
3. As against third persons; and
4. Contractual breach.
6. DAMNUM ABSQUE INJURIA
There can be damage without injury in those
instances in which the loss or harm was not the
result of a violation of a legal duty. In such cases,
the consequences must be borne by the injured
person alone, the law affords no remedy for
damages resulting from an act which does not
amount to a legal injury or wrong. These situations
are often called damnum absque injuria.
(BPI Express Card Corporation v. Court of Appeals,
G.R. No. 120639)
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Damage v. Damages v. Injury
There is a material distinction among damage,
damages and injury. Injury is the illegal invasion of
a legal right; damage is the loss, hurt or harm which
results from the injury; and damages are the
recompense or compensation awarded for the
damage suffered.
(Custodio v. Court of Appeals, G.R. No. 116100,
1996)
When Not Applicable
The principle of damnum absque injuria does not
apply when there is an abuse of a person’s right.
(Cebu Country Club, Inc., v. Elizagaque, G.R. No.
160273, 2008)
Mistakes by public officers are not actionable in the
absence of malice or gross negligence amounting to
bad faith.
(Farolan v. Solmac Marketing Corporation, G.R. No.
83589)
B. PROXIMATE CAUSE
Definition
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.
(Vda. de Bataclan v. Medina, G.R. No. L-10126,
1957)
The proximate cause of the injury is not necessarily
the immediate cause of, or the cause nearest in time
to, the injury. It is only when the causes are
independent of each other that the nearest is to be
charged with the disaster. So long as there is a
natural, direct and continuous sequence between
the negligent act and the injury that it can
reasonably be said that but for the act the injury
could not have occurred, such negligent act is the
proximate cause of the injury, and whoever is
responsible therefore is liable for damages resulting
therefrom.
(Brinas v. People of the Philippines, G.R. L-30309,
1983)
Proximate Cause Inapplicable in Breach of
Contract
Such doctrine only applies in actions for quasidelicts, not in breach of contract. It is a device for
imputing liability to a person where there is no
relation between him and another party.
(Sps. Guanio v. Makati Shangri-La Hotel, G.R. No.
190601, 2011)
CIVIL LAW (AND PRACTICAL EXERCISES)
But note that in the case of Bataclan v. Medina, the
court used the doctrine of proximate cause in the
case of breach of contract of carriage but only to
determine the extent of liability.
Bataclan v. Medina (G.R. No. L-10126, 1957)
Necessary Link
The necessary link or the causal relation between
the proximate cause and the injury must be directly
shown and established to overcome the burden of
proof required, and to determine liability.
NOTE: If plaintiff's negligence is only contributory,
he is considered partly responsible only. Plaintiff
may still recover from the defendant but the award
of damages may be reduced by the courts in
proportion to his own negligence.
(Bank of America NT & SA vs. Philippine Racing
Club, G.R. No. 150228, 2009)
Efficient Intervening Cause
An independent intervening cause as one which is
so distinct as to sever the connection of cause and
effect between the negligent act and the injury.
(Bartels v. City of Williston, 629 F.2d 509, 1980)
An intervening cause, to be considered efficient,
must be one not produced by a wrongful act or
omission, but independent of it, and adequate to
bring the injurious results.
Any cause intervening between the first wrongful
cause and the final injury which might reasonably
have been foreseen or anticipated by the original
wrongdoer is not such an efficient intervening cause
as will relieve the original wrong of its character as
the proximate cause of the final injury.
(Abrogar v. Cosmos Bottling Co., G.R. No. 164749,
March 15, 2017)
If an independent cause intervenes, which is of itself
sufficient to produce the result, it is regarded as
proximate cause, and the originator of the first cause
is relieved from liability.
(Michael v. U.S., 338 F.2d 219, 1964)
Immediate Cause
The cause nearest in time to the injury.
Intervening Cause
If the intervening cause is one which in ordinary
human experience is reasonably to be anticipated
or one which the defendant has reason to anticipate
under the particular circumstances, the defendant
may be negligent among other reasons, because of
failure to guard against it; or the defendant may be
negligent only for that reason.
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One who sets a fire may be required to foresee that
an ordinary, usual and customary wind arising later
will spread it beyond the defendant's own property,
and therefore to take precautions to prevent that
event. The person who leaves the combustible or
explosive material exposed in a public place may
foresee the risk of fire from some independent
source. In all of these cases there is an intervening
cause combining with the defendant's conduct to
produce the result and in each case the defendant's
negligence consists in failure to protect the plaintiff
against that very risk.
(Phoenix Construction v. IAC, G.R. No. L-65295,
1987).
A prior and remote cause cannot be made the basis
of an action if such remote cause did nothing more
than furnish the condition or give rise to the occasion
by which the injury was made possible, if there
intervened between such prior or remote cause and
the injury a distinct, successive, unrelated, and
efficient cause of the injury, even though such injury
would not have happened but for such condition or
occasion. If no danger existed in the condition
except because of the independent cause, such
condition was not the proximate cause. And if an
independent negligent act or defective condition
sets into operation the instances, which result in
injury because of the prior defective condition, such
subsequent act or condition is the proximate cause.
(Manila Electric Co. v. Remoquillo, G.R. No. L-8328,
1956).
Remote Cause
That cause which some independent force merely
took advantage of to accomplish something not the
natural effect thereof. It cannot be considered the
legal or proximate cause of the damage. (Aquino,
Torts and Damages, p. 318, 2013)
Concurrent Cause
Where several causes producing an injury are
concurrent and each is an efficient cause without
which the injury would not have happened, the injury
may be attributed to all or any of the causes and
recovery may be had against any or all of the
responsible
persons
although
under
the
circumstances of the case, it may appear that one
of them was more culpable, and that the duty owed
by them to the injured person was not the same. No
actor's negligence ceases to be a proximate cause
merely because it does not exceed the negligence
of other actors. Each wrongdoer is responsible for
the entire result and is liable as though his acts were
the sole cause of the injury.
(Ruks Konsult and Construction v. Adworld Sign
and Advertising Corp., G.R. No. 204886, 2015)
CIVIL LAW (AND PRACTICAL EXERCISES)
Legal Cause/Proximate Cause; Test of
Foreseeability
Where the particular harm was reasonably
foreseeable at the time of the defendant’s
misconduct, his act or omission is the legal cause
thereof. Foreseeability is the fundamental test of the
law of negligence. To be negligent, the defendant
must have acted or failed to act in such a way that
an ordinary reasonable man would have realized
that certain interests of certain persons were
unreasonably subjected to a general but definite
class of risk which made the actor’s conduct
negligent, it is obviously the consequence for the
actor must be held legally responsible. Otherwise,
the legal duty is entirely defeated. Accordingly, the
generalization may be formulated that all particular
consequences, that is, consequences which occur
in a manner which was reasonably foreseeable by
the defendant at the time of his misconduct are
legally caused by his breach of duty.
(Achevara v. Ramos, G.R. No. 175172, 2009)
Emergency Rule Doctrine
Under the emergency rule, one who suddenly finds
himself is a place of danger and is required to act
without time to consider the best means that may be
adopted to avoid the impending danger is not guilty
of negligence even if fails to adopt what
subsequently and upon reflection may appear to
have been a better method unless the emergency,
he finds himself in is brought by his own negligence.
(Gan v. Court of Appeals G.R. No. L-44264, 1988)
Elements
The emergency rule or sudden peril doctrine can be
broken down into elements namely:
i.
Defendant found himself in a place of
danger;
ii.
Defendant had no time to consider the best
means to avoid such danger; and
iii.
Defendant was not negligent.
Case Law Has Discredited the Distinction
Between Cause and Condition
The distinction between cause and condition has
now been entirely discredited.
In Phoenix Construction v. IAC, the Court ruled:
Many courts have sought to distinguish between the
active "cause" of the harm and the existing
"conditions" upon which that cause operated. If the
defendant has created only a passive static
condition, which made the damage possible, the
defendant is said not to be liable. But so far as the
fact of causation is concerned, in the sense of
necessary antecedents which have played an
important part in producing the result it is quite
impossible to distinguish between active forces and
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CIVIL LAW (AND PRACTICAL EXERCISES)
passive situations, particularly since, as is invariably
the case, the latter are the result of other active
forces which have gone before.
a good father of a family, unless the law or the
stipulation of the parties requires another standard
of care. (Art. 1163)
The defendant who spills gasoline about the
premises creates a "condition," but the act may be
culpable because of the danger of fire. When a
spark ignites the gasoline, the condition has done
quite as much to bring about the fire as the spark;
and since that is the very risk, which the defendant
has created, the defendant will not escape
responsibility. Even the lapse of a considerable time
during which the "condition" remains static will not
necessarily affect liability; one who digs a trench in
the highway may still be liable to another who fans
into it a month afterward.
Diligence of a “good father of a family"
It is the standard of diligence expected of, among
others, usufructuaries, passengers of common
carriers, agents, depositaries, pledgees, officious
managers, and persons deemed by law as
responsible for the acts of others. It requires only
that diligence which an ordinary prudent man would
exercise with regard to his own property.
(Philippine National Bank v. Santos, G.R. No.
208293 & 208295)
"Cause" and "condition" still find occasional mention
in the decisions; but the distinction is now almost
entirely discredited. So far as it has any validity at
all, it must refer to the type of case where the forces
set in operation by the defendant have come to rest
in a position of apparent safety, and some new force
intervenes. But even in such cases, it is not the
distinction between "cause" and "condition" which is
important but the nature of the risk and the character
of the intervening cause.
(Phoenix Construction v. IAC, G.R. L-65295, 1987)
If the law or contract does not state the diligence
which is to be observed in the performance, that
which is expected of a good father of a family shall
be required. (Art. 1173)
C. NEGLIGENCE
1. STANDARD OF CARE
Intoxication
Mere intoxication is not negligence, nor does the
mere fact of intoxication establish a want of ordinary
care. It is but a circumstance to be considered with
the other evidence tending to prove negligence.
(Wright v. Manila Electric R.R. & Light Co., G.R. No.
7760)
Concept
The omission of that degree of diligence which is
required by the nature of the obligation and
corresponds to the circumstances of the persons,
time and place. (Art. 1173)
Lawyers
A lawyer is not bound to exercise extraordinary
diligence, but only a reasonable degree of care and
skill, having reference to the character of the
business he undertakes to do.
(Adarne v. Aldaba, A.C. No. 801)
The test by which to determine the existence of
negligence in a particular case may be stated as
follows: Did the defendant, in doing the alleged
negligent act, use that reasonable care and caution
which an ordinarily prudent person would have used
in the same situation? If not, then he is guilty of
negligence.
(Picart v. Smith, 37 Phil. 809)
Physicians
The physician’s duty to his patient relates to his
exercise of the degree of care, skill and diligence
which
physicians
in
the
same
general
neighborhood, and in the same general line of
practice, ordinarily possess and exercise in like
cases.
Negligence has been defined as “the failure to
observe for the protection of the interests of another
person that degree of care, precaution, and
vigilance which the circumstances justly demand,
whereby such other person suffers injury."
(Cusi v. Philippine National Railways, G.R. No. L29889)
Good father of a family or reasonably prudent
person
Every person obliged to give something is also
obliged to take care of it with the proper diligence of
Banks
Similar to common carriers, banking is a business
that is impressed with public interest. Hence, the
Court has recognized the fiduciary nature of banks’
functions and attached a special standard of
diligence for the exercise of their functions.
One who is blind
One who is physically disabled is required to use the
same degree of care that a reasonably careful
person who has the same physical disability would
use. Physical handicaps and infirmities, such as
blindness or deafness, are treated as part of the
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circumstances under which a reasonable person
must act. Thus, the standard of conduct for a blind
person becomes that of a reasonable person who is
blind.
(Francisco v. Chemical Bulk Carriers, Incorporated,
G.R. No. 193577)
In possession of dangerous instrumentalities
A higher degree of care is required of someone who
has in his possession or under his control an
instrumentality extremely dangerous in character,
such as dangerous weapons or substances.
(Pacis v. Morales, G.R. No. 169467)
Emergency
One who suddenly finds himself in a place of danger
and is required to act without time to consider the
best means that may be adopted to avoid the
impending danger, is not guilty of negligence, if he
fails to adopt what subsequently and upon reflection
may appear to have been a better method, unless
the emergency in which he finds himself is brought
about by his own negligence.
(Gan v. Court of Appeals, G.R. No. L-44264, 1988)
An individual will nevertheless be subject to liability
if the emergency was brought about by his own
negligence.
(Valenzuela v. CA, G.R. Nos. 115024 & 117944,
1996)
NOTE: Applicable only to situations that are sudden
and unexpected such as to deprive the actor of all
opportunity
for
deliberation
(absence
of
foreseeability); the action shall still be judged by the
standard of the ordinary prudent man.
2. PRESUMPTIONS
General Rule
The burden of proof in each action based on quasidelict rests on the plaintiff.
Exception
There are certain exceptions when the plaintiff need
not prove the existence of negligence as an element
of quasi-delict i.e. res ipsa loquitur, injury caused by
dangerous weapons and substances, violation of
traffic rules and regulations, strict liability torts.
NOTE: However, the party invoking such
presumption
must
still
establish
certain
preconditions before the presumption can operate.
For instance, Article 2185 requires proof that there
was a violation of a traffic regulation while Article
2188 requires proof of possession of dangerous
weapons or substances, such as firearms and
poison. (Aquino, Torts and Damages, p. 137, 2005)
CIVIL LAW (AND PRACTICAL EXERCISES)
D. DAMAGES
1. GENERAL PROVISIONS
Concept
Adequate compensation for the value of loss
suffered or profits which obligee failed to obtain.
Exceptions
1. Law; and
2. Stipulation.
Actual damages shall be construed to include all
damages that the plaintiff may show he has suffered
in respect to his property, business, trade,
profession, or occupation, and no other damages
whatsoever. Actual damages are compensatory
only. They simply make good or replace the loss
caused by the wrong.
(Algarra v. Sandejas, G.R. No. L-8385, 1914.).
Indemnification is meant to compensate for the
injury inflicted and not to impose a penalty. A party
is entitled to adequate compensation only for such
pecuniary loss actually suffered and duly proved.
(PNOC Shipping and Transport Corp v. CA, G.R.
No. 107518, 1998)
2. KINDS OF DAMAGES
a. Actual Damages
Classes (I-LAV-IIT)
1. Indemnity for death;
2. Lucrum Cesans (Benefits you would have
obtained;
3. Attorney’s fees;
4. Value of loss actually sustained (damnum
emergens);
5. Interest;
6. Injury to business standing or commercial
credit; and
7. Temporary or permanent loss of earning
capacity.
Kinds of Actual or Compensatory Damages
i.
General Damage
Natural,
necessary
and
logical
consequences of a particular wrongful act
which result in injury; need not be
specifically pleaded because the law itself
implies or presumes that they resulted from
the wrongful act
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ii.
Special Damages
Damages which are the natural, but not the
necessary and inevitable result of the
wrongful act. (i.e., attorney’s fees)
Requisites
1. Alleged and Proved with Certainty
a. Must be pleaded and proved with
certainty; and
b. Must pray for the relief that claim for
loss be granted.
2.
CIVIL LAW (AND PRACTICAL EXERCISES)
Not Speculative
Plaintiff must prove the loss. For damages
to be recovered, the best evidence
obtainable by the injured party must be
presented. Actual or compensatory
damages cannot be presumed but must be
proved with reasonable degree of certainty.
The Court cannot rely on speculation,
conjecture or guesswork as to the fact and
amount of damages, but must depend upon
competent proof that they have been
suffered and on evidence of the actual
amount. If the proof is flimsy and
unsubstantial, no damages will be
awarded.
(Consolidated Industrial Gases, Inc. vs.
Alabang Medical Center, G.R. No. 181983,
2013)
The claimant has the burden of proof. He must
establish his case by a preponderance of evidence
which means that evidence, as a whole, adduced by
one side is superior to that of the other. It is not
enough that the plaintiff presents an estimated
amount. But uncertainty as to the precise amount is
not necessarily fatal. Mere difficulty in the
assessment of damages is not sufficient reason for
refusing to award damages where the right to them
has been established.
(PNOC Shipping and Transport Corp v. CA, G.R.
No. 107518, 1998).
When Loss Need Not Be Proved
1. Liquidated damages previously agreed
upon; liquidated damages take the place of
actual damages except when additional
damages are incurred;
2. If damages other than actual are sought;
3. Loss is presumed (ex: loss if a child or
spouse);
4. Forfeiture of bonds in favor of the
government for the purpose of promoting
public interest or policy (ex: bond for
temporary stay of alien); and
5.
Award of civil indemnity in tort cases or
criminal cases where the victim died. This
civil indemnity is in addition to any actual or
compensatory damages that may be
awarded in favor of the victim’s heirs.
Value of Loss
Means the unrealized profit.
Value of Loss Suffered
Destruction of things, fines or penalties, medical &
hospital bills, attorney's fees, interests, cost of
litigation.
Loss of Earning Capacity; Variables to
Consider
1.
Life expectancy:
Formula: [2/3 x( 80 – (age at the time of death))]
The resulting amount should be used as a
multiplier even if the computed life expectancy
goes beyond the victim’s retirement age. The
presumption is that the victim could have
earned income even if he is beyond the
retirement age.
(Smith Bell Dodwell Shipping Agency
Corporation v. Borja, G.R. No. 143008, 2002)
2.
Net income/earnings: total of the earnings less
expenses necessary for the creation of such
earnings and less living or other incidental
expenses.
3.
Living expenses: In the absence of the
specific amount to be deducted from the gross
income, the amount of living expenses shall be
50% of the gross income. Examples of living
expenses: transportation, clothing, toiletries.
4.
Non-working victims: Earning capacity may
be impaired even if no actual earning is lost in
the meantime. The liability under Article 2206 is
for loss of earning capacity rather than loss of
actual earnings. The minimum wage can be
used in computing the net earnings.
5.
Pension: Loss of earning capacity covers
pension which the decedent would have
received.
(De Caliston v. CA, G.R. No. L-63135, 1983).
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Formula for Computation of Loss of Earning
Capacity
American Expectancy Table of Mortality or the
Actuarial of Combined Experience Table of
Mortality:
[2/3 x (80 – (age at the time of death))] x
monthly earnings x 12 = GROSS
EARNINGS (GE)
GE – Approximate Expenses
(50% of GE) = Net Earnings
NOTE: In the absence of documentary evidence of
expenses, it is reasonable to presume that it is 50%
of the gross income.
(Philippine Hawk Corporation v. Lee, G.R. No.
166869, 2010)
LEC May Be Awarded to Parents of Deceased
Child Who Had NO History of Earnings
Art. 2206(1) provides that damages for LEC shall be
assessed and awarded by the court “unless the
deceased on account of permanent physical
disability not caused by the defendant, had no
earning capacity at the time of his death”. Damages
for LEC may be awarded to a minor’s heirs although
he had no history of earnings because
compensation of this nature is awarded not for loss
of time or earnings but for loss of the deceased’s
power or ability to earn money.
(Spouses Pereña v. Spouses Zarate, G.R. No.
157917, August 29, 2012)
How to Compute LEC of Non-Earning Student
As a general rule, damages for LEC are computed
by applying the following formula:
Damages for LEC = 2/3(80-X) multiplied
by Net Annual Income
o
o
X – the deceased or permanently
incapacitated person’s age at the time of
the accident; and
Net Annual Income – equivalent to a
person’s Gross Annual Income less
Necessary and Living Expenses (in the
absence of evidence, it is presumed that
Necessary and Living Expenses are equal
to half of a person’s Gross Annual Income).
The Formula May Be Modified When a Minor
Who Was Not Yet Earning is Involved:
1. “X” may be fixed at 21, instead of the
person’s age at the time of his death or
permanent incapacity.
Courts may
presume that persons graduate from
CIVIL LAW (AND PRACTICAL EXERCISES)
2.
college at the age of 21, and it is only then
that they would start earning a livelihood;
“Net Annual Income '' may be computed
on the basis of the prevailing minimum
wage for workers in the non-agricultural
sector at the time of the minor’s death or
permanent incapacity.
(Spouses Pereña v. Spouses Zarate, 2012;
and Abrogar v. Cosmos Bottling Co., 2017)
General Rule
Documentary evidence should be presented to
substantiate the claim for damages for loss of
earning capacity.
Exceptions
Damages for loss [or impairment] of earning
capacity may be awarded despite the absence of
documentary evidence when (1) the deceased [or
the injured] was self-employed and earning less
than the minimum wage under current labor laws, in
which case, judicial notice may be taken of the fact
that in the deceased’s line of work no documentary
evidence is available; or (2) the deceased was
employed as a daily worker earning less than the
minimum wage under current labor laws.
Loss of Profits (Lucrum Cessans)
May be determined by considering the average
profit for the preceding years multiplied by the
number of years during which the business was
affected by the wrongful act or breach
The income of similar businesses or activities may
be considered.
(G.A. Machineries, Inc. v. Yaptinchay, G.R. No. L30965, 1983)
Damage to Business Standing/ Commercial
Credit
In Radio Communications v. CA, compensatory
damages were also awarded for injury to
respondent's "business reputation or business
standing", "loss of goodwill and loss of customers or
shippers who shifted their patronage to
competitors". The grant thereof is proper under the
provisions of Article 2205, which provides that
damages may be recovered "for injury to the
plaintiff's business standing or commercial credit."
And even if not recoverable compensatory
damages, they may still be awarded in the concept
of temperate or moderate damages.
There are cases where from the nature of the case,
definite proof of pecuniary loss cannot be offered,
although the court is convinced that there has been
such loss. For instance, injury to one's commercial
credit or to the goodwill of the business firm is often
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hard to show with certainty in terms of money. The
judge should be empowered to calculate moderate
damages in such cases, rather than that the plaintiff
should suffer, without redress from the defendant's
wrongful act.
(Radio Communications of the Philippines, Inc. v.
Court of Appeals, G.R. No. L-55194, 1981)
Attorney’s Fees
They are actual damages due to the plaintiff and not
to counsel.
Plaintiff must allege the basis of his claim for
attorney’s fees in the complaint. The basis should
be one of the cases under Art. 2208.
In its ordinary concept, an attorney’s fee is the
reasonable compensation paid to a lawyer by his
client for the legal services he has rendered to the
latter. The basis of this compensation is the fact of
his employment by and his agreement with the
client.
In its extraordinary concept, an attorney’s fee is an
indemnity for damages ordered by the court to be
paid by the losing party in litigation. The basis of this
is any of the cases provided by law where such
award can be made, such as those authorized in
Article 2208, Civil Code, and is payable not to the
lawyer but to the client, unless they have agreed that
the award shall pertain to the lawyer as additional
compensation or as part thereof.
Attorney's fees are recoverable not as a matter of
right. It is the import of Article 2208 that the award
of attorney's fees is an exception and that the
decision must contain an express finding of fact to
bring the case within the exception and justify the
grant of attorney's fees. "Just and equitable" under
paragraph 11, Article 2208, New Civil Code is not a
matter of feelings, but demonstration. The reason
for the award of attorney's fees must be stated in the
text of the court's decision, otherwise, if it is stated
only in the dispositive portion of the decision, the
same must be disallowed on appeal.
(Abrogar v. IAC, G.R. No. L-67970 January 15,
1988)
When Attorney’s Fees are Recoverable;
General Rule
In the absence of stipulation, attorney's fees and
expenses of litigation, other than judicial costs,
cannot be recovered.
Exceptions:
1. When exemplary damages are awarded;
2. When the defendant's act or omission has
compelled the plaintiff to litigate with third
CIVIL LAW (AND PRACTICAL EXERCISES)
persons or to incur expenses to protect his
interest;
3. In criminal cases of malicious prosecution
against the plaintiff;
4. In case of a clearly unfounded civil action or
proceeding against the plaintiff;
5. Where the defendant acted in gross and
evident bad faith in refusing to satisfy the
plaintiff's plainly valid, just and demandable
claim;
6. In actions for legal support;
7. In actions for the recovery of wages of
household helpers, laborers and skilled
workers;
8. In actions for indemnity under workmen's
compensation and employer's liability laws;
9. In a separate civil action to recover civil liability
arising from a crime;
10. When at least double judicial costs are
awarded. (Art. 2208)
Interest
Two types of interest:
1. Monetary Interest; and
2. Compensatory Interest.
Monetary Interest
Compensation for the use of money.
NOTE: The legal rate at the time of perfection of the
obligation will apply. It will not be affected by a
supervening change in the legal rate of interest.
Requisites
The collection of interest in loans or forbearance of
money is allowed only when these two conditions
concur:
1. There was an express stipulation for the
payment of interest; and
2. The agreement for the payment of the
interest was reduced in writing.
Absent any of these two conditions, the money
debtor cannot be made liable for interest. Evidence
must be presented to show that the parties agreed
on the payment of interest.
BUT SEE: S.C. Megaworld v. Parada (G.R. No.
183804, 2013) and Raymundo v. Galen Realty
(G.R. No. 191594, 2013) where the Court awarded
interest despite the absence of stipulation.
Compensatory interest
It is awarded in the concept of damages for delay in
the performance of an obligation. It is due and
demandable from the time demand is first made,
whether judicial or extrajudicial.
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NOTE: For compensatory interest, the legal rate of
interest always applies. This means that
compensatory interest is affected by supervening
changes in legal rate of interest.
Rules in the Computation of Interest in the
Concept of Actual or Compensatory Damage
(a) In case of loan or forbearance of money,
goods, credits or judgments, the interest due
should be that which is stipulated by the parties
in writing, provided that it is not excessive and
unconscionable. which may have been
stipulated in writing:
1. In the absence of a stipulated reckoning
date, the interest shall be computed from
default, i.e., from extrajudicial or judicial
demand in accordance with Article 1169 of
the Civil Code, UNTIL FULL PAYMENT,
without compounding any interest.
o Unless compounded interest is
expressly stipulated by the parties,
by law or regulation.
2. Interest due on the principal amount
accruing as of judicial demand shall
separately earn legal interest at the
prevailing rate prescribed by the Bangko
Sentral ng Pilipinas, from the time of judicial
demand until full payment.
(b) Obligation other than a loan or forbearance
of money, goods, credits or judgments
1. The rate of interest on the principal amount
shall be the prevailing legal interest
prescribed by the Bangko Sentral ng
Pilipinas.
2. It shall be computed from extrajudicial or
judicial demand in accordance with Article
1169 of the Civil Code, UNTIL FULL
PAYMENT, without compounding any
interest.
o Unless compounded interest is
expressly stipulated by the parties,
by law or regulation.
3. Interest due on the principal amount
accruing as of judicial demand shall
separately earn legal interest at the
prevailing rate prescribed by the Bangko
Sentral ng Pilipinas, from the time of judicial
demand until full payment.
(c) When the obligation, not constituting a loan
or forbearance of money, goods, credits or
judgments, is breached, an interest on the
amount of damages awarded may be imposed
in the discretion of the court at the prevailing
legal interest prescribed by the Bangko Sentral
CIVIL LAW (AND PRACTICAL EXERCISES)
ng Pilipinas, pursuant to Articles 2210 and
2011 of the Civil Code, which is 6%.
(d) No interest, however, shall be adjudged on
unliquidated claims or damages until the
demand
can
be
established
with
reasonable certainty. Accordingly, where the
amount of the claim or damages is established
with reasonable certainty, the prevailing legal
interest shall begin to run from the time the
claim is made extrajudicially or judicially (Art.
1169) until full payment, but when such
certainty cannot be so reasonably established
at the time the demand is made, the interest
shall begin to run only from the date of the
judgment of the trial court (at which time the
quantification of damages may be deemed to
have been reasonably ascertained) until full
payment.
o The actual base for the computation of the
interest shall, in any case, be on the
principal amount finally adjudged, without
compounding
any interest
unless
compounded interest is expressly
stipulated by law or regulation.
(Lara’s Gifts & Decors, Inc. v. Midtown
industrial Sales, Inc., G.R. No. 225433,
2019).
NOTE: C.B. Circular No. 799, July 1, 2013, changed
the rate of interest in the absence of stipulation in
loans or forbearance of money to 6%.
When Actual Damages are Mitigated
1. Contributory negligence;
2. In contracts, quasi-contracts, and quasi-delict;
(a) Plaintiff has contravened the terms of
contract;
(b) Plaintiff derived some benefit as result of
contract;
(c) In case where exemplary damages are to
be awarded, that the defendant acted
upon the advice of counsel;
(d) That the loss would have resulted in any
event; and
(e) That since the filing of the action, the
defendant has done his best to lessen the
plaintiff's loss or injury.
General Rule
Insofar as actual or compensatory damages are
concerned, Article 2199 provides, “Except as
provided by law or by stipulation, one is entitled to
an adequate compensation only for such pecuniary
loss suffered by him as he has duly proved. Such
compensation is referred to as actual or
compensatory damages.”
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“Conformably with the foregoing provision, the rule
is long and well settled that there must be pleading
and proof of actual damages suffered for the
same to be recovered.
In addition to the fact that the amount of loss must
be capable of proof, it must also be actually proven
with a reasonable degree of certainty, premised
upon competent proof or the best evidence
obtainable.
The burden of proof of the damage suffered is,
consequently, imposed on the party claiming the
same who should adduce the best evidence
available in support thereof, like sales and delivery
receipts, cash and check vouchers and other pieces
of documentary evidence of the same nature. In the
absence of corroborative evidence, it has been held
that self-serving statements of account are not
sufficient basis for an award of actual damages.
Corollary to the principle that a claim for actual
damages cannot be predicated on flimsy, remote,
speculative, and insubstantial proof, courts are,
likewise, required to state the factual bases of the
award.
(Oceaneering Contractors (Phils.), Inc. v. Barreto,
G.R. No. 184215, 2011)
Exceptions
1. It should be emphasized however that
uncertainty as to the precise amount is not
necessarily fatal.
(Talisay-Silay Milling, Inc. v. Associacion de
Agricultores de Talisay-Silay, Inc., G.R. No.
91852,1995);
2.
3.
Mere difficulty in the assessment of damages is
not sufficient reason for refusing to award
damages where the right to them has been
established.
(Ball v. Pardy CTJ Construction Co., 63 ALR
139, 108 Conn. 549, 143 A 855);
Proof of Actual loss is also not necessary in
cases where the law or jurisprudence allows the
award of civil indemnity. As in People v.
Guanzon, the Court ruled that: Civil indemnity,
which is actually in the nature of actual or
compensatory damages, is mandatory upon the
finding of the fact of rape.
(People v. Alex Condez y Guanzon, G.R. No.
187077, 2011)
CIVIL LAW (AND PRACTICAL EXERCISES)
1.
Damages in Case of Good Faith
(a) Natural and probable consequences of
breach of obligations; and
(b) Parties have foreseen or could have
reasonably foreseen at the time the
obligation was created.
2.
Damages in Case of Bad Faith
It is sufficient that damages may be reasonably
attributed to the non-performance of the
obligation.
Two Kinds of Foreseeability
1. Imputed Foreseeability
Those consequences which a reasonable
person should have foreseen; the test is
whether a reasonable person would have
foreseen the damages that the purchaser
encountered.
(Hadley v. Baxendale, cited in Daywalt v. La
Corporacion, G.R. No. L-13505, 1919).
2.
Actual Foreseeability
Actual knowledge (not just imputed) of relevant
facts is necessary where the loss in question is
of an unusual kind or of an unusually high
extent.
In Mendoza v. PAL, the defendant cannot be
held liable for damages where it could not have
foreseen the damages that would be suffered
by the plaintiff upon failure to deliver the can of
film for reason that the plans of the plaintiff to
exhibit that film during the town fiesta and his
preparation, specially the announcement of
said exhibition by poster and advertisement in
the newspapers were not called to the
defendant's attention.
Unusual or extraordinary damages (beyond
the ordinary course of things) must have been
brought within the contemplation of the parties
as the probable result of breach at the time of
or prior to contracting. (Mendoza v. PAL, G.R.
No. L-3678, 1952)
Extent or Scope of Actual Damages; In Crimes
and Quasi-Delicts
1. Defendant is liable for all damages that are
natural and probable consequences of the
act complained of; and
2. Not necessary that damages have been
foreseen or could have been reasonably
foreseen.
Extent or Scope of Actual Damages; In
Contracts and Quasi-Contracts
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b. Moral Damages
Concept
Includes (PBMF-MWSSS)
1. Physical suffering
2. Besmirched reputation
3. Mental anguish
4. Fright
5. Moral shock
6. Wounded feelings
7. Social humiliation
8. Serious anxiety
9. Sentimental value of real or personal property
may be considered in adjudicating moral
damages. (Art. 2217)
The social and economic/financial standing of the
offender and the offended party should be taken into
consideration in the computation of moral damages.
(Kierulf v. Court of Appeals, G.R. No. 99343, 1997)
Moral damages is awarded only to enable the
injured party to obtain means, diversions or
amusements that will serve to alleviate the moral
suffering he has undergone, by reason of
defendant's culpable action and not intended to
enrich a complainant at the expense of defendant.
(Mayo v. People, G.R. No. 91201, 1991)
When Moral Damages Recoverable
1. Criminal offense resulting in physical injuries
2. Quasi-delicts causing physical injuries
3. Seduction, abduction, rape or other acts of
lasciviousness
4. Adultery and concubinage
5. Illegal or arbitrary detention or arrest
6. Illegal search
7. Libel, slander or other form of defamation
8. Malicious prosecution
9. Acts mentioned in ART. 309 of the RPC
relating to disrespect of the dead and
interference with funeral
10. Acts and actions referred to in Arts. 21, 26, 27,
28, 29, 30, 32, 34 and 35. (Art. 2219)
CIVIL LAW (AND PRACTICAL EXERCISES)
In culpa aquiliana,
1. when the act or omission causes physical
injuries; or
2. when the defendant is guilty of intentional
tort (in this latter case, moral damages may
be recovered even in loss of or damage to
property).
In culpa criminal, when the accused is guilty of
physical injuries, lascivious acts, adultery or
concubinage, illegal or arbitrary detention, illegal
arrest, illegal search, defamation and malicious
prosecution.
(Expertravel & Tours, Inc. v. CA, G.R. No. 130030,
June 25, 1999)
Who May Recover Moral Damages
1. The parents of the female seduced, abducted,
raped, or abused may also recover under No.
3; and
2. Spouse, descendants, ascendants and
brothers and sisters for acts mentioned in Art.
309 (“Any person who shows disrespect to the
dead, or wrongfully interferes with a funeral
shall be liable to the family of the deceased for
damages, material and moral.”).
Siblings Not Entitled to Moral Damages for
Death of their Brother / Sister
Article 2206 of the Civil Code entitles the
descendants, ascendants, illegitimate children, and
surviving spouse of the deceased passenger to
demand moral damages for mental anguish by
reason of the death of the deceased. The omission
from Article 2206 (3) of the brothers and sisters of
the deceased passenger reveals the legislative
intent to exclude them from the recovery of moral
damages for mental anguish by reason of the death
of the deceased. Inclusio unius est exclusio alterius.
(Sulpicio Lines, Inc., v. Curso, G.R. No. 157009,
March 17, 2010)
NOTE: Art.2219 is not an exclusive enumeration.
General Rule
The plaintiff must allege and prove the factual basis
for moral damages and its causal relation to the
defendant’s act
Moral damages may also be awarded in cases of
willful injury to property or breaches of contract
where the defendant acted fraudulently or in bad
faith. (Art. 2220)
Exception
Moral damages may be awarded to the victim in
criminal proceedings without the need for pleading
proof of the basis hereof.
In culpa contractual, only in cases of gross
negligence amounting to bad faith or in wanton
disregard of his contractual obligation. In a breach
of contract of carriage, moral damages may also be
recovered in case of death of a passenger.
Moral damages are mandatory without need of
allegation and proof other than the death of the
victim, owing to the fact of the commission of murder
or homicide.
(Espineli v. People of the Philippines, G.R. No.
179535, 2014)
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When Moral Damages Awarded Without
Evidence of Injury
1. Rape cases. It is assumed that the victim has
suffered moral injuries (People v. Iroy, G.R.
No. 187743, 2010);
2. Murder cases. A violent death necessarily
brings about emotional pain and anguish on
the part of the victim’s family (People v.
Rarugal, G.R. No. 188603, 2013); and
3. Where a broadcast is libelous per se, the
law implies moral damages (FBNI v. AMEC,
G.R. No. 141994, 2005)
NOTE: In Filipinas Broadcasting Network v. AMEC,
the Supreme Court held:
A juridical person is generally not entitled to moral
damages because, unlike a natural person, it cannot
experience physical suffering or such sentiments as
wounded feelings, serious anxiety, mental anguish
or moral shock.
Nevertheless, AMEC's claim for moral damages
falls under item 7 of Article 2219 of the Civil Code.
This provision expressly authorizes the recovery of
moral damages in cases of libel, slander or any
other form of defamation. Article 2219(7) does not
qualify whether the plaintiff is a natural or juridical
person. Therefore, a juridical person such as a
corporation can validly complain for libel or any
other form of defamation and claim for moral
damages.
(Filipinas Broadcasting Network v. AMEC, G.R. No.
141994, 2005)
c. Nominal Damages
Concept
Nominal damages are adjudicated in order that a
right of the plaintiff, which has been violated or
invaded by the defendant, may be vindicated or
recognized, and not for the purpose of indemnifying
the plaintiff for any loss suffered by him.
Elements
1. Plaintiff has a right;
2. Right of plaintiff is violated; and
3. Purpose is not to identify but vindicate or
recognize right violated.
NOTE: The law presumes damage although actual
or compensatory damages are not proven. They are
damages in the name only and are allowed simply
in recognition of a technical injury based on a
violation of a legal right. Nominal damages cannot
coexist with actual or compensatory damages.
CIVIL LAW (AND PRACTICAL EXERCISES)
d. Temperate Damages
Concept
More than nominal but less than compensatory
where some pecuniary loss has been suffered but
its amount can't be proved with certainty due to the
nature of the case. Also called “Moderate
Damages.”
In cases where the resulting injury might be
continuing and possible future complications directly
arising from the injury, while certain to occur are
difficult to predict, temperate damages can and
should be awarded on top of actual or compensatory
damages; in such cases there is no incompatibility
between actual and temperate damages.
Requisites
1. Some pecuniary loss
2. Loss is incapable of pecuniary estimation
3. Must be reasonable
General Rule
Actual Damages cannot be recovered with
temperate damages due to the nature of the said
damages.
Exception
When the injury is chronic or recurring such as in
loss of earnings.
(Ramos v. Court of Appeals, G.R. No. 124354,
1999)
Temperate damages may also be awarded for injury
to the plaintiff’s business standing or commercial
credit if amount is not certain (and thus actual
damages cannot be granted).
e. Liquidated Damages
Those agreed upon by the parties to a contract, to
be paid in case of breach thereof.
When Liquidated Damages May Be Equitably
Reduced
1. Iniquitous or unconscionable;
2. Partial or irregular performance.
Rules Governing in Case of Breach of Contract
Penalty may be imposed by stipulation or agreed
upon by the parties in case of breach of contract.
Such penalty is in the nature of liquidated damages.
f.
Exemplary Damages
Imposed by way of example or correction for the
public good, in addition to the moral, temperate,
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liquidated to compensatory damages. Also called
“Corrective Damage.”
NOTE: Exemplary damages cannot be recovered
as a matter of right; the court will decide whether or
not they should be adjudicated.
When Recovered
1. In Criminal Offenses
Exemplary damages as a part of the civil liability
may be imposed when the crime was
committed with one or more aggravating
circumstances. Such damages are separate
from fines and shall be paid to the offended
party.
2.
3.
In Quasi-Delicts
Exemplary damages may be granted if the
defendant acted with gross negligence.
In Contracts and Quasi-Contracts
The court may award exemplary damages if the
defendant acted in a wanton, fraudulent,
Burden of Proof
In case liquidated damages have been agreed
upon, although no proof of loss is necessary in order
that such liquidated damages may be recovered,
nevertheless, before the court may consider the
question of granting exemplary in addition to the
liquidated damages, the plaintiff must show that he
would be entitled to moral, temperate or
compensatory, damages were it not for the
stipulation for liquidated damages.
CIVIL LAW (AND PRACTICAL EXERCISES)
3. IN CASE OF DEATH
In Crimes and Quasi-Delicts Causing Death
1. Medical & Hospital Bills;
2. Civil Indemnity/ Damages for Death under Art.
2206 (Automatically awarded);
3. Loss of earning capacity unless deceased had
permanent physical disability not caused by
defendant so that deceased had no earning
capacity at time of death;
4. Support, if deceased was obliged to give
support (for period not more than 5 years); and
5. Moral damages.
NOTE: Civil Indemnity for death is mandatory and a
matter of course, and without need of proof other
than the fact of death as the result of the crime or
quasi-delict, and the fact that the accused was
responsible therefor.
Article 2206 only imposes a minimum amount for
awards of civil indemnity, which is 3,000.00. The
law did not provide for a ceiling. Thus, although the
minimum amount for the award cannot be changed,
increasing the amount awarded as civil indemnity
can be validly modified and increased when the
present circumstance warrants it.
(People vs. Jugueta G.R. No. 202124, 2016)
Death Caused by Breach of Contract by a
Common Carrier
1. Indemnity for death;
2. Indemnity for loss of earning capacity; and
3. Moral Damages.
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CIVIL LAW (AND PRACTICAL EXERCISES)
ANNEXES
CULPA CONTRACTUAL v. CULPA AQUILIANA v. CULPA CRIMINAL
OBLIGATION
VINCULUM
JURIS /
JURIDICAL TIE
ESSENTIAL
ALLEGATIONS
TO ESTABLISH
A CAUSE OF
ACTION
CULPA
CONTRACTUAL
CULPA
AQUILIANA
CULPA
CRIMINAL
Breach of contract
Quasi-delict
Delict, or an act, or
omission punishable by law
The contract itself.
The fault or negligence of the
defendant
which
is
the
proximate cause of the damage
suffered by the plaintiff.
The
plaintiff
must
establish:
(a) That a contract
exists; and
(b) That it was
breached
by
the defendant.
The plaintiff must establish:
(a) The damage suffered;
(b) The fault or negligence
of the defendant or
some other person for
whose
acts
the
defendant
must
respond;
(c) The causal connection
between (a) and (b);
and
(d) That there is no preexisting
contract
between the parties.
General rule: The plaintiff
bears the burden of proving the
fault or negligence of the
defendant.
The act or omission that
violates a penal law.
There is no crime unless
there is a law that defines
and punishes an act or
omission as a crime.
The acts or omissions
constituting the crime, facts
showing the time and/or
place where the crime was
committed (if these are
essential elements of the
crime), and the aggravating
circumstances, if any.
General
rule:
prosecution
bears
burden of proving
essential elements of
crime charged.
The
the
the
the
BURDEN OF
PROVING
FAULT OR
NEGLIGENCE
Fault or negligence is
presumed from the
breach of a contract. No
need to specifically
prove that a contract
was breached through
fault or negligence.
QUANTUM OF
EVIDENCE
REQUIRED
Preponderance of
evidence
Preponderance of evidence
Proof of guilt beyond
reasonable doubt
PERSON/S
LIABLE
The contracting parties,
their heirs, and assigns,
except where the rights
and obligations are
intransmissible by their
nature, or by stipulation,
The actual tortfeasor/s under
Art. 2176, and the persons who
may be vicariously liable under
Article 2180.
Criminal
liability only
attaches
to
principals,
accomplices, accessories,
and
other
persons
specifically declared liable
for a crime under a penal
Exceptions: In cases where the
fault or negligence of the
defendant may be inferred or
presumed (i.e. res ipsa loquitur,
negligence per se, vicarious
liability, Art. 2188).
Exceptions:
In
cases
where fault or negligence,
when these are essential
elements of the crime
charged, may be inferred or
presumed (i.e., res ipsa
loquitur).
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AVAILABILITY
OF THE
DEFENSES OF
DUE DILIGENCE
IN THE
SELECTION
AND
SUPERVISION
OF EMPLOYEES
or by provision of law.
law.
The heir is not liable
beyond the value of the
property he received
from the decedent.
Civil liability may attach to
the person guilty of a crime,
or to persons declared by
law to be civilly liable for the
crime committed by another
(i.e., the parents of a minor
who is exempt from criminal
responsibility,
or
the
employer
engaged
in
business or industry of an
insolvent employee who
commits a crime in the
discharge of his duties).
Not available.
Generally not available,
except when otherwise
provided by the penal law
(i.e., the Anti-Drunk and
Drugged Driving Act and
the Anti-Distracted Driving
Act allow employers and
operators of vehicles to
prove that they observed
extraordinary diligence in
the
selection
and
supervision of their drivers
in
general,
and
the
offending
driver
in
particular, in order to evade
liability).
Available.
Actual, nominal,
temperate, and
exemplary (ANTE)
damages are
recoverable.
DAMAGES
RECOVERABLE
Moral
damages
generally cannot be
recovered in breach of
contract cases, except:
(a) When
the
contract
is
breached
through
bad
faith or gross
negligence, or
in
circumstances
amounting to a
violation of Art.
21; and
(b) When
a
passenger dies
as a result of a
ANTE + moral damages are
recoverable.
Liquidated damages generally
not recoverable because an
obligation based on quasi-delict
cannot arise between parties
previously bound by contract.
The exception is when
contract is breached by tort.
a
All types of damages are
recoverable depending on
the circumstances and the
crime involved (i.e., when a
contract is breached and
the breach also constitutes
the crime of estafa, then
liquidated damages may
also be recovered).
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BAR OPERATIONS 2022
breach of
contract
carriage.
a
of
Liquidated damages
can only be recovered in
cases where a contract
is breached as they
presuppose
the
existence of a contract
where a provision for
liquidated damages is
included.
POSSIBILITY OF
COMPROMISE
Possible.
Possible.
Criminal liability generally
cannot be compromised
except in cases of private
crimes.
Civil liability
compromised.
may
be
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BAR OPERATIONS 2022
TABLE ON VICARIOUS LIABILITY
PERSON
VICARIOUSLY
LIABLE
PARENT/S (JOINT
PARENTAL
AUTHORITY based
on Art. 221, Family
Code)
FATHER, IN CASE
OF DEATH OR
INCAPACITY, THE
MOTHER (Art.
2180)
PERSON FOR
WHOM
VICARIOUSLY
LIABLE
Children below
18.
(Art. 221, Family
Code)
REQUIREMENTS
FOR VICARIOUS
LIABILITY TO
ATTACH
Child lives in their
company; AND is
under their parental
authority.
(Art.2180, in relation to
Art.221, Family Code;
Tamargo v. CA, G.R. No.
85044, 1992)
DEFENSES
Diligence of a good
father of a family to
prevent damage.
(Art. 2180; Exconde v.
Capuno, G.R. No. L10134, 1957)
NATURE OF
LIABILITY
Father and mother
exercise joint
parental authority
over their minor
children. Their
liability is direct
and primary, not
subsidiary.
(Art. 211, Family
Code; Libi v. IAC,
G.R. No. 70890,
1992)
Children 18 to
21.
“Child” lives in their
company.
Direct and
primary.
(Art. 2180, in
relation to Art. 236
¶ 3, Family Code)
(Art.2180, in relation to
Art. 236, ¶ 3, Family
Code)
(Art. 2180 in relation
to Art. 236, ¶ 3,
Family Code)
Principal and
solidary.
(Art. 219, Family
Code)
SCHOOLS,
ADMINISTRATORS
AND TEACHERS,
INDIVIDUALS,
ENTITIES, OR
INSTITUTIONS
ENGAGED IN
CHILD CARE
HAVING SPECIAL
PARENTAL
AUTHORITY OVER
CHILDREN
Children below
18.
(Arts. 218- 219,
Family Code)
Child is under their
supervision,
instruction or custody
at the time the tort is
committed.
Exercised the
proper diligence
required under the
particular
circumstances.
(Art. 218, Family Code)
(Art. 219, Family Code)
General
Rule:
Parents are not
liable; child was in
school; not in their
custody
(Cuadra vs. Monfort,
G.R. No. L-24101,
1970)
Exception:
Parents,
judicial
guardians
or
persons exercising
substitute parental
authority shall be
subsidiarily liable.
(Art. 219, Family
Code)
GUARDIANS
Minors or
incapacitated
persons.
Under their authority
and live in their
company.
Diligence of a good
father of a family to
prevent damage.
(Art. 2180)
(Art. 2180)
(Art. 2180)
Direct and
primary.
(Art. 2180)
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Employees
in
the service of
the branches in
which they are
employed or on
the occasion of
their functions.
(Art. 2180(4))
EMPLOYERS,
OWNERS, AND
MANAGERS
Employees and
household
helpers acting
within the scope
of their assigned
tasks
even
though
the
employer is not
engaged in any
business
or
industry.
(Art. 2180(5))
That the employee is
liable for a QD;
EER exists; and
employee was acting
within the scope of his
assigned tasks when
the
tort
was
committed, or that the
injurious act was
committed at a time
the employee was
performing
his
functions.
(Dela Llana v. Biong,
G.R. No. 182356, 2013;
Castilex Industrial Corp.
vs. Vasquez, G.R. No.
132266, 1999; Martin v.
CA, G.R. No. 82248,
1992; Jayme v. Apostol,
G.R. No. 136609, 2008)
NOTE: “Acting within
the scope of assigned
tasks” – includes any
act done in the
furtherance of the
employer’s business.
(Filamer Christian
Institute v. IAC, G.R.
No.75112 1990) (e.g.,
janitor who drove vehicle
for the benefit of the
employer).
No EER.
(Jayme v Apostol, G.R.
No. 136609, 2008) –
municipality, not the
mayor is the employer
of the driver).
EE acted beyond
the
scope
of
authority (i.e. when
the EEs are on
strike).
(Universal Aquarius v.
QC Human Resources
Management
Corporation, G.R. No.
155990, 2007)
Diligence of a good
father of a family in
the selection and
supervision
of
employees.
Direct and
primary.
(Art. 2180)
NOTE: “Manager”
means employer.
(Philippine Rabbit Bus
Lines, Inc. v.
Philippine American
Forwarders, Inc., G.R.
No. L-25142, 1975)
(Mercury Drug v.
Huang, G.R. No.
172122, 2007; Sanitary
Steam vs. CA, G.R.
No. 119092, 1998)
[3 THEORIES]
1.
EER (Art.2180)
2.
Doctrine
of
Apparent
Authority
or
Ostensible
Agency
or
“Holding
out”
Reliance
Doctors and
hospital
employees.
HOSPITALS
(Ramos v. CA G.R.
No. 124354, 1999
and 2002; Nogales
v. Capitol Medical
Center G.R. No.
142625, 2006;
Casumpang v.
Cortejo, G.R. No.
171127, 171217, &
17122, 2015)
(Nogales vs. Capitol
Medical Center, G.R.
No. 142625, 2006;
Professional
Services
Inc.v.
Agana
G.R. No.
126297, 2007; G.R.
No. 126467, 2008;
G.R. No. 127590,
2010)
3.
Doctrine
of
Corporate
Negligence:
Hospital is liable
1.
2.
Elements of the
3 theories are
not
present;
and
Due diligence
in the selection
and
supervision (if
EER).
(Art. 2180(5); Nogales
vs. Capitol Medical
Center, G.R. No.
142625, 2006;
Professional Services
Inc.v. Agana G.R. No.
126297, 2007; G.R.
No. 126467, 2008;
G.R. No. 127590,
2010)
Direct and
primary.
(Casumpang v.
Cortejo, G.R. No.
171127, 171217, &
17122, 2015)
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CIVIL LAW (AND PRACTICAL EXERCISES)
for
its
own
negligence; not
vicariously for the
doctor’s
or
medical
personnel’s
negligence.
(Professional
Services
Inc.v.
Agana, supra)
RULES:
Special agent –
i.e., one who
receives
a
definite
and
fixed order or
commission,
foreign to the
exercise of the
duties of his
office if he is a
special official.
(Art.2180; Merritt v.
GPI, G.R. No. L11154, 1916)
STATE
Government
Owned
and
Controlled
Corporations
(GOCCs)
–
When
the
government
enters into a
commercial
business,
it
abandons
its
sovereign
capacity and is
to be treated like
any other private
corporation.
(Manila Hotel
Employees
Association v.
Manila Hotel
Company, G.R. L48524, 1941)
Public officials (PO)
performing
functions of his
office – State is
immune from suit.
Public official liable
under Art.2176.
PO
specially
commissioned
to
perform
a
task
foreign to his office
– State liable; PO is a
special agent.
Private
individual
(PI) commissioned
by the State to
perform
nongovernmental
functions – State is
liable as an employer.
PI commissioned to
perform a special
governmental task
(special agent) –
State liable.
Observed diligence
of a good father of a
family to prevent
damage.
(Art.2180)
Observed diligence
of a good father of a
family
in
the
selection
and
supervision
of
employees.
Direct and
primary.
(Art. 2180; Fontanilla
v. Maliaman, G.R.
Nos. 55963 & 61045,
1991)
(Fontanilla v.
Maliaman, G.R. No. L55963, 1989)
Employees
of
government offices
performing
proprietary
functions – State
liable as an employer.
(Fontanilla v. Maliaman,
G.R. No. L-55963, 1989)
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CIVIL LAW (AND PRACTICAL EXERCISES)
Direct and
primary.
Adult pupils and
students
(for
teachers).
Adult
apprentices (for
heads
of
establishments
of
arts
and
trades).
TEACHERS/
HEADS OF
ESTABLISHMENTS
OF ARTS AND
TRADES
(Art.2180; Amadora
v. CA, G.R. No. L47745, 1988)
If pupil, student
or apprentice is
a minor, apply
Art. 218, Family
Code.
NOTE:
Pupil
need not live or
board with the
teacher.
(Palisoc v.Brillates,
G.R. No. L-29025,
1971)
Student is in the
school premises in
pursuance
of
a
legitimate
student
objective,
in
the
exercise
of
a
legitimate
student
right, and even in the
enjoyment
of
a
legitimate
student
privilege,
the
responsibility of the
school
authorities
over
the
student
continues.
Indeed, even if the
student should be
doing nothing more
than relaxing in the
campus
in
the
company
of
his
classmates
and
friends and enjoying
the ambience and
atmosphere of the
school, he is still
within the custody and
to
the
subject
discipline
of
the
school
authorities
under the provisions
of Art. 2180.
(Amadora v. CA, G.R. No.
L-47745, 1988)
NOTE:
Applies
whether
the
institution
is
academic or not.
(Amadora v. CA,
supra)
Basis of liability
of teacher and
head
=
close
supervisory
relationship; ability
to instill discipline.
Teacher was not
negligent.
NOTE:
Art.2180
does not apply
when the tort was
not committed by a
student.
(Aquinas School vs.
Sps. Inton, G.R. No.
184202, 2011)
General
Rule:
School
is
not
liable.
Exception: When
it is being held
liable
as
an
employer.
(Amadora v. CA,
supra)
School has an
implied contractual
duty to maintain a
safe environment
conducive
for
learning.
If it
breaches that duty
through
negligence, it may
be
held
liable
under Art. 2176.
(PSBA v. CA, G.R.
No. 84698, 1992, in
relation to Air France
vs. Carrascoso, G.R.
No. L-21438, 1966).
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CIVIL LAW (AND PRACTICAL EXERCISES)
6.
7.
a.
b.
c.
PART II: CIVIL LAW II (AND
PRACTICAL EXERCISES)
I.
PROPERTY
TOPIC OUTLINE UNDER THE SYLLABUS
A. CLASSIFICATION OF PROPERTY
1. Immovables
2. Movables
B. OWNERSHIP
1. General Provisions
a. Bundles of Rights
b. Distinction between real and personal rights
c. Modes of acquiring ownership
d. Limitations of ownership
2. Rules on Accession
a. For immovables
b. For movables
c. Rights of Builder/planter/sower in good faith
C. CO-OWNERSHIP
1. Characteristics of co-ownership
2. Sources of co-ownership
3. Rights of co-owners
4. Termination of co-ownership
D. POSSESSION
1. Characteristics
2. Kinds of Possession
3. Acquisition of possession (including
possession based on tolerance)
4. Effects of possession
5. Loss or unlawful deprivation of a movable
E. USUFRUCT
1. Characteristics
2. Classification
3. Rights and obligations of usufructuary
4. Rights of the owner
5. Extinction, termination, and extinguishment
F.
Legal vs. Voluntary Easement
Kinds of Legal Easements
Relating to waters
Relating to way
Light and View
G. NUISANCE
1. Nuisance per se
2. Nuisance per accidens
3. Liabilities
4. No prescription
5. Remedies Against a Public Nuisance
6. Remedies Against a Private Nuisance
7. Criminal prosecution
8. Judgment with abatement
9. Extrajudicial abatement
10. Special injury to individual
11. Right of individual to abate a public nuisance
12. Right to damages
13. Defenses to action
14. Who may sue on private nuisance
H. MODES OF ACQUIRING OWNERSHIP
1. Occupation
2. Donations
a. Nature
b. Persons who may give or receive a donation
c. Effects and limitations of donation
d. revocation and reduction
3. Prescription
a. General provisions
b. Prescription of ownership and other real
rights
c. Prescription of actions
I.
QUIETING OF TITLE
1. Requisites
2. Distinctions between quieting of title and
removing / preventing a cloud
3. Prescription / non-prescription of action
J.
ACTIONS TO RECOVER PROPERTY
1. Accion interdictal
2. Accion publiciana
3. Accion reinvidicatoria
EASEMENTS
1. Characteristics
2. Classification
3. Modes of acquiring easements
4. Rights and obligations of the owners of the
dominant and servient estates
5. Modes of extinguishment
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CIVIL LAW (AND PRACTICAL EXERCISES)
b)
A. CLASSIFICATION OF PROPERTY
What are the Classifications of Property as to
Mobility?
a)
b)
Movable
Immovable
What are the Classifications of Property as to
Whether in The Custody Of The Court Or Free?
a)
b)
What are the Classifications of Property as to
Ownership?
a)
b)
a)
b)
Within the commerce of man (or which may
be the objects of contracts or judicial
transactions)
Outside the commerce of man
What are the Classifications of Property as to
Existence?
a)
b)
Present property (res existents)
Future property (res futurae)
Note: Both present and future property may be the
subject of sale but generally not the subject of
donation.
What are the Classifications of Property as to
Materiality?
a) Tangible or corporeal
b) Intangible or incorporeal
What are the Classifications of Property as to
Dependence or Importance?
a)
b)
Principal
Accessory
What are the Classifications of Property as to
Capability of Substitution?
a)
b)
Fungible: Capable of substitution by other
things of the same quality and quantity
Non-Fungible:
Incapable
of
such
substitution, hence, the identical thing must
be given or returned
What are the Classifications of Property as to
Nature or Definiteness?
a)
Generic – one referring to a group or class
In “Custodia Legis” – in the custody of the
court
“Free” property (Tolentino, supra, p. 7-10)
1. IMMOVABLES
Public property
Private property
What are the Classifications of Property as to
Alienability?
Specific – one referring to a single, unique
object
What are the Four Juridical Classifications of
Immovable Properties? (NIDA) (Tolentino, supra,
p. 8)
1.
2.
3.
4.
by Nature
by Incorporation
by Destination
by Analogy
What are those that are Immovable by NATURE?
– What cannot be moved from place to place?
1.
2.
3.
4.
5.
6.
Land (Art. 415 (1))
Buildings (Art. 415 (1))
Roads (Art. 415 (1))
Constructions of all kinds adhered to soil
Mines, quarries, and slag dumps, while the
matter forms part of the bed (Art. 415 (8))
Waters, either running or stagnant (Art. 415 (8))
Note: A structure, which is merely superimposed on
the soil, may be considered movable. Similarly, a
shovelful of land is a movable for it is no longer
adhered to the soil.
Note: When the minerals have been extracted, they
become movables.
Buildings are always immovable under the Code. The
mere fact that the parties to a contract treat the
building as separate does not change its character as
immovable property. (Punsalan v. Lacsamana, GR
No. L-55729, 1983)
Once a house is demolished, its character as an
immovable ceases. (Bicerra v. Teneza, GR No. L16218, 1962)
A mortgage of land necessarily includes buildings, in
the absence of stipulation of the improvements
thereon. A building by itself may be mortgaged apart
from the land on which it has been built. Such would
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be a real estate mortgage for the building would still
be considered immovable property. (Leung Yee v.
Strong Machinery, GR No. L-11658, 1918)
A valid real estate mortgage can be constituted on
the building erected on the land belonging to another.
(Prudential Bank v. Panis, GR No. L-50008, 1987)
A party to a chattel mortgage is estopped from
assailing the deed as void on the ground that
the house subject of the mortgage is real property.
Parties are bound by their agreement, but not third
persons. (Tumalad v. Vicencio, GR No. L-30173,
1971)
If contracting parties stipulate that a real property be
considered personal, they are consequently
estopped from claiming otherwise. However, third
persons acting in good faith are not affected by the
stipulation characterizing the subject machinery as
personal. (Serg’s Products v. PCI Leasing, GR No.
137705, 2000)
What are Immovables by INCORPORATION? –
What are those that are essentially movables but
attached to an immovable in a fixed manner to be an
integral part of it?
1.
2.
3.
4.
Trees, plants, and growing crops (Art. 415 (2))
Everything attached to an immovable in a fixed
manner (Art. 415 (3))
Statues, reliefs, paintings, or other objects for
use or ornamentation, placed in buildings or on
land (Art. 415 (4))
Animal houses, pigeon houses, beehives,
fishponds, or breeding places of similar nature
(Art. 415 (6))
CIVIL LAW (AND PRACTICAL EXERCISES)
What are the requisites of the properties that are
attached to an Immovable in a Fixed Manner?
1.
2.
What are the Schools of Thought in Temporary
Separation?
May either be:
1.
2.
1.
2.
1.
2.
Uprooted timber if the land is timber land (timber
still forms an integral part thereof);
Trees blown by a typhoon (part of the land upon
which they rest)
Placed by the Owner of the immovable (not the
object) or his agent;
Intent to attach them Permanently to the
tenements. (Art. 415 (4))
What are the requisites of Animal Houses, Pigeon
Houses, Beehives, Fishponds, or Breeding
Places of Similar Nature?
1.
2.
Placed by the Owner of the immovable or his
agent;
Intent to attach them Permanently to the land.
(Art. 415 (6))
Note: Includes the animals found therein.
What are considered as Immovable by
DESTINATION? – What are properties that are
movable placed on immovable for the utility it gives
to the activity carried thereon?
2.
3.
Note: Once cut or uprooted, they cease to be
immovable.
What are the Exceptions?
Immovable if there is intent to put them back; or
Movable because the material fact of
incorporation is what determines its condition.
What are the requisites of Statues, Reliefs,
Painting, or Other Objects for Use or
Ornamentation?
1.
What are considered as Trees, Plants, and
Growing Crops?
Trees and plants are immovable by incorporation if
they are planted through labor but are immovable by
nature if they are spontaneous products of the soil.
Intent to attach permanently is essential;
In case of separation, the injury, breakage,
deterioration must be Substantial. (Art. 415 (3))
Machinery,
receptacles,
instruments,
or
implements (Art. 415 (5))
Fertilizer actually used on a piece of land (Art.
415 (7))
Docks and structures which, though floating, are
intended by their nature and object to remain at
a fixed place on a river, lake, or coast (Art. 415
(9))
What are the requisites of Machinery,
Receptacles, Instruments or Implements for an
Industry or Works?
1.
Industry or works must be Carried on inside the
building or on the land;
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2.
3.
4.
Placed by the Owner of the building or property
or his agent;
Machines must be Essential and principal
elements in carrying out the industry;
Machines must tend Directly to meet the needs
of said industry or works (adaptability). (Art. 415
(5))
Note: Incidentals are not included (movables without
which the businesses can still continue or carry on
their functions)
Machinery is immobilized if placed by owner of plant
or property; not so if placed by a tenant or
usufructuary or any person having any temporary
right. (Davao Sawmill Co. v. Castillo, GR No. L40411, 1935)
Equipment destined only to repair or service a
transportation business may not be deemed real
property. (Mindanao Bus v. City Assessor, GR No. L17870, 1962)
Note: Attachment or incorporation to the immovable
is not essential.
Fertilizer Actually Used on a Piece of Land
Fertilizers still in the barn or still wrapped inside some
newspaper even though already on the ground are
still movables.
Docks and Floating Structures
Docks and structures which, though floating, are
intended by their nature and object to remain at a
fixed place on a river, lake, or coast are considered
immovable. (Art. 415 (9))
Note: A floating house is an immovable if it is tied to
a shore or bank post, since it is a movable.
Otherwise, it assumes the category of a vessel.
Note further: Although personal property, vessels
partake, to a certain extent, the nature and conditions
of real property because of their value and
importance in the world of commerce.
Immovable by Analogy or by Law – Contracts for
public works and servitudes & other real rights over
immovable property (Art. 415 (10))
CIVIL LAW (AND PRACTICAL EXERCISES)
2. MOVABLES
What are considered as Movable? (SIFTOS)
1. Susceptible of appropriation that are not included
in enumeration in immovables. (Art. 416 (1))
2. Immovables that are designated as movables by
special provision of law. (Art. 416 (2))
3. Forces of nature brought under control by
science. (Art. 416 (3))
4. Things which can be transported w/o impairment
of real property where they are fixed (Art. 416 (4))
5. Obligations, which have for their object movables
or demandable sums (credits), obligations and
actions must be legally demandable demandable sums must be liquidated (Art. 417
(1))
6. Shares of stock of agricultural, commercial &
industrial entities although they may have real
estate (Art. 417 (2))
What is an example of “Susceptible of
Appropriation”?
An interest in business, that is, providing
telecommunication and telephone service, is
personal property since it is capable of appropriation
and not included in the enumeration of real
properties. Thus, it could be subject of theft under the
RPC. (Laurel v. Abrogar, GR No. 155076, 2009)
What is an example of a movable Designated by
Special Provision of Law?
Growing crops are considered immovable under Art.
415(2) but personal property under Chattel Mortgage
Law (Sibal v. Valdez, GR No. L-26278, 1927)
House built on leased land may be treated as
personal property and be the object of a chattel
mortgage, insofar as the parties are concerned.
(Navarro v. Reyes, GR No. L-18456, 1963)
What are examples of Forces of Nature?
Electricity, gas, rays, heat, light, oxygen, atomic
energy, water, power etc. Electricity, the same as
gas, is an article bought and sold like other personal
property and is capable of appropriation by another.
(United States v. Carlos, GR No. 6295, 1911)
What are the two Classifications of Movables
According to Nature?
1. Consumable – cannot be utilized w/o being
consumed
2. Non-consumable (Tolentino, supra, p. 10)
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What are the two Classifications According to
Intention of the Parties/Purpose? (whether it can
be substituted by other things of same kind, quality,
and quantity)
1.
2.
Fungible (res fungibles) – only the equivalent is
returned
Non-fungible (res nec fungibles) – the identical
thing is returned; do not admit of substitution
(Tolentino, supra, p. 10)
What are the Tests To Determine Whether
Property Is Real or Personal?
1. Whether the property can be transported or
carried from place to place
2. Whether such change of location can be made
without injuring the immovable to which the object
may be attached
3. Whether the object does not fall within any of the
cases enumerated in Art. 415
B. OWNERSHIP
1. GENERAL PROVISIONS
CIVIL LAW (AND PRACTICAL EXERCISES)
3. Sole Ownership – ownership is vested only in
one person
4. Co-Ownership/ Tenancy in Common –
ownership is vested in two or more owners; unity
of the property, plurality of the subjects; each coowner is the owner of the whole and at the same
time, the owner of an undivided part thereof.
a. Bundle of rights
What are the Seven Rights of Ownership? (PUFADVA) (De leon, Comments and Cases on Property,
77, 1993)
1. Jus Possidendi (right to possess)
a. Right to hold the thing and does not
necessarily include the right to use (e.g.,
contract of deposit)
2. Jus Utendi (right to use and enjoy)
a. Includes the right to exclude any person
from the enjoyment and disposal thereof
b. Limitation: use in such a manner as not to
injure the rights of a third person
What is OWNERSHIP?
The independent and general right of a person to the
exclusive enjoyment and control of a thing in his
possession, enjoyment, disposition, and recovery,
subject only to the restrictions or limitations
established by law and the rights of others. (Art. 427)
3. Jus Fruendi (right to fruits)
a. Right to the fruits
b. Kinds of Fruits: (NIC)
i. Natural
ii. Industrial
iii. Civil
Possession is an essential attribute of ownership.
Whoever owns the property has the right to possess
it. Adjudication of ownership includes the delivery of
possession if the defeated party has not shown any
right to possess the land independently of her
rejected claim of ownership. (Pascual vs. Daquioag,
GR No. 162063, 2014)
4. Jus Abutendi (right to consume)
a. Includes the right to transform or abuse or
destroy by its use
What is TITLE?
That which constitutes a just cause of exclusive
possession or which is the foundation of ownership
of property. In t