CIVIL LAW

BAR REVIEWER

FACULTY ADVISER ATTY. BENJAMIN LERMA

ACADEMICS HEAD PIERRE MARTIN REYES
SUBJECT HEADS FRANCESCO BENZON ANBOCHI
HANNAH STEPHANIE ANG
 ATENEO CENTRAL BAR OPERATIONS 2012
ACADEMICS COMMITTEE

Academics Head: Pierre Martin Reyes;

Understudy: Clariesse Jami Mari Chan

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

CIVIL LAW COMMITTEE

Heads: Francesco Benzon Anbochi, Hannah Stephanie Ang;

Understudy: Alessandra Vilches, Ken Patrick Habana;
Volunteers: Rizza Anne Sy, John Benedict Ty, Rose Angelique Dizon,
Geoanne Christi Battad, Paolo de Guzman, Roberto Miguel Ramiro;
 CIVIL LAW
Table of Contents
PRELIMINARY TITLE…………………………………… 5 PRESCRIPTION…………………………………………………78
1. Effect and Effectivity of Law ===================================
2. Human Relations
A. Definition
PERSONS………………………………………………………8 B. No Prescription Applicable
=================================== C. Prescription or limitation of actions
A. General Provisions D. Interruption
B. Natural Persons
C. Juridical Persons OBLIGATIONS …………………………………………………82
D. Domicile ===================================
E. Marriage
F. Legal Separation A. Definition
G. Rights and Obligations Between Husband and Wife B. Elements of an Obligation
H. Property Relations Between Husband and Wife C. Different Kinds of Prestations
I. The Family D. Classification of Obligations
J. Family Home E. Sources of obligations (Arts. 1156-1157)
K. Paternity and Filiation F. Nature and Effect of Obligations
L. Adoption G. Kinds of Civil Obligations
M. Support H. Joint and Solidary Obligation
N. Parental Authority I. Extinguishment of Obligations
O. Funerals
P. Surname CONTRACTS ………………………………………………… 109
Q. Absence ===================================
R. Civil Register
A. Essential Requisites (Art. 1261)
PROPERTY……………………………………………………37 B. Kinds of Contracts
=================================== C. Formality (Arts. 1356, 1357, 1358)
A. Classification of Property (Arts. 414-418, CC) D. Defective Contracts
B. Ownership (Arts. 427-439, CC) E. Effect of contracts (Art. 1311)
C. Accessions
D. Quieting Title SALES ……………………………………………… 123
E. Co-ownership ===================================
F. Condominium Act (RA 4726)
G. Possession A. Introduction
H. Usufruct B. Parties to a Contract of Sale
I. Easements C. Subject Matter
J. Modes Of Acquring Ownership D. Obligations of the Seller to Transfer Ownership
K. Occupation E. Price
L. Intellectual Creation F. Formation of Contract of Sale
M. Donation G. Transfer of Ownership
N. Other Modes of Acquiring Ownership H. Risk of Loss
O. Nuisance I. Documents of Title
J. Remedies of an Unpaid Seller
K. Performance of Contract
L. Warranties
M. Breach of Contract
N. Extinguishment of the Sale

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O. The Subdivision and Condominium Buyers' Protective C. Guaranty and Suretyship
Decree D. Pledge
P. The Condominium Act E. Real Mortgage
F. Antichresis
SUCCESSION ………………………………………………… 155 G. Chattel Mortgage
=================================== H. Quasi-contracts
I. Concurrence and Preference of Credits
A. General Provisions J. Insolvency Law
B. Testamentary Succession
C. Legal or Intestate Succession
D. Provisions Common to Testate and Intestate Succession LAND TITLES AND DEEDS …………………………………… 283
E. Partition and distribution of estate ===================================

A. Torrens System
LEASE………………………………………………………… 199 B. Regalian Doctrine
================================= C. Citizen Requirements
A. Lease of Things D. Non-Registrable Properties
B. Lease of Work or Services E. Original Registration
C. Lease of Rural and Urban Lands F. Subsequent Registration
D. Contract for Piece of Work G. Dealings With Unregistered Land
E. Rights and Obligations of Lessor and Lessee

PARTNERSHIP……………………………………………… 205 TORTS AND DAMAGES…………………………………… 323

================================= ===================================
A. Contract Of Partnership
B. Rights and Obligations of Partnership Book I--Torts
C. Rights and Obligations of Partners Among Themselves A. Principles
D. Obligations of Partnership/Partnership to Third Persons B. Classification of Torts
E. Dissolution C. The Tortfeasor
F. Limited Partnership D. Act of Omission and Its Modalities
E. Proximate Cause
AGENCY………………………………………………………… 221 F. Legal Injury
================================= G. Intentional Torts
A. Definition of Agency H. Negligence
B. Powers I. Special Liability in Particular Activities
C. Express V. Implied Agency J. Strict Liability
D. Agency By Estoppel
E. General vs. Special Agency Book II--Damages
F. Agency Couched in General Terms A. General Considerations
G. Agency Requiring Special Power of Attorney B. Actual and Compensatory Damages
H. Agency by Operation of Law C. Moral Damages
I. Rights and Obligations of Principal D. Nominal Damages
J. Modes of Extinguishment E. Temperate or Moderate Damages
F. Liquidated Damages
CREDIT TRANSACTIONS…………………………………………235 G. Exemplary or Corrective Damages
================================= H. Damages in Case of Death
A. Loan I. Graduation of Damages
B. DEPOSIT J. Miscellaneous Rules

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

d) Waiver of Rights (art.6)

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 (relating to Philippines, Nationality: follow
General Rule- Rights may be waived family rights including those one’s own national
and duties, living abroad laws
Exceptions - When waiver is status, legal
1. Contrary to law, public order, public policy, morals, good capacity)
customs (e.g. waiver of future inheritance, political rights, Property Laws Real and Lex rei sitae: follow
future support) personal laws of the place
2. Prejudicial to a third person with a right recognized by law property where property is
situated
e) Repeal of Laws (art. 7) Laws on Forms Forms and Lex loci
and solemnities of celebrationis: follow
1. Express repeal - repeal of repealing law will not revive Solemnities contracts, wills, laws of the country in
the old law (unless expressly provided) public which they are
2. Implied repeal - the provisions of the subsequent law are instruments executed
incompatible with those of the previous law
Requisites: j) Rules on Prohibitive Laws (art. 17)
1. Both laws cover the same subject matter
2. The latter law is repugnant to the earlier law General Rule - Prohibitive laws concerning persons, their acts
or property and laws which have for their object public order,
f) Judicial Decisions public policy or good customs are not rendered ineffective by
laws, judgments promulgated or conventions agreed upon in
Judgment of the Courts (Arts. 8-9) foreign country.
 Decisions of the SC form part of the law
 All judges or courts have the duty to render Exception: Art. 26 (2) of Family Code
judgment even in the absence of a law
2. HUMAN RELATIONS
g) Presumption & Applicability of Custom (Arts.
10-12) a) Application

Construction and interpretation of laws come only after it has
been demonstrated that application is impossible or
inadequate without them.
Customs which are contrary to law, public order or public
policy shall not be countenanced. A custom must be proved
as a fact according to the rules of evidence.
PRINCIPLE OF ABUSE OF RIGHTS (ART. 19) - When one’s right
is exercised for the purpose of prejudicing or injuring another
Requisites/ Elements:
1. There is a legal right or duty
2. Which is exercised in bad faith
3. For the sole intent of prejudicing or injuring another

h) Computation of Time Standards to observe in the exercise of one’s rights:

1. Act with justice
Legal Periods (Art. 13, as amended by Sec. 31, EO 292) 2. Give everyone his due
Year = 12 months; Month = 30 days, unless referring to a 3. Observe honesty and good faith
specific calendar month; Day = 24 hours; Night = sunset to
sunrise b) Duty to Act with Justice, Observe Honesty and
Good Faith
i) Governing Laws (Arts. 14-17)
ACTS CONTRA BONUS MORES (ART.21)- When persons
LAW Matters/Persons Principle/ Doctrine wilfully cause loss or injury to another
Bound
Penal Laws All those who Principle of Elements:
live or sojourn in Territoriality: follow 1. There is an act which is legal
Philippine laws of the place 2. But which is contrary to morals, good customs, public
territory where crime was order, or public policy
committed 3. Done with intent to injure
Status Laws Citizens of the Principle of

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Note:
 Similarities: In Arts. 19-21, at the core is bad
faith or malice; and the aggrieved party must
be indemnified.
 Difference: Under Arts. 19 & 21, the act must
be done intentionally. Art. 20, however, does
not distinguish (the act may be done either
willfully or negligently, as long as the act is be
contrary to law).
c) Actions for Breach of Promise to Marry
General Rule: Breach of promise to marry is not actionable.
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 12 SCRA 649 (1964))
d) Unjust Enrichment at the Expense of Others
ACCION IN REM VERSO (Art. 22) – action for recovery of
what has been paid without just cause.
e) Rights to Personal Dignity and Privacy
Protection of Human Dignity (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: (PryMIVex)
1. Prying into the privacy of another’s residence
2. Meddling with or disturbing the private life or family
relations of another
3. Intriguing to cause another to be alienated from friends
4. Vexing or humiliating another on account of his religious
beliefs, lowly station in life, place of birth, physical
defect, or other personal condition
f) Liability of Public Officers
Relief Against Public Officials (Art. 27)
When one suffers material or moral loss because a public
officer fails without cause to perform his duty, the officer is
not protected by his office and is personally liable.

Requisites:
1. Defendant has been enriched
2. Plaintiff suffered a loss
3. Unjust Enrichment of defendant is without just or legal
ground
4. Plaintiff has no other action based on contract, quasi-
contract, crime, or quasi-delict

 Distinguished from solutio indebiti: Mistake is an essential

element in solutio indebiti but not in accion in rem verso.

DUTY TO INDEMNIFY ONE FOR DAMAGE TO HIS PROPERTY

(Art. 23): when defendant was benefitted even if not due to
fault or negligence

DUTY OF COURTS TO PROTECT A PARTY IN A CONTRACT

(Art. 24): When such party is at a disadvantage on account of
his: (MIgIMenTO)
- Moral dependence
- Ignorance
- Indigence
- Mental weakness
- Tender age
- Other handicap

THOUGHTLESS EXTRAVAGANCE (Art. 25)

May be prevented if the ff requisites are present:
1. During an acute public want or emergency
2. Person seeking to stop it is the gov’t or a private
charitable institution

CIVIL LAW REVIEWER Page 7 of 338

I. PERSONS Circumstances that Modify or Limit Capacity to Act (art. 39)
Age Penalty Absence
=================================================
Insanity Prodigality Insolvency
TOPICS UNDER THE SYLLABUS Imbecility Family Relations Trusteeship
A. General Provisions Deaf-muteness Alienage
1. Juridical Capacity v Capacity to Act
2. Restrictions and Modifications on Capacity to CIVIL PERSONALITY – the aptitude of being the subject, active
Act or passive, of rights and obligations
B. Natural Persons
B. NATURAL PERSONS
1. When Personality Begins and Ends
2. Rules on Survivorship (Art.43, CC v Rule 131 Sec NATURAL PERSONS V. JURIDICAL PERSONS
jj) Natural Persons Juridical Persons
C. Juridical Persons A human being, has Exists only in
1. Who are Juridical Persons physical existence contemplation of law
2. When Personality Begins and Ends Product of procreation Product of legal fiction
3. Rights of Juridical Persons
1. When Personality Begins and Ends
D. Domicile
========================================== Civil Personality, Natural Persons (Arts. 40-43)

A. GENERAL PROVISIONS General Rule - Determined by birth, extinguished by death

1. Juridical Capacity v. Capacity to Act (Art. 37) Exception - The conceived child shall be considered born for
JURIDICAL CAPACITY CAPACITY TO ACT all purposes favorable to it, provided it be born later under
Fitness to be the subject of Power to do act with legal the following conditions:
legal relations effects 1. It is alive at the time it is completely delivered
Passive Active from the mother’s womb
Inherent Merely acquired 2. BUT if it had an inter-uterine life of less than 7
Lost only through death Lost through death and other months, only if it lives for at least 24 hours after
causes its complete delivery from the maternal womb
Can exist without capacity to Cannot exist without juridical
act capacity 2. Rules on Survivorship
Cannot be limited or Can be restricted, modified,
restricted or limited Doubts as to Order of Death: As between two or more
persons called to succeed each other, if there is doubt as to
Full Civil Rights: union of both juridical capacity and capacity which of them died first, whoever alleges the death of prior
to act to the other shall prove the same. In the absence of proof, it
2. Restrictions on Capacity to Act (Art. 38) is presumed that they died at the same time and there shall
(MInD - ICIP) be no transmission of rights from one to the other.
 This rule applies only to cases involving succession
Do not exempt the incapacitated person from certain
obligations C. JURIDICAL PERSONS
1. Minortiy
2. Insanity 1. Who are Juridical Persons
3. State of being Deaf-mute
4. Imbecility Civil Personality, Juridical Persons (Arts. 44-47)
5. Civil Interdiction 1. The state and its political subdivisions
6. Prodigality – state of squandering money or property 2. Other corporations, institutions, and entities for
with a morbid desire to prejudice the heirs of a person public interest or purpose, created by law
(Martinez v. Martinez, 1 Phil. 182) 3. Corporations, partnerships, and associations for
private interest or purpose

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 2. When Personality Begins and Ends
 Creation: (1) and (2) are created by the laws creating
or recognizing them, private corporations
are governed by the Corp. Code (B.P. 68)
and partnership and associations are
governed by the provisions of the New
Civil Code on partnerships
 Extinguished: by termination of existence
3. Rights of Juridical Persons
1. Acquire and possess property of all kinds
2. Incur obligations
3. Bring civil or criminal actions
CITIZENSHIP
 In the Philippine jurisdiction, what is followed is the
concept of jus sanguinis (citizenship by blood) as
opposed to jus soli (citizenship by place of birth)
D. DOMICILE
DOMICILE ( Arts. 50-51)
- For natural persons, it is the place of
habitual residence
- For juridical persons, it is where their legal
representation is established or where
they exercise their principal functions
(when the law creating them does not fix
the domicile)
A minor follows the domicile of his parents
 Domicile of origin can only be lost when a change of
domicile occurs.
Requirements for the acquisition of new domicile:
1. Bodily presence in a new locality
2. Intention to remain therein (animus manendi)
3. Intention to abandon the old domicile (animus non
revertendi)
 The husband and the wife shall fix the family domicile. In
case of disagreement, the court shall decide
Kinds of Domicile
1. Domicile of origin – received by a person at birth
2. Domicile of choice – the place freely chosen by a person
sui juris
3. Constructive domicile – assigned to a child by law at the
time of his birth
================================
TOPICS UNDER THE SYLLABUS
E. Marriage (Arts. 1-54, Family Code)
1. Concept
2. Essential and Formal Requirements
3. Non-Essential Requirements
4. Marriages Celebrated Outside the
Philippines
a. Validity and Exceptions
b. Foreign Divorce
5. Void Marriages
a. Void ab initio under Art. 35
b. Void under Art. 36
c. Void for Being Incestuous under Art. 37
d. Void for Reason of Public Policy under
Art. 38
e. Imprescriptibility of action or defense for
declaration of nullity of marriage. (Art. 39)
f. Subsequent Marriage Without Judicial
Declaration of Nullity of Previous Void
Marriage (Art. 40)
6. Annullable Marriages
7. Procedure and Effects of Termination of
Marriage
================================================
E. MARRIAGE
1. CONCEPT
Marriage is
1. A special contract
2. of permanent union
3. Between a man and a woman
4. Entered into in accordance with law
5. For the establishment of conjugal and family life
2. ESENTIAL AND FORMAL REQUIREMENTS
1. Legal capacity of contracting parties
a. Must be between a man and woman
b. Must be at least 18 years old
2. Consent freely given, IN the PRESENCE of the
solemnizing officer
Formal Requisites of Marriage: (ALC)
1. Authority of solemnizing officer
2. Valid marriage license (except in cases where a marriage
license is not required)
 valid only for 120 days from issue in any part of the
Philippines

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3. Marriage ceremony where the contracting parties appear
before the solemnizing officer, with their personal
declaration that they take each other as husband and wife
in the presence of not less than two witnesses of legal age
Effects:
1. Absence of essential or formal requisites – void ab initio
Exceptions:
a. If solemnized by unauthorized person, the marriage will
still be valid if either or both contracting parties believed in
good faith that the solemnizing officer had legal authority
(Article 35(2))
Those exempt from the license requirement.
If either of the contracting parties are
a. at a point of death (articulo mortis),
b. or the residence of either party is located
that there is no means of transportation to
enable such party to appear personally
before the civil registrar,
c. cohabitation for 5 years,
then the marriage may be solemnized without
the necessity of a marriage license. (Article 27
and 28)
2. Defect in any of the essential requisites – voidable
3. Irregularity in any of the formal requisites – does not
affect the validity of the marriage but will make the party
responsible civilly, criminally, or administratively liable
Authorized Solemnizing Officers: (JPCCCM)
1. Incumbent member of the judiciary within the
court’s jurisdiction
2. Duly authorized priest, rabbi, imam or the minister
of any church or religious sect
3. Ship captain or airplane chief only in articulo mortis
between passengers or crew members while the
ship is at sea or the plane is in flight and also during
stopover at ports of call
4. Military commander of a unit to which a chaplain is
assigned only in articulo mortis between persons
within the zone of military operations whether
members of the armed forces or civilians and only in
the absence of the chaplain
5. Consul-general, consul or vice-consul only when
contracting parties are both Filipinos abroad
6. Mayor (Local Government Code of 1991)
The vice mayor, in case the mayor is temporarily
incapacitated to discharge his duties
Marriages Exempt from License Requirements:
1. Marriage in articulo mortis (one of the parties is at the
point of death)
CIVIL LAW REVIEWER
2. If the residence of either party is so located that there is
no means of transportation to enable such party to
appear personally before the civil registrar
3. Marriage solemnized outside the Philippines where no
marriage license is required by the country where it was
solemnized
4. Marriage among Muslims or among members of ethnic
cultural communities in accordance with their customs
5. 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
Requisites:
a. Man and woman must have been living
together as husband and wife for at least five
years before marriage
b. The parties must have no legal impediment to
marry each other
c. The fact of absence of legal impediment
between the parties must be present at the
time of marriage
d. The parties must execute an affidavit stating
that they have lived together for at least five
years (and are without legal impediment to
marry each other)
e. 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
 No legal impediment during the entire period:
This 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 vs.
Bayadog, 328 SCRA 122 (2000))
AUTHORIZED VENUES FOR MARRIAGE:
General Rule: Must be solemnized publicly, and not
elsewhere, in the:
1. Chambers of the judge or in open court
2. Church, chapel or Office of consul-general, consul or
vice-consul
Exceptions:
1. Marriage at the point of death (articulo mortis)
2. Marriage in remote places
3. Marriage at a house or place designated by the
parties in a sworn statement upon their written
request to the solemnizing officer
Page 10 of 338
 OTHER REQUIREMENTS: Exceptions:
Either or Both Parties Requires 1. Where either or both parties are below 18 years old
2. Bigamous or polygamous marriage (except Art. 41
18 years old and above but Parental consent on presumptive death of spouse)
below 21 Marriage counseling 3. Mistake in identity
21 years old and above but Parental advice 4. Marriages void under Art. 53 – contracted following
below 25 Marriage counseling the annulment or declaration of nullity of a previous
marriage but before partition
EFFECTS 5. Psychological incapacity
Lack of parental consent Marriage is VOIDABLE 6. Incestuous marriages
Lack of parental advice or NO EFFECT on th validity of 7. Marriage void for reasons of public policy
marriage counselling marriage
However, this will suspend b) Foreign Divorce
the issuance of the
marriage license for 3 Divorce by Foreigner-Spouse:
months from the  If a Filipino is married to a foreigner and the latter
completion of publication subsequently obtains a valid divorce abroad capacitating
 If they get married him/her to remarry, the Filipino spouse shall likewise
during the 3-month have the capacity to remarry under the Philippine law.
period without a (Art. 26, par. 2)
license, the marriage  Requisites:
shall be VOID a.) There is a valid marriage that had been celebrated
 If they are able to between Filipino citizen and a foreigner
obtain a license during b.) A valid divorce is obtained abroad by the alien
the 3-month period, the spouse capacitating him or her to remarry
marriage will still be
valid but civil and The traditional rule applies when parties at the time of
criminal liability may celebration are a Filipino and an alien BUT
attach.  This includes cases involving parties who, at the time of
the celebration of the marriage, were Filipino citizens
but, later on, one of them becomes naturalized as a
3. NON-ESSENTIAL REQUIREMENTS foreign citizen and obtains a divorce decree. The Filipino
spouse should be allowed to remarry as if the other
Marriage Certificate party was a foreigner at the time of the solemnization of
While a marriage certificate is considered the primary the marriage. Republic v. Orbecido III, 472 SCRA 114
evidence of a marital union, it is not regarded as the sole and (2005)
exclusive evidence of marriage. Jurisprudence teaches that  For the second paragraph of Article 26 to apply, a spouse
the fact of marriage may be proven by relevant evidence who obtained the divorce must not be a Filipino at the
other than the marriage certificate. Hence, even a person’s time of the divorce. Otherwise, the divorce is not
birth certificate may be recognized as competent evidence of recognized in the Philippines. Republic v. Iyoy, G.R. No.
the marriage between his parents. (Anonuevo vs. Int. Estate 15277, September 21, 2005
of Jalandoni, [GR 178221, December 1, 2010])  Additionally, an action based on the second paragraph of
Article 26 of the Family Code is not limited to the
4. MARRIAGES SOLEMNIZED ABROAD recognition of the foreign divorce decree. If the court
finds that the decree capacitated the alien spouse to
a) Validity and Exceptions remarry, the courts can declare that the Filipino spouse
is likewise capacitated to contract another marriage. No
General Rule: Marriages solemnized outside the Philippines court in this jurisdiction, however, can make a similar
in accordance with the laws of the foreign country shall be declaration for the alien spouse (other than that already
valid here (lex loci celebrationis). – Basis: Principle of comity established by the decree), whose status and legal
 However, if solemnized inside the Philippine Consulate capacity are generally governed by his national law.
abroad, Philippinelaws must be observed Corpuz vs. Sto. Tomas, G.R. No. 186571, August 11,
2010

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5. VOID MARRIAGES
a) Void ab initio under Art. 35
1. Contracted by any party below 18 years old
2. Solemnized by unauthorized solemnizing officer
(Except if either or both parties believed in good
faith that the officer had authority)
3. Solemnized without marriage license (Except when
license not required)
 A petition to declare the marriage void due to
absence of marriage license, filed after the court
denied a petition to declare the marriage void due
to psychological incapacity, is barred by RES
JUDICATA. There is only one cause of action which
is the nullity of marriage. Petitioner is estopped
from asserting that the first marriage had no
marriage license because he impliedly admitted the
same when he did not question the absence of a
marriage license in the first case. Mallion v.
Alcantara, G.R. No. 141528, October 31, 2006
4. Bigamous or polygamous marriages
Exception: Art. 41 – Marriage contracted by a
person whose spouse has been absent for 4 years
(ordinary absence) or 2 years (extraordinary
absence), where such person has a well founded
belief that his/her absent spouse is already dead,
and after the absent spouse is judicially declared
presumptively dead, and at the time of the marriage
ceremony is in good faith together with the
subsequent spouse
5. Mistake in identity
 The contemplated mistake here refers to the
actual physical identity of the other party, and
not merely mistake in the name, character, age,
or other attributes of the person.
6. Subsequent marriage void under Art. 53
- A person whose marriage has been annulled
may remarry as long as after the marriage is
annulled, the properties of the spouses must be
partitioned and distributed and the presumptive
legitimes of the children be distributed.
Furthermore, the judgment of annulment or
absolute nullity, the partition and distribution,
and the delivery of the presumptive legitimes
must be recorded in the appropriate civil registry
and registries of property. Failure to comply
CIVIL LAW REVIEWER
with these requisites will make the subsequent
marriage void ab initio. Further, failure to record
in the proper registries will mean that such will
not affect third persons (Arts. 52-53)
NOTE: The enumeration of void marriages under Art. 35 is
not exclusive.
b) Void under Art. 36
Where any of the parties, who at the time of the celebration
of the marriage, was psychologically incapacitated to comply
with the essential marital obligations, even if incapacity
becomes manifest only after solemnization.
 Psychological Incapacity must be judged on a case to
case basis. It should refer to no less than a mental
(not physical) incapacity. It must be characterized by
a. gravity b. juridical antecedence c. incurability.
Carating-Siaynco v. Siaynco, 441 SCRA 422 (2004)
 Mere showing of irreconcilable differences and
conflicting personalities does NOT constitute
psychological incapacity. Carating-Siaynco v.
Siaynco, 441 SCRA 422 (2004)
 Mere sexual infidelity or perversion and
abandonment do not by themselves constitute
psychological incapacity within the contemplation of
the Family Code. Neither could emotional
immaturity and irresponsibility be equated with
psychological incapacity. Dedel v. CA 421 SCRA 461
(2004)
 It must be shown that these acts are manifestations
of a disordered personality which make respondent
completely unable to discharge the essential
obligations of a marital state. Root cause must be
traceable prior to the marriage ceremony. Dedel v.
CA 421 SCRA 461 (2004)
 One of the essential marital obligations is "To
procreate children based on the universal principle
that procreation of children through sexual
cooperation is the basic end of marriage." Constant
non-fulfillment of this obligation will finally destroy
the integrity or wholeness of the marriage. The
senseless and protracted refusal of one of the
parties to fulfill this marital obligation is equivalent
to psychological incapacity. Chi Ming Tsoi v. CA,
G.R. No. 119190, January 16, 1997
 Psychological incapacity is not equated with insanity
or total mental inability to function in all aspects of
Page 12 of 338
 human life…it is a ground restricted to psychological
incapacity “to comply with marital obligations”.
Perez-Ferraris v. Ferraris GR No. 162368 (2006)
 A finding of psychological incapacity on the part of
one spouse shows non-cognizance of one’s essential
marital obligation, and therefore negates bad faith.
As a consequence moral and exemplary damages
cannot be awarded against him/her because bad
faith is an essential element in awarding moral and
exemplary damages. Award of moral damages
should be predicated, not on the mere act of
entering into the marriage, but on specific evidence
that is was done deliberately and with malice by a
party who had known of his or her disability and yet
willfully concealed the same. Buenaventura v. CA,
GR No. 127358, March 31, 2005
The Court emphasizes that the burden falls upon
petitioner, not just to prove that private respondent suffers
from a psychological disorder, but also that such
psychological disorder renders her "truly incognitive of the
basic marital covenants that concomitantly must be
assumed and discharged by the parties to the marriage."
Psychological incapacity must be more than just a
"difficulty," a "refusal," or a "neglect" in the performance
of some marital obligations. An unsatisfactory marriage is
not a null and void marriage. Baccay vs. Baccay, GR No.
117318, December 1, 2010
JURISPRUDENTIAL GUIDELINES (BRE-IGO-IC)
(Republic v. CA & Molina 268 SCRA 198 (1997))
1. Burden of proof to show the nullity of marriage is
upon the plaintiff
2. The root cause of the psychological incapacity must
be:
a. Medically or clinically identified
b. Alleged in the complaint
c. Sufficiently proven by experts
d. Clearly explained in the decision
3. The incapacity must be proven to be existing at the
time of the celebration of the marriage
4. Such incapacity must be shown to be medically or
clinically permanent or incurable
5. Such illness must be grave enough to bring about the
disability of the party to assume the essential
obligations of marriage
6. Essential marital obligations must be those embraced
by Art. 68-71, as well as Art. 220, 221, and 225 of the
Family Code.
7. Interpretations given by the National Appellate
Matrimonial Tribunal of the Catholic Church in the
CIVIL LAW REVIEWER
Philippines, while not controlling or decisive, should be
given great respect by our courts
8. The trial court must order the prosecuting attorney or
fiscal and the Solicitor General to appear as counsel
for the state
 The foregoing guidelines do not require that a physician
examine the person to be declared psychologically
incapacitated. What is important is that the totality of
evidence can adequately establish the party’s
psychological condition. Republic v. CA & Molina, 268
SCRA 198 (1997)
 In determining if one of the contracting parties is
psychologically incapable, the courts should interpret the
provision on a case-to-case basis. Courts should be
guided by experience, the findings of experts and
researchers in psychological disciplines, and by decisions
of church tribunals. Te v. Te, G.R. No. 161793, February
13, 2009
c) Void for Being Incestuous under Art. 37
Whether relationship is legitimate or illegitimate:
1. Between ascendants and descendants of any degree
2. Between brothers and sisters, whether full or half
blood
d) Void for Reason of Public Policy under Art. 38
1. Between collateral blood relatives up to the 4th civil
degree
- There is no prohibition regarding
marriages between collateral blood
relatives by half-blood
2. Between step-parents and step-children
3. Between parents-in-law and children-in-law
4. Between adopting parent and adopted child
5. Between surviving spouse of the adopter and the
adopted
6. Between surviving spouse of the adopted and the
adopter
7. Between adopted and legitimate child of adopter
8. Between adopted children of same adopter
9. Between parties where one, with the intention to
marry the other, killed that other person’s spouse or
his/her own spouse
No prior criminal conviction by the court for
the killing is required by the law since mere
preponderance of evidence is required to
prove the killing.
Article 38 is an exclusive list.
Page 13 of 338
Under the new Family Code, the following can now marry
each other:
a. Brother-in-law and sister-in-law
b. Stepbrother and stepsister
c. Guardian and ward
d. Adopted and illegitimate child of the
adopter
e. Parties who have been convicted of
adultery or concubinage
NOTE: R.A. 6995 (Mail Order Bride Act) declares as unlawful
the practice of matching Filipino women for marriage to
foreign nationals on a mail-order basis and other similar
practices including the advertisement, publication, printing or
distribution of brochures, fliers, and other propaganda
materials in furtherance thereof.
e) Imprescriptibility of action or defense for
declaration of nullity of marriage. (Art. 39)
A marriage that is invalid from the beginning is non-existent,
and in effect, cannot be dissolved. The judicial decree to
declare its nullity is a mere confirmation of the voidness of
the marriage, hence this petition is imprescriptible.
f) Subsequent Marriage Without Judicial Declaration
of Nullity of Previous Void Marriage (Art. 40)
- For the purposes of remarriage, the only legally
acceptable basis for declaring a previous marriage an
absolute nullity is a final judgment declaring such
previous marriage void, whereas, for purposes other
than remarriage, other evidence is acceptable
- In a case for concubinage, the accused need not
present a final judgment declaring his marriage void
for he can adduce evidence in the criminal case of
nullity of his marriage other than proof of final
judgment declaring his marriage void. Hence, the
pendency of the civil action for nullity of marriage
does not pose a prejudicial question in a criminal case
for concubinage.
 However, a judicial declaration of nullity is not
needed where no marriage ceremony at all was
performed by a duly authorized solemnizing officer
as where the parties merely signed a marriage
contract on their own. The mere signing of a
marriage contract bears no semblance to a valid
marriage and thus needs no judicial declaration of
nullity. Lucio Morigo v. People, G.R. No. 145226,
February 6, 2004
CIVIL LAW REVIEWER
 Second marriage is still bigamous even if the first
marriage is judicially declared void after contracting
the second marriage, only if the first marriage
ostensibly transpired as there was a marriage
ceremony. However, if the first marriage was void
due to the fact that no marriage ceremony was
solemnized at all, then the second marriage is not
bigamous. Morigo v. People, 422 SCRA 376 (2004)
NOTE: Even if a marriage is void, it must be declared void
first by final judgment before the parties to such void
marriage can remarry. The parties cannot decide for
themselves the invalidity of their marriage.
EXCEPTION: When the purpose is other than remarriage, a
collateral attack of the marriage is allowed.
PRESUMPTION OF DEATH FOR REMARRIAGE (Art. 41)
General Rule: Marriage contracted by any person during the
subsistence of a previous marriage is VOID
Exception: If before the celebration of the subsequent
marriage:
a. The previous spouse had been absent for 4
consecutive years (ordinary absence) or 2 years
(extraordinary absence) and
b. The remaining spouse has a well-founded belief
that the absent spouse is already dead
c. Judicial declaration of presumptive death
- In this case, the subsequent marriage is valid
but it shall be automatically terminated by
the recording of the affidavit of
reappearance of the absent spouse.
- Without filing of the affidavit of
reappearance, there will exist two valid
marriages (valid bigamous marriage)
Exception to the Exception: If both spouses of the
subsequent marriage acted in bad faith, such marriage is void
ab initio (Art. 44)
Effect of Reappearance
 The subsequent bigamous marriage under Art. 41
remains valid despite reappearance of the absentee
spouse
 UNLESS, the reappearance made in a sworn statement is
recorded in the civil registry in the place where the
parties to the subsequent marriage resides. In such case,
the subsequent marriage is automatically terminated.
 HOWEVER, if there was a previous judgment annulling or
declaring the first marriage a nullity, the subsequent
bigamous marriage remains valid.
Page 14 of 338
 d. Concealment of drug addiction, habitual
NOTE: Summary proceedings under the Family Code are final alcoholism, homosexuality and lesbianism
and executory pursuant to Article 247. Hence, summary 4. Force, intimidation or undue influence
proceeding for the declaration of presumptive death of an 5. Physical incapability of either party to consummate
absent spouse under Article 41 of the Family Code is non- the marriage with the other, and such incapacity
appealable. Republic v. Tango, G.R. No. 161062, July 31, 2009 continues and appears to be incurable
Requisites of Annulment due to Impotence:
Effects of Termination of Subsequent Marriage: (LDDRI) a. Impotence exists at the time of the
1. Children of the subsequent marriage conceived celebration of marriage
prior to its termination shall be considered b. Permanent
legitimate c. Incurable
2. The absolute community or conjugal partnership d. Unknown to the other spouse
shall be dissolved and liquidated e. The other spouse must not also be impotent
 Doctrine of Triennial Cohabitation: Presumption
 If either spouse acted in bad faith, his/her share that the husband is impotent should the wife
in the net profits shall be forfeited: still remain a virgin after 3 years of living
a. In favor of the common children together with her husband.
b. If none, in favor of the children of the guilty 6. Affliction of Sexually Transmissible Disease found to
spouse by previous marriage be serious and which appears incurable
c. In default of children, in favor of the Elements:
innocent spouse a. Existing at the time of marriage
3. Donations by reason of the marriage remain valid b. Sexually transmissible disease
except if the donee contracted the marriage in bad c. Serious
faith d. Appears incurable
4. The innocent spouse may revoke the designation of
the spouse in bad faith as the beneficiary in any
insurance policy, even if designation is stipulated as ARTICLE 45 ARTICLE 46
irrevocable, and The STD is a ground for The STD is a type of fraud
5. The spouse who contracted the subsequent annulment which in turn is a ground for
marriage in bad faith shall be disqualified to inherit annulment
from the innocent spouse by testate or intestate The STD does not have to The STD must be concealed
succession be concealed

NOTE: The above effects apply to voidable bigamous The STD must be serious The STD does not have to be
marriages. Except for (1), the above effects also and incurable serious and appears incurable
apply to marriages which are annulled or declared
void ab initio under Art. 40.

6. ANNULLABLE MARRIAGES

Grounds for Annulment (art. 45): (PUFFIS)

1. Lack of parental consent
2. Either party is of unsound mind
3. Fraudulent means of obtaining consent of either
party

 Circumstances constituting fraud: (Art. 46)

a. Non-disclosure of conviction by final
judgment of crime involving moral
turpitude
b. Concealment of pregnancy by another man
c. Concealment of sexually transmissible
disease, regardless of nature, existing at
the time of marriage

CIVIL LAW REVIEWER Page 15 of 338

 EFFECTS OF TERMINATION OF MARRIAGE
GROUNDS FOR ANNULMENT WHO CAN FILE PRESCRIPTIVE PERIOD RATIFICATION

Lack of parental consent (PC) a. Underage party (18-21) a. Within 5 years after Free cohabitation after reaching 21
turning 21
b. Parent or guardian b. Before child reaches 21

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

Dean Del Castillo:

Within 5 years from the time the
right or action accrues

Guardian of insane spouse Anytime before the death of either

party
Insane spouse During the lucid interval or after
regaining sanity also before death
of other party
Fraud Injured Party Within 5 years after discovery of Free cohabitation even with full knowledge of facts
Fraud constituting the fraud

Vitiated consent Injured Party Within 5 years from time force, Free cohabitation after the cause (force, intimidation,
intimidations or undue influence undue influence) disappeared or ceased
disappeared or ceased *intimidation can be on the person or the property of
the injured party and his/her immediate family
Incapability to Consummate/ Sexually Injured Party Within 5 years after the marriage No ratification since defect is permanent.
transmissible disease ceremony
(CONSUMMATE/STD)

CIVIL LAW REVIEWER Page 16 of 338

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

CIVIL LAW REVIEWER Page 17 of 338

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

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7. PROCEDURE AND EFFECTS OF TERMINATION OF 3. Fraud Injured Party Within 5 years
MARRAIGE from discovery of
fraud
A.M. No. 02-11-10-SC 4. Vitiated Injured Party Within 5 years
PROPOSED RULE ON DECLARATION OF ABSOLUTE Consent from time of
NULLITY OF VOID MARRIAGES AND ANNULMENT OF force,
VOIDABLE MARRIAGES intimidation or
undue influence
SCOPE: disappeared or
 Petitions for declaration of absolute nullity of void ceased
marriages and annulment of voidable marriages under 5. Incapability to Injured Party Within 5 years
the Family Code Consummate/ after the
 The Rules of Court shall apply suppletorily Sexually marriage
Transmitted ceremony
PETITION FOR DECLARATION OF ABSOLUTE NULLITY: Disease

Who may file: solely the husband or wife A. Venue: Family Court of the province or city where the
petitioner or the respondent has been residing for at least
What to allege: If based on psychological incapacity, 6 months prior to the date of filing (or non-resident
complete facts showing either one is incapacitated from respondent: where he may be found in the Philippines) AT
complying with marital obligations at the time of the THE ELECTION OF THE PETITIONER.
celebration of the marriage including physical
manifestations, if any B. Petition shall allege:
1. Complete facts constituting the cause of action
 Actions or defenses shall NOT prescribe 2. Names and ages of the common children of the parties
and specify the regime governing their property
PETITION FOR ANNULMENT OF VOIDABLE MARRIAGES relations, and the properties involved
Who may file: 3. Verified and accompanied by a certification against
GROUND PARTY TO FILE PRESCRIPTIVE forum shopping, which must be signed personally by
THE SUIT PERIOD the petitioner
1. No Parental a. Parent or a. Anytime before
Consent Guardian having charge reaches  Petition may not be signed solely by counsel or
Legal Charge of 21 yrs. old through an attorney-in-fact
“no-consent”  If petitioner is in a foreign country, the
party verification/certification shall be authenticated by
the duly authorized officer of the Philippine
b.“No-Consent” b. Within 5 years embassy or legation, consul general, consul, vice-
Party after reaching 21 consul, or consular agent in said country
2. Insanity a. Sane spouse a. Anytime before
without death of either 4. Filed in 6 copies, a copy to be served to the OSG and the
knowledge of party Office of the City or Provincial Prosecutor, w/in 5 days
insanity from the date of its filing and submit to the court proof
of such service w/in the same period
b. Relative, b. Anytime
guardian or before death of  Failure to comply with requirements may be a
person having either party ground for immediate dismissal of the petition.
legal charge of
insane C. Service of Summons
 Governed by the Rule 14 of the Rules of Court and
c. Insane spouse c. During lucid the following:
interval or after
regaining sanity

CIVIL LAW REVIEWER Page 19 of 338

 1. Respondent cannot be located at his given address
or his whereabouts are unknown and cannot be
ascertained by diligent inquiry:
(a) Service of summons by publication once a week
for 2 consecutive weeks in a newspaper of
general circulation in the Philippines and in such
places as the court may order
(b) Served at respondent’s last known address by
registered mail or any other means the court may
deem sufficient
2. Summons to be published shall be contained in a
court order with the following data:
(a) title of the case
(b) docket number
(c) nature of the petition
(d) principal grounds of the petition and the reliefs
prayed for
(e) a directive for the respondent to answer w/in 30
days from the last issue of the publication
D. Motion to Dismiss: not allowed, except for lack of
jurisdiction over the subject matter or over the parties
(however, any ground that might warrant a dismissal may
be raised as an affirmative defense in an answer)
E. Answer
 Verified by the respondent himself & filed w/in 15
days from service of summons or w/in 30 days
from the last issue of publication in case of service
of summons by publication
 Failure to answer shall NOT make him in default
 Court will order the public prosecutor to
investigate if there is collusion if no answer is filed
or when answer does not tender an issue
F. Investigation Report of the Public Prosecutor
 To be made w/in 1 month after the receipt of the
court order
 Shall state whether the parties are in collusion and
basis for such finding, serve copies to parties &
counsels
(a) there is collusion – parties shall file their
respective comments w/in 10 days from
receipt of a copy
(b) no collusion – set the case for pre-trial
 Public prosecutor shall represent the State
 Investigation is a condition sine qua non for further
proceedings in cases where the respondent does
not answer. This is true even if during the hearing
the fiscal participated and cross-examined the
CIVIL LAW REVIEWER
witnesses. Corpus vs. Ochoterena, 435 SCRA 446
(2004)
G. Court may require a social worker to conduct a case
study and submit report at least 3 days before the pre-trial
H. Pre-trial is MANDATORY.
 Notice
1. Notice of pre-trial shall be served to the
parties, their counsels and the public
prosecutor, containing: date of pre-trial
conference and order directing the parties to
file pre-trial brief, ensuring its receipt by the
adverse party at least 3 days before the date
of pre-trial
2. Notice of pre-trial shall still be sent to
respondent even if he did not file an answer
 Personal Appearance
1. Parties should appear personally at the pre-
trial
2. Failure of petitioner to appear at the pre-trial
personally w/o the valid cause, case dismissed
3. Failure to file the pre-trial brief or to comply
with its required contents, case dismissed
4. If respondent filed his answer but fails to
appear at the pre-trial, the court shall proceed
but public prosecutor required to investigate
reason for non-appearance (if due to
collusion)
 Pre-trial conference
Court may refer issues to mediator, but should
this fail or is not availed of, proceed with pre-trial
conference
 Pre-trial order
1. Parties are not allowed to raise issues or
present witnesses and evidence other than
those stated in the pre-trial order
2. Parties have 5 days from receipt of pre-trial
order to make corrections or modifications
3. Public prosecutor shall appear for the State
to prevent collusion
J. Prohibited Compromise
(a) Civil status of persons
(b) Validity of marriage or legal separation
(c) Any ground for legal separation
(d) Future support
(e) Jurisdiction of courts
(f) Future legitimes
Page 20 of 338
K. Decision
 Copies will be served on the parties, including the
SolGen and public prosecutor
 Final after expiration of 15 days from notice to the
parties
 Should be registered in the Civil Registry where the
marriage was celebrated and in the Civil Registry of
the place where the Family Court is located
L. Appeal
 Not allowed if no motion for reconsideration or
new trial is made w/in 15 days from notice of
judgment
M. Death
 Party dies before entry of judgment: case closed
and terminated w/o prejudice to the settlement
of the estate in proper proceedings in the regular
courts
 Party dies after the entry of judgment: binding
upon the parties and their successors-in-interest in the
settlement of the estate in the regular courts.
N. Date of Effectivity: March 15, 2003
================================================
TOPICS UNDER THE SYLLABUS
F. LEGAL SEPARATION
1. Grounds
2. Procedure
3. Defenses
4. Liquidation
5. Effects of Legal Separation Pendente Lite
6. Reconciliation Effects
==========================================
1. GROUNDS
(PRC-FAL-BILA)
1. Repeated physical violence or grossly abusive conduct
directed against petitioner, a common child or a child
of the petitioner
2. Physical violence or moral pressure to compel the
petitioner to change religious or political affiliation
3. 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
4. Final judgment sentencing respondent
imprisonment of more than 6 years (even if pardoned)
5. Drug addiction or habitual alcoholism
6. Lesbianism or homosexuality
CIVIL LAW REVIEWER
7. Subsequent bigamous marriage
8. Sexual infidelity or perversion
9. Attempt by respondent against the life of the
petitioner
10. Abandonment for more than 1 year without justifiable
cause
Grounds to Deny Legal Separation/Defenses to Legal
Separation:
(C4-D-GRP)
1. Condonation
 failure of the husband to look for his adulterous
wife is not condonation to wife’s adultery
2. Consent
3. Connivance
4. Collusion
5. Mutual guilt
6. Prescription – action for legal separation must be filed
within five years from the time of the occurrence of
the cause of action
7. Death of either party during the pendency of the case
Lapuz-Sy v. Eufemio, 43 SCRA 177 (1972)
8. Reconciliation of the spouses during the pendency of
the case
Effects of Separation:
1. Spouses are entitled to live separately
2. Marriage bond is not severed
3. Dissolution of property regime
4. Forfeiture of the share of the guilty spouse in the net
profits of the ACP/CPG
5. Custody of minor children to innocent spouse (subject
to Art. 213: parental authority shall be exercised by
parent designated by the court)
 The imposed custodial regime under the second
paragraph of Article 213 is limited in duration, lasting
only until the child’s seventh year. From the eighth
year until the child’s emancipation, the law gives the
separated parents freedom, subject to the usual
contractual limitations, to agree on custody regimes
they see fit to adopt. (Dacasin vs. Dacasin, GR168785,
February 5, 2010)
6. Guilty spouse is disqualified from intestate succession
and provisions made by innocent spouse in his favor in
a will shall be revoked by operation of law
7. Innocent spouse may revoke the donation made by
him in favor of the offending spouse. However,
to alienations, liens and encumbrances registered in
good faith before the recording of the complaint for
revocation in the registries of property shall be
respected.
Page 21 of 338
8. Innocent spouse may revoke designation of guilty
spouse as beneficiary in the insurance policy even if
such designation be stipulated as irrevocable
2. PROCEDURE FOR LEGAL SEPARATION
A.M. No. 02-11-11-SC
PROPOSED RULE ON LEGAL SEPARATION
 The Rules of Court shall apply suppletorily
Who may file: solely the husband or wife
When to file: within 5 years from the occurrence of any of
the grounds
 Procedure is almost the same as in the Rule on
Declaration of Absolute Nullity & Annulment (see
above)
 Creditors are furnished copies of the petition
 Pre-trial set not earlier than 6 months from filing of
the petition for possibility of reconciliation (COOLING
OFF PERIOD)
Exception: There is no cooling-off period if the ground
alleged are those under R.A. 9262 (Violence Against
Women & Children). The court shall proceed in the main
case and other incidents of the case as soon as possible.
R.A. 9262, Sec. 19.
 The abandonment contemplated is one without
justifiable cause for more than one year. As it was
established that Lucita left William due to his
abusive conduct, such does not constitute
abandonment contemplated by the said
provision. Ong Eng Kiam vs. Ong, G.R. No.
153206, October 23, 2006
================================================
TOPICS UNDER THE SYLLABUS
G. RIGHTS AND OBLIGATIONS BETWEEN
HUSBAND AND WIFE
==========================================
Obligations of Husband and Wife (L2H2ds)
1. Live together
2. Observe mutual love, respect and fidelity
3. Render mutual help and support
4. Management of the household
5. Fix the family domicile
6. Joint responsibility for the support of the family
CIVIL LAW REVIEWER
Profession
General Rule - Either spouse may exercise any legitimate
profession/business without the consent of the other
Exception - The other spouse may object on valid, serious
and moral grounds. In case of disagreement,
the court shall decide whether
a. The objection is proper AND
b. Benefit has accrued to the family before
and after the objection.
 If benefit accrued to the family before the objection,
the resulting obligation shall be enforced against the
separate property of the spouse who has not obtained
consent
 If benefit accrued to the family after the objection has
been made, the resulting obligation shall be enforced
against the community property
================================================
TOPICS UNDER THE SYLLABUS
H. PROPERTY RELATIONS BETWEEN HUSBAND
AND WIFE
1. How Governed
2. Marriage Settlements
3. Donations by Reason of Marriage
4. Property Relations of Union with Marriage
a.System of Absolute Marriage
b. Conjugal Partnership of Gains
5. Separation of Properties During Marriage
6. Regime of Separation of Property
==========================================
1. WHAT GOVERNS PROPERTY RELATIONS BETWEEN
SPOUSES
1. Marriage settlement – future spouses may agree upon
the regime of ACP, CPG, complete separation of
property, or any other regime
2. Family Code – if there is no marriage settlement or
when the regime agreed upon therein is void, the
system of ACP shall govern
3. Local customs
Page 22 of 338
2. MARRIAGE SETTLEMENT  Applies to common law spouses (Art. 87)

Requisites of a Valid Marriage Settlement: (WSB-TC-CR) Grounds to Revoke Donation Propter Nuptias: (CARNIVL)
1. In writing 1. Marriage is not celebrated
2. Signed by the parties 2. Marriage is judicially declared void ab initio
3. Executed before the celebration of marriage 3. Marriage without the needed parental consent
4. To fix the terms and conditions of their property 4. Marriage is annulled and donee is in bad faith
relations 5. If it is with a resolutory condition and the condition is
5. If parental consent is needed for the marriage, the complied with
parent/guardian must be made a party to the 6. In legal separation and donee is the guilty spouse
agreement 7. Donee commits acts of ingratitude such as:
6. If the party executing the settlement is under civil a. Commits an offense against the person, honor or
interdiction or any other disability, the guardian property of the donor, his wife, or his children under
appointed by the court must be made a party to the his parental authority
settlement b. Imputes to the donor any criminal offense or any act
7. Registration (to bind 3rd persons) involving moral turpitude, unless the crime was
committed against the donee himself, his wife, or
General Rule: Property Relations are governed by his children under his authority
Philippine laws c. Unduly refuses to support the donor when he is
Exceptions: legally or morally bound to give such support
1. When both are aliens, even if married in the Phils.
2. As to extrinsic validity of contracts DONATION PROPTER NUPTIAS v. ORDINARY DONATION
3. Contrary stipulation DONATIONS ORDINARY
BASIS
PROPTER NUPTIAS DONATIONS
3. DONATIONS BY REASON OF MARRIAGE (Donations Governed by the
Propter Nuptias) rules on ordinary
Governed by rules
donations except if
Formalities on donations (Arts.
Before Marriage future property, it
725-773 NCC)
General Rule: Future spouses cannot donate to each other must conform with
more than 1/5 of their present property (excess shall be formalities of wills
considered void)
No limit except that
Requisites: May be donated but
Present donor shall leave
1. Made before celebration of marriage up to 1/5 of donor's
Property property enough for
2. In celebration of marriage present property
his support
3. In favor of one or both future spouses
Exception: If they are governed by ACP May be included
Future
provided donation is Cannot be included
Property
During Marriage mortis causa
General Rule: Donations made by spouses to each other Grounds for Art. 86 of Family Arts. 760, 764, 765
during the marriage are VOID revocation Code NCC
REASON:
1. To protect unsecured creditors from being Prescriptive Periods for Filing Action for Revocation of
defrauded Donation Propter Nuptias
2. To prevent stronger spouse from imposing upon (Based on Sta. Maria)
the weaker one the transfer of the latter’s If marriage is not celebrated 5 years (Art. 1149 NCC) from
property to the former (Except: donations in the time marriage is not
3. To prevent indirect modification of the marriage marriage settlements solemnized on the fixed
settlement automatically void if date
Exceptions: marriage not celebrated)
1. Moderate gifts on the occasion of any family
rejoicing If marriage is judicially
2. Donation mortis causa declared void, it depends:

CIVIL LAW REVIEWER Page 23 of 338

 (a) If subsequent marriage By operation of law if
is void pursuant to Art. 40 in donee-spouse contracted Exceptions/Exclusions from Community Property:
relation to Arts. 52 and 53, subsequent void marriage in 1. Property acquired before the marriage by either
because contracted by a bad faith spouse who has legitimate descendants by a former
spouse before prior void marriage and its fruits and income
marriage is judicially 2. Property for personal and exclusive use, except
declared void jewelry
3. Property acquired during the marriage by gratuitous
(b) Judicially declared void 5 years from finality of title, except when the donor, testator, or grantor
on grounds other than Art. judicial declaration of nullity expressly provides otherwise
40 in relation to Arts. 52 (if action to recover
and 53 property)  Encumbrance or disposition of the community
property without the consent of the other spouse is
When marriage takes place 5 years totally void. Benefit to the family must always be
without the required proven. Homeowner’s Savings & Loan Bank vs. Dailo,
parental consent G.R. No. 153802, March 11, 2005
If resolutory condition is 5 years from happening of
complied with condition Charges Upon and Obligations of the ACP:
When marriage is annulled 5 years from finality of 1. Debts and obligations contracted during the marriage:
and donee in bad faith decree a.) By either spouse without the consent of the
If donee commits an act of 1 year from donor’s other to the extent that it benefited the family
ingratitude knowledge of that fact b.) By designated administrator-spouse
In cases of legal separation 5 years from the time the c.) By both spouses
decree of separation has d.) By one with the consent of the other
become final 2. Taxes, liens, charges and expenses including major or
minor repairs, upon community property
4. PROPERTY RELATIONS 3. Support of spouses, their common children and
legitimate children of either spouse
a. System of Absolute Community (acp) 4. Expenses of litigation between spouses unless the suit
is found to be groundless
The property regime of spouses in the absence of a
5. Ante-nuptial debts which redounded to the benefit of
marriage settlement or when the regime agreed upon is
the family
void.
6. Taxes and expenses for mere preservation made
during the marriage upon the separate property of
NOTE: Shall commence at the precise moment that the either spouse used by the family
marriage is celebrated. Any stipulation, express or implied, 7. Expenses for professional or vocational course
for the commencement of the regime at any other time 8. Other ante-nuptial debts, support of illegitimate child,
shall be VOID. and liabilities for crime or quasi-delicts in absence of
separate property
No waiver of rights allowed during the marriage except in 9. Donated or promised to common legitimate children
case of judicial separation of property. The waiver must be for profession, vocational course or self improvement
in a public instrument.
If the community property is insufficient to cover all these
Property acquired during the marriage, whether acquisition liabilities (except those falling under (8) spouses shall be
appears to have been made in the name of one or both solidarily liable for the unpaid balance with their separate
spouses, is PRESUMED to belong to the community. properties

General Rule: The community property consists of all the Dissolution of the ACP:
property owned by the spouses at the time of the 1. Upon death of either spouse
celebration of the marriage or acquired thereafter. 2. Decree of legal separation
3. Marriage is annulled or nullified

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4. Judicial separation of property during the marriage
(Arts. 134-138)
Liquidation of the ACP:
1. Inventory of all properties
a. Inventory of community property
b. Inventory of separate property of the wife
c. Inventory of separate property of the husband
2. Debts and obligations of ACP are paid
3. Remainder of the separate properties of the spouses
are returned to the owner
4. Net remainder of the ACP is divided equally between
husband and wife
5. Presumptive legitimes of children are delivered
6. Adjudication of conjugal dwelling and custody of
common children
b. System of Conjugal Property of Gains (cpg)
The spouses contribute the following to a common fund:
1. Proceeds, products, fruits and income of separate
properties of spouses
2. Everything acquired by spouses through their efforts
3. Everything acquired by spouses through chance
 Shall commence at the precise moment that the
marriage is celebrated. Any stipulation, express or
implied, for the commencement of the regime at any
other time shall be VOID.
 No waiver of rights allowed during the marriage
except in case of judicial separation of property. The
waiver must be in a public instrument.
 Property acquired during the marriage, whether
acquisition appears to have been made in the name of
one or both spouses, is PRESUMED to be conjugal.
 The presumption is not rebutted by the mere fact that
the certificate of title of the property or the tax
declaration is in the name of one of the spouses.
Villanueva v. CA,427 SCRA 439 (2004)
 It is not even necessary to prove that the properties
were acquired with funds of the partnership. The
presumption shall subsist in the absence of clear,
satisfactory and convincing evidence to overcome the
same. Chine v. CA, 423 SCRA 371 (2004)
Exclusive Property in CPG:
1. That brought into the marriage as his/her own
2. That acquired during the marriage gratuitously
CIVIL LAW REVIEWER
3. That acquired by redemption, barter or exchange with
exclusive property
4. That purchased with exclusive money
What Constitutes CPG:
1. Fruits of conjugal property due or received during the
marriage and net fruits of separate property
2. Those acquired through occupation
3. Livestock in excess of what was brought to the marriage
4. Those acquired during the marriage with conjugal funds
5. Share in hidden treasure
6. Those obtained from labor, industry, work or profession
of either or both spouse
7. Those acquired by chance
Rules in Cases of Improvement of Exclusive Property:
GENERAL RULE: The ownership of improvements made on
the separate property of the spouses at the expense of the
partnership or through efforts of both spouses shall pertain
to the partnership.
1. Accession – if the cost of the improvement and any
resulting increase in value are equal or less than the
value of the entire property at the time of the
improvement, the entire property remains the exclusive
property of the owner-spouse (subject to
reimbursement of improvement cost)
2. Reverse Accession – if the cost of the improvement and
any resulting increase in value are more than the value
of the entire property at the time of the improvement,
the property becomes conjugal (subject to
reimbursement of the value of the property of the
owner-spouse)
Charges upon CPG:
-Same as that under ACP, except that under taxes and
expenses for preservation of separate property of either
spouse during the marriage -> property need not be used
by the family
NOTE: If the conjugal partnership is insufficient, the
spouses shall be solidarily liable for the unpaid balance
with their separate properties.
Dissolution of CPG: Same as under ACP
Liquidation of the CPG:
1. Inventory of all property
2. Amounts advanced by CP as payment for personal
debts and obligations of either spouse are credited
3. Reimbursement for use of exclusive funds
4. Debts and obligations of the CP are paid
Page 25 of 338
5. Remains of exclusive properties are returned b. encumbrance
6. Indemnify loss of deterioration of movables belonging - Both spouses must approve any disposition or
to either spouse used for the benefit of the family encumbrance. Any encumbrance or disposition is
7. Net remainder of conjugal property is divided equally void if without the written consent of the other
8. Delivery of children’s presumptive legitimes spouse or the court approval. However, the
9. Adjudication of conjugal dwelling and custody of transaction shall be construed as a continuing
children offer on the part of the consenting spouse, which
 Prior to the liquidation of the conjugal may be perfected as a binding contract upon
partnership, the interest of each spouse in the acceptance by the spouse or court approval.
conjugal assets is inchoate, a mere expectancy,
which constitutes neither a legal nor an equitable Rules on Games of Chance: (ACP/CPG)
estate, and does not ripen into title until after LOSS: Borne by the loser spouse and shall not be charged
liquidation and settlement. The right of the to the community property
husband or wife to one-half of the conjugal assets WINNINGS: Form part of the community property
does not vest until the dissolution and liquidation
of the conjugal partnership or after dissolution of Distinction between ACP and CPG
the marriage and there are net assets left which ACP CPG
can be divided between the spouses or their All the properties owned Each spouse retains his/her
respective heirs. Abalos v. Macatangay, 439 by the spouses at the time property before the
SCRA 649 (2004) of marriage become marriage and only the
NOTES: community property fruits and income of such
 Property bought on installments paid partly from properties become part of
exclusive funds of the spouses and partly from conjugal the conjugal properties
funds: during the marriage
a. If full ownership is vested before the marriage – it Upon dissolution and Upon dissolution of the
shall belong to the buyer-spouse liquidation of the partnership, the separate
b. If full ownership was vested during the marriage – community property, the property of the spouses
it shall belong to the conjugal partnership net remainder is divided are returned and only the
(In any case, the amount advanced by the equally between the net profits of the
partnership or by either/both spouses shall be spouses. partnership are divided
reimbursed by the owner upon liquidation) equally between the
spouses of their heirs
 If the community or conjugal properties are insufficient,
the separate properties shall be solidarily and c. Separation of Property
subsidiarily liable for the obligations
 Separation of property between the spouses during the
 The conjugal partnership property shall likewise be marriage shall not take place except by judicial order.
liable for the payment of the personal debts of either  Judicial separation of property may either be voluntary
spouse insofar as they have redounded to the benefit of or for sufficient cause.
the family.
SUFFICIENT CAUSE FOR GROUNDS FOR REVIVAL
Administration and Enjoyment of the ACP/CPG SEPARATION OF OF FORMER PROPERTY
General Rule: It shall belong to both spouses jointly PROPERTY REGIME
Exceptions: 1. Petitioner’s spouse 2. Civil interdiction
1. In cases of disagreement, husband’s decision shall sentenced to penalty with terminates
prevail civil interdiction
 Wife has recourse to the courts within 5 years 2. Petitioner’s spouse 2. Absent spouse re-
2. In case one spouse is incapacitated or unable to declared an absentee appears
participate in the administration of the common 3. Loss of parental 3. Parental authority
properties, other spouse may assume sole powers authority of petitioner’s judicially restored
 These powers do not include: spouse declared by court
a. disposition and

CIVIL LAW REVIEWER Page 26 of 338

 4. Abandonment or 4. When spouse who has 4. Other void 7. Void marriages by
failure to comply with left conjugal home marriages / live-in reason of public
marital obligations without degree of legal policy under Art.38
separation resumes Exclusively owned;
common life with the Salaries and Owned in equal married party 
other wages shares property of CPG of
5. Spouse abused power 5. Court authorizes the legitimate marriage
of administration granted resumption of Properties
administration, being acquired Remains exclusive
satisfied that there will be through provided there is Remains exclusive
no abuse exclusive proof
6. At the time of petition, 6. Spouses reconcile and funds
spouses have been resume common life Only the properties
separated in fact for at acquired by both
Presumed to be
least one year and parties through their
obtained in equal
reconciliation is highly actual joint
shares since it is
improbable contribution of money,
presumed to have
7. When after voluntary property, or industry
been acquired
dissolution of the ACP or shall be owned by
through joint efforts
CPG has been judicially them in common in
Properties
decreed, spouses agree to proportion to their
acquired If one party did not
revive former regime (no respective
while living participate in
subsequent voluntary contributions.
together acquisition,
separation may be Properties owned in
presumed to have
granted) common shall be
contributed through
presumed to be equal;
care and
GROUNDS FOR TRANSFER OF ADMINISTRATION OF however, proof may be
maintenance of
EXCLUSIVE PROPERTY OF EITHER SPOUSE: (GACA) shown to show that
family and
1. One spouse becomes guardian of the other their contribution and
household
2. One spouse judicially declared absent respective shares are
3. One spouse sentenced to penalty with civil interdiction not equal.
4. One spouse becomes a fugitive from justice or is
hiding as an accused in a criminal case  The registration of a property in the name of the
paramour who had no income whatsoever at the time
PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE of the donation by another’s husband is tantamount
BASIS ARTICLE 147 ARTICLE 148 to a donation which is void under Article 87 of the
1. Man and woman Family Code. The paramour then holds the property
2. Living together as 1. Man and woman under a constructive trust under Article 1456 in favor
husband and wife 2. Living together as of the conjugal partnership of the husband with the
3. With capacity to husband and wife legitimate spouse. Joaquino v. Reyes, 434 SCRA 260
marry (without 3. NOT capacitated to (2004)
legal impediment) marry (Art.35(1)
 At least 18 years under 18 years old)  Under Article 148, there must be proof of actual joint
old 4. Adulterous contribution by both the live-in partners before the
Applicability
 Not Art. 37 relationship (e.g. property becomes co-owned by them in proportion to
(incestuous void concubinage) their contribution. Otherwise, there are no
marriage) 5. Bigamous/polygamo presumptions of co-ownership and equal sharing.
 Not Art. 38 (void us marriage Villanueva v. CA, 427 SCRA 439 (2004)
marriage by (Art.35(4))
reason of public 6. Incestuous  No co-ownership exists between parties to an
policy) marriages under adulterous relationship. In such a relationship, it is
 Not bigamous Art.37 necessary for each of the partners to prove his or her

CIVIL LAW REVIEWER Page 27 of 338

 actual contribution to the acquisition of property in
order to be able 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, July 21, 2006
==============================================
TOPICS UNDER SYLLABUS:
I. The Family (Arts 149-151, FC)
==============================================
FAMILY - basic social institution which public policy
cherishes and protects
 Hence, no suit between members of the family shall
prosper unless earnest efforts towards a compromise
have been made but failed.
 Allegation of “earnest efforts” is JURISDICTIONAL, if it is
absent, the court can dismiss the case. BUT this rule is
inapplicable to the following cases: (CLV-FJF)
1. Civil status of persons
2. Any ground for legal separation
3. Validity of marriage or legal separation
4. Future support
5. Jurisdiction of courts
6. Future legitime
FAMILY RELATIONS INCLUDE:
1. Between husband and wife
2. Between parents and children
3. Among other ascendants and descendants
4. Among brothers and sisters, full or half blood
================================================
TOPICS UNDER SYLLABUS
J. FAMILY HOME
================================================
FAMILY HOME It is deemed constituted from the time it is
occupied as a family residence
BENEFICIARIES OF A FAMILY HOME
1. Husband and wife, or unmarried head of the family
2. Parents (may include parent-in-laws), ascendants,
brothers and sisters (legitimate/illegitimate) living in
the family home and dependent on head of family for
support
1. MANNER OF CONSTITUTION
GUIDELINES:
CIVIL LAW REVIEWER
1. FH is deemed constituted from time of actual
occupation as a family residence
2. FH must be owned by person constituting it
3. FH must be permanent
4. Rule applies to valid, voidable and even to common-
law marriages under Arts. 147 and 148
5. FH continues despite death of one or more spouses or
unmarried head of family for 10 years or as long as
there is a minor beneficiary (Art. 159)
6. Only one FH can be constituted
2. QUALIFIED PROPERTY
Actual value of the family home shall not exceed P300,000
in URBAN areas and P200,000 in RURAL areas (Art.157)
3. EXEMPTION FROM EXECUTION
General Rule: (Art. 153) The family home (FH) is exempted
from:
1. Execution
2. Forced Sale
3. Attachment
Exceptions: (Art. 155)
1. Non-payment of taxes
2. Debts incurred prior to constitution of home
3. Debts secured by mortgages on the premises
4. Debts due laborers, mechanics, architects, builders,
materialmen, and others who have rendered service
or furnished materials for the construction of the
building
NOTE: The exemption is limited to the value allowed by the
Family Code
4. SALE
Sale, Alienation, Donation, Assignment, Or Encumbrance
Of The Family Home
1. The person who constituted the same must give
his/her written consent
2. The spouse of the person who constituted the family
home must also give his/her written consent
3. A majority of the beneficiaries of legal age must also
give their written consent
4. In case of conflict, the court shall decide
Requisites For Creditor To Avail Of The Right To Execute:
(Art. 160)
1. He must be a judgment creditor
2. His claim is not among those excepted under Art. 155
Page 28 of 338
3. He has reasonable grounds to believe that the family
home is worth more than the maximum amount fixed
in Art. 157
PROCEDURE:
1. Creditor to file a motion in the court proceeding where
he obtained a favorable for a writ of execution against
FH.
2. Hearing on the motion where the creditor must prove
that the actual value of the FH exceeds the maximum
amount fixed by the Family Code, either at the time of
its constitution or as a result of improvements
introduced thereafter its constitution.
3. If creditor proves that actual value exceeds the
maximum amount the, court will order its sale in
execution.
4. If FH is sold for more than the value allowed, the
proceeds shall be applied as follows:
a. First, the obligations enumerated in Art. 155 must
be paid (listed above)
b. Then the judgment in favor of the creditor will be
paid, plus all the costs of execution
c. The excess, if any, shall be delivered to the
judgment debtor
==============================================
TOPICS UNDER SYLLABUS
K. Paternity and Filiation (Arts. 163-182, FC)
1. Kinds of Filiation
2. Children by Nature
a. Legitimate Children
b. Illegitimate Children
c. Legitimated Children
3. Actions regarding filiation
a. To claim filiation
i. Proof of filiation
ii. Admissibility of Scientific Testing
b. To impugn filiation
4. Rights of
Legitimate/Legitimated/Illegitimate Children
==========================================
TOPICS UNDER SYLLABUS
G. PATERNITY AND FILIATION
1.Kinds of Filiation
2 Children by Nature
================================================
1.KINDS OF FILIATION
2.CHILDREN BY NATURE
a. Legitimate Children
LEGITIMATE CHILDREN -are those conceived OR born
during a valid marriage.
INCLUSIONS: Those children who are:
1. Conceived as a result of artificial insemination
2. Born of a voidable marriage before decree of
annulment
3. Conceived or born before judgment of annulment or
absolute nullity under Art. 36 (psychological
incapacity) becomes final & executory
4. Conceived or born of a subsequent marriage under
Art. 53 (failure to record the judgment, partition and
distribution of properties, and delivery of children’s
presumptive legitime)
5. Of mothers who may have declared against their
legitimacy or was sentenced as an adulteress (Art.167)
6. Legally adopted
7. Legitimated, conceived and born outside of wedlock of
parents without impediment at the time of conception
and who subsequently married
 A child born inside a valid marriage is legitimate.
Hence a child born inside a bigamous marriage, which
is void, is considered a child under the first marriage,
which has not been nullified or annulled. Concepcion
v. CA, [G.R. No. 123450, Aug. 31, 2005]
 An agreement by parties as to the status of a child is
void. Only the law determines legitimacy or
illegitimacy. Thus, the child, in eyes of the law, is
legitimate under the first marriage notwithstanding
the admission in pleadings by the wife and his second
husband that the child is their legitimate son.
Similarly, any declaration of the mother that her child
is illegitimate has no probative value. Concepcion v.
CA, [G.R. No. 123450, Aug. 31, 2005]
b. Illegitimate Children
ILLEGITIMATE CHILDREN -are those conceived AND born
outside a valid marriage.
Exceptions: Those children who are:
1. Born of marriages which are void ab initio such as
bigamous and incestuous marriages and void
marriages by reason of public policy
2. Born of voidable marriages born after the decree of
annulment

CIVIL LAW REVIEWER Page 29 of 338

 c. Legitimated Children
REQUISITES FOR LEGITIMATION:
1. The child was conceived and born outside of wedlock
2. The parents, at the time of child’s conception, were
not disqualified by any impediment to marry each
other
3. There is a valid marriage subsequent to the child’s
birth
 Legitimation takes place by the subsequent marriage
of the child’s parents
 Effect of legitimation:
- Confers on the child the rights of legitimate
children
- Retroacts to the time of the child’s birth
 Legitimation may be impugned only by those who are
prejudiced in their rights within 5 years from the time
the cause of action accrues (death of parents of
legitimated child)
3. ACTIONS REGARDING FILIATION
a. To claim filiation
i. Proof of filiation
PROOF OF FILIATION
General Rule: (Art. 172, Par. 1) Filiation of legitimate or
illegitimate children is established by any of the following:
1. The record of birth appearing in the civil register or a
final judgment
 Must be prepared by the father. A certificate of live
birth purportedly identifying the putative father is not
competent evidence of paternity when there is no
showing that the putative father had a hand in the
preparation of said certificate. The local civil registrar
has no authority to record the paternity of an
illegitimate child on the information of a third person.
Cabatania v. CA, [441 SCRA 96 (2004)]
 Record of Birth merely prima facie evidence. In
Benitez-Badua v. CA, it is well-settled that a record of
birth is merely a prima facie evidence of the facts
contained therein. It is not conclusive evidence of the
truthfulness of the statements made there by the
interested parties.
2. An admission of legitimate or illegitimate filiation in a
public document or a private handwritten instrument
and signed by the parent concerned
CIVIL LAW REVIEWER
Exception: (Art. 172, Par. 2) In the absence of these
evidences, the legitimate filiation may be proved by:
1. Open and continuous possession of the status of a
legitimate (or illegitimate) child
 Definition. Continuous does not mean that the
concession of status shall continue forever but only
that it shall not be of an intermittent character while it
continues. The possession of such status means that
the father has treated the child as his own, directly
and not through others, spontaneously and without
concealment though without publicity. Mendoza v.
CA, [G.R. No. 86302, Sept. 21, 1991]
 How to prove. There must be evidence of the
manifestation of the permanent intention of the
supposed father to consider the child as his, by
continuous and clear manifestations of parental
affection and care, which cannot be attributed to pure
charity. Such acts must be of such a nature that they
reveal not only the conviction of paternity, but also
the apparent desire to have and treat the child as such
in all relations in society and in life, not accidentally,
but continuously. Jison v. CA, [G.R. No. 124853,
February 24, 1998]
2. Any other evidence allowed by the Rules of Court and
special laws
 The due recognition of an illegitimate child in a record
of birth, a will, a statement before a court of record, or
in any authentic writing is, in itself, a consummated
act of acknowledgement of the child, and no further
court action is required. In fact, any authentic writing
is treated not just a ground for compulsory
recognition; it is in itself a voluntary recognition that
does not require a separate action for judicial
approval. Eceta v. Eceta, [428 SCRA 204 (2004)]
NOTE: For illegitimate children: when the action is based
on the par. 2 of Art. 172, the action may be brought ONLY
during the lifetime of the alleged parent
ii. Admissibility of Scientific Evidence
REQUISITES FOR CHILDREN BY ARTIFICIAL INSEMINATION
TO BE CONSIDERED LEGITIMATE: (Art. 164)
1. The artificial insemination must made on the wife;
2. The sperm of the husband, or of a donor, or both the
husband and a donor must be used;
3. The artificial insemination has been authorized or
ratified by both spouses on a written instrument
Page 30 of 338
 executed and signed by them before the birth of the
child; AND
4. The written instrument is recorded in civil registry
together with the birth certificate of the child
b. To impugn filiation
WHO MAY IMPUGN THE LEGITIMACY OF A CHILD:
General Rule: Only the husband can impugn the legitimacy
of a child
Exceptions: The heirs of the husband may impugn the
child’s filiation in the following cases:
a. If the husband dies before the expiration of period for
filing the action
b. If the husband dies after filing without desisting
c. If the child was born after the death of the husband
GROUNDS TO IMPUGN THE LEGITIMACY OF THE CHILD:
(EXCLUSIVE LIST) (PBA)
1. It was physically impossible for the husband to have
sexual intercourse with his wife within the first 120
days of the 300 days which immediately preceded the
birth of the child because of:
a. Physical incapacity of the husband to have sexual
intercourse with his wife
b. Fact that the husband and wife were living
separately in such a way that sexual intercourse
was not possible, or
c. Serious illness of the husband which absolutely
prevented intercourse
2. If its proved that for biological or other scientific
reasons, the child could not have been that of the
husband, except in the case of children conceived
through artificial insemination
3. In case of children conceived through artificial
insemination, when the written authorization or
ratification of either parent was obtained through
mistake, fraud, violence, intimidation, or undue
influence
PERIODS FOR FILING OF ACTION TO IMPUGN LEGITIMACY:
1. If the husband (or his heirs, in proper cases) resides in
the SAME city or municipality: within 1 year from
knowledge of the birth OR its recording in the civil
register
2. If the husband (or his heirs) does NOT RESIDE in the
city or municipality where the child’s birth took place
or was recorded BUT his residence is IN THE PHILS.:
within 2 years
3. If the child’s birth took place or was recorded in the
PHILS. while the husband has his residence ABROAD,
or vice-versa: within 3 years
CIVIL LAW REVIEWER
NOTE:
 The period shall be counted from the knowledge of the
child’s birth or its recording in the civil register.
HOWEVER, if the child’s birth was concealed from or
was unknown to the husband or his heirs, the period
shall be counted from the discovery or knowledge of
the birth of the child or of the act of registration of said
birth, whichever is earlier.
 Legitimacy CANNOT be collaterally attacked or
impugned. It can be impugned only in a direct suit
precisely filed for the purpose of assailing the
legitimacy of the child.
RULE ON STATUS OF A CHILD BORN WITHIN 300 DAYS
AFTER TERMINATION OF FORMER MARRIAGE (Art. 168):
Rules in the absence of proof to the contrary:
1. If the child was born before 180 days after celebration
of 2nd marriage provided born within 300 days after
the termination of the 1st marriage: considered to
have been conceived during the first marriage.
2. If the child was born after 180 days following the
celebration of the 2nd marriage whether born within
300 days after termination of 1st marriage or
afterwards: considered to have been conceived during
the second marriage.
ACTION TO CLAIM LEGITIMACY:
1. The child can bring the action during his lifetime
2. If the child dies after reaching majority without filing
an action, his heirs can no longer file the action after
death
3. If the child dies during minority or in the state of
insanity, his heirs can file the action for him within 5
years from the child’s death
4. If the child dies after commencing the action, the
action will survive and his heirs will substitute for him
5. If the child is a minor, incapacitated or insane, his
guardian can bring the action in his behalf
4. RIGHTS OF LEGITIMATE/LEGITIMATED/ILLEGITIMATE
CHILDREN
RIGHTS OF LEGITIMATE AND ILLEGITIMATE CHILDREN
BASIS LEGITIMATE ILLEGITIMATE
Use of father Use of mother’s
Surname and mother’s surname
surname NOTE: R.A. 9255
Page 31 of 338
 amended Art. 176 of =============================================
FC as of March 19, TOPICS UNDER SYLLABUS
2004  can use
L. ADOPTION (Arts 183-193, FC)
father’s surname
Entitled to  Inter-country Adoption Law
legitime and  Domestic Adoption Law
other Entitled only to ½ of 1. Construction
Legitime successional legitime of legitimate 2. Qualifications and Disqualifications of
rights granted child Adopter
to them by the
3. Qualifications and Disqualifications of
NCC
Entitled to
Adopted
receive support 4. Rights Granted by Adoption
from parents, 5. Rules on Succession
Receive support
Support
ascendants,
according to the
6. Rescission of Adoption
and in proper ==========================================
provision of the FC
cases, brothers
and sisters R.A. 8043: INTER-COUNTRY ADOPTION ACT OF 1995
under Art. 174
 His/her whole 1. CONSTRUCTION
His/her whole lifetime regardless
Action for lifetime of type of proof INTER-COUNTRY ADOPTION -is the socio-legal process of
claim for regardless of provided under adopting a Filipino child by a foreigner or a Filipino citizen
legitimacy or type of proof Art.172 par. 1 permanently residing abroad where the petition is filed,
illegitimacy provided under  ONLY lifetime of the supervised trial custody is undertaken, and the decree
Art. 172 alleged parent for of adoption is issued outside the Philippines.
Art. 172 par. 2
Transmissible 2. QUALIFICATIONS AND DISQUALIFICATIONS OF
to heirs under Yes No ADOPTER
Art.173?
No right to inherit ab An alien or a Filipino citizen permanently residing abroad
Right to intesto from legitimate may file an application for inter-country adoption of a
inherit ab Yes children and relative Filipino child if:
intesto of father and mother 1. At least 27 years of age and at least 16 years older
under Art. 992 NCC than the child to be adopted, at the time of application
unless the adopter is the parent by nature of the child
NOTE: to be adopted or the spouse of such parent
 Use the surname of the mother if the requisites of R.A. 2. If married, his/her spouse must jointly file for the
9255 are not complied with adoption
 Use the surname of the father if the child’s filiation has 3. Has the capacity to act and assume all rights and
been expressly recognized by the father, either responsibilities of parental authority under his
through: national laws, and has undergone the appropriate
1. Record of birth in civil register counseling from an accredited counselor in his/her
2. Father’s admission in public document country
3. Father’s admission in private handwritten 4. Has not been convicted of a crime involving moral
document (R.A. 9255, Sec. 1, effective March 19, turpitude
2004) 5. Eligible to adopt under his/her national law
NOTE: The father under R.A. 9255, Sec. 1 has the right 6. In a position to provide the proper care and support
to file an action to prove non-filiation during his and to give the necessary moral values and example to
lifetime. all his children, including the child to be adopted
7. Agrees to uphold the basic rights of the child as
embodied under Philippine laws, the U.N. Convention

CIVIL LAW REVIEWER Page 32 of 338

 on the Rights of the Child, and to abide by the rules
and regulations issued to implement the provisions of
this Act
8. 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
9. Possesses all the qualifications and none of the
disqualifications provided herein and in other
applicable Philippine laws
3. 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 - is a child who has been voluntarily
or involuntarily committed to the Department, 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
 Qualified children: Section 25, Article 8 of the Rules
and Regulations provide: any child who has been
voluntarily or involuntarily committed to the
Department as dependent, abandoned, or neglected
pursuant to the provisions of the Child and Youth
Welfare Code may be the subject of Inter-Country
Adoption
R.A. 8552: DOMESTIC ADOPTION ACT
1. CONSTRUCTION
2. QUALIFICATIONS AND DISQUALIFICATIONS OF
ADOPTER
WHO MAY ADOPT:
1. FILIPINO CITIZEN
a. Of legal age
b. In possession of full civil capacity and legal
rights
c. Of good moral character
d. Has not been convicted of any crime
involving moral turpitude
e. Emotionally and psychologically capable of
caring for children,
f. At least 16 years older than the person to be
adopted, unless:
CIVIL LAW REVIEWER
i. The adopter is the natural parent of the
child to be adopted, or
ii. The adopter is the spouse of the
legitimate parent of the person to be
adopted
g. In a position to support and care for his
legitimate and illegitimate children, in
keeping with the means of the family
2. ALIEN
a. Possessing the same qualifications as above
stated for Filipino nationals
b. His/her country has diplomatic relations with
the Philippines
c. 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, EXCEPT in the case of:
i. A former Filipino citizen who seeks to
adopt a relative within the 4th degree of
consanguinity or affinity; or
ii. One who seeks to adopt the legitimate
child of his/her Filipino spouse; or
iii. 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; or
3. GUARDIAN - with respect to the ward after the
termination of the guardianship and clearance of
his/her financial accountabilities
RULE ON ADOPTION BY SPOUSES
General Rule: Husband and wife shall jointly adopt
Exceptions:
1. One spouse seeks to adopt the legitimate
son/daughter of the other; or
2. One spouse seeks to adopt his/her own illegitimate
son/daughter
3. The spouses are legally separated from each other.
3. QUALIFICATIONS AND DISQUALIFICATIONS OF
ADOPTED
WHO MAY BE ADOPTED:
1. Any person below 18 years of age who has been
administratively or judicially declared available for
adoption;
2. Legitimate son/daughter of one spouse by the other
spouse;
Page 33 of 338
3. Illegitimate son/daughter by a qualified adopter to
improve his/her status to that of legitimacy;
4. Person of legal age if, prior to the adoption, said
person has been consistently considered and treated
by the adopter as his/her own child since minority;
5. Child whose adoption has been previously rescinded;
or
6. Child whose biological or adoptive parents have died
provided that no proceedings shall be initiated within
6 months from the time of death of said parents.
WRITTEN CONSENT NECESSARY FOR ADOPTION:
(A-BLISS-A)
1. Adoptee, if 10 years of age or over;
2. Biological parents of the child, if known, or the legal
guardian, or the proper government instrumentality
which has legal custody of the child
3. Legitimate children of the adopter, 10 years old or
over
4. Illegitimate children of the adopter, 10 years old or
over and living with him
5. Spouse of the adopted, if married
6. Spouse of the adopter, if married
7. Adopted children of the adopter, 10 years old or over
EFFECTIVITY OF DECREE OF ADOPTION
 A decree of adoption is effective as of the date the
original petition was filed. This also applies in case the
petitioner dies before the issuance of the decree of
adoption
 Where the petition for adoption was granted after the
child killed a girl, no retroactive effect may be given to
the decree of adoption so as to impose a liability upon
the adopting parents accruing at a time when the
adopting parents had no actual or physically custody
over the adopted child. Retroactive effect may
perhaps be given where such is essential to permit the
accrual of some benefit or advantage in favor of the
adopted child. To hold that parental authority had
been retroactively lodged in the adopting parents so
as to burden them with liability for a tortuous act that
they could not have foreseen nor prevented would be
unfair and unconscionable. Tamargo v. CA, [G.R. No.
85044, June 3, 1992]
4. RIGHTS GRANTED BY ADOPTION
EFFECTS OF ADOPTION:
1. Severance of all legal ties between the biological
parents and the adoptee and the same shall then be
vested on the adopters EXCEPT in cases where the
biological parent is the spouse of the adopter
CIVIL LAW REVIEWER
2. Deemed a legitimate child of the adopter
3. Acquired reciprocal rights and obligations arising from
parent-child relationship
4. Right to use surname of the adopter
5. RULES ON SUCCESSION
In legal and intestate succession, the adopters and the
adoptee shall have reciprocal rights of succession without
distinction from legitimate filiation. However, if the
adoptee and his/her biological parents had left a will, the
law on testamentary succession shall govern.
6. RECISSION OF ADOPTION
GROUNDS FOR RECISSION OF ADOPTION: (MASA)
1. Repeated physical and verbal maltreatment by the
adopters despite having undergone counseling
2. Attempt on the life of the adoptee
3. Sexual assault or violence
4. Abandonment and failure to comply with parental
obligations.
 Adoption, being in the best interest of the child, shall
not be subject to rescission by the adopter
 Only the adoptee is given the right to rescind the
decree of adoption
 However, the adopters may disinherit the adoptee for
causes provided in Art. 919 NCC
EFFECTS OF THE RESCISSION OF THE ADOPTION:
1. The parental authority of the adoptee's biological
parents, if known, OR the legal custody of the DSWD
shall be restored if the adoptee is still a minor or
incapacitated.
2. The reciprocal rights and obligations of the adopters
and the adoptee to each other shall be extinguished.
3. The court shall order the Civil Registrar to cancel the
amended certificate of birth of the adoptee and
restore his/her original birth certificate.
4. Succession rights shall revert to its status prior to
adoption, but only as of the date of judgment of
judicial rescission. Vested rights acquired prior to
judicial rescission shall be respected.
================================================
TOPICS UNDER SYLLABUS
M. SUPPORT (Arts 194-208)
1. What constitutes support
2. Persons Obliged to Support each other
a. Spouses
b. Ascendants and Descendants
Page 34 of 338
 c. Parents and Legitimate and Illegitimate PROPERTIES THAT ARE LIABLE FOR THE SUPPORT OF
Children/Descendants THE RELATIVES (SOURCES OF MUTUAL SUPPORT)
d. Legitimate/Illegitimate Brothers and
Absolute community of
Sisters Spouses
conjugal partnership
2. Contractual Support
3. Basis of Support Common children of the Absolute community or
4. Options of Giver spouses conjugal property
========================================== Children of a spouse by Absolute community or
another marriage conjugal property
1. WHAT CONSTITUTES SUPPORT Under ACP, separate
property of parent-spouse.
SUPPORT consists of everything indispensable for:
But if insufficient, absolute
1. Sustenance
community liable but
2. Dwelling
considered as advances on
3. Clothing
the share of the parent to
4. Medical attendance
be paid during liquidation
5. Education – includes schooling (formal education) or
Illegitimate children of
training (non-formal education) for some profession,
either spouse Under CPG, separate
trade or vocation, even beyond the age of majority
property of parent-spouse.
6. Transportation – includes expenses going to and from
But if insufficient, conjugal
school, or to and from place of work (art. 194)
partnership liable if
financially capable, but
 Makes no distinction between natural support (basic support paid shall be
necessities) and civil support (those beyond the basics) deducted from share of
spouse during liquidation
NOTE: Amount of support shall be in proportion to the
means of the giver and to the need of the recipient Separate property of the
obligor-spouse
2. PERSONS OBLIGED TO SUPPORT EACH OTHER
if the same is not sufficient
Legitimate ascendants,
Persons Obliged To Support Each Other To The Whole or there is none, the
other legitimate and
Extent: (Art. 195) absolute community or
illegitimate descendants,
a. Spouses conjugal property shall be
and legitimate and
b. Ascendants and Descendants liable if financially capable,
illegitimate brothers and
c. Parents and Legitimate/Illegitimate which support shall be
sisters
Children/Descendants deducted from the share of
the spouse upon
d. Legitimate/Illegitimate Brothers and
liquidation of the ACP or
Sisters
CPG
RULES REGARDING SUPPORT TO ILLEGITIMATE BROTHERS
AND SISTERS (WHETHER FULL OR HALF BLOOD):
1. If the one asking for support is below majority age, he 2. CONTRACTUAL SUPPORT
is entitled to support from his illegitimate brother or 3. BASIS OF SUPPORT
sister to the full extent, without any condition
2. If the one asking for support is already of majority age, LEGACY OF SUPPORT CONTRACTUAL SUPPORT
he is entitled to support only if his need for support is Based on contract, so it can
Based on law
not due to a cause imputable to his fault or negligence be between strangers
(Art. 196) Not exempt from attachment
Exempt from execution and
and execution because it is
attachment
not a legal obligation

CIVIL LAW REVIEWER Page 35 of 338

 to give it, and the obligor does not have sufficient
Exception: If the giver means to satisfy all claims:
contracts with a person - The order established in the preceding article
whom he is obliged by law to shall be followed:
support, in which case only a. Spouse
the excess of what is obliged b. Descendants in nearest degree
(based on need) can be c. Ascendants in nearest degree
attached or subject to d. Brothers and sisters (Art. 200)
execution - If the concurrent obligees should be the spouse
Follow rules of contracts and a child subject to parental authority, the child
which says that obligation shall be preferred
must be fulfilled (support
If contained in a will, apply
must be given) no matter SOURCES OF SUPPORT
the rules of contractual
what happens (even if you DURING THE PENDING
support because there is no AFTER LITIGATION
lose your job). BUT if the MARRIAGE LITIGATION
more obligation of support
change in circumstances are SPOUSES
to speak of since the giver is
manifestly beyond that From the
already dead
contemplation of the parties, community
support may be adjusted property assets
accordingly except if Art. 203
applies, i.e. if the
 Judgment of support is always provisional in claimant spouse is
No obligation to
character. Res Judicata does not apply. Lam v. Chua, the guilty spouse,
support except if
[426 SCRA 29 (2004]) he/she will not be
there is legal
From the entitled to support.
separation, in which
4. OPTIONS OF GIVER community
case the court may
property If the spouses are
require the guilty
Options Of The Person Giving Support: under CPG, support
spouse to give
1. To give a fixed monthly allowance; or is considered an
support
2. To receive and maintain the recipient in the giver's advance of such
home or family dwelling (Art. 204) spouses' share; the
rule does not apply
Exception to # 2: Existence of legal or moral obstacle if the spouses are
under ACP, based
ORDER OF LIABILITY IF 2 OR MORE ARE OBLIGED TO on Art 153
SUPPORT: CHILDREN
1. Spouse From the From the separate
2. Descendants in nearest degree From the community
community property of the
3. Ascendants in nearest degree property
property spouses
4. Brothers and sisters (Art. 199)
=============================================
 When the obligation to give support falls upon two or TOPICS UNDER SYLLABUS
more persons, the payment of the same shall be
divided between them in proportion to the resources
N. Parental Authority
of each. 1. Contempt
 However, in case of urgent need and by special 2. Over Person
circumstances, the judge may order only one of them 3. Over Property
to furnish the support provisionally, without prejudice 4. Substitute and Special Parental Authority
to his right to claim from the other obligors the share 5. Suspension/Termination of Parental
due from them.
Authority
 When two or more recipients at the same time claim
support from one and the same person legally obliged
6. Liability of Parents for Acts of Children

CIVIL LAW REVIEWER Page 36 of 338

==========================================
1. CONTEMPT
PARENTAL AUTHORITY (PATRIA POTESTAS) -is 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:
1. It is a natural right and duty of the parents (Art. 209)
2. It cannot be renounced, transferred or waived, except
in cases authorized by law (Art. 210)
3. It is jointly exercised by the father and the mother
(Art. 211)
4. It is purely personal and cannot be exercised through
agents
5. It is temporary
2. OVER PERSON
RULES AS TO THE EXERCISE OF PARENTAL AUTHORITY:
1. 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)
2. If the child is illegitimate, parental authority is with the
mother.
WHO EXERCISES PARENTAL AUTHORITY
Absence of
Parent present
either parent
Death of
Surviving parent
either parent
Remarriage
Surviving parent, unless the court appoints
of surviving
a guardian
parent
Parent designated by the court, taking into
account all relevant considerations,
especially the choice of the child over 7
years old, unless the parent chosen is unfit
GR: A child under 7 years of age shall not
be separated from the mother
UNLESS the court finds compelling
Separation of
reasons to order otherwise (TENDER
parents
YEARS DOCTRINE)
(Art. 213)
Paramount consideration in matters of
custody of a child is the welfare and well-
being of the child Tonog v. Court of
Appeals, [G.R. No. 122906, February 7,
2002]
CIVIL LAW REVIEWER
 In case of death, absence or unsuitability of both
parents, the surviving grandparent shall exercise
substitute parental authority (Art. 214)
 No descendant shall be compelled, in criminal cases,
to testify against his parents or grandparents, except
when such testimony is indispensable in a crime
against the defendant or by one parent against the
other. (Art 215)
3. OVER PROPERTY
Effect Of Parental Authority Upon The Property Of The
Child:
1. The father and mother shall jointly exercise legal
guardianship over the property of the minor common
child without court appointment
2. In case of disagreement, the father’s decision shall
prevail, unless there is judicial order to the contrary
3. If the market value of the property or the annual
income of the child exceeds P50,000, the parent is
required to furnish a bond of not less than 10% of the
value of the child’s property or income
4. SUBSTITUTE AND SPECIAL PARENTAL AUTHORITY
Order Of Substitute Parental Authority:
1. The surviving grandparent
2. The oldest brother or sister, over 21 years old, unless
unfit or disqualified
3. The child's actual custodian, over 21 years old, unless
unfit or disqualified (Art. 216)
 In case of foundlings, abandoned children, neglected
children, or abused children, summary judicial
proceedings shall be instituted so that they may be
entrusted to:
a. Heads of children’s homes
b. Orphanages, or
c. Similar institutions duly accredited by the proper
government agency (Art. 217)
Person Exercising Special Parental Authority:
1. School
2. Administrators and teachers
3. Individual, entity, or institution engaged in child care
Liability Of Those Exercising Special Parental Authority
Over The Child:
1. They are principally and solidarily liable for damages
caused by the acts or omissions of the child while
under their supervision, instruction or custody.
Page 37 of 338
 HOWEVER, this liability is subject to the defense that
the person exercising parental authority exercised
proper diligence.
2. The parents and judicial guardians of the minor or
those exercising substitute parental authority over the
minor are subsidiarily liable for said acts and omissions
of the minor.
the welfare of the child or have distracted the
offending spouse from exercising proper parental care.
Writ of habeas corpus has no leg to stand on to
deprive the mother of a child below seven years of
age, unless there are compelling reasons to do so.
Gualberto v. Gualberto, G.R. No. 154994, June 28,
2005

Cases Where Parental Authority May Be Revived:

1. Adoption of child
DISTINCTION BETWEEN SUBSTITUTE AND SPECIAL 2. Appointment of general guardian
PARENTAL AUTHORITY 3. Judicial declaration of abandonment
SUBSTITUTE PARENTAL SPECIAL PARENTAL 4. Final judgment divesting parental authority
AUTHORITY AUTHORITY 5. Judicial declaration of absence or incapacity or person
It is exercised concurrently exercising parental authority
with the parental authority of
It is exercised in case of the parents. The parents 6. LIABILITY OF PARENTS FOR ACTS OF CHILDREN
death, absence, or temporarily relinquish
unsuitability of parents. parental authority over the Liability Of Parents For Torts Committed By Their Minor
child to the person with Children:
special parental authority.  Parents and other persons exercising parental
authority shall be civilly liable for the injuries and
damages caused by the acts or omissions of their
5. SUSPENSION/TERMINATION OF PARENTAL minors PROVIDED the children are living in their
AUTHORITY company and under their parental authority
 This is subject to the appropriate defenses provided by
Grounds For Suspension Of Parental Authority: (CHOBA) law
1. Conviction of parent for crime with civil interdiction
2. Treats child with excessive harshness and cruelty NOTE:
3. Gives corrupting orders, counsel or example  Parental authority and responsibility are inalienable
4. Compels child to beg and may not be transferred and renounced except in
5. Subjects to or allows him to be subjected to acts of cases authorized by law
lasciviousness  Parents may exercise parental authority over their
child’s property
 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 TOPIC UNDER SYLLABUS
repeated N. Funerals (Arts. 305-310,CC)
O. Surname (Arts 364-380, CC)
Grounds For The Permanent Termination Of Parental P. Absence (Arts. 381-396,CC)
Authority :
Q. Civil Register (Arts. 407-413,CC)
1. Death of parents
2. Death of child =================================
3. Emancipation of child
4. Parents exercising parental authority has subjected N. FUNERAL
the child or allowed him to be subjected to sexual
abuse General Guidelines:
 Lesbianism is not compelling reason to deprive the 1. Duty and right to make arrangement in funerals in
mother of a child below seven years of age. To deprive accordance with Art. 199 FC:
the wife of custody, the husband must clearly establish a. Spouse
that her moral lapses have had an adverse effect on b. Descendants in nearest degree

CIVIL LAW REVIEWER Page 38 of 338

 c. Ascendants in nearest degree WIFE SURNAME TO BE USED
d. Brothers and sisters a. First name and maiden
2. The funeral shall be in keeping with the social position name + her husband’s
of the deceased surname
3. The funeral shall be in accordance with the expressed b. First name + her husband’s
wishes of the deceased surname
a. In the absence of expressed wishes, his religious c. Her husband’s full name,
beliefs or affiliation shall determine Husband is
but prefixing a word
b. In case of doubt, the persons in Art. 199 of FC living
indicating that she is his
shall decide (Art. 370)
Valid wife, such as “Mrs”
4. Any person who disrespects the dead or allows the d. Retain the use of her
marriage
same shall be liable for damages maiden name (use of
husband’s surname is not a
O. SURNAME duty but merely an option
USE OF SURNAME of the wife)

CHILD CONCERNED SURNAME TO BE USED Husband is

She can use the surname of the
Legitimate child Father’s surname dead
husband as if he were still living
Legitimated child Father’s surname (Art. 373)
Adopted child Adopter’s surname Wife is the She shall resume using her
1. Mother’s surname; or guilty party maiden name
2. Father’s name if they 1. Resume using her maiden
were recognized by their name; or
Illegitimate child
father in the record of 2. Continue employing her
birth or in an authentic Marriage
husband’s surname
writing is
Wife is the UNLESS:
Conceived prior to the annulled
Father’s surname innocent a. Court decrees
annulment of the marriage (Art.371)
party otherwise, or
Conceived after the b. She or the former
Mother’s surname
annulment of the marriage husband is
married again to
 Since a legitimate child can ask for a change of name, another person
an adopted child can do the same. Continue using the name and
surname she was employing
Legally separated
 The interest of justice and of the child permits an prior to the legal separation
(Art.372)
illegitimate child to change his name adopting the Laperal v. Republic,[6 SCRA
surname of his parent’s other spouse. Calderon vs. 357 (1962)]
Republic, [19 SCRA 721] IDENTITY OF NAMES AND SURNAMES
Younger person is obliged to use
Between persons such additional name OR surname as
(Art. 374) will avoid confusion

1. Son may use the word “Junior”

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

CIVIL LAW REVIEWER Page 39 of 338

P. ABSENCE

Persons Who May Be Appointed By Way Of Court Order

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

When Administration Shall Cease

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

CIVIL LAW REVIEWER Page 40 of 338

 STAGES WHEN TO FILE WHO MAY FILE? REMEDY COMMENTS
Provisional Absence In provisional absence,
- A person disappears from his a. Receivership (Art. 12, FC) the judge at the instance
domicile, whereabouts are No statutory period a. Interested party b. Judicial separation of property (Art. 12, of an interested party, a
unknown and b. Relative FC) relative, or a friend may
a. He did not leave any agent; or c. Friend c. Authority to be sole administrator of the appoint a person to
b. He left an agent but agent's conjugal partnership (Art . 12, FC) represent him in all that
power has expired may be necessary.
Judicial Declaration of Absence Without administrator a.Spouse a. When the spouse of the absentee is Judicial declaration of
-Necessary for interested persons - After 2 years having elapsed b.Voluntary heirs asking for separation of property(Art. absence does not take
to be able to protect the interest without any news about the c.Intestate heirs 135, FC) effect until six months
of the absentee absentee or since the last d.Those who may have over the b. When the spouse of the absentee is after its publication in a
news property of the absentee some asking the Court that the administration newspaper of general
With administrator right subordinated to the of all classes in the marriage be circulation.
- After 5 years from time of condition of the absentee's transferred to her(Art.142, FC)
disappearance death
Presumption of death Spouse Action to declare a person presumptively Except for purposes of
ORDINARY ABSENCE dead is proper only when the spouse of the remarriage, there is no
 4 years  person presumed dead for purposes of remarriage of the absentee wants to remarry need for filing a case to
spouse present declare that one is
 7 years  presumed dead for all purposes EXCEPT for those of presumptively dead.
succession Presumption of death
 10 years  person presumed dead for purposes of opening takes effect by operation
succession of law.
EXCEPT if he disappeared after the age of 75, an absence of 5 years is
sufficient
EXTRAORDINARY ABSENCE
1. If a person rode an airplane or sea vessel lost in the course of
voyage, from the time of loss of the airplane or sea vessel
2. If a person joined the armed forces who has taken part in war, from
the time he is considered missing in action
3. Danger of death under other circumstances, from time of
disappearance

 4 years  for all purposes including those of opening succession

 2 years  for purposes of remarriage

CIVIL LAW REVIEWER Page 41 of 338

Q. CIVIL REGISTER
MATTERS RECORDED/ENTERED IN THE CIVIL REGISTER:
1. Acts, events and judicial decrees concerning the civil status
of persons
2. Birth
3. Marriage
4. Death
5. Legal separation
6. Annulment of marriage
7. Judgments declaring marriage void from the beginning
8. Legitimation
9. Adoption
10. Acknowledgement of natural children
11. Naturalization
12. Loss of citizenship
13. Recovery of citizenship
14. Civil interdiction
15. Judicial determination
16. Voluntary emancipation of a minor
17. Change of name
General Rule: Entries in the civil register may be changed or
altered only upon a judicial order.
Exception: Clerical or typographical errors or change in the
name or nickname can be changed administratively through
verified petition with the local office of the civil registrar.
Who may file petition: Any person having direct and personal
interest in any act, event, order or decree concerning the civil
status of persons or change of name
PROCEDURAL REQUIREMENTS FOR A PETITION FOR CHANGE
OF NAME:
1. 3 years residency in the province where change is sought
prior to the filing
2. Must not be filed within 30 days prior to an election
3. Petition must be verified
PROPER AND REASONABLE CAUSES THAT MAY WARRANT THE
GRANT OF A PETITION FOR CHANGE OF FIRST
NAME/NICKNAME:
1. Petitioner’s true and official name is ridiculous;
2. Petitioner’s true and official name is tainted with dishonor
3. Petitioner’s true and official name is extremely difficult to
write or pronounce
4. New first name or nickname has been habitually and
continuously used by the petitioner and he has been
publicly known by the first names and nicknames in the
community
5. When the change is necessary to avoid confusion (Sec. 4,
R.A. 9048)
CIVIL LAW REVIEWER
 R.A. 9048 does not sanction a change of first name on the
ground of sex reassignment. Rather than avoiding
confusion, changing the first name to make it compatible
with the sex he transformed himself into through surgery
may only create grave complications in the civil registry
and the public interest. Silverio vs. Republic, G.R. No.
174689, Oct. 22, 2007
6. When the request for change is a consequence of a change
of status, such as when a natural child is acknowledged or
legitimated
USURPATION OF NAME - implies some injury to the interests of
the owner of the name. It consists in the possibility of
confusion of identity between the owner and the usurper.
ELEMENTS OF USURPATION OF NAME:
1. An actual use of another's name by the defendant
2. Use is unauthorized
3. Use of another's name is to designate personality or to
identify a person
REMEDIES AVAILABLE TO THE PERSON WHOSE NAME HAS
BEEN USURPED:
1. Civil (insofar as private persons are concerned)
a. Injunction
b. Damages (actual and moral)
2. Criminal (when public affairs are prejudiced)
WHEN USE OF ANOTHER'S NAME IS NOT ACTIONABLE:
Used as stage, screen, or pen name, provided:
1. Use of name is in good faith; and
2. By using the name of another, no injury is caused to that
person's right
3. When use is motivated by modesty, a desire to avoid
unnecessary trouble, or other reason not prohibited by law
or morals
 The law does not allow dropping of middle name from
registered name unless there are justifiable reasons to do
so. Mere convenience is not justifiable. Middle names
serve to identify the maternal lineage filiation of a person
as well as further distinguish him from others who may
have the same given name and surname as he has.
 An illegitimate child whose filiation is not recognized by
the father bears only a given name and his mother’s
surname, and does not have a middle name, unless
legitimated or subsequently acknowledged by the father in
a public document or private handwritten instrument. In
Re: Petition for Change of Name of Wang,[G.R. No.
159966, March 30, 2005]
Page 42 of 338
 CHANGE OF ENTRIES IN CIVIL REGISTRY or nickname
WITHOUT JUDICIAL WITH JUDICIAL
AUTHORITY AUTHORITY  If the correction is clerical: summary proceeding
Matters which may be  If the rectification affects the civil status, citizenship or
Change of surname can
made by the concerned nationality of a party (substantial): adversarial proceeding
only be done through a
city or municipal registrar
court proceeding
or consul general (R.A.
EXCEPT when the request  Change of sex is not a mere clerical or typographical error.
9048): There is no special aw in the Philippines governing sex
for change is a
1. Clerical or reassignment and its effects. Silverio vs. Republic, [G.R.
consequence of a change
typographical error No. 174689, Oct. 22, 2007]
of status, such as when a
 NOT nationality, age,
natural child is
civil status  needs NOTE: The new law, R.A. 9048, applies only to clerical and
acknowledged or
court order typographical errors in entries of name and does not modify
legitimated
2. Change of first name the rules mentioned above

CIVIL LAW REVIEWER Page 38 of 338

II. PROPERTY
===================================
TOPICS UNDER SYLLABUS
A. Classification of Property (Arts. 414-418, CC)
1. Immovable Property
2. Movable Property
3. According to Ownership
a. Public Dominion
b. Private Ownership
===================================
PROPERTY: An object or a right which is appropriated or
susceptible of appropriation by man, with capacity to satisfy
human wants and needs.
A. CLASSIFICATION OF PROPERTY
Requisites of Property: (USA)
1. Utility for the satisfaction of some human wants
 endows property with value susceptible of
pecuniary estimation (e.g. food, shelter, clothing,
recreation)
2. Substantivity or individuality
 quality of having existence apart from any other
thing (e.g. blood, when separated from the body)
3. Appropriability
 susceptibility of being possessed by men
 not susceptible of appropriation:
I. Common things (res communes)
 Exception: those that may be appropriated
under certain conditions in a limited way
(e.g. Electricity, oxygen)
II. Due to physical impossibility (e.g. Sun)
III. Due to legal impossibility (e.g. Human body)
IV. Due to no ownership (e.g. wild animals) or
abandonment by the owner.
Classification of Property
1. Mobility and Non-mobility
A. Movable or personal property
B. Immovable or real property
2. Ownership
A. Public
B. Private
3. Alienability
A. Within the commerce of man (or which may be
the objects of contracts or judicial transactions)
B. Outside the commerce of man
4. Existence
A. Present property (res existents)
B. Future property (res futurae)
NOTE: Both present and future property may be
the subject of sale but generally not the subject
of donation.
CIVIL LAW REVIEWER
5. Materiality or Immateriality
A. Tangible or corporeal
B. Intangible or incorporeal
6. Dependence or Importance
A. Principal
B. Accessory
7. Capability of Substitution
A. Fungible – capable of substitution by other things
of the same quality and quantity
B. Non-Fungible – incapable of such substitution,
hence, the identical thing must be given or
returned
8. Nature or Definiteness
A. Generic – one referring to a group or class
B. Specific – one referring to a single, unique object
9. Whether in the Custody of the Court or Free
A. In “custodia legis” – in the custody of the court
B. “free” property
1. IMMOVABLE PROPERTY
Juridical Classification of Immovable Properties: (NIDA)
1. By nature – cannot be moved from place to place
because of their nature (Art. 415 par 1 & 8 NCC)
A. land, buildings, roads and constructions of all
kinds adhered to soil
 a structure which is merely superimposed on
the soil may be considered movable.
B. mines, quarries, and slag dumps, while the
matter thereof forms parts of the bed, and
waters either running or stagnant
 Once a house is demolished, its character as an
immovable ceases. Bicerra v. Teneza, [6 SCRA 649
(1962)]
 A mortgage of land necessarily includes, in the
absence of stipulation of the improvements thereon,
buildings. Still a building by itself may be mortgaged
apart from the land on which it has been built. Such
would be a real estate mortgage for the building
would still be considered immovable property. Leung
Yee v. Strong Machinery, [37 Phil. 644 (1981)]
 A valid real estate mortgage can be constituted on the
building erected on the land belonging to another.
Prudential Bank v. Panis, [153 SCRA 390 (1987)]
 The contracting parties may validly stipulate that a
real property be considered as personal. After
agreeing, they are consequently estopped from
claiming otherwise. However, third persons acting in
good faith are not affected by its stipulation
characterizing the subject machinery as personal.
Serg’s Products v. PCI Leasing, [328 SCRA 299 (2000)]
Page 37 of 338
2. By incorporation – essentially movables but attached
to an immovable in a fixed manner to be an integral
part of it (Art. 415 par 2,3,4,6)
A. Trees, plants & growing fruits – while adhered to
soil, immovable
 once cut or uprooted, they cease to be
immovables
Except: Uprooted Timber
B. Everything attached to an immovable in a fixed
manner that it cannot be separated without
breaking the material or deterioration of the
object
 intent to attach permanently is essential
 On temporary separation: 2 points of view:
I. May still be considered as immovable –
If there is intent to put them back.
II. Movable – because the material fact of
incorporation is what determines its
condition
C. Statues, reliefs, painting or other objects for use
or ornamentation
Requisites: (OP)
I. Placed by the owner of the immovable
or his agent
II. Intent to attach them permanently to
the tenements
D. Animal houses, pigeon houses, beehives, fish
ponds, or breeding places of similar nature
including the animals in these places
Requisites: (OP)
I. Placed by the owner of the or his agent
II. Intent to attach them permanently to
the land
3. By destination – movable placed on immovable for
the utility it gives to the activity carried thereon (Art.
415 par 4,5,6,7,9)
A. Machinery, receptacles, instruments or
implements intended by owner of the tenement
or his agent for an industry or works which may
be carried on in a building & which tend directly
to meet the needs of such works/industry
 attachment or incorporation to the
immovable is not essential
Requisites: (COE)
I. industry or works must be carried on
inside the building or on the land
II. placed by the owner of the building or
property or his agent
III. machines must be essential and
principal elements in carrying out the
industry
CIVIL LAW REVIEWER
 does not include incidentals (movables
without which the businesses can still
continue or carry on their functions)
 Equipment destined only to repair or service a
transportation business may not be deemed real
property. Mindanao Bus v. City Assessor, [6 SCRA
197 (1962)]
B. fertilizers – actually used on a piece of land
C. docks & floating structures – intended by their
nature and object to remain at a fixed place on a
river, lake or coast.
4. By analogy/by law – contracts for public works,
servitude & other real rights over immovable property
(Art. 415 par 10)
2. MOVABLE PROPERTY
Movable Property: (SIFTOS)
1. Susceptible of appropriation that are not included in
enumeration in immovables. Example−
 ½ interest in the business is personal property.
Involuntary Insolvency of Strochechker v.
Ramirez,[44 Phil 933 (1922)]
2. Immovable that are designated as movable by special
provision of law. Examples−
 Growing crops are considered immovable under
Art. 415(2) but personal property by Chattel
Mortgage Law. Sibal v. Valdez, 50 Phil 512 (1927)
 House built on leased land may be treated insofar
as the parties are concerned as personal property
and be the object of a chattel mortgage. Navarro
v. Reyes,[9 SCRA 63 (1963)]
3. Forces of nature brought under control by science.
Examples−
 Electricity, gas, rays, heat, light, oxygen, atomic
energy, water power etc.
 Electricity, the same as gas, is an article bought
and sold like other personal property and is
capable of appropriation by another. United
States v. Carlos,[21 Phil. 364 (1946)]
4. Things which can be transported w/o impairment of
real property where they are fixed
5. Obligations which have for their object movables or
demandable sums (credits)
 obligations and actions must be legally
demandable
 demandable sums must be liquidated
6. Shares of stocks of agricultural, commercial &
industrial entities although they may have real estate
Classification Of Movables:
1. According to nature
a. Consumable – cannot be utilized w/o being
consumed
b. Non-consumable
Page 38 of 338
 2. According to intention of the parties/purpose
(whether it can be substituted by other things of same
kind, quality and quantity)
a. Fungible (res fungibles) – only the equivalent is
returned
b. Non-fungible (res nec fungibles) – identical thing
is returned, do not admit of substitution
Test To Determine Whether Property Is Real Or Personal
1. Whether the property can be transported or carried
from place to place (Rule of Description)
2. Whether such change of location can be made
without injuring the immovable to which the object
may be attached (Rule of Description)
3. Whether the object does not fall within any of the
cases enumerated in Art. 415 (Rule of Exclusion)
3. ACCORDING TO OWNERSHIP
a. Public Dominion
Public Dominion – outside the commerce of men.
 KINDS: (USD)
A. intended for public use– can be used by the
public or everybody
B. intended for specific public service of state,
provinces, cities & municipalities – can be
used only by duly authorized persons, such
as government buildings and vehicles
C. for the development of national wealth
 Characteristics:
A. Outside the commerce of men – cannot be
alienated or leased or be the subject of any
contract
B. Cannot be acquired by private individual or
even municipalities through prescription
C. Not subject to attachment & execution
D. Cannot be burdened by voluntary easement
E. Cannot be registered under the Land
Registration Law and be the subject of a
Torrens Title
F. In general, can be used by everybody
NOTE: Fishponds are considered as part of public dominion and
cannot be acquired by private persons unless it is converted
into patrimonial property. However, fishponds may be leased
by the government.
 Properties which the government owns for fundamental
purposes for rendering government services are properties
of public dominion. They are held by the local
governments for public service, but at the same time, they
can be removed by the State from the LGUs without
having to pay just compensation because the LGUs are
merely acting as agents. (City of Zamboanga Del Norte v.
Province of Zamboanga Del Norte)
CIVIL LAW REVIEWER
b. Private Ownership
KINDS:
Patrimonial property - the property of the State owned by it in
its private or proprietary capacity, the property is not intended
for public use, or for some public service, or for the
development of the national wealth.
G.
- Exist for attaining economic ends of state
- Property of public dominion when no longer
intended for public use/service – declared
patrimonial (Article 422 NCC)
- Subject to prescription
- May be an object of ordinary contract
- Example: property acquired in execution and tax
sales, incomes or rents of the State
H. Property for LGUs
- Property for public use
- roads, streets, squares, fountains, public
waters, promenades and public works for public
service paid for by the LGUs
- all other properties possessed by LGUs without
prejudice to special laws are considered
patrimonial
NOTE: Patrimonial properties of LGUs cannot be removed
by the State without paying just compensation.
I. Property of Private Ownership - all properties
belonging to private persons and those belonging to
the State and any of its political subdivisions which are
patrimonial in nature
Conversion Of Property Of Public Dominion To Patrimonial
Property
1. Property of the National Government
 formal declaration by the executive or legislative
department that the property is no longer
needed for public use or for public service
2. Property of political subdivisions
 must be authorized by law
NOTE: Sacred and religious objects are outside the commerce
of man. They are neither public nor private party.
Political subdivisions cannot register as their own any part of
the public domain, UNLESS:
1. grant has been made
2. possession has been enjoyed during the period necessary
to establish a presumption of ownership
Aliens have no right to acquire any public or private
agricultural, commercial, or residential lands except by
hereditary succession.
Private individual has superior right over the property against
the state.
 The right of the public to use the city streets may not be
bargained away through contract. Rule: Local government
Page 39 of 338
 cannot withdraw a public street from public use, unless it
has been granted such authority by law. Dacanay v. Asistio
Jr.,[208 SCRA 404 (1992)]
 The power to vacate or withdraw a street or alley from
public use is discretionary and such will not be interfered
with by the courts. The Charter of Cebu City gives such
power to the City Council. Such withdrawn portion thus
becomes patrimonial property which can be the object of
an ordinary contract. Cebu Oxygen v. Bercilles, [66 SCRA
481 (1975)]
 A property continues to be part of the public domain
until there is a formal declaration on the part of the
government to withdraw it from being such. An
abandonment of the intention to use the property for
public service and to make it patrimonial property must be
definite. It cannot be inferred from the non-use alone.
Laurel v. Garcia, [187 SCRA 797 (1990)]
====================================================
TOPICS UNDER SYLLABUS
B. Ownership (Arts. 427-439, CC)
1. Rights of Ownership/Limitations
2. Doctrines of Incomplete Privilege/Self Help
3. Presumption of Ownership
4. Rule of Hidden Treasure
============================================
OWNERSHIP -is the independent right of a person to the
exclusive enjoyment and control of a thing including its
disposition and recovery subject only to the restrictions or
limitations established by law and the rights of others.
TITLE -is that which constitutes a just cause of exclusive
possession or which is the foundation of ownership of
property.
Kinds Of Ownership:
1. FULL OWNERSHIP (dominium or jus in re propia) –
includes all the rights of the owner
2. NAKED OWNERSHIP (nuda proprietas) – where the
right to the use and the fruits has been denied
 Naked ownership + usufruct = Full ownership
3. SOLE OWNERSHIP – ownership is vested only in one
person
4. CO-OWNERSHIP/TENANCY IN COMMON – ownership
is vested in two or more owners; unity of the
property, plurality of the subjects
1. RIGHTS OF OWNERSHIP/LIMITATIONS
Seven Rights Of Ownership:
1. JUS ABUTENDI – right to consume, transform or
abuse by its use
2. JUS ACCESIONES – right to fruits and accessories
CIVIL LAW REVIEWER
3. JUS DISPONENDI – right to dispose, including the right
not to dispose, or to alienate
4. JUS FRUENDI – right to fruits
5. JUS POSSIDENDI – right to possess
 does not necessarily include the right to use (e.g.
contract of deposit)
6. JUS UTENDI – right to use and enjoy
 Includes the right to transform and exclude any
person from the enjoyment and disposal thereof
 Limitation: use in such a manner as not to injure
the rights of a third person
7. JUS VINDICANDI – right to vindicate or recover
Limitations on the Right of Ownership: (CLOGS)
1. those arising from conflicts of private rights (e.g.
those which take place in accession continua)
2. those imposed by law (e.g. Legal easement)
3. those imposed by the owner himself (e.g. Voluntary
easement, pledge, lease)
4. those imposed by the grantor of the property on the
grantee
A. by contract (e.g. donation)
B. by last will
5. those imposed in general by the State
A. police power
B. power of taxation
C. power of eminent domain
Right of Ownership not absolute
 The welfare of the people is the supreme law of
the land. Salus populi suprema est lex.
 Use your property so as not to impair the rights
of other. Sic utere tuo ut alienum non laedas.
Page 40 of 338
ACTIONS FOR POSSESSION:
MOVABLES – Replevin/ Manual Delivery (return of a movable)
 both principal and provisional remedy
 Plaintiff shall state in the affidavit that he is the owner of the property claimed, particularly describing it or that
he is entitled to possession, and that it is wrongfully detained by the other.
 PERIOD: 4 or 8 years from the time the possession thereof is lost, in accordance with Art. 1132
 machinery and equipment used for an industry and indispensable for the carrying on of such industry, cannot be
the subject of replevin, because they are considered real properties.
 property validly deposited in custodia legis cannot be the subject of a replevin suit

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

I. Injunction
- Generally not available as a remedy.
- When injunction is allowed:
A. Actions for forcible entry
B. Ejectment
- possessor admittedly the owner or in possession in concept of owner
- possessor clearly not entitled to property
- extraordinary cases – where urgency, expediency and necessity so required
II. Writ of possession
- When proper:
A. Land registration cases
B. Foreclosure, judicial or extra-judicial, of mortgage – provided that the mortgagor has possession and no
third party has intervened
C. Execution sales
D. Eminent domain proceedings
E. Ejectment

CIVIL LAW REVIEWER Page 41 of 338

2. DOCTRINE OF STATE OF NECESSITY
STATE OF NECESSITY—is the principle which authorizes the
destruction of a property which is lesser in value to avert the
danger poised to another property the value of which is much
greater.
REQUISITES OF STATE NECESSITY:
1. Interference necessary to avert an imminent danger
2. Damage to another much greater than damage to property
 COMPARATIVE DANGE— Danger must be greater
than damage to property. Consider the economic and
sentimental value of the property.
 MEASURE OF RATIONAL NECESSITY— the law does
not require a person acting in a state of necessity to
be free from negligence or mistake. He must be given
the benefit of reasonable doubt as to whether he
employed rational means to avert the threatened
injury.
 The owner of the sacrificial property is obliged to
tolerate the act of destruction but subject to his
reimbursement by all those who benefited.
 In case of conflict between the exercise of the right of
self-help and a proper and licit state of necessity, the
latter prevails because there is no unlawful aggression
when a person or group of persons acts pursuant to
the right given in a state of necessity.
3. PRESUMPTION OF OWNERSHIP
a) Requisites to Raise the Disputable Presumption of
Ownership:
1. Actual possession of the property
2. Possession is under the claim of ownership
a. Possessor of property has the presumption of title in
his favor
b. Judicial process contemplated for recovery of
property: ejectment suit or reinvindicatory action
c. The person claiming better right must prove:
a. That he has better title to the property
b. Identity of the property
d. One must depend on strength of his title and not the
weakness of the defense
e. Action is founded on positive rights
f. Evidence required: preponderance of evidence.
b) Eminent Domain
EMINENT DOMAIN—is the superior right of the State to
acquire private property whether registered or not for public
use upon payment of just compensation. It is one of the
limitations of the right of ownership.
CIVIL LAW REVIEWER
a. Absolute necessity for expropriation is not required. It is
enough that reasonable necessity for public use is
intended.
b. Just compensation is equivalent to the value of the land.
(Market value plus consequential damages minus the
consequential benefits)
c. The market value should be determined at the time of the
filing of the complaint or at the time of taking of the
property, whichever transpires first.
d. The ownership over the property taken is transferred only
when the just compensation with proper interest had
been made
Elements for Taking in Eminent Domain: (CPJD)
1. Taking done by Competent authority
a. Executive branch
b. Municipal corporations, other government entities,
and public service corporations.
2. For Public use
a. That only a few actually benefit does not diminish its
public use
3. Owner paid Just compensation
a. Value at the time of the taking
4. Due process of law observed
Computation for Just Compensation under Agrarian Reform
LBP v. Cruz, [G.R. No. 175175, Sept. 29, 2008]
How will the computation of just computation applied? Section
17 of R.A. No. 6657: In determining just compensation, the cost
of acquisition of the land, the current value of like properties,
its nature, actual use and income, the sworn valuation by the
owner, the tax declarations, and the assessment made by
government assessors, shall be considered. The social and
economic benefits contributed by the farmers and the
farmworkers and by government to the property as well as the
non-payment of taxes or loans secured from any government
financing institution on the said land shall be considered as
additional factors to determine its valuation.
Formula by the DAR in using Section 17 of RA 6657 (DAR
A.O. No. 5, series of 1998):
LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per declaration
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
Procedure of Expropriation under Agrarian Reform:
LBP is an agency created primarily to provide financial support
in all phases of agrarian reform pursuant to Section 74 of
Republic Act (RA) No. 3844 and Section 64 of RA No. 6657.
Once an expropriation proceeding for the acquisition of private
agricultural lands is commenced by the DAR, the indispensable
role of LBP begins. No judicial determination of just
Page 37 of 338
compensation allowed without LBP’s participation. Tabuena v. 4. HIDDEN TREASURE
LBP, [G.R. No. 180557, Sept. 26, 2008].
Concept of Treasure: (HUM)
Abandonment of Property Expropriated: 1. Hidden and unknown
2. Unknown owner
MCIAA v. Tudtud, [G.R. No. 174012, Nov. 14, 2008] 3. Consists of Money, jewels, or other precious objects.
(not raw materials)
When a private land is expropriated for public use and
subsequently, the public use was abandoned, it returns to its Right to Hidden Treasure:
owner unless there is a statutory provision that prohibits it. 1. Finder is the same as owner of the property – treasure
totally belongs to him.
MCIAA has the obligation to return to X the land. X has the 2. Finder is third person and he discovered it by chance –
obligation to return: finder is entitled to one half of the value of the treasure.
1. What he received as just compensation with interest 3. Finder is an intruder – he is not entitled to anything
computed from default. 4. Finder was given express permission by the owner –
2. Necessary expenses incurred by MCIAA in sustaining lot subject to the contract of service and principle of unjust
and monetary value for services in managing insofar as X enrichment
was benefitted
services in managing insofar as X was benefitted

Following Article 1187 of the Civil Code, the MCIAA may keep
whatever income or fruits it may have obtained from Lot No.
988, and X need not account for the interests that the amounts
they received as just compensation may have earned in the
meantime.

Respondents, as creditors, do not have to settle as part of the

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

c) Police Power

POLICE POWER— is another limitation of the right of

ownership wherein property may be interfered with, even
destroyed, if so demanded by the welfare of the community.
The owner of the property is not entitled to compensation

Requisites of Police Power: (PRO)

1. Public interest
2. Reasonably necessary means for the accomplishment of a
purpose
3. It is not unduly Oppressive upon individuals
a. No taking of property involved
b. No financial compensation

SURFACE RIGHTS OF A LANDOWNER— right to surface &

everything under it only as far as necessary for his practical
interest (Benefit or Enjoyment)
1. Rights subject to:
a. Existing servitudes or easements
b. Special laws
c. Local ordinances
d. Reasonable requirements of aerial navigation
e. Rights of third persons

CIVIL LAW REVIEWER Page 38 of 338

 BASIS REPLEVIN FORCIBLE ENTRY UNLAWFUL DETAINER ACCION PUBLICIANA ACCION
REINVINDICATORIA
Action or provisional remedy where Summary action to recover Action brought when It is the preliminary Action to recover
the complainant prays for the recovery material or physical possession by a landlord, action to recover a ownership of real
of the possession of the personal possession of real property vendor or vendee or other better right to property
property when a person originally in person of any land or possess
Definition possession was deprived building is being unlawfully
* NOT APPLICABLE TO thereof by (FISTS) withheld after the
(a) Movables distrained or taken for a Force, termination or expiration
tax assessment or fine pursuant to law Intimidation, Strategy, of the right to hold
(b) Those under a writ of execution or Threat, or possession, by virtue of a
preliminary attachment Stealth contract, express or
(c) Those under custodia legis implied
Where to MTC or RTC depending on the amount MTC MTC RTC RTC
file of money involved
Issue Recovery of possession of personal Material or physical Material or physical Better right of Ownership of real
involved property possession of real property possession of real property possession of real property
Possession de facto Possession de facto property. Possession
de jure
Action In Personam Quasi in Rem Quasi in Rem Quasi in Rem Quasi in Rem
Prescription 1 year from dispossession 1 year from the time the 10 years 10 or 30 years depending
FIT – from dispossession possession became on whether it’s ordinary
SS – from discovery unlawful – last date of or extraordinary
demand or letter of prescription
demand
Others Steps:  May be brought against  If there’s a fixed period – 2 kinds:  Accion reinvindicatoria
i. Complaint is filed at the owner in some cases 1 year from the a) Possession not can be filed
commencement or at any such as lease expiration of the lease through FISTS simultaneously with
time before answer of - can be filed
 Complaint must state  If the reason is non- FE
other party Immediately
FISTS or else it would just payment of rent or non-  Judgment of
ii. Complaint should allege
be an accion publiciana fulfillment of the ownership usually
OWTA (owner, wrongfully b) 1 year period for
which should be filed with conditions of the lease – includes the right of
taken, taken against law) FE or UD has
the RTC 1 year from demand to possession
iii. Pay bond double the Elapsed
vacate
amount of property
iv. Sheriff takes property  Complaint filed 5 days  Should remember
v. Doors broken if necessary after demand Article 434. In an
(buildings) or 15 days action to recover

CIVIL LAW REVIEWER Page 39 of 338

 Defendant’s remedy: (land ownership, the
1. File a bond double the amount,  Refers to any kind of property must be
and land identified, and the
2. Give copy to plaintiff plaintiff must rely on
 It should be alleged
the strength of his
that the right to
Stranger’s remedy – File a 3rd party title and not on the
possess had been
claim weakness of the
terminated and that
defendant’s claim
the continued
possession was
unlawful
 Not the remedy if
what is sought is
specific performance
 Demand
Necessary - if there is a
breach
Not necessary – if the fixed
period just expires

CIVIL LAW REVIEWER Page 40 of 338

================================ 2. ACCESSION CONTINUA — the extension of the right of
TOPICS UNDER THE SYLLABUS ownership of a person to that which is incorporated or
attached to a thing which belongs to such person. It may
C. Accessions
take place:
1. Accession Discreta a. With respect to real property
a. Natural Fruits a) accession industrial
b. Industrial Fruits b) accession natural
c. Civil Fruits b. With respect to personal property
2. Accession Continua i. adjunction or conjunction
a.1 Accession Industrial ii. commixtion or confusion
iii. specification
i. Builder/ Planter/ Sower (BPS) in
Good Faith
a.1 Accession Industrial
ii. BPS in Bad Faith
iii. No Claim of Ownership PRINCIPLES:
a.2 Accession Natural 1. Accessory follows the principal.
a.3 For Personal Property 2. The incorporation or union must be intimate that
i. Adjucntion/ Conjunction removal or separation cannot be effected without
ii. Mixture substantial injury to either or both.
3. Good faith exonerates a person from punitive liability
iii. Specification
but bad faith may give rise to dire consequences.
================================ 4. Bad faith of one party neutralizes the bad faith of the
C. ACCESSION other.
5. No one should enrich himself at the expense of another.
ACCESSION— is the right of the owner of a thing, real or
personal, to become the owner of everything which is OBLIGATIONS:
produced thereby, or which is incorporated or attached i. Gathered Fruits
thereto, either naturally or artificially.
PLANTER OWNER
NOTE: It is NOT one of the modes of acquiring ownership
enumerated in Article 712. Planter in Keeps fruits No need to reimburse
Good Faith the planter of expenses
(GF) since he retains the
2 KINDS OF ACCESSION:
fruits
Planter in Reimbursed for Gets fruits, pay planter
1. ACCESSION DISCRETA— the extension of the right of
Bad Faith expenses for necessary expenses
ownership of a person to the products of a thing which
(BF) production,
belongs to such person. It takes place with respect to:
gathering, and
a. NATURAL FRUITS – spontaneous products of the
preservation
soil and the young of animals.
(necessary
b. INDUSTRIAL FRUITS – those produced by lands of
expenses)
any kind through cultivation or labor.
c. CIVIL FRUITS – rents of buildings, the price of lease
of lands and other property and the amount of ii. Standing Crops
perpetual or life annuities or other similar income.
PLANTER OWNER
GENERAL RULE: All fruits belong to the owner of a thing. Planter in Reimbursed for Owns fruits provided
GF expenses for he pays planter
EXCEPTIONS: (PULPA) production, expenses for
1. Possession in good faith by another gathering, and production, gathering,
2. Usufruct preservation and preservation.
3. Lease of rural lands (forced co-ownership)
4. Pledge Planter in Loses everything. Owns fruits
5. Antichresis BF No right to
reimbursement

CIVIL LAW REVIEWER Page 41 of 338

 ESSENCE OF DISTINGUISHMENT
iii. Re: Offsprng of Animals. When the male and In planting: planter may be required to buy the land.
female animals belong to different owners, under In sowing: sower may be required to pay rents.
the Partidas, the owner of the female was
considered also the owner of the young, unless
there is a contrary custom or speculation. The legal
presumption, in the absence of proof to the
contrary, is that the calf, as well as its mother
belong to the owner of the latter, by the right of
accretion. US v. Caballero, [25 Phil 356] This is also
in accord with the maxim “pratus sequitor ventrem”
(the offspring follows the dam or mother).

Right of Accession with Respect to Immovables

Two disputable presumptions as to improvements on land:

1. Works made by the owner
2. Works made at the owner’s expense

WHERE LAND AND MATERIALS BELONG TO DIFFERENT

OWNERS
Land Owner (LO) Owner of Materials
(OM)
OM = GF Becomes the 1. Entitled to
LO = GF; owner of the reimbursement
materials but he - provided he does not
Or must pay for their remove them
value. 2. Entitled to removal
OM = BF - provided no injury to
LO = BF Exception: the work constructed or
(as if both OM exercises the destruction of the
in GF) right of removal plantings, etc. will be
caused
LO = BF Becomes the 1. Entitled to the
OM = GF owner of the ABSOLUTE right of
materials but he removal and damages
must pay: (whether or not
1. Value substantial injury is
2. Damages caused)
2. Entitled to
reimbursement and
damages (in case he
chooses not to remove)

PLANTING V. SOWING

1. PLANTING— pertains to a perennial fact. Something

that will grow and produce fruits year after year without
having to be replanted.
2. SOWING— pertains to an annual crop. Something that
will grow and produce fruits and then you plant again
before it will produce fruits again.

CIVIL LAW REVIEWER Page 48 of 338

WHERE A PERSON BUILDS (IN GOOD OR IN BAD FAITH) ON
THE LAND OF ANOTHER
LAND OWNER (LO)
LO = GF OPTIONS:
Builder= GF; 1. Appropriate improvements as
his own after paying for
Or indemnity
2. Compel the builder to buy the
LO = BF land where the building has
Builder = BF been built
Exception:
(as if both in GF) Value of land > Value of improvements  rent to
be paid
If builder fails to pay the rent:
- no right of retention
- LO entitled to removal of improvement
LO = GF OPTIONS:
Builder= BF 1. Appropriate the improvements
- must pay for:
- a. necessary expenses for the preservation of
the land
- b. damages
- no need to pay for its value or other
expenses
2. right to demolish or removal + damages
- at the builder’s expense
3. compel the builder or planter to pay the
price of the land, and the sower the proper rent +
damages
- whether or not the value of the land is
considerably more than the value of the house
General Rule: LO has no right of removal or demolition.
Exception: Option of right of removal is compulsory on the part
of the LO when builder fails to pay.
REMEDIES:
1. Demolish what has been built, sown, or planted
2. Consider price of land as an ordinary money debt of the
builder
- may enforce payment thru an ordinary action for
the recovery of a money debt (levy and execution)
EXCEPTIONS to the Rule on Builders, etc. (HSBC)
1. Builder, etc. does not claim ownership over the land
but possesses it as mere Holder, agent, usufructuary
or tenant; he knows that the land is not his.
CIVIL LAW REVIEWER
BUILDER
1. Right to indemnification
a. Necessary expenses, w/ right of retention until
reimbursed
b. Useful expenses, w/ right of retention
2. Right of removal - if the thing suffers no injury, and if his
successor in the possession does not prefer to refund
the amount expended.
1. Loses what is built, planted, or sown without right to
indemnity
2. Liability for damages
3. Entitled to reimbursement for the necessary expenses of
preservation of land
EXCEPTION TO THE EXCEPTION: Tenant whose lease is about to
expire, but still sows, not knowing that the crops will no longer
belong to him
2. A person constructs a building on his own land, and
then Sells the land but not the building to another
a. no question of good faith or bad faith on the
part of the builder
b. can be compelled to remove the building
c. new owner will not be required to pay any
indemnity for the building
3. Builder is a Belligerent occupant
4. Builder, etc. is a Co-owner
a. even if later on, during the partition, the
portion of land used is awarded to another
co-owner;
Page 49 of 338
  For Art. 448 of the NCC to apply, the construction
must be of a permanent character, attached to the
soil with an idea of perpetuity. It is of a transitory
character or is transferable, there is no accession, and
the builder must remove the construction. Alviola v.
CA, [G.R. 117642, April 12, 1998]
RD
RULES WHEN LANDOWNER SELLS LAND TO A 3 PERSON
WHO IS IN BAD FAITH
1. Builder must go against him.
2. BUT when the 3rd person paid the landowner:
a. Builder may still file a case against him
b. 3rd person may file a 3rd party complaint against
landowner
 A promised to donate a property to B. B constructed his
house thereon before the donation. If the property was
not donated to him, can B be considered a possessor in
good faith? Mere promise to donate the property to B
cannot convert him into a builder in good faith. At the
time the improvement was built, such promise was not
yet fulfilled, but a mere expectancy of ownership that
may or may not be realized. If at all, B is a mere
possessor by tolerance. A person whose occupation of a
realty is by tolerance of its owners are not possessors in
good faith. Hence, he is not entitled to the value of the
improvements built thereon. Verona Pada-Kilario v. CA,
[G.R. No. 134329, January 19, 2000]
RULES WHEN THREE PARTIES ARE INVOLVED:
Parties:
1. Land owner (LO)
2. Builder, planter, sower (builder)
3. Owner of materials (OM)
 Rights of LO and Builder  same as set forth in the
table
 Rights of OM
a. Bad faith
i. Loses all rights to be indemnified
ii. Can be liable for consequential damages (as
when the materials are of an inferior quality)
b. Good faith
i. Entitled to reimbursement
ii. In case of insolvency on the part of the builder
LO is subsidiarily liable, if he makes use of the
materials.
RULE: OM bad faith, Builder bad faith, LO good faith
1. Between OM and Builder, good faith must govern. 
Builder must reimburse OM, but in case Builder
cannot pay, LO will not be subsidiarily liable because
CIVIL LAW REVIEWER
as to him, OM is in bad faith. If the builder pays, he
cannot ask reimbursement from LO because as to LO,
builder is in bad faith
2. LO  Can ask damages from BOTH; has the choice to:
a. Appropriate what has been built as his own
i. Without payment of any indemnity for
useful or necessary expenses for the building
ii. With indemnity for the necessary expenses
for the preservation of the land
b. Demand the demolition at builder’s expense
c. Compel builder to pay the price of the land
i. Whether the land is considerably more
valuable than the building or not.
 A lessee cannot be a builder in good faith. He is
estopped to deny his landlord’s title, or to assert a
better title not only in himself, but also in some third
person while he remains in possession of the leased
premises and until he surrenders possession to the
landlord. Munar v. CA, [230 SCRA 372]; Frederico
Geminiano, et al. v. CA, et al., [G.R. No. 120303, July
24, 1996]
 Estoppel applies even if the lessor had no title at the
time. The relation of lessor and lessee was created
and may be asserted not only by the original lessor,
but also by those who succeed to his title. As lessees,
they knew that their occupation of the premises
would continue only for the life of the lease. They
cannot be considered as possessors nor builders in
good faith. Racaza v. Susan Realty, Inc., [18 SCRA
1172]; Vda. De Bacaling v. Laguna, [54 SCRA 243];
Santos v. CA, [221 SCRA 42]
 Even if the lessor promised to sell, it would not make
the lessee possessor or builder in good faith so as to
be covered by the provisions of Art. 448 of the NCC, if
he improves the land. The latter cannot raise the
mere expectancy of ownership of the land because
the alleged promise to sell was not fulfilled nor its
existence even proven. (Jurado)
 The owner of the land on which a building has been
built in good faith by another has the option to buy
the building or sell his land to the builder, he cannot
refuse to exercise either option. Sarmiento v. Agana,
[129 SCRA 122 (1984)]
 Owner of the land on which improvement was built by
another in good faith is entitled to removal of
improvement only after landowner chose to sell the
land and the builder refused to pay for the same.
Where the land’s value is greater than the
improvement, the landowner cannot compel the
Page 48 of 338
 builder to buy the land. A “forced lease” is then
created and the court shall fix the terms thereof in
case the parties disagree thereon. Depra v. Dumlao,
[136 SCRA 475 (1985)]

 The right to choose between appropriating the

improvement or selling the land on which the
improvement of the builder, planter or sower stands,
is given to the owner of the land (not the court)
Balatan v. CA, [304 SCRA 34 (1999)]

 Improvements made prior to the annotation of the

notice of lis pendens are deemed to have been made
in good faith. After such annotation, P can no longer
invoke the rights of a builder in good faith. Should E
opt to appropriate the improvements made by P, it
should only be made to pay for those improvements
at the time good faith existed to be pegged at its
current market value. Carrascoso v. CA, [G.R. No.
123672, December 14, 2005]

CIVIL LAW REVIEWER Page 49 of 338

 ACCESSION

Accession Accession
Discreta Continua

Natural Industrial Civil Real Personal

Fruits Fruits Fruits

rents of buildings
price of leases of
land & Accession Accession Adjunction/ Specification Mixed
Spontaneous Industrial Natural Conjunction
products of the other property
soil, amount of
Young and perpetual or life
other products annuities or
Building Alluvium (ISTEP) 1) commixtion
of animals other similar
Planting Avulsion Inclusion or 2) confusion
income
Sowing Change of course engraftment
of rivers Soldadura or
Formation of soldering
islands Tejido or weaving
Escritura or
writing
Pintura or Painting

CIVIL LAW REVIEWER Page 51 of 338

Accession Natural
i. Alluvium
ALLUVION - the accretion which the banks of rivers gradually
receive from the effects of the current of the waters and
which belong to the owners of lands adjoining the said
banks.
ACCRETION - act or process by which a riparian land
gradually and imperceptively receives addition made by the
water to which the land is contiguous.
ESSENTIAL ELEMENTS:
1. Deposit or accumulation of soil or sediment must be
gradual and imperceptible.
2. Accretion results from the effects or action of the
current of the waters of the river.
3. The land where accretion takes place must be adjacent
to the bank of a river.
 Registration under the Torrens System does not
protect the riparian owner against the diminution
of the area of his registered land through gradual
changes in the course of an adjoining stream. Viajar
v. CA, [168 SCRA 405 (1988)]
 Failure to register the acquired alluvial deposit by
accretion for 50 years subjected said accretion to
acquisition through prescription by third persons.
Reynante v. CA, [207 SCRA 794 (1992)]
 The rules on alluvion do not apply to man-made or
artificial accretions to lands that adjoin canals or
esteros or artificial drainage system. Ronquillo v.
CA, [195 SCRA 433 (1991)]
 Law of Waters: “ART. 4. Lands added to the shores
by accretions and alluvium deposits caused by the
action of the sea, form part of the public domain.
When they are no longer washed by the waters of
the sea, and are not necessary for the purposes of
public utility, or for the establishment of special
industries, or for the coastguard service, the
Government shall declare them to be the property
of the owners of the estates adjacent thereto and
as an increment thereof.” Lanzar v. Dir. Of Lands,
[78 SCRA 152]
ii. Avulsion
AVULSION - accretion which takes place when the current of
a river, creek, or torrent segregates from an estate on its
bank a known portion and transfers it to another estate, in
CIVIL LAW REVIEWER
which case, the owner of the estate to which the segregated
portion belonged, retain the ownership thereof.
ALLUVIUM vs. AVULSION
ALLUVIUM AVULSION
Deposit of soil is gradual and Deposit of soil is sudden or
imperceptible. abrupt.
Soil cannot be identified. Soil is identifiable and
verifiable.
Deposit of soil belongs to Deposit of soil belongs to the
the owner of the property to owner from whose property it
which it is attached. was detached.
ESSENTIAL ELEMENTS:
1. Segregation and transfer must be caused by the Current
of a river, creek or torrent.
2. Segregation and transfer must be Sudden or abrupt.
3. The portion of land transported must be Known or
identifiable.
NOTE: The owner should remove the transferred portion
within two years; otherwise, it becomes permanently
attached.
Uprooted Trees
1. Trees uprooted and carried away by the current of the
waters
a. Owners do not claim them w/in 6mos 
Belong to the owner of the land upon which
they may be cast
b. Owners claim them  owners pay the
expenses incurred in gathering them or
putting them in a safe place
iii. Change of Riverbed
Requisites:
1. There must be a natural change in the course of the
waters of the river.
2. The change must be abrupt or sudden.
Right of owner of land occupied by new river course:
1. Right to old bed ipso facto in proportion to area lost
2. Owner of adjoining land to old bed: right to acquire the
same by paying its value – Value not to exceed the value
of area occupied by new bed
New River Banks
1. New river banks created  public dominion
2. New river bed may itself be abandoned, due to natural
or artificial causes authorized by law.
a. owners will get back this previous property if the
course of the river reverts back to its original place
Page 52 of 338
 iv. Formation of Islands 2. Separation with injury – accessory is much more
precious than the principal; the owner of the former
ISLAND BELONGS TO THE STATE: may demand its separation even though the principal
1. On seas within the jurisdiction of the Philippines may suffer injury.
2. on lakes 3. Owner of principal in bad faith
3. on navigable or floatable rivers

Islands formed in Non-navigable or Non-floatable Rivers: RULES AS TO OWNERSHIP

1. Island  to the owners of the margins or banks of the OWNER OF OWNER OF ACCESSORY
river nearest to each of them. PRINCIPAL (OP) (OA)
2. If in the MIDDLE of the river  divided longitudinally in OP = GF Acquires the May demand reparation:
halves OA = GF accessory a. If no injury will be
- indemnifies the caused
a.3 For Personal Property Or former owner for b. If value of accessory
its value is greater than principal -
i. Adjunction/ Conjunction OP = BF even if damages will be
OA = GF caused to principal
ADJUNCTION OR CONJUNCTION — Is a process whereby two (expenses is to the one
movable things owned by different persons are joined who caused the
together without bad faith, in such a way that they form a conjunction)
single object. OP =GF 1. Owns the 1. Loses the thing
OA = BF accessory incorporated
Requisites: 2. Right to 2. Indemnify the OP
1. The two things belong to different owners. damages for the damages OP may
2. They form a single object. have suffered
3. They are inseparable; that their separation would impair OP = BF 1. Pay OA value Right to choose between
their nature or result in substantial injury to either OA = GF of accessory or 1. OP paying him its
component. 2. Principal and value or
accessory be 2. That the thing
CLASSES OF ADJUNCTION: (ISTEP) separated belonging to him be
1. Inclusion (engraftment) PLUS separated even though it
i.e. setting a precious stone on a golden ring Liability for be necessary to destroy
2. Soldadura (soldering) damages the principal thing
i.e. joining a piece of metal to another metal
a. Feruminatio – same metal ii. Mixture
b. Plumbatura – different metals
MIXTURE— takes place when two or more things belonging
3. Tejido (weaving) to different owners are mixed or combined to such extent
4. Escritura (writing) that the components lose their identity.
5. Pintura (painting)
a. Owner of the principal: KINDS:
a. By law becomes the owner of the resulting 1. COMMIXTION – mixture of solid things
object 2. CONFUSION – mixture of liquid things
b. Indemnifies the owner of the accessories
for the values thereof. RULES:
1. Mixture by the will of the owners
Test To Determine Principal: a. Rights governed by stipulations
1. Rule of importance and purpose b. Without stipulation: each acquires a right or
2. Greater value - If they are of unequal value interest in proportion to the value of his material
3. Greater volume - If they are of equal value 2. Mixture caused by an owner in GF or by chance
4. Greater merits a. Each share shall still be in proportion to the value of
their thing
When Separation Allowed: 3. Mixture caused by owner in BF
1. Separation without injury a. The actor forfeits his thing

CIVIL LAW REVIEWER Page 53 of 338

 b. Liable for damages Reasons:
1. Prevent litigation
iii. Specification 2. Protect true title & possession
3. Real interest of both parties which requires that precise
SPECIFICATION — imparting of a new form to the material state of title be known
belonging to another; or the making of the material of
another into a thing of a different kind. ACTION TO QUIET TITLE
1. Puts an end to vexatious litigation in respect to property
RULES: involved; plaintiff asserts his own estate & generally
1. When the maker (considered principal) is in GF declares that defendant’s claim is w/o foundation
a. May appropriate but must indemnify the 2. Remedial
owner of the material 3. QUASI IN REM - suits against a particular person or
b. May not appropriate – when material persons in respect to the res May not be brought for the
transformed > new thing. The OM may: purpose of settling a boundary disputes
i. Appropriate the new thing subject 4. Applicable to real property or any interest therein. The
to the payment of the value of the law, however, does not exclude personal property from
work, or actions to quiet title.
ii. Demand indemnity for the material 5. An action to quiet title brought by the person in
with damages possession of the property is IMPRESCRIPTIBLE.
b. When the maker is in BF 6. If he is not in possession, he must invoke his remedy
a. OM can appropriate the work without within the prescriptive period.
paying for the labor or industry
b. OM can demand indemnity plus damages Classifications:
c. OM cannot appropriate if the value of the work is 1. Remedial action –to remove cloud on title
considerably more than the value of the material 2. Preventive action –to prevent the casting of a
due to artistic or scientific importance (threatened ) cloud on the title.
Requisites: (TICR)
COMPARISON OF THE 3 TYPES OF ACCESSION OF 1. Plaintiff must have a legal or equitable Title or interest
MOVABLES in the real property
ADJUNCTION MIXTURE SPECIFICATION 2. Cloud in such title
Involves at least 2 Involves at Involves at least 2 3. Such cloud must be due to some Instrument, record,
things least 2 things things claim, encumbrance or proceeding which is:
As a rule, As a rule, co- As a rule, accessory a) apparently valid
accessory follows ownership follows principal b) but is in truth invalid, ineffective, voidable or
principal results unenforceable
The things joined May either The new object retains c) prejudicial to the plaintiff’s title
retain their retain or lose or preserves the 4. Plaintiff must Return to the defendant all benefits
nature respective nature of the original received from the latter or reimburse him for expenses
natures object that may have redounded to his benefit

================================
TOPICS UNDER THE SYLLABUS
D. Quieting Title
================================
QUIETING OF TITLE— is a remedy or proceeding which has
for its purpose an adjudication that a claim of title to realty
or an interest thereon, adverse to the plaintiff, is invalid or
inoperative, or otherwise defective and hence, the plaintiff
and those claiming under him may forever be free of any
hostile claim.
NO APPLICATION TO:
1. Questions involving interpretation of documents
2. Mere written or oral assertions of claims, EXCEPT
a. If made in a legal proceeding
b. If it is being asserted that the instrument of entry in
plaintiff’s favor is not what it purports to be
3. Boundary disputes
4. Deeds by strangers to the title UNLESS purporting to
convey the property of the plaintiff
5. Instruments invalid on their face
6. Where the validity of the instrument involves pure
questions of law

CIVIL LAW REVIEWER Page 54 of 338

ACTION TO REMOVE CLOUD
1. Intended to procure cancellation, delivery, release of an
instrument, encumbrance, or claim constituting a on
plaintiff’s title which may be used to injure or vex him in
the enjoyment of his title
2. Preventive
CLOUD—is a semblance of title, either legal or equitable, or a
claim or a right in real property, appearing in some legal form
but which is, in fact, invalid or which would be inequitable to
enforce.
imprescriptible so long as the plaintiff is in possession of the
property.
Ruinous Buildings and Trees in Danger of Falling
Liability for damages:
1. Collapse – engineer, architect or contractor
2. Collapse resulting from total or partial damage; no
repair made – owner; state may compel him to demolish
or make necessary work to prevent if from falling
3. If no action – done by government at expense of owner

Existence of Cloud: (AIP)  To constitute an Act of God:

1. Instrument or record or claim or encumbrance or Requisites:
proceeding which is Apparently valid or effective 1. The cause of the breach of obligation must be
2. BUT is, in truth and in fact, Invalid, ineffective, voidable, independent of the will of the debtor
or unenforceable, or extinguished (or terminated) or 2. The event must be either unforeseeable or
barred by extinctive prescription unavoidable
3. May be Prejudicial to the title 3. The event must be such as to render it impossible
for the debtor to fulfill his obligation in a normal
DISTINCTIONS BETWEEN ACTION FOR QUIETING OF TITLE manner
AND ACTION FOR REMOVAL OF CLOUD 4. The debtor must be free form any participation in,
BASIS ACTION TO QUIET ACTION TO REMOVE or aggravation of the injury to the creditor. Nakpil
TITLE CLOUD v. CA, [144 SCRA 595 (1986)]
Purpose To end vexatious Procure cancellation,
litigation in respect release of an ================================
to the property instrument, TOPICS UNDER THE SYLLABUS
concerned encumbrance or claim
E. Co-ownership
in the plaintiff’s title-
which affects the title
1. Elements
or enjoyment of the 2. How Created
property 3. Rights of Co-owners
Nature Plaintiff asserts own Plaintiff declares his a. Ownership over Whole Property
claim and declares own claim and title, b. Sale/ Alienation
that the claim of the and at the same time i. Of Individual Interest
defendant is indicates the source
ii. Of Entire Property
unfounded and calls and nature of the
on the defendant to defendant’s claim, iii. Redemption by Other Co-owners
justify his claim on pointing its defects and iv. Prescription
the property that prays for the c. Benefits/ Fruits/ Interest/ Income
the same may be declaration of its d. Use/ Possession
determined by the invalidity e. Management/ Administration
court
4. Partition
Except: In one case, a piece of land was owned by as a
a. Demandable Anytime
husband and wife, and it was offered for bail. They executed b. Prohibition for Indivision
a mortgage in the land in favor of the Court. Later on, the 5. Obligations of Co-owners
land was foreclosed and the State was the sole bidder. Deed 6. Termination
of Sale was issued in favor of the State. The owner of the ================================
land could not redeem it. But the State did not change the
title to be under its name. Many years after that, the heirs of
the couple brought an action to quiet title. The Supreme
Court denied the claim. The Court failure of the State to have
it registered does not mean that the title is invalid. The Court
also held that the right for action to quiet title is

CIVIL LAW REVIEWER Page 55 of 338

E. CO-OWNERSHIP of the common
property
CO-OWNERSHIP —is a form of ownership which exists Representation As a rule, no As a rule, there is
whenever an undivided thing or right belongs to different mutual mutual
persons. representation representation
Effect of death Not dissolved by Dissolved by the
1. ELEMENTS death or death or
1. Plurality of subjects – many owners incapacity of a co- incapacity of a
2. Object of ownership must be undivided owner partner
3. Recognition of ideal shares; no one is an owner of a Substitution Can dispose of his Cannot
specific portion of the property until it is partitioned. share without substitute
consent of others another as
2. HOW CREATED partner in his
1. Law place without
2. Contracts consent of
3. Succession others
4. Fortuitous event/chance (i.e., commixtion) Profits Must always May be
5. Occupancy (i.e.,2 persons catch a wild animal) depend on stipulated upon
6. Donation proportionate
shares
Kinds of Co-ownership:
1. Ordinary – right of partition exists DISTINGUISHED FROM JOINT TENANCY
2. Compulsory – no right partition exists (party wall) BASIS CO- JOINT
3. Legal – created by law OWNERSHIP TENANCY
4. Contractual – created by contract Shares Involves a physical Involves a physical
5. Universal – over universal things (co-heirs) whole. But there is whole. But there is no
6. Singular or Particular – over particular or specific thing an ideal (abstract) ideal (abstract)
7. Incidental – exists independently of the will of the division; each co- division; each and all
parties owner being the of them own the
owner of his ideal whole thing
DISTINGUISHED FROM PARTNERSHIP share
BASIS CO- PARTNERSHIP Disposal of Each co-owner Each co-owner may
OWNERSHIP shares may dispose of his not dispose of his own
Legal personality No legal Has legal or ideal or undivided share without the
personality juridical share (without consent of all the rest,
personality boundaries) because he really has
Source Created by Created by without the other’s no ideal share
contract or other contract only consent
things (express or Effect of share goes to his share goes by
implied) death own heirs accretion to the other
Purpose Collective Profit joint-tenants by virtue
enjoyment of a of their survivorship
thing or jus accrecendi
Term Agreement for it No term limit set Effect of If a co-owner is a If one joint-tenant is
to exist for 10 by law disability minor, this does under legal disability
years – valid (If not benefit the (like minority), this
more than 10 others for the benefits the other
years, the excess purpose of against whom
is void) prescription, and prescription will not
prescription run
NOTE: 20 years is therefore runs
the maximum if against them
imposed by the
testator or donee

CIVIL LAW REVIEWER Page 56 of 338

3. RIGHTS OF CO-OWNERS
a. Ownership over Whole Property
b. Sale/ Alienation
i. Of Individual Interest
o Right to alienate, assign or mortgage
own part; except personal rights like
right to use and habitation
ii. Of Entire Property
iii. Redemption by Other Co-owners
Right of redemption
i. Right to be adjudicated thing (subject to right of
others to be indemnified)
ii. Right to share in proceeds of sale of thing if
thing is indivisible and they cannot agree that it
be allotted to one of them
NOTE:
 To be exercised w/in 30days from written
notice of sale of undivided share of
another co-owner to a stranger
 Redemption of the whole property by a
co-owner does not vest in him sole
ownership over said property.
Redemption within the period prescribed
by law by a co-owner will inure to the
benefit of all co-owners. Hence, it will not
put an end to existing co-ownership.
Mariano v. CA, [222 SCRA 736 (1993)]
iv. Prescription
General Rule - A co-owner cannot acquire the whole
property as against the other co-owners by acquisitive
prescription.
Exception - When there is valid repudiation – prescription
shall start from such repudiation
Exception to the Exception - In constructive trusts,
prescription does not run
i. A co-owner cannot sell the property without the
other co-owners’ consent, otherwise, the selling co-
owner’s share shall be the only one valid.
Paulmitan v. CA, [215 SCRA 866 (1992)]
ii. While the husband is the recognized administrator
of the conjugal property under the Civil Code, there
are instances when the wife may assume
CIVIL LAW REVIEWER
administrative powers or ask for the separation of
property. Where the husband is absent and
incapable of administering the conjugal property,
the wife must be expressly authorized by the
husband or seek judicial authority to assume
powers of administration. Thus, any transaction
entered by the wife without the court or the
husband’s authority is unenforceable. Being an
unenforceable contract, the 2nd Contract is
susceptible to ratification. The husband continued
remitting payments for the satisfaction of the
obligation under the questioned contract. These
acts constitute ratification of the contract. Fabrigas
v. San Francisco, [G.R. No. 152346, Nov. 25, 2005]
c. Benefits/ Fruits/ Interest/ Income
o Right to benefits proportional to respective
interest
i. Stipulation to contrary is void
o Right to full ownership of his part and fruits
d. Use/ Possession
o Right to use thing co-owned
i. For purpose for which it is intended
ii. Without prejudice to interest of
ownership
iii. Without preventing other co-owners
from making use thereof
e. Management/ Administration
o Right to change purpose of co-ownership by
agreement
o Right to bring action in ejectment in behalf of
other co-owner
o Right to compel co-owners to contribute to
necessary expenses for preservation of thing
and taxes
o Right to exempt himself from obligation of
paying necessary expenses and taxes by
renouncing his share in the pro indiviso
interest; but can’t be made if prejudicial to
co-ownership
o Right to make repairs for preservation of
things; can be made at will of one co-owner;
receive reimbursement therefrom; notice of
necessity of such repairs must be given to co-
owners, if practicable
o Right to ask for partition anytime
o Right of pre-emption
4. PARTITION
a. Demandable Anytime
Page 57 of 338

General Rule: No co-owner shall be obliged to remain in the
co-ownership. Each co-owner may at any time demand the
partition of the thing owned in common, insofar as his share
is concerned.
b. Prohibition for Indivision
Exception - A co-owner may not successfully demand a
partition:
1. If by agreement (for a period not exceeding 10 years,
renewable) partition is prohibited
2. When partition is prohibited by a donor or testator (for
a period not exceeding 20 years) – from whom the
property came
3. When partition is prohibited by law
4. When a physical partition would render the property
unserviceable, but in this case, the property may be
allotted to one of the co-owners, who shall indemnify
the others, or it will be sold, and the proceeds
distributed
5. When the legal nature of the common property does
not allow partition
REQUISITES OF REPUDIATION:
1. Unequivocal acts of repudiation of the co-ownership
amounting to an ouster of the other co-owners
2. Positive acts of repudiation have been made Known
3. Evidence is clear and conclusive
4. Open, continuous, exclusive, notorious possession
5. OBLIGATIONS OF CO-OWNERS
1. Share in charges proportional to respective interest;
stipulation to contrary is void
2. Pay necessary expenses and taxes – may be exercised by
only one co-owner
3. Pay useful and luxurious expenses – if determined by
majority
4. Duty to obtain consent of all if thing is to be altered
even if beneficial; resort to court if non-consent is
manifestly prejudicial
5. Duty to obtain consent of majority with regards to
administration and better enjoyment of the thing;
majority means majority in the interest not in the
number of co-owners; court intervention if prejudicial –
appointment of administrator
6. No prescription to run in favor co-owner as long as he
recognizes the co-ownership; requisites for acquisition
through prescription
i. He has repudiated through unequivocal acts
ii. Such act of repudiation is made known to other
co-owners
CIVIL LAW REVIEWER
iii. Evidence must be clear and convincing
7. Co-owners cannot ask for physical division if it would
render thing unserviceable; but can terminate co-
ownership
8. After partition, duty to render mutual accounting of
benefits and reimbursements for expenses
9. Under Art. 493 of the NCC, each co-owner has full
ownership of his part and of the fruits and benefits
pertaining thereto, and he may alienate, assign or
mortgage the portion which may be allotted to him
upon the termination of the co-ownership. It appears
that while there is a single certificate of title, the three
lots are distinguishable from each other.
RIGHTS OF 3RD PARTIES
1. Creditors of assignees may take part in division and
object if being effected without their concurrence,
but cannot impugn unless there is fraud or made
notwithstanding their formal opposition
2. Non-intervenors – retain rights of mortgage and
servitude and other real rights and personal rights
belonging to them before partition was made
================================
TOPICS UNDER THE SYLLABUS
F. Condominium Act (RA 4726)
================================
CONDOMINIUM – an interest in real property consisting of a
separate interest in a unit in a residential, commercial or
industrial building and an undivided interest in common,
directly or indirectly, in the land on which it is located and in
other common areas of the building.
a. Any transfer or conveyance of a unit or an
apartment office or store or other space therein
shall include the transfer and conveyance of the
undivided interest in the common areas or in a
proper case, the membership or shareholdings in
the condominium: provided however, that where
the common areas in the condominium project are
held by the owners of separate units as co-owners
thereof, no condominium unit therein shall be
conveyed or transferred to persons other than
Filipino citizens or corporations at least 60% of the
capital stock of which belong to Filipino citizens,
except in cases of hereditary succession.
General Rule: Common areas shall remain undivided, and
there shall be no judicial partition thereof
Exceptions
1. When the project has not been rebuilt or repaired
substantially to its state prior to its damage or destruction 3
Page 58 of 338
years after damage or destruction which rendered a material
part thereof unfit for use;
2. When damage or destruction has rendered ½ or more of
the units untenable and that the condominium owners
holding more than 30% interest in the common areas are
opposed to restoration of the projects;
3. When the project has been in existence for more than
50 years, and the condominium owners holding in aggregate
more than 50% interest in the common areas are opposed to
restoration, remodeling or modernizing;
4. When a project or a material part thereof has been
condemned or expropriated and the project is no longer
viable or that the condominium owners holding in aggregate
more than 70% interest in the common areas are opposed to
the continuation of the condominium regime.
5. When conditions for partition by sale set forth in the
declaration of restrictions duly registered have been met.
POSSESSION— is the holding of a thing or enjoyment of a
right
1. ELEMENTS
a. Occupancy – actual or constructive (corpus)
b. Intent to possess (animus possidendi)
c. Must be by virtue of one’s own right
Extent of Possession:
1. Physical/actual – occupancy in fact of the whole or at
least substantially the whole
2. Constructive – occupancy in part in the name of the
whole under such circumstances that the law extends
the occupancy to the possession of the whole
Subject of possession: things or rights which are susceptible
of being appropriated

Exceptions:
================================ 1. Res communes
TOPICS UNDER THE SYLLABUS 2. Property of public dominion
G. Possession 3. Discontinuous servitudes
1. Elements 4. Non-apparent servitudes
2. Kinds
DEGREES OF POSSESSION:
3. Requirements—To Ripen into Ownership 1. Holding w/o title and in violation of right of owner
4. Acquisitive Prescription (grammatical degree)
5. Rights of Legal Processor Ex. possession of a thief
a. Peaceful & Uninterrupted Possession 2. Possession with juridical title but not that of owner
i. Co-possession (juridical possession)
Ex. that of a lessee, pledge, depositary
ii. Actions in Case of Deprivation of
3. Possession with just title but not from true owner
Possession (possessory right)
b. Fruits Ex. A in good faith buys a car from B who
i. Civil Fruits delivers the same to A but B merely
ii. Natural/ Industrial Fruits pretended to be the owner
iii. Pending Fruits 4. Possession with just title from true owner
c. Indemnity for Expenses/ Improvements
ACQUISITION OF POSSESSION FROM THE VIEWPOINT OF
i. Necessary WHO POSSESSES:
ii. Useful 1. Personal
iii. Luxurious Requisites:
iv. Possession by Lessee a. Intent to possess
6. Prescription of Just Title b. Capacity to possess
a. When Applicable c. Object must be capable of being possessed
2. Thru authorized person (agent or legal representative)
b. Meaning of Just Title
Requisites:
7. Possession of Movables a. Intent to possess for principal (not for agent)
a. When Lost b. Authority or capacity to possess (for another)
b. Unlawful Deprivation c. Principal has intent and capacity to possess
8. Loss of Possession 3. Thru Unauthorized person (but only if subsequently
================================ ratified)
Requisites:
a. Intent to possess for another (the principal)

CIVIL LAW REVIEWER Page 59 of 338

 b. Capacity of “principal” to possess
c. Ratification by principal
2. REQUIREMENTS—TO RIPEN INTO OWNERSHIP
Classes of Possession:
1. In concept of owner – owner himself or adverse
possessor
Effects:
A. May be converted into ownership through
acquisitive prescription
B. Bring actions necessary to protect
possession
C. Ask for inscription of possession
D. Demand fruits and damages from one
unlawfully detaining property
2. In concept of holder – usufruct, lessee, bailee in
commodatum
3. In oneself – personal acquisition
A. must have capacity to acquire possession
B. intent to possess
C. possibility to acquire possession
4. In name of another – agent; subject to authority
and ratification if not authorized; negotiorum gestio
A. Voluntary – as when an agent possesses
for the principal
B. Necessary – as when a mother possesses
for a child still in the maternal womb
C. Unauthorized – this will become the
principal’s possession only after there has
been a ratification without prejudice to
the effects of negotiorum gestio
 Possession and ownership are distinct legal
concepts. Ownership confers certain rights to the
owner, among which are the right to enjoy the thing
owned and the right to exclude other persons from
possession thereof. On the other hand, possession
is defined as the holding of a thing or the enjoyment
of a right. Literally, to possess means to actually
and physically occupy a thing with or without a
right. Thus, a person may be declared an owner but
he may not be entitled to possession. Heirs of
Roman Soriano v. CA, [363 SCRA 86 (2001)]
4. ACQUISITIVE PRESCRIPTION
POSSESSOR IN GOOD FAITH is one who is not aware that
there exist a flaw in the title or mode w/c invalidates it.
POSSESSOR IN BAD FAITH is one who is aware of defect.
Notes on Good Faith/Bad Faith
CIVIL LAW REVIEWER
 Mistake upon a doubtful/difficult question of law 
may be the basis of good faith
 Good faith is always presumed. Burden of proof lies
on the one alleging bad faith
 Possession is presumed to be enjoyed in the same
character in which it is acquired, until contrary is
proven.
Ways of Acquiring Possession
1. Material occupation or exercise of a right
a. TRADICION BREVI MANU– when one already in
possession of a thing by a title other than
ownership continues to possess the same under a
new title, that of ownership
b. TRADICION CONSTITUTUM POSSESSORIUM—
when the owner continues in possession of the
property alienated not as owner but in some other
capacity.
b. By the subjection of the thing or right to our will
a. TRADICION LONGA MANU– effected by mere
consent or agreement of the parties
b. TRADICION SIMBOLICA– effected by delivering an
object (such as key) symbolizing the placing of one
thing under the control of the vendee
c. By proper acts and legal formalities established for
acquiring such right of possession
POSSESSION THROUGH SUCCESSION
1. Possession of hereditary property:
a. If ACCEPTED  deemed transmitted w/o
interruption from moment of death
b. If NOT ACCEPTED  deemed never to have
possessed the same
2. Except from date of death of decedent.
EFFECTS OF BAD FAITH OF DECEDENT ON HEIR
1. Heir shall not suffer the consequences of the wrongful
possession of the decedent (bad faith is personal)
EXCEPTION: when he becomes aware of the
flaws affecting the decedent’s title
2. Interruption of good faith may take place at the date of
summons or that of the answer if the date of summons
does not appear. HOWEVER, there is a contrary view
espousing that summons is insufficient to make the
possessor in bad faith.
3. Effects of possession in good faith  counted only from
the date of the decedent’s death
MINORS/INCAPACITATED:
1. May acquire MATERIAL possession but not right to
possession;
Page 60 of 338
2. May only acquire them through guardian or legal
representatives
ACQUISITION: cannot be acquired through force or
intimidation when a possessor objects thereto – resort to
courts
 The execution of a deed of sale is merely a prima facie
presumption of delivery of possession of a piece of real
property, which is destroyed when the delivery is not
effected because of a legal impediment. Said
construction or symbolic delivery, being merely
presumptive, may be negated by the failure of the
vendee to take actual possession of the land sold.
Copuyoc v. De Sola, [G.R. No. 151322, October 26,
2006]
5. RIGHTS OF LEGAL POSSESSOR
a. Peaceful & Uninterrupted Possession
o Right to be respected in his possession; if
disturbed – protected by means established by
law; spoliation
o Possession acquired and enjoyed in concept of
owner can serve as title for acquisitive
prescription
 Possession has to be in concept of owner,
public, peaceful and uninterrupted
 Title short of ownership
o Legal presumption of just title (prima facie) –
for person in concept of owner
o Possession of real property presumes that
movables are included
i. Co-possession
Co-possessors deemed to have exclusively possessed part
which may be allotted to him; interruption in whole or in
part shall be to the prejudice of all
ii. Actions in Case of Deprivation of
Possession
b. Fruits
For possessors in good faith:
1. Entitled to fruits received before possession is legally
interrupted (natural and industrial – gathered or
severed; civil – accrue daily )
2. Entitled to part of net harvest and part of expenses of
cultivation if there are natural or industrial fruits (
proportionate to time of possession )
CIVIL LAW REVIEWER
a. Owner has option to require possessor to finish
cultivation and gathering of fruits and give net
proceeds as indemnity for his part of expenses;
b. If possessor in good faith refuses – barred from
indemnification in other manner
c. Indemnity for Expenses/ Improvements
For possessors in good faith:
1. Right to be reimbursed for useful expenses with right of
retention; owner has option of paying expenses or
paying the increase in value of property which thing
acquired by reason of useful expenses
2. May remove improvements if can be done w/o damage
to principal thing- unless owner exercises option of
paying; possessor in bad faith not entitled.
Regardless of good faith/bad faith:
1. Right to be indemnified for necessary expenses;
2. Possessor in good faith has right of retention over thing
unless necessary expenses paid by owner
3. Not entitled to payment for luxurious expense but may
remove them provided principal is not injured –
provided owner does not refund the amount expended
4. Improvements caused by nature or time to inure to the
benefit of person who has succeeded in recovering
possession
5. Wild animals possessed while in one’s control;
domesticated – possessed if they retain habit of
returning back home
6. One who recovers, according to law, possession unjustly
lost is deemed to have enjoyed it w/o interruption
Liabilities/ Duties Of Possessors
1. Return of fruits if in bad faith – fruits legitimate
possessor could have received
2. Bear cost of litigation
3. Possessor in good faith not liable for loss or
deterioration or loss except when fraud and
negligence intervened
4. Possessor in bad faith liable for loss or deterioration
even if caused by fortuitous event
5. Person who recovers possession not obliged to pay
for improvements which have ceased to exist at the
time of occupation
General Rule Re: possession as a fact: Possession as a fact
cannot be recognized at the same time in two different
personalities
Exceptions:
1. Co-possessor – there is no conflict of interest, both of
them acting as co-owners, as in the case of property
owned or possessed in common
Page 61 of 338
2. Possession of different concepts or different degrees 1. On capital  1. On capital 
charged to owner charged to owner
SUMMARY OF RULES ON NECESSARY/ USEFUL/
LUXURIOUS POSSESSION & POSSESSION BY LESSEE 2. On fruits  2. On fruits 
BASIS IF IN GOOD FAITH IF IN BAD FAITH Taxes and charged to charged to owner
Charges possessor
Necessary 1. Right to Right to
Expenses reimbursement reimbursement
3. Charges  3. Charges  to
2. Right of - no right of
prorated owner
retention retention
1. Right to Possessor must
reimbursement of return value of fruits
either the amount already received as
spent or the well as value of
Useful increase in value – fruits which the
expenses “plus value” – at owner or legitimate
owner’s option possessor (not the
(art. 546) Regarding possessor in BF)
2. Right of gathered or To possessor could have received
retention until severed fruits with due care or
paid diligence, MINUS
3. Right of No right to necessary expenses
removal (provided reimbursement for cultivation,
no substantial gathering, and
damage or injury harvesting, to
is caused to the prevent the owner
principal, reducing from being unjustly
its value) – enriched
UNLESS the Cultivation Reimbursed to
winner (owner or expenses of possessor
lawful possessor) gathered fruits –
exercises the not reimbursed to
option in (1) possessor
In general, no In general, no right Regarding pro-rating To owner
Luxurious or right to refund or of refund or pending or between
Ornamental retention but can retention but can ungathered possessor and
Expenses remove if no remove if no fruits owner of
substantial injury substantial injury is expenses, net
is caused. caused. However, harvest, and
However, owner owner has OPTION charges
has OPTION to to allow:
allow: 1. Possessor to
a. Possessor to remove
remove 2. Or retain for
b. Or retain for himself (the owner)
himself (the the ornament by
owner) the refunding the value
ornament by it has at the time
refunding the owner enters into
amount spent (art. possession (art. 549)
548)

CIVIL LAW REVIEWER Page 62 of 338

 Production No indemnity b. One who has lost or has been unlawfully
expenses of deprived of it may recover the thing from
pending fruits – whomever possesses it, ordinarily, w/o
indemnity pro rata reimbursement.
to possessor: c. Owner must prove:
(owner’s option) i. Ownership of the thing
money allowing ii. Loss or unlawful deprivation or bad faith
full cultivation and of the possessor
gathering of all NOTE: Owner acts negligently or voluntarily parts w/ the
fruits; if possessor thing owned  cannot recover from possessor
refused, he shall
lose all the right to SUMMARY OF RECOVERY OR NON-RECOVERY
be indemnified in PRINCIPLE
any other manner. Owner may recover 1. from possessor in bad faith
Improvements No No reimbursement without 2. from possessor in good faith (if
no longer reimbursement reimbursement owner had lost the property or
existing been unlawfully deprived of it)
Liability for Only if acting w/ Liable in every case the acquisition being from a
accidental loss fraudulent intent private person [art. 559]
or or negligence, Owner may recover if possessor acquired the
deterioration after summons but should object in good faith at a public
Improvements To owner or lawful To owner or lawful REIMBURSE the sale or auction; owner to pay the
due to time or possessor possessor possessor price paid.
nature Owner cannot1. if possessor had acquired it in
recover, even if he good faith by purchase from a
Rules in case of conflict or dispute regarding possession offers to reimburse merchant’s store, or in fairs, or
1. Present possessor shall be preferred (whether or not the markets in accordance with the
2. If both are present, the one longer in possession owner had lost or Code of Commerce and special
3. If both began to possess at the same time, the one who been unlawfully laws
present (or has) title deprived) 2. if owner is by his conduct
4. If both present a title, the Court will determine. precluded from denying the
(Meantime, the thing shall be judicially deposited.) seller’s authority to sell
3. if seller has voidable title which
A NOTICE OF LIS PENDENS is proper in the following cases: has not been avoided at the time
(PORC-Q) of sale to the buyer in good faith
1. Action to recover possession of real estate for value and without notice of
2. Action to quiet title thereto the sellers defect in title
3. Action to remove clouds thereon 4. if recovery is no longer possible
4. Action for partition because of prescription
5. Any other proceedings of any kind in Court directly 5. if sale is sanctioned by statutory
affecting the title to the land or the use or occupation or judicial authority
thereof of the buildings thereon 6. if possessor had obtained the
goods because he was an
6. PRESCRIPTION OF JUST TITLE innocent purchaser for value and
holder of a negotiable document
of title to the goods
7. POSSESSION OF MOVABLES
ANIMALS
Requisites:
1. Good faith
WILD ANIMALS – possessor is the one who has control over
2. Owner voluntarily parted with the possession of the
them
thing
DOMESTICATED AND TAMED ANIMALS – the possessor does
3. In the concept of owner
not lose possession as long as habitually they return to the
a. Possession in good faith - Equivalent to title
possessor’s premises

CIVIL LAW REVIEWER Page 63 of 338

 a. Fruits
NOTE: For ownership, the owner must claim them within 20 b. Possession and enjoyments
days from their occupation by another person c. Lease of property
d. Sale/Alienation of Usufructuary rights
Loss Of Possession: (PALA) 5. Obligations of the Usufructuary
1. Abandonment of the thing – renunciation of right;
a. Before the Usufruct commences
intent to lose the thing
2. Assignment made to another by onerous or b. During the Usufruct
gratuitous title i. Alteration of form and substance
3. Destruction or total loss of the thing or thing went ii. Exercise of diligence
out of commerce iii. Repairs
4. Possession of another if new possession lasted iv. Charges and Taxes
longer that 1 year (possession as a fact); real right v. Insurance
of possession not lost except after 10 years
6. Termination of Usufruct
8. LOSS OF POSSESSION ================================

Acts Not Affecting Possession: (not deemed abandonment USUFRUCT is the right to enjoy the property of another with
of rights); possession not interrupted the obligation of preserving its form and substance, unless
1. Acts merely tolerated the title constituting it or the law otherwise provides
2. Clandestine and unknown acts
3. Acts of violence Quasi-usufruct is the usufruct pertaining to immovables.

Possession Not Lost When: 1. NATURE/ELEMENTS

2. Even for time being he may not know their whereabouts,
possession of movable is not deemed lost
3. When agent encumbered property without express
authority – except when ratified
4. Possession may still be recovered:
a. Unlawfully deprived or lost
b. Acquired at public sale in good faith – with
reimbursement
c. Provision of law enabling the apparent owner to
dispose as if he is owner
d. Sale under order of the court
e. Purchases made at merchant stores, fairs or
markets
f. Negotiable document of title
Possession Equivalent To Title:
1. Possession is in good faith
2. Owner has voluntarily parted with the possession of
the thing - Possessor is in concept of an owner
Characteristics or Elements
1. Essential – those without which it cannot be termed
usufruct
a. A real right (whether registered in the Registry of
Property or not)
b. Of a temporary nature or duration
c. Purpose: to enjoy the benefits and derive all
advantages from the object as a consequence of
normal use or exploitation
2. Natural – that which ordinarily is present, but a contrary
stipulation can eliminate it because it is not essential
a. Obligation of conserving or preserving the form and
substance (value) of the thing
3. Accidental – those which may be present or absent
depending upon the stipulation of the parties
a. Whether it be a pure or a conditional usufruct
b. The number of years it will exist
c. Whether it is in favor of one person or several, etc

DISTINGUISHED FROM EASEMENT

================================ BASIS USUFRUCT EASEMENT

TOPICS UNDER THE SYLLABUS Object May be real or Involves only real
H. USUFRUCT personal property. property
1. Nature/Elements Can also be on rights,
2. Application to Personal and Real Properties but not personal
3. How constituted rights
Extent What can be enjoyed Limited to a
4. Rights of the Usufructuary
here are all uses and particular use

CIVIL LAW REVIEWER Page 64 of 338

 fruits of the property Taxes The usufructuary The lessee generally
Coverage Cannot be May be constituted pays for the annual pays no taxes
constituted on an in favor or, or charges and taxes
easement; but it may burdening, a piece on the fruits
be constituted on the of land held in As to A usufructuary The lessee cannot
land burdened by an usufruct other may lease the constitute a usufruct on
easement things property itself to the property leased
Effect of Usually extinguished Not extinguished by another
death by death of the death of the
usufructuary owner of the KINDS:
dominant estate 1. As to Origin
a. Legal – created by law such as usufruct of parents
DISTINGUISHED FROM LEASE over the properties of their children
BASIS USUFRUCT LEASE b. Voluntary or conventional
Extent Covers all fruits Generally covers only a i. Created by will of the parties inter vivos
and uses as a rule particular or specific ii. Created mortis causa
use c. Mixed – partly created by law and partly by will
Nature Always a real right A real right only if, as in d. Prescriptive – is one acquired by a third person
the case of a lease over through continuous use of the usufruct for the
real property, the lease period required by law
is registered, or is for
more than 1 year, 2. As to quantity or extent
otherwise, it is only a a. As to fruits
personal right i. Total
Creator Can be created The lessor may or may ii. Partial
only by the owner, not be the owner as b. As to extent
or by a duly when there is a sub- i. Universal – if over the entire patrimony
authorized agent, lease or when the ii. Particular/Singular - if only individual things
acting in behalf of lessor is only a are included
the owner usufructuary
Origin May be created by May be created as a 3. As to the number of persons enjoying the right
law, contract, last rule only by contract; a. Simple – if only one usufructuary enjoys the right
will, or and by way of b. Multiple – if several usufructuaries enjoy the right
prescription exception by law (as in i. Simultaneous – at the same time
the case of an implied ii. Successive – one after the other
new lease, or when a
builder has built in BUT, in this case, if the usufruct is created by donation, all
good faith on the land the donees must be alive, or at least already conceived, at
of another a building, the time of the perfection of the donation.
when the land is
considerably worth 4. As to the quality or kind of objects involved
more in value than the a. Usufruct over rights – rights must not be personal
building or intransmissible in character, so present or future
Cause The owner is more The owner or lessor is support cannot be an object of usufruct
or less passive, and more or less active, and b. Usufruct over things
he allows the he makes the lessee i. Normal (or perfect or regular) – this involves
usufructuary to enjoy the thing being non-consumable things where the form and
enjoy the thing leased substance are preserved
given in usufruct ii. Abnormal (or imperfect or irregular) – involves
Repairs The usufructuary The lessee generally consumable things
has the duty to has no duty to pay for
make the ordinary repairs 5. As to terms or conditions
repairs a. Pure – no term or condition
b. With a term or period

CIVIL LAW REVIEWER Page 65 of 338

 i. Ex die – from a certaign day
ii. In diem – up to a certain day
iii. Ex die in diem – from a certain day up to a
certain day
c. With a condition
i. Suspensive
ii. Resolutory
2. APPLICATION TO PERSONAL AND REAL PROPERTIES
Some rules regarding Usufruct:
1. Usufruct can be constituted even if the object is subject
to Mortgage
2. Usufruct CANNOT be constituted on an object subject to
Pledge
3. Usufruct can be constituted on an object subjected
previously to a Lease.
4. Usufructuary can lease out the property to other parties
5. Usufructuary can construct improvements over property
subject to usufruct
3. HOW CONSTITUTED
How to constitute Usufruct
1. Legal Usufruct – but is not evident in today’s laws
2. Act Inter Vivos
3. By Prescription
4. RIGHTS OF USUFRUCTUARY
a. Fruits
b. Possession and enjoyments
Right to civil, natural & industrial fruits of property (jus
fruendi and jus utendi)
a. Civil Fruits accrue daily
I. Belong to the usufructuary in proportion in
proportion to the time the usufruct may last
II. Both stock dividends and cash dividends are
considered civil fruits
b. Industrial and Natural Fruits
I. Fruits pending at the beginning of the usufruct
 Belong to the usufructuary
 No necessity of refunding the owner for
expenses incurred, (for the owner gave the
usufruct evidently without any thought of
being reimbursed for the pending fruits, or
because the value of said fruits must have
already been taken into consideration in fixing
the terms and conditions of the usufruct, if for
instance, the usufruct came about because of
contract)
 BUT without prejudice to the right of 3 rd
persons. (Thus, if the fruits had been planted
by a possessor in good faith, the pending crop
CIVIL LAW REVIEWER
expenses and charges shall be pro-rated
between said possessor and the usufructuary)
II. Fruits pending at the termination of usufruct
 Belong to the owner
 BUT the owner must reimburse the
usufructuary for ordinary cultivation expenses
and for seeds and similar expenses, from the
proceeds of the fruits. (Hence, the excess of
expenses over the proceeds need not be
reimbursed)
c. Lease of Property
Right to lease the property
General Rule: The lease expires at the end of the usufruct or
earlier
Exception: In the case of leases of rural lands which
continues for the remainder of the agricultural year;.
If the usufruct should expire before the termination of the
lease, he or his heirs and successors shall receive only the
proportionate share of the rent that must be paid by the
lessees. (Art 568) If the naked owner allows the lease to
continue even after the expiration of the usufruct, he will be
entitled to the rentals pertaining to such extension.
d. Sale/Alienation of Usufructuary rights
Right to transfer usufructuary rights – gratuitous or onerous;
but is co-terminus with term of usufruct; but cannot do acts
of ownership such as alienation or conveyance except when
property is:
a. Consumable
b. Intended for sale
c. Appraised when delivered; if not appraised and
consumable – return same quality (mutuum)
OTHER RIGHTS OF THE USUFRUCTUARY:
1. Right to hidden treasure as stranger
2. Right not exempt from execution and can be sold at
public auction by owner
3. Naked owner still have rights but w/o prejudice to
usufructuary; may still exercise act of ownership – bring
action to preserve ownership
4. Right to necessary expenses from cultivation at end of
usufruct
5. Right to enjoy accessions and servitudes in its favor
and all benefits inherent therein
Page 66 of 338
6. Right to make use of dead trunks of fruit bearing trees
and shrubs or those uprooted/cut by accident but
obliged to plant anew
7. Right of usufructuary of woodland – ordinary cutting as
owner does habitually or custom of place; cannot cut
down trees unless it is for the restoration of
improvement of things in usufruct – must notify owner
first
8. Right to leave dead, uprooted trees at the disposal of
owner with right to demand that owner should clear
and remove them – if caused by calamity or
extraordinary event – impossible to replace them
9. Right to oblige owner to give authority and furnish him
proofs if usufruct is extended to recover real property or
real right
10. Right to introduce useful and luxurious expenses but
with no obligation of reimbursement on part of owner;
may remove improvement if can be done without
damage
11. Right to set-off improvements against damages he
made against the property
12. Right to administer when property is co-owned; if co-
ownership cease – usufruct of part allotted to co-owner
belongs to usufructuary – not affected
13. Right to demand the increase in value of property if
owner did not spend for extraordinary repairs; when
urgent and necessary for preservation of thing
5. OBLIGATIONS OF THE USUFRUCTUARY
 Pay expenses to 3rd persons for cultivation and
production at beginning of usufruct; those who have
right to fruits should reimburse expenses incurred
 Generally, usufructuary has no liability when due to
wear and tear, thing deteriorates, obliged to return in
that state; except when there is fraud or negligence,
then he shall be liable
a. Before the Usufruct commences
Before entering into Usufructuary:
a. Notice of inventory of property (appraisal of movables
and description)
b. Posting of security
i. Not applicable to parents who are usufructuary of
children except when 2nd marriage contracted
ii. Caucion Juratoria – promise under oath to deliver:
CIVIL LAW REVIEWER
A. Furniture necessary for the use of the
usufructuary
B. House included in the usufruct
C. Implements, tools and other movable property
necessary for an industry or vocation for which
he is engaged
iii. Excused – allowed by owner, not required by law or
no one will be injured
Failure to give security, owner may demand that:
A. Immovables be placed under administration
B. Negotiable instruments can be converted into registered
certificates or deposited in bank
C. Capital and proceeds of sale of movables be invested in
safe securities
D. Interest on proceeds or property under administration
belong to usufructuary
E. Owner may retain property as administrator w/
obligation to deliver fruits to usufructuary until he gives
sufficient security
F. Effect of security is retroactive to day he is entitled to
fruits
b. During the Usufruct
i. Alteration of form and substance
ii. Exercise of diligence
Obligation to exercise diligence:
1. Take care of property as a good father of family
2. Liable for negligence and fault of person who substitute
him
iii. Repairs
Obligation to make ordinary repairs – wear and tear due to
natural use of thing and are indispensable for preservation;
owner may make them at expense of usufructuary – during
existence of usufruct
iv. Charges and Taxes
Obligation to charges and taxes:
A. Obliged to make expenses due to his fault; cannot
escape by renouncing usufruct
B. Pay legal interest from extraordinary expenses made by
owner
C. Payment of expenses, charges and taxes affecting fruits
D. Payment of interest on amount paid by owner charges
on capital
E. Expenses, cost and liabilities in suits brought with regard
to usufructuary – borne by usufructuary
v. Insurance
Page 67 of 338
  Usufruct constituted on immovable whereby a building
OTHER OBLIGATIONS OF THE USUFRUCTUARY is erected – and building is destroyed – right to make
1. Obliged to notify owner of act of 3rd person prejudicial use of land and materials
to rights of ownership – he is liable if he does not do so
for damages – as if it was caused through his own fault  If owner wishes to construct a new building – pay
usufructuary the value of interest of land and materials
2. If usufruct is constituted on animals – duty bound to
replace dead animals that die from natural causes or  Both share in insurance if both pay premium; if owner
became prey; if all of them perish w/o fault but due to only – then proceeds will go to owner only
contagious disease / uncommon event – deliver remains
saved; if perish in part due to accident – continue on  Effect of bad use of the thing – owner may demand the
remaining portion; if on sterile animals – as if fungible – delivery of and administration of the thing with
replace same kind & quality responsibility to deliver net fruits to usufructuary at
termination of usufruct
RIGHTS OF THE NAKED OWNER
1. Alienate thing  Thing to be delivered to owner with right of retention
2. Cannot alter form or substance for taxes and extraordinary expenses w/c should be
3. Cannot do anything prejudicial to usufructuary reimbursed, security of mortgage shall be cancelled
4. Construct any works and make any improvement
provided it does not diminish value or usufruct or
prejudice right of usufructuary
================================
TOPICS UNDER THE SYLLABUS
OBLIGATIONS OF THE NAKED OWNER I. EASEMENTS
1. Extraordinary expenses; usufructuary obliged to inform 1. Kinds of Easements
owner when urgent and there is the need to make them 2. Rights and Obligations
2. Expenses after renunciation of usufruct 3. Modes of Extinguishment
3. Taxes and expenses imposed directly on capital
4. Legal Easements
4. If property is mortgaged, usufructuary has no obligation
to pay mortgage; if attached, owner to be liable for a. Public
whatever is lost by usufructuary b. Private
5. If property is expropriated for public use – owner i. Waters
obliged to either replace it or pay legal interest to ii. Right of Way
usufructuary of net proceeds of the same iii. Party Wall
iv. Light and View
6. TERMINATION OF USUFRUCT
v. Drainage of Building
Extinguishment of Usufruct: (PLDTERM) vi. Intermediate Distances
1. Prescription – use by 3rd person vii. Against Nuisance
2. Termination of right of person constituting usufruct viii. Lateral and Subjacent Support
3. Total loss of thing ================================
4. Death of usufructuary – unless contrary intention
appears EASEMENT is an encumbrance imposed upon an immovable
5. Expiration of period of usufruct for the benefit of another immovable belonging to a different
6. Renunciation of usufructuary – express owner. The immovable in favor of which the easement is
7. Merger of usufruct and ownership established is called the dominant estate; that which is
subject thereto, the servient estate.
 Loss in part – remaining part shall continue to be held in
usufruct 1. KINDS
a) According to purpose of easement or the nature of
 Usufruct cannot be constituted in favor of a town, limitation
corporation or association for more than 50 years a. Positive – one which imposes upon the servient
estate the obligation of allowing something to be
done or of doing it himself

CIVIL LAW REVIEWER Page 68 of 338

 b. Negative – that which prohibits the owner of the
servient estate from doing something which he
could lawfully do if the easement did not exist
b) According to party given the benefit
a. Real (or predial) – for the benefit of another
belonging to a different owner (e.g. easement of
water where lower estates are obliged to allow
water naturally descending from upper estates to
flow into them)
b. Personal – for the benefit of one or more persons
or community (e.g. easement of right of way for
passage of livestock)
c) According to the manner they are exercised
i. Continuous – their use is incessant or may be
incessant
a. for legal purposes for acquisitive prescription,
the easement of aqueduct is considered
continuous; easement of light and view is also
continuous
ii. Discontinuous – used at intervals and depend upon
the acts of man
Ex. right of way because it can only be used if a
man passes
d) According to whether or not their existence is indicated
i. Apparent – make known and continually kept in view
by external signs that reveal the use and enjoyment of
the same
Ex. right of way when there is an alley or a
permanent path
ii. Non-apparent – they show no external indication of
their existence
Ex. easement of not building to more than
certain height
DOCTRINE OF APPARENT SIGN - Easements are inseparable
from the estate to which they actively or passively pertain.
The existence of the apparent sign under Art. 624 is
equivalent to a title. It is as if there is an implied contract
between the two new owners that the easement should be
constituted, since no one objected to the continued
existence of the windows. Amor v. Florentino, 74 Phil 404
(1951)
e) According to right given
i. Right to partially use the servient estate
Ex. right of way
ii. Right to get specific materials or objects from the
servient estate
iii. Right to participate in ownership
Ex. easement of party wall
CIVIL LAW REVIEWER
iv. Right to impede or prevent the neighboring
estate from performing a specific act of ownership
f) According to source or origin and establishment of
easement
a. Voluntary – constituted by will or agreement of the
parties or by a testator
b. Mixed – created partly by agreement and partly by
law
c. Legal – constituted by law for public use or for
private interest
How established:
1. By law (Legal)
2. By the will of the owners (Voluntary)
3. Through prescription (only for continuous and apparent
easements)
 Resultantly, when the court says that an easement
exists, it is not creating one. For, even an injunction
cannot be used to create one as there is no such thing as
a judicial easement. The court merely declares the
existence of an easement created by the parties. La
Vista Association v. CA, 278 SCRA 498 (1997)
Essential qualities of easements:
1. Incorporeal
2. Imposed upon corporeal property
3. Confer no right to a participation in the profits arising
from it
4. Imposed for the benefit of corporeal property
5. Has 2 distinct tenements – dominant and servient
estate
6. Cause must be perpetual
2. RIGHTS AND OBLIGATIONS
a) Rights Of Dominant Owner
1. Exercise all rights necessary for the use of the easement
2. Make any works necessary for the use and preservation
of the servitude; subject to the following conditions:
A. The works shall be at his expense, are necessary for
the use and preservation of the servitude;
B. They do not alter or render the servitude more
burdensome;
C. The dominant owner, before making the works,
must notify the servient owner; and
D. They shall be done at the most convenient time and
manner so as to cause the least inconvenience to
the servient owner
3. Renounce the easement if he desires to exempt himself
from contribution to necessary expenses
4. Ask for mandatory injunction to prevent impairment of
his use of the easement
Page 69 of 338
b) Obligations Of The Dominant Owner
1. Notify the servient owner of works necessary for the use
and preservation of the servitude
2. Contribute to the necessary expenses if there are
several dominant estates in proportion to the benefits
derived from the works
3. Cannot alter or impose added burden on the easement
4. Choose the most convenient time and manner in making
the necessary works as to cause the least inconvenience
to the servient owner
c) Rights Of The Servient Owner
1. Retain ownership of the portion on which the easement
is established, and may use it in such a manner as not to
affect the exercise of the easement
2. Change the place or manner of the use of the easement,
provided it be equally convenient
3. Use the property subject of the easement, unless there
is an agreement to the contrary
d) Obligations Of The Servient Owner
1. Contribute to the necessary expenses in case he uses
the easement, unless there is an agreement to the
contrary
2. Not to impair the use of the easement
3. MODES OF EXTINGUISHMENT
How extinguished:
1. Merger in the same person of the ownership of the
dominant and servient estates;
2. Non-user for 10 years
a. If discontinuous easements  period computed
from the day it was ceased to be used
b. If continuous  period from the day on which an
act contrary to the same took place
3. Expiration of the term or fulfillment of the condition (if
temporary or conditional)
4. Renunciation of the owner of the dominant estate
5. Redemption agreed upon between owners of the
dominant and servient estates
6. When either or both estates fall into a condition that
the easement cannot be used; revived if subsequent
condition should again permit its use, unless sufficient
time for prescription has elapsed
4.LEGAL EASEMENTS
LEGAL EASEMENTS are those imposed by law having for their
object either public use or the interest of private persons.
They shall be governed by the special laws and regulations
relating thereto, and in the absence thereof, by the Civil
Code.
CIVIL LAW REVIEWER
Kinds Of Legal Easements:
1. Public – for public or communal use
2. Private – for the interest of private persons/private use,
including those relating to: (WRPL-DIAL)
a. Waters
b. Right of Way
c. Party Wall
d. Light and View
e. Drainage of Building
f. Intermediate Distances
g. Against Nuisance
h. Lateral and Subjacent Support
a) Easement Relating To Waters
 Lower estates are obliged to receive the waters which
naturally and without the intervention of man descend
from the higher estates, as well as stones or earth which
they carry with them
 Cannot construct works which will impede the
easement; neither can the owner of the higher estate
make works which will increase the burden
 Banks of rivers and streams, although of private
ownership, are subject throughout their entire length
and within a zone of 3 meters along their margins, to the
easement of public use in the general interest of
navigation, floatage, fishing and salvage
 Estates adjoining the banks of navigable and floatable
rivers are, subject to the easement of towpath, for the
exclusive service of river navigation and floatage
 Compulsory easements for drawing of water and for
watering animals can be imposed for reasons of public
use in favor of a town or village, after payment of the
proper indemnity
 Use of any water by anyone can be disposed by having
the water flow through the intervening estates but is
obliged to do the following:
1. Prove that he can dispose of the water and that it is
sufficient for the use intended
2. Show that the proposed right of way is the most
convenient and least onerous to 3rd persons
3. Indemnify the owner of the servient estate
 Easement of aqueduct is continuous and apparent even
though the flow of water may not be continuous
b) Easement Of Right Of Way
 Right granted to a person or class of persons to pass
over the land of another by using a particular pathway
therein, to reach the former’s estates, which have no
adequate outlet to a public highway, subject, however
to payment of indemnity to the owner of the servient
estate
Page 70 of 338
Requisites: (LIPO NA)
1. Claimant must be an owner of enclosed immovable or
one w/ real right
2. No adequate outlet to public highway
3. Right of way is absolutely necessary
4. Least prejudicial
5. Isolation not due to claimant’s own act
6. Proper indemnity
a. Not compulsory if the isolation of the immovable is
due to the proprietor’s own acts
b. Right of Way is granted without indemnity if land
was acquired by and is surrounded by the other
estates of the vendor, exchanger or co-owner
through:
i. Sale
ii. Exchange
iii. Partition
 Burden of proof of proving the requisites on the owner
of the dominant estate
EXTINGUISHMENT: Legal or compulsory right of way
 When the dominant estate is joined to another estate
(such as when the dominant owner bought an adjacent
estate) which is abutting a public road, the access being
adequate and convenient
 When a new road is opened giving access to the isolated
estate
 In both cases: must substantially meet the needs of the
dominant estate. Otherwise, the easement may not be
extinguished.
 Extinguishment NOT ipso facto
 If extinguished, must return the amount received as
indemnity to the dominant owner without any interest.
Interest shall be deemed in payment for the rent.
 The only servitude w/c a private owner is required to
recognize in favor of the government is the easement of
a public highway, way, private way established by law,
or any government canal or lateral that has been pre-
existing at the time of the registration of the land. If the
easement is NOT PRE-EXISTING and is sought to be
imposed only AFTER the land has been registered under
the Land Registration Act, proper expropriation
proceedings should be had, and just compensation paid
to the registered owner. Eslaban v. Vda. De Onorio, G.R.
No. 146062 (2001)
 Easement of right of way is DISCONTINUOUS. It may be
exercised only if a person passes or sets foot on
somebody else’s land. An easement of right of way of
CIVIL LAW REVIEWER
railroad tracks is discontinuous because the right is
exercised only if and when a train operation by a person
passes over another’s property. Bomedco v. Valdez,
G.R. No. 124669 (2003)
c) Easement Of A Party Wall
 A wall erected on the line between two adjoining
properties belonging to different persons, for the use of
both estates.
 Presumed, unless there is a title, or exterior sign, or
proof to the contrary:
1. In dividing walls of adjoining buildings up to the
point of common elevation
2. In dividing walls of gardens or yards situated in
cities, towns, or in rural communities
3. In fences, walls and live hedges dividing rural lands
Exterior signs rebutting presumption:
1. There is a window or opening in the dividing wall of
buildings
2. Dividing wall is on one side straight and plumb on all its
facement, and on the other, it has similar conditions on
the upper part but the lower part slants or projects
outward
3. Entire wall is built within the boundaries of one of the
estates
4. The dividing wall bears the burden of the binding beams,
floors and roof frame of one of the buildings, but not
those of the others
5. The dividing wall between courtyards, gardens and
tenements is constructed in such a way that the coping
sheds the water upon only one of the estates
6. The dividing wall, being built by masonry, has stepping
stones, which at certain intervals project from the
surface of one side only, but not on the other
7. The lands enclosed by fences or live hedges adjoin
others which are not enclosed
In all these cases, the ownership is deemed to belong
exclusively to the owner of the property which has in its
favor the presumption based on any of these signs.
d) Easement Of Light And View
 Period of prescription for the acquisition shall be
counted:
1. From the time of opening of the window, if through
a party wall
2. From the time of the formal prohibition upon the
proprietor of the adjoining land, if window is
through a wall on the dominant estate
4. VOLUNTARY EASEMENTS are those which may be
established by the owner of a tenement of piece of land as
he may deem suitable, and in the manner and form which he
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may deem best, provided that he does not contravene the
laws, public policy or public order. Mode Title
Directly and immediately Serves merely to give the
================================ produces a real right occasion for its acquisition
TOPICS UNDER THE SYLLABUS or existence
The cause The means
J. Modes of Acquiring Ownership
Proximate cause Remote cause
1. Mode v. Title Essence of the right which Means whereby that
2. Original/Derivative Modes is to be created or essence is transmitted
K. Occupation transmitted
L. Intellectual Creation
M. Donation 2. ORIGINAL/DERIVATIVE MODES
1. Essential Elements
Original Mode – independent of any pre-existing or
2. Kinds
preceding title or right of another
3. Conditional Donations
a. Effect of Impossible/Illegal Conditions Derivative Mode – there was a preceding owner
4. Inter Vivos/Mortis Causa Donations
5. Form Modes Of Extinguising Ownership:
a. Onerous Donations 1. Absolute – all persons are affected
a. Physical loss or destruction
6. Capacity
b. Legal loss or destruction (when it goes out of the
a. Of Donor commerce of man)
b. Of Donee 2. Relative – only for certain persons for others may
7. Revocation acquire their ownership
a. Birth, Survival or Adoption a. Law
b. Ingratitude b. Succession
c. Non-fulfillment of Condition c. Tradition as a consequence of certain contracts
d. Donation
d. Innoficiousness e. Abandonment
N. OTHER MODES OF ACQUIRING OWNERSHIP f. Destruction of the prior title or right (like
1. Law expropriation, rescission, annulment, fulfillment of
2. Prescription a resolutory condition)
O. NUISANCE g. Prescription
================================
OCCUPATION is the acquisition of ownership by seizing
MODES OF ACQUIRING OWNERSHIP: (OLDTIPS)
corporeal things w/c have no owner, made with the intention
1. Occupation
of acquiring them, and accomplished according to legal rules
2. Law
3. Donation
4. Tradition Requisites:
5. Intellectual Creation 1. Seizure or apprehension
6. Prescription  The holding of the material is not required as long as
7. Succession there is right of disposition
2. Property must be corporeal personal property
1. MODE V. TITLE 3. Property must be susceptible of appropriation
a. Abandoned property – res derelicata, a thing is
Difference between Mode and Title considered abandoned when:
i. The spes recuperandi (expectation to recover)
MODE is the process of acquiring or transferring ownership is gone
ii. The animo revertendi (intention to return or to
TITLE is the juridical act, right or condition which gives the have it returned) has been given up by the
juridical justification for a mode or means to their acquisition owner
but which in itself is insufficient to produce them b. Unowned property – res nullius
4. Without an owner

CIVIL LAW REVIEWER Page 72 of 338

5. Intent to appropriate
6. Compliance with the requisites or conditions of the law
 Abandonment requires (1) a clear and absolute
intention to renounce a right or a claim or to abandon a
right or property; and (2) an external act by which that
intention is expressed or carried into effect. The
intention to abandon implies a departure, with the
avowed intent of never returning, resuming or claiming
the right and the interest that have been abandoned.
Castellano v. Francisco, [G.R. No. 155640, May 7, 2008]
Things Susceptible to Occupation
1. Things w/c has no owner – res nullius; abandoned
2. Stolen property cannot be subject of occupation
3. Animals that are the object of hunting and fishing
NOTE: Hunting and fishing are regulated by special laws: Act
2590; Fisheries Act 4003 as amended by CA 116, CA 147 and
RA 659; Act 1499 as amended by Act 1685; PD 534;
Municipal ordinances.
Kinds Of Animals
a. Wild – considered res nullius when not yet captured;
when captured and escaped – becomes res nullius again
b. Domesticated animals – originally wild but have been
captured and tamed; now belong to their capturer; has
habit of returning to premises of owner; becomes res
nullius if they lose that habit of returning and regain
their original state of freedom
c. Domestic/tamed animals – born and ordinarily raised
under the care of people; become res nullius when
abandoned by owner
 Hidden treasure (only when found on things not
belonging to anyone)
 Abandoned movables
Animals
1. Swarm of bees
- owner shall have right to pursue them to another’s
land (owner to identify latter for damages, if any)
- land owner shall occupy/retain the bees if after 2
days, owner did not pursue the bees
2. Domesticated animals
- may be redeemed within 20 days from occupation
of another person; if no redemption is made, they
shall pertain to the one who caught them
3. Pigeons and fish
- when they go to another breeding place, they shall
be owned by the new owner provided they are not
enticed
Movables:
1. Treasure found on another’s property
CIVIL LAW REVIEWER
2. Movable found w/c is not treasure:
c. Must be returned to owner
d. If finder retains the thing found – he may be
charged with theft
e. If owner is unknown, give to mayor; mayor shall
announce finding of the movable for 2 weeks in a
way he deems best
f. If owner does not appear 6 months after
publication, thing found shall be awarded to the
finder
g. If owner appears, he is obliged to pay the finder
1/10 of value of property as price
h. If movable is perishable or cannot be kept w/o
deterioration or w/o expenses it shall be sold at
public auction 8 days after the publication
Ownership of a piece of land cannot be acquired by
occupation
 Because when a land is without an owner, it pertains to
the State
 Land that does not belong to anyone is presumed to be
public land
 But when a property is private and it is abandoned it can
be object of occupation
J. INTELLECTUAL CREATION
 By Article 722 and Decree Intellectual Property (P.D. 49),
the author, composer, artist, or scientist can be
considered as the owner of the creation or product even
if it has not been copyrighted or patented. (Jurado)
 Letters and other private communications in writing are
owned by the person to whom they are addressed and
delivered, but they cannot be published or disseminated
without the consent of the writer or his heirs EXCEPT
when the court so authorize if the public good or the
interest of justice so requires.
K. DONATION
DONATION is an act of liberality whereby a person disposes
gratuitously of a thing or right in favor of another, who
accepts it
1. ESSENTIAL ELEMENTS
Characteristics
1. Unilateral – obligation imposed on the donor
2. Consensual – perfected at time donor knows of
acceptance
Requisites: (CIDA)
Page 73 of 338
1. The donor must have capacity to make the donation of a
thing or right
2. Donative intent (animus donandi) or intent to make the
donation out of liberality to benefit the donee
3. Delivery, whether actual or constructive of the thing or
right donated
4. donee must accept or consent to donation
 The donation is perfected once the acceptance of the
donation was made known to the donor. Accordingly,
ownership will only revert to the donor if the resolutory
condition is not fulfilled. Quijada v. CA, 299 SCRA 695
(1998)
Requirements of a Donation:
1. Subject matter – anything of value; present and
not future property, must not impair legitime
2. Cause – anything to support a consideration,
generosity, charity, goodwill, past service, debt
3. Capacity to donate, dispose and accept donation
4. Form – depends on value of donation
2. KINDS
a) As to Effectivity
1. Inter vivos – takes effect during the lifetime of the
donor
2. Mortis Causa – takes effect upon the death of the
donor
3. Propter Nuptias – made by reason of marriage and
before its celebration, in consideration of the same
and in favor of one or both of the future spouses.
b) As to Consideration
1. Simple – the cause of which is the pure liberality of
the donor in consideration of the donee’s merits
2. Remuneratory or compensatory – it is given out of
gratitude on account of the services rendered by
the donee to the donor, provided they do not
constitute a demandable debt.
3. Modal – imposes upon the donee a burden less
than the value of the gift
4. Onerous – the value of which is considered the
equivalent of the consideration for which it is given
and thus governed by the rules of obligations and
contracts
c) As to Effectivity of Extinguishment
1. Pure – not subject to any condition (uncertain
event) or period
2. Conditional – subject to suspensive or resolutory
condition
3. With a Term – subject to a period, suspensive or
resolutory
3. CONDITIONAL DONATIONS
a. Effect of Impossible/Illegal Conditions
Conditional – subject to suspensive or resolutory condition
4. INTER VIVOS/MORTIS CAUSA DONATIONS
Inter vivos – takes effect during the lifetime of the donor

DONATION INTER VIVOS
Disposition and acceptance
to take effect during
lifetime of donor and
donee
Already pertains to the
donee unless there is a
contrary intent
Formalities required -
follow law on donations
and certain kinds of
donations and law on
obligations and contracts
(suppletory)
Irrevocable at the instance
of the donor; may be
revoked only by reasons
provided by law
Revoked only for reasons
provided for by law (except
onerous donations)
DONATION MORTIS CAUSA
Disposition happens upon
the death of donor
Even if there is a term of
effectivity and effectivity is
upon the death of the
donor, still entitled to fruits
Formalities required - follow
law on succession to be
valid, and donation must be
in the form of a will
Revocable ad mutuum
(exclusive will of donor)
Mortis Causa – takes effect upon the death of the donor
5. FORM
a. Onerous Donations
ONEROUS – the value of which is considered the equivalent
of the consideration for which it is given and thus governed
by the rules of obligations and contracts
6. CAPACITY
a. Of Donor
Who may give donations
All persons who may contract and dispose of their property
― donor’s capacity shall be determined as of the time of the
making of the donation
b. Of Donee
Who may accept donations
1. Natural and juridical persons not especially disqualified
by law

CIVIL LAW REVIEWER Page 74 of 338

2. Minors and other incapacitated
A. By themselves
I. If pure and simple donation
II. If it does not require written acceptance
B. By guardian, legal representatives if needs written
acceptance
I. Natural guardian – not more than 50,000
II. Court appointed – more than 50,000
4. Conceived and unborn child, represented by person who
would have been guardian if already born
Who are disqualified to donate
1. Guardians and trustees with respect to property
entrusted to them
2. Husband and wife
3. Between paramours/persons guilty of adultery or
concubinage at the time of donation
4. Between parties guilty of same criminal offense
5. Made to public officers, wife, descendant, ascendant, by
reason of his office
The prohibition against donations between spouses must
likewise apply to donations between persons living together
in illicit relations. Joaquino v. Reyes, [G.R. No. 154645, July
13, 2003]
Other persons disqualified to receive donations
1. Priest who heard confession of donor during his last
illness
2. Relatives of priest within 4th degree, church, order or
community where priest belongs
3. Physician, nurse, etc. who took care of donor during his
last illness
4. Individuals, corporations and associations not permitted
Acceptance
a. Acceptance must be made personally or thru agent
b. Donation may be made orally or in writing:
 Movable:
5,000 and below – may be oral or written, if oral it
must be with simultaneous delivery of
thing/document & acceptance need not be in
writing
above 5,000 - must be written and accepted also in
writing
 Immovable - must be in a public instrument and
acceptance must also be in a public instrument (in
same instrument or in other instrument); otherwise
it is void
c. Must be made during the lifetime of the donor and
donee
In case of doubt with regard to nature of donation: inter
vivos
CIVIL LAW REVIEWER
Badges of mortis causa:
2. Title remains with donor (full or naked
ownership) and conveyed only upon death
3. Donor can revoke ad mutuum
4. Transfer is void if transferor survives transferee
 A donation mortis causa must comply with the
formalities of a last will and testament otherwise, it
would be void and would produce no effect. If the
donation is made in such a way that the full and naked
ownership will pass to the donee upon the death of the
donor, then it is at that time when the donation will take
effect and it is the donation mortis causa which should
be embodied in the last will and testament. Maglasang
v. Cabatingan, [G.R. No. 131953, June 2, 2002]
SOME RULES ON DETERMINATION WHETHER MORTIS
CAUSA OR INTER VIVOS:
1. A donation made “in consideration of love and affection of
the donor and the donee” but further stipulates that “It
became effective upon the death of the donor provided that
in the event the donee should die before the donor, the
present donation shall be deemed automatically rescinded
and of no force and effect.”  mortis causa since the right of
disposition is not transferred to donee while donor is still
alive. Sicad v. CA
5. A donation made stipulating that it will take effect after
the death of the donor but further stipulates that (1) the
donor will not dispose nor take it away from the donee
and that (2) the donor is parting with the beneficial
ownership while he lived  inter vivos
Donation Of The Same Thing To 2 Or More Different
Persons
 Rules on double sale will apply
Page 75 of 338
CLASSIFICATION OF DONATION INTER VIVOS  Donation propter nuptias
1. From the viewpoint of motive, purpose, or cause 4. From the viewpoint of object donated
 Corporeal property
PURE/ REMUNERATO CONDITI ONEROUS A. Donation of real property
SIMPLE RY ONAL B. Donation of personal property
Considera- Liberality or Valuable Valuable  Incorporeal property – donation of inalienable
tion merits of considera- considera- rights
Merits of donee or tion is tion given
donee burden/ imposed What may be given
charge of but value is  All or part of donor’s present property provided he
past less than reserves sufficient means for the support of the ff:
services value of a. Himself
provided thing b. Relatives who by law are entitled to his support
they do not donated c. Legitimes shall not be impaired
constitute  when w/o reservation or if inofficious, may be reduced
demandabl on petition of persons affected
e debt  Exception: conditional donation and donation mortis
Law to Law on Extent of Law on causa
apply/ donations burden obligations  Exception To The Exception: future property (cannot be
forms imposed> disposed of at the time of donation)
Law on ObliCon
donations excess>  A donation would not be legally feasible if the donor has
donation neither ownership nor real rights that he can transmit to
the donee. Hemedes v. CA, [G.R. No. 107132, October
Form of Required Required Required
8, 2008]
acceptance
Required
DOUBLE DONATIONS:
Reservation Applicable Applicable Not
Rule: Priority in time, priority in right
w/regard to Applicable
1. If movable – one who first takes possession in good faith
personal
2. If immovable – one who recorded in registry of property
support
in good faith
and
 No inscription, one who first took possession in
legitime
good faith
Applicable
 In absence thereof, one who presents oldest title
Warranty In bad faith In bad faith Applies
against only only
7. REVOCATION
eviction
and hidden
Grounds For Revocation
defects
1. Birth, Adoption, Reappearance of a child
In bad faith
only  Period of 4 years from the time of birth, adoption or
reappearance to revoke the donation
Revocation Applicable Applicable Applicable  Transmissible to the heirs of the donor if the donor
Applicable dies within the 4 year period, in which case the
remaining period shall apply to the donor’s heirs
 Reduction shall be based on the inofficiousness of
the donation
2. From the viewpoint of the taking effect 2. Non-fulfillment of the conditions
 Inter vivos – takes effect before the death 3. Ingratitude
 In praesenti – to be delivered in future (also  Cannot be passed to the donor’s heir
considered inter vivos)  Period of 1 year from knowledge of the act of
 Mortis causa ingratitude, and it was possible for him to bring the
3. From the viewpoint of occasion action
 Ordinary donation

CIVIL LAW REVIEWER Page 76 of 338

Grounds For Reduction 3. Donee unduly refuses to give support to donor
1. Failure of the donor to reserve sufficient means for when legally or morally bound to give support to
support of himself or dependent relatives donor
2. Failure of donor to reserve sufficient property to pay off
existing debts BIRTH OF CHILD NON- INGRTITAUDE
3. Inofficiousness, that is, the donation exceeds that which FULFILLMENT OF
the donor can give by will CONDITION
4. Birth, appearance or adoption of a child Ipso jure Needs court Needs court
revocation, no action action
AUTOMATIC REVOCATION need for action,
 In contracts providing for automatic revocation, judicial court
intervention is necessary not for purposes of obtaining a decision is merely
judicial declaration rescinding a contract already declaratory
deemed rescinded by virtue of an agreement providing Extent: portion Extent: whole Extent: Whole
for rescission even without judicial intervention, but in which may impair portion but court portion returned
order to determine whether or not the rescission was legitime of heirs may rule partial
proper the stipulation of the parties providing for revocation only
automatic revocation of the deed of donation, without Property must be Property in Property to be
prior judicial action for that purpose, is valid subject to returned excess returned
the determination of the propriety of the rescission Alienation/mortg Alienations/mort Prior ones are
sought. Where such propriety is sustained, the decision ages done prior to gages imposed void; demand
of the court will be merely declaratory of the revocation, recording in are void unless value of property
but it is not in itself the revocatory act. Zamboanga Register of Deeds: registered with when alienated
Barter Traders v. Plagata, [G.R. No. 148433] If already sold or Register of Deeds and cannot be
cannot be recovered or
Revocation Of Donations returned – the redeemed from
 Affects the whole donation value must be 3rd persons
 Applies only to donation inter vivos returned
 Not applicable to onerous donations If mortgaged –
 Donor can revoke donation if the donee fails to comply donor may
with the conditions imposed by the donor. Prescription: redeem the
4 years from the non-compliance with condition. mortgage with
right to recover
 X donated a parcel of land to the University on the from donee
condition that the latter will establish a medical college Fruits to be Fruits to be
named after X. After 50 years, X’s heirs filed annulment returned at filing returned at filing
for failure to abide by the condition. Can this be of action for of complainant
revoked? General rule is that if the period is not fixed in revocation
the contract, the court can fix the period. However, it Prescription of Prescription is 4 Prescription is 1
has been 50 years, more than enough time to comply. action is 4 years years from non- year from
The Court refused to fix a period and ruled that the from birth, etc. fulfillment knowledge of
donation can be revoked for failure to comply with fact and it was
condition. Central Philippine University v. CA, 246 SCRA possible for him
511 to bring action
Action cannot be Action cannot be
Action for revocation by reason of ingratitude renounced renounced in
1. Donee commits offense against person, honor, advance
property of donor, spouse, children under his Right of action Right of action at Heirs cannot file
parental authority transmitted to instance of donor action
2. Donee imputes to donor any criminal offense or any heirs but may be
act involving moral turpitude even if he should transmitted to
prove it unless act/crime has been committed heirs
against donee himself, spouse or children under his Action extends to Action does not
parental authority donee’s heirs extend to

CIVIL LAW REVIEWER Page 77 of 338

 donee’s heirs
Exception to rule on intransmissibility of action with regard
to revocation due to ingratitude:
1. Personal to the donor; general rule is heir cannot
institute if donor did not institute
2. Heirs can only file in the following cases:
a. Donor has instituted proceedings but dies before
bringing civil action for revocation
b. Donor already instituted civil action but died, heirs
can substitute
c. Donee killed donor or his ingratitude caused the
death of the donor
d. Donor died w/o having known the ingratitude done
e. Criminal action filed but abated by death
3. Can only make heirs of donee liable if complaint was
already filed when donee died
Inofficious donations:
1. Shall be reduced with regard to the excess
2. Action to reduce shall be filed by heirs who have
right to legitime at time of donation
3. Donees/creditors of deceased donor cannot ask for
reduction of donation
4. If there are 2 or more donation: recent ones shall
be suppressed
5. If 2 or more donation at same time – treated
equally and reduction is pro rata but donor may
impose preference which must be expressly stated
in donation
6. Effect of declaration as inofficious: the donation is
annulled only as to the portion diminishing the
legitime
 Cause of action arising from the inofficiousness of
donation arises only upon death of the donor, as the
value of the donation will be contrasted with the net
value of the estate of the donor decedent. Eloy Imperial
v. CA,[ G.R. No. 112483 (1999)]
Checklist For Donation:
1. Whether onerous or gratuitous – if onerous, governed
by law on contracts
2. If gratuitous, whether mortis causa or inter vivos – if
mortis causa, governed by law on succession
3. If inter vivos, whether perfected or not (made known to
the donor). If no perfection, donation is void.
4. If perfected, check for the capacity of the donor to give
and the donee to receive. If no capacity, donation is
void.
5. Compliance with Art 748 (movable) and 749
(immovable) of NCC. Non-compliance, donation is void.
ILLEGAL AND IMPOSSIBLE CONDITIONS
CIVIL LAW REVIEWER
- In Simple/Remunatory donations – shall be considered
as not imposed (Art 727)
- In Onerous/Contract – annuls obligation; obligation and
conditions are void (Art 1183)
N. Other Modes of Acquiring Ownership
1. LAW
Refers to those instances where the law, independently of
the other modes of acquiring ownership, automatically and
directly vests the ownership of the thing in a certain
individual once the prescribed requisites or conditions are
present or complied with (Jurado).
2. PRESCRIPTION
PRESCRIPTION is a mode by which one acquires ownership
and other real rights thru lapse of time; also a means by
which one loses ownership, rights and actions; retroactive
from the moment period began to run; founded on grounds
of public policy; regarded as a statute of repose
Kinds:
1. Acquisitive
General Requisites:
A. Capacity to acquire by prescription
B. Thing capable of acquisition by prescription
C. Possession of thing under certain conditions
D. Lapse of time provided by law
2. Extinctive – also called as limitation of actions Morales v
CFI, 97 SCRA 872, 1980
Who may acquire by prescription
1. Person who is capable of acquiring property by other
legal modes
2. State
3. Minors – through guardians or personally
Against whom prescription may run
1. Minors and incapacitated person who have guardians
2. Absentees who have administrators
3. Persons living abroad who have administrators
4. Juridical persons except the state with regard to
property not patrimonial in character
5. Between husband and wife
6. Between parents and children (during minority/insanity)
7. Between guardian and ward (during guardianship)
8. Between co-heirs/co-owners
9. Between owner of property and person in possession of
property in concept of holder
Page 78 of 338
Prescription does NOT run
1. Between husband and wife, even though there be a
separation of property agreed upon in the marriage
settlements or by judicial decree
2. Between parents and children, during the minority or
insanity of the latter
3. Between guardian and ward during the continuance of
the guardianship
Things subject to prescription: all things within the
commerce of men
1. Private property
2. Patrimonial property of the State
Things not subject to prescription
1. Public domain
2. Intransmissible rights
3. Movables possessed through a crime
4. Registered land
Renunciation of Prescription
 Persons with capacity to alienate may renounce
prescription already obtained but not the right to
prescribe in the future
 May be express or tacit
 Prescription is deemed to have been tacitly renounced;
renunciation results from the acts w/c imply
abandonment of right acquired
 Creditors and persons interested in making prescription
effective may avail it themselves notwithstanding
express or tacit renunciation
 Reasonable belief that person who transferred the thing
is the owner and could validly transmit ownership
 Must exist throughout the entire period required for
prescription
JUST TITLE (TRUE and VALID) – must be proved and never
presumed; only Titulo Colorado is required
 Titulo Colorado – such title where there was a mode of
transferring ownership but something is wrong because
the grantor is not the owner
 Titulo putativo - a person believes he has obtained title
but he has not because there was no mode of acquiring
ownership, as when one is in possession of a thing in the
mistaken belief that it had been bequeathed to him.
Doliendo v Biarnesa, 7 Phil. 232, 1906
 Title must be one which would have been sufficient to
transfer ownership if grantor had been the owner
 Through one of the modes of transferring ownership but
there is vice/defect in capacity of grantor to transmit
ownership
IN CONCEPT OF OWNER
 Possession not by mere tolerance of owner but adverse
to that of the owner
 Claim that he owns the property
PUBLIC, PEACEFUL & UNINTERRUPTED
 Must be known to the owner of the thing
 Acquired and maintained w/o violence
 Uninterrupted (no act of deprivation by others) in the
enjoyment of property

PRESCRIPTION OF OWNERSHIP AND OTHER REAL RIGHTS INTERRUPTION

1. Natural
Kinds of Acquisitive prescription A. Through any cause, possession ceases for more
1. Ordinary than 1 year
a. Possession in good faith B. If 1 year of less – as if no interruption
b. Just title 2. Civil
c. Within time fixed by law A. Produced by judicial summons; EXCEPT:
i. 4 years for movables i. Void for lack of legal solemnities
ii. 8 years for immovables ii. Plaintiff desists from complaint/allows
d. In concept of an owner proceedings to lapse
e. Public, peaceful, uninterrupted iii. Possessor is absolved from complaint
 Express or tacit renunciation
2. Extra-ordinary  Possession in wartime
a. Just title is proved
b. Within time fixed by law RULES IN COMPUTATION OF PERIOD
i. 10 years for movables
 Present possessor may tack his possession to that of his
ii. 30 years for immovables
grantor or predecessor in interest
1. In concept of an owner
 Present possessor presumed to be in continuous
2. Public, peaceful, uninterrupted
possession even with intervening time unless contrary is
proved
GOOD FAITH
 First day excluded, last day included

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 Kinds of Nuisances According To Number of Persons
TACKING PERIOD Affected:
 There must be privity between previous and present 1. Public (or common) nuisance – affects a community or
possessor neighborhood or considerable number of persons
 Possible when there is succession of rights 2. Private nuisance – affects a an individual or few persons
 If character of possession different: only
- predecessor in bad faith possessor in good faith –
use extraordinary prescription Other Classification:
1. Nuisance Per Se – always a nuisance because of its
PRESCRIPTION OF ACTIONS nature regardless of location or surroundings
PRESCRIPTIVE ACTION 2. Nuisance Per Accidens – nuisance by reason of location,
PERIOD surrounding or in the manner it is conducted or
30 yrs 1. action over immovables - from managed.
time possession is lost
10 yrs 1. mortgage action DOCTRINE OF ATTRACTIVE NUISANCE:
2. action upon written contract 1. REASON for the doctrine: one who maintains on his
3. action upon obligation created by premises dangerous instrumentalities or appliances of a
law character likely to attract children in play, and who fails
4. action upon a judgment to exercise ordinary care to prevent children from
8 yrs 1. action to recover movables - from playing therewith or resorting thereto, is liable to a child
time possession is lost of tender years who is injured thereby, even if the child
6 yrs 1. action upon an oral contract is technically a trespasser in the premises. The principal
2. action upon a quasi-contract reason for the doctrine is that the condition or appliance
4 yrs 1. upon injury to rights of plaintiff in question although its danger is apparent to those of
2. upon a quasi-delict age, is so enticing or alluring to children of tender years
as to induce them to approach, get on or use it, and this
1 yr 1. forcible entry and unlawful
attractiveness is an implied invitation to such children.
detainer
Hidalgo Enterprises, Inc. v. Balandan, 91 Phil. 488
2. defamation
(1952)
5 yrs 1. others where periods are not fixed
2. Application to bodies of water – generally not applicable
by law
to bodies of water, artificial as well as natural in the
absence of some unusual condition or artificial feature
Rights not extinguished by prescription:
other than the mere water and its location.
1. Demand right of way
2. Abate public/private nuisance
Remedies against a public nuisance:
3. Declare contract void
1. Prosecution under the Penal Code or any local ordinance
4. Recover property subject to expressed trust
2. Civil action
5. Probate of a will
3. Extra-judicial abatement
6. Quiet title
 All remedies may be simultaneously pursued to remove
a nuisance
O. NUISANCE
Requirements for abatement of a public/private nuisance
NUISANCE is any act, omission, establishment, business, by a private person:
condition of property, or anything else which: 1. Demand has been made
1. Injures or endangers the health or safety of others 2. Demand has been rejected
2. Annoys or offends the senses 3. Abatement be approved by the district health officer
3. Shocks, defies or disregards decency or morality and executed with the assistance of the local police
4. Obstructs or interferes with the free passage of any 4. Value of the destruction does not exceed P3000
public highway or street, or any body of water 5. If public nuisance, it must be specially injurious to him
5. Hinders or impairs the use of property
A private person or a public official extra-judicially abating a
 Lapse of time cannot legalize any nuisance, whether nuisance shall be liable for damages:
public or private 1. If he causes unnecessary injury

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2. If an alleged nuisance is later declared by the courts to
be not a real nuisance

Remedies against a private nuisance:

1. Civil action
2. Abatement, without judicial proceedings

NOTE:
1. No legalization of nuisance, whether private or public,
by prescription
2. Even if nuisance no longer exists, the aggrieved person
may still pursue a civil action for damages for the
injuries suffered during the existence of nuisance
3. Subsequent owner of the property, having full
knowledge of the existence of the nuisance, did not
remove the nuisance is solidarily liable for the injuries
and damages caused
4. Owner of nuisance property is not entitled to
compensation
5. Civil action against a public nuisance shall be
commenced by the mayor of the locality
6. A private person may commence a civil action to
eliminate a public nuisance only if he suffered a
particular harm or injury which is different from the
harm or damage suffered by the general public by
reason thereof

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OBLIGATIONS C. 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
A. GENERAL PROVISIONS 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
TOPICS UNDER THE SYLLABUS unilateral acts of persons.
A. GENERAL PROVISIONS
1. Definition D. OBJECT/ SUBJECT MATTER: the prestation or conduct
2. Elements of an Obligation which has to be observed by the debtor/obligor. It is not a
3. Different Kinds of Prestation thing but a particular conduct of the debtor.
4. Classification of Obligations
REQUISITES OF A VALID PRESTATION:
5. Sources of Obligations
a. Licit
A. Art. 1157
b. Possible
B. Natural obligations c. Determinate/ Determinable
C. Extra-contractual obligations d. Must have pecuniary value

=========================================
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS
1. Definition
=========================================
1. DEFINITION
OBLIGATION:
1. A juridical necessity to give, to do or not to do. (Art. 1156)
2. It is a “legal bond whereby constraint is laid upon a
person or group of persons to act or forbear on behalf of
another person or group of persons.”1
=========================================
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS
2. Elements of an Obligation
=========================================
2. ELEMENTS OF AN OBLIGATION
ELEMENTS OF AN OBLIGATION: ARTS. 1156 – 1162 (PAVO)
A. PASSIVE SUBJECT (obligor/debtor): one who has the duty
of giving, doing or not doing; person bound to the
fulfillment
B. ACTIVE SUBJECT (obligee/creditor): one in whose favor
the obligation is constituted; person entitled to demand
Ang Yu Asuncion vs Court of Appeals [G.R. No. 109125,
December 2, 1994].
The obligation is constituted upon the concurrence of the
essential elements thereof, viz.: (a) The vinculum juris or the
juridical tie which is the efficient cause established by the
various sources of obligations (law, contracts, quasi-
contracts, delicts and quasi-delicts); (b) the object which is
the prestation or conduct, required to be observed (to give,
to do, or not to do); and (c) subject-persons who, viewed
from the demandability of the obligation, are the active
(obligee) and the passive (obligor) subjects.
NOTE: The form in which the obligation is manifested is
sometimes added as a fifth element. This element, however,
cannot be considered as essential as there is no particular
form required to make obligations binding, except in rare
cases.
=========================================
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS
3. Different Kinds of Prestation
=========================================
3. DIFFERENT KINDS OF OBLIGATION
a) To give
b) To do
c) Not to do – consists in abstaining from some act, includes
“not to give,” both being negative obligations

1 William F. Elliot, Commentaries on the Law of Contracts, Volume 1,

1913 edition, Indianapolis, The Bobbs-Merrill Company, page 6, citing
Anson Cont. 5, 23.

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========================================= 5. Sources of Obligations
TOPICS UNDER THE SYLLABUS =========================================
A. GENERAL PROVISIONS
4. Classification of Obligations 5. SOURCES OF OBLIGATION
=========================================
A. ARTICLE 1157. OBLIGATIONS ARISE FROM
(1) Law;
4. CLASSIFICATION OF OBLIGATIONS
(2) Contracts;
A. Viewpoint of Sanction (3) Quasi-contracts;
a. Civil Obligations – give a right of action to compel (4) Acts or omissions punished by law; and
their performance (5) Quasi-delicts
b. Natural Obligations – not based on positive law
but on equity and natural law, do not grant a right NOTE: The list is exclusive (Sagrado Orden v. Nacoco, [G.R.
of action to enforce their performance, but after No. L-37756, June 30, 1952]). However, some writers
voluntary fulfillment by the obligor, they authorize expressly recognize that a UNILATERAL PROMISE can give
retention of what has been delivered or rendered rise to obligations (Tolentino, Volume IV, p. 62).
by reason thereof.
c. Moral Obligations – those that cannot be enforced A.1. LAW (OBLIGATION EX LEGE)
by action but which are binding on the party who  The law cannot exist as a source of obligations,
makes it in conscience and natural law. unless the acts to which its principles may be
applied exist.
B. Viewpoint of Performance  Once the acts or facts exist, the obligations arising
a. Positive Obligation – to give; to do. therefrom by virtue of the express provisions of
b. Negative Obligation – not to do. the law are entirely independent of the agreement
of the parties. And such obligations and their
C. Viewpoint of Subject Matter correlative rights are governed by the law by which
a. Personal Obligation they are created.
b. Real Obligation  It must be expressly or impliedly set forth and
I. Determinate or Specific cannot be presumed.
II. Generic
III. Limited Generic A.2. CONTRACTS (OBLIGATION EX CONTRACTU)
 A juridical conventions manifested in legal form, by
D. Viewpoint of Person Obliged virtue of which one or more persons bind
a. Unilateral – only one party is bound themselves in favor another, or others, or
b. Bilateral – both parties are bound reciprocally, to the fulfillment of a prestation to
give, to do, or not to do. (Sanchez Roman)
Distinguish a Civil Obligation from Natural Obligation  Obligations arising from contracts have the force
CIVIL OBLIGATION NATURAL OBLIGATION of law between the contracting parties and should
Art. 1156 Arts. 1423- 1430 be complied with in good faith. (Art. 1159)
Based on positive law Based on equity and  The terms of the contracts determine the
natural justice respective obligations of the parties.
Enforceable by court Cannot be compeled by  If the terms of the contract are clear and leave no
action cour action but depends doubt upon the contracting parties’ intention, such
exclusively upon the good terms should be applied in their literal meaning.
conscience of the debtor  Neither party may unilaterally evade his obligation
in the contract, unless the contract authorizes it or
========================================= the other party assents.
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS

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  Parties may freely enter into any stipulations
provided they are not contrary to law, morals,
good customs, public order or public policy.
A.3. QUASI-CONTRACTS (Obligation Ex Quasi-Contractu)
 Juridical relations resulting from lawful, voluntary
and unilateral acts, which has for its purpose, the
payment of indemnity to the end that no one shall
be unjustly enriched or benefited at the expense of
another.
 Distinguished from other Sources (LUV)
a. The act giving rise to a quasi-contract must be
LAWFUL distinguishing it from delict;
b. The act must be VOLUNTARY distinguishing it from
a quasi-delict which is based on fault or
negligence;
c. The act must be UNILATERAL distinguishing it from
contract which is based on agreement. (Tolentino,
Volume IV, p. 68)
KINDS OF QUASI-CONTRACT
a. Negotiorum Gestio: is the voluntary management of
the property or affairs of another without the
knowledge or consent of the latter. (Art. 2144)
b. Solutio indebiti: is the juridical relation, which is
created when something is received when there is no
right to demand it and it was unduly delivered through
mistake. (Art. 2145) The requisites are:
c. There is no right to receive the thing delivered;
d. The thing was delivered through mistake.
e. Other cases (Art. 2164-2175)
A.4. DELICTS (OBLIGATION EX MALEFICIO OR EX DELICTO)
 Article 100 of the Revised Penal Code – Every person
criminally liable for a felony is also civilly liable.
 The civil liability springs out and is dependent upon the
facts which, if true, would constitute a crime.
 Such civil liability is a necessary consequence of
criminal responsibility, and is to be declared and
generally enforced in the criminal proceeding except
where the injured party reserves his right to avail
himself of it in a distinct civil action or in cases where
an independent civil action is allowed by law.
GOVERNING RULES:
1. Articles 100-113 of the RPC and other penal laws subject
to Art 2177 Civil Code (quasi-delict);
2. Chapter 2, Preliminary title, on Human Relations ( Civil
Code )
3. Title 18 of Book IV of the Civil Code on damages
CIVIL LAW REVIEWER
SCOPE OF CIVIL LIABILITY
1. Restitution
2. Reparation for damage caused
3. Indemnity for Consequential damages
EFFECT OF ACQUITTAL IN CRIMINAL CASE
GENERAL RULE: The acquittal of the accused in the criminal
case does not prejudice the civil action, in which the
offended party may still be able to recover damages by a
preponderance of evidence.
EXCEPTION: Where the judgment of acquittal contained a
declaration that no negligence can be attributed to the
accused and that the fact from which the civil action might
arise did not exist
CRIMES WITHOUT CIVIL LIABILITY
1. Contempt
2. Insults to persons in authority
3. Gambling
4. Violations of traffic regulations (De Leon, 2003
ed.,p. 23)
EXTINGUISHMENT OF LIABILITY: The civil liability for crimes
is extinguished by the same causes provided by the Civil
Code for the extinguishment of other obligations.
A.5. QUASI-DELICT/TORTS (OBLIGATION EX QUASI-
DELICTO/ EX QUASI MALEFICIO)
 It is an act or omission arising from fault or negligence
which causes damage to another, there being no pre-
existing contractual relations between the parties
 ELEMENTS:
1. That there exists a wrongful act or omission
imputable to the defendant by reason of his fault
or negligence;
2. That there exists a damage or injury, which must
be proved by the person claiming recovery;
3. That there must be a direct causal connection or a
relation of cause and effect between the fault or
negligence and the damage or injury; or that the
fault or negligence be the cause of the damage or
injury.
DISTINCT FROM A CRIME: An injured party or his heirs has
the choice of either:
(a) An action to enforce civil liability arising from crime
under Article 100 of the RPC, or
(b) An action from quasi-delict under Articles 2176-2194
of the Civil Code.
Page 84 of 338
NEGLIGENCE: Failure to observe for the protection of the
interests of another person, that degree of care, precaution
and vigilance which the circumstances justly demand,
whereby such other person suffers injury. US v. Barrias, [23
Phil. 434, (1912)]
 ELEMENTS OF NEGLIGENCE: (DFI)
a. A duty on the part of the defendant to protect the
plaintiff from the injury of which the latter
complains;
b. A failure to perform that duty; and
c. An injury to the plaintiff through such failure.
 TEST of NEGLIGENCE: “Would a prudent man, in the
position of the person to whom negligence is
attributed, foresee harm to the person injured as a
reasonable consequence of the course about to be
pursued?” Picart v. Smith, [37 Phil. 809]
B. NATURAL OBLIGATIONS (Arts. 1423 – 1430)
NATURAL OBLIGATIONS
1. They are real obligations to which the law denies an
action, but which the debtor may perform voluntarily.
2. It is patrimonial, and presupposes a prestation.
3. The binding tie of these obligations is in the conscience of
man, for under the law, they do not have the necessary
efficacy to give rise to an action.
EXAMPLES OF NATURAL OBLIGATIONS ENUMERATED
UNDER THE CIVIL CODE:
1. Performance after the civil obligation has prescribed
2. Reimbursement of a third person for a debt that has
prescribed
3. Restitution by minor after annulment of contract
4. Delivery by minor of money or fungible thing in fulfillment
of obligation
5. Performance after action to enforce civil obligation has
failed
6. Payment by heir of debt exceeding value of property
inherited
7. Payment of legacy after will have been declared void.
C. EXTRA-CONTRACTUAL OBLIGATIONS
the person making it and cannot be denied or disproved as
against the person relying thereon.
KINDS:
1. Estoppel in pais (by conduct)
a. Estoppel by silence
b. Estoppel by acceptance of benefits
2. Technical Estoppel
a. Estoppel by deed
b. Estoppel by record
c. Estoppel by judgment
d. Estoppel by laches
C.2. LACHES OR STALE DEMANDS
LACHES – Failure or neglect, for an unreasonable and
unexplained length of time to do that which, by exercising
due diligence, could or should have been done earlier; it is
negligence or omission to assert a right within reasonable
time warranting a presumption that the party entitled to
assert it either has abandoned it or declined to assert it
ELEMENTS (CDLI)
1. Conduct on part of the defendant, or of one under
whom he claims, giving rise to the situation of which
complaint is made and for which the complaint seeks a
remedy
2. Delay in asserting the complainant’s rights, the
complainant having knowledge or notice, of the defendant’s
conduct and having been afforded the opportunity to
institute a suit
3. Lack of knowledge or notice on the part of the
defendant that the complainant would assert the right on
which he bases his suit
4. Injury to the defendant in the event relief is accorded
to the complainant, or the suit in not held to be barred.
Distinguish Laches from Prescription
LACHES PRESCRIPTION
Concerned with effect of delay Concerned with fact
of delay
Question of inequity of permitting Question or matter of
the claim to be enforced time

Not statutory Statutory

Applies in equity Applies at law
C.1. ESTOPPEL (Arts. 1431 – 1439) Not based on a fixed time Based on a fixed time
ESTOPPEL - a condition or state by virtue of which an
admission or representation is rendered conclusive upon

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 END OF DISCUSSION ON TOPIC =========================================
A. GENERAL PROVISIONS
Personal Obligations: obligations to do or not to do; where
================================ the subject matter is an act to be done or not to be done
a. Positive – obligation to do
B. NATURE AND EFFECT OF
b. Negative – obligation not to do
OBLIGATIONS
================================ Real Obligations: obligations to give; where the subject
TOPICS UNDER THE SYLLABUS matter is a thing which the obligor must deliver to the
B. NATURE AND EFFECT OF OBLIGATIONS obligee
1. Obligation to give a. Determinate or specific – object is particularly
A. A determinate or specific thing designated or physically segregated from all other
things of the same class
B. An indeterminate or generic thing
b. Generic –object is designated by its class or genus
2. Obligation to do or not to do c. Limited Generic – generic objects confined to a
3. Breaches of obligations particular class
A. Complete failure to perform a. Ex: An obligation to deliver one of my
B. Default or Delay (Art. 1169) horses (Tolentino, Volume IV, p. 91; De
B.1. Mora solvendi Leon, 2003 ed., p. 7)
B.2. Mora accipiendi 1. OBLIGATION TO GIVE
B.3. Compesatio morae A. DUTIES OF OBLIGOR IN AN OBLIGATION TO GIVE A
DETERMINATE THING (Arts. 1163, 1164, 1166.)
C. Fraud
C.1. Waiver of future fraud is void (Art. 1171) To preserve or take care of the thing due with the diligence
D. Negligence of a good father of a family
D.1. Ordinary Diligence
EXCEPTION: if the law requires or the parties stipulate
D.2 Exceptions another standard of care
E. Contravention of the tenor of obligation
B. DUTIES OF OBLIGOR IN AN OBLIGATION TO GIVE A
F. Fortuitous Event
GENERIC THING (Arts. 1246 AND 1170)

4. Remedies of Obligations
A. Specific Performance
A.1. Substituted performance by a third person
on obligation to deliver generic thing and in
obligation to do, unless a purely personal act
B. Rescission (resolution in reciprocal obligations)
C. Damages, in any event
D. Subsidiary remedies of creditors (Art. 1177)
D.1. Accion subrogatoria
D.2. Accion pauliana
D.3. Accion directa (Arts. 1652, 1608, 1729, 1893)
========================================
TOPICS UNDER THE SYLLABUS
B. NATURE AND EFFECT OF OBLIGATIONS
1. Obligation to give
To deliver the thing of the quality intended by the parties,
taking into consideration the purpose of the obligation,
intent of the parties, and other circumstances;
To be liable for damages in case of fraud, negligence, or
delay, in the performance of his obligation, or contravention
of the tenor thereof.
1. To deliver the fruits of the thing: Right to the fruits of the
thing from the time the obligation to deliver it arises;
2. To deliver its accessions and accessories (Art. 1166)
a. Accessions – additions to or improvements upon a
thing. Ex: air conditioner in a car.
b. Accessories – things joined to, or included with the
principal thing for its better use, embellishment or
completion. Ex: key of a house; frame of a picture (De
Leon, 2003 ed., pp. 37-38)
3. To deliver the thing itself (Specific Performance)

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4. To pay damages in case of breach of the obligation by b. the obligation is subject to a suspensive condition or
reason of delay, fraud, negligence or contravention of the period; arises upon fulfillment of the condition or
tenor of the obligation. arrival of the period
c. in a contract to sell, the obligation arises from the
RIGHTS OF THE CREDITOR TO THE FRUITS
perfection of the contract even if the obligation is
1. Before Delivery – personal right
subject to a suspensive condition or a suspensive
2. After Delivery – real right
period where the price has been paid

RIGHTS OF THE CREDITOR IN REAL OBLIGATION TO GIVE =========================================

(Art. 1165) TOPICS UNDER THE SYLLABUS
1. GENERIC REAL OBLIGATION (Obligation to deliver a
B. NATURE AND EFFECT OF OBLIGATIONS
generic thing):
a. To ask for performance of the obligation
2. Obligation to do or not to do
b. To ask that obligation be complied with at the =========================================
expense of the obligor
c. To recover damages in case of breach of obligation 2. OBLIGATION TO DO OR NOT TO DO
RIGHTS OF A CREDITOR IN PERSONAL OBLIGATION (TO DO
NOTE: A generic real obligation can be performed by a third OR NOT TO DO)
person since the object is expressed only according to its
family or genus. A. POSITIVE PERSONAL OBLIGATIONS:
1. Performance at debtor’s cause: The obligee is entitled to
2. DETERMINATE OR SPECIFIC REAL OBLIGATION have the thing done in a proper manner, by himself or by a
(Obligation to deliver a determinate thing): third person, at the expense of the debtor.
a. To demand specific performance or fulfillment (if it is
2. To demand what has been poorly done be undone
still possible) of the obligation with a right to indemnity
3. To recover damages because of breach of the obligation
for damages
b. To demand rescission of the obligation with right to
B. NEGATIVE PERSONAL OBLIGATION
recover damages 1. To have it undone at the expense of the obligor; and
c. To demand payment of damages when it is the only 2. To ask for damages
feasible remedy
d. If the obligor delays, or has promised to deliver the DISTINGUISH PERSONAL RIGHT FROM REAL RIGHT
same thing to two or more persons who do not have PERSONAL REAL
the same interest, he shall be responsible for any Jus ad rem, a right Jus in re, a right
fortuitous event until he has effected delivery. enforceable only against a enforceable against the
definite person or group whole world
NOTE: In an obligation to deliver a determinate thing, the of persons
very thing itself must be delivered and consequently, only
Right pertaining to a Right pertaining to a
the debtor can comply with the obligation.
person to demand from person over a specific
another, as a definite thing, without a definite
WHEN OBLIGATION TO DELIVER THE THING AND FRUIT
passive subject, the passive subject against
ARISES
fulfillment of the whom the right may be
prestation to give, to do personally enforced
1. If the source of the obligation is law, quasi-contract,
or not to do.
delict, quasi-delict, it arises from the time designated
by the law creating or regulating them;
========================================
2. If the source is contract, it arises from the time of the
TOPICS UNDER THE SYLLABUS
perfection of the contract (i.e. meeting of the minds
between the parties), unless
B. NATURE AND EFFECT OF OBLIGATIONS
a. the parties made a stipulation to the contrary, 3. Breaches of obligations
========================================

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3. BREACHES OF OBLIGATIONS (Arts. 1170 – 1174)
A. Voluntary – debtor in the performance of the obligation
is guilty of:
1. Delay (Mora)
2. Fraud (Dolo)
3. Negligence (Culpa)
4. Contravention of the tenor of the obligation
NOTE: debtor is liable for damages
B. Involuntary – debtor is unable to comply with his
obligation due to fortuitous event/s
NOTE: debtor is not liable for damages
A.1. DEFAULT OR DELAY
GENERAL RULE: Those obliged to deliver or to do something
incur in delay from the time the obligee judicially or
extrajudicially demands from them the fulfillment of their
obligation. (Art. 1169)
EXCEPTION: Demand by the creditor shall not be necessary
in order that delay may exist:
(1) When the obligation or the law expressly so declares;
(2) When from the nature and the circumstances of the
obligation it appears that the designation of the time when
the thing is to be delivered or the service is to be rendered
was a controlling motive for the establishment of the
contract; or
(3) When the demand would be useless, as when the obligor
has rendered it beyond his power to perform.
In reciprocal obligations, neither party incurs in delay if the
other does not comply or is not ready to comply in a proper
manner with what is incumbent upon him. From the
moment one of the parties fulfills his obligation, delay by
the other begins.
NOTE: Art. 1169 is applicable only when the obligation is to
do something other than the payment of money. In case of
obligation for payment of sum of money, the interest
replaces the damages.
KINDS OF DELAY:
1. Mora solvendi – delay or default committed by debtor
2. Mora accipiendi – delay or default committed by creditor
3. Compensatio Morae – default of both parties in reciprocal
obligations
CIVIL LAW REVIEWER
GENERAL RULE: An action or suit can be filed at anytime
after the non-compliance of the other party. However,
damages or interest shall only start to run after judicial or
extra-judicial demand.
EXCEPTION: In ejectment and consignment cases, the extra-
judicial demand should first be made prior to the filing of a
civil suit.
DEMAND IS NOT NECESSARY WHEN:
1. Law or obligation expressly declares so
2. Time is of the essence
3. Demand would be useless
NOTE: In reciprocal obligations, a party does not incur in
delay for failure of the other party to assume and perform
the obligation imposed upon him/her.
A.2. FRAUD (Dolo)
It is the deliberate or intentional evasion of the normal
fulfillment of an obligation. (8 Manresa 72)
It is the fraud in the performance or fulfillment of an
obligation already existing, as distinguished from the fraud
referred to in Article 1338 which is the cause of nullity of
contracts and which exists before and at the moment of
creating the obligation.
Samson vs Court of Appeals [G.R. No. 108245, November
25, 1994].
Bad faith is essentially a state of mind affirmatively
operating with furtive design or with some motive of ill-will.
It does not simply connote bad judgment or negligence. It
imports a dishonest purpose or some moral obliquity and
conscious doing of wrong. Bad faith is thus synonymous with
fraud and involves a design to mislead or deceive another,
not prompted by an honest mistake as to one’s rights or
duties, but by some interested or sinister motive.
TYPES OF FRAUD:
1. Causal Fraud (Dolo Causante): fraud employed in the
execution of the contract
2. Incidental Fraud (Dolo Incidente): fraud in
performance of obligation already existing because of a
contract
Page 88 of 338
 FRAUD IN THE CAUSAL FRAUD/ DOLO INSTANCES WHERE THE LAW REQUIRES A HIGHER
PERFORMANCE/ DOLO CAUSANTE (ART. 1338) STANDARD OF CARE:
INCIDENTE
C.1. Banks – as a business affected with public interest, and
(ART. 1170)
because of the nature of its functions, the bank is under
Present during the Present during the obligation to treat the accounts of its depositors with
performance of a pre- perfection of a contract meticulous care, always having in mind the fiduciary nature
existing obligation of their relationship. (Simex v. CA, 183 SCRA 360)

Purpose is to evade the Purpose is to secure the EXCEPTION: Extraordinary diligence does not cover
normal fulfillment of the consent of another to enter transactions outside bank deposits, ie: commercial
obligation into the contract transactions (Reyes v. CA, 363 SCRA 51)
Results in the breach of an Results in vitiation of
obligation consent; voidable contract C.2. Common Carriers – from the nature of their business
Gives rise to a right in favor Gives rise to a right of an and for reasons of public policy, common carriers are bound
to observe extraordinary diligence in the vigilance over the
of the creditor to recover innocent party to annul the
goods and for the safety of the passengers transported by
damages contract them, according to all the circumstances of each case (Art.
1733)
NOTE: Future fraud cannot be waived. However, the law
does not prohibit renunciation of the action for damages on Diligence of a good father of a family: ordinary care or that
the ground of past fraud. diligence which an average or reasonably prudent person
would exercise over his own property.)
REMEDIES OF DEFRAUDED PARTY
a. Specific performance (Art 1233) NOTE: Rule on Standard of Care
b. Resolve contract (Art 1191)  That which the law requires; or
c. Damages, in either case  That stipulated by the parties; or
 In the absence of the two, diligence of a good
A.3. NEGLIGENCE (Culpa) father of a family
 Any voluntary act or omission, there being no
malice which prevents the normal fulfillment of an DISTINGUISH FRAUD FROM NEGLIGENCE
obligation FRAUD
 Consists in the omission of that diligence which is NEGLIGENCE
required by the nature of the obligation and There is deliberate There is no deliberate
corresponds with the circumstances of the intention to cause damage. intention to cause
persons, of the time and of the place (Art. 1173) damage.
Liability cannot be Liability may be
mitigated. mitigated.
Presumed from the breach Must be clearly proved
KINDS OF NEGLIGENCE of a contractual obligation
a. Quasi-Delict (Culpa aquiliana/culpa extra Waiver for future fraud is Waiver for future
contractual) – source of obligation; wrong or void. negligence may be
negligence committed independent of contract and allowed in certain cases
without criminal intent
b. Contractual Negligence (Culpa Contractual) – DISTINGUISH NEGLIGENCE FROM CRIME
wrong or negligence in the performance of a NEGLIGENCE CRIME
obligation/contract
c. Criminal Negligence (Culpa Criminal) – wrong or WHAT IT Any act with fault Acts punishable
PUNISHABLE or negligence by law
negligence in the commission of a crime

CONDITION OF Criminal intent Necessary

THE MIND unnecessary

CIVIL LAW REVIEWER Page 89 of 338

LIABILITY FOR Damages may be Some crimes do NOT to do an VALID DISREGARD
DAMAGES awarded to injured not give rise to impossible thing CONDITION
party civil liability Condition is pre- VALID VOID
NATURE OF THE Violation of private Public rights existing and NOT
RIGHT VIOLATED rights dependent on the
AMOUNT OF Preponderance of Proof beyond fulfillment of
EVIDENCE evidence reasonable
impossible condition
doubt
for existence
COMPROMISE Can be Criminal liability Condition ONLY THE AFFECTED OBLIGATION IS
compromised as can never be IMPOSSIBLE BUT VOID.
any other civil compromised
Obligation DIVISIBLE
liability
PRESUMPTION Presumption of Presumption of
negligence innocence A.4. CONTRAVENTION OF THE TENOR OF THE OBLIGATION

KINDS OF NEGLIGENCE, DISTINGUISHED B. FORTUITOUS EVENT (Force Majeure)

CULPA AQUILIANA CULPA CONTRACTUAL GENERAL RULE: No one should be held to account for
Negligence is substantive Negligence merely an fortuitous cases, which are those situations that could not
and independent incident of performance of an be foreseen, or which though foreseen, were inevitable.
obligation
There may or may not be a There is a pre-existing EXCEPTION: There concurs a corresponding fraud,
pre-existing contractual contractual relation negligence, delay or violation or contravention in any
obligation manner of the tenor of the obligation.
Source of the obligation is Source of the obligation is the
the negligence itself breach of the contractual ELEMENTS OF A FORTUITOUS EVENT:
obligation 1. The cause of breach is independent of the debtor’s will.
Negligence must be proved Proof of existing of the 2. The event must be unforeseeable or unavoidable
contract and its breach is 3. The events render performance impossible
prima facie sufficient to 4. The debtor must be free from any participation, or
warrant recovery aggravation of the injury.
Diligence in the selection Diligence in the selection and
and supervision of the supervision of the employees NOTE: In the case of Republic v. Luzon Stevedoring [G.R.
employees is a defense is not available as a defense No. L-21749, September 29, 1967], the Court held that the
person obliged to perform an obligation shall not be
EFFECTS OF CONTRIBUTORY NEGLIGENCE OF THE OBLIGEE excused from a fortuitous event when the nature of the
GENERAL RULE: Reduces or mitigates the damages which he obligation requires the assumption of risk. In other words, it
can recover is not enough that the event should not be foreseen or
anticipated, but it must be one that is impossible to foresee
EXCEPTION: If the negligent act or omission of the creditor or to avoid.
is the proximate cause of the event, which led to the
========================================
damage or injury complained of, he cannot recover.
TOPICS UNDER THE SYLLABUS
EFFECTS OF IMPOSSIBLE AND ILLEGAL CONDITIONS B. NATURE AND EFFECT OF OBLIGATIONS
CONDITION EFFECT ON EFFECT ON 4. Remedies of obligations
OBLIGATION CONDITION ========================================
TO DO impossible OR VOID VOID
illegal GENERAL RULE: The law protects the creditors. The
NOT to Do an Illegal VALID VALID creditors are given by law all possible remedies to enforce
Thing such obligations.

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A. SPECIFIC PERFORMANCE
To demand specific performance or fulfillment of the
obligation with a right to indemnity for damages
B. RESCISSION
 It means to abrogate the contract from the beginning
and to restore the parties to their relative positions as if
no contract has been made.
 It is “to declare the contract void at its inception and to
put an end to it as though it never was.”2
 It is predicated on the breach of faith by any party that
violates the reciprocity between them.
NOTE: In the case of Adorable v. Court of Appeals [G.R. No.
119466, November 25, 1999], the Court held that unless a
debtor acted in fraud of his creditor, the creditor has no
right to rescind a sale made by the debtor to someone on
the mere ground that such sale will prejudice the creditors’
rights in collecting later on from the debtor. The creditor’s
right against the debtor is only a personal right to receive
payment for the loan; it is not a real right over the lot
subject of the deed of sale transferring the debtor’s
property.3
C. DAMAGES
To demand payment of damages when it is a feasible
remedy
D. SUSIDIARY REMEDIES OF CREDITORS
1. Accion Subrogatoria – action which the creditor may
exercise in the place of his negligent debtor in order to
preserve or recover for the patrimony of the debtor the
product of such action, and then obtain therefrom the
satisfaction of his own credit
2. Accion Pauliana – action to revoke or rescind acts which
the debtor may have done to defraud his creditor.
3. Accion Directa - (Arts. 1652, 1608, 1729, 1893)
END OF DISCUSSION ON TOPIC
B. NATURE AND EFFECT OF OBLIGATIONS
================================
C. KINDS OF CIVIL OBLIGATIONS
================================
TOPICS UNDER THE SYLLABUS
2 SPOUSES VELARDE V. COURT OF APPEALS, [G.R. NO. 108346, JULY 11,2001].
3 MELENCIO S. STA. MARIA, JR., OBLIGATIONS AND CONTRACTS: TEXT AND CASES
101 (2ND ED. 2003).
CIVIL LAW REVIEWER
C. KINDS OF CIVIL OBLIGATIONS
1. Pure Obligations (Arts. 1179-1180)
2. Conditional Obligations (Art. 1181)
A. Suspensive Condition
B. Resolutory Condition
C. Potestative; casual or mixed
C.1. Obligations subject to potestative
suspensive conditions are void (Art. 1182)
D. Effect of the happening of suspensive
condition or resolutory condition (Art. 1187)
D.1. Extent of retroactivity
E. Effect of improvement, loss or deterioration of
specific thing before the happening of a
suspensive condition in obligation to do or not to
do (Art. 1189)
F. Effect when a resolutory condition in
obligation to do or not to do happens and there
is improvement, loss or deterioration of the
specific thing (Art. 1190, par. 3)
3. Obligation with a period or a term (Art.1193)
A. Presumption that period is for the benefit of
both debtor and creditor (Art. 1196)
B. Effect if suspensive period is for the benefit of
both debtor and creditor
C. Effect if given to debtor alone
C.1. Instances when debtor losses benefit of
period (Art. 1198)
D. Resolutory period
E. Definite or indefinite period
E.1. Instances when courts may fix the period
(Art. 1197)
E.2. Creditor must ask court to set the period
before he can demand payment
4. Alternative or facultative (Art. 1199)
A. Difference between alternative and
facultative obligations
B. Effect of loss of specific things or impossibility
of performance of alternative, through fault of
debtor/creditor or through fortuitous events
=========================================
TOPICS UNDER THE SYLLABUS
C. KINDS OF CIVIL OBLIGATION
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1. Pure Obligations
=========================================
1. PURE OBLIGATIONS
It is an unqualified obligation which is demandable
immediately. It is an obligation whose performance does
not depend upon a future and uncertain event, or past
event unknown to the parties. (Art. 1179)
=========================================
TOPICS UNDER THE SYLLABUS
C. KINDS OF CIVIL OBLIGATION
2. Conditional Obligations
=========================================
2. CONDITIONAL OBLIGATIONS
It is exactly the reverse of a pure obligation. The
performance in conditional obligations depends upon a
future or uncertain event or upon a past event unknown to
parties.
A. RESOLUTORY CONDITION
 Demandable at once
 Once the condition is established or acknowledged, the
right to demand performance immediately exists and
therefore the obligation concomitant to the right can
be demanded at once.
 It is also known as “condition subsequent”
 It extinguishes obligations
NOTE: In case of a contract with a reciprocal obligation, the
obligation of one is a resolutory condition of the obligation
of the other, the non-fulfillment of which entitles the other
party to rescind the contract.
B. SUSPENSIVE CONDITION
 Not demandable at once
 It gives rise to the performance of an obligation (ex.
Contract to Sell)
 It is also known as “condition precedent”
 It gives birth to obligations
C. POTESTATIVE CONDITION
The fulfillment of the condition entirely depends upon the
sole will of the debtor.
GENERAL RULE: All potestative conditions are void.
CIVIL LAW REVIEWER
EXCEPTION: Potestative resolutory conditions are not void.
If the potestative condition is imposed not on the birth
(suspensive) of the obligation but on its fulfillment
(resolutory), only the condition is avoided, leaving
unaffected the obligation itself.
D. EFFECT OF SUSPENSIVE AND RESOLUTORY
CONDITIONS
Art. 1187:
 When the obligation imposes reciprocal prestations,
the fruits and interests during the pendency of the
condition shall be deemed to have been mutually
compensated.
 If the obligation is unilateral, the debtor or obligor shall
appropriate the fruits and interests received, unless
from the nature and circumstances of the obligation it
should be inferred that the intention of the person
constituting the same is different.
D.1. Extent of Retroactivity
 In resolutory conditions, retroactivity is irrelevant.
 In suspensive conditions, the effect of a conditional
obligation “to give” retroacts to the day of the
constitution of the obligation (Art 1187)
E. IMPROVEMENT, LOSS, AND DETERIORATION
Constructive fulfillment - The condition shall be deemed
fulfilled when the obligor (debtor) voluntarily prevents its
fulfillment (Art. 1186)
NOTE: “LOSS” happens when the thing perishes, goes out of
commerce, or it disappears in such a way that its existence
is unknown or it cannot be recovered. (Art. 1189)
E.1. Before the happening of a suspensive condition in an
obligation to do or not to do (Art. 1189)
 If the thing is lost without the fault of debtor, the
obligation shall be extinguished.
 If the thing is lost with the fault of debtor, he shall be
obliged to pay damages.
 If the thing deteriorates without the fault of debtor, the
impairment is to be borne by creditor
 If the thing deteriorates with the fault of debtor, the
creditor may choose between rescission of the
Page 92 of 338
 obligation and its fulfillment, with indemnity for
damages in either case
 If the thing improves by its nature or by time, the
benefit shall inure to the benefit of the creditor.
 If the thing improves at the expense of debtor, he shall
have no other right than that granted to the
usufructuary.
E.2. When a resolutory condition in an obligation to do or
not to do happens (Art. 1190, par. 3)
 In obligations to do and not to do, the court shall
determine the effect of the extinguishment of the
obligation
=========================================
TOPICS UNDER THE SYLLABUS
C. KINDS OF CIVIL OBLIGATION
3. Obligations with a Period or Term
=========================================
3. OBLIGATIONS WITH A PERIOD OR TERM
 WITH A PERIOD – An obligation whose demandability
or extinguishment depends on a future and certain
event; subject to the expiration of a term of period
(Arts 1193, 1196)]
 PERIOD – Interval of time, which, exerting an
influence on an obligation as a consequence of a
juridical act, either suspends its demandability or
produces its extinguishment
REQUISITES:
1. Future
2. Certain
3. Legally and physically possible
WHEN STIPULATION SAYS “PAYABLE WHEN ABLE”
 When the obligor binds himself to pay when his means
permit him to do so, the obligation shall be deemed to
be one with a period.
 Remedy:
1. Agreement among parties
2. Court shall fix period of payment when parties
unable to agree
KINDS OF OBLIGATIONS WITH A PERIOD:
1. According to effect:
CIVIL LAW REVIEWER
a. Resolutory (in diem) – demandable at once but
terminates upon arrival of the day certain
 Day certain – that which must necessarily come,
although it may not be known when
b. Suspensive (ex die) – obligation becomes
demandable on the day stipulated
2. According to source
a. Legal - when it is provided by laws
b. Conventional or Voluntary - when it is agreed to by
the parties
c. Judicial - when it is fixed by the court
3. According to definiteness:
a. Definite - when it is fixed or it is known when it will
come
b. Indefinite - when it is not fixed or it is not known
when it will come
TERM VS. CONDITION, DISTINGUISHED
TERM CONDITION
Interval of time which is Fact or event which is future
future and certain or uncertain or a past event
unknown to the parties
Time w/c must necessarily Future and uncertain fact or
come although it may not event which may or may not
be known when happen
Exerts an influence upon Exerts an influence upon the
the time of demandability very existence of the
or extinguishment of an obligation itself
obligation
Does not have any Has retroactive effect
retroactive effect unless
there is an agreement to
the contrary
When it is left exclusively When it is left exclusively to
to the will of the debtor, the will of the debtor, the
the existence of the obligation is void
obligation is affected
WHEN COURTS MAY FIX PERIOD:
1. 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
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2. If the duration of the period depends upon the will of
the debtor
3. In case of reciprocal obligations, when there is a just
cause for fixing a period
4. If the debtor binds himself when his means permit him
to do so
PERIOD, FOR WHOSE BENEFIT
GENERAL RULE: When a period is designated for the
performance or fulfillment of an obligation, it is presumed
to have been established for the benefit of both parties.
EXCEPTION: When it appears from the tenor of the
obligation or other circumstances that the period has been
established in favor of one or the other.
PERIOD FOR THE BENEFIT OF THE CREDITOR
 Creditor may demand the fulfillment of the obligation
at any time but the debtor cannot compel him to
accept before the expiration of the period
PERIOD FOR THE BENEFIT OF THE DEBTOR
 Debtor may oppose any premature demand of the
creditor but he may renounce the benefit of the period
by performing his obligation in advance (Manresa)
WHEN DEBTOR LOSES RIGHT TO PERIOD (Art 1198)
1. Insolvency of debtor, unless security provided
2. Did not deliver security promised
3. Impaired security through his own acts or through
fortuitous event unless he gives new securities equally
satisfactory
4. Violates undertaking in consideration of extension of
period
5. Attempts to abscond
=========================================
TOPICS UNDER THE SYLLABUS
C. KINDS OF CIVIL OBLIGATION
4. Alternative or Facultative Obligation
=========================================
4. ALTERNATIVE OR FACULTATIVE OBLIGATION
(ARTS. 1199 – 1206)
FACULTATIVE - only one prestation has been agreed upon
but another may be given in substitution
EFFECT OF LOSS OR DETERIORA0TION THRU NEGLIGENCE,
DELAY OR FRAUD OF OBLIGOR:
 Of thing intended as substitute - no liability
CIVIL LAW REVIEWER
 Of the substitute after substitution is made – with
liability
ALTERNATIVE – bound by different prestations but only one
is due
RIGHT OF CHOICE IN ALTERNATIVE OBLIGATIONS
GENERAL RULE: the right of choice belongs to debtor
EXCEPTION:
1. Expressly granted to creditor
2. Expressly granted to third person
LIMITATIONS ON THE RIGHT OF CHOICE OF THE DEBTOR
The debtor shall not have the right to choose the
prestations, which are:
a. Impossible
b. Unlawful
c. Those which could not have been the object of the
obligation
WHEN CONVERTED TO SIMPLE OBLIGATION:
1. When the person who has a right of choice has
communicated his choice
2. Only one is practicable
EFFECT OF LOSS OF OBJECTS OF ALTERNATIVE
OBLIGATIONS
1. If the right of choice belongs to the debtor
 If through a fortuitous event all were lost, debtor
cannot be held liable for damages
 If 1 or more but not all of the things are lost or one
or some but not all of the prestations cannot be
performed due to fortuitous event or fault of the
debtor, creditor cannot hold the debtor liable for
damages because the debtor can still comply with
his obligation
 If all things, except one, were lost, the debtor must
comply by performing that which remain
 If all were lost by fault of the debtor the later is
liable for the value of the last thing or service
which became impossible
2. If right of choice belongs to the creditor
 If 1 of the things is lost through a fortuitous event,
the debtor shall perform the obligation by
delivering that which the creditor should choose
from among the remainder or that which remains
if only 1 subsists
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  If the loss of 1 of the things occurs through the ================================
fault of the debtor, the creditor may claim any of TOPICS UNDER THE SYLLABUS
those subsisting or the price of that which, through
the fault of the former, has disappeared with a
D. JOINT AND SOLIDARY OBLIGATION
right to damages
1. Joint (Divisible) Obligation
 If all the things are lost through the fault of the
debtor, the choice by the creditor shall fall upon A. Concurrence of two or more creditors and/or
the price of any 1 of them, also with indemnity for two or more debtors
damages. A.1. Joint obligation is presumed, unless
otherwise indicated by the law or nature of
REQUISITES FOR MAKING THE CHOICE: obligation (Art. 1207)
1. Made properly so that creditor or his agent will actually
A.2. Obligation presumed to be divided into as
know
2. Made with full knowledge that a selection is indeed
many equal shares as there are creditors or
being made debtors
3. Made voluntarily and freely A.3. Each credit is distinct from one another,
4. Made in due time – before or upon maturity therefore a joint debtor cannot be required to
5. Made to all proper persons pay for the share of another with debtor,
6. Made w/o conditions unless agreed by the creditor
although he may pay if he wants to (Art. 1209)
7. May be waived, expressly or impliedly
A.4. Insolvency of a joint debtor, others not
DISTINGUISH ALTERNATIVE FROM FACULTATIVE liable for his share (Art. 1209)
ALTERNATIVE FACULTATIVE
Various things are due but Only one thing is due but 2. Joint (Indivisible) Obligation
the giving principally of one a substitute may be given A. Obligation cannot be performed in parts but
is sufficient to render debtors are bound jointly
payment/fulfillment easy
B. In case of failure of one joint debtor to perform
If one of prestations is If principal obligations is
his part (share), there is default but only the guilty
illegal, others may be valid void and there is no
but obligation remains necessity of giving the shall be liable for damages
substitute; nullity of P
carries with it nullity of S 3. Solidary Obligation
If it is impossible to give all If it is impossible to give A. Mutual agency among solidary debtors (Arts.
except one, the last one the principal, the 1214-1215)
must still be given substitute does not have
B. Mutual guaranty among solidary debtors (Arts.
to be given; if it is
impossible to give the
1216, 1217, 1222)
substitute, the principal C. Each one of solidary creditors may do whatever
must still be given may be useful to the others, but not anything
Right to choose may be The right of choice is given prejudicial to them (Art. 1212)
given either to debtor or only to the debtor C.1. Effect of any novation, compensation,
creditor
confusion or remission of debt executed by a
solidary creditor
END OF DISCUSSION ON TOPIC
C. KINDS OF CIVIL OBLIGATION
================================ 4. Divisible and Indivisible (Art. 1225)

D. JOINT AND SOLIDARY OBLIGATION

CIVIL LAW REVIEWER Page 95 of 338

5. Obligations with a Penal Clause (Arts. 1226,
1228-1230)
=========================================
TOPICS UNDER THE SYLLABUS
D. JOINT AND SOLIDARY OBLIGATIONS
1. Joint (Divisible) Obligation
=========================================
1. JOINT (DIVISIBLE) OBLIGATION
JOINT OBLIGATION (Obligacion Mancumunada) – The
whole obligation is to be paid or fulfilled proportionately by
different debtors or demanded proportionately by the
different obligees
GENERAL RULE: The presumption of the law is that an
obligation is always joint.
EXCEPTIONS TO THE PRESUMPTION
1. When expressly stated that there is solidarity
2. When the law requires solidarity
3. When the nature of the obligation requires solidarity
4. When a charge or condition is imposed upon heirs or
legatees and the testament expressly makes the charge
or condition in solidum (Manresa)
5. When a solidary responsibility is imputed by a final
judgment upon several defendants (Gutierrez v.
Gutierrez)
EFFECTS OF JOINT LIABILITY
1. Demand on one produces delay only with respect to
the debt
2. Interruption in payment by one does not benefit or
prejudice the other
3. Vices of one debtor to creditor has no effect on the
others
4. Insolvency of one debtor does not affect other debtors
JOINT DIVISIBLE OBLIGATIONS
1. Each creditor can demand for the payment of his
proportionate share of the credit, while each debtor
can be held liable only for the payment of his
proportionate share of the debt
2. A joint creditor cannot act in representation of the
other creditors while a joint debtor cannot be
compelled to answer for the acts or liability of the
other debtors
NOTE: Unless there is no specification as to their
proportionate share in the credit or in the debt, the
CIVIL LAW REVIEWER
creditors and debtors in a joint obligation shall be entitled
or shall make payment in equal proportion.
=========================================
TOPICS UNDER THE SYLLABUS
D. JOINT AND SOLIDARY OBLIGATIONS
2. Joint (Indivisible) Obligation
=========================================
2. JOINT (INDIVISIBLE) OBLIGATION
1. 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. The obligation can be enforced only by
proceeding against all of the debtors.
2. 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 enforcement of the
obligation
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.
INDIVISIBILITY and SOLIDARITY, DISTINGUISHED
INDIVISIBILITY SOLIDARITY
Refers to the prestation Refers to the legal tie and
which constitutes the consequently to the subjects
object of the obligation or parties of the obligation
Plurality of subjects is Plurality of subjects is
not required indispensable
In case of breach, When there is liability on the
obligation is converted part of the debtors because
into 1 of indemnity for of the breach, the solidarity
damages because of among the debtors remains
breach, indivisibility of
the obligation is
terminated
PASSIVE SOLIDARITY SURETYSHIP
Stands for some other person
May be reimbursed after payment
liable for his and co- only the principal's
debtor's share share
Primary Secondary
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Extension of time, not Released  EFFECTS:
released a. Payment made before debt is due, no interest can
be charged, otherwise – interest can be charged
b. Insolvency of one – others are liable for share pro-
========================================= rata
TOPICS UNDER THE SYLLABUS c. If different terms and conditions – collect only
D. JOINT AND SOLIDARY OBLIGATIONS what is due, later on collect from any
3. Solidary Obligation d. No reimbursement if payment is made after
========================================= prescription or became illegal
e. Remission made after payment is made – co-
3. SOLIDARY OBLIGATION debtor still entitled to reimbursement
f. Effect of insolvency or death of co-debtor – still
SOLIDARY OBLIGATION (Obligacion Solidaria) – must be liable for whole amount
expressed in stipulation or provided by law or by nature of g. Fault of any debtor – everyone is responsible –
obligation price, damage and interest
h. Complete/ personal defense – total or partial ( up
1. Active – on the part of creditor or oblige to amount of share only ) if not personal to him
EFFECTS:
 Death of 1 solidary creditor transmits share to heirs EFFECT OF LOSS OR IMPOSSIBILITY OF THE PRESTATION:
(but collectively) 1. If without fault – no liability
 Each creditor represents the other in the act of 2. If with fault – there is liability (also for damage and
recovery of payment interest)
3. Loss due to fortuitous event after default – there is
 Credit is divided equally between creditors as among
liability (because of default)
themselves
 Debtor may pay any of the solidary creditors
NOTE: The law clearly provides that the creditor who may
have executed any acts mentioned in Art. 1215 (Novation,
2. Passive – on the part of debtors or obligors
Compensation, Merger or Confusion), as well as he or she
EFFECTS:
who collects the debts, shall be liable to the others for the
 Each debtor may be requested to pay whole obligation
share in the obligation corresponding to them.
with right to recover from co-debtors
 Interruption of prescription to one creditor affects all
=========================================
 Interest from delay on 1 debtor is borne by all
TOPICS UNDER THE SYLLABUS
3. Mixed – on the part of the obligors and obligees, or the D. JOINT AND SOLIDARY OBLIGATIONS
part of the debtors and the creditors 4. Divisible and Indivisible Obligation
=========================================
4. Conventional – agreed upon by the parties
4. DIVISIBLE AND INDIVISIBLE OBLIGATION
5. Legal – imposed by law
 Instances where law imposes solidary obligation: DIVISIBLE - obligation that is capable of partial performance
a. Obligations arising from tort  Execution of certain no of days work
b. Obligations arising from quasi-contracts  Expressed by metrical units
c. Legal provisions regarding obligation of devisees and  Nature of obligation – susceptible of partial
legatees fulfillment
d. Liability of principals, accomplices, and accessories of a
felony INDIVISIBLE - one not capable of partial performance
e. Bailees in commodatum  To give definite things
 Not susceptible of partial performance
 Provided by law

CIVIL LAW REVIEWER Page 97 of 338

 Intention of parties Penalty of payment in Power to choose prestation
lieu of the principal must is absolute
NOTES: be expressly granted
Creditor may demand Creditor may not demand
 Divisibility or indivisibility of the obligation refers to the
both if expressly granted both principal and penalty
performance of the prestation and not to the thing
which is the object thereof
 Intention of parties should be taken into account to
determine whether obligation is divisible or not

=========================================
TOPICS UNDER THE SYLLABUS
D. JOINT AND SOLIDARY OBLIGATIONS
5. Obligations with a Penal Clause
=========================================
5. OBLIGATIONS WITH A PENAL CLAUSE PENAL CLAUSE DISTINGUISHED FROM GUARANTEE
PENAL CLAUSE GUARANTEE
Insure performance of principal obligation
WITH A PENAL CLAUSE – One to which an accessory
Accessory and subsidiary obligations
undertaking is attached for the purpose of insuring its Obligation to pay the penalty Object of the principal
performance by virtue of which the obligor is bound to pay is different from the principal and the guarantee is the
a stipulated indemnity or perform a stipulated prestation in obligation same
case of breach. Principal and penalty can be No
PENAL CLAUSE DISTINGUISHED FROM CONDITION assumed by the same person
PENAL CLAUSE CONDITION Penalty is extinguished by the Guarantee subsists even
Constitutes an obligation Not an obligation nullity of the principal if the principal obligation
Demandable in default Never demandable is voidable,
Obligation exists No obligation until unenforceable or a
condition happens natural one, same
Depends on the non- Principal itself is applies if penal clause is
performance of the principal dependent on an assumed by a guarantee
obligation uncertain event
PURPOSE OF PENALTY:
1. Funcion coercitiva o de garantia – to insure the
PENAL CLAUSE DISTIGUISHED FROM ALTERNATIVE performance of the obligation
OBLIGATIONS 2. Funcion liquidatoria – to liquidate the amount of
PENAL CLAUSE ALTERNATIVE damages to be awarded to the injured party in case of
OBLIGATIONS breach of the principal obligation (compensatory), and
Only 1 prestation Several prestations 3. Funcion estrictamente penal – in certain
Impossibility of principal Impossibility of 1 exceptional cases, to punish the obligor in case of
extinguishes penalty prestation does not
breach of the principal obligation (punitive).
extinguish the obligation
Debtor may not choose Debtor may choose among
between principal and the prestations CHARACTERISTICS OF PENAL CLAUSES:
penalty 1. Subsidiary - As a general rule, only penalty can be
demanded, principal cannot be demanded, except:
Penalty is joint or cumulative
PENAL CLAUSE DISTINGUISHED FROM FACULTATIVE 2. Exclusive - takes place of damage, damage can only be
OBLIGATION demanded in the ff. cases:
PENAL CLAUSE FACULTATIVE OBLIGATION a. Stipulation – granting right
b. Refusal to pay penalty
c. With dolo ( not of creditor )

CIVIL LAW REVIEWER Page 98 of 338

 B. Form of payment (Art. 1249)
PENALTY AS SUSTITUTE FOR DAMAGES C. Extraordinary inflation or deflation (Art.
GENERAL RULE: the penalty fixed by the parties is or
1250)
substitute for damages in case of breach
D. Application of payment (Arts. 1252-1254)
EXCEPTIONS:
1. When there is a stipulation to the contrary E. Tender of payment and consignation (Arts.
2. When the debtor is sued for refusal to pay the agreed 1256-1261)
penalty; and
3. When debtor is guilty of fraud 2. Loss of determinate thing due or impossibility
or difficulty of performance (Arts. 1262, 1266-
DOUBLE FUNCTIONS OF PENALTY
1267)
1. to provide for liquidated damages
2. to strengthen the coercive force of the
obligation by the threat of greater responsibility in the 3. Condonation or remission of debt
event of breach A. Express condonations and required
formality thereof (Art. 1270)
KINDS OF PENALTIES: B. Implied (Arts. 1271, 1272, 1274)
1. Legal – constituted by law
2. Conventional – constituted by
agreement of the parties
4. Confusion or Merger of Rights (Arts. 1275,
3. Compensatory – established for the 1272)
purpose of indemnifying the damages suffered by the
obligee or creditor in case of breach of the obligation 5. Compensation
4. Punitive – established for the A. Kinds (Arts. 1278, 1279)
purpose of punishing the obligor or debtor in case of
A.1. Legal compensation (Arts. 1286-1290)
breach of the obligation
A.2. Agreement (Art. 1282)
5. Subsidiary or alternative- in case of
non-performance only the penalty is demandable A.3. Voluntary (Art. 1282)
6. Joint or cumulative – both the A.4. Judicial (Art. 1283)
principal undertaking and the penalty may be A.5. Facultative
demanded B. Obligations not compensable (Arts. 1287-
1288)
CAUSES FOR REDUCTION OF PENALTY:
1. Partial/irregular performance
2. Penalty provided is iniquitous/ unconscionable 6. Novation (Arts. 1291-1288)

=========================================
END OF DISCUSSION ON TOPIC TOPICS UNDER THE SYLLABUS
D. JOINT AND SOLIDARY OBLIGATION E. EXTINGUISHMENT OF OBLIGATIONS
================================ 1. Payment
=========================================
E. EXTINGUISHMENT OF OBLIGATIONS
Principal Modes: (PAL-CoCoCo-No)
================================
1. Payment or performance
TOPICS UNDER THE SYLLABUS
2. Loss of the thing due
3. Condonation or remission of debt
E. EXTINGUISHMENT OF OBLIGATIONS 4. Confusion or merger of rights
1. Payment (Arts. 1236-1238) 5. Compensation
A. Dation in payment (Art. 1245) 6. Novation

CIVIL LAW REVIEWER Page 99 of 338


Other Modes:
7. Annulment
8. Rescission
9. Fulfillment of resolutory condition
10. Prescription
Not Stated in the Civil Code:
11. Death of a Party in Personal Obligations
12. Mutual Desistance
13. Compromise
14. Impossibility of Fulfillment
15. Happening of Fortuitous Event
16. Arrival of Resolutory Period
17. Will of One of the Parties Due to Indeterminate
Duration or Nature of the Prestation/ Unilateral
Withdrawal in Partnerships
18. Change of Civil Status
19. Rebus Sic Stantibus (Art. 1267)
20. Want of Interest in Some Circumstances
21. Abandonment in Special Cases
22. Insolvency Judicially Declared and Debtor is Discharged
1. PAYMENT OR PERFORMANCE
Delivery of money and performance, in any other manner of
the obligation
REQUISITES FOR VALID PAYMENT/PERFORMANCE
1. With respect to prestation itself
a. Identity
b. Integrity or completeness
c. Indivisibility
2. With respect to parties - must be made by proper party
to proper party
a. Payor
1. Payor - the one performing, he can be the debtor
himself or his heirs or assigns or his agent, or anyone
interested in the fulfillment of the obligation; can be anyone
as long as it is with the creditor's consent
2. 3RD person pays/performs - only the creditor's consent;
if performance is done also with debtor's consent - he takes
the place of the debtor. There is subrogation except if the
3rd person intended it to be a donation
3. 3rd person pays/performs with consent of creditor but
not with debtor's consent, the repayment is only to the
extent that the payment has been beneficial to debtor
b. Payee
CIVIL LAW REVIEWER
i. Payee - creditor or obligee or successor in
interest of transferee, or agent
ii. 3rd person - if any of the ff. concur:
a. It must have redounded to the obligee's
b. benefit and only to the extent of such benefit
c. It falls under art 1241, par 1,2,3 - the benefit is
total so, performance is total
iii. Anyone in possession of the credit - but will
apply only if debt has not been previously
garnished
PRINCIPLE OF INTEGRITY (Art. 1233)
GENERAL RULE: A debt shall not be understood to have
been paid unless a thing or service of which the obligation
consists has been completely delivered or rendered, as the
case maybe.
EXCEPTIONS:
1. When the obligation has been substantially performed in
good faith (Art. 1234);
2. When the obligee accepts performance despite its
incompleteness or irregularity and without expressing any
protest or correction. (Art. 1235)
PERSONS FROM WHOM THE CREDITOR MUST ACCEPT
PAYMENT
1. Debtor himself or his legal representative
2. Any person who has interest in the obligation (i.e.,
guarantor)
3. A 3rd person who has no interest in the obligation, when
there is a stipulation to the contrary
PAYMENT MADE BY 3Rd PERSON
 If payment was made without the knowledge or against
the will: the recovery is only up to the extent or the
amount of the debt at the time of the payment; the
defense may only be availed of by the obligor
 If payment was with knowledge: the rights of
reimbursements and subrogation are acquired by the
3rd person
TO WHOM PAYMENY MUST BE MADE
1. The person in whose favor the obligation has been
constituted
2. His successor-in-interest
3. Any person authorized by law or by the obligee at the
time when payment is due to receive it (not during the time
when the obligation is constituted)
PAYMENT TO AN INCAPACITATED PERSON, VALID IF:
Page 100 of 338
1. Incapacitated person kept the thing delivered, or
2. Insofar as the payment has been beneficial to him
PAYMENT TO 3RD PERSON
GENERAL RULE: Payment is not valid, even though made in
good faith
EXCEPTIONS:
1. Payment which redounded to the benefit of the obligee
 Instances when the presumption that the payment
redounded to the benefit of the obligee:
1. After payment, 3rd person acquires the creditor’s
rights (subrogation)
2. Creditor ratifies payment to 3rd person
3. By creditor’s conduct, debtor has been led to make
the payment (estoppel)
2. Payment to the possessor of the credit, when made in
good faith
 REQUISITES:
1. Payment by debtor must be made in good faith
2. Creditor must be in possession of the credit and not
merely the evidence of indebtedness
NOTE: With respect to time and place of payment - must
be according to the obligation
WHERE PAYMENT SHOULD BE MADE
1. In the place designated in the obligation
2. If there is no express stipulation and the undertaking is
to deliver a specific thing – at the place where the thing
might be at the moment the obligation was constituted
3. In other case – in the place of the domicile of the
debtor
 Time of payment - time stipulated
 Effect of payment – extinguish obligation Except:
order to retain debt
SUBSTANTIAL PERFORMANCE
A debt shall not be understood to have been paid unless the
thing or service in which the obligation consists has been
completely delivered or rendered, as the case may be.
If the obligation has been substantially performed in good
faith, the obligor may recover as though there had been a
strict and complete fulfillment, less damages suffered by the
obligee.
When the obligee accepts the performance, knowing its
incompleteness or irregularity, and without expressing any
protest or objection, the obligation is deemed fully complied
with
 Attempt in Good Faith to perform without willful or
intentional departure
CIVIL LAW REVIEWER
 Deviation is slight
 Omission/Defect is technical or unimportant
 Must not be so material that intention of parties is not
attained
EFFECT OF SUBSTANTIAL PERFORMANCE IN GOOD FAITH
 Obligor may recover as though there has been strict
and complete fulfillment, less damages suffered by the
oblige
 Right to rescind cannot be used for slight breach
SPECIAL RULES/FORMS OF PAYMENT
1. Application of Payments
2. Dation in Payment/ Dacion en Pago/
Adjudication/ Dacion in Solutum/ Adjudicacion en
Pago/ Payment in Kind/ Dation en Paiement
3. Payment by Cession/Cession en Pago
4. Tender of Payment and Consignation
A. APPLICATION OF PAYMENTS – the designation of the
debt which payment shall be made, out of 2 or more
debts owing the same creditor: stipulation or
application of party given benefit of period – OK; to be
valid: must be debtor’s choice or w/ consent of debtor
REQUISITES FOR THE APPLICATION OF PAYMENT:
a. There must be only one debtor and only one
creditor
b. Two or more debts of the same kind
c. All debts must be due
EXCEPTION: there may be application of payment
even if all debts are not yet due if:
i. Parties so stipulate
ii. When application of payment is made by the
party for whose benefit the term has been
constituted
iii. Payment is not enough to extinguish all debts
d. Amount paid by the debtor is insufficient to cover
the total amount of all debts.
HOW APPLICATION IS MADE:
a. Debtor makes the designation
b. If not, creditor makes it by so stating in the
receipt that he issues – unless there is cause for
invalidating the contract
c. If neither the debtor nor creditor has made the
application or if the application is not valid, then
application, is made by operation of law
Page 101 of 338
 agreement subsequent contract where the parties
WHO MAKES APPLICATION OF DEBTS and independent from agree that in the event
GENERAL RULE: Debtor the original contract is debtor fails to pay, the
entered into by the mortgaged or pledged
EXCEPTION: Creditor
parties to have the property shall automatically
a. Debtor without protest accepts receipt in which property collaterizes in be appropriated or owned
creditor specified expressly and unmistakably the the original agreement by the creditor
obligation to which such payment was to be applied – as payment of the debt
debtor in this case renounced the right of choice Valid Void
b. When monthly statements were made by the bank
specifying the application and the debtor signed said
statements approving the status of her account as thus
sent to her monthly by the bank
c. In case no application is made:
 Apply payment to the most onerous
 If debts are of the same nature and burden, DACION EN PAGO DISTINGUISHED FROM PLEDGE
application shall be made to all DACION EN PAGO PLEDGE
proportionately Delivery and transfer of Delivery but no transfer of
ownership ownership
Presumed since less
B. DACION EN PAGO: mode of extinguishing an obligation transmission of rights
whereby the debtor alienates in favor of the creditor
property for the satisfaction of monetary debt; DACION EN PAGO DISTINGUISHED FROM SALE
extinguish up to amount of property unless w/ contrary DACION EN PAGO SALE
stipulation; A special form of payment because 1 Preexisting credit None
element of payment is missing: IDENTITY Obligation extinguished Obligation rises
Less freedom in determining Greater freedom
REQUISITES FOR A VALID DACION EN PAGO: the price
Total or partial Payment of price
a. There must be the performance of the prestation in lieu
extinguishment generally totally
of payment (animo solvendi) which may consist in the
extinguishes
delivery of a corporeal thing or a real right or a credit if done by mistake, recovery ... recovery of the
against the third person of the thing price paid
b. There must be some difference between the prestation
due and that which is given in substitution (aliud pro DACION EN PAGO DISTINGUISHED FROM ASSIGNMENT
alio) DACION EN PAGO ASSIGNMENT
c. There must be an agreement between the creditor and Substitute forms of performance
debtor that the obligation is immediately extinguished 1 creditor Several creditors
by reason of the performance of a prestation different Debtor not partially insolvent Debtor partially
insolvent
from that due

C. CESSION or ASSIGNMENT (IN FAVOR OF CREDITORS) –

CONDITIONS FOR A VALID DACION:
the process by which debtor transfer all the properties not
a. If creditor consents, because a sale presupposes
subject to execution in favor of creditors is that the latter
the consent of both parties
may sell them and thus, apply the proceeds to their credits;
b. If dacion will not prejudice the other creditors
extinguish up to amount of net proceeds ( unless w/
c. If debtor is not judicially declared insolvent
contrary stipulation)

NOTE: DACION is governed by the law on sales

KINDS OF ASSIGNMENT:
DACION EN PAGO DISTINGUISHED FROM PACTUM
a. Legal – governed by the insolvency law
COMMISORIUM
DACION EN PAGO PACTUM COMMISORIUM b. Voluntary – agreement of creditors
There is an intervening Generally, only one single
REQUISITES OF VOLUNTARY ASSIGNMENT:

CIVIL LAW REVIEWER Page 102 of 338

 a. More than one debt
b. More than one creditor
c. Complete or partial insolvency of debtor
d. Abandonment of all debtor’s property not exempt
from execution
e. Acceptance or consent on the part of the creditors
EFFECTS OF ASSIGNMENT:
a. Creditors do not become the owner; they are
merely assignees with authority to sell
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
DATION IN PAYMENT DISTINGUISHED FROM CESSION IN
PAYMENT
DATION IN PAYMENT CESSION IN PAYMENT
One creditor Plurality of creditors
Not necessarily in state of Debtor must b partially or
financial difficulty relatively insolvent
Thing delivered is Universality of property of
considered as equivalent of debtor is what is ceded
performance
Payment extinguishes Merely releases debtor for
obligation to the extent of net proceeds of things
the value of the thing ceded of, assigned, unless
delivered as agreed upon, there is a contrary
proved or implied from the intention
conduct of the creditor
D. TENDER AND CONSIGNATION
TENDER -the act of offering the creditor what is due him
together with a demand that the creditor accept the same
(When creditor refuses w/o just cause to accept payment,
he becomes in mora accepiendi and debtor is released from
responsibility if he consigns the thing or sum due)
CONSIGNATION – the act of depositing the thing due with
the court or judicial authorities whenever the creditor
cannot accept or refuses to accept payment; generally
requires prior tender of payment
REQUISITES OF VALID CONSIGNATION:
a. Existence of valid debt
CIVIL LAW REVIEWER
b. Consignation was made because of some legal
cause - previous valid tender was unjustly refused
or circumstances making previous tender exempt
c. Prior Notice of Consignation had been given to the
person interested in performance of obligation (1st
notice)
d. Actual deposit/Consignation with proper judicial
authorities
e. Subsequent notice of Consignation (2nd notice)
EFFECTS: EXTINGUISHMENT OF OBLIGATION
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,
after acceptance by creditor or after judge
declares that consignation has been properly made
– risk of loss is shifted to creditor)
CONSIGNATION W/O PRIOR TENDER – allowed in:
a. Creditor absent or unknown/ does not appear at
the place of payment
b. Incapacitated to receive payment at the time it is
due
c. Refuses to issue receipt w/o just cause
d. 2 or more creditor claiming the same right to
collect
e. Title of obligation has been lost
TENDER OF PAYMENT DISTINGUISHED FROM
CONSIGNATION
TENDER OF PAYMENT CONSIGNATION
antecedent act; principal act; produces the
preparatory effects of payment
extrajudicial judicial
=========================================
TOPICS UNDER THE SYLLABUS
E. EXTINGUISHMENT OF OBLIGATIONS
2. Loss of determinate thing due or impossibility or
difficulty of performance
=========================================
2. LOSS OF DETERMINATE THING OR IMPOSSIBILITY OR
DIFFICULTY OF PERFORMANCE
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LOSS OF THE THING DUE: partial or total/ includes
impossibility of performance
WHEN IS THERE A LOSS
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
WHEN IS THERE IMPOSSIBILITY OF PERFORMANCE:
a. Physical impossibility
b. Legal impossibility
i. Directly – caused as when prohibited by law
ii. Indirectly – caused as when debtor is required
to enter a military draft
EFFECT OF LOSS IN OBLIGATION TO DELIVER A SPECIFIC
THING
GENERAL RULE: Loss shall extinguish the obligation
EXCEPTIONS:
a. If by law the obligor is liable even for fortuitous event
b. If by stipulation the obligor is liable even for
fortuitous event
c. If the nature of the obligation requires the
assumption of the risk
d. If the loss of the thing occurs after the obligor
incurred in delay
e. If the loss of the thing occurs after the obligor
incurred delay
f. If the obligor promised to deliver the same thing to
two or more persons who do not have the same
interest
g. IF the obligation is generic, unless the object is a
particular class or group with specific or determinate
qualities
OBLIGATION TO DELIVER A GENERIC THING
GENERAL RULE: Not extinguished
EXCEPTIONS:
a. If the generic thing is delimited
b. If the generic thing has already been segregated
c. Monetary obligation
EFFECT OF IMPOSSIBILITY OF PERFROMANCE
OBLIGATION TO DO
CIVIL LAW REVIEWER
GENERAL RULE: Debtor is released when prestation
becomes legally or physically impossible without fault on
part of debtor
EFFECT OF PARTIAL LOSS
a. When loss is significant – may be enough to
extinguish obligation
b. When loss insignificant – not enough to extinguish
obligation
NOTE:
 Judicial determination of extent is necessary
 Doctrine of Unforeseen Events: The court is
authorized to release the obligor, in whole or in
part, when the service has become so difficult as
to be manifestly beyond the contemplation of the
parties.
 Doctrine of Subjective Impossibility: The obligation
undoubtedly becomes impossible if there is no
physical or legal loss but the object obligation
belongs to another person; the obligor must
indemnify the obligee for the damages suffered by
the latter.
WHEN THING IS LOST IN THE POSSESSION OF THE DEBTOR
Presumption: Loss due to debtor’s fault (disputable)
Exception: natural calamity, earthquake, flood, storm
REBUS SIC STANTIBUS: agreement is valid only if the same
conditions prevailing at time of contracting continue to exist
at the time of performance; Obligor may be released in
whole or in part based on this ground
REQUISITES:
A. The event or change could not have been foreseen at the
time of the execution of the contract
B. The performance is extremely difficult, but not
impossible (because if it is impossible, it is extinguished by
impossibility)
C. The event was not due to the act of any of the parties
D. The contract is for a future prestation
==========================================
TOPICS UNDER THE SYLLABUS
E. EXTINGUISHMENT OF OBLIGATIONS
IN 3. Condonation or Remission of Debt
=========================================
3. CONDONATION OR REMISSION OF DEBT
Page 104 of 338
CONDONATION/REMISSION OF THE DEBT – gratuitous
abandonment of debt; right to claim; donation; rules of ==========================================
donation applies; express or implied TOPICS UNDER THE SYLLABUS
E. EXTINGUISHMENT OF OBLIGATIONS
REQUISITES: 4. Confusion or Merger
a. There must be an agreement =========================================
b. There must be a subject matter (object of the
4. CONFUSION OR MERGER
remission, otherwise there would be nothing to
condone)
CONFUSION OR MERGER: – character of debtor and
c. Cause of consideration must be liberality
creditor is merged in same person with respect to same
(Essentially gratuitous, an act of liberality )
obligation
d. Parties must be capacitated and must consent;
requires acceptance by obligor; implied in mortis
REQUISITES:
causa and expressed inter vivos
a. It must take place between principal debtor and
e. Formalities of a donation are required in the case
principal creditor only
of an express remission
b. Merger must be clear and definite
f. Revocable – subject to rule on inofficious donation
c. The obligation involved must be same and identical –
( excessive, legitime is impaired ) and ingratitude
one obligation only
and condition not followed
g. Obligation remitted must have been demandable d. Revocable, if reason for confusion ceases, the
at the time of remission obligation is revived
h. Waivers or remission are not to be presumed
=========================================
generally
TOPICS UNDER THE SYLLABUS
FORMS EXTENT KINDS E. EXTINGUISHMENT OF OBLIGATIONS
a. Express – a. Total a. Principal – accessory 5. Compensation
formalities of also condoned =========================================
donation 5. COMPENSATION
b. Implied – b. Partial b. Accessory – principal
conduct is still outstanding COMPENSATION: Set off; it is a mode of extinguishment to
sufficient the concurrent amount the obligation of persons who are in
c. Accessory obligation of their own right reciprocally debtors or creditors
pledge – condoned; REQUISITES:
presumption only, a. Both parties must be mutually creditors and
rebuttable debtors - in their own right and as principals
b. Both debts must consist in sum of money or if
REQUISITES OF IMPLIED CONDONATION consumable , of the same kind or quality
1. Voluntary delivery – presumption; when evidence of c. Both debts are due
indebtedness is w/ debtor – presumed voluntarily d. Both debts are liquidated and demandable
delivery by creditor; rebuttable (determined)
2. Effect of delivery of evidence of indebtedness is e. Neither debt must be retained in a controversy
conclusion that debt is condoned – already conclusion; commenced by 3rd person and communicated w/
voluntary delivery of private document debtor (neither debt is garnished)
a. If in hands of joint debtor – only his share is
condoned 1. Kinds OF COMPENSATION
b. If in hands of solidary debtor - whole debt is a. Legal – by operation of law; as long as 5 requisites
condoned concur- even if unknown to parties and if payable
c. Tacit – voluntary destruction of instrument by in diff places; indemnity for expense of exchanges;
creditor; made to prescribe w/o demanding

CIVIL LAW REVIEWER Page 105 of 338

 even if not equal debts – only up to concurring
amount
b. Conventional – agreement of parties is enough,
forget other requirement as long as both
consented
c. Facultative – one party has choice of
claiming/opposing one who has benefit of period
may choose to compensate:
i. Not all requisites are present
ii. Depositum; commodatum; criminal offense;
claim for future support; taxes
d. Judicial – set off; upon order of the court; needs
pleading and proof; all requirements must concur
except liquidation
e. Total – when 2 debts are of the same amount
f. Partial – when 2 debts are not of the same amount
EFFECT OF ASSIGNMENT OF CREDIT TO 3RD PERSON; CAN
THERE STILL BE COMPENSATION
a. If made after compensation took place – no effect;
compensation already perfected
b. If made before compensation took place –
depends
i. With consent of debtor – debtor is estopped
unless he reserves his right and gave notice to
assignee
ii. With knowledge but w/o consent of debtor –
compensation may be set up as to debts
maturing prior to assignment
iii. W/o knowledge – compensation may be set-
up on all debts prior to his knowledge
COMPENSATION DISTINGUISHED FROM CONFUSION
COMPENSATION CONFUSION
2 persons; each is a debtor only 1 person who is
and creditor of each other creditor and debtor of
himself
2 obligations one obligation
indirect payment impossibility of payment
COMPENSATION DISTINGUISHED FROM PAYMENT
COMPENSATION PAYMENT
capacity not necessary capacity to dispose and
capacity to receive required
may be partial must be complete
performance performance
Simpler
more guarantee and less
risk
CIVIL LAW REVIEWER
may take place by involves action or delivery of
operation of law the amount paid
COMPENSATION DISTINGUISHED FROM COUNTERCLAIM
COMPENSATION COUNTERCLAIM
takes place by operation of law must be pleaded to be
and extinguishes reciprocally 2 effectual
claims as soon as they exist
simultaneously to the
concurrent amounts
2. Obligations Not Compensable
 When one of the debts arises from a depositum or
from the obligations of a depositary or of a baliee
in commodatum. (Art. 1287)
 Against a creditor who has a claim for support due
by gratuitous title, without prejudice to Article 301
par. 2 (Article 1287)
 If one of the debts consists in civil liability arising
from a penal offense. (Art. 1288)
=========================================
TOPICS UNDER THE SYLLABUS
E. EXTINGUISHMENT OF OBLIGATIONS
5. Novation
=========================================
5. NOVATION
NOVATION: Extinguishment of obligation by creating/
substituting a new one in its place
 Changing object or principal conditions
 Substituting person of debtor
 Subrogating 3rd person in right of creditor
REQUISITES:
a. Valid obligation
b. Intent to extinguish old obligation – expressed or
implied: completely/substantially incompatible old
and new obligation on every point
c. Capacity and consent of parties to the new obligation
d. Valid new obligation
EFFECTS OF NOVATION:
a. Extinguishment of principal carries accessory, except:
i. Stipulation to contrary
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 ii. Stipulation pour autrui unless beneficiary 2. Delegatario - creditor
consents 3. Delegado – new debtor
iii. Modificatory novation only; obliged to w/c is
less onerous
iv. Old obligation is void
b. Old obligation subsists if new obligation is void or EXPROMISION DISTINGUISHED FROM DELEGACION
voidable but annulled already (except: intention of EXPROMISION DELEGACION
parties) Intention: old debtor be released from the obligation
c. If old obligation has condition Consent of creditor may be express or tacit but not
presumed by acceptance of payment from third person
i. If Resolutory and it occurred – old obligation
Donation cannot be presumed
already extinguished; no new obligation since
consent of creditor consent of debtor (initiates),
nothing to novate and third person creditor and third person; need
ii. If Suspensive and it never occurred –as if no not be given simultaneously
obligation; also nothing to novate governed by the same applies in the absence of
d. If old obligation has condition, must be compatible with rules of payment an agreement by old and new
the new obligation; if new is w/o condition – deemed by third persons debtors
attached to new if w/o knowledge subrogation
of debtor,
e. If new obligation has condition
beneficial
i. If resolutory: valid reimbursement, no
ii. If suspensive and did not materialize: old subrogation
obligation is enforced new debtor's same unless new debtor is
insolvency does known to the public as insolvent
KINDS OF NOVATION: not make old or old debtor knows of such
1. REAL/OBJECTIVE – change object, cause/consideration debtor liable insolvency at the time of
delegacion
or principal condition
creditor may not recover from
old debtor if he knows of such
2. PERSONAL/SUBJECTIVE insolvency of the new debtor
i. Substituting person of debtor (passive) quite rare delegante (old)
delegado (new)
 EXPROMISION: initiative is from 3rd delegatario (creditor)
person or new debtor; new debtor and
creditor to consent; old debtor released ii. Subrogating 3rd person to rights of creditor ( active )
from obligation; subject to full 1. Conventional - agreement and consent of all parties;
reimbursement and subrogation if made clearly established
w/ consent of old debtor; if w/o consent 2. Legal - takes place by operation of law; no need for
or against will , only beneficial consent; not presumed except as
reimbursement; if new debtor is provided for in law:
insolvent, not responsible since w/o his
consent PRESUMED WHEN -
• Creditor pays another preferred creditor even w/o
 DELEGACION: initiative of old debtor; all debtor’s knowledge
parties to consent; full reimbursement; • 3rd person not interested in obligation pays w/ approval
if insolvent new debtor – not of debtor
responsible old debtor because • Person interested in fulfillment of obligation pays debt
obligation extinguished by valid even w/o knowledge of debtor
novation unless: insolvency already
existing and of public knowledge or
know to him at time of delegacion
1. Delegante – old debtor

CIVIL LAW REVIEWER Page 107 of 338

DIFFERENCE FROM PAYMENT BY 3rd PERSON vs CHANGE
OF DEBTOR
DIFFERENCE FROM CHANGE OF DEBTOR
RD
PAYMENT BY 3
PERSON
debtor is not debtor is released
necessarily released
from debt
can be done w/o needs consent of creditor
consent of creditor – express or implied

one obligation two obligations; one is

extinguished and new one created
3rd person has no new debtor is obliged to pay
obligation to pay if
insolvent

CONVENTIONAL SUBROGATION DISTINGUISHED FROM

ASSIGNMENT OF RIGHTS
CONVENTIONAL ASSIGNMENT OF RIGHTS
SUBROGATION
Governed by Arts. Governed by Arts. 1624 to 1627
1300-1304
debtor’s consent is debtor’s consent is not required
required
extinguishes the transmission of right of the
obligation and gives creditor to third person without
rise to a new one modifying or extinguishing the
obligation
defects and vices in defects and vices in the old
the old obligation are obligation and not cured
cured
takes effect upon as far as the debtor is concerned,
moment of novation takes effect upon notification
or subrogation

END OF DISCUSSION ON TOPIC

================================

CIVIL LAW REVIEWER Page 108 of 338

 CONTRACTS
A. GENERAL PROVISIONS
================================
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS
1. Essential Requisites (Art. 1261)
2. Kinds of Contracts
A. Consensual
B. Real
C. Formal or solemn
C.1. Donations (Arts. 748-749)
C.2. Partnership where real property
contributed (Arts. 1771, 1773)
C.3. Antichresis (Art. 2134)
C.4. Agency to sell real property or an interest
therein (Art. 1874)
C.5. Stipulation to charge interest (Art. 1956)
C.6. Stipulation limiting common carrier’s duty
of extraordinary diligence to ordinary diligence
(Art. 1744)
C.7. Chattel mortgage
C.8. Sale of large cattle
3. Formality (Arts. 1356, 1357, 1358)
4. Reformation of Contracts
5. Interpretation of Contracts
6. Defective Contracts
A. Rescissible contracts (Art. 1381)
A.1. Difference with rescission (resolution)
under Art. 1191
B. Voidable contracts (Arts. 1328-1344, 1390-
1402)
C. Unenforceable contracts (Arts. 1403-1408,
1317)
D. Void contracts (Arts. 1409, 1346)
(1) Pactum commissorium (Arts. 2088, 2130,
1390)
(2) Pactum de non alienando (Art. 2130)
(3) Pactum leonine (Art. 1799)
CIVIL LAW REVIEWER
7. Effect of contracts (Art. 1311)
=========================================
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS
1. Essential Requisites
=========================================
1. ESSENTIAL REQUISITES
ESSENTIAL ELEMENTS:
1. Consent
2. Subject Matter
3. Consideration
A. CONSENT
CONSENT – meeting of minds between parties on subject
matter and cause of contract; concurrence of offer and
acceptance
REQUIREMENTS:
1. Must be manifested by the concurrence of the offer and
payment;
2. Parties are legally capacitate to enter into contracts
3. Consent must be intelligent, free, spontaneous, and real
AUTO CONTRACTS - made by a person acting in another’s
name in one capacity
COLLECTIVE CONTRACTS - will of majority binds a minority
to an agreement notwithstanding the opposition of the
latter
CONTRACTS OF ADHESION - one party has already a
prepared form of a contract, containing the stipulations he
desires, and he simply asks the other party to agree to them
if he wants to enter into the contract
NOTE: We follow the theory of cognition and not the theory
of manifestation.
Under our Civil Law, the offer and acceptance concur only
when the offeror comes to know, and not when the offeree
merely manifests his acceptance.
OFFER – a proposal made by one party to another to enter
into a contract; must be certain or definite, complete and
intentional
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ELEMENTS OF VALID OFFER / ELEMENTS OF VALID
ACCEPTANCE
1. Definite--unequivocal
2. Complete--unconditional
3. Intentional
WHEN OFFER BECOMES INEFFECTIVE:
1. Death, civil interdiction, insanity or insolvency of either
party before acceptance is conveyed
2. Express or implied revocation of the offer by the
offeree
3. Qualified or conditional acceptance of the offer, which
becomes a counter-offer
4. Subject matter becomes illegal or impossible before
acceptance is communicated
ACCEPTANCE - manifestation by the offeree of his assent to
the terms of the offer; must be absolute
NOTE: A qualified acceptance constitutes counter-offer
PERIOD FOR ACCEPTANCE
1. Stated fixed period in the offer
2. No stated fixed period
a. Offer is made to a person present – acceptance
must be made immediately
b. Offer is made to a person absent – acceptance
may be made within such time that, under normal
circumstances, an answer can be received from
him
NOTE: Acceptance may be revoked before it comes to the
knowledge of the offeror. (withdrawal of offer)
AMPLIFIED ACCEPTANCE
Under certain circumstances, a mere amplification on the
offer must be understood as an acceptance of the original
offer, plus a new offer, which is contained in the
amplification.
RULE ON COMPLEX OFFERS
1. Offers are interrelated – contract is perfected if all
the offers are accepted
2. Offers are not interrelated – single acceptance of
each offer results in a perfected contract unless the
offeror has made it clear that one is dependent upon
the other and acceptance of both is necessary.
 Offer inter praesentes must be accepted
IMMEDIATELY. If the parties intended that there
CIVIL LAW REVIEWER
should be an express acceptance, the contract will
be perfected only upon knowledge by the offeror
of the express acceptance by the offeree of the
offer. An acceptance which is not made in the
manner prescribe by the offeror is NOT EFFECTIVE,
BUT A COUNTER-OFFER which the offeror may
accept or reject. Malbarosa v. CA, [G.R. No.
125761, April 30, 2003]
RULE ON ADVERTISEMENTS AS OFFERS
Business advertisements – Not a definite offer, but mere
invitation to make an offer, unless it appears otherwise
Advertisement for Bidders – only invitation to make
proposals and advertiser is not bound to accept the highest
or lowest bidder, unless appears otherwise
THE 4 THEORIES IN ACCEPTANCE OF OFFER BY TELEGRAM
OR LETTER
1. Manifestation – perfected from the moment the
acceptance is declared or made
2. Expedition – perfected from the moment the offeree
transmits the notification of acceptance
3. Reception – perfected from the moment the offeror
receives the letter
4. Cognition – perfected from the moment the acceptance
comes to the knowledge of the offeror
NOTE: Contracts under the Civil Code generally adhere to
the Cognition Theory while transactions under the Code of
Commerce use the Manifestation Theory.
When the offeror refuses to open the letter or telegram he
is held to have a constructive notice of the contents thereof
and will be bound by the acceptance of the offeree. (Jurado
citing Castan)
OPTION: option may be withdrawn anytime before
acceptance is communicated but not when supported by a
consideration other than purchase price: option money
EFFECTS OF OPTION:
 NOT supported by independent consideration –
the offeror can withdraw the privilege at any time
by communicating the withdrawal before
acceptance
 Supported by independent consideration – the
offeror cannot withdraw his offer
Page 110 of 338
 INCAPACITY DISTINGUISHED FROM DISQUALIFICATION
PERSONS WHO CANNOT GIVE CONSENT TO A CONTRACT: INCAPACITY DISQUALIFICATION
1. Minors Restrains the exercise of Restrains the very right itself
2. Insane or demented persons, unless the contract was the right to contract
entered into during a lucid interval May still enter into Absolutely disqualified
3. Illiterates/ deaf-mutes who do not know how to write contract through parent,
4. Intoxicated and under hypnotic spell guardian or legal
5. Art 1331 - person under mistake; mistake may deprive representative
intelligence Based upon subjective Based upon public policy and
6. Art 1338 - person induced by fraud (dolo causante) circumstance of certain morality
NOTE: Dolus bonus (usual exaggerations in trade) are not in person
themselves fraudulent Contracts entered into are Contracts entered into are
merely voidable void
RULE ON CONTRACTS ENTERED INTO BY MINORS
GENERAL RULE: VOIDABLE
CAUSES WHICH VITIATE FREEDOM
EXCEPTIONS:
1. Violence
a. Upon reaching age of majority – they ratify the
 REQUISITES
same
a. Irresistible physical force
b. They were entered unto by a guardian and the
b. Such force is the determining cause for giving
court having jurisdiction had approved the same
consent
c. They were contracts for necessities such as food,
but here the persons who are bound to give
2. Intimidation
them support should pay therefor
 REQUISITES:
d. Minor is estopped and cannot be absolved from
b. Determining cause for the contract
the contract they entered into for having
c. Threatened act is unjust and unlawful
misrepresented his age and misled the other
d. Real and serious
party through his active misrepresentation.
e. Produces a well grounded fear that the person
Mercado vs. Espiritu, [37 Phil 215] HOWEVER,
making it will carry it over
minors can set up the defense of minority to
Reluctant consent – a contract is valid even
resist the claim when there is only passive
though one of the parties entered into it against
misrepresentation, as they did not disclose their
his wishes and desires or even against his better
minority because they had no juridical duty to
judgment. Contracts are also valid even though
disclose their inability. (Braganza vs. De Villa
they are entered into by one of the parties without
Abrille, [105 Phil 456]
hope of advantage or profit. Martinez vs.
Hongkong and Shanghai Bank, [15 Phil 252]
DISQUALIFIED TO ENTER INTO CONTRACTS: (contracts
entered into are void)
3. Mistake
1. Those under civil interdiction
 Not only wrong conception of the thing but also
2. Hospitalized lepers
the lack of knowledge with respect to it (Manresa)
3. Prodigals
4. Deaf and dumb who are unable to read and write
Two General Kinds of Mistake:
5. Those who by reason of age, disease, weak mind
a. Mistake of Fact – when one or both of the
and other similar causes, cannot without outside aid, take
contracting parties believe that a fact exist when in
care of themselves and manage their property, becoming an
reality it does not, or that such fact does not exist when
easy prey for deceit and exploitation (Rule 92, Sec.2, Rules
in reality it does
of Court)
b. Mistake of Law
General Rule: Mistake does not vitiate consent

CIVIL LAW REVIEWER Page 111 of 338

 Exception: Mutual error as to the effect of an  When a person takes improper advantage of his
agreement when the real purpose of the parties is power over the will of another, depriving the latter
frustrated of a reasonable freedom of choice

4. Fraud SIMULATED CONTRACTS

 When, through insidious words or machinations of 1. Absolute – no intention to be bound at all, fictitious
1 of the contracting parties, the other is induced to only – void from beginning
WANT OF CAUSE EFFECT 2. Relative – there is intention to be bound but
ABSENCE OF Void - produce no legal effect concealed; concealed contract binds:
CAUSA c. No prejudice to 3rd persons
ILLEGALITY OF Void - produce no legal effect d. Not contrary to law, morals, etc.
CAUSA
B. OBJECT
FALSITY OF Voidable – party must prove that
REQUISITES:
CAUSA cause is untruthful; presumption of
1. Within the commerce of man – either existing or in
validity but rebuttable
potency
CAUSA NOT Presumed to Exist - burden of proof
2. Licit or not contrary to law, good customs
STATED IN is on the person assailing its
3. Possible
CONTRACT existence
4. Determinate as to its kind or determinable w/o need to
INADEQUACY OF Does not Invalidate Contract per se
enter into a new contract
CAUSA Exceptions:
5. Transmissible
* Fraud
* Mistake
* Undue influence THINGS WHICH CANNOT BE THE OBJECT OF CONTRACT:
* Cases specified by law 1. Things which are outside the commerce of men
- contracts entered when ward 2. Intransmissible rights
suffers lesion of more than 25% 3. Future inheritance, except in cases expressly authorized
enter into a contract which, without them, he by law
would not have agreed to. 4. Services which are contrary to law, morals, good
KINDS: customs, public order or public policy
o Causal Fraud (Dolo Causante)- Fraud in the 5. Impossible things or services
PERFECTION of the contract 6. Objects which are not possible of determination as to
 Deception of serious character, without which the their kind
other party would not have entered into
 It is the cause which induces the party to enter C. CAUSE (CAUSA)
into a contract CAUSA- Immediate, direct and most proximate reason why
 Renders the contract voidable. Insidious words or parties enter into contract
machinations are employed REQUISITES:
 Not employed by both or by third person 1. It must exist
 Ground for annulment 2. It must be true
3. It must be licit
o Incidental Fraud (Dolo Incidente)- Fraud in the
PERFORMANCE of an obligation MOTIVE:
 Deception which are not serious and without Purely private reason; illegality does not invalidate contract
which the other party would still have entered into except when it predetermines purpose of contract; when
the contract merged into one
 It is not the cause which induced the party to enter
into a contract CAUSE DISTINGUISHED FROM MOTIVE
 Renders the party liable for damages CAUSE MOTIVE
5. Undue influence Direct and most proximate Indirect or remote reasons

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reason of a contract obligation contract
Objective and juridical Psychological or purely
reason of contract personal reason CONTRACT DISTINGUISHED FROM AGREEMENT
Cause us always same for The motive differs for each CONTRACT AGREEMENT
each contracting party contracting party Agreements enforceable Cannot be enforced by
Legality or illegality of cause Legality or illegality of through legal proceedings action in courts of justice
affects the existence or motive does not affect the Should have all the Need not have all the
validity of the contract existence or validity of requisites of a contract requisites
contract There must be an There need not be a
agreement contract
CAUSA IN SOME CONTRACTS:
1. Onerous contracts – the prestation of promise of a A. PRINCIPAL CHARACTERISTICS:
thing or service by the other 1. Autonomy of wills – parties may stipulate anything
2. Remuneratory contracts – the service or benefit as long as not illegal, immoral, etc.
remunerated 2. Mutuality – performance or validity binds both
3. Pure Beneficence – mere liberality of the donor or parties; not left to will of one of parties
benefactor 3. Obligatory Force and Consensuality – parties are
4. Accessory – identical with cause of principal contract, bound from perfection of contract; contracts are
the loan which it derived its life and existence (ex: perfected by mere consent and from that moment the
mortgage or pledge) parties are bound not only to the fulfillment of what
has been expressly stipulated but also to all
Want of Cause - There is a total lack or absence of cause consequences which, according to their nature may be
in keeping with good faith, usage and law.
Illegal Cause – The cause is contrary to law, morals, good 4. Fulfill what has been expressly stipulated
customs, public order and public policy 5. All consequences w/c may be in keeping with good
faith, usage and law
False Cause – The cause is stated but it is not true 6. Relativity – binding only between the parties, their
assigns, heirs; strangers cannot demand enforcement
Moral Obligation as Cause
 Where the moral obligation arises wholly from ethical B. EXCEPTION TO RELATIVITY:
considerations, unconnected with any civil obligations, it 1. Accion Pauliana
cannot constitute a sufficient cause or consideration to 2. Accion directa
support an onerous contract. Fisher vs. Robb [69 Phil 101] 3. Stipulation pour autrui
 Where such moral obligation is based upon a previous
civil obligation which has already been barred by the statute C. REQUISITES OF STIPULATION POUR AUTRUI
of limitations at the time when the contract is entered into, 1. Parties must have clearly and deliberately
it constitutes a sufficient cause or consideration to support conferred a favor upon a 3rd person
a contract Villaroel vs. Estrada 71 Phil 14] 2. The stipulation in favor of a 3rd person should be a
part of, not the whole contract
A contract is a meeting of minds between two persons 3. That the favorable stipulation should not be
whereby one binds himself, with respect to the other, to conditioned or compensated by any kind of obligation
give something or to render some service whatsoever
4. Neither of the contracting parties bears the legal
representation or authorization of 3rd party
CONTRACT DISTINGUISHED FROM OBLIGATION 5. The third person communicates his acceptance
CONTRACT OBLIGATION before revocation by the original parties
One of the sources of Legal tie or relation itself 6. Art 1312; Art 1314
obligations
There must be an There need not be a

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In contracts creating real rights, third persons who come
into possession of the object of the contract are bound
thereby, subject to the provisions of the Mortgage Law and
the Land Registration Laws
D. REQUISITES:
1. Existence of a valid contract
2. Knowledge of the contract by a 3rd person
3. Interference by the 3rd person
E. TEST OF BENFICIAL SITUATION
 The fairest to determine whether the interest of
3rd person in a contract is a stipulation pour autrui
or merely an incidental interest is to rely upon the
intention of the parties as disclosed by their
contract. Determine whether contracting parties
desired to tender him such interest Uy Tam vs.
Leonard, [30 Phil 471]
=========================================
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS
2. Kinds of Contracts
=========================================
2. KINDS OF CONTRACTS
1. As to perfection or formation
a. Consensual – perfected by agreement of parties
b. Real – perfected by delivery (e.g. commodatum,
pledge, deposit)
c. Formal/solemn – perfected by conformity to
essential formalities (donation )
2. As to cause
a. Onerous – with valuable consideration
b. Gratuitous – founded on liberality
c. Remunerative – prestation is given for service
previously rendered not as obligation
3. As to importance or dependence of one upon another
a. Principal – contract may stand alone
b. Accessory – depends on another contract for its
existence; may not exist on its own
c. Preparatory – not an end by itself; a means
through which future contracts may be made
4. As to parties obliged
a. Unilateral – only one of the parties has an
obligations
b. Bilateral – both parties are required to render
reciprocal prestations
5. As to form
a. Common or informal – require no particular form
b. Special or formal – require some particular
Form
6. As to their purpose
a. Transfer of ownership
b. Conveyance of use
c. Rendition of service
7. As to their subject matter
a. Things
b. Services
8. As to the risk involved
a. Commutative – example lease
b. Aleatory – example insurance
9. As to name or designation
a. Nominate – those which have their own distinctive
individuality and are regulated by special
provisions of law
b. Innominate – those which lack individuality and
are not regulated by special provisions of law
II. Do ut des – I give that you may give
III. Do ut facias – I give that you may do
IV. Facio ut des – I do that you may give
V. Facio ut facias – I do that you may do
NOTE: According to some authorities, do ut des is no longer
an innominate contract. It has already been given a name of
its own, i.e. barter or exchange. (Art. 1638)
STAGES IN A CONTRACT:
1. Preparation - negotiation
2. Perfection/birth
3. Consummation – performance
FORMAL CONTRACTS
1. Donation
 The donation of a movable may be made orally or
in writing (Article 748)
 An oral donation requires the simultaneous
delivery of the thing or of the document
representing the right donated. (Article 748)
 If the value of the personal property donated
exceeds five thousand pesos, the donation and the
acceptance shall be made in writing. Otherwise,
the donation shall be void. (Article 748)
 In order that the donation of an immovable may
be valid, it must be made in a public document,
specifying therein the property donated and the
value of the charges which the donee must satisfy.
(Article 749)
 The acceptance may be made in the same deed of
donation or in a separate public document, but it

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 shall not take effect unless it is done during the
lifetime of the donor. (Article 749)
 If the acceptance is made in a separate instrument,
the donor shall be notified thereof in an authentic
form, and this step shall be noted in both
instruments. (Article 749)
2. Partnership
 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. (Article 1771)
 A contract of partnership is void, whenever
immovable property is contributed thereto, if an
inventory of said property is not made, signed by
the parties, and attached to the public instrument.
(Article 1773)
3. Antichresis
 The amount of the principal and of the interest
shall be specified in writing; otherwise, the
contract of antichresis shall be void
4. Agency to Sell Real Property
 When a sale of a piece of land or any interest
therein is through an agent, the authority of the
latter shall be in writing; otherwise, the sale shall
be void. (Article 1874)
5. Interest
 No interest shall be due unless it has been
expressly stipulated in writing (Article 1876)
6. Ordinary Diligence
 A stipulation between the common carrier and the
shipper or owner limiting the liability of the former
for the loss, destruction, or deterioration of the
goods to a degree less than extraordinary diligence
shall be valid, provided it be:
o In writing, signed by the shipper or
owner;
o Supported by a valuable consideration
other than the service rendered by the
common carrier; and
o Reasonable, just and not contrary to
public policy. (Article 1744)
CIVIL LAW REVIEWER
7. Chattel Mortgage
 By a chattel mortgage, personal property is
recorded in the Chattel Mortgage Register as a
security for the performance of an obligation. If
the movable, instead of being recorded, is
delivered to the creditor or a third person, the
contract is a pledge and not a chattel mortgage.
8. Sale of Large Cattle
 The form of sale of large cattle shall be governed
by special laws. (Article 1581)
=========================================
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS
3. Formality
=========================================
3. FORM OF CONTRACTS
FORM: in some kind of contracts only as contracts are
generally consensual; form is a manner in which a contract
is executed or manifested
1. Informal – may be entered into whatever form as long
as there is consent, object and cause
2. Formal – required by law to be in certain specified form
such as: donation of real property, stipulation to pay
interest, transfer of large cattle, sale of land thru agent,
contract of antichresis, contract of partnership,
registration of chattel mortgage, donation of personal
prop in excess of 5,000
3. Real – creation of real rights over immovable prop must
be written
WHEN FORM IS IMPORTANT:
1. For validity (formal/solemn contracts)
2. For enforceability (statute of frauds)
3. For convenience
 GENERAL RULE: contract is valid and binding in
whatever form provided that 3 essential requisites
concur
 EXCEPTIONS
a. Law requires contract to be in some form for
validity - donation and acceptance of real
property
b. Law requires contract to be in some form to be
enforceable - Statute of Frauds; contract is valid
Page 115 of 338
 but right to enforce cannot be exercised; need
ratification to be enforceable
c. Law requires contract to be in some form for
convenience - contract is valid and enforceable,
needed only to bind 3rd parties
Ex: public documents needed for the ff:
i.Contracts w/c object is creation, transmission
or reformation of real rights over
immovables
ii.Cession, repudiation, renunciation
hereditary rights/CPG
iii.Power to administer property for another
iv.Cession of action of rights proceeding from an
act appearing in a public inst.
v.All other docs where amount involved is in
excess of 500 (must be written even private
docs )
NOTE: RA 8792 (E-COMMERCE ACT) – formal requirements
to make contracts effective as against third persons and to
establish the existence of a contract are deemed complied
with provided that the electronic document is unaltered and
can be authenticated as to be useable for future reference.
=========================================
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS
4. Reformation of Instruments
=========================================
4. REFORMATION OF INSTRUMENTS
REFORMATION OF CONTRACTS: remedy to conform to real
intention of parties due to mistake, fraud, inequitable
conduct, accident
CAUSES/GROUNDS:
1. Mutual: instrument includes something w/c should not
be there or omit what should be there
a. Mutual
b. Mistake of fact
c. Clear and convincing proof
d. Causes failure of instrument to express true
intention
2. Unilateral
a. One party was mistaken
b. Other either acted fraudulently or inequitably or
knew but concealed
c. Party in good faith may ask for reformation
CIVIL LAW REVIEWER
3. Mistake by 3rd persons – due to ignorance, lack of skill,
negligence, bad faith of drafter, clerk or typist
4. Others specified by law – to avoid frustration of true
intent
Requisites:
a. There is a written instrument
b. There is meeting of minds
c. True intention not expressed in instrument
d. Clear and convincing proof
of e. Facts put in issue in pleadings
NOTE:
 Prescribes in 10 years from date of execution of
instrument
 When one of the parties has brought an action to
enforce the instrument, no subsequent reformation can be
asked. (principle of estoppel)
 Reformation is based on justice and equity
 When there is no meeting of the minds, the proper
remedy is annulment and not reformation
WHEN REFORMATION NOT AVAILABLE:
1. Simple donation inter vivos
2. Wills
3. When real agreement is void
4. Estoppel when party has brought suit to enforce it
=========================================
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS
5. Interpretation of Contracts
=========================================
5. INTERPRETATION OF CONTRACTS
GENERAL RULE: If the terms of the contract are clear and
leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulations shall control.
(Art. 1370)
EXCEPTION: It is alleged and proved that the intention of
the parties is otherwise.
Sec. 13 Rule 130 of the Rules of Court: “When an
instrument consists partly of written words and partly of a
printed form, and the two are inconsistent, the former
controls the latter.”
NOTE:
1. If the law is clear, there is no room for interpretation
2. In case of ambiguity, the most important guideline is
intention of the parties.
Page 116 of 338
3. Ambiguity is construed against the one who caused it
because he had control (e.g. contract of adhesion).
However, this rule does not apply to all contracts of
adhesion (e.g. if contract is negotiated)
4. In order to judge the intention of the contracting parties,
their contemporaneous and subsequent acts shall be
principally considered. (Art. 1371)
5. Words which may have different significations shall be
understood in that which is most in keeping with the nature
and object of the contract. (Art. 1375)
6. The interpretation of obscure words or stipulations in a
contract shall not favor the party who caused the obscurity.
(Art. 1377)
7. If the court cannot resolve the ambiguity based on the
elements of the contract:
a. If a gratuitous contract, the least transmission of
rights and interests shall prevail
b. If an onerous contract, doubt shall be settled in
favor of the greatest reciprocity of interest
8. The principles of interpretation stated in Rule 123 of the
Rules of Court shall likewise be observed in the construction
of contracts
In the case of Felipe v. Heirs of Maximo Aldon [G.R. No. L-
60174, February 16, 1983], the Court stated that the
description that a contract is “invalid” is no longer precise,
since the Civil Code uses specific names in designating
defective contract (e.g. rescissible, voidable, unenforceable,
and void or inexistent contracts)
=========================================
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS
6. Defective Contracts
=========================================
6. DEFECTIVE CONTRACTS
KINDS OF DEFECTIVE CONTRACTS:
A. RESCISSIBLE CONTRACTS
RESCISSIBLE CONTRACTS - Those which have caused a
particular economic damage either to one of the parties or
to a 3rd person and which may be set aside even if valid. It
may be set aside in whole or in part, to the extent of the
damage caused
REQUISITES:
(a) Contract must be rescissible
Under Art 1381: Contracts entered into by persons
exercising fiduciary capacity:
CIVIL LAW REVIEWER
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 creditor (accion pauliana)
4. Objects of litigation; contract entered into by
defendant w/o knowledge or approval of litigants or
judicial authority
5. Provided for by law – Arts 1526, 1534, 1539, 1542,
1556, 1560, 1567 and 1659
 Art. 1526 – Unpaid seller of goods,
notwithstanding that the ownership in the
goods may have passed to the buyer, subject
to other provisions on Sales
 Art. 1534 – Unpaid seller having the right of
lien or having stopped the goods in transit,
where he expressly reserved his right to do so
in case the buyer should make default, or the
buyer has been in default in the payment of
the price for an unreasonable time
 Art. 1539 – In the sale of real estate at a rate
of a certain price for a unit of measure or
number, at the will of the vendee, when the
inferior value of the thing sold exceeds one-
tenth of the price agreed upon, or if the
vendee would not have bought the
immovable had he known of its smaller area
or inferior quality
 Art. 1542 – In the sale of real estate, made for
a lump sum, where the boundaries are
mentioned and the area or number within the
boundaries exceed that specified in the
contract, when the vendee does not accede
to the failure to deliver what has been
stipulated
 Art. 1556 – Should the vendee lose, by reason
of eviction, a part of the thing sold of such
importance, in relation to the whole, that he
would not have bought it without said part
 Art. 1560 – Vendee may ask for recession if
the immovable sold should be encumbered
with any non-apparent burden or servitude,
not mentioned in the agreement, of such a
nature that it must be presumed that the
vendee would not have acquired it had he
been aware thereof
Page 117 of 338
  Art. 1567 – In cases of breach of warranty 3. The creditor cannot in any legal manner collect his
against hidden defects of or encumbrances credit (subsidiary character of rescission)
upon the thing sold 4. The object of the contract must not be legally in the
 Art. 1658 – If the lessor or lessee should not possession of a 3rd person who did not act in bad faith.
comply with their obligations, the aggrieved
party may ask for rescission OBLIGATION CREATED BY THE RESCISSION OF THE
CONTRACT: Mutual Restitution
ART 1191 COMPARED TO ART 1381 a. Things w/c are the objects of the contract and their
RESCISSION IN ART 1191 RESCISSION PROPER IN fruits
ART 1381 b. Price with interest
It is a principal action it is a subsidiary remedy
retaliatory in character MUTUAL RESTITUTION NOT APPLICABLE WHEN
Only ground is non- There are 5 grounds to a. creditor did not receive anything from contract
performance of one’s rescind. Non-performance b. thing already in possession of party in good faith;
obligation or what is by the other is not subject to indemnity only; if there are 2 or more
incumbent upon him important alienations – liability of 1st infractor
Applies only to Applies to both unilateral
reciprocal obligation and reciprocal obligations BADGES OF FRAUD
Only a party to the Even a third person who is a. consideration of the conveyance is inadequate or
contract may demand prejudiced by the contract fictitious
fulfillment or seek the may demand the rescission b. transfer was made by a debtor after a suit has
rescission of the of the contract. been begun and while it is pending against him
contract c. sale upon credit by an insolvent debtor
Court may fix a period or Court cannot grant d. evidence of indebtedness or complete insolvency
grant extension of time extension of time for e. transfer of all his property by a debtor when he is
for the fulfillment of the fulfillment of the obligation financially embarrassed or insolvent
obligation f. transfer made between father and son where
Its purpose is to cancel Its purpose is to seek there is present any of the above circumstances
the contract reparation for the damage g. failure of the vendee to take exclusive possession
or injury caused, thus of the property
allowing partial rescission B. VOIDABLE CONTRACTS
of the contract VOIDABLE CONTRACTS -intrinsic defect; valid until annulled;
defect is due to vice of consent or legal incapacity
Under Art. 1382 - Payments made in a state of insolvency
1. Plaintiff has no other means to obtain reparation. CHARACTERISTICS:
2. Plaintiff must be able to return whatever he may be a. Effective until set aside
obliged to return due to rescission b. May be assailed or attacked only in an action for
3. The things must not have been passed to 3rd parties that purpose
who did not act in bad faith c. Can be confirmed (NOTE: confirmation is the
4. It must be made within the prescribed period (of 4 proper term for curing the defect of a voidable
years) contract)
d. Can be assailed only by the party whose consent
REQUISITES before a contract entered into in fraud of was defective or his heirs or assigns
creditors may be rescinded:
1. There must be credit existing prior to the celebration of WHAT CONTRACTS ARE VOIDABLE:
the contract. a. Minors
2. There must be fraud, or at least, the intent to commit b. Insane unless acted in lucid interval
fraud to the prejudice of the creditor seeking rescission c. Deaf mute who can’t read or write
d. Persons specially disqualified: civil interdiction

CIVIL LAW REVIEWER Page 118 of 338

e. In state of drunkenness
f. In state of hypnotic spell
MISTAKE
False belief of something which is contrary to the real
intention of the parties
REQUISITES:
a. Refers to the subject of the thing which is the object of
the contract
b. Refers to the nature of the contract
c. Refers to the principal conditions in an agreement
d. Error as to person - when it is the principal
consideration of the contract
e. Error as to legal effect - when mistake is mutual and
frustrates the real purpose of parties
VIOLENCE
Serious or irresistible force is employed to wrest consent
INTIMIDATION
One party is compelled by a reasonable and well-grounded
fear of an imminent and grave danger upon person and
property of himself, spouse, ascendants or descendants
(moral coercion)
UNDUE INFLUENCE
Person takes improper advantage of his power over will of
another depriving latter of reasonable freedom of choice
The doctrine on reluctant consent provides that a contract
is still valid even if one of the parties entered it against his
wishes or even against his better judgment. Contracts are
also valid even though they are entered into by one of the
parties without hope of advantage or profit. Martinez vs.
HSBC, [12 Phil 252]
FRAUD
Thru insidious words or machinations of contracting parties,
other is induced to enter into contract w/o w/c he will not
enter (dolo causante)
KINDS OF FRAUD IN THE PERFORMANCE OF OBLIGATION
OR CONTRACTS
a. Causal Fraud (dolo causante) – deception of serious
character without which the other party would not have
entered into; contract is VOIDABLE (Art. 1338)
b. Incidental Fraud (dolo incidente) – deception which are
not serious and without which the other party would still
CIVIL LAW REVIEWER
have entered into the contract; holds the guilty party liable
for DAMAGES (Art. 1344)
c. Tolerated Fraud – includes minimizing the defects of
the thing, exaggeration of its god qualities and giving it
qualities it does not have; LAWFUL misrepresentation
NOTE:
Expression of an opinion – not fraud unless made by expert
and other party relied on the former’s special knowledge
Fraud by third person – does not vitiate consent; only
action for damages except if there is collusion between one
party and the third person, or resulted to substantial
mistake, mutual between parties.
CAUSES OF EXTINCTION OF ACTION TO ANNUL
a. PRESCRIPTION - Period to bring an action for Annulment
i. Intimidation, violence, undue influence - 4 years from
time defect of consent ceases
ii. Mistake, fraud – 4 years from time of discovery
iii.Incapacity - From time guardianship ceases
 Discovery of fraud must be reckoned to have taken
place from the time the document was registered in
the office of the register of deeds. Registration
constitutes constructive notice to the whole world.
Carantes v. CA, [76 SCRA 514]
b. RATIFICATION
REQUISITES:
i. Knowledge of reason rendering contract
voidable
ii. Such reason must have ceased, except in case of
ratification effected by the guardian to contracts
entered into by an incapacitated,
iii. The injured party must have executed an act
which expressly or impliedly conveys an
intention to waive his right
c. LOSS OF THE THING which is the object of the contract
through fraud or fault of the person who is entitled to
annul the contract
NOTE: Object is lost through a fortuitous event, the contract
can still be annulled, but the person obliged to return the
same can be held liable only for the value of the thing at the
time of the loss, but without interest thereon.
Page 119 of 338
 Ratification cleanses the contract of its defects from the
moment it was constituted.
C. UNENFORCEABLE CONTRACT
UNENFORCEABLE CONTRACT – valid but cannot compel its
execution unless ratified; extrinsic defect; produce legal
effects only after ratified
KINDS:
a. Unauthorized or No sufficient authority – entered
into in the name of another when:
i. No authority conferred
ii. In excess of authority conferred (ultra vires)
b. Curable by Ratification - Both parties incapable of
giving consent -2 minor or 2 insane persons
c. Curable by Acknowledgment - Failure to comply
with Statute of Frauds
STATUTE OF FRAUDS:
i. Agreement to be performed within a year after making
contract
ii. Special promise to answer for debt, default or
miscarriage of another
iii. Agreement made in consideration of promise to marry
iv. Agreement for sale of goods, chattels or things in action
at price not less than 500; exception: auction when
recorded sale in sales book
v. Agreement for lease of property for more than one
year and sale of real property regardless of price
vi. Representation as to credit of another
TWO WAYS OF CURING UNENFORCEABLE CONTRACTS:
a. Failure of defendant to object in time, to the
presentation of parole evidence in court, the defect of
unenforceability is cured
b. Acceptance of benefits under the contract. If there is
performance in either part and there is acceptance of
performance, it takes it out of unenforceable contracts;
also estoppel sets in by accepting performance, the
defect is waived
NOTES:
 The contracts/agreements under the Statute of Frauds
require that the same be evidenced by some note or
memorandum or writing, subscribed by the party
charged or by his agent, otherwise, the said contracts
shall be unenforceable.
CIVIL LAW REVIEWER
 The Statute of Frauds applies only to executory
contracts, not to those that are partially or completely
fulfilled.
D. VOID OR INEXISTENT
VOID OR INEXISTENT – of no legal effect
CHARACTERISTICS:
a. It produces no effect whatsoever either against
or in favor of anyone
b. There is no action for annulment necessary as
such is ipso jure. A judicial declaration to that
effect is merely a declaration
c. It cannot be confirmed, ratified or cured
d. If performed, restoration is in order, except if
pari delicto will apply
e. The right to set up the defense of nullity cannot
be waived
f. Imprescriptible
g. Anyone may invoke the nullity of the contract
whenever its juridical effects are asserted
against him
KINDS OF VOID CONTRACT:
a. Those lacking in essential elements: no consent,
no object, no cause (inexistent ones) – essential
formalities are not complied with ( ex: donation
propter nuptias – should conform to formalities of
a donation to be valid )
i. Those w/c are absolutely simulated or
fictitious – no cause
ii. Those which cause or object did not exist at
the time of the transaction – no cause/object
iii. Those whose object is outside the commerce
of man – no object
iv. Those w/c contemplate an impossible service
– no object
v. Those w/c intention of parties relative to
principal object of the contract cannot be
ascertained
b. Prohibited by law
c. Those expressly prohibited or declared void by
law - Contracts w/c violate any legal provision,
whether it amounts to a crime or not
d. Illegal/Illicit ones – Those whose cause, object or
purpose is contrary to law, morals, good customs,
public order or public policy ; Ex: Contract to sell
marijuana
OTHER VOID CONTRACTS:
Page 120 of 338
1. PACTUM COMMISSORIUM (Arts. 2088, 2130, 1390)
ELEMENTS:
1. There should be a property mortgaged by way of security
for the payment of the principal obligation.
2. There should be a stipulation for automatic appropriation
by the creditor of the thing mortgaged in case of non-
payment of the principal obligation within the stipulated
period.
2. PACTUM DE NON ALIENANDO (Art. 2130)
e. payment of any amount in excess of the maximum
price of any article or commodity fixed by law or
regulation by competent authority
f. contract whereby a laborer undertakes to work
longer than the maximum number of hours fixed
by law
g. One who lost in gambling because of fraudulent
schemes practiced on him is allowed to recover his
losses (Art. 313 RPC) even if gambling is
prohibited.

 A stipulation forbidding the owner from alienating the

REQUISITES OF ILLEGAL CONTRACTS:
immovable mortgaged shall be void.
 It is a clause in a mortgage giving the mortgagee the
right to foreclose by executory process directed solely
against the mortgagor, and giving him or her the right
to seize and sell the mortgaged property, regardless of
any subsequent alienations.
3. PACTUM LEONINA (Art. 1799)
a. Contract is for an illegal purpose
b. Contract must be repudiated by any of the parties
before purpose is accomplished or damage is
caused to 3rd parties
c. Court believes that public interest will be served by
allowing recovery (discretionary upon the court) –
based on remorse; illegality is accomplished when
parties entered into contract; before it takes effect
– party w/c is remorseful prevents it

A stipulation which excludes one or more partners from

WHERE LAWS ARE ISSUED TO PROTECT CERTAIN SECTORS:
any share in profit or loss is void.
CONSUMER PROTECTION, LABOR, AND USURY LAW
a. Consumer protection – if price of commodity is
KINDS OF ILLEGAL CONTRACTS
determined by statute, any person paying an
PARI DELICTO DOCTRINE
amount in excess of the maximum price allowed
Both parties are guilty, no action against each other; those
may recover such excess
who come in equity must come with clean hands; applies
b. Labor – if law sets the minimum wage for
only to illegal contracts and not to inexistent contracts; does
laborers, any laborer who agreed to receive less
not apply when a superior public policy intervene
may still be entitled to recover the deficiency; if
law set max working hours and laborer who
EXCEPTION TO PARI DELICTO RULE - If purpose has not yet
undertakes to work longer may demand
been accomplished and if damage has not been caused to
additional compensation
any 3rd person
c. Interest paid in excess of the interest allowed by
the usury law may be recovered by debtor with
OTHER EXCEPTIONS:
interest from date of payment
a. Payment of Usurious interest
b. payment of money or delivery of property for an
EFFECTS OF ILLEGAL CONTRACTS
illegal purpose, where the party who paid or
a. If one party is incapacitated, courts may allow
delivered repudiates the contract before the
recovery of money, property delivered by
purpose has been accomplished, or before any
incapacitated person in the interest of justice; pari
damage has been caused to a 3rd person
delicto cannot apply because an incapacitated
c. payment of money or delivery of property made by
person does not know what he is entering into;
an incapacitated person
unable to understand the consequences of his own
d. agreement or contract which is not illegal per se
action
and the prohibition is designed for the protection
b. If agreement is not illegal per se but merely
of the plaintiff
prohibited and prohibition is designated for the

CIVIL LAW REVIEWER Page 121 of 338

 protection of the plaintiff – may recover what he
has paid or delivered by virtue of public policy

MUTUAL RESTITUTION IN VOID CONTRACTS

GENERAL RULE: parties should return to each other what
they have given by virtue of the void contract in case
 Where nullity arose from defect in essential elements
a. return object of contract and fruits
b. return price plus interest

EXCEPTION: No recovery can be had in cases where nullity

of contract arose from illegality of contract where parties
are in pari delicto; except when incapacitated – not obliged
to return what he gave but may recover what he has given
other party is less guilty or not guilty

=========================================
TOPICS UNDER THE SYLLABUS
A. GENERAL PROVISIONS
7. Effect of Contracts
=========================================
7. EFFECT OF CONTRACTS
Contracts take effect only between the parties, their assigns
and heirs, except in case where the rights and obligations
arising from the contract are not transmissible by their
nature, or by stipulation or by provision of law. The heir is
not liable beyond the value of the property he received
from the decedent. (Article 1311)

If a contract should contain some stipulation in favor of a

third person, he may demand its fulfillment provided he
communicated his acceptance to the obligor before its
revocation. A mere incidental benefit or interest of a person
is not sufficient. The contracting parties must have clearly
and deliberately conferred a favor upon a third person.
(Article 1311)

CIVIL LAW REVIEWER Page 122 of 338

SALES 3. Stages of Contract of Sale
=========================================
3. STAGES IN LIFE OF CONTRACT OF SALE
A. INTRODUCTION 1. Negotiation
================================ 2. Perfection
TOPICS UNDER THE SYLLABUS 3. Consummation

=========================================
A. Introduction TOPICS UNDER THE SYLLABUS
1. Definition of sales (Arts. 1458, 1470) A. INTRODUCTION
2. Essential requisites of a contract of sale (Art. 4. Obligations created
1505) =========================================
3. Stages of contract of sale 4. OBLIGATIONS CREATED
4. Obligations created (Art. 1165) 2 sets of real obligations to give
5. Characteristics of a contract of sale Obligation of the Seller:
6. Sale is title and not mode a. to transfer ownership and
7. Sale distinguished from other contracts b. to deliver possession
8. Contract of sale/contract to sell =========================================
TOPICS UNDER THE SYLLABUS
=========================================
A. INTRODUCTION
TOPICS UNDER THE SYLLABUS
5. Characteristics of Contract of Sale
A. INTRODUCTION
=========================================
1. Definition of Sales 5. CHARACTERISTICS OF CONTRACT OF SALE:
========================================= 1. Nominate
1. DEFINITION OF SALES (Arts. 1458 & 1470) 2. Principal
3. Consensual
CONTRACT OF SALE – One of the contracting parties 4. Bilateral
obligates himself to transfer the ownership of and to 5. Reciprocal
deliver a determinate thing, and the other to pay therefore 6. Onerous
a price certain in money or its equivalent. A contract of sale 7. Commutatitve
may be absolute or conditional. 8. Title and not a mode

========================================= =========================================
TOPICS UNDER THE SYLLABUS TOPICS UNDER THE SYLLABUS
A. INTRODUCTION A. INTRODUCTION
2. Elements of a Contract of Sale 6. Sale is Title and not Mode
========================================= =========================================
2. ELEMENTS OF A CONTRACT OF SALE 6. SALE IS TITLE AND NOT MODE

1. Consent =========================================
2. Determinate subject matter TOPICS UNDER THE SYLLABUS
A. INTRODUCTION
3. Price certain in money or its equivalent
7. Sale distinguished from other contracts
========================================
=========================================
TOPICS UNDER THE SYLLABUS
A. INTRODUCTION

CIVIL LAW REVIEWER Page 123 of 338

CONTRACT FOR PIECE OF WORK DISTINGUISHED FROM DATION IN PAYMENT DISTINGUISHED FROM SALE
SALE Dation in Payment Sale
Contract for piece of work Sale Pre-existing credit No pre-existing credit
Goods are to be Contract for delivery of an Obligations are extinguished Obligations are
manufactured specially for a article which the vendor in created
customer and upon special the ordinary course of Debtor’s consideration: Consideration of
order and not for the business manufactures or extinguishment of the debt seller: price
general market procures for general Creditor’s consideration: Consideration of
market (whether on hand acquisition of the object offered buyer: acquisition of
or not) in lieu of the original credit the object
Essence is service Essence is object Less freedom in determining Greater freedom in
Real obligation Personal obligation the price determining the price
Tests under Jurisprudence: Payment is received by the Buyer still has to pay
GR: IF YES, Contract for piece of work, IF NO, SALE debtor before the contract is the price
perfected
1. Timing test - Under art 1467: whether the thing
transferred only existed upon special order AGENCY TO SELL DISTINGUISHED FROM SALE
Agency to Sell Sale
2. Habituality test - if manufacturer engages in activity
with the need to employ extraordinary skills and Agent not obliged to pay for Buyer pays for price of
equipment (Celestino v CIR) price, merely obliged to object
deliver price received from
3. Nature of the object test - Each product’s nature of buyer.
execution differs from the others; products are not Preparatory contract Principal contract
ordinary products of Manufacturer (EEI v CIR) Principal remains owner even Buyer becomes owner of
if object delivered to agent thing; in agency

BARTER DISTINGUISHED FROM SALE Agent assumes no Seller warrants

Barter Sale risk/liability as long as within
Consideration: giving of a Consideration: giving of the authority given
thing money as payment May be revoked unilaterally Not unilaterally
Governed by law on sales: species of the genus sales because fiduciary and even if revocable
If consideration consists partly in money revoked w/o ground
and partly by thing – Agent not allowed to profit Seller receives profit
look at manifest intention; Personal Contract; Rescission Real Contract
If intention is not clear: If intention is not clear: is not available
value of thing is more than value of thing is equal or
amount of money – barter less than amount of money DONATION DISTINGUISED FROM SALE
– sale Donation Sale
Lease Sale Gratuitous or onerous Onerous
Use of thing is for a specified Obligation to absolutely Formal contract Consensual contract
period only with an transfer ownership of thing
obligation to return
NOTE: Lease with option to buy: really a contract of sale
Consideration is rent Consideration is price but designated as lease in name only; it is a sale by
Lessor need not be owner Seller needs to be owner of installments
thing to transfer ownership

CIVIL LAW REVIEWER Page 124 of 338

========================================= TOPICS UNDER THE SYLLABUS
TOPICS UNDER THE SYLLABUS B. PARTIES TO A CONTRACT OF SALE
A. INTRODUCTION 2. Absolute Incapacity
8. Contract of Sale/Contract to Sell =========================================
=========================================
2. ABSOLUTE INCAPACITY
8. Contract of Sale/Contract to Sell
MINORS, INSANE AND DEMENTED PERSONS, AND DEAF-
Contract of Sale Contract to Sell
MUTES
Absolute Conditional
Real obligation – Personal obligation –  Contracts are voidable, subject to annulment or
obligation to give obligation to do ratification
Title passes to the buyer Ownership is reserved in
upon delivery the seller and will pass to  Also includes:
the buyer only upon full
payment of the price - State of drunkenness
Non-payment of the Full payment is a positive
price is a negative suspensive condition, the - Hypnotic spell
resolutory condition failure of which is not a
breach but prevents the - NECESSARIES: Those sold and delivered to a minor
obligation of the vendor to or other person without capacity to act, he must
convey title to arise pay a reasonable price therefore
Remedies available: Remedies available:
Specific Performance Resolution =========================================
Rescission Damages TOPICS UNDER THE SYLLABUS
Damages
B. PARTIES TO A CONTRACT OF SALE
3. Relative Incapacity
END OF DISCUSSION ON TOPIC =========================================
A. INTRODUCTION
================================ 3. RELATIVE INCAPACITY
A. SPOUSES - A spouse may, without the consent of the
B. PARTIES TO A CONTRACT OF SALE other spouse, enter into sales transactions in the regular
pursuit of their profession, vocation, or trade. These
================================
TOPICS UNDER THE SYLLABUS contracts are void.
GENERAL RULE: The husband and the wife cannot sell
property to each other.
B. Parties to a Contract of Sale EXCEPTION:
1. Capacity of parties (Arts. 1489-1492)  When a separation of property was agreed upon in the
2. Absolute incapacity (Arts. 1327, 1397, 1399) marriage settlement

3. Relative incapacity: married persons  When there has been a judicial separation of property
4. Special disqualifications (Arts. 1491-1492) under Art. 191

========================================= NOTE: Prohibition likewise applies to common-law spouses

TOPICS UNDER THE SYLLABUS
B. PARTIES TO A CONTRACT OF SALE
1. Capacity of Parties
=========================================
GENERAL RULE - All persons who are authorized in this Code
to obligate themselves may enter into a contract of sale
B. OTHERS - TRUST RELATIONSHIPS
I. Art. 1491 - Two groups of parties prohibited from
acquiring by purchase certain properties:
a. Guardian/Agent/Executors and Administrators
 Direct or indirect

=========================================  May be ratified since only private wrong is involved

CIVIL LAW REVIEWER Page 125 of 338

 Emptio rei Emptio spei
b. Public Officers & Employees/Officers of Court speratae
i. Cannot be ratified since public wrong is involved Sale of an Sale of a mere hope or
ii. Requisites for the prohibition to apply to expected thing expectancy that the thing will
attorneys: come to existence; sale of the
1. Existence of attorney client relationship; hope itself
2. Property is the subject matter in litigation; Sale is subject to Sale is effective even if the
3. While in litigation (from filing of complaint to the condition; thing does not come into
final judgment) that the thing existence, unless it is a vain
will exist; if it hope (Art 1461 Sale of a vain
NOTE: Exception to the prohibition against attorneys: does not, there hope or expectancy is void)
contingent fee arrangement where the amount of legal fees is no contract
is based on a value of property involved in litigation (reason Uncertainty is The uncertainty is with regard
is that the transfer or assignment of the property takes with regard to to the existence of the thing
effect only after the finality of a favorable judgment the quantity and
quality of the
II. Legal Status of Contract thing and not
1. Void (case law) – guardian/ executor/public officers / the existence of
officers of the court the thing
2. Voidable (civil code) – agent; VALID if with consent Object is a Object is a present thing which
future thing is the hope or expectancy
=========================================
TOPICS UNDER THE SYLLABUS
Requisites:
B. PARTIES TO A CONTRACT OF SALE 1. Things
4. Special Disqualifications
========================================= A. “Possible” - existing, future, and contingent
i.Whether the subject matter is of a type and
4. SPECIAL DISQUALIFICATIONS nature that exists or could be made to exist to
allow the seller reasonable certainty of being
able to comply with his obligations
END OF DISCUSSION ON TOPIC
B. PARTIES TO A CONTRACT OF SALE ii.Minimum requirement of potential existence:
taking into consideration the state of science
================================
and technology at the time of perfection of
the contract
C. SUBJECT MATTER OF SALE
================================ B. Licit
TOPICS UNDER THE SYLLABUS B.1. Not outside the commerce of man
B.2. If illicit, contract is void
B.3. Prohibited:
C. Subject Matter i. Animals with contagious diseases
1. Requisites of a valid subject matter (Arts. ii. Sale of future inheritance
1459-1465)
C. Determinate or determinable
2. Particular kinds i. Determinate: particularly designated or physically
segregated from all others of the same class;
========================================= always specific
TOPICS UNDER THE SYLLABUS
C. SUBJECT MATTER OF SALE ii. Determinable: always generic
1. Requisites of a valid subject matter
a) Thing is capable of being made determinate
=========================================
1. REQUISITES OF A VALID SUBJECT MATTER b) Without the necessity of a new or further
contract between the parties.

CIVIL LAW REVIEWER Page 126 of 338

 2. Sale by a person having a voidable title (Arts.
NOTE: Subject matter CAN NOT be DETERMINED BY a 3rd
1506, 559)
PARTY.

2. Rights – Must be transmissible, except: =========================================

TOPICS UNDER THE SYLLABUS
a. Future inheritance D. OBLIGATIONS OF THE SELLER TO TRANSFER
b. Service OWNERSHIP
1. Sale by a person not the owner at the time of
delivery
=========================================
=========================================
TOPICS UNDER THE SYLLABUS
1. OBLIGATION OF THE SELLER TO TRANSFER
C. SUBJECT MATTER OF SALE
OWNERSHIP
2. Particular Kinds
GENERAL RULE: Seller need not be the owner of the subject
========================================= matter at the time of perfection: sufficient that he is the
2. PARTICULAR KINDS owner at the time of delivery.

GOODS THAT MAY BE THE OBJECTS OF SALE
1. Existing goods – goods owned or possessed by the
seller at the time of perfection
2. Future goods – goods to be manufactured, raised
or acquired by the seller after the perfection of the
contract
NOTES:
 Quantity of subject matter is not essential for perfection;
must determine nature and quality of subject matter
 Generic things may be the object of 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)
END OF DISCUSSION ON TOPIC
C. SUBJECT MATTER OF SALE
================================
D. OBLIGATIONS OF THE SELLER TO
TRANSFER OWNERSHIP
================================
TOPICS UNDER THE SYLLABUS
EXCEPTION: Foreclosure sale (mortgager must be absolute
owner)
RULES ON LEGAL EFFECTS OF SALE BY A NON-OWNER
GENERAL RULE: Sale by non-owner, buyer acquires no
better title than seller had.
EXCEPTIONS:
1. Owner by his conduct is precluded from denying seller’s
authority (ESTOPPEL)
2. Contrary is provided for in recording laws (PD 1529)
3. Sale is made under statutory power of sale or under
order of a court of competent jurisdiction
4. Sale is made in a merchant’s store in accordance with
code of commerce and special laws.
But subject to ANTI-FENCING LAW
TITLE AS TO MOVABLE PROPERTIES
GENERAL RULE: Possession is equivalent to title
REQUISITES: Possession of movable and Good Faith
EXCEPTIONS:
1. Owner lost movable – owner can recover without
reimbursing price
2. Owner is unlawfully deprived – owner can recover w/o
reimbursing price
EXCEPTIONS TO THE EXCEPTIONS:
1. Movable is bought at public sale – owner can only recover
after reimbursing price
2. Acquired in good faith and for value from auction
=========================================

D. Obligations of the Seller to Transfer Ownership TOPICS UNDER THE SYLLABUS

D. OBLIGATIONS OF THE SELLER TO TRANSFER
1. Sale by a person not the owner at time of
delivery (Arts. 1462, 1505, 1459); Exceptions OWNERSHIP

CIVIL LAW REVIEWER Page 127 of 338

1. Sale by a person having a voidable title
========================================
END OF DISCUSSION ON TOPIC
B. In money or its equivalent
Consideration for a valid contract of sale can be the price
and other valuable consideration; at the very least, a true
contract of sale must have price as part of its consideration
(Test of value consideration)

D. OBLIGATIONS OF THE SELLER TO TRANSFER C. Certain or ascertainable

OWNERSHIP i. Certain: expressed and agreed in terms of
specific pesos and/or centavos
================================
ii. Ascertainable:
E. PRICE
================================ a. Set by third persons
TOPICS UNDER THE SYLLABUS
b. Set by the courts – in cases where the third
person fixes the price in bad faith or by
E. Price
mistake
1. Meaning of price (Arts. 1469-1474)
2. Requisites for a valid price c. Set by reference to a definite day, particular
3. How price is determined exchange or market
4. Inadequacy of price (Arts. 1355, 1470)
d. Set by reference to another thing certain
5. When no price agreed (Art. 1474)
6. Manner of payment must be agreed upon e. But never by one party to the contract (unless
7. Earnest money vs. Option money (Art. 1482) the price is accepted by the other party)

========================================= Note: When the 3rd party is unwilling to set the price, the
TOPICS UNDER THE SYLLABUS parties may not ask the court to fix the price because the
E. PRICE condition imposed on the contract has not happened yet
and thus, no enforceable contract has arisen.
1. Meaning of Price
========================================= EFFECT WHERE PRICE IS SIMULATED
1. MEANING OF PRICE  The act may be shown to have been in reality a
PRICE – The sum stipulated as the equivalent of the thing donation, or some other act or contract
sold and also every incident taken into consideration for the
fixing of the price, put to the debit of the vendee and agreed  If not and neither party had any intention
to by him.
whatsoever that the amount will be paid
(absolutely simulated): the sale is void
=========================================
TOPICS UNDER THE SYLLABUS If there is a real price but what is stated in the
contract is not the one intended to be paid (only
E. PRICE relatively simulated): the contract of sale is valid
2. Requisites for a Valid Price but subject to reformation (false price)
=========================================
2. REQUISITES FOR A VALID PRICE: EFFECT OF NON-PAYMENT OF PRICE

A. Real NOTE: Non-payment of price does not cancel sale, as the

When at the perfection of the contract of sale, there is sale is still considered perfected. But it is a cause for either:
every intention on the buyer to pay the price, and every
expectation on the part of the seller to receive such price as 1. Specific performance or
the value of the subject matter he obligates himself to
deliver. (Test of intention) 2. Rescission.

CIVIL LAW REVIEWER Page 128 of 338

 Manner of payment must be agreed upon Marnelego v.
========================================= Banco Filipino Savings and Mortgage Bank, [G.R. No.
TOPICS UNDER THE SYLLABUS 161524, January 27, 2006
E. PRICE
3. How price is determined =========================================
========================================= TOPICS UNDER THE SYLLABUS
3. HOW PRICE IS DETERMINED E. PRICE
7. Earnest money vs. Option money
=========================================
=========================================
7. EARNEST VS. OPTION MONEY
TOPICS UNDER THE SYLLABUS
E. PRICE EARNEST MONEY
4. Inadequacy of price 1. Money given as part of purchase price
=========================================
2. Acceptance is the proof that contract of sale exists
4. INADEQUACY OF PRICE
3. Nothing in law prevents parties from treating
EFFECT OF GROSS INADEQUACY OF PRICE
earnest money differently

NOTE: Mere inadequacy of the price does not affect the 4. Old concept: subject to forfeiture when BUYER
validity of the sale, except backs out

(1) When there is fraud, mistake, or undue influence 5. New concept: cannot be forfeited – part of
indicative of a defect in consent is present, purchase price; must be restored

(2)When it shows that the parties really intended a donation 6.
or some other act or contract.
7.
(3)Judicial sale, where the inadequacy is shocking to the
conscience of man and there is showing that in event of
resale, a better price can be obtained.
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

TOPICS UNDER THE SYLLABUS OPTION MONEY EARNEST MONEY
E. PRICE
Money given as distinct Part of the purchase
5. When no price agreed consideration for an option price
========================================= contract
5. WHEN NO PRICE AGREED
Applies to a sale not perfected Given only when there is
Note: If there was a failure of the contract to set a price but
already a sale
the BUYER has already APPROPRIATED IT, then the buyer
must pay a reasonable price (Article 1474)
Not required to buy When given, buyer is
bound to pay the
========================================= balance
TOPICS UNDER THE SYLLABUS
E. PRICE
6. Manner of payment must be agreed upon END OF DISCUSSION ON TOPIC
========================================= E. PRICE
6. MANNER OF PAYMENT MUST BE AGREED UPON

CIVIL LAW REVIEWER Page 129 of 338

 ================================ 4. Offer floated Continues to be valid depending
F. FORMATION OF CONTRACT OF SALE without upon circumstances of time, place
and person
================================
period/without
TOPICS UNDER THE SYLLABUS
condition
5. Offer is floated Original offer is destroyed, there
F. Formation of Contract of Sale and there is a new offer; can not go back to
1. Preparatory (Art. 1479) original offer
1.1. Offer (Art. 1475) is counter-offer
6. Offer is floated No authority of offeror to modify
1.2. Option contract (Arts. 1479, 1324)
offer
1.3. Right of first refusal
1.4. Mutual promise to buy and sell (Art. 1479) 7. Offer accepted Proceed to perfected stage
2. Perfection (Arts. 1475, 1319, 1325, 1326) absolutely
3. Formalities of the contract (Art. 1403 (d)&(e))
OPTION CONTRACT - a contract granting an exclusive right
========================================= in one person, for which he has paid a separate
TOPICS UNDER THE SYLLABUS consideration, to buy a certain object within an agreed
F. FORMATION OF CONTRACT OF SALE period
1. Preparatory
NOTE: There is no presumption of consideration, it needs to
========================================= be proven
1. PREPARATORY
3 STAGES IN LIFE OF A CONTRACT OF SALE OPTION- an unaccepted or unexercised contractual offer
A. Policitacion/Negotiation Stage - offer is floated,
acceptance is floated but they do not meet; the time when Characteristics of Option Contract
parties indicate their interest but no concurrence of offer
and acceptance. a. Not the contract of sale by itself, separate and distinct
B. Perfection - concurrence of all requisites; meeting of the
minds. b. Nominate
C. Consummation - parties perform their respective
undertakings c. Principal - but can be attached to other principal
contracts
A. PREPARATORY
d. Onerous
I. RULES:
e. Commutative
1. Offer is floated Prior to acceptance, may be
withdrawn at will by offeror f. Unilateral – versus contract of sale which is bilateral

2. Offer floated with Without acceptance, extinguished g. Preparatory

a period when period has ended and
maybe withdrawn at will by
offeror; right to withdraw must
not be arbitrary otherwise, liable
to damage under Art 19, 20, 21 of
Civil Code
3. Offer floated w/ Extinguished by happening/non-
condition happening of condition
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. Cojuangco)
How EXERCISED: Notice of acceptance should be
communicated to offeror without actual payment as long as
there is delivery of payment in consummation stage

CIVIL LAW REVIEWER Page 130 of 338

ELEMENTS OF VALID OPTION CONTRACT Effect of new doctrine: turned the world of policitacion
upside down because while valid option contract is not
a. Consent – meeting of the minds subject to specific performance, right of first refusal which
b. Subject matter – an option right, or accepted unilateral does not even have a separate consideration may be subject
offer to buy, or accepted unilateral offer to sell: to specific performance
i. a determinate object
ii. for a price certain (including manner of payment) Recognizes recovery of damage based on abuse of rights
doctrine
c. Prestation – a consideration separate from purchase
price for option given OPTION CONTRACT DISTINGUISHED FROM RIGHT OF FIRST
REFUSAL
SITUATIONS IN AN OPTION CONTRACT: Option Contract Right of First Refusal

a. With separate consideration Principal contract; stands Accessory; can not stand on
on its own its own
i. Option contract is valid Needs separate Does not need separate
consideration consideration
ii. Offeror cannot withdraw offer until after Subject matter and price There must be subject
expiry period must be valid matter but price not
important
iii. Subject to rescission, damages but not to Not conditional Conditional
specific performance because this is not an Not subject to specific Subject to specific
obligation to give performance performance

b. Without separate consideration

i. OLD RULE - offer is still valid, but option
contract is void and not subject to rescission,
damages
ii. NEW RULE: Right of first refusal recognized as
a valid offer
=========================================
TOPICS UNDER THE SYLLABUS
F. FORMATION OF CONTRACT OF SALE
2. Perfection of Sales
=========================================

RIGHT OF FIRST REFUSAL:
1. Creates a promise to enter into a contract of
sale and it has no separate consideration, not
subject to specific performance because there is
no contractual relationship here and it is not an
obligation to give (not a real contract)
2. New doctrine: May be subject to specific
performance.
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
EXCEPTION: When the sale is subject to a suspensive
condition
REQUIREMENTS:

The right of first refusal 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. Equatorial Dev’t v. Mayfair Theater, *370
SCRA 56]
1. When parties are face to face – when there is
absolute acceptance of an offer that is certain
2. When thru correspondence or telegram – when
the offeror receives or had knowledge of the
acceptance
3. When the sale is subject to a suspensive condition
– from the moment the condition is fulfilled

CIVIL LAW REVIEWER Page 131 of 338

NOTES: Qualified acceptance: mere counter-offer which
needs to be absolutely accepted to give rise to perfected
contract of sale
Business ads are mere invitations to make an offer except
when it appears to be otherwise
When form is important for enforceability [STATUTE OF
FRAUDS Article 1403 (2)]
a. Performed 1 Year: A sale agreement which by its
terms is not to be performed within a year from
the making thereof;

Rules governing auction sales: b.
1. Sales of separate lots by auction are separate contracts of
sale
2. Sale is perfected by the fall of the hammer
3. Seller has the right to bid at the auction provided such
c.
right was reserved and notice was given to that effect
500 and Above: An agreement for the sale of
goods, chattels or things in action, at a price not
less than P500.00; and
Sale Land: A sale of real property or of an interest
therein.

EXCEPTIONS TO COVERAGE OF STATUTE IN SALES

=========================================
CONTRACTS:
TOPICS UNDER THE SYLLABUS
F. FORMATION OF CONTRACT OF SALE 1. WRITTEN: When there is a note or memorandum
3. Formalities of the Contract in writing and subscribed to by party or his agent
========================================= (contains essential terms of the contract)

2. PARTIAL EXECUTION: When there has been partial

3. FORMALITIES OF THE CONTRACT
performance/execution (seller delivers with intent
to transfer title/receives price)
Form not important in validity of sale
3. FAILURE TO OBJECT: When there has been failure
A. Sale being consensual, may be oral or written,
to object to presentation of evidence (oral)
perfected by mere consent as to price and subject
matter 4. E-COMMERCE: When sales are effected through
electronic commerce
B. If particular form is required under the statute of
frauds:
While a sale of land appearing in a private deed is binding
- valid and binding between parties but not between the parties, it cannot be considered binding on
binding to 3rd persons third persons if not embodied in a public instrument and
recorded in the Registry of Deeds. Secuya v. Vda. De Selma,
- Reason: purposes of convenience only and not
[G.R. No. 136021, February 22, 2000]
for validity and enforceability; cause of action
is granted to sue and compel other party to
execute the document
END OF DISCUSSION ON TOPIC
When form is important for validity; exception by specific E. FORMATION OF CONTRACT OF SALE
provision of law;

1. Power to sell a piece of land granted to an agent –

otherwise VOID

2. Sale of large cattle; must also be registered with

Municipal treasurer – otherwise VOID

3. Sale of land by non-Christian if not approved by

Governor– VOID

CIVIL LAW REVIEWER Page 132 of 338

 ================================
G. TRANSFER OF OWNERSHIP
================================
TOPICS UNDER THE SYLLABUS
G. Transfer of Ownership
1. Manner of Transfer (Arts. 1477, 1496-1501)
2. When delivery does not transfer title
3. Kinds of delivery
4. Double sales (Art. 1544)
5. Property Registration Decree
5.1. Requisites for registration of deed of sale
in good faith
5.2. Accompanied by vendors duplicate
certificate of title, payment of capital gains tax,
and documentary tax registration fees
=========================================
TOPICS UNDER THE SYLLABUS
G. TRANSFER OF OWNERSHIP
1. Manner of Transfer
=========================================
1. MANNER OF TRANSFER
NOTE: Stage where parties both comply with their
obligation.
OBLIGATIONS OF THE SELLER
1. Preserve subject matter (proper diligence of a good father
of a family unless law or parties stipulate another standard)
2. Deliver – transfer ownership and deliver object
3. Deliver fruits and accessories
4. Warrant subject matter against eviction and hidden
defects
A. Delivery of the Thing - Transfer ownership (tradicion)
covers twin obligations of the seller which are:
1. To transfer the ownership; and
2. To deliver a determinate thing
B. Delivery of the thing together with the payment of the
price, marks the consummation of the contract of sale. PNB
v. Ling, [69 Phil 611, October 5, 1927]
The act of delivery must be coupled with the intention of
delivering the thing and putting the buyer under control.
Norkis Distributor v. CA, [195 SCRA 694, February 7, 1991]
=========================================
CIVIL LAW REVIEWER
TOPICS UNDER THE SYLLABUS
G. TRANSFER OF OWNERSHIP
2. When Delivery does not transfer Title
=========================================
2. WHEN DELIVERY DOES NOT TRANSFER TITLE
=========================================
TOPICS UNDER THE SYLLABUS
G. TRANSFER OF OWNERSHIP
3. Different Kinds of Delivery
=========================================
3. DIFFERENT KINDS OF DELIVERY
Different Kinds of Delivery:
1. Actual or real - when thing sold is placed in the control
and possession of the buyer
2. Legal or Constructive- can take several forms and may be
any manner signifying an agreement that the possession is
transferred from the vendor to the vendee.
C. Different forms of Constructive Delivery - Constructive
delivery has same legal effect as actual or physical delivery
Gives rise only to a prima facie presumption of delivery
which is destroyed when actual delivery is not effected
because of a legal impediment. Ten Forty Realty v. Cruz
1. Traditio Longa Manu
Delivery of thing by mere agreement; when SELLER points to
the property without need of actually delivering
2. Traditio Brevi Manu
Before contract of sale, the would be buyer was already in
possession of the would be subject matter of sale (ex: as
lessee)
3. Symbolic delivery
As to movables – ex: delivery of the keys to a car
4. Constitutum possessarium
When at the time of the perfection of the contract of sale,
seller had possession of the subject matter in the concept of
owner and pursuant to the contract, seller continues to hold
physical possession no longer in the concept of an owner
but as a lessee or any other form of possession other than in
the concept of owner.
5. Quasi-tradition
Page 133 of 338
Delivery of rights, credits or incorporeal property, made by:
Placing titles of ownership in the hands of the buyer
Allowing buyer to make use of rights
6. Tradition by operation of law
The execution of a public instrument is equivalent to
delivery. But to be effective, it is necessary that the vendor
have such control over the thing sold that, at the moment of
sale, its material delivery could have been made. Addison v.
Felix, [38 Phil. 404]
A. WHEN EXECUTION OF PUBLIC INSTRUMENT DOES NOT
PRODUCE THE EFFECTS OF DELIVERY
1. When there is stipulation to contrary, execution
does not produce effect of delivery
2. When at the time of execution of instrument,
subject matter was not subject to control of the
seller
3. Subject matter should be within control of seller;
he should have capacity to deliver at the time of
execution of public instrument when he wants to
effect actual delivery
4. Such capacity should subsist for a reasonable time
after execution of instrument (reasonable time
depends on circumstances of persons, places and
things)
 The presumption of delivery when the sale is made
through a public instrument can be rebutted by clear
and convincing evidence. Presumptive delivery through
a public instrument can be negated by the failure of the
vendee to take actual possession of the land or the
continued enjoyment of possession by the vendor.
Santos v. Santos, [366 SCRA 395]
B. Delivery of Fruits and Accessions/ Accessories
Right to fruits and accessions/accessories accrue from time
sale is perfected but no real right over it until it is delivered
C. Delivery Through Carrier
GENERAL RULE: Where the seller is authorized or required
to send the goods to the buyer, delivery to the carrier is
delivery to the buyer.
CIVIL LAW REVIEWER
EXCEPTIONS: a contrary intention appears or implied
reservation of ownership under pars. 1,2, 3 of Art. 1503
I. FAST – FREE ALONG SIDE - When goods delivered
alongside the ship, there is already delivery to the
buyer (twin effects deemed fulfilled)
II. FOB - FREE ON BOARD - Shipment – when goods are
delivered at ship at point of shipment; delivery to
carrier by placing goods on vessel is delivery to buyer
Destination – when goods reach the port even if not
disembarked yet from the vessel, there is delivery to
the buyer
III. CIF – COST, INSURANCE, FREIGHT
 When buyer pays for services of carrier – delivery
to carrier is delivery to buyer; carrier is agent of
the buyer.
 When buyer pays seller the price – from moment
the vessel is at port of destination, there is already
delivery to buyer.
See Arts. 1522, 1539, 1540, 1541, 1542, 1543.
D. TIME AND PLACE OF DELIVERY
a. Follow stipulation in contact, or
b. Follow usage in trade, or
c. Seller’s place of business or his residence
d. Specific goods – place where the thing is
E. At reasonable hour
E. EFFECTS OF DELIVERY
GENERAL RULE: The ownership of the thing sold shall be
transferred to the buyer upon the actual or constructive
delivery thereof.
EXCEPTION: When the contrary is stipulated such in the
cases of:
1. Contract to sell
Page 134 of 338
 2. Sale on acceptance/approval – ownership only
passes to the buyer when:
 The buyer signifies approval to the seller,
or
 The buyer does not signify his rejection
but retains the goods
3. Sale on return – ownership passes to the buyer
but he may re-vest ownership to the seller by
returning the goods within time fixed. If no time is
fixed, within reasonable time.
NOTE: Who Bears Expenses of Delivery? Seller
F. SALE BY DESCRIPTION/SAMPLE
1. Sample – goods must correspond with sample
shown
2. Description – goods must correspond with
description or sample
3. Effect if there is no compliance: RESCISSION may
be availed of by the buyer
G. OBLIGATIONS OF BUYER
1. Pay the price
o Buyer is obligated to pay price according to
terms agreed upon regarding time, place and
amount
o If payment of interest is stipulated – must pay;
if amount of interest not mentioned – apply
legal rate
o When buyer defaults – constitutes breach:
subject to specific performance/rescission and
damages; interest to be paid also from default
2. Accept delivery of thing sold
a. Where to accept: at time and place stipulated
in the contract; if none specified – at the time
and place of delivery goods; there is
acceptance when:
CIVIL LAW REVIEWER
i. He intimates to seller that he has accepted
ii. When delivered and does any act inconsistent
with ownership of seller
iii. Retains without intimating to seller that he has
rejected
3. Sale of Goods on installment
1. Goods must be delivered in full, except when
stipulated
2. When not examined by buyer – not accepted
until examined or at least had reasonable
time to examine
Acceptance of goods in general, absent contrary
express stipulation, does not discharge seller from
liability in case of breach of warranties (unless no
notice or failure to give it within reasonable time)
4. When buyer has a right to refuse goods, no need
to return; shall be considered as depositary;
unless there is stipulation to the contrary
=========================================
TOPICS UNDER THE SYLLABUS
G. TRANSFER OF OWNERSHIP
4. Double Sale
=========================================
4. DOUBLE SALE
GENERAL RULE: FIRST IN TIME, PRIORITY IN RIGHT
When does it apply: when not all requisites embodied in
Art. 1544 concur.
I. REQUISITES FOR DOUBLE SALES TO EXIST: (VOCS)
1. Two or more sales transactions must
constitute valid sales;
2. Two or more sales transactions must pertain
to the same object or subject matter;
3. Two or more buyers at odds over the rightful
ownership of the subject matter must each
represent conflicting interests; and
4. Two or more buyers must each have bought
from the very same seller.
Page 135 of 338
  If not all the elements are present for Art. 1544 to
apply, the priniciple of prior tempore, potior jure
or simply “he who is first in time is preferred in
right” should apply. Undisputably, he is a
purchaser in good faith because at the time he
bought the real property, there was still no sale to
as a second vendee. Consolidated Rural Bank v.
CA, [Jan. 17, 2005]
II. RULES ACCORDING TO 1544:
1. MOVABLE
First to posses in good faith
2. IMMOVABLE
1. First to register in good faith
2. No inscription, first to possess in good faith
3. No inscription and no possession in good faith
– Person who presents oldest title in good
faith
4. Good Faith - one who buys property without
notice that another person has a right or
interest in such property; one who has paid
price before notice that another has claim or
interest
III. LIS PENDENS – notice that subject matter is in litigation
IV. ADVERSE CLAIM – notice that somebody is claiming
better right
V. POSSESSION - Both actual or constructive
VI. REGISTRATION: any entry made in the books of the
registry, including both registration in its ordinary
and strict sense, and cancellation, annotation, and
even marginal notes. It is the entry made in the
registry which records solemnly and permanently
the right of ownership and other real rights.
 Registered under Torrens system 1544 applies
 Not registered under the Torrens system 1544
still applies
CIVIL LAW REVIEWER
If 2nd sale is a judicial sale (by way of levy on execution),
buyer merely steps into the shoes of the judgment
debtor. Outside of such situation – must apply to
conflicting sales over the same unregistered parcel of
land. If sale 1 occurs when land is not yet registered
and sale 2 is done when land is already registered –
apply FIRST IN TIME, PRIORITY IN RIGHT.
Good faith must concur with registration. To be entitled
to priority, the second purchaser must not only
establish prior recording of his deed, but must have
acted in good faith. Gabriel v. Mabanta, [GR 142403,
March 26, 2003]
CONDITION
1. Effect of Non-Fulfillment of Condition
The other party may
a. refuse to proceed with the contract
b. proceed with the contract, waiving the
performance of the condition
If the condition is in the nature of a promise that it should
happen, the non-performance of such condition may be
treated by the other party as breach of warranty.
2. Effect if buyer has already sold the goods
GENERAL RULE: The unpaid seller’s right to lien or stoppage
in transitu remains even if buyer has sold the goods
EXCEPTION:
 When the seller has given consent thereto, or
 When the buyer is a purchaser in good faith for
value of a negotiable document of title.
=========================================
TOPICS UNDER THE SYLLABUS
G. TRANSFER OF OWNERSHIP
4. Property Registration Decree
=========================================
4. PROPERTY REGISTRATION DECREE
END OF DISCUSSION ON TOPIC
G. TRANSFER OF OWNERSHIP
================================
H. RISK OF LOSS
Page 136 of 338
================================
TOPICS UNDER THE SYLLABUS 3. AFTER PERFECTION BUT BEFORE DELIVERY

 Loss – confused state

H. Risk of Loss
1. General Rule (Arts. 1263, 1189)  Paras: BUYER
2. When loss occurred before perfection
 Tolentino: SELLER
3. When loss occurred at time of perfection
(Arts. 1493 and 1494)  Deterioration and fruits - Buyer bears loss;
4. When loss occurred after perfection but
before delivery 4. AFTER DELIVERY
5. When ownership is transferred (Art. 1504)
 Res perit domino
=========================================
 Delivery extinguishes ownership vis-a-vis the
TOPICS UNDER THE SYLLABUS
seller and creates a new one in favor of the
H. RISK OF LOSS buyer
=========================================
END OF DISCUSSION ON TOPIC
1. GENERAL RULE H. RISK OF LOSS
 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 I. DOCUMENTS OF TITLE
deterioration and the benefits of fruits and ================================
improvements, were fro the account of the buyer. TOPICS UNDER THE SYLLABUS

I. Documents of Title
 If Subject matter is GENERIC, Simply replace item.
WHO BEARS RISK OF LOSS/ DETERIORATION/ FRUITS:
1. BEFORE PERFECTION
 Res perit domino
 Owner is seller so seller bears risk of loss
1. Definition (Art. 1636)
2. Purpose of documents of title
3. Negotiable documents of title
4. Non-negotiable documents of title
5. Warranties of seller of documents of title (Art.
1516)
6. Rules on levy/garnishment of goods (Arts.
1514, 1519, 1520)

=========================================
2. AT PERFECTION TOPICS UNDER THE SYLLABUS
I. DOCUMENTS OF TITLE
 Res perit domino
1. Definition
 Contract is merely inefficacious because loss =========================================
of the subject matter does not affect the
validity of the sale 1. DEFINITION

 Seller cannot anymore comply with obligation DOCUMENTS OF TITLE

so buyer cannot anymore be compelled.

CIVIL LAW REVIEWER Page 137 of 338

1. Not creation of law but by merchants to allow them to
deal with merchandise without having to physically carry
them around
2. Pertains to specific type of movables only: GOODS
a. Documents of title serve two (2) functions:
i. Evidence of existence and possession of goods
described therein
ii. Medium by which seller is able to transfer
possession of goods
3. A document of title which states that the goods referred
to therein will be delivered to the bearer, or to the order of
any person named in such document
4. Negotiable by delivery or indorsement
=========================================
TOPICS UNDER THE SYLLABUS
I. DOCUMENTS OF TITLE
2. Purpose of documents of title
=========================================
2. PURPOSE OF DOCUMENTS
=========================================
TOPICS UNDER THE SYLLABUS
I. DOCUMENTS OF TITLE
3. Negotiable documents of title
=========================================
3. NEGOTIABLE DOCUMENTS OF TITLE
1. Deliver to bearer (negotiation by mere delivery)
2. Deliver to specific person or his order (negotiation
by endorsement + delivery)
Even if face of instrument says NON-NEGOTIABLE,
it is still NEGOTIABLE; limiting words does not
destroy negotiability.
If order instrument and no endorsement was made
– equivalent to assignment
=========================================
TOPICS UNDER THE SYLLABUS
I. DOCUMENTS OF TITLE
4. Non-negotiable documents of title
=========================================
CIVIL LAW REVIEWER
4. NON-NEGOTIABLE DOCUMENTS OF TITLE
Effects of Unauthorized Negotiation
The validity of the negotiation of a negotiable document is
not impaired by the fact that negotiation was done in
breach of duty or that the owner of the document was
deprived of the same by loss, theft, accident, fraud, mistake
if the person to whom the document is delivered is in good
faith and without notice of the said irregularities.
Important Considerations
1. Negotiation gives better right than assignment
2. Assignee takes document with defects of the
assignor
3. Obligation of bailee – bailee is immediately bound
to the document
=========================================
TOPICS UNDER THE SYLLABUS
I. DOCUMENTS OF TITLE
5. Warranties of seller of documents of title
=========================================
Warranties on Negotiation
1. The document is genuine
2. He has legal right to negotiate or transfer it
3. He has knowledge of no fact which would impair
the validity or worth of the document
4. He has right to transfer title to goods and goods
are merchantable/fit
=========================================
TOPICS UNDER THE SYLLABUS
I. DOCUMENTS OF TITLE
6. Rules on Levy or Garnishment of Goods
=========================================
6. Rules of Levy/Garnishment of Goods Covered by
Documents of Title
 NON NEGOTIABLE:
o Notification is operative act to transfer
title/possession of goods in favor assignee
o Before notification – can still be garnished
Page 138 of 338
 b. What is void is the transfer of title/ ownership
 NEGOTIABLE: did not pass

o Cannot be levied or garnished when documents c. Effect: buyer acquired no better right than
are already with purchaser in good faith, unless: transferor

o Document is first surrendered d. Legal effect: CAVEAT EMPTOR – BUYER

BEWARE
o Document is pounded by court
e. Sale of co-owner of whole property or definite
o Negotiation is enjoined portion

NEGOTIATION ASSIGNMENT GENERAL RULE:

Transferor/holder
acquires title to goods
Bailee has direct
obligation to holder as if
directly dealt with him
Acquires title to goods
against transferor
Acquires right to notify
bailee so that he
acquires obligation of
bailee to hold goods for
him
 Co-owner sells whole property prior to partition – sale
of property itself is void but valid as to his spiritual
share
 Co-owner sells definite portion 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 the definite portion sold
would not be acquired by him.

EXCEPTIONS TO THE RULE ON THE EFFECT OF SALE OF A

A. SALE BY NON-OWNER OR BY ONE HAVINGVOIDABLE
TITLE
1. PERFECTION STAGE
a. Sale by owner – VALID
b. Sale by non-owner – VALID;
c. Reason why both sales are valid: ownership is
necessary only at time when transfer title to
goods; at perfection stage, no obligation on
part of seller to transfer ownership
d. Law on estoppel further bolsters it: title
passes by operation of law to grantee when
person who is not owner of the goods sold
delivers it and later on acquires title thereto
e. Since valid, action to annul is improper; there
is already a perfected contract
2. CONSUMMATION STAGE
a. Contract of sale is valid because it has passed
perfected stage, despite seller not being the
owner or seller having no authority to sell
DEFINITE PORTION BY A CO-OWNER
1. Subject matter is indivisible in nature or by intent;
2. Sale of a particular portion of a property is with consent
of other co-owners;
3. Co-owner sells 1 of 2 commonly-owned lands and does
not turn over ½ of the proceeds, other co-owner, by law and
equity, has exclusive claim over remaining land.
B. SALE BY SELLER WITH VOIDABLE TITLE IN GOOD FAITH
and WITHOUT NOTICE OF THE DEFECT
1. PERFECTION STAGE
a. Valid sale – buyer acquires title of goods
2. CONSUMMATION STAGE
o Valid sale – if title has not yet been avoided,
buyer buys goods under following condition:
 in good faith
 for value
 without notice of seller’s defect of title
END OF DISCUSSION ON TOPIC
I. DOCUMENTS OF TITLE

CIVIL LAW REVIEWER Page 139 of 338

 ================================ seller proceed with his other special rights of resale or to
rescind.
J. REMEDIES OF UNPAID SELLER
Possessory Lien
================================
TOPICS UNDER THE SYLLABUS 1. Seller not bound to deliver if buyer has not paid
him the price
J. Remedies of an Unpaid Seller
2. Right to retain; cannot be availed when seller does
1. Definition of unpaid seller (Art. 1525)
not have custody
2. Remedies of unpaid seller
3. Exercisable only in following circumstances:
=========================================
TOPICS UNDER THE SYLLABUS a. goods sold without stipulation as to credit

J. REMEDIES OF UNPAID SELLER b. goods sold on credit but term of credit has
1. Definition of unpaid seller expired
=========================================
c. buyer becomes insolvent
1. DEFINITION OF UNPAID SELLER
d. When part of goods delivered, may still
GENERAL RULE: Any man may not take law in his own exercise right on goods undelivered
hands, must seek remedy through courts.

EXCEPTION: Instances when possessory lien lost:

 DOCTRINE OF SELF HELP
1. seller delivers goods to carrier for transmission to
 SPECIAL REMEDIES buyer without reserving ownership in goods or
right to possess them

REQUISITES: 2. buyer or his agent lawfully obtains possession of

1. Subject matter – goods goods
2. Seller is unpaid – not completely paid or received
negotiable instrument under a condition and condition has
3. Waiver
been breached by reason of dishonor
3. Physical possession is with seller
4. loses lien when he parts with goods (still has
========================================= stoppage in transitu)
TOPICS UNDER THE SYLLABUS 5. notice by seller to buyer not essential
J. REMEDIES OF UNPAID SELLER
2. Remedies of unpaid seller
Stoppage In Transitu
=========================================
 Goods are in transit
2. REMEDIES OF UNPAID SELLER
 Requisites when goods are in transit
The following are the special remedies of unpaid seller:
1. Possessory lien
1. From the time goods are delivered to
2. Stoppage in transitu
3. Special right of re-sale carrier for purpose of transmission to
4. Special right to rescind buyer

NOTE: Hierarchical Application - only when unpaid seller 2. Goods rejected by buyer and carrier
has exercised possessory lien or stoppage in transitu can the continues to possess them

CIVIL LAW REVIEWER Page 140 of 338

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

1. Reached point of destination

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

4. Shown by seller that buyer is insolvent (failure to pay When Seller fails to deliver, buyer may seek SPECIFIC
when debts become due) PERFORMANCE WITHOUT GIVING SELLER OPTION TO
RETAIN GOODS ON PAYMENT OF DAMAGES

How is right exercised END OF DISCUSSION ON TOPIC

1. Obtain actual possession of goods
J. REMEDIES OF UNPAID SELLER
================================
2. Give notice of claim to carrier / bailee in
possession thereof K. PERFORMANCE OF CONTRACT
================================
3. Notice by seller to buyer is not required; TOPICS UNDER THE SYLLABUS
notice to carrier is essential

K. Performance of Contract
1. Delivery of thing sold
III. Special Right to Resell the Goods
(1) Sale of movables (Arts. 1522, 1537, 1480)
1. Goods are perishable (2) Sale of immovables (Arts. 1539, 1543)
(3) Inspections and Acceptance
2. stipulated the right of resale in case buyer defaults in
2. Payment of price
payment

3. Buyer in default for unreasonable time =========================================

TOPICS UNDER THE SYLLABUS
4. Notice by seller to buyer not essential K. PERFORMANCE OF CONTRACT
1. Delivery of thing sold
Why special? There are things which seller cannot do in =========================================
ordinary sale:
1. DELIVERY OF THING SOLD
A. ownership is with buyer but seller can
A. MOVABLES
sell goods
a. Delivery of thing plus accessories and
B. title accorded to buyer is destroyed
accessions in the condition in which they were
even without court intervention
upon the perfection of the contract including
the fruits
Special Right to Rescind
b. When the seller delivers to the buyer a
1. Expressly stipulated quantity of goods LESS than he contracted to
sell, buyer has the option to reject or accept
2. Buyer is in default for unreasonable time it.

CIVIL LAW REVIEWER Page 141 of 338

 a. When accepts with knowledge that seller
is not going to perform contract in full,
he must pay at price stipulated
b. When accepts and consumes before
knowledge that buyer will not perform
contract in full, liable only for fair value of
goods delivered
c. When seller delivers to the buyer a
quantity of goods LARGER than he
contracted to sell the buyer has the
following options:
i. Accept per contract and reject the rest
ii. Accept the whole – pay price stipulated
iii. Eject whole if subject matter is indivisible
d. When the seller delivers to the buyer
the goods he contracted to sell,
MIXED with goods of a different
description not included in the
contract, buyer has 2 options:
i. Accept good w/c are in accordance
with contract and reject the rest
ii. Reject goods entirely – if indivisible
Obligations of a Vendor (Art. 1537)
1. To deliver the subject matter
2. To deliver the fruits and accessories
 Those which pertains to the vendee from the
day on the perfection of contract
3. To preserve the subject matter
 In the condition in which they were upon the
perfection of the contract.
Article 1480. Any injury to or benefit from the thing sold,
after the contract has been perfected, from the moment of
the perfection of the contract to the time of delivery, shall
be governed by articles 1163 to 1165, and 1262.
CIVIL LAW REVIEWER
This rule shall apply to the sale of fungible things, made
independently and for a single price, or without
consideration of their weight, number, or measure.
Should fungible things be sold for a price fixed according to
weight, number, or measure, the risk shall not be imputed
to the vendee until they have been weighed, counted, or
measured and delivered, unless the latter has incurred in
delay.
B. IMMOVABLES
o Sold per unit or number
i. If the sale should be made with
statement of its area, rate at certain
price, deliver all that may have been
stated in the contract if impossible,
remedies of buyer:
ii. If Less in area:
 Rescission
 Proportional reduction of price: LACK IN
AREA SHLD NOT BE LESS THAN 1/10 OF
AREA AGREED UPON
iii. If Greater in area:
 Accept per stipulation and reject
the rest
 Accept whole area – pay at
contract rate
 Not applicable to judicial sales
iv. Sold for lump sum
 When price per unit not indicated
 If area delivered is either greater or
lesser – price will not be adjusted
accordingly
 The actions arising from above in delivery of
immovables shall prescribe in six months, counted from
the day of delivery.
Page 142 of 338
 C. INSPECTIONS AND ACCEPTANCE 2. Implied warranties (Art. 1547)
3. Effects of warranties
Accept delivery of thing sold
4. Effects of waivers
 Where to accept: at time and place 5. Buyer’s options in case of breach of warranty
stipulated in the contract; if none (Art. 1599)
specified – at the time and place of
delivery goods; =========================================
TOPICS UNDER THE SYLLABUS
 There is acceptance when: He intimates
to seller that he has accepted L. WARRANTIES
1. Express warranties
 When delivered and does any act =========================================
inconsistent with ownership of seller
1. EXPRESS WARRANTIES
 Retains without intimating to seller that
he has rejected I. Condition

1. When a contract contains a condition, the non

=========================================
TOPICS UNDER THE SYLLABUS
K. PERFORMANCE OF CONTRACT
2. Payment of price
=========================================
2. PAYMENT OF PRICE
 Buyer is obligated to pay price according to terms agreed
upon regarding time, place and amount
 If payment of interest is stipulated – must pay; if amount
of interest not mentioned – apply legal rate
happening of which would not constitute a breach but
extinguishes the obligation
2. However, if party to the sales contract has promised
that the condition should happen or be performed, the
non-performance of which may be treated by parties as
breach
II. Warranties
A statement or representation made by the seller
contemporaneously and as a part of the contract of sale,
having reference to the character, quality, or title of the
goods, and by which he promises or undertakes to insure
that certain facts are or shall be as he then represents

When buyer defaults – constitutes breach: subject to Express Warranties

specific performance/rescission and damages; interest to be
REQUISITES:
paid also from default
1. It must be an affirmation of fact or any promise by
END OF DISCUSSION ON TOPIC seller relating to the subject matter of sale
K. PERFORMANCE OF CONTRACT
2. Natural tendency of affirmation or promise is to
================================ induce buyer to purchase subject matter

L. WARRANTIES 3. Buyer purchases the subject matter relying

thereon
================================
TOPICS UNDER THE SYLLABUS 4. When breached, seller is liable for damages

L. Warranties
1. Express warranties

CIVIL LAW REVIEWER Page 143 of 338

========================================= 5. Damages and interests if the sale was in bad faith
TOPICS UNDER THE SYLLABUS
L. WARRANTIES
Partial Eviction
2. Implied warranties
1. To enforce vendor’s liability for eviction (VICED);
=========================================
2. To demand rescission of contract.
2. Implied Warranties
Deemed included in all contracts of sale whether parties are
a. No appeal needed nor a need for buyer to resist
actually aware or not, whether they were intended or not;
by operation of law eviction for right to accrue; it is enough that the
aforementioned requisites are complied with
1. Warranty that seller has a right to sell
b. Warranty cannot be enforced until
 Refers to consummation stage since in
aforementioned requisites concur
consummation stage, it is where ownership is
transferred by tradition c. Applies to judicial sale; judgment debtor
responsible for eviction unless otherwise decreed
 Not applicable to sheriff, auctioneer,
in judgment
mortgagee, pledge
d. Vendor not liable for eviction if adverse possession
had been commenced before sale but prescriptive
2. Warranty against eviction
period is completed after transfer
a. Implied, unless contrary provision appears in
contract e. Rights of buyer when deprived of only part of the
subject matter but would not have bought such
b. When ownership is transferred, buyer shall enjoy part if not in relation for the whole:
the legal and peaceful possession of the thing
1. Rescission
c. Requisites of breach of warranty against eviction:
2. Mutual restitution
 Buyer is evicted in whole or in part from the
subject matter of sale 3. Warranty against encumbrances (non-apparent)

 There is a final judgment REQUISITES:

a. Immovable sold is encumbered with non–apparent
 Basis of eviction is a right prior to sale or an burden or servitude not mentioned in the agreement
act imputable to vendor
b. Nature of non–apparent servitude or burden is such
 Seller has been summoned in the suit for that it must be presumed that the buyer would not
eviction at the instance of buyer; or made 3rd have acquired it had he been aware thereof
party defendant through 3rd party complaint
brought by buyer c. When breach of warranty exist: buyer may ask for
rescission of indemnity

Vendor’s liability shall consists of (Total Eviction) (VICED) d. Warranty not applicable when non–apparent burden
1. Value of the thing at the time of eviction; or servitude is recorded in the Registry of Property –
unless there is express warranty that the thing is free
2. Income or fruits if he has been ordered to deliver the to from all burdens and encumbrances
the party who won the suit

3. Cost of the suit

4. Expenses of the contract; and

CIVIL LAW REVIEWER Page 144 of 338


4. Warranty against hidden defects
 SELLER does not warrant patent defect; caveat
emptor
 Except when hidden
1. subject matter may be movable or immovable
2. nature of hidden defect is such that it should
render the subject matter unfit for the use of
which it was intended or should diminish its
fitness
3. had the buyer been aware, he would not have
acquired it or would have given a lower price
a. When defect is visible or even if not visible but
buyer is an expert by reason of his trade or
profession, seller is not liable
b. Obligation of seller for breach depends on whether
he has knowledge of such defect or not
c. Seller is aware – seller should return price and
refund expenses of contract with damages
d. Seller is not aware - seller should return price and
interest and refund expenses (no damages)
e. Buyer may elect between withdrawing from
contract or demanding proportionate reduction of
price with damages in either case
f. Applicable to judicial sale except that judgment
debtor not liable for damages
g. Action to prescribe 6 months from delivery of
subject matter
5. Defects on animals
a. Even in the case of professional inspection but
hidden defect is of such nature that expert
knowledge is not sufficient to discover it - defect
shall be considered as REDHIBITORY
b. If vet fails to discover through ignorance or bad
faith, he is liable for damages
c. Sale of animals on teams (2 or more)
CIVIL LAW REVIEWER
 When only one is defective, only one is
prohibited and not the others
 Exception: when it appears buyer would not
have purchased the team without the
defective one
 Apply to sale of other things
d. Animals at fair or public auction
 No warranty against hidden defects
e. Sale of animals with contagious disease is void
f. Sale of unfit animals
 Void if use / service for which they are acquired
has been stated in the contract and they are
found to be unfit therefor
 Prescription of action: 40 days from date of
delivery to buyer
 If sale is rescinded, animals to be returned in
same condition when they were acquired;
buyer shall answer for injury / loss due to his
fault
 Buyer may elect between withdrawing from
sale and demanding proportionate reduction
of price with damages in either case
Specific Implied Warranties in the Sale of Goods
A. Warranty as to fitness and quality; requisites:
1. Buyer makes known to seller the particular purpose
for which goods are acquired and it appears that the
buyer relied on the seller’s skill or judgment
2. Goods are bought by description from seller who
deals in goods of that description
3. in case of sale of specified article under its patent or
trade name, no warranty unless there is a
stipulation to the contrary
4. measure of damage: difference between value of
goods at time of delivery and value they would have
had if they had answered to the warranty
Page 145 of 338

SALE OF GOODS BY SAMPLE
If seller is a dealer in goods of that kind, there is an implied
warranty that the goods shall be free from defect rendering
them unmerchantable which would not be apparent on
reasonable examination of the sample
iii. If seller aware – waiver is in bad faith, thus seller
still liable
Buyer’s Option in Case of Breach of Warranty
1. Accept goods and set up breach of warranty by way
of recoupment in diminution or extinction of the
price.

========================================= 2. Accept goods and maintain action against seller for

TOPICS UNDER THE SYLLABUS damages
L. WARRANTIES
3. Refuse to accept goods and maintain action against
3. Effects of warranties seller for damages
=========================================
4. Rescind contract of sale and refuse to receive
3. EFFECTS OF WARRANTIES goods/return them when already received.
=========================================
When rescission by buyer not allowed:
TOPICS UNDER THE SYLLABUS 1. If the buyer accepted the goods knowing the
L. WARRANTIES breach of warranty WITHOUT protest
4. Effects of waivers
2. If he fails to notify the seller within a reasonable
=========================================
time of his election to rescind
4. EFFECTS OF WAIVER
Waiver in Warranty against eviction - Parties may increase 3. If he fails to return or offer to return the goods in
or diminish implied warranty against eviction; but effect substantially as good condition as they were in at
depends on good faith or bad faith on the part of the seller. the time of the transfer of ownership to him

o Seller in bad faith and there is waiver against eviction END OF DISCUSSION ON TOPIC
– null and void L. WARRANTIES

o Buyer without knowledge of a particular risk, made ================================

general renunciation of warranty – not waiver but M. BREACH OF CONTRACT
merely limits liability of seller in case of eviction (pay
================================
value of subject matter at time of eviction)

o Buyer with knowledge of risk of eviction assumed its TOPICS UNDER THE SYLLABUS
consequences and made a waiver – vendor not liable
(applicable only to waiver of warranty against M. Breach of Contract
eviction) 1. Remedies of the seller (Arts. 1636, 1594)
5. Waiver to a specific case of eviction - wipes out (1) Sale of movables
warranty as to that specific risk but not as to eviction caused 2. Recto Law: sale of movables on installment
by other reasons. (Arts. 1484-1486)
3. Sale of immovables
Waiver against Hidden Defects (1) PD 957, sec. 23, 24
i. If there has been a stipulation exempting seller (2)Maceda Law: sale of immovables on
from hidden defects Installment
4. Remedies of the Buyer
ii. If seller not aware of hidden defects – loss of the
thing due to such defect will not make seller liable (1) Sale of movable

CIVIL LAW REVIEWER Page 146 of 338

 (2) Sale of immovables GENERAL RULE: If already chose specific performance, can
no longer choose other remedies
=========================================
EXCEPTION: After choosing, it has become impossible,
TOPICS UNDER THE SYLLABUS
rescission may be pursued
M. BREACH OF CONTRACT
1. Remedies of the seller  The fact that the seller did not foreclose the
========================================= chattel mortgage constituted on the movable
purchased on credit, but opted specific
1. REMEDIES OF THE SELLER performance, with a plea for a writ of replevin,
does not amount to a foreclosure of the chattel
Remedies of Unpaid Seller (Art. 1484)
mortgage to be covered by Art. 1484. Tajanglangit
1. Exact fulfillment should the buyer fail to pay. v. Southern Motors, [101 Phil. 606]

2. Cancel the sale if buyer fails to pay 2 or more

Rescission
installments.
1. When chosen, there is correlative obligation to restitute
2. But stipulations that installments paid are forfeited are
3. Foreclose on chattel mortgage if buyer fails to pay 2 or
valid if not unconscionable
more installments 3. Deemed chosen when:
- Notice of rescission is sent
=========================================
- Takes possession of subject matter of sale
TOPICS UNDER THE SYLLABUS
M. BREACH OF CONTRACT - Files action for rescission
2. Recto Law: Sale of Movables on Installment
- Barring effect on recovery of balance
=========================================

2. RECTO LAW: SALE OF MOVABLES ON INSTALLMENT Foreclosure

i. Barring effect on recovery of balance
Incidents: ii. Extent of barring effect: purchase price
1. If buyer chooses foreclosure, no further action iii. Exception: mortgagor refuses to deliver property to
against buyer to recover any unpaid balance of effect foreclosure, recover also expenses incurred in
the price attorneys fees, etc. (Perverse Buyer-Mortgagor)

2. When is the law applicable? Sale on movables by

installment =========================================
TOPICS UNDER THE SYLLABUS
o Sale on installment: payment by several M. BREACH OF CONTRACT
partial payments in small amount
3. Sale of Immovables
=========================================

Rationale of the law: Buyer is lulled into thinking that he 3. SALE OF IMMOVABLES
could afford because of small amounts per installment and
Remedies of Seller
at the same time remedy abuse of commercial houses
Anticipatory breach
Nature of remedies: alternative and not cumulative
1. Seller has reasonable grounds to fear loss of immovable
Coverage: sale and financing transaction and contracts of
sold and its price, sue for RESCISSION
lease with option to purchase
2. Non–payment of price, sue for RESCISSION

CIVIL LAW REVIEWER Page 147 of 338

 4. Cancellation to be effected 30 days from
IMMOVABLES (BY INSTALLMENT) notice and upon payment of cash surrender
value
Art 1592 – Applies only to contract of sale

MACEDA LAW o Buyer paid less than 2 years installment

1. applies to COS and CTS and Financing 1. 1st Grace period is 60 days from date
installment became due
2. Coverage: REAL ESTATE – defined space vs. CONDO –
not defined space (w/ common areas) 2. 2nd grace period of 30 days from notice of
cancellation/demand for rescission
1. Excluded:
 buyer can still pay within the 30 day period
a. Industrial
 with interest
b. Commercial
 No payment after 30 day period, can cancel.
c. Sale to tenants under agrarian laws

========================================= Purpose of law - Protect buyers in installments against

TOPICS UNDER THE SYLLABUS oppressive conditions
M. BREACH OF CONTRACT
Notice needed - waiver thereof if oppressive
3. Remedies of the Buyer
========================================= Applies to contracts even before law was enacted

4. REMEDIES OF THE BUYER  Stipulation to contrary is void

 In case of subdivision or condo projects, suspend

payment.
Other rights:
 If real estate developer fails to comply with
obligation according to approved plan: o Sell rights to another

- RESCIND o Reinstate contract by updating during grace

period and before actual cancellation
- SUSPEND PAYMENT UNTIL SELLER COMPLIES
o Deed of Sale to be done by notarial act

Rights Granted to Buyers: o To pay in advance any installment or the full

balance of price anytime without interest
o Buyer paid at least 2 years installment
o Have full payment annotated in certificate of
1. Pay without interest the balance within grace
title
period of 1 month for every year of
installment payment
REMEDY OF RESCISSION IN CONTRACTS COVERING
2. Grace to be exercised once every 5 years IMMOVABLES (Articles 1191 & 1592)

3. When no payment - cancelled; buyer entitled GENERAL RULE: Judicial

to 50% of what he has paid + if after 5 years
of installments, 5% for every year but not to EXCEPTION: Extra judicial Rescission allowed but SUBJECT to
exceed 90% of total payments made COURT Confirmation.

CIVIL LAW REVIEWER Page 148 of 338

 a. allowed if stipulated; burden to sue shifts to 2. Loss of the subject matter
party who does not like rescission
3. Condonation or remission
b. court still has final say as to propriety of
rescission 4. Confusion or merger of rights of creditor and
debtor
c. Forfeiture of amounts valid being in nature of
penal clause 5. Compensation

 Contract of Sale – Rescission is Applicable 6. Novation

 Contract to Sell – Rescission not Applicable 7. Annulment

8. Rescission
 Non–payment of purchase price would
automatically cancel even without further
9. Fulfillment of a resolutory condition
action for rescission
10. Prescription
Exception: If subject matter is residential lots, law on
rescission applies when there is substantial breach. Maceda
law applies. =========================================
END OF DISCUSSION ON TOPIC TOPICS UNDER THE SYLLABUS
M. BREACH OF CONTRACT N. EXTINGUISHMENT OF SALE
2. Conventional Redemption
================================ =========================================
N. EXTINGUISHMENT OF SALE
2. CONVENTIONAL REDEMPTION
================================
 Only extinguishes obligations pertaining to
TOPICS UNDER THE SYLLABUS
contract of sale, not extinguish contract itself; only
applies to contract of sale
N. Extinguishment of Sale
1. Causes (Arts. 1600, 1231)  The right which the vendor reserves to himself to
2. Conventional redemption (Art. 1601) reacquire the property sold provided he returns to
the vendee:
3. Equitable mortgage (Arts. 1602-1604)
4. Distinguish from option to buy (Art. 1602) a. The price of the sale,
5. Period of redemption (Art. 1606)
b. Expenses of contract,
6. Exercise of the right to redeem (Art. 1616)
7. Legal redemption (Art. 1619) c. Other legitimate payments,
8. Age redemption (Art. 1619)
d. The necessary and useful expenses made on the
========================================= thing sold
TOPICS UNDER THE SYLLABUS e. And fulfills other stipulations which may have been
N. EXTINGUISHMENT OF SALE agreed upon
1. Causes
=========================================  The right is exercised only be seller in whom right
1. CAUSES is recognized in the contract or by any person to
whom right was transferred; must be in the same
I. GROUNDS (same grounds whereby obligations in general
contract
are extinguished)
1. Payment or performance

CIVIL LAW REVIEWER Page 149 of 338

=========================================
TOPICS UNDER THE SYLLABUS
N. EXTINGUISHMENT OF SALE
3. Equitable Mortgage
=========================================
3. EQUITABLE MORTGAGE
One which lacks the proper formalities, form of words, or
other requisites prescribed by law for a mortgage, but
shows the intention of the parties to make the property
subject of the contract as security for a debt and contains
nothing impossible contrary to law. Cachola v. CA, [208
SCRA 496]
1. A contract with right to repurchase is deemed to be
an equitable mortgage if the following requisites
concur (IPERTI):
a. Price of sale with right to repurchase is unusually
inadequate
b. Seller remains in possession as lessee or otherwise
c. Upon or after expiration of right to repurchase,
another instrument extending the period of
redemption or granting new period is executed
d. Buyer retains for himself a part of the purchase
price
e. Seller binds himself to pay taxes on thing sold
f. Real intention of parties is to secure the payment
of a debt or performance of other obligation
NOTE: In case of doubt – in determining whether it is an
equitable mortgage or a sale a retro, the sale shall be
construed as an equitable mortgage.
2. What to Look for in Determining Nature of Contract
a. Language of the contract
b. Conduct of parties – to reveal real intent
3. Remedy available to vendor: ask for reformation of
contract
4. Rationale behind provision on Equitable Mortgage:
a. Circumvention of usury law
CIVIL LAW REVIEWER
b. Circumvention of prohibition against pactum
commissorium – creditor cannot appropriate the
things given by way of pledge or mortgage;
remedy here is foreclosure. The real intention of
parties is that the pretended purchase price is
money loaned and to secure payment of the loan,
sale with pacto de retro is drawn up
=========================================
TOPICS UNDER THE SYLLABUS
N. EXTINGUISHMENT OF SALE
4. Distinguish from option to buy
=========================================
4. DISTINGUISH FROM OPTION TO BUY
OPTION TO PURCHASE - Right to repurchase the thing sold
granted to the vendor in a separate instrument from the
deed of sale
=========================================
TOPICS UNDER THE SYLLABUS
N. EXTINGUISHMENT OF SALE
5. Period of Redemption
=========================================
5. PERIOD OF REDEMPTION
a. No period agreed upon – 4 years from date of
contract
b. Period agreed upon – should not exceed 10 years; if
it exceeded, valid only for the first 10 years.
c. When period to redeem has expired and there has
been a previous suit on the nature of the contract –
seller still has 30 days from final judgment on the
basis that contract was a sale with pacto de retro:
d. Rationale: no redemption due to erroneous belief
that it is equitable mortgage which can be
extinguished by paying the loan.
e. This refers to cases involving a transaction where one
of the parties contests or denies that the true
agreement is one of sale with the right to
repurchase; not to cases where the transaction is
conclusively a pacto de retro sale.
f. Example: Where a buyer a retro honestly believed
that he entered merely into an equitable mortgage,
Page 150 of 338
 not a pacto de retro transaction, and because of such
belief he had not redeemed within the proper
period.
IN CASE OF MULTI-PARTIES
1. When an undivided thing is sold because co-
owners cannot agree that it be allotted to one of
them – vendee a retro may compel the vendor to
redeem the whole thing

NOTE: When period has expired and seller allowed the
period of redemption to expire – seller is at fault for not
having exercised his rights so should not be granted a new
period
Tender of payment is SUFFICIENT to compel redemption,
but is not in itself a payment that relieves the vendor from
his liability to pay the redemption price. Paez v. Magno,
G.R. No. :-792, April 27, 1949
=========================================
TOPICS UNDER THE SYLLABUS
N. EXTINGUISHMENT OF SALE
6. Exercise of the Right to Redeem
=========================================
2. When an undivided thing is sold by co-owners / 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
3. 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
4. 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.

EFFECT WHEN THERE IS NO REDEMPTION MADE FRUITS

i. Jurisprudence before the NCC: buyer a retro What controls is the stipulation between parties as regards
automatically acquires full ownership the fruits;

ii. Under present art 1607: there must be judicial If none:

order before ownership of real property is
consolidated in the buyer a retro
HOW IS REDEMPTION EFFECTED
Seller a retro must first pay the following:
o The price of the thing sold
o Expenses of the contract and other legitimate
payments made by reason of the sale
a. At time of execution of the sale a retro there are
visible or growing fruits – there shall be no pro-
rating at time of redemption if no indemnity was
paid by the vendee a retro
b. 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.

o Necessary and useful expenses made on the thing

PRE-EMPTION
sold
1. Arises before sale
2. No rescission because no
o Valid tender of payment is sufficient
sale exists yet
3. The action is directed
o Mere sending of notice without valid tender is
against prospective seller
insufficient
REDEMPTION
Arises after sale
There can be rescission of
the original sale
Action is directed against
buyer

o Failure to pay useful and unnecessary expenses

entitles vendee to retain land unless actual
reimbursement is made

=========================================

CIVIL LAW REVIEWER Page 151 of 338

TOPICS UNDER THE SYLLABUS o Where piece of rural land has an area not
N. EXTINGUISHMENT OF SALE exceeding 1 hectare, adjoining owner has right to
redeem unless grantee does not own a rural land
7. Legal Redemption
========================================= o If two or more adjacent lot owners desire to
7. LEGAL REDEMPTION exercise right to redeem, owner of adjoining lot
with smaller area shall be preferred
LEGAL REDEMPTION
 Only applies to contracts of sale.
o If two or more adjacent lit owners desire to
 The right to be subrogated upon the same terms and exercise right to redeem and both have same lot
conditions stipulated in the contract, in the place of area, one who first requested shall be granted
one who acquires the thing by (1) purchase OR (2) by
dation in payment OR (3) by other transaction whereby ii. Urban land
ownership is transmitted by onerous title.
o when piece of land is small and cannot be
 Types of Legal Redemption: used for any practical purpose and bought
merely for speculation, owner of adjoining
land can redeem
a. Among co-heirs
o 2 or more owners of adjoining lot desire to
i. Any of the heirs sell his hereditary rights to exercise right to redeem, owner whose
stranger before partition intended use is best justified shall be
preferred.
ii. Any of the co-heirs may be subrogated to the
rights of the purchaser by redeeming said
hereditary right: reimburse buyer of the price of d. Sale of credit in litigation
the sale i. when a credit or other incorporeal right in
litigation is sold, debtor shall have a right to
iii. Co-heirs has 1 month from receipt of notice in extinguish it by reimbursing the assignee for the
writing price the latter paid therefor plus judicial costs,
interest
b. Among co-owners
ii. debtor may exercise right within 30 days from
i. any or all of co-owners sells their shares to 3 rd the date assignee demands payment from him
person
Other Instances When Right of Legal Redemption
ii. any co-owner may exercise right of redemption
is Granted
by paying reasonable price of property to the
buyer a. Redemption of homesteads

iii. if 2 or more co-owners desire to exercise right of b. Public Land Act

redemption, they may only do so in proportion
to the share they respectively have in thing c. Land acquired under free patent homestead
owned in common subject to repurchase by wife, legal heirs within 5
years from date of conveyance granted by law,
need not be stipulated
c. Among adjoining owners

i. Rural land
1. Redemption in tax sales

CIVIL LAW REVIEWER Page 152 of 338

 i. in case of tax delinquency/failure to pay tax
assessments, property is foreclosed
ii. delinquent payer has 1 year from date of sale to
redeem by paying to the revenue District Officer
the amount of tax delinquencies, and interest or
purchase price.
2. Redemption by judgment debtor - 1 year from
date of registration of certificate of sale to redeem
by paying purchaser at public auction with interest
3. Redemption in extrajudicial foreclosure - 1 year
from date of sale and registration
4. Redemption in judicial foreclosure of mortgage -
no right to redeem is granted to debtor mortgagor
except when mortgagee is bank of a banking
institution 90 days after finality of judgment
5. When Period of Redemption Begins to Run - Right
of legal pre-emption of redemption shall be
exercised within 30 days from notice by the seller
6. How exercised - tender of payment is not
necessary; offer to redeem is enough.
i. There is no prescribed form for an offer to
redeem to be properly effected. Hence, it can
either be through a formal tender with
consignation of the redemption price within
the prescribed period. What is paramount is
the availment of the fixed and definite period
within which to exercise the right of legal
redemption.
ii. Deeds of sale are not to be recorded in
Register of Deeds unless accompanied by
affidavit of seller that he has given notice to
all possible redemptioners
NOTE: Written notice under Art. 1623 is mandatory for the
right of redemption to commence (PSC vs. Sps. Valencia,
[August 19, 2003].
GENERAL RULE: Actual knowledge notwithstanding, written
notice is still required
EXCEPTION: When actual knowledge is acquired by co-heirs
living in same land with purchaser, or co-owner was
middleman in sale to 3rd party.
CIVIL LAW REVIEWER
o Art. 1623 does not prescribe any distinctive
method for notifying the redemptioner. Etcuban v.
CA, [148 SCRA 507]
=========================================
TOPICS UNDER THE SYLLABUS
N. EXTINGUISHMENT OF SALE
8. Age Redemption
=========================================
9. ASSIGNMENT (See Arts . 1624 – 1634)
I. ASSIGNMENT: The owner of a credit transfers to
another his rights and actions in consideration of a
price certain in money or its equivalent
1. Transfers the right to collect the full value of the
credit, even if he paid a price less than such value
2. Transfers all the accessory rights (e.g. guaranty,
mortgage, pledge, preference)
3. Debtor can set up against the assignee all the
defenses he could have set up against the assignor
II. WHAT MAKES ASSIGNMENT DIFFERENT FROM
SPECIES SALE?
1. Technical term but basically a sale
2. Sale of credits and other incorporeal things
III. EFFECTS OF ASSIGNMENT
1. Lack of knowledge or consent of debtor not
essential for validity but has legal effects (“meeting
of minds” in assignment contemplates that
between assignor of the credit and his assignee)
2. Assignment of rights made w/o knowledge of
debtor – debtor may set up against assignee the
compensation w/c would pertain to him against
assignor of all credits prior to assignment and of
later ones until he had knowledge of the
assignment
3. Debtor has consented to assignment – cannot set
up
Page 153 of 338
 4. Compensation unless assignor was notified by b. Warranty shall last for 1 year only
debtor that he reserved his right to the
compensation c. One who assigns inheritance right w/o
enumerating rights shall be answerable
5. Debtor has knowledge but no consent - may still for his character as an heir
set up compensation of debts previous to
assignment but not the subsequent ones. d. One who sells whole of certain rights for
a lump sum, shall be answerable for
legitimacy of the whole in general but not
IV. TRANSFER OF OWNERSHIP for each of the various parts

1. By tradition and not by perfection

VII. BREACH OF WARRANTY: LIABILITIES OF THE
2. By execution of public instrument because ASSIGNOR OF CREDIT FOR VIOLATION OF HIS
intangibles cannot be physically transferred WARRANTIES

3. Without necessity of delivering the document 1. Assignor in good faith

evidencing the credit.
Liability is limited to price received, expenses of
4. This rule does not apply to negotiable documents the contract and other legitimate payments made
and documents of title which are governed by by reason of the assessment
special laws. 2. Assignor in bad faith

Liable ALSO for (expenses of contract and other

V. EFFECT OF PAYMENT OF DEBTOR AFTER legitimate payments plus useful and necessary
ASSIGNMENT OF CREDIT expenses) damages

1. Before Notice of the Assignment VIII. ASSIGNMENT OF CREDIT OR INCORPOREAL RIGHT

IN LITIGATION - REQUISITES:
Payment to the original creditor is valid and
debtor shall be released from his obligation 1. There must be a sale or assignment of credit

2. After Notice 2. There must be a pending litigation

a. Payment to the original creditor is not valid as 3. The debtor must pay the assignee:
against the assignee
a. Price paid by him AND
b. He may be made to pay again by the assignee
b. Judicial costs incurred by him AND

c. Interest on the price from the date of

VI. WARRANTIES OF THE ASSIGNOR OF CREDIT
payment
1. NO warranty against hidden defect - N/A because
4. The right must be exercised by the debtor within 30
intangibles has no physical existence
days from the date the assignee demands (judicially or
2. He warrants the existence and legality of credit - extra-judicially) payment from him
there is warranty except when expressly sold as a
doubtful account
NOTE:
a. NO warranty as to the solvency of debtor  Presumption: buyer’s purpose is speculation and; law
unless it is expressly stipulated OR unless would rather benefit the debtor of such credits rather
the insolvency was already existing and of than the one who merely speculates for profit.
public knowledge at the time of the
assignment

CIVIL LAW REVIEWER Page 154 of 338

 When credit or incorporeal right in litigation is assigned REMEDIES FOR FAILURE OF THE DEVELOPER TO DEVELOP
or sold, debtor has a right to extinguish it by THE SUBDIVISION OR CONDOMINIUM ACCORDING TO THE
reimbursing the assignee for the price the buyer paid APPROVED PLAN AND TO COMPLY WITH SUCH WITHIN
plus interest THE TIME LIMIT.

 The buyer may desist from further payment any

IX. Right to redeem by debtor not available in the installments. Also, there would be no forfeiture of past
following instances (not considered speculative payments in favor of the developer after due notice has
been given.
1. Assignment of credit / incorporeal right to co-heir or
co-owner; the law does not favor co-ownership  The buyer may demand reimbursement of the total
amount paid including amortization interests but excluding
2. Assignment to creditor in payment for his credit
delinquency interests, with interest thereon at the legal
rate. (Sec. 23, P.D. 957)
 Presumption is that the assignment is above
suspicion; assignment is in the form of dacion en
Otherwise: RA 6552 (Maceda Law) will apply.
pago, thus perfectly legal
REQUISITES OF SEC 3 OF RA 6552:
3. Assignment to possessor of tenement or piece of land
which is subject to the right in litigation assigned  Failure to pay installments was due to reasons, other
than failure of the developer to develop the subdivision or
 Purpose is to presumably preserve the
condominium according to the approved plan and to comply
tenement
with such within the time limit, and,

 Only covers residential lots including condominium

END OF DISCUSSION ON TOPIC units, excluding, sales to tenants.
N. EXTINGUISHMENT OF SALE
 The buyer has paid at least two years of installments

================================
O. THE SUBDIVISION AND
RIGHTS OF THE BUYER UNDER RA 6552 WITH AT LEAST
CONDOMINIUM BUYER’S PROTECTIVE TWO (2) YEARS OF INSTALLMENT:
DECREE
================================  To pay, without additional interest, the unpaid
TOPICS UNDER THE SYLLABUS 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
The Subdivision and Condominium Buyer’s
made. Thus, here the buyer has at least two months grace
Protective Decree (P.D. 957) for he should have paid at least two years of installments to
avail of the rights under this section.
=========================================
TOPICS UNDER THE SYLLABUS This rights can only be exercised only once in every
O. THE SUBDIVISION AND CONDOMINIUM five (5) years of the life of the contract and its
extensions, if any.
BUYER’S PROTECTIVE DECREE
=========================================  To be refunded of the cash surrender value of this
P.D. 957: LAW ON SALE OF SUBDIVISION AND payments equal to 50% of his total payments if the contract
CONDOMINIUM 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

CIVIL LAW REVIEWER Page 155 of 338

payments. McLaughlin v CA, [G.R. No. L-57552, Oct 10, TOPICS UNDER THE SYLLABUS
1986] P. THE CONDOMINIUM ACT
=========================================
R.A. 4726: THE CONDOMINIUM ACT
THE ACTUAL CANCELLATION OF THE CONTRACT REFERRED Restrictions and Additional requirements on transfer of
TO ABOVE SHALL TAKE PLACE ONLY: condominiums:

1. After 30 days from receipt by the buyer of the notice of
cancellation or demand for rescission, AND
2. Upon full payment to the buyer of the cash surrender
value
In the computation of the total number of installment
payments the following are included:
1. downpayment and
 It shall include the transfer or conveyance of the
undivided interests in the common areas or
membership or shareholdings in the condominium
corporation.
 Membership in a condominium corporation, regardless
whether stock or non-stock, shall not be transferable
separately from the condominium unit of which it is an
appurtenance.

2. deposit or option money  No condominium owner’s copy of the certificate of title

shall, subsequent to the original conveyance, be
RIGHTS OF THE BUYER UNDER RA 6552 WITH LESS THAN 2 registered unless accompanied by a certificate of the
YEARS OF INSTALLMENTS: management body of the project that such conveyance
is in accordance with the provisions of the declaration
 If he has paid less than two (2) years of of restrictions of such project.
installments, he still has the right to pay within a
grace period of not less than sixty (60) days from END OF DISCUSSION ON TOPIC
the date the installment became due. P. THE CONDOMINIUM ACT
================================
 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.

Here the buyer is not entitled to any refund

END OF DISCUSSION ON TOPIC

O. THE SUBDIVISION AND CONDOMINIUM
BUYER’S PROTECTIVE DECREE
================================

P. THE CONDOMINIUM ACT

================================
TOPICS UNDER THE SYLLABUS

The Condominium Act (R.A. 4726)

=========================================

CIVIL LAW REVIEWER Page 156 of 338

 H. SUCCESSION KINDS OF HEIRS
================================= 1. Compulsory – those who succeed by force of law to
some portion of the inheritance, in an amount
TOPICS UNDER THE SYLLABUS predetermined by law, of which they cannot be
I. General Provisions (Arts. 774-780) deprived by the testator, except by a valid
disinheritance
A. Definition/what is transmitted (Arts. 774, 776,
781) 2. Voluntary or Testamentary – those who are instituted
by the testator in his will, to succeed to the portion
B. When succession occurs (Art. 777) of the inheritance of which the testator can freely
dispose
C. Kinds of successors: heirs, devisees, legatees
3. Legal or Intestate – those who succeed to the estate of
(Art. 782)
the decedent who dies without a valid will, or to the
================================= portion of such estate not disposed of by will

I. GENERAL PROVISIONS ii. Devisees or Legatees – persons to whom

SUCCESSION – mode of acquisition by virtue of which the gifts of real or personal property are
property, rights and obligations to the extent of the value of respectively given by virtue of a will (Art.
the inheritance, of a person are transmitted through his 782)
death to another or others either by his will or by operation
of law. (Art. 774) NOTE: The distinction between heirs and devisees/legatees
are important in these cases:
KINDS OF SUCCESSION (Balane)
a. Preterition
1. Compulsory—succession to the legitime (this prevails
over all kinds) b. Imperfect disinheritance

2. Testamentary—succession by will c. After-acquired properties

3. Intestate—succession in default of a will d. Acceptance or non-repudiation of successional

rights
4. Mixed—not a distinct kind really, but a combination of
any two or all of the first three II. Causal Element (Art. 777)

Death of the Person – However, a person may be

ELEMENTS OF SUCCESSION presumed dead for the purpose of opening his
succession (see rules on presumptive death). In
I. Subjective Element this case, succession is only of provisional
character because there is always the chance that
A. Decedent — person whose property is transmitted
the absentee may be alive.
through succession (Art. 775)
III. Objective Element (Art. 776)
B. Successors
Inheritance – is the subject matter of Succession it
i. Heirs – those who are called to the whole or
includes:
to an aliquot portion of the inheritance
either by will or by operation on law (Art. i. Property and transmissible rights and
782) obligations

CIVIL LAW REVIEWER Page 157 of 338

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

6. To take effect after his death.

=================================
KINDS OF WILLS:
TOPICS UNDER THE SYLLABUS
II. Testamentary Succession 1. Notarial – an ordinary or attested will

A. Wills 2. Holographic – a handwritten will

CIVIL LAW REVIEWER Page 158 of 338


COMMON REQUISITES BETWEEN THE TWO WILLS:
1. Must be in writing and
2. In a language or dialect known to the testator
CHARACTERISTICS OF A WILL:
1. UNILATERAL — does not need the approval of any
other person (implied in Art. 783)
2. STRICTLY PERSONAL ACT (Art. 784-785)
a. Acts which may not be left to the discretion of
third persons (Arts. 785 and 787):
i. Duration or efficacy of the designation of
heirs, devisees or legatees;
ii. Determination of the portions which they are
to take, when referred to by name; and
iii. Determination of whether or not the
testamentary disposition is to be operative
b. Acts which may be entrusted to third persons
(Article 787);
i. Distribution of specific property or sums of
money that he may leave in general to
specified classes or causes; and
ii. 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
4. FORMAL AND SOLEMN ACT — the formalities are
essential for validity
5. ACT MORTIS CAUSA (Art. 783)— takes effect only after
the death of the testator
CIVIL LAW REVIEWER
6. AMBULATORY AND REVOCABLE during the testator’s
lifetime
7. INDIVIDUAL ACT — two or more persons cannot make a
single joint will, either for their reciprocal benefit or for
another person. However, separate or individually
executed wills, although containing reciprocal
provisions (mutual wills) are not prohibited, subject to
the rules on disposicion captatoria.
8. Executed with ANIMUS TESTANDI
9. Executed with TESTAMENTARY CAPACITY
10. DISPOSITIVE OF PROPERTY
11. STATUTORY
INTERPRETATION OF WILLS (Art. 788-794)
Underlying Principle: Testacy is always preferred to
intestacy, because the former is the express will of the
decedent whereas the latter is only his implied will.
1. Animus Testandi - The testator’s intent (animus
testandi), as well as giving effect to such intent is
primordial.
EXCEPT: when the intention of the testator is
contrary to law, morals or public policy.
2. In case of doubt, the interpretation by which the
disposition is to be operative or will sustain and uphold
the will in all its parts shall be adopted, provided that it
can be done consistently with the established rules of
law.
3. Ambiguities in Wills – Intrinsic or extrinsic evidence
may be used to ascertain the testatorial intent of the
testator.
EXCEPT: The oral declarations of the testator as to
his intentions must be excluded because such
testimony would be hearsay.
Page 159 of 338
 KINDS OF AMBIGUITIES (Art. 789)
I. Latent or Intrinsic Ambiguities—those which do
not appear on the face of the will and is discovered
only by extrinsic evidence
II. Patent or Extrinsic Ambiguities—those which
appear on the face of the will itself
4. After Acquired Property - Property acquired during the
period between the execution of the will and the death
of the testator is NOT included among the property
disposed of. EXCEPT: When a contrary intention
expressly appears on the will.
NOTE: This rule applies only to legacies and devisees and
not to institution of heirs
NOTE: The validity of a will as to its form depends upon the
observance of the law at the TIME it was MADE (Art. 795)
TESTAMENTARY CAPACITY—the ability as well as the power
to make a will (must be present at the TIME of EXECUTION):
1. All persons who are not expressly prohibited by law
(Art. 796)
2. 18 years old and above (Art. 797)
3. Of sound mind, at the time of its execution (Art. 798); A
testator is considered of sound mind if he knows at the
time of making of the will the following:
a. Nature of the estate to be disposed of
b. Proper objects of his bounty
c. Character of the testamentary act (Art. 799)
LEGAL PRESUMPTION IN FAVOR OF SOUNDNESS OF MIND
(Art. 800):
General Rule: The law presumes that every person is of
sound mind, in the absence of proof to the contrary.
Exceptions:
CIVIL LAW REVIEWER
1. When the testator, one month or less before the
execution of the will, was PUBLICLY KNOWN to be
INSANE (Art. 800);
2. When the testator executed the will after being
placed under guardianship Torres and Lopez de
Bueno vs. Lopez, [48 Phil. 772] or ordered
committed, in either case, for insanity (under Rules
93 and 101, respectively of the Rules of Court), and
before said order has been lifted.
 Supervening capacity or incapacity does not invalidate
an effective will, nor is the will of an incapable
validated by supervening capacity (Art. 801).
FORMS OF WILL
COMMON FORMALITIES:
1. Every will must be in WRITING; and
2. Executed in a LANGUAGE or DIALECT KNOWN to
the TESTATOR (Art. 804)
SPECIAL FORMALITIES:
I. NOTARIAL WILL – a valid notarial will: (Art. 805)
A. Subscribed at the end by the testator himself or by
the testator’s name written by some other person
in his presence, and by his express direction
Physical end- where the writing stops
Logical end- where the last testamentary
disposition ends
B. Attested & subscribed by three or more credible
witnesses in the presence of the testator and of
one another
 Mandatory Part: The signing on every page in
the witnesses’ presence
NOTE: Test of presence is not whether they
actually saw each other sign, but whether
they might have seen each other sign had
they chosen to do so considering their mental
and physical condition and position with
Page 160 of 338
 relation to each other at the moment of
inscription of each signature.
 Directory Part: The place of the signature, i.e.
the left margin; the signature can be affixed
anywhere on the page.
C. Each and every page, except the last, must be signed by
the testator or by the person requested by him to write
his name, and by the instrumental witnesses of the will,
on the left margin.
F.
Signatures on the left margin on each and every page
NOT REQUIRED:
b. The fact that the testator signed the will
and every page, or caused some other
person to write his name, under his
express direction, in the presence of the
instrumental witnesses
c. All the instrumental witnesses witnessed
and signed the will and all its pages in the
presence of the testator and of one
another
It must be acknowledged before a notary public by
the testator and the witnesses (Art. 806)

i.In the last page, when the will consists of two or  The notary public cannot be counted as one of the
more pages; attesting witnesses. Cruz v. Villasor, [54 SCRA 31]

ii.When the will consists of only one page;

iii.When the will consists of two pages, the first
consists of all the testamentary disposition
and is signed at the bottom by the testator
and the witnesses and the second contains
only the attestation clause duly signed at the
bottom by the witnesses.
NOTE: A statute requiring a will to be signed is satisfied if
the signature is made by the testator's mark. A thumbmark
is sufficient signature. Payad v. Tolentino, [62 Phil 846] But
a mere sign of the cross cannot be accepted as it does not
have the trustworthiness of a thumbmark Garcia v.
Lacuesta, [90 Phil 489]
ATTESTATION v. SUBSCRIPTION
Attestation – An act of witnessing execution of will by
testator in order to see and take note mentally those things
are done which the statute requires for the execution of a
will and that the signature of the testator exists as a fact
Subscription – manual act of instrumental witnesses in
affixing their signature to the instrument
ATTESTATION SUBSCRIPTION
1. act of the senses 1. act of the hand

D. Each and every page of the will must be numbered 2. mental act 2. mechanical act
correlatively in letters placed on the upper part of
3. Purpose is to render 3. Purpose is for
each page.
available proof during the identification
probate that such will had
 Mandatory Part: Pagination by means of a been executed in
conventional system. accordance with the
formalities prescribed by
 Directory Part: The pagination in letters on law
the upper part of each page
4. Found after the 4. Found at the left side
attestation clause at the end margin of every page of the
E. It must contain an attestation clause, stating the or last page of the will will
following:

a. The number of pages used upon which

the will is written

CIVIL LAW REVIEWER Page 161 of 338

 The attestation clause need not be written in a
language or dialect known to the testator nor to the b. If the Testator be Blind: The will shall be read to the
witnesses since it does not form part of the testator twice –
testamentary disposition
i. Once by one of the subscribing witnesses

 The attestation clause need only be signed by the ii. Once by the notary public before whom the will
witnesses and not by the testator as it is a declaration is acknowledged (Art 808)
made by the witnesses.
NOTE: Articles 807 and 808 are mandatory, failure to
comply with either would result in nullity and denial of
probate.
RULE ON SUBSTANTIAL COMPLIANCE (ART. 809)
 The inadvertent failure of one witness to affix his
1. In the absence of signature to one page of the original will due to the
simultaneous lifting of two pages in the course of
o bad faith signing is not per se sufficient to justify denial of
probate when the duplicate will shows such signatures.
o forgery
Icasiano v. Icasiano, [11 SCRA 422]
o fraud

o undue and improper pressure and

II. HOLOGRAPHIC WILL – a holographic will is valid if it is:
influence
A. Entirely written, dated, and signed by the hand of
the testator himself
2. Defects and imperfections
B. Dispositions of the testator written below his
o in the form of attestation or in the
signature must be dated and signed by him in
language used therein
order to validate the testamentary dispositions.
3. Shall not render the will invalid (Art 812)

4. If it is proved that the will was in fact executed and
attested in substantial compliance with all the
requirements of Article 805.
 Defects and imperfections can be supplied by an
examination of the will itself. Caneda v. CA [222
SCRA 781]
EXCEPT: In case of dispositions appearing in a
holographic will which are signed without being
dated, where the last disposition has a
signature and a date, such date validates the
dispositions preceding it, whatever be the time
of prior dispositions
 A holographic will is subject to no other form,
and may be made in or out of the Philippines,
and need not be witnessed. (Art 810)

ADDITIONAL REQUISITES FOR VALIDITY

a. If the Testator be Deaf or Deaf-Mute:
i. Testator must personally read the will, if able to
do so;
ii. Otherwise, he shall designate two persons to
read it and communicate to him, in some
practicable manner, its contents (Art 807)
ELEMENTS OF A CODICIL (ART. 825)
1. It is a supplementary or addition to a will
2. Made after the execution of the will
3. Annexed to be taken as a part thereof
4. By which any disposition in the original will may be
explained, added to or altered

CIVIL LAW REVIEWER Page 162 of 338


REQUISITES FOR INCORPORATION BY REFERENCE (Art. 827)
1. the document or paper referred to in the will must be
in existence at the time of the execution of the will
2. the will must clearly describe and identify the same,
stating among other things the number of pages
thereof
3. it must be identified by clear and satisfactory proof as
the document or paper referred to therein
4. it must be signed by the testator and the witnesses on
each and every page, except in case of voluminous
books of account or inventories
NOTE: The text of Art, 827 suggests that holographic wills
cannot incorporate documents by reference. Paragraph 4
requires the signatures of the testator and witnesses on
every page of the incorporated document. It seems,
therefore, that only attested wills can incorporate
documents by reference, since only these are witnessed
(unless the testator has his holographic will superfluously
witnessed)
PROBATE OF HOLOGRAPHIC WILL
A. There must be at least one witness.
EXCEPTION: If the will is contested, at least three
of such witnesses shall be required (merely
directory). In the absence of such competent
witness and if the court deems it necessary, expert
testimony may be resorted to.
B. Who knows the handwriting and signature of the
testator
C. Must explicitly declare that the will and the
signature are in the handwriting of the testator.
(Art 811)
NOTE: This article applies only to post mortem probates and
not to ante mortem probates since in such cases the
testator himself files the petition and will identify the
document himself.
CIVIL LAW REVIEWER
 in the probate of a holographic will, the document
itself must be produced; a lost holographic will
cannot be probated. Gan v. Yap, [104 Phil 509]
Exception: When copy of the will is produced or
survives Rodelas v. Aranza, [G.R. No. L-58509,
December 7, 1982]
INSERTION, CANCELLATION, ERASURE OR ALTERATION IN
A HOLOGRAPHIC WILL
A. If made after the execution of the will, but without
the consent of the testator, such insertion is
considered as not written because the validity of
the will cannot be defeated by the malice or
caprice of a third person
B. If the insertion after the execution of the will was
with the consent of the testator, the will remains
valid but the insertion is void.
C. If the insertion after the execution is validated by
the testator by his signature thereon then the
insertion becomes part of the will, and, the entire
will becomes void, because of failure to comply
with the requirement that it must be wholly
written by the testator
D. If the insertion made by a third person is made
contemporaneous to the execution of the will,
then the will is void because it is not written
entirely by the testator
WHO MAY BE A WITNESS TO A WILL – Any person may be a
witness provided he is:
A. Of sound mind
B. Of the age of 18 years or more
C. Not blind, deaf or dumb
D. Able to read and write
E. Domiciled in the Philippines
F. Have not been convicted of falsification of a
document, perjury or false testimony
Page 163 of 338
 LAWS GOVERNING VALIDITY OF A WILL AMENDMENT OF WILLS

1. FORMAL VALIDITY 1. Notarial – only through a codicil

FORMAL FILIPINO ALIEN 2. Holographic – in three ways

VALIDITY
A. Dispositions may be added below the signature,
EXECUTED IN (a) CC of (a)CC of the PROVIDED that said dispositions are also dated and
PHILIPPINES Philippines Philippines signed, and everything is written by the hand of
the testator himself
(b)Law of His
Country B. Certain dispositions or additional matter may be
suppressed or inserted PROVIDED that said
FOREIGN (a) CC of (a) CC of cancellation is signed by the testator and written
COUNTRY Philippines Philippines by the hand of the testator himself

(b) Law where (b) Law of his C. Through a codicil which may either be notarial or
Made Country holographic

(c) Law of Country

where he resides REVOCATION OF WILLS

*CC – Civil Code 1. By operation of law – instances of revocation by

operation of law:

a. decree of legal separation

2. SUBSTANTIVE VALIDITY
b. preterition
ASPECTS OF THE WILL GOVERNED BY NATIONAL LAW OF
THE DECEDENT: c. legacy or credit against third person or remission
of debt was provided in will and subsequently,
A. Order of succession testator brings action against debtor

B. Capacity to succeed d. substantial transformation of specific thing

bequeathed
C. Amount of successional rights
e. when heir, devisee or legatee commits any of the
D. Intrinsic validity acts of unworthiness

VALIDITY OF 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.
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.
AMENDMENT, REVOCATION AND REPUBLICATION OF
WILLS
2. By the execution of a will, codicil or other writing
executed as provided in case of wills
a. EXPRESS – When there is a revocatory clause
expressly revoking the previous will or a part
thereof
b. IMPLIED – When the provisions thereof are
partially or entirely inconsistent with those of the
previous wills

CIVIL LAW REVIEWER Page 164 of 338

3. By burning, tearing, canceling, or obliterating the will
with the intention of revoking it, by the testator EXCEPTION: Doctrine of Dependent Relative Revocation –
himself, or by some other person in his presence, and when the testator provides in the subsequent will that the
by his express direction. revocation of the prior one is dependent on the capacity or
acceptance of the heirs, devisees, or legatees instituted in
the subsequent will. (Molo v, Molo, [90 Phil 37])
REQUISITES:
LAWS WHICH GOVERN REVOCATION
a. Testamentary capacity at the time of performing
the act of destruction; LAW FOR REVOCATION LAW

b. Intent to revoke (animus revocandi); IN PHILIPPINES Philippine Law

c. Actual physical act of destruction; Philippine Law

d. Completion of the subjective phase; AND OUTSIDE Domicile Philippine Law

PHILIPPINES
e. Performed by the testator himself or by some
Non (a) Where will was made
other person in his presence and express direction
Domicile
(b)Where DOMICILED at
(The list is NOT exclusive.)
time of revocation

DOCTRINE of PRESUMED REVOCATION:

REVOCATION BASED ON A FALSE OR ILLEGAL CAUSE
 Where the will cannot be found following the death of
 Revocation based on a false or illegal cause is null and
the testator and it is shown that it was in the testator's
void.
possession when last seen, the presumption is that he
must have destroyed it with animus revocandi.  REQUISITES:

 Where the will cannot be found following the death of a. The cause must be concrete, factual and not purely
the testator and it is shown that the testator had ready subjective
access to it, the presumption is that he must have
destroyed it with animus revocandi. b. It must be false

 Where it is shown that the will was in the custody of c. The testator must not know of its falsity
the testator after its execution, and subsequently, it
d. It must appear from the will that the testator is
was found among the testator's effects after his death
revoking because of the cause which is false.
in such a state of mutilation, cancellation, or
obliteration, as represents a sufficient act of revocation
within the meaning of the applicable statute, it will be  Art. 834. The recognition of an illegitimate child
presumed, in the absence of evidence to the contrary, does not lose its legal effect, even though the will
that such act was perfomed by the testator with wherein it was made should be revoked.
animus revocandi.

 Art. 837. If after making a will, the testator makes

 Art. 832 A revocation made in a subsequent will shall
take effect, even if the new will should become
inoperative by reason of the incapacity of the heirs,
devisees or legatees designated therein, or by their
renunciation.
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.

CIVIL LAW REVIEWER Page 165 of 338

 1. A special proceeding required for the purpose of
 establishing the validity of the will.

FACTS DEMONSTRATING ART 837 2. Probate of a will is mandatory

 In 1985, X executed Will 1 3. The probate court can only inquire into the
extrinsic validity of testamentary provisions, which
 In 1987, X executed Will 2, expressly revoking Will 1 include the following:

 In 1990, X executed Will 3, revoking Will 1 a. That the testator was of sound and disposing
mind
CONCLUSION ON THE FACTS b. That his consent was not vitiated

 The Revocation of Will 2 by Will 3 does not revive Will 1 c. That the will was signed by the required
number of witness
 This demonstrates the theory of instant revocation
because the revocatory effect of the second will is d. That the will is genuine
immediate upon the first will
EXCEPTION: The probate court may pass upon the intrinsic
validity of the will when its probate might become an idle
ceremony if on the will’s face it appears to be intrinsically
NOTE: This article only applies where the revocation of
void. Nuguid v. Nuguid, [17 SCRA 449]
the first will by the second will is express.
KINDS OF PROBATE

1. Post-Mortem – after the testator’s death

REPUBLICATION AND REVIVAL OF WILLS
2. Ante-Mortem – during his lifetime
 If the testator wishes to republish a will that is void as
to form, the only way to republish it is to execute a FINAL DECREE OF PROBATE
subsequent will and reproduce it
 Once a decree of probate becomes final in
accordance with the rules of procedure it becomes
 The testator need only execute a subsequent will or Res Judicata
codicil referring to the previous will if the testator
wishes to republish a will that is either:  It is conclusive as to the due execution of the will
(extrinsic validity only)
a. Void for reason other than a formal defect

b. Previously revoked II. DISALLOWANCE OF WILL - grounds for

disallowance of a will:

1. If the formalities required by law have not been

REPUBLICATION REVIVAL complied with;

Takes place by an act of the Takes place by operation of 2. If the testator was insane, or otherwise mentally
testator law incapable of making a will, at the time of its
execution;
Corrects extrinsic and Restores a revoked will
extrinsic defects 3. If it was executed through force or under duress,
or the influence of fear, or threats;
ALLOWANCE AND DISALLOWANCE OF WILLS
I. PROBATE OF A WILL

CIVIL LAW REVIEWER Page 166 of 338

 4. If it was procured by undue and improper pressure 2. Will specifically assigns to such person an inchoate
and influence, on the part of the beneficiary or of share in the estate.
some other person;
3. The person so named has capacity to succeed
5. If the signature of the testator was procured by
fraud; 4. The will is formally valid

6. If the testator acted by mistake or did not intend 5. No vice of consent is present
that the instrument should be his will at the time
6. No preterition results from the effect of such will
of affixing his signature thereto.(Art 839)

REVOCATION DISALLOWANCE
THREE PRINCIPLES IN THE INSTITUTION OF HEIRS
Voluntary act of the Given by judicial decree
testator 1. Equality – heirs who are instituted without a
designation of shares inherit in equal parts
With or without cause Always for a legal cause
2. Individuality – heirs collectively instituted are deemed
May be partial or total Always total EXCEPT when individually named unless a contrary intent is proven
the ground of fraud or
influence for example affects 3. Simultaneity – when several heirs are instituted, they
only certain portions of the are instituted simultaneously and not successively
will

RULES ON A PERSON’S RIGHT TO DISPOSE OF HIS ESTATE

B. INSTITUTION OF HEIRS
1. If one has no compulsory heirs:
INSTITUTION OF HEIR
a. He can give his estate to any person qualified to
1. It is an act by virtue of which a testator designates in
inherit under him
his will
b. However, he must respect restrictions imposed by
2. The person or persons who are to succeed him in his
special laws
property and transmissible
2. If one has compulsory heirs:
3. Rights and obligations
a. He can give only the disposable portion to
strangers
REQUISITES FOR A VALID INSTITUTION OF HEIR
b. Legitimes of compulsory heirs must be respected
1. Designation in will of person/s to succeed

a. Directory - designation of name and surname

REQUISITES FOR THE ANNULMENT OF INSTITUTION OF
b. Mandatory – identity of the heir must be HEIRS:
established, otherwise void disposition, unless his
1. Cause of institution of the heirs must be stated in
identity becomes certain.
will
NOTE: If there is ambiguity in the designation, the
2. Cause must be shown to be false
designation must be resolved by discerning the testator’s
intent. If the ambiguity cannot be resolved, intestacy to that
portion results.

CIVIL LAW REVIEWER Page 167 of 338

 3. It appears from the face of the will that the c. Anything is left from the inheritance which the heir
testator would not have made the institution had may get by way of intestacy
he known the falsity of the cause.

EFFECTS OF PRETERITION:

1. The institution of heir is annulled

RULES ON INSTITUTION OF ALIQUOT SHARE LESS THAN OR
IN EXCESS OF THE WHOLE ESTATE: 2. Devises and legacies shall remain valid as long as they
are not inofficious
1. Intestacy Results if
3. If the omitted compulsory heir should die before the
a. the heir institutes an aliquot portion of the estate
testator, the institution shall be effectual, without
b. to only one heir If the heir institutes several heirs prejudice to the right of representation
to an aliquot part of the

DISTINGUISH PRETERITION FROM DISINHERITANCE

2. Each heir’s share shall be proportionally increased: PRETERITION DISINHERITANCE

a. There are more than one instituted heir
Deprivation of a Deprivation of the
b. The testator intended the heirs to inherit the
compulsory heir of his compulsory of his legitime is
whole estate
legitime is tacit express
c. The aliquot parts of each share do not cover the
whole inheritance May be voluntary but the Always voluntary
law presumes that it is
3. Each heir’s share shall be proportionally decreased: involuntary
a. There are more than one instituted heir
b. The testator intended the heirs to inherit the Law presumes that there Done with a legal cause
whole estate has been merely an
c. The aliquot parts of each share exceed the whole oversight or mistake on the
inheritance part of the testator

ELEMENTS OF PRETERITION Omitted heir gets not only If disinheritance is unlawful,

his legitime but also his compulsory heir is merely
1. There must be an omission of one, some or all of the share in the free portion restored to his legitime
heir/s in the will not disposed of by way of
legacies or devises
2. The omission must be that of a COMPULSORY HEIR

3. Compulsory heir omitted must be of the DIRECT LINE

4. The omitted compulsory heir must be LIVING at the

time of testator’s death or must at least have been
CONCEIVED before the testator’s death
C. SUBSTITUTION OF HEIRS
5. The omission must be complete and total in character. :
There is no omission if CLASSES OF SUBSTITUTION

a. A devise or legacy has been given to the heir 1. Vulgar or Simple – the testator may designate one or
more persons to substitute the heir or heirs instituted
b. A donation inter vivos has been previously given to in case such heir or heirs should:
the heir
a. die before him (PREDECEASE)

CIVIL LAW REVIEWER Page 168 of 338

 b. should not wish, (RENOUNCE) or NOTE: Pending the transmission of the property, the
fiduciary is entitled to all the rights of a usufructuary
c. should be incapacitated to accept the although the fideicommissary is entitled to all the rights
inheritance (INCAPACITATED) of a naked owner.

 Restricted simple substitution- The testator may

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

CIVIL LAW REVIEWER Page 169 of 338

 The condition suspends but does not obligate, the Constructive Compliance
mode obligates but does not suspends (for he who
inherits with a mode is already an heir; one who a. if casual – not applicable
inherits conditionally is not yet an heir.)
b. if mixed –

i. If dependent partly on chance – not applicable

RULES ON POTESTATIVE, CASUAL AND MIXED CONDITIONS
ii. If dependent partly on will of third party –
1. POTESTATIVE
1. if 3rd party interested – applicable
Positive Potestative Condition:
2. if 3rd party not interested – not
General Rule – must be fulfilled as soon as the heir learns of applicable
the testator’s death

EXCEPTION
EFFECTS OF SUSPENSIVE CONDITION OR TERM
a. the condition was already complied with at the
time the heir learns of the testator’s death The estate shall be placed under administration until

b. the condition is of such nature that it cannot be 1. condition is fulfilled

fulfilled again
2. until it becomes certain condition will never be fulfilled

Negative Potestative Condition: 3. until arrival of the term

 Heir must give security to guarantee the return of the

value of property, fruits, and interests, in cases of
contravention CONDITIONS PROHIBITING MARRIAGE

1. If a first marriage is prohibited – condition considered

2. CASUAL OR MIXED always as not imposed

2. If a subsequent marriage is prohibited as imposed by

Positive the deceased spouse or by his/her ascendants or
descendants - valid
 GENERAL RULE – may be fulfilled at any other time
(before testator’s death), unless testator provides 3. if a subsequent marriage is prohibited and imposed by
otherwise. anyone else- considered not written

 If ALREADY FULFILLED at the time of execution of the

will

ii. If testator unaware of fact of fulfillment- deemed

fulfilled E. LEGITIMES

iii. If testator aware thereof –

 The portion of the decedent’s estate reserved by law is
i. If it can no longer be fulfilled again – deemed
called the legitime.
fulfilled
 The heirs for whom the law reserves such portion are
ii. If it can be fulfilled again – must be fulfilled
called compulsory heirs.
again

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CLASSES OF COMPULSORY HEIRS ascendants

1. Primary – those who have precedence over and Surviving spouse In default of the foregoing,
exclude other compulsory heirs illegitimate parents only

 Legitimate children and descendants (legitimate), Illegitimate children and Surviving spouse
with respect to their legitimate parents and descendant
ascendants

2. Secondary – those who succeed only in the absence of

the primary heirs GENERAL RULES IN ASCERTAINING LEGITIMES

 Legitimate parents and ascendants (legitimate), 1. Direct descending line

with respect to their legitimate children and
a. Rule of preference between lines
descendants
b. Rule of proximity
3. Concurring – those who succeed together with the
primary or the secondary compulsory heirs c. Right of representation ad infinitum in case of
predecease, incapacity or disinheritance
 Widow or widower (legitimate) – the surviving
spouse referred to is the spouse of the decedent. 2. Direct ascending line

a. Rule of division by line

NOTE:
a. Mere estrangement is not a ground for the b. Rule of equal division
disqualification of the surviving spouse as heir
b. Effect of decree of legal separation: 3. Non-impairment of legitime
i. On the offending spouse – disqualified
ii. On the innocent spouse – no effect a. Any compulsory heir who was given title less than
c. Death of either spouse during the pendency of a his legitime may demand that the same be
petition for legal separation – dismissal of the case completed (Art 906)
 Illegitimate children and descendants (legitimate
or illegitimate) EXCEPTIONS:

a. If the predecessor gave the compulsory heir a

donation inter vivos and provided that it was not
charged against the legitime (Art 1062)

b. Testamentary dispositions made by the

predecessor to the compulsory heir, unless the
testator provides that it should be considered part
of the legitime.

Testator is a Legitimate Testator is an Illegitimate STEPS IN DETERMINING THE LEGITIME OF COMPULSORY

Person Person HEIRS:

Legitimate children and Legitimate children and 1. Determination of the gross value of the estate at the
descendant descendants time of the death of the testator;

In default of the foregoing, Illegitimate parents and 2. Determination of all debts and charges which are
legitimate parents and ascendants chargeable against the estate;

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3. Determination of the net value of the estate by 7.
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 8.
against the disposable free portion and restoration to
the hereditary estate if the donation is inofficious.
CIVIL LAW REVIEWER
If legitime is impaired, the following reductions shall be
made:
a. First, reduce pro-rata non-preferred legacies and
devises, and the testamentary dispositions.
b. Second, reduce pro rata the preferred legacies and
devises
c. Third, reduce the donations inter vivos according
to the inverse order of their dates
Distribution of the residue of the estate in accordance
with the will of the testator.
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 SHARES OF COMPULSORY HEIRS

HEIR LEGITIME FREE PORTION

LEGITIMATE CHILDREN & DESCENDANTS 1/2 1/2

LEGIMITATE PARENTS & ASCENDANTS 1/2 1/2

1 (ONE) LEGITIMATE CHILDREN/DESCENDANT & CHILDREN – 1/2 1/4

SURVIVING SPOUSE
SPOUSE -1/4

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

SPOUSE – EQUAL TO SHARE OF 1 (ONE) WHAT REMAINS

LC

LEGITIMATE CHILDREN (LC) & ILLEGITIMATE CHILDREN LC -1/2

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

LEGITIMATE PARENTS/ASCENDANT & SURVIVING LEGITIMATE PARENTS/ASCENDANT – 1/2

SPOUSE
SPOUSE – 1/4 1/4

LEGIMITATE PARENTS/ASCENDANTS & ILLEGIMTATE LEGITIMATE PARENTS/ASCENDANTS –

CHILDREN 1/2
1/4
ILLEGIMITATE CHILDREN – 1/4

ILLEGITIMATE CHILDREN & SURVIVING SPOUSE

ILC – 1/3 1/3

SPOUSE – 1/3

LEGIMIATE CHILDREN/DESCENDANTS, SURVIVING

SPOUSE & ILLEGITIMATE CHILDREN
LC –1/2 WHATEVER REMAINS

SPOUSE – EQUAL TO 1 (ONE) LC

ILC – 1/2 OF SHARE OF ONE (1) LC

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

ILC –1/4

SURVIVING SPOUSE GENERALLY 1/2 1/2

ARTICULO MORTIS 1/3 2/3

ILLEGITIMATE CHILDREN ONLY 1/2 1/2

ILLEGITIMATE PARENTS 1/2 1/2

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

SPOUSE – 1/4

CIVIL LAW REVIEWER Page 174 of 338

 RESERVA TRONCAL
RESERVA TRONCAL: The reservation by virtue of which an
ascendant who inherits from his descendant any property
which the latter may have acquired by gratuitous title from
another ascendant or a brother or sister, is obliged to
reserve the property for the benefit of relative within the 3rd
degree and who belong from the same line from which the
property came from.
 It constitutes as an exception to both the system of
legitime and the order of intestate succession.
PURPOSE OF RESERVA TRONCAL:
1. To reserve certain properties in favor of certain
persons;
2. To prevent person outside a family from acquiring, by
some chance or accident, property which otherwise
would have remained with the said family;
3. To maintain a separation between paternal and
maternal lines.
REQUISITES OF RESERVA TRONCAL
1. The property should have been acquired by operation
of law by an ascendant (RESERVISTA) from his
descendant (PROPOSITUS) upon the death of the latter.
NOTE: by operation of law is limited to succession,
either by legitime or intestacy
2. The property should have been previously acquired by
gratuitous title by the propositus from another
ascendant or from a brother or sister (ORIGINATOR).
NOTE: gratuitous encompasses transmissions by
donation, remission, and testate or intestate
succession.
3. The propositus should have died without any legitimate
issue in the direct descending line who could inherit
from him.
 All relationships must be legitimate. Nieva v.
Alcala, [41 Phil 495]
4. That there are relatives within the third degree
belonging to the line from which said property came.
PERSONAL ELEMENTS
1. ORIGINATOR – the ascendant, brother or sister from
whom the propositus had acquired the property by
gratuitous title
CIVIL LAW REVIEWER
2. PROPOSITUS – The descendant who died and from
whose death the reservistas in turn had acquired the
property by operation of law. The so-called “ARBITER
OF THE FATE OF THE RESERVA TRONCAL.”
NOTE: Prepositus can terminate the reserva by:
a. Substituting or alienating the property
b. By bequeathing or devising it either to the
potential reservista or to other third person
c. By partitioning it and assigning the property to
parties other than the reservista
3. RESERVISTA – The ascendant, not belonging to the line
from which the property came that is the only
compulsory heir and is obliged to reserve the property.
(Justice Vitug’s View)
NOTE: Tolentino is of the view that even if the
reservista and the originator belong to the same line,
there is still an obligation to reserve.
4. RESERVATARIOS – The relative of the propositus within
the 3rd degree and who belong to the line from which
the property came and for whose benefit reservation is
constituted. They must be related by blood not only to
the propositus but also to the originator.
NOTE: The Civil Code did not provide for the rules on
how the reservatarios would succeed to the reservista.
However, the following rules on intestacy have been
consistently applied:
a. Rule of preference between the lines
b. Rule of proximity
c. Right of representation – provided that the
representative is a relative within the 3rd degree,
and that he belongs to the line from which the
reservable property came
d. “full blood/double share” rule in Article 1006
 The reservista had no power to appoint, by will,
which reservatarios were to get the reserved
property. Gonzales v. CFI, [104 Phil 479]
2 EVENTS TO BE CONSIDERED TO DETERMINE THE RIGHT
OF THE RESERVATARIOS OVER THE RESERVABLE PROPERTY
1. Death of Propositus – all qualified reservatario merely
acquire an inchoate right. The reservistas own the
property subject to the resolutory condition
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2. Death of Reservista – surviving reservatarios acquire a
perfect right.
OBLIGATIONS OF A RESERVISTA AND THE
CORRESPONDING RIGHTS OF THE RESERVATARIOS (A-I-S-
A)
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:
1. The indemnity for any deterioration of or damage to
the property occasioned by the reservista’s fault or
negligence, and
2. The payment of the value of such reserved
movables as may be alienated by the reservista
onerously and gratuitously
3. As restitution for movables not alienated
RIGHT OF THE RESERVISTA OVER THE RESERVABLE
PROPERTY
1. The right of the reservista over the reserved property is
one of ownership
2. The ownership is subject to a resolutory condition
3. The right of ownership is alienable
4. The right of ownership is registrable
RIGHT OF THE RESERVASTARIOS OVER THE RESERVABLE
PROPERTY
1. The reservatarios have a right of expectancy over the
property
2. The right is subject to a suspensive condition
3. The right is alienable, but subject to the same
suspensive condition
4. The right is registrable
PROPERTY SUBJECT TO RESERVATION:
GENERAL RULE: It must be the same property which the
reservista had acquired by operation of law from the
propositus upon the latter’s death and which the latter, in
turn had acquired by gratuitous title during his lifetime from
another ascendant, brother or sister.
EXCEPTION: Substitution of the reservable property through
unavoidable necessity:
1. Property is consumable
2. Lost or destroyed through the fault of the reservista
3. Deteriorated through the same cause
4. It has been alienated
CIVIL LAW REVIEWER
Reserva Maxima Reserva Minima
Much of the potentially Every single property in the
reservable property as Prepositus estate must be
possible must be deemed deemed to pass, partly by
included in the part that will and partly by operation
passes by operation of law of law, in the same
proportion that the part
given by will bears to the
part not so given
Maximizes the scope of Minima finds wider
reserve acceptance here
EXTINGUISHMENT OF RESERVA TRONCAL
1. The death of the Reservista
2. The death of the all the Reservatorios
3. Waiver or renunciation by all Reservatorios,
provided none is born subsequently
4. Total fortuitous loss of the reserved property
5. Confusion or merger of rights
6. Prescription or adverse possession
IMPORTANT NOTES:
 A reservatario may dispose of his expectancy to the
reservable property during the pendency of the reserva
in its uncertain and conditional form. If he dies before
the reservista, he has not transmitted anything, but if
he survives such reservista, the transmission shall
become effective.
 A will may prevent the constitution of a reserva. In
testate succession, only the legitime passes by
operation of law. The propositus may, by will, opt to
give the legitime of his ascendant without giving to the
latter properties he had acquired by gratuitous title
from another ascendant, or brother or sister. In such
case, reserva troncal is avoided.
 Howerver, if the ascendant was not disentitled in the
will to receive such properties, the reserva minima rule
(proportional reserva) should be followed. The rule
holds that all properties passing to the reservista must
be considered as passing partly by operation of law and
partly by will of the propositus. Thus, one-half of the
properties acquired by gratuitous title should be
reservable and the other half should be free.
PRINCIPLE OF UNIMPAIRMENT OF THE LEGITIME OF THE
COMPULSORY HEIR
1. General Rule: The testator cannot deprive his
compulsory heirs of their legitime.
Exception: valid disinheritance
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2. General Rule: He cannot impose upon the same any
burden, encumbrance, condition, or substitution of any
kind whatsoever.
Exception: express prohibition of the partition of the
estate for a period not exceeding 20 years.
 Renunciation or compromise as regards future legitime
between the person owing it and his compulsory heir is
void.
i. The rights of the heirs are merely inchoate because
it is only perfected upon the testator’s death.
Hence, there is still nothing to renounce.
ii. No contract may be entered into with respect to
future inheritance except in cases expressly
authorized by law.
EFFECTS OF INCOMPLETE LEGITIME
Incomplete Legitime Preterition
Heir not entirely forgotten Total omission of the heir
Less than the portion of the Total deprivation of legitime
legitime
Remedy is to demand for Effect is the total annulment
completion of legitime of the institution of heirs
STEPS IN DETERMINING THE LEGITIME OF COMPULSORY
HEIRS IF THERE ARE DONATIONS:
1. Determination of the gross value of the estate at the
time of the death of the testator;
2. Determination of all debts and charges which are
chargeable against the estate – this refers to the pre-
existing obligations of the testator during his lifetime,
and not to the charges or burdens which are created by
the testamentary dispositions found in the will;
3. Determination of the net value of the estate by
deducting all the debts and charges from the gross
value of the estate;
4. Collation or addition of the value of all donations inter
vivos to the net value of the estate;
5. Determination of the amount of the legitime from the
total thus found;
NOTE: proceeds of an insurance policy where the
beneficiary is a third person or even a compulsory heir
belongs exclusively to the beneficiary and not to the
estate of the insured. Hence, not subject to collation.
6. Imputation of the value of all donatioins inter vivos
made to compulsory heirs against their legitime and of
the value of all donations inter vivos made to strangers
against the disposable free portion and restoration to
the hereditary estate if the donation is inofficious; and
CIVIL LAW REVIEWER
7. Distribution of the residue of the estate in accordance
with the will of the testator.
REDUCTION OF TESTAMENTARY DISPOSITIONS AND
DONATIONS
The order of preference is as follows:
1. Legitime of compulsory heirs
2. Donation inter vivos
3. Preferential legacies or devises
4. All other legacies or devises
If after satisfying the legitime of the compulsory heirs, the
disposable portion is sufficient to cover donations inter
vivos but not the legacies and devises, the rule is that such
legacies and devises will be reduced pro rate, after satisfying
those preferential ones.
DISINHERITANCE
CAUSES OF VACANCY IN SUCCESSION
1. Disinheritance - The testator creates it himself
2. Repudiation - The heir does something
3. Incapacity/Predecease - Something happens to the heir
HOW VACANCIES ARE FILLED
1. Substitution
2. Representation
3. Accretion
DISINHERITANCE
1. Heir is being deprived of his legitime.
2. Only in cases of testate succession.
NOTE: Counterpart in intestate is unworthiness.
3. Even if validly disinherited, heir can still be validly
restored in the legitime by RECONCILIATION.
4. Reconciliation – when in “speaking terms again,” no
particular form
5. In unworthiness, there must a pardon in writing to
remove incapacity to inherit. However, it does not have
to be in a will.
6. If grounds for disinheritance and unworthiness are
common, reconciliation does not erase the fact that the
heir is unworthy.
7. As long as there is reconciliation, it should be
considered to have revoked the inheritance as well as
the unworthiness.
8. Ineffective disinheritance v. Preterition
REQUIREMENTS FOR VALID DISINHERITANCE
1. Effected only through a valid will;
NOTE: Will containing disinheritance must be probated.
2. For a cause expressly stated by law;
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3. Cause must be expressly state in the will itself;
4. Cause must be certain and true;
5. Unconditional;
6. Total; AND
7. The heir disinherited must be designated in such a
manner that there can be no doubt as to his identity.
EFFECTS OF DISINHERITANCE
1. Total exclusion of the compulsory heir in from the
inheritance, which includes his legitime, his intestate
portion, and any testamentary disposition made in a
prior will.
NOTE: Therefore, the heir loses his legitime. As to the
free portion, it passes through Substitution, Accretion,
and Intestacy.
2. 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.
NOTE: The disinherited heir can be represented in the
legitime.
a. Only in the descending line, never in the ascending
b. In collateral line, only with respect to nephews and
nieces.
3. The disinherited parents shall not have the usufruct or
administration of the property which constitutes the
legitime.
GROUNDS FOR DISINHERITANCE
Grounds for Disinheritance Common To All Compulsory
Heirs
1. Attempt on the life of testator, spouse, ascendant,
descendant
a. Conviction necessary
b. In case of spouse, giving cause for legal separation,
no conviction needed
c. Include both attempted and frustrated.
d. Attempt on life of relatives, may be consummated.
2. Accusation of a crime with penalty of six years or
more.
a. Penalty imposable, not actually imposed.
b. Made by the heir in a proceeding as a complainant
or witness in a criminal case.
c. Found to be groundless, false.
d. Groundless – court should make a positive finding
that the testator has not committed the crime. It is
then false.
CIVIL LAW REVIEWER
e. Chismis – not the one referred here, it is outside
criminal proceeding.
3. Induce testator to make/change the will.
a. Will – purely personal
b. Vices of consent.
c. It does not punish the result but the interference
in the making/changing of the will.
d. Will + disinheritance (will making)
e. Will + amended will + disinheritance (will changing)
4. Support unjustifiably not given.
a. Must prove obligation to give support
b. Spouses: mutual obligation to give support
c. Reason must be unjustifiable
Grounds for Disinheritance Common between Ascendants
and Descendants
 Adultery and Concubinage – with the spouse of the
testator
1. It must be the heir who committed such liaison
2. With the legal spouse of the testator
3. Not necessarily incestuous
4. Applicable to both legitimate and illegitimate
descendant
Grounds for Disinheritance Common Ascendant and
Spouse
Loss of parental authority
1. Causes: Arts. 230, 231, 232 of the Family Code
2. Ascendant of testator
3. Spouse has given cause for loss of parental authority.
4. No actual deprivation, but it must exist. It means that
the act is committed which may be a cause for loss of
parental authority over their common children, EXCEPT
for those enumerated in A.
5. There are no common grounds between spouse and
descendants.
Grounds for Disinheritance Only against Descendant
1. Maltreatment of testator
a. By word – slander, offensive language, insult,
libel. May be spoken or written.
b. By deed – no need for violence, something
which caused the testator to be humiliated.
Laying hands if not under attempt on life.
2. Leading a disgraceful life (or dishonest)
i.e., daughter living with a married man,
estafadora, prostitutes, drug dealers, drug addict.
3. Commission of crime which carries with it the penalty
of civil interdiction
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 a. Descendant convicted of crime with civil
interdiction. Necessarily imposable, not
actually imposed.
b. Reclusion temporal, reclusion perpetua.

Ground for Disinheritance Only against Ascendants

(Parents)

1. Abandonment by parents
a. Willfully left the children to fend for themselves
b. Abdication of parental duties.
c. Only refers to abandoned child.
d. Induced daughters to lead a disgraceful life – also
applicable to sons.

2. Attempt on the life of one parent against another

parent.

a. Parent v. parent
b. Even if parents are not married, it is still a ground.
c. No need for conviction. As long as the heir can
prove that there is an attempt.
d. They do not need to be spouses. However, the
testator must be a common child.

Grounds for Disinheritance Only against spouse – refers to

legal spouses only, legally married to each other
1. Giving cause for legal separation
a. No need for previous conviction
b. Prove infidelity if cause is contested
c. No need to prove grounds unless contested by the
heir.
d. Legal separation instituted but not terminated, OK
e. If there is already a decree:
i. Ground is conclusive
ii. But, there is a need to disinherit
iii. Effects: Guilty spouse is not entitled to
inherit.
f. See 10 causes under the Family Code.
2. Support – refusal to give support to the children
a. Offended the testator
b. Common children of the testator and the spouse
c. Spouse refuses to give support to the child
d. Parents share in support of their common children.
Refusal of the other spouse causes damage to the
other. (testator)

CIVIL LAW REVIEWER Page 179 of 338

GROUND CHILD/ PARENT/ SPOUSE

DESCEND ASCEND

Attempt against the life of the √ √ √

testator, spouse, ascendant,
descendant

Accusation of a crime with penalty of √ √ √

six years

Induce testator to make/change the √ √ √

will.

Support unjustifiably not given √ √ √

Adultery and Concubinage √ √ N/A

Loss of parental authority N/A √ √

Grounds Specific to a Particular Heir 1.Maltreatment of 1. Abandonment by 1 Giving Cause Legal

testator parents Separation

2. Leading a 2. Attempt on the life of 2. Support

disgraceful life one parent against
another parent.
3. Commission of
crime which carries
with it the penalty of
civil interdiction

CIVIL LAW REVIEWER Page 180 of 338

IMPERFECT DISINHERITANCE: Disinheritance which does
not have one or more of the essential requisites for its
validity.
EFFECTS OF IMPERFECT DISINHERITANCE
1. If the testator had made disposition of the entire
estate; annulment of the testamentary disposition
only in so far as they prejudice the legitime of the
person disinherited; 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;
compulsory heir 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
IMPERFECT DISINHERITANCE PRETERITION
Person disinherited may be The person omitted must
any compulsory heir be a compulsory heir in the
direct line
EXPRESS IMPLIED
INTENTIONAL EITHER intentional or
unintentional
partial annulment of Effect: total annulment of
institution of heirs institution of heirs
REVOCATION OF DISINHERITANCE
1. Reconciliation
NOTE: 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.
2. Subsequent institution of the disinherited heir
3. Nullity of the will which contains the disinheritance
NOTES:
 Even if validly disinherited, heir can still be validly
restored in the legitime by RECONCILIATION.
 A subsequent reconciliation between the offender and
the offended person deprives the latter of the right to
disinherit and renders ineffectual any disinheritance
that may have been made. (Art. 922)
 Reconciliation – when in “speaking terms again,” no
particular form required, it may be express or tacit.
CIVIL LAW REVIEWER
However, mere civility which may characterize their
relationship is not enough.
 In order for reconciliation to be effective, the testator
must pardon the disinherited heir. Such pardon must
specifically refer to the heir and to the acts causing the
disinheritance. The heir must accept the pardon.
 In unworthiness, there must a pardon in writing to
remove incapacity to inherit. However, it does not have
to be in a will.
 If grounds for disinheritance and unworthiness are
common, reconciliation does not erase the fact that the
heir is unworthy. What then is the effect of a
subsequent reconciliation upon the heir’s capacity to
succeed?
1. If disinheritance has been made: Rule on
reconciliation applies, the disinheritance becomes
ineffective
2. If disinheritance has not been made: The rule on
reconciliation does not apply, the heir continues to
be incapacitated to succeed unless the testator
pardoned him under Art. 1033.
LEGACIES AND DEVISES
PERSONS CHARGED WITH LEGACIES AND DEVISES:
1. Compulsory heir;
2. Voluntary heir;
3. Legatee or devisee;
4. Estate.
 If the will is silent as to who shall pay or deliver the
legacy/devise,
1. If there is an administration proceedings, there is a
presumption that such legacy or devise constitutes
a charge against the decedent’s estate
2. If there is no administration proceedings, it is a
charge upon the heirs (Art. 926, par. 2)
 Since legacies and devises are to be taken from the
disposable free portion of the estate, the provisions on
institution of heirs are generally applicable to them
 The legatees/devisees shall be liable for the charge to
the extent of the value of the legacy/devise received.
 The compulsory heir shall NOT be liable for the charge
beyond the disposable portion given to him. It should
not affect his legitime.
ORDER OF PAYMENT IN CASE ESTATE IS INSUFFICIENT TO
COVER ALL LEGACIES AND DEVICES
1. Remuneratory legacies or devises
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2. Legacies or devises declared by the testator to be
preferential
3. Legacies for Support
4. Legacies for Education
5. Legacies or devises of a specific, determinate thing
which forms a part of the
6. estate
7. All others, pro-rata

WHEN LEGACY/DEVISE CAN BE REVOKED BY OPERATION

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

GROUNDS FOR REVOCATION OF LEGACIES OR DEVISES

1. Testator transforms the thing bequeathed in such a
manner it does not retain either the form or the
denomination it had.
2. The testator by any title or for any cause alienates the
thing bequeathed, or any part thereof, it being
understood that in the latter case the legacy or devise
shall be without only with respect to the part alienated
EXCEPT: when the thing should again belong to the
testator after alienation.
3. The thing bequeathed is totally lost during the lifetime
of the testator, or after his death without the heirs
fault;
4. Other Causes: nullity of the will; noncompliance with
suspensive conditions affecting the bequests; sale of
the thing to pay the debts of the deceased during the
settlement of his estate.

CIVIL LAW REVIEWER Page 182 of 338

 VALIDITY AND EFFECT OF LEGACY

Thing owned in part by testator (Art. 929) General Rule: Conveys only interest or part owned by testator

Exception: if testator otherwise provides –

1. He may convey more than what he owns - the state should try to
acquire the part or interest owned by other parties. If other parties are
unwilling to alienate, the estate should give the legatee/devisee the
monetary equivalent (analogy with Article 931)

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

Thing owned by another General Rule:

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

2. If testator erroneously believed that the thing belonged to him -

legacy/device is void

Exception: if testator acquire the thing onerously or gratuitously after

making of the disposition, disposition is validated

3. If testator knew that the thing did not belong to him but did not order
its acquisition - code is silent but disposition should be considered valid
- there is an implied order to acquire and doubts must be resolved in
favor of intestacy

Thing already owned to the legatee/devisee 1. If thing already belonged to legatee/devisee at time of execution of will
(Arts 932-933) – legacy/devise is void

2. If thing was owned by another person at time of making the will and
thereafter it is acquired by legatee/devisee:

a. If testator erroneously believed that he owned the thing – legacy

/devise is void

b. If testator was not in error –

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

reimbursed

ii. If thing was acquired gratuitously by L/D – nothing is due

3. If thing was owned by testator at time will was made and L/D acquired

CIVIL LAW REVIEWER Page 183 of 338

 the thing from him thereafter – law is silent

*Balane – L/D deemed revoked

*Tolentino – no intention to revoke (BUT if the testator has not

alienated the thing directly to the L/D, but to a 3rd person and the
former just acquired it from the latter, there is an intention to revoke)

Legacy/Devise to remove an encumbrance Valid, if the encumbrance can be removed for a consideration
over a thing belonging to testator (Art 932 par
2)

Legacy/Devise of a thing pledged or The encumbrance must be removed by paying the debt unless the testator
mortgaged (Article 934) intended otherwise

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

EFFECTS OF INCAPACITY OR REPUDIATION is disinherited

Effects Upon The Division
1. If there are several relatives of the same degree and on Acquires the right with Acquires the right with
or more of them are unwilling or incapacitated to respect to the legitime respect to the entire legal
succeed, his portion shall accrue to the others of the portion
same degree (right of accretion) save the right of Per stirpes Per stirpes
representation when it should take place.

2. If the inheritance should be repudiated by the nearest

relative, should there be only one, 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 (per capita) and cannot represent the
person repudiating the inheritance.
REPRESENTATION: A right created by fiction of law, by
virtue of which the representative is raised to the place and
degree of the person represented, and acquires the rights
which the latter would have if he were living or if he could
have inherited.
INSTANCES WHEN REPRESENTATION OCCURS:
1. Predecease
2. Incapacity of Unworthiness
3. Disinheritance
IN WHAT KINDS OF SUCCESSION REPRESENTATION
OPERATES
1. Legitimes
The children and descendants of the person
disinherited shall take his or her place and shall
preserve the rights of compulsory heir with respect to
the legitime (Art 923)
 And only when the heir to be represented:
a. Predecease, becomes incapacitated, or was
disinherited by the testator.
b. Is a compulsory heir.
c. No right of representation if the heir to be
represented is a voluntary heir.
2. Intestate succession

NOTE: In case of repudiation, accretion takes place.
 Although a renouncer cannot be represented, he
can represent the person whose inheritance he has
renounced. Sayson v. CA, [205 SCRA 324]
 Representation occurs in all intestate estate. All legal
heirs may be represented when proper. (It is not proper
only when the heir to be represented repudiated his
share in the inheritance)

CHARACTERISTICS OF REPRESENTATION

1. A right of subrogation
2. Exception to the rule on proximity and equal
division
3. Called to succession by law
4. Representative succeeds the decedent and NOT
the person represented

CIVIL LAW REVIEWER Page 186 of 338

OUTLINE OF RULES:

KIND OF HEIR Predecease Incapacity Renunciation Disinheritance

Compulsory Transmits nothing; Transmits nothing; Transmits nothing; Transmits nothing;

Representation Representation NO Representation Representation

Voluntary Transmits nothing; Transmits nothing; Transmits nothing; Not applicable

NO Representation NO Representation NO Representation

Legal Transmits nothing; Transmits nothing; Transmits nothing; Not applicable

Representation Representation NO Representation

IN WHAT LINES DOES REPRESENTATION OBTAIN

1. Legitime - in the direct descending line only. QUALIFICATIONS TO REPRESENT

Representation does not exist in the ascending line. 1. The representative himself must have capacity to
Hence, the father cannot represent the son in the succeed the decedent
inheritance from the grandfather. 2. The representative need not be qualified to succeed
the person represented.
2. Intestacy:
a. In the direct descending line. HOW REPRESENTATION OPERATES

b. In the collateral line, it takes place only in favor of Factual Situation Division
the children of brother or sisters (nieces and
nephews of the decedent, not grand-nieces or If all the children are All grandchildren still
grand-nephews), whether of the full or half blood, disqualified inherit per stirpes
and only if they concur with at least 1 uncle or
aunt. If all the brothers /sisters Nephews and nieces
are disqualified inherit per capita

NOTE: If all the brothers and sisters are disqualified, the  Division shall be made PER STIRPES.
nephews and nieces shall inherit per capita.

REPRESENTATION OF ILLEGITIMATE OR ADOPTED

CHILDREN THE SUCCESSIONAL BARRIER
 An illegitimate child has no right to inherit ab intestato
1. If the child to be represented is legitimate – only
from the legitimate children and relatives of his father
legitimate children and descendants can represent him.
or mother; nor shall such children or relatives inherit in
2. If the child to be represented is illegitimate – both
the same manner from the illegitimate child. (Art 992)
legitimate and illegitimate children/descendants can
represent him.
 The Barrier rule only applies if there is a legitimate and
3. An adopted child can neither represent nor be
illegitimate relation. Example: A is the legitimate son of
represented
B. C is the illegitimate son of A. C cannot inherit from B
if A predeceases, or becomes incapacitated or be
 The rationale why an adopted child can neither disinherited by B.
represent or be represented is because the legal
relationship created by the adoption is strictly EFFECTS OF REPUDIATION
between the adopter and the adopted. Teotica v.
Del Val, [13 SCRA 406] 1. By representative – right of representation is present

CIVIL LAW REVIEWER Page 187 of 338

 Example: A child who repudiates his inheritance when
his father died may still represent the latter when his
grandfather dies.
2. By heir – no right of representation

ORDER OF INTESTATE SUCCESSION

INTESTATE HEIRS: Those who are called by law to the

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

REGULAR ORDER OF SUCCESSION

1. Legitimate Children/Descendants

2. Illegitimate Children/Descendants

3. Legitimate Parents/ Ascendants

4. Illegitimate Parents

5. Surviving Spouse

5. Brothers, Sisters, Nephews, Nieces

6. Other Collaterals – to the 5th degree

7. State

NOTE: Decedent is a legitimate person

ORDER OF SUCCESSION (If descendent is a legitimate

person)

1. Legitimate Children/Descendants

2. Illegitimate Children/Descendants

3. Illegitimate Parents

4. Surviving Spouse

5. Brothers, Sisters, Nephews, Nieces

6. State

CIVIL LAW REVIEWER Page 188 of 338

 RULES OF EXCLUSION AND CONCURRENCE

Intestate Heir EXCLUDES CONCURS WITH

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

Illegitimate children and Illegitimate No one Surviving spouse

Descendants parents,
collaterals and Legitimate children
state and legitimate parents

Legitimate parents and Collaterals and Legitimate Illegitimate children

legitimate ascendants state children and surviving spouse

Illegitimate parents Collaterals and Legitimate Surviving spouse

state children and
illegitimate
children

Surviving spouse Collaterals No one Legitimate children

other than
siblings, Illegitimate children
nephews and
Legitimate parents and
nieces
Illegitimate parents

Siblings, nephews nieces All other Legitimate Surviving spouse

collaterals and children,
state illegitimate
children,

Legitimate
parents and
illegitimate
parents

Other collaterals within 5th Collateral Legitimate Collaterals in the same

degree remoter in children degree
degree and
state Illegitimate
children

Legitimate
parents

Illegitimate
parents and

Surviving

CIVIL LAW REVIEWER Page 189 of 338

 spouse

State No one Everyone No one

SUMMARY OF INTESTATE SHARES

HEIR LEGITIME FREE PORTION TOTAL

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

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

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

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

LEGITIMATE CHILDREN (LC) & SPOUSE CHILDREN – 1/2 ENTIRE ESTATE IS

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

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

LEGITIMATE PARENTS/ASCENDANT & LEGITIMATE PARENT – 1/2

SURVIVING SPOUSE PARENTS/ASCENDANT
– 1/2

SPOUSE – 1/4 SPOUSE -1/4 SPOUSE - 1/2

LEGIMITATE PARENTS/ASCENDANTS & LEGITIMATE PARENTS - 1/2

ILLEGIMTATE CHILDREN PARENTS/ASCENDANTS
– 1/2

ILLEGIMITATE ILLEGITIMATE CHILDREN - ILC - 1/2

CHILDREN – 1/4 1/4

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

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 SPOUSE

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

LEGIMIATE CHILDREN/DESCENDANTS, WHOLE ESTATE

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

LEGITIMATE PARENTS/ASCENDANTS, LEGIMIATE LEGITIMATE

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

ILC –1/4

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

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

MORTIS

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

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

ILLEGITIMATE PARENTS & SURVIVING ILLEGITIMATE PARENTS ILLEGITIMATE PARENTS - ILLEGIMITATE

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

SIBLINGS, NEPHEWS & NIECE (1/2) (1/2) 100%

SPOUSE – 1/2

NEPHEWS/SIBLINGS
1/2

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

NEPHEWS & NIECES

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WHEN DECEDENT HAS NO HEIRS
1. Assignment and Disposition of Assets
a. if decedent is a resident of the Philippines at any
time
i. Personal property – to the municipality of last
residence
ii. Real property – where situated
b. If decedent was never a resident of the Philippines
- Personal and real property – where
respectfully situated
2. How Property is to be Used
a. For the benefit of public educational and
charitable institutions in the respective
municipalities/cities
b. Alternatively, at the instance of an interested
party, or motu proprio, the court may order the
permanent trust for the benefit of the institutions
concerned
CARDINAL PRINCIPLES OF INTESTATE SUCCESSION (By
Justice Paras)
1. Even if there is an order of intestate succession, the
compulsory heirs are never excluded. The Civil Code
follows the concurrence theory, not the exclusion
theory.
2. Right of Representation in the collateral line occurs
only in intestate succession, never in testamentary
succession because a voluntary heir cannot be
represented (collateral relatives are not compulsory
heirs)
3. The intestate shares are either equal to or greater than
the legitime.
4. General Rule: Grand Children always inherit by Right of
Representation, provided representation is proper.
Exception: Whenever all the children repudiate, the
grandchildren inherit in their own right because Right
of Representation would not be proper
5. Nephews and nieces inherit either by Right of
Representation or in their Own Right
a. Right of Representation when they concur with
aunts and uncles (provided that Right of
Representation is proper)
b. Own Right: when they do not concur with aunts
and uncles
6. Illegitimate Children and Descendants of legitimates
cannot represent because of the barrier, but both the
Illegitimate and Legitimate Children and Descendants
of Illegitimates can.
7. There can be reserva troncal in intestate succession
8. A renouncer can represent, but cannot be represented
9. A person who cannot represent a near relative cannot
also represent a relative father in degree.
CIVIL LAW REVIEWER
MIXED SUCCESSION OR PARTIAL INTESTACY
Mixed Succession: Succession that is effected partly by will
and partly by operation of law.
Rules:
1. The law of legitimes must be brought into operation in
partial intestacy because the testamentary dispositions
can affect only the disposable free portion but never
the legitimes.
2. If among the concurring intestate heirs there are
compulsory heirs, whose legal or intestate portions
exceed their respective legitmes, then the amount of
the testamentary disposition must be deducted from
the disposable free portion, to be borne by all the
intestate heirs in the proportions that they are entitled
to receive from such disposable free portion as
intestate heirs.
3. If the intestate share of a compulsory heir is equal to
his legitime, then the amount of the testamentary
disposition must be deducted only from the intestate
shares of the others, in the proportions stated above.
4. If the testamentary dispositions consume the entire
disposable free portion, then the intestate heirs who
are compulsory heirs will get only their legitime, and
those who are not compulsory heirs will get nothing.
=================================
TOPICS UNDER THE SYLLABUS
IV. Provisions Common to Testate and Intestate
Succession (Arts. 1015-1105)
A. Right of accretion (Arts. 1015-1023)
(1) Definition and requisites (Arts. 1015-1016)
B. Capacity to succeed by will or intestacy (Arts.
1024-1040)
(1) Persons incapable of succeeding (Arts.
1027, 739, 1032)
(2) Unworthiness vs. Disinheritance
C. Acceptance and repudiation of the inheritance
(Arts. 1041-1057)
D. Collation (Arts. 908-910, 1061-1062)
E. Partition and distribution of estate (Arts.
1078-1105)
(1) Partition (Arts. 1079, 1080)
(2) Partition inter vivos
(3) Effects of partition (Arts. 1091, 1097, 1100,
1104-1105)
=================================
IV. PROVISIONS COMMON TO TESTATE AND
INTESTATE SUCCESSION
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RIGHT TO ACCRETION: When two or more persons are
called to the same inheritance, devisee, or legacy, the
part assigned to one who renounce or cannot receive
his share or who died before the testator, is added or
incorporated to that of his co-heirs, co-devisees, or co-
legatees
1. In Testamentary Succession
a. Predecease
b. Incapacity
c. Repudiation
d. Non-fulfillment of suspensive condition imposed
upon instituted heir
e. Ineffective testamentary disposition
2. In Intestate Succession
a. Predecease of a legal heir (only when
representation does not apply)
b. Incapacity of legal heir (only when
representation does not apply)
c. Repudiation by a legal heir
ELEMENTS OF ACCRETION IN TESTAMENTARY SUCCESSION
1. Two or more persons are called to the same
inheritance, or to the same portion thereof, pro
indiviso (aliquot share)
a. In cases of legacy or devise, as long as there is no
specific designation of the specific share of each
legacy or devise.
b. Not necessarily equal.
c. Once a certain specific part of the free portion has
already been specifically earmarked, there is no
accretion and there is no express provision on
accretion.
d. But, it is okay to earmark parts of the free portion
as long as no specific property has been
designated.
NOTE: The heir to whom the portion goes by the
right of accretion takes it in the same proportion
that they inherit
2. Renunciation, predecease or incapacity of one (or more
but less than all) of the instituted heirs that result to a
vacancy in the inheritance, legacy or devise.
FUNDAMENTAL PRINCIPLES IN ACCRETION
1. Accretion in testate succession only takes place in
the free portion. No accretion in the legitime because
when the compulsory heir repudiates his legitime,
the other co-compulsory heir inherits the repudiated
share in their own right and not through accretion. If
the cause of the vacancy is PID, representation will
occur.
CIVIL LAW REVIEWER
2. Accretion also takes place in cases of devisees and
legatees and usufructuaries under the same
conditions established for heirs.
3. Accretion is subordinate to substitution, because
substitutes are instituted by the testator; hence,
express will prevails over presumed will.
NOTE: if there is neither accretion nor substitution in
testamentary succession, the part left vacant will
lapse into testacy
4. The one that the heir gets from accretion can be
renounced separate from the inheritance attributed
to the heir who will renounced the accrued
inheritance.
SUMMARY:
I. In testamentary succession:
1. Legitime:
 In case of predecease of an heir, there is
representation if there are children or
descendants; if none, the others inherit in
their own rights.
 In case of incapacity, results are the same as
in predecease.
 In case of disinheritance, results are the same
as in predecease.
 In case of repudiation by an heir, the others
inherit in their own rights.
2. Disposable free portion:
 Accretion takes place when requisites are
present, but if such requisites are not present,
the others inherit in their own right.
II. In intestate succession:
 In case of predecease, there is representation if
there are children or descendants; if none, the
others inherit in their own rights.
 In case of incapacity, results are the same as in
predecease.
 In case of repudiation, there is always accretion.
CAPACITY TO SUCCEED
The following are capable of succeeding:
1. Natural Persons
a. General Rule – must be (1) living when succession
opens, and (2) not incapacitated or disqualified by
law to succeed.
NOTE: It is enough that the heir, devisee or legatee
be already conceived in accordance with Arts 40
and 41, to be considered living.
b. If institution subject to a suspensive condition –
successor must be living both when decedent dies
and when the condition happens
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 c. If institution subject to a suspensive term – must
be alive only at the moment of decedent’s death,
successor need not be alive when the term arrives.
2. Juridical Persons
- Organizations or associations which possess
juridical personality
WHO ARE INCAPABLE OF SUCCEEDING
A. ABSOLUTE INCAPACITY
1. Those not living at the time of death except Arts.
1026, 1027, and 1030
2. Those who cannot be identified – uncertain
persons (Art. 845)
3. Those who are not permitted by law to inherit (Art.
1027)
B. RELATIVE INCAPACITY
1. Those Prohibited under Art 1027 due to Undue
Influence or Interest
a. Priest who heard the confession of the testator during
his last illness, or the minister of the gospel who
extended spiritual aid to him during the same period
b. Relatives of such priest or minister of the gospel within
the 4th degree, the church, order, chapter, community,
organization, or institution to which such priest or
minister may belong
c. Guardian with respect to testamentary dispositions
given by a ward in his favor before the final accounts of
the guardianship have been approved, even if the
testator should die after the approval thereof; EXCEPT
if the guardian is his ascendant, descendant, brother,
sister, or spouse
d. Attesting witness to execution of will, their spouses,
parents, children or any one claiming under such
witness, spouse, parents or children
e. Physician, surgeon, nurse, health officer or druggist
who took care of the testator during his last illness
f. Individuals, associations, and corporations not
permitted by law to inherit
NOTE: Possible only in testamentary succession.
Therefore, if the one incapacitated is a compulsory heir,
it does not affect the legitime but only the free portion.
2. Those prohibited under Art 739 from giving and
receiving donation from each other based on Morality
or Public Policy
a. Those made between persons who were guilty of
adultery or concubinage at the time of the
donation;
b. Those made between persons found guilty of the
same criminal offense, in consideration thereof;
CIVIL LAW REVIEWER
c. Those made to a public officer or his wife,
descendants and ascendants, by reason of his
office.
NOTE: Possible only in testamentary succession.
Therefore, if the one incapacitated is a compulsory heir,
it does not affect the legitime but only the free portion.
3. The following are incapable of succeeding by reason of
unworthiness:
a. Parents who have abandoned their children or
induced their daughters to lead a corrupt or
immoral life, or attempted against their virtue;
b. Any person who has been convicted of an attempt
against the life of the testator, his or her spouse,
descendants, or ascendants;
c. Any person who has accused the testator of a
crime for which the law prescribes imprisonment
for six years or more, if the accusation has been
found groundless;
d. Any heir of full age who, having knowledge of the
violent death of the testator, should fail to report
it to an officer of the law within a month, unless
the authorities have already taken action; this
prohibition shall not apply to cases wherein,
according to law, there is no obligation to make an
accusation;
e. Any person convicted of adultery or concubinage
with the spouse of the testator;
f. Any person who by fraud, violence, intimidation,
or undue influence should cause the testator to
make a will or to change one already made;
g. Any person who by the same means prevents
another from making a will, or from revoking one
already made, or who supplants, conceals, or
alters the latter's will;
h. Any person who falsifies or forges a supposed will
of the decedent. (756, 673, 674a)
NOTE: The cause of unworthiness shall be without effect if
the testator had knowledge thereof at the time he made the
will, or if, having known of them subsequently, he should
condone them in writing.
This is applicable to both testamentary and legal succession.
It is total in the sense that it extends not only to the free
portion but also to the legitime.
4. By Operation of Law – The moment the testator uses
one of the acts of unworthiness as a cause for
disinheritance, he thereby submits it to the rules on
disinheritance. Thus, reconciliation renders the
disinheritance ineffective.
PARDON OF ACTS OF UNWORTHINESS
Page 194 of 338
 EXPRESS
Made by the execution of a
document or any writing in
which the descendent
condones the cause of
incapacity
Cannot be revoked
TIME TO DETERMINE THE CAPACITY
GENERAL RULE: at the moment of the death of the
descedent.
IMPLIED
Effected when testator
makes a will instituting the
unworthy heir with
knowledge of the cause of
incapacity
Revoked when the testator
revokes the will or the
institution
an heir. It can be presumed from certain acts of the heir
such as:
a. When heir sells, donates, or assigns his right.
b. When heir renounces it for the benefit of one or
more heirs.
c. When renunciation is in favor of all heirs
indiscriminately for consideration
d. Other acts of tacit acceptance:
i. Heir demands partition of the inheritance
ii. Heir alienates some objects of the inheritance
iii. Under Article 1057, failure to signify
acceptance or repudiation within 30 days
after an order of distribution by the probate
court.

EXCEPTION: CHARACTERISTICS OF REPUDIATION

a. Those disqualified under Art. 1032 (2,3,5) wherein it is
necessary to wait until final judgment is rendered
b. Those disqualified under Art.1032 (4) wherein it is
necessary to wait for the expiration for the month
allowed for report
c. If the institution of the heirs, legacy or devise is
conditional, the time of compliance with the condition
shall be considered.
NOTE: The action for a declaration of incapacity and
recovery of the inheritance, devise or legacy shall be 5
years from the time the disqualified person took
possession thereof.
ADDITIONAL NOTES
1. The capacity to succeed is governed by the law of the
nation of the decedent.
2. Persons not incapacitated by law may succeed by will
or ab intestato.
3. If the heir excluded from the inheritance by reason of
incapacity is a compulsory heir, and if such compulsory
heir has children or descendant, the latter shall acquire
the incapacitated heir’s right to the legitime (by
representation.).
4. A testamentary provision in favor of a disqualified
person, even though made under the guise of an
onerous contract, or made through an intermediary,
shall be void. (Art. 755)
MANNER OF ACCEPTANCE OF INHERITANCE
1. Express
a. Public Document
b. Private Writing
1. Free and Voluntary Act
2. Irrevocable once made and cannot be impugned, except
in cases vitiating consent.
3. Retroactive
REQUISITES FOR A VALID REPUDIATION
Heir repudiating must be certain of two things before
repudiating:
a. Death of the person from whom he is to inherit;
b. Right to the inheritance.
 Who may accept or repudiate? Any person having the
free disposal of his property UNLESS he is incapacitated
such as when he is a minor, deaf-mute who cannot
read and write, judicially declared insolvent, under civil
interdiction, in which cases his guardian or
representative shall be the one to accept or repudiate.
However, judicial authorization is necessary in case of
repudiation.
If the beneficiary happens to be the POOR:
a. Acceptance – person designated by the testator to
determine the beneficiaries and to distribute the
property. In default thereof, the executor.
b. Repudiation – beneficiaries themselves once they are
determined
If the beneficiary happens to be a CORPORATION,
ASSOCIATION, INSTITUTION, OR ENTITY:
a. Acceptance – legal representative
b. Repudiation – legal representative with judicial
authorization

2. Tacit Acceptance – one resulting from acts by which If the beneficiary happens to be a MARRIED WOMAN: she
the intention to accept is necessarily implied or which may either accept or repudiate the inheritance without her
one would have no right to do except in the capacity of husband’s consent

CIVIL LAW REVIEWER Page 195 of 338

 How is repudiation made? The repudiation of the
inheritance shall be made in:
a. a public document - acknowledged before a notary
public, or
b. authentic instrument – equivalent to an
indubitable writing or a writing whose authenticity
is admitted or proved, or
c. by a petition presented to the court having
jurisdiction over the testamentary or intestate
proceedings.
RATIO: The law considers that the act of repudiation is
more solemn that the act of acceptance and that
repudiation produces more violent and disturbing
consequences.
 If the heir repudiates the inheritance to the prejudice
of his own creditors, the latter may petition the court
to authorize them to accept it in the name of the heir.
 If an heir is both a testate and legal heir, repudiation of
the inheritance as a testate heir, he is understood to
have repudiated in both capacities. However, should he
repudiate as a legal heir, without knowledge of being a
testate heir, he may still accept the inheritance as a
legal heir.
NOTES: If renounced in favor of other heirs, does it
mean acceptance? It depends:
a. If specific heir – whether or not renouncing heir
receives anything, considered as acceptance on
the part of the heir. There are two transfers.
b. If gratuitous –
i. In favor of all his co heirs indiscriminately -
there is repudiation because heir deemed to
have not accepted. Hence, accretion takes
place.
ii. In favor of all co-heirs but in proportion
different from those they would receive by
accretion: considered as tacit acceptance.
iii. If gratuitous in favor of one or some of his co-
heirs – deemed conveyance in favor of the co-
heirs specified, hence there is acceptance.
c. If onerously:
 There is no repudiation
 Transfer considered to be with consideration
 There are also tax implications because there
are two transfers.
EFFECTS OF ACCEPTANCE AND REPUDIATION
General Rule: irrevocable
Exception:
1. if made through any of the causes that vitiates consent
(mistake, violence, intimidation, undue influence and
fraud)
CIVIL LAW REVIEWER
2. when an unknown will appears
COLLATION: the act by virtue of which, the persons who
concur in the inheritance bring back to the common
hereditary mass the property which they have received
from him, so that a division may be effected according to
law and the will of the testator.
To collate is to bring back or to return to the hereditary
mass, in fact or by fiction, property which came from the
estate of the decedent, during his lifetime, but which the
law considers as an advance from the inheritance
PROPERTIES OR RIGHTS RECEIVED BY COMPULSORY HEIR
NOT SUBJECT TO COLLATION
1. Property left by will
2. Property which may have been donated by an
ascendant of the compulsory heir
3. Property donated to the spouse of the compulsory heir
4. Expenses for support, education, medical attendance
even in extraordinary illness, apprenticeship, ordinary
equipment or customary gifts
5. Expenses incurred by parents in giving their children a
professional, vocational, or other career
6. Wedding gifts consisting of jewelry, clothing and outfit,
given by parents or ascendants, so long as they do not
exceed 1/10 of the disposable portion
OPERATIONS RELATED TO COLLATION
1. Collation – adding to the mass of the hereditary estate
the value of the donation or gratuitous disposition
2. Imputing or Charging – crediting the donation as an
advance on the legitime (if the donee is a compulsory
heir) or on the free portion (if the donee is a stranger)
3. Reduction – determining to what extent the donation
will remain and to what extent it is excessive or
inofficious
4. Restitution – return or payment of the excess to the
mass of hereditary estate.
PERSONS OBLIGATED TO COLLATE
GENERAL RULE: compulsory heirs
EXCEPTION:
a. When the testator should have so expressly
provided; and
b. When the compulsory heir should have repudiated
his inheritance
 Grandchildren who survive with their uncles, aunts, or
first cousins, and inherit by right of representation.
NOTE: Grandchildren may inherit from grandparent in
their own right (i.e. heirs next in degree) and not by
right of representation if their parent repudiates the
inheritance of the grandparent, as no living person can
be represented except in cases of disinheritance and
Page 196 of 338
 incapacity. (In such cases, grandchildren are not obliged
to bring to collation what their parent has received
gratuitously from their grandparent)
WHAT TO COLLATE
1. Any property or right received by gratuitous title during
the testator’s lifetime
2. All that they may have received from the decedent
during his lifetime
3. All that their parents would have brought to collation if
alive.
PROPERTIES NOT SUBJECT TO COLLATION
1. Absolutely no collation – expenses for support,
education (elementary and secondary only),
medical attendance, even in extraordinary illness,
apprenticeship, ordinary equipment or customary
gifts.
2. Generally not imputable to legitime:
a. Expenses incurred by parents in giving their
children professional, vocational or other career
unless the parents so provide, or unless they
impair the legitime
b. Wedding gifts by parents and ascendants
consisting of jewelry, clothing, and outfit except
when they exceed 1/10 of the sum disposable by
will.
PARTITION AND DISTRIBUTION
PARTITION AND DISTRIBUTION : The separation, division
and assignment of a thing held in common among those to
whom it may belong. It includes every act which is intended
to put an end to indivision among co-heirs, and legatees or
devisees, although it should purport to be a sale, exchange,
compromise, or any other transaction. It is not subject to
any form
WHO MAY EFFECT PARTITION
i. Decedent himself during his lifetime by an act inter
vivos or by will;
ii. Heir themselves;
iii. Competent court; 3rd person designated by the
decedent
WHO CAN DEMAND PARTITION
1. Compulsory heir;
2. Voluntary heir
3. Legatee or devisee;
4. Any person who has acquired interest in the estate
WHEN PARTITION CANNOT BE DEMANDED (PAPU)
1. When expressly Prohibited by the testator himself for a
period not exceeding 20 years;
CIVIL LAW REVIEWER
2. When the co-heirs Agreed that the estate shall not be
divided for a period not exceeding 10 years, renewable
for another 10 years;
3. When Prohibited by law;
4. When to partition the estate would render it
Unserviceable for the use for which it is intended.
NOTE:
 Partition Inter Vivos – it is one that merely
allocates specific items or pieces of property on
the basis of the pro-indiviso shares fixed by law or
given under the will to heirs or successors.
 Partition is not itself a mode of acquiring
ownership, nor a title therefore, this partition,
being predicated on succession, necessitates
relationship to the decedent (in case of intestacy)
or a will duly probated (in case of testacy). A
partition inter vivos made in favor or intestate
heirs could be operative. Dispositions, however, to
non-intestate heirs may suffer an impediment
unless based on a valid will, except perhaps when
such dispositions are intended to take effect
during the life of the testator and the formalities of
donations are properly complied with.
PROHIBITION TO PARTITION
1. The prohibition to partition for a period not exceeding
20 years can be imposed on the legitime.
2. If the prohibition to partition is for more than 20 years,
the excess is void.
3. Even if a prohibition is imposed, the heirs by mutual
agreement can still make the partition.
LEGAL REDEMPTION IN FAVOR OF CO-HEIRS
 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:
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.
Page 197 of 338
 After the partition, the co-heirs shall be reciprocally 1 month form written Right to repurchase hereditary
bound to warrant the title to (warranty against notice of sale rights sold to a stranger by a co-
eviction) and the quality of (warranty against hidden heir
defects), each property adjudicated. 10 years To enforce warranty of
 The obligation of warranty shall cease in the following title/quality of property
cases: adjudicated to co-heir from the
i. When the testator himself has made the partition time right of action accrues
unless his intention was otherwise, but the 5 years from partition To enforce warranty of solvency of
legitime shall always remain unimpaired. debtor of the estate at the time
ii. When it has been expressly stipulated in the partition is made
agreement of partition, unless there has been bad 4 years form partition Action for rescission of partition
faith. on account of lesion
iii. When the eviction was due to a cause subsequent
to the partition, or has been caused by the fault of
END OF DISCUSSION
the distributee of the property.
==========================================
EFFECTS OF INCLUSION OF INTRUDER IN PARTITION
1. Between a true heir and several mistaken heirs –
Partition is VOID
2. Between several true heirs and a mistaken heir –
transmission to mistaken heir is VOID
3. Through error or mistake; share of true heir is allotted
to mistaken heir – partition shall not be rescinded
unless there is bad faith or fraud on the part of the
other persons 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.

A VOID WILL MAY BE A VALID PARITION

1. If the will was in fact a partition; and
2. If the beneficiaries in the void will were legal heirs

IMPORTANT PERIODS TO REMEMBER

PERIODS TO REMEMBER ON PARTITION
1 month or less before Testator, if publicly known to be
making a will insane, burden of proof is on the
one claiming validity of the will
20 years Maximum period testator can
prohibit alienation of dispositions
5 years from delivery To claim property escheated to
to the State the State
1 month To report knowledge of violent
death of decedent lest he be
considered unworthy
5 years from the time Action for declaration of
disqualified person incapacity & for recovery of the
took possession inheritance, devise or legacy
30 days from issuance Must signify
of order of acceptance/repudiation
distribution otherwise, deemed accepted

CIVIL LAW REVIEWER Page 198 of 338

III. LEASE - One of the parties binds himself to produce a result
out of his work or labor
================================= - For a price certain
TOPIC UNDER THE SYLLABUS:
A. Lease of Things Duties Of A Contractor Who Furnishes Work And Material
B. Lease of Work or Services 1. Duty to deliver
C. Lease of Rural and Urban Lands 2. Duty to transfer ownership
1. Qualified persons 3. Duty to warrant eviction and hidden defects
2. Registration
3. Prohibitions Remedies Of Employer In Case Of Defects
D. Contract for Piece of Work  Ask contractor to remove the defect or to execute
E. Rights and Obligations of Lessor and Lessee another work
=================================  If contractor fails or refuses to remove the defect,
CONTRACT OF LEASE is a contract by which one person binds employer can ask another person to do it at the
himself to grant temporarily, the use of a thing or the contractor’s expense.
rendering of some service to another who undertakes to pay
some rent, compensation, or price 3. Lease of service
- One party binds himself to render to the other
Characteristics Of Lease Of Things: (CLONS-PEP-TP) some service
1. Consensual - For a price certain
2. Lessor need not be the owner
3. Onerous CONTRACT FOR A CONTRACT OF CONTRACT OF
4. Nominate PIECE OF WORK LEASE OF LEASE OF
5. Subject matter must be within the commerce of man (Locatio Operis) SERVICE (Locatio THING
(i.e. not belonging to public domain) Operarum)
6. Principal contract The object of The object of The object of
7. Purpose is to allow Enjoyment or use of a thing contract is the contract is the contract is a
8. Purpose to which the thing will be devoted should not result of the work service itself and thing
be immoral without not the result
9. Period is Temporary considering the which it
10. Period may be definite or indefinite labor that generates
produced it
NOTE: Persons disqualified to buy under Arts. 1490 and 1491 If the result Even if the result Lessor has to
of the Civil Code are also disqualified to become lessees of promised is not intended is not deliver the
the things mentioned therein. (Art. 1646, NCC) accomplished, attained, the thing leased.
the lessor is not services of the In case of
Kinds Of Lease entitled to lessor must still breach, there
1. Lease of things (whether immovable or movable compensation be paid. can be an
property) In case of breach, action for
 One of the parties binds himself to give to another no action for specific
the enjoyment or use of a thing specific performance
 For a price certain and performance
 For a period which may be definite or indefinite
NOTE: However, no lease for more than 99 years shall be Elements Of A Tenancy Agreement (PACAPS)
valid. 1. Parties are the landowner and the tenant or agricultural
lessee
General Rule: The contract of lease may be made orally 2. Subject matter of the relationship is an agricultural land
Exception: Lease of real property for more than 1 year (must 3. There is consent between the parties to the
be in writing to comply with Statute of Frauds) relationship.
4. Purpose of the relationship is to bring about agricultural
2. Lease of work (contract for a piece of work) production
5. There is personal cultivation on the part of the tenant
or agricultural lessee and

CIVIL LAW REVIEWER Page 199 of 338

6. Harvest is shared between the landowner and the definite period indefinite period
tenant or agricultural lessee. It may be created by It may be created by law,
contract as a general rule contract, last will or
NOTE: Absence of any of the elements will not make the prescription
alleged tenant a de facto tenant. Lessee has no duty to Usufructuary has duty to
make repairs make repairs
RENT is the compensation either in money, provisions, Lessee has no duty to pay Usufructuary has a duty to
chattels, or labor, received by the lessor from the lessee. taxes pay taxes
Lessee cannot constitute a Usufructuary may constitute
REQUISITES: usufruct of the property a sublease
1. Must not be fictitious or nominal, otherwise the leased
contract is considered essentially gratuitous
2. Must be capable of determination LEASE DISTINGUISHED FROM SALE
3. May be in the form of products, fruits, or construction, LEASE SALE
as long as it has value Only the use or Ownership is transferred
enjoyment is transferred
 Owner has the right to fix the rent because the contract Transfer is temporary Transfer is permanent
is consensual and not imposed by law. Lessor need not be the Seller must be the owner at
 Increasing the rent is NOT an absolute right of the owner the time the property is
lessor. delivered
 If the rent is fixed for the first time, courts cannot The price of the object Usually, the selling price is
interfere, but if it is a renewal, the courts can settle the (distinguished from the mentioned
disagreements. rent) is usually not
 There being no agreement on the reasonable mentioned
compensation that a lessee must pay for its continuing
use and occupation of the premises after the LEASE OF SERVICE DISTINGUISHED FROM AGENCY
termination of the lease, it was proper for the lower LEASE OF SERVICES AGENCY
courts to determine the same. MATERCCO v. First
It is based on It is based on representation
Landlink Asia Development Corporation, [G.R. No.
employment – agent represents his
175678 (2007)]
– the lessor of services principal and enter into
 In lease of rural lands, lessee has no right to a reduction does not represent his juridical acts
of the rent on account of the sterility of land leased, or employer nor does he
by reason of the loss of fruits due to ordinary fortuitous execute juridical acts
events, except when the loss more than ½ of the fruits is
Principal contract Preparatory contract
through extraordinary and unforeseen fortuitous events
unless there be stipulation to the contrary.
General Rule: A lease of real property is a personal right
Exceptions:
LEASE DISTINGUISHED FROM USUFRUCT
1. If it is for more than one year and to be enforceable it
LEASE USUFRUCT
must be in writing
Ownership on the part of Ownership of the thing on 2. If it is registered with Registry of Property, regardless of
the lessor is not necessary the part of the grantor is its period
to constitute a contract of necessary to constitute a
lease usufruct Effects If Lease Of Real Property Is Not Registered:
It is generally a personal It is always a real right 1. The lease is not binding on third persons
right and is a real right 2. Such third person is allowed to terminate the lease in
only by exception case he buys the property from the owner-lessor
It is limited to the use It includes all possible uses 3. Actual knowledge of existence and duration of lease is
specified in the contract and enjoyment of the thing equivalent to registration
Lessor places and Owner allows the 4. Stranger knows of the existence of the lease, but was
maintains the lessee in usufructuary to use and led to believe that the lease would expire soon or before
the peaceful enjoyment of enjoy the property the new lease in favor of him begins, the stranger can
the thing still be considered innocent
Its term is generally for a Its term may be for an

CIVIL LAW REVIEWER Page 200 of 338

Persons Disqualified To Become Lessees:
1. Husband and wife cannot lease to each other their
separate properties (Exception: separation of property)
2. Those disqualified due to fiduciary relationship
 Guardian: ward
 Agent: principal
 Executor and administrators
 Public officer: state property
 Justices/judges: property under litigation
 Others disqualified by law
Lease By Filipinos
 May lease lands of public domain with an area of 500
hectares and may acquire not more than 12 hectares
Lease By Corporations
 At least 60% Filipino-owned, may lease lands of public
domain for a period of 25 years, renewable for not more
than 25 years; the area not to exceed more than 1,000
hectares
Rules On Lease Of Things When Lessee Is An Alien
1. 99-year limit applies to aliens as long as it is a lease of
personal property
2. Aliens CANNOT lease public lands, and cannot acquire
private lands except through succession
3. If lease of real property (private lands), maximum of 25
years renewable for another 25 years (P.D. 713)
4. Under the Investor’s Lease Act of 1995, the 25-year
period was extended to 50 years renewable for another
25 years provided the following conditions are met:
a. Lessee must make investments
b. Lease is approved by DTI
c. If terms are violated, DTI can terminate it
NOTE: the ILA did not do away with P.D. 713. Under ILA the
consent of DTI is required, while in P.D. 713 it is not.
E. Rights and Obligations of Lessor and Lessee
Obligations Of The Lessor (Art 1654) (DNM)
1. To DELIVER THE THING which is the object of the
contract in such condition as to render it fit for the use
intended
2. To make on the same during the lease all the
NECESSARY REPAIRS in order to keep it suitable for the
use to which it has been devoted, unless there is a
stipulation to the contrary
3. To MAINTAIN THE LESSEE IN THE PEACEFUL AND
ADEQUATE ENJOYMENT OF THE LEASE for the entire
duration of the contract
- This is true only if the contract is valid. Where the
contract is void, for having an existent contract of
CIVIL LAW REVIEWER
lease, the lessor has no right to lease the same
property. Bercero v. Capitol Development
Corporation,[ G.R. No. 154765 (2007)]
Nature Of The Duty Of The Lessor To Maintain Peaceful
Possession Of The Premises By The Lessor
- This is merely a warranty that the lessee shall not be
disturbed in his legal, and not physical, possession. Chua
Tee Dee v. Court of Appeals, 429 SCRA 418
Obligations Of The Lessee (Art. 1657) (PUP)
1. PAY THE PRICE of the lease according to the terms
stipulated
2. USE THE THING leased as a diligent father of a family
devoting it to the use stipulated, and in the absence of
stipulation, to that which may be inferred from the
nature of the thing leased, according to the custom of
the place
3. PAY THE EXPENSES for the deed of lease
Rights Of The Lessee
1. Right to be respected in his possession
2. Right to be restored to said possession by the means
established by law or by the Rules of Court, should he be
disturbed therein
Remedies When Lessor Or Lessee Does Not Comply With
Their Obligations
1. Rescission and damages or
2. Damages while allowing the contract to remain in force
Remedy Of Lessee Is Lessor Refuses To Accept The Rentals
- To make a proper tender of payment and consignation
in order to extinguish the debt
Rules On Changing The Form Of The Lease
- The lessor can alter the thing leased provided there is no
impairment of the use to which the thing is devoted
under the terms of the lease
- Alteration can also be made by the lessee so long as the
value of the property is not substantially impaired
Rules In Case Of Urgent Repairs
- The lessee is obliged to tolerate the work, although it
may be very annoying to him and although during the
same time he may be deprived of a part of the premises,
if repairs last for not more than 40 days
- If repairs last for 40 days or more, lessee can ask for
reduction of the rent in proportion to the time –
including the 1st 40 days – and the part of the property
of which he is deprived.
Page 201 of 338
NOTE: In either case, rescission may be availed of if the main
purpose of the lease is to provide a dwelling place and the
property becomes uninhabitable.
Effects If Lessor Fails To Make Urgent Repairs
The lessee may:
1. Order repairs at the lessor’s cost
2. Sue for damages
3. Suspend the payment of the rent
4. Ask for rescission, in case of substantial damage to him
EFFECT OF DESTRUCTION OF THE SUBJECT MATTER WITH
RESPECT TO THE LEASE
IF TOTALLY DESTROYED IF ONLY PARTIALLY
DESTROYED
Lease is extinguished Lessee can choose between
reduction of the rent and
rescission
Rules Upon Termination Of Lease Governing Useful
Improvements Caused By The Lessee
If made in good faith and suitable to the use for which the
lease is intended, without altering the form or substance of
the property:
1. Lessor may appropriate the improvements provided he
pays the lessee ½ of its value at that time
2. If lessor does not appropriate, lessee may remove the
improvements even if the principal thing may suffer
damage,
3. If improvement is ornamental, no right of
reimbursement, but lessee may remove them provided
no damage is caused to the principal thing
NOTE: Lessee has no right of retention of the premises if the
lessor does not pay. His only right is right of removal if lessor
does opt not to pay and appropriate.
Kinds Of Trespass In Lease:
1. Trespass in fact (perturbacion de mere hecho):
- Lessor is not liable for the mere fact of a trespass or
trespass in fact made by a third person of a leased
property.
- Mere fact or mere act of trespass is when the third
person claims no right whatever
- Physical enjoyment is reduced
2. Trespass in law (perturbacion de derecho):
- A third person claims legal right to enjoy the
premises
- Lessor will be held liable
Duration Of Lease
1. Lease may be for a determinate time or fixed period
CIVIL LAW REVIEWER
- Lease will be for the said period and it ends on the
day fixed without need of a demand
2. Lease may be without a fixed period
a. For rural lands (Art. 1682)
- It shall be for all time necessary for the
gathering of fruits which the whole estate may
yield in 1 year, or which it may yield once
b. For urban lands (Art. 1687)
- If rent is paid daily, lease is from day to day
- If rent is paid weekly, lease is from week to
week
- If rent is paid monthly, lease is from month to
month
- If rent is paid yearly, lease is from year to year
Rules On Extension Of The Lease Period
1. If a lease contract for a definite term allows lessee to
extend the term, there is no necessity for lessee to duly
notify lessor of his desire to so extend the term, unless
the contrary is stipulated.
2. “may be extended” as stipulation: lessee can extend
without lessor’s consent but lessee must notify lessor.
3. “may be extended for 6 years, agreed upon by both
parties” as stipulation: this must be interpreted in favor
of the lessee. Hence, ordinarily the lessee, at the end of
the original period, may either:
a. leave the premises
b. remain in possession
4. In co-ownership, assent of co-owner is needed;
otherwise, it is void or ineffective as against non-
consenting co-owners.
5. Where according to the terms of the contract, the lease
can be extended only by the written consent of the
parties thereto, no right of extension can rise without
such written consent.
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)]
Page 202 of 338

Requisites For Implied New Lease:
1. The term of the original contract has EXPIRED
2. The lessor HAS NOT GIVEN THE LESSEE a notice to
vacate
3. 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:
1. When before or after the expiration of the term, THERE
IS A NOTICE TO VACATE given by either party
2. When there is NO DEFINITE FIXED PERIOD IN THE
ORIGINAL LEASE CONTRACT as in the case of successive
renewals
EXTENSION DISTINGUISHED FROM RENEWAL
EXTENSION OF LEASE RENEWAL OF LEASE
CONTRACT CONTRACT
Original contract subsists Original contract ceases to
exist
Creates additional term 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
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. Mallarte v. Court of Appeals, G.R.
No. 85108 (1989)
- In a sublease arrangement, there are two distinct leases:
the principal lease and the sublease.
SUBLEASE DISTINGUISHED FROM AN ASSIGNMENT OF A
LEASE
SUBLEASE ASSIGNMENT
Lessee remains a party in Lessee is disassociated from
the contract the original contract of lease
Two leases and two Only one (lessor- assignee who
CIVIL LAW REVIEWER
distinct juridical becomes the lessee) because
relationship (lessor-lessee lessee transmits absolutely his
and sublessor-sublessee) rights and his personality
disappears
Sublessee does not have Assignee has a direct action
any direct action against against the lessor, there being
the lessor novation
Subleasing is allowed Assignment is not allowed
unless there is an express unless the lessor gives his
prohibition consent
NOTE: The sub-lessee is primarily liable to his sub-lessor and
only a court can extinguish or modify this primary liability if
the sub-lessor contests the pre-termination of the principal
lease by the lessor. Tamio v. Ticson, G.R. No. 154895 (2004)]
Circumstances When A Sublessee Is Made Liable To The
Lessor:
1. For all acts which affect the use and preservation of the
thing leased in the manner stipulated between the
lessor and the lessee
2. For any rent due to the lessor from the lessee which the
latter failed to pay
 Sublessee is subsidiarily liable
 Sublessee shall not be responsible beyond amount
of rent due from him, in accordance with the terms
of the sublease, at the time of the extrajudicial
demand by the lessor
Grounds For Ejectment
1. When the period agreed upon or that which is fixed for
the duration of leases (Arts. 1682 and 1687) has expired
(see Duration of Lease)
2. Lack of payment of the price stipulated
- In case lessor refuses to accept rentals, lessee
should make tender of payment, and consignation
otherwise there is no payment
- Willingness to pay is not payment
3. Violation of any of the conditions agreed upon in the
contract
4. When the lessee devotes thing leased to any use or
service not stipulated which causes the deterioration
thereof, or if he does not observe the requirement in Art
1657.
R.A. 9341 - AN ACT ESTABLISHING REFORMS IN THE
REGULATION OF RENT OF CERTAIN RESIDENTIAL UNITS,
PROVIDING THE MECHANISMS THEREFOR AND FOR OTHER
PURPOSES (APPROVED LAST DEC. 21, 2005)
Limitations Imposed Upon The Lessor For The Protection Of
The Lessee (SECS. 3, 5 AND 8)
Page 203 of 338
1. The rent of any residential unit covered by this Act shall
not be increased by more than 10% annually as long as
the unit is occupied by the same lessee. When the
residential unit becomes vacant, the lessor may set the
initial rent for the next lessee.
2. No lessor may demand more than 1 month advance
rent. Neither can he demand more than 2 months
deposit which shall be kept in a bank under the lessor’s
account name during the entire duration of the lease
agreement. Any and all interest that shall accrue therein
shall be returned to the lessee at the expiration of the
lease contract.
3. No lessor or his successor-in-interest shall be entitled to
eject the lessee upon the ground that the leased
premises have been sold or mortgaged to a third person
regardless of whether the lease or mortgage is
registered or not.

Grounds For Judicial Ejectment (SEC. 7)

1. Assignment of lease or subleasing of residential units in
whole or part, including the acceptance of boarders or
bedspacers, without the written consent of the
onwer/lessor.
2. Arrears in payment of rent for a total of 3 months;
Provided, That in the case of refusal by the lessor to
accept payment of the rental agreed upon, the lessee
may either deposit by way of consignation, the amount
in court, or with the city or municipal treasurer, as the
case may be, or in a bank in the name of the lessor and
with notice to the latter, within 1 month after the
refusal of the latter to accept payment.
 The lessee shall thereafter deposit the rental within
10 days of every current month. Failure to deposit
the rental or 3 months shall constitute a ground for
ejectment.
 The lessor, upon authority of the court in case of
consignation or upon joint affidavit by him and the
lessee to be submitted to the city or municipal
treasurer and to the bank where the deposit was
made, shall be allowed to withdraw the deposit.
3. Legitimate need of the owner/lessor to repossess his
/her property for his/her own use or of any immediate
member of his/her family as a residential unit.
4. Need of the lessor to make necessary repairs of the
leased premises which is the subject of an existing order
of condemnation by appropriate authorities concerned
in order to make the said premises safe and habitable.
5. Expiration of the period of the lease contract.

CIVIL LAW REVIEWER Page 204 of 338

IV. PARTNERSHIP
=================================
TOPICS UNDER THE SYLLABUS
A. CONTRACT OF PARTNERSHIP
B. RIGHTS AND OBLIGATIONS OF PARTNERSHIP
C. RIGHTS AND OBLIGATIONS OF PARTNERS
AMONG THEMSELVES
D. OBLIGATIONS OF PARTNERSHIP/PARTNERSHIP
TO THIRD PERSONS
E. DISSOLUTION
F. LIMITED PARTNERSHIP
=================================
CHAPTER 1: GENERAL PROVISIONS
A. CONTRACT OF PARTNERSHIP
1. DEFINITION
PARTNERSHIP - a contract wherein two or more persons bind
themselves to contribute money, property, or industry to a
common fund, with the intention of dividing the profits
among themselves.
2. ELEMENTS
ELEMENTS OF A PARTNERSHIP:
There shall be a partnership whenever:
1. There is a meeting of the minds;
2. To form a common fund;
3. With intention that profits (and losses) will be divided
among the contracting parties.
ESSENTIAL FEATURES:
1. There must be a VALID CONTRACT.
2. The parties must have legal capacity to enter into the
contract.
3. There must be a mutual contribution of money,
property, or industry to a common fund.
4. There must be a lawful OBJECT.
5. The purpose or primary purpose must be to obtain
profits and divide the same among the parties.
ADDITIONAL REQUIREMENT FOR JURICICAL PERSONALITY
a. It is also required that the articles of partnership must
NOT be kept SECRET among the members; otherwise,
the association shall have no legal personality and shall
be governed by the provisions on CO-OWNERSHIP (Art.
1775).
b. "kept secret among the members" - secrecy directed
not to third persons but to some of the partners
CIVIL LAW REVIEWER
c. 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
CHARACTERISTICS:
1. Essentially contractual in nature (Art. 1767, 1784)
2. Separate juridical personality (Art. 1768)
3. Delectus personae
4. Mutual Agency (Art. 1803)
5. Personal liability of partners for partnership debts
3. RULES TO DETERMINE EXISTENCE
GENERAL RULE: Persons who are NOT partners as between
themselves, CANNOT be partners as to third persons. (Art.
1769(1))
EXCEPTION: Partnership by Estoppel under Art. 1825
Other Rules to Determine whether a partnership exists:
(Art. 1769)
The following, alone, do not establish partnership
1. Co-ownership or co-possession
2. Sharing of gross returns, whether or not the persons
sharing them have a joint or common right or interest in
any property from which the returns are derived;
Receipt by a person of a share of the profits of a business is
prima facie evidence that he is a partner in the business,
UNLESS such were received in payment:
1. Debt by installments or otherwise;
2. Wages or rent;
3. Annuity;
4. Interest on loan;
5. Consideration for sale of goodwill of business/other
property by installments
A partnership must have a lawful object or purpose, and
must be established for the common benefit or interest of
the partners.
When an unlawful partnership is dissolved by a judicial
decree, the profits shall be confiscated in favor of the State,
without prejudice to the provisions of the Penal Code
governing the confiscation of the instruments and effects of
a crime.
EFFECTS OF AN UNLAWFUL PARTNERSHIP:
1. Void ab initio - never existed in the eyes of the law. (Art.
1409(1))
2. Profits shall be confiscated in favor of the government.
(Art. 1770)
Page 205 of 338
3. Instruments or tools and proceeds of the crime shall also
be forfeited in favor of the government. (Art. 1770, Art.
45-RPC)
4. The contributions of the partners shall not be
confiscated unless they fall under no. 3. (See Arts. 1411
and 1412)
Judicial decree is not necessary to dissolve an unlawful
partnership.
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.
4. HOW PARTNERSHIP FORMED
GENERAL RULE: No special form is required for the validity of
a contract. (Art. 1356)
BURDEN OF PROOF AND PRESUMPTION
1. Must be proven, not presumed.
2. Persons acting as partners presumed to have entered
into contract of partnership. Burden of proof shifted to
party denying its existence.
3. Extant Parntership presumed to exist until proven
terminated.
4. Use of the term “partner” does not necessarily show
existence of partnership. Non-use of the terms
“parntership” or “partners” 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 — the term for which the
partnership is to exist is fixed or agreed upon or one formed
for a particular undertaking
6. UNIVERSAL VS. PARTICULAR; GENERAL VS. LIMITED
CIVIL LAW REVIEWER
UNIVERSAL VS. PARTICULAR
UNIVERSAL PARTNERSHIP OF ALL PRESENT PROPERTY —
comprises the following:
1. Property which belonged to each of the partners at the
time of the constitution of the partnership
2. Profits which they may acquire from all property
contributed
UNIVERSAL PARTNERSHIP OF PROFITS — comprises all that
the partners may acquire by their industry or work during the
existence of the partnership
Note: Persons who are prohibited from giving donations or
advantage to each other cannot enter into a universal
partnership. (Art. 1782)
PARTICULAR PARTNERSHIP—has for its objects:
1. Determinate things
2. Their use or fruits
3. Specific undertaking
4. Exercise of profession or vocation
GENERAL VS. LIMITED
GENERAL PARTNERSHIP—consists of general partners who
are liable pro rata and subsidiarily and sometimes solidarily
with their separate property for partnership debts.
LIMITED PARTNERSHIP—one formed by 2 or more persons
having as members one or more general partners and one or
more limited partners, the latter not being personally liable
for the obligations of the partnership
7. PARTNERSHIP BY ESTOPPEL
PARTNER BY ESTOPPEL—by words or conduct, he does any
of the ff.:
Directly represents himself to anyone as a partner in an
existing partnership or in a non-existing partnership
Indirectly represents himself by consenting to another
representing him as a partner in an existing partnership
or in a non-existing partnership
Elements to establish liability as a partner on ground of
estoppel:
Defendant represented himself as partner/represented
by others as such and not denied/refuted by defendant
Plaintiff relied on such representation
Statement of defendant not refuted
LIABILITIES IN ESTOPPEL
All partners consented Partnership is liable
to representation
Page 206 of 338
No existing partnership Person who represented himself a. Only Filipino citizens properly registered and
& all those represented & all those who made licensed as architects under this Act may, among
consented; representation liable pro- themselves, or together with allied technical
Not all partners of rata/jointly professionals, form and obtain registration as a
existing partnership firm, company, partnership, association or
consents to corporation for the practice of architecture;
representation b. Registered and licensed architects shall compose at
No existing partnership Person who represented himself least seventy-five percent (75%) of the owners,
& not all represented liable & those who shareholders, members incorporators, directors,
consented; made/consented to executive officers, as the case may be;
None of partners in representation separately liable c. Individual members of such firm, partnership
existing partnership association or corporation shall be responsible for
consented their individual and collective acts as an entity and
as provided by law;
8. PARTNERSHIP VS. JOINT VENTURE d. Such firm, partnership, association or corporation
shall be registered with the Securities and Exchange
Particular partnership distinguished from joint venture: Commission and Board.
Heirs of Tan Eng Kee v. CA, G.R. No. 126881, October 3, 2000
10. MANAGEMENT
A particular partnership is distinguished from joint venture, See Rights and Obligations of Partners Among Themselves
to wit:
1. A joint venture (an American concept similar to our joint B. RIGHTS AND OBLIGATIONS OF PARTNERSHIP
account) is a sort of informal partnership, with no firm
name and no legal personality. In a joint account, the General Rule – A partnership begins from the moment of the
participating merchants can transact business under execution of the contract, unless it is otherwise stipulated.
their own name, and can be individually liable therefore;
and Exception –
2. Usually, but not necessarily a joint venture is limited to a 1. Where immovable property/real rights are contributed
single transaction, although the business of pursuing to (Art. 1771)
a successful termination may continue for a number of Public instrument is necessary
years; a partnership generally relates to a continuing Inventory of the property contributed must be
business of various transactions of a certain kind. made, signed by the parties and attached to the
public instrument otherwise it is VOID
It would seem that under Philippine law, a joint venture is a 2. When the contract falls under the coverage of the
FORM of PARTNERSHIP, specifically a particular partnership Statute of Frauds (Art. 1409)
which has for its object specific undertaking. 3. Where capital is P3,000 or more, in money or property
(Art. 1772)
The Supreme Court has, however, recognized a Public instrument is necessary
distinction between these two business forms and has Must be registered with SEC
held that although a corporation cannot enter into a But failure to comply shall not affect the liability of the
partnership, it may, however, engage in a joint venture partnership and the members thereof to third persons
with others. Aurbach v. Sanitary Wares, 180 SCRA 130 A “void” partnership under Article 1773, in relation to Article
(1989) 1771, may still be considered a partnership de facto or by
estoppel vis-à-vis third persons; and may be considered by
9. PROFESSIONAL PARTNERSHIP the courts as an ordinary contract (though not exactly an
“Art. 1767” partnership) from which rights and obligations
General Professional Partnership (Art. 1767, Par. 2): Two or may legally stem. Torres v. CA, 320 SCRA 428 (1999)
more persons may also form a partnership for the exercise of
a profession. SEC Opinion, 1 June 1960: For purposes of convenience in
dealing with government offices and financial institutions,
The Architecture Act of 2004 (R.A. 9266) grants that a firm, registration of partnership having a capital of less than Php
company, partnership, corporation or association may be 3,000 is recommended.
registered or licensed as such for the practice of architecture
under the following conditions:

CIVIL LAW REVIEWER Page 207 of 338


SEPARATE JURIDICAL PERSONALITY
The partnership has a juridical personality separate and
distinct from that of each of the partners, even in case of
failure to comply with the requirements of Article 1772, first
paragraph (Registration with SEC).
As a JURIDICAL PERSON, a partnership may:
1. Acquire and possess property of all kinds;
2. Incur obligations; and
3. Bring suit, in conformity with the laws and regulations of
their organization. (See Art. 46)
DELECTUS PERSONAE - The selection or choice of the person.
Implications: (Dean Villanueva)
The assignment of a partner of his share does not make
assignee a partner (Art. 1804 and 1813)
The existence of the partnership is closely tied-up to the
particular contractual relationship of the partners (see
instances of dissolution of the partnership upon change
of contractual relationship.)
PARTNERSHIP RELATIONSHIP IS FIDUCIARY IN NATURE
1. Right to choose co-partners – No one can become
member of partnership without the consent of all other
partners
2. Power to dissolve partnership – Allowed the power, not
necessarily the right, to dissolve partnership. Dissolution
must be in good faith. Bad faith will not prevent
dissolution but may result in liability for damages.
Doctrine of Delectus Personae: Partnership at will is
predicated on the mutual desire and consent of the partners.
The right to choose with whom to associate himself is the
very foundation and essence of that partnership. Ortega v.
CA, G.R. No. 109248, July 3, 1995
Delectus personarum; does not apply to a limited partner
who merely contributes his interest and is not barred from
engaging in competitive business or from transacting
business with the partnership as if he were a stranger (Art.
1866, in relation to Arts. 1789, 1808, and 1854).
MUTUAL AGENCY
(According to Dean Villanueva)
Unless otherwise stated, all partners are considered agents
and whatever any one of them may do alone shall bind the
partnership (Arts. 1803(1), 1818)
Partners can dispose of partnership property even when in
partnership name (Art. 1819)
CIVIL LAW REVIEWER
Admission or representation made by any partner concerning
partnership affairs is evidence against the partnership (Art.
1820)
Notice to any partner of any matter relating to partnership
affairs is notice to the partnership (Art. 1821)
Wrongful act or omission of any partner acting for
partnership affairs makes the partnership liable (Art. 1822)
Partnership bound to make good losses for acts or
misapplications of partners (Art. 1823)
UNLIMITED LIABILITY
(According to Dean Villanueva)
All partners are liable pro rata with all their properties
and after partnership assets have been exhausted, for all
partnership debts (Art. 1816)
Any stipulation against personal liability of partners for
partnership debts is void, except as among them (Art.
1817)
Partners are liable solidarily with the partnership for
everything chargeable to the partnership when caused
by the wrongful act or omission of any partner acting in
the ordinary course of business of the partnership or
with authority from the other partners and for partner's
act or misapplication of properties (Art. 1824)
A newly admitted partner into an existing partnership is
liable for all the obligations of the partnership arising
before his admission but out of partnership property
shares (Art. 1826)
Partnership creditors are preferred to those of each of
the partners as regards the partnership property (Art.
1827)
Upon dissolution of the partnership, the partners shall
contribute the amounts necessary to satisfy the
partnership liabilities (Art. 1839(4), (7))
Page 208 of 338
PARTNERSHIP DISTINGUISHED FROM CO-OWNERSHIP AND Effect of Death of Death of co- Death of
CORPORATION death partner owner does stockholder
results in not does not
BASIS PARTNERSHIP CO-OWNER CORP dissolution of necessarily dissolve
SHIP
partnership dissolve co- corporation
Creation Created by a Created by Created by
ownership
contract, by law law
Dissolution May be May be Can only be
mere
dissolved at dissolved dissolved
agreement of
any time by anytime by with the
the parties
the will of any the will of consent of
Juridical Has a juridical None Has a
or all of the any or all of the state
personality personality juridical
partners the co-
separate and personality
owners
distinct from separate and
# of Minimum of 2 Minimum Minimum of
that of each distinct from
incorporato persons of 2 persons 5
partner that of each
rs incorporators
stockholder
Commence From the None From date of
Purpose Realization of Common Depends on
ment of moment of issuance of
profits enjoyment AOI
juridical execution of certificate of
of a thing or
personality contract of incorporation
right
partnership by the SEC
Duration/ No limitation 10 years 50 years
Term of maximum maximum,
existence extendible to
WHO MAY BE PARTNERS
not more
than 50 years GENERAL RULE: Any person capacitated to contract may
in any one enter into a contract of partnership.
instance EXCEPTIONS
Disposal/ Partner may Co-owner Stockholder Persons who are prohibited from giving each other any
Transferabil not dispose of may freely has a right to donation or advantage cannot enter into a universal
ity of his individual do so transfer partnership. (Art. 1782)
interest interest unless shares Persons suffering from civil interdiction.
agreed upon without prior Persons who cannot give consent to a contract:
by all partners consent of Minors
other insane persons
stockholders deaf-mutes who do not know how to write
Power to In absence of Co-owner Management
act with 3rd stipulation to cannot is vested with De Leon: There is no prohibition for partnerships to be
persons contrary, a represent the Board of partners, BUT THIS IS DOUBTFUL AND IMPRACTICAL on
partner may the co- Directors account of Art. 1768 (that a partnership has a juridical
bind ownership personality separate from that of each of the partners) and of
partnership the essential attribute called delectus personae.
(each partner
is agent of MAY CORPORATIONS ENTER INTO PARTNERSHIP?
partnership)
Philippine Corporate Law (2001) by Dean Villanueva (p.
902) citing various SEC Opinions:

Corporations may enter into partnership agreements on the

following conditions:
Authority to enter into a partnership relation is
expressly conferred by the charter or the articles of
incorporation (AoI), and the nature of the business
venture to be undertaken by the partnership is in line
with the business authorized by the charter or AoI.

CIVIL LAW REVIEWER Page 209 of 338

 If it is a foreign corporation, it must obtain a license to
transact business in the country in accordance with the
Corporation Code of the Philippines.
NOTE: How tax law treats the matter:
Notion of partnership no matter how created or organized: a
pool of insurance companies was considered a partnership
under applicable tax law. Afisco v. CA, G.R. No. 112675,
January 25, 1999
Without prejudice to the formation of a joint venture. J.M.
Tuazon v. Bolanos, 95 Phil. 106 (1954); Aurbach v. Sanitary
Wares Manufacturing, 180 SCRA 130 (1989)
WHAT MAY BE CONTRIBUTED
Must be in equal shares unless otherwise stipulated (Art.
1790).
Money – failure to contribute promised money makes the
promissory-partner liable for the amount
promised, and also for interest due and damages
arising from the time the former should have
complied with his or her undertaking (Art. 1786, ¶
1) (upon perfection of contract, unless contrary
stipulation)
If there is fraud or misrepresentation, action for
rescission may be filed and the party entitled to
rescind, without prejudice to any other right, has
the right to:
 lien on, or right of retention over, the surplus of
partnership property after satisfying partnership
liabilities to third persons (for any sum paid by the
injured partner for the purchase of an interest in
the partnership and for any capital or advances
contributed by the latter)
 stand in place of creditors of the partnership for any
payments made by the injured partner in respect of
partnership liabilities, after all liabilities to third
persons have been satisfied
 indemnity by the guilty partner against all
partnership debts and liabilities (Art. 1838); relate
to Art. 1831: with or without fraud or
misrepresentation, injured partner may seek
judicial dissolution
Property – may include intangible or incorporeal, e.g. credit
Lim Tong Lim v. Phil. Fishing Gear, 316
SCRA 728 (1999)
Art. 1786, ¶¶ 1 and 2 applies: liable for fruits from the
time property should have been delivered without need
of demand; also include obligation to preserve the
promised property with the diligence of a good father of
a family pending delivery.
CIVIL LAW REVIEWER
Industry – may concur with any or both of the first two or in
the absence of any one or both of them; manual
and/or intellectual in consideration of share in
the profits; hence, as generally, partners are not
entitled to charge each other. Marsh’s Appeal,
69 Pa. St. 30
“Every partner is bound to work to the extent of his
ability for the benefit of the whole, without regard to
the services of his co-partners, and without comparison
of value; for services to the firm cannot, from their very
nature, be estimated and equalized by compensation of
differences.” Beatty v. Wray, 7 Harris 519
BUT: a partner who has agreed to render special service
to the partnership, for the performance of which he is
qualified, and which is one of the inducements for the
other members to enter the partnership, was found
liable civilly to account for the value of such service
upon a finding that he wrongfully refused to perform
such service.
BUT THEN AGAIN, specific performance not available
due to constitutional prohibition vs. involuntary
servitude
A limited partner is not allowed to contribute services,
only “cash or other property” (Art. 1845); otherwise, he
is considered an “industrial and general partner” and
thus, not exempted from personal liability.
WHEN IMMOVABLES OR REAL RIGHTS CONTRIBUTED
GENERAL RULE: Failure to comply with the requirement of
appearance in public instrument and SEC Registration
will not affect the liability of the partnership and the
members thereof to third persons. (Art. 1772, ¶ 2)
EXCEPTION: When IMMOVABLE PROPERTY/ REAL RIGHTS
are contributed,
*public instrument + inventory*
made and signed by the parties and attached to the
public instrument (Arts. 1771 and 1773) is required for
the benefit of third persons.
Page 210 of 338
 EFFECT OF ABSENCE OF REQUIREMENTS UNDER ARTICLES
1771 AND 1773
OTHER CLASSIFICATIONS OF PARTNERSHIP
Condition of
Partnership where Real Bautista, E. De Leon As to legality of existence
Property is Contributed DE JURE PARTNERSHIP—one which has complied with all the
legal requirements for its establishment
No public Instrument, DE FACTO—one which has failed to comply with all the legal
VOID VOID requirements for its establishment
No Inventory
With Public Instrument, As to purpose
VOID VOID
No Inventory
COMMERCIAL OR TRADING PARTNERSHIP—one formed
VALID for the transaction of business
But either party PROFESSIONAL OR NON TRADING PARTNERSHIP—one
may compel formed for the exercise of a profession
execution of public
instrument so it KINDS OF PARTNERS

No Public Instrument, may be registered in

the registry of VOID CAPITALIST—contributes money or property
With Inventory
property; INDUSTRIAL—contributes only industry or personal service
nonetheless, GENERAL—liability to 3rd persons extends to separate
partnership property
agreement may be LIMITED—liability to 3rd persons limited to capital
enforced (cf. Arts. contribution
1356 to 1358) MANAGING—manages the affairs/business of the
partnership
With Public Instrument, LIQUIDATING—takes charge of the winding up of partnership
VALID VALID
With Inventory affairs upon dissolution
(Source: Bar Review Notes for Partnership Law by Atty. PARTNERS BY ESTOPPEL—not really a partner but liable as a
Villareal) partner for the protection of innocent 3rd persons
CONTINUING PARTNER—continues the business of a
Atty. Villareal: The safer view is De Leon’s due to his partnership after dissolution by reason of the admission of a
simplified view of statute. new partner, retirement, death or expulsion of one of the
NOTE: partners
Partnerships void under Art.1773, in relation Art. 1771 SURVIVING PARTNER—after a partnership has been
may still be considered either de facto or estoppel dissolved by death of any partner
partnerships vis-à-vis third persons; may even be SUBPARTNER—not a member of the partnership who
treated as an ordinary contract from which rights and contracts with a partner with reference to the latter's share
obligations may validly arise, although not exactly a in the partnership
partnership under the Civil Code. Torres v. CA, 320 SCRA OSTENSIBLE—takes active part and known to the public as
428 (1999) partner in the business
SECRET—takes active part in the business but is not known
Failure to prepare an inventory of the immovable property to be a partner by outside parties
contributed, in spite of article 1773 declaring the partnership SILENT—does not take any active part in the business
void would not render the partnership void when: although he may be known to be a partner
NO THIRD PARTY INVOLVED (since Art. 1773 was DORMANT—does not take active part in the business and is
intended for the protection of 3rd parties; not known or held out as a partner
Partners have MADE A CLAIM ON THE PARTNERSHIP
AGREEMENT.

CIVIL LAW REVIEWER Page 211 of 338

C. RIGHTS AND OBLIGATIONS OF PARTNERS AMONG He cannot directly or indirectly use partnership assets for his
THEMSELVES own benefit;

1) OBLIGATIONS OF THE PARTNERS AMONG THEMSELVES He cannot carry on a business of the partnership for his
private advantage;
PROMISED CONTRIBUTION
He cannot, in conducting the business of the partnership,
Obligations with respect to contribution of property: take any profit clandestinely;
1. to contribute at the beginning of the partnership or at
the stipulated time the money, property or industry He cannot obtain for himself that he should have obtained
which he may have promised to contribute (Art. 1786) for the partnership (e.g. business opportunity)
To answer for eviction in case the partnership is
deprived of the determinate property contributed (Art. He cannot carry on another business in competition with the
1786) partnership;
2. To answer to the partnership for the fruits of the
property the contribution of which he delayed, from the He cannot avail himself of knowledge or information which
date they should have been contributed up to the time may be properly regarded as the property of the partnership;
of actual delivery (Art. 1786)
3. To preserve said property with the diligence of a good
father of a family pending delivery to partnership (Art. PROHIBITION AGAINST ENGAGING IN COMPETITIVE
1163) BUSINESS
4. To indemnify partnership for any damage caused to it by
INDUSTRIAL PARTNER CAPITALIST PARTNER
the retention of the same or by the delay in its
- cannot engage in business - cannot engage in
contribution (Arts. 1788, 1170)
(w/n same line of business business (with same kind
with the partnership) unless of business with the
Effect of failure to contribute property promised:
partnership expressly permits partnership) for his own
Partners becomes ipso jure a debtor of the partnership even
him to do so. account, unless there is
in the absence of any demand (See Art. 1169[1])
(Art. 1789) a stipulation to the
Remedy of the other partner is not rescission but specific
contrary.
performance with damages from defaulting partner (Art.
( Art. 1808)
1788)

Obligations with respect to contribution of money and
money converted to personal use:
1. To contribute on the date fixed the amount he has
undertaken to contribute to the partnership
2. To reimburse any amount he may have taken from the
partnership coffers and converted to his own use
3. To pay for the agreed or legal interest, if he fails to pay
his contribution on time or in case he takes any amount
from the common fund and converts it to his own use
4. To indemnify the partnership for the damages caused to
it by delay in the contribution or conversion of any sum
for his personal benefits
(See Art. 1788)
FIDUCIARY DUTY
A partnership is a fiduciary relation—one entered into and to
be maintained on the basis of trust and confidence. With
that, a partner must observe the utmost good faith, fairness,
and integrity in his dealings with the others:
CONSEQUENCES IF AN INDUSTRIAL PARTNER ENGAGES IN
ANY BUSINESS: (Art. 1789)
he can be excluded from the partnership; or
the capitalist partners can avail of the benefit he
obtained from the business, or
the capitalist partners have the right to file an action for
damages against the industrial partner, in either case.
CONSEQUENCES IF THE CAPITALIST PARTNER ENGAGES IN A
BUSINESS (which competes with the business of the
partnership):
1. he may be required to bring to the common fund the
profits he derived from the other business; (Art. 1808)
2. he shall personally bear the losses; (Art. 1808)
3. he may be ousted form the partnership, especially if
there was a warning.

CIVIL LAW REVIEWER Page 212 of 338

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

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

Obligation of managing partners who collects debt from

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

Requisites:
1. There exist at least 2 debts, one where the collecting
partner is creditor and the other, where the partnership
is the creditor
2. Both debts are demandable

The partner who collects is authorized to manage and

actually manages the partnership

Obligation of partner who receives share of partnership

credit
Obliged to bring to the partnership capital what he has
received even though he may have given receipt for his share
only (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

CIVIL LAW REVIEWER Page 213 of 338

BEARING THE RISK OF LOSS OF THINGS CONTRIBUTED (Art. cause; Revocable
1795) only when in bad
faith
Specific and determinate things which Risk is borne by Partner is appointed Power is
are not fungible where only the use is partner manager after revocable any
contributed constitution of time for any
Specific and determinate things the Risk is borne by partnership cause
ownership of which is transferred to the partnership 2 or more persons Each may In case of
partnership entrusted with execute all acts opposition,
Fungible things (consumable) Risk is borne by management of of administration decision of
partnership partnership without majority shall
Things contributed to be sold Risk is borne by specification of prevail; In case
partnership duties/stipulation of tie, decision
Things brought and appraised in the Risk is borne by that each shall not of partners
inventory partnership act w/o the other's owning
Specific and determinate things which Risk is borne by consent controlling
are not fungible where only the use is partner interest shall
contributed prevail
Stipulated that none Concurrence of Absence or
RULES FOR DISTRIBUTION OF PROFITS AND LOSSES of the managing all necessary for disability of any
PROFITS LOSSES partners shall act w/o the validity of one cannot be
With According to According to the consent of others acts alleged unless
agreement agreement agreement there is
Without Share of capitalist If sharing of profits imminent
agreement partner is in is stipulated - apply danger of grave
proportion to his to sharing of losses or irreparable
capital contribution If no profit sharing injury to
Share of industrial stipulated - losses partnership
partner is not fixed - as shall be borne Manner of All partners are If refusal of
may be just and according to capital management not agents of the partner is
equitable under the contribution agreed upon partnership manifestly
circumstances Purely industrial Unanimous prejudicial to
partner not liable consent required interest of
for losses for alteration of partnership,
immovable court's
A stipulation which excludes one or more partners from any property intervention
share in the profits and losses is void. may be sought

NOTE: Stipulation exempting a partner from losses should be Other rights and obligations of partners:
allowed. If a person can make a gift to another, there is no 1. Right to associate another person with him in his share
sound reason why a person cannot also agree to bear all the without consent of other partners (subpartnership)
losses. Of course, as far as THIRD PERSONS are concerned, 2. Right to inspect and copy partnership books at any
any such stipulation may be properly declared void. (De reasonable hour
Leon, pp. 124-125, citing Espiritu and Sibal) 3. Right to a formal account as to partnership affairs (even
during existence of partnership):
RIGHTS AND OBLIGATIONS WITH RESPECT TO 4. If he is wrongfully excluded from partnership business or
MANAGEMENT possession of its property by his copartners
5. If right exists under the terms of any agreement
Partner is appointed Power of Vote of partners As provided by art. 1807
manager in the managing representing Whenever other circumstances render it just and reasonable
articles of partnership partner is controlling Duty to render on demand true and full information affecting
irrevocable interest partnership to any partner or legal representative of any
without necessary to deceased partner or of any partner under legal disability
just/lawful revoke power Duty to account to the partnership as fiduciary

CIVIL LAW REVIEWER Page 214 of 338

 POWER OF PARTNER AS AGENT OF PARTNERSHIP
2) PROPERTY RIGHTS OF A PARTNER
His rights in specific partnership property Acts for carrying on in the Every partner is an agent
His interest in the partnership usual way the business of the and may execute acts
His right to participate in the management partnership with binding effect even if
(Art. 1810) he has no authority
Except: when 3rd person
Nature of partner's right in specific partnership property—a has knowledge of lack of
partner has an equal right to possession which is not authority
assignable and such right is limited to the share of what Act w/c is not apparently for Does not bind partnership
remains after partnership debts have been paid the carrying of business in unless authorized by
the usual way other partners
Nature of partner's right in the partnership—a share in the Acts of strict dominion or
profits and surplus ownership:
Assign partnership
3. OBLIGATION OF PARTNERS WITH REGARD property in trust for
TO THIRD PERSONS creditors
Every partnership shall operate under a firm name. Dispose of good-will of
Persons who include their names in the partnership business
name even if they are not members shall be liable as a Do an act w/c would
partner make it impossible to
All partners shall be liable for contractual obligations carry on ordinary
of the partnership with their property, after all business of partnership
partnership assets have been exhausted: Confess a judgment
Pro rata Enter into compromise
Subsidiary concerning a
Admission or representation made by any partner partnership claim or
concerning partnership affairs within scope of his liability
authority is evidence against the partnership Submit partnership
Notice to partner of any matter relating to partnership claim or liability to
affairs operates as notice to partnership, except in arbitration
case of fraud: Renounce claim of
Knowledge, of partner acting in the partnership
particular matter, acquired while a Acts in contravention of a Partnership not liable to
partner restriction on authority 3rd persons having actual
Knowledge of the partner acting in the or presumptive
particular matter then present to his knowledge of the
mind restrictions
Knowledge of any other partner who
reasonably could and should have EFFECTS OF CONVEYANCE OF REAL PROPERTY BELONGING
communicated it to the acting partner TO PARTNERSHIP
Partners and the partnership are solidary liable to 3rd Title in partnership name, Conveyance passes title
persons for the partner's tort or breach of trust Conveyance in partnership name but partnership can
Liability of incoming partner is limited to: recover if:
His share in the partnership property for Conveyance was not in
existing obligations the usual way of
His separate property for subsequent business, or
obligations Buyer had knowledge of
Creditors of partnership preferred in partnership lack of authority
property & may attach partner's share in Title in partnership name, Conveyance does not
partnership assets Conveyance in partner's name pass title but only
Every partner is an agent of the partnership equitable interest,
unless:

CIVIL LAW REVIEWER Page 215 of 338

 Conveyance was not in WINDING UP—process of settling the business or
the usual way of partnership affairs after dissolution
business, or
2. Buyer had TERMINATION—that point when all partnership affairs are
knowledge of lack of completely wound up and finally settled. It signifies the end
authority of the partnership life.
Title in name of 1/ more Conveyance passes title
partners, Conveyance in name if but partnership can CAUSES OF DISSOLUTION:
partner/partners in whose name recover if: 1) Without violation of the agreement between the partners
title stands Conveyance was not in  By termination of the definite term/ particular
the usual way of undertaking specified in the agreement
business, or  By the express will of any partner, who must act in
Buyer had knowledge of good faith, when no definite term or particular
lack of authority undertaking is specified
Title in name of 1/more/all Conveyance will only  By the express will of all the partners who have not
partners or 3rd person in trust pass equitable interest assigned their interest/ charged them for their
for partnership, Conveyance separate debts, either before or after the
executed in partnership name if termination of any specified term or particular
in name of partners undertaking
Title in name of all partners, Conveyance will pass  By the bona fide expulsion of any partner from the
Conveyance in name of all title business in accordance with power conferred by the
partners agreement
B) In contravention of the agreement between the partners,
where the circumstances do not permit a dissolution under
ASSIGNMENT OF INTEREST IN PARTNERSHIP
any other provision of this article, by the express will of any
Assignment is subject to three (3) conditions:
made in good faith partner at any time
for fair consideration
C) By any event which makes it unlawful for business to be
after a fair and complete disclosure of all important
carried on/for the members to carry it on for the partnership
information as to its value
Loss of specific thing promised by partner before its delivery
RIGHTS OF AN ASSIGNEE:
D) Death of any partner
Get whatever assignor-partner would have obtained
Avail usual remedies in case of fraud in the management E) Insolvency of a partner/partnership
Ask for annulment of contract of assignment if he was
induced to join through any of the vices of consent F) Civil interdiction of any partner
Demand an accounting (only in case of dissolution)
G) Decree of court under art. 1831
4) RESPONSIBILITY OF PARTNERSHIP TO PARTNERS
To refund the amounts disbursed by partner in behalf of the GROUNDS FOR DISSOLUTION BY DECREE OF COURT (Art.
partnership + corresponding interest from the time the 1831)
expenses are made (loans and advances made by a partner  Partner declared insane in any judicial proceeding
to the partnership aside from capital contribution) or shown to be of unsound mind
To answer for obligations partner may have contracted in  Incapacity of partner to perform his part of the
good faith in the interest of the partnership business partnership contract
To answer for risks in consequence of its management
 Partner guilty of conduct prejudicial to business of
partnership
E. DISSOLUTION AND WINDING UP
 Willful or persistent breach of partnership
agreement or conduct which makes it reasonably
DISSOLUTION—change in the relation of the partners caused
impracticable to carry on partnership with him
by any partner ceasing to be associated in the carrying on of
 Business can only be carried on at a loss
the business; partnership is not terminated but continues
 Other circumstances which render dissolution
until the winding up of partnership affairs is completed
equitable

CIVIL LAW REVIEWER Page 216 of 338

  Upon application by purchaser of partner's interest:
o After termination of specified
term/particular undertaking
o Anytime if partnership at will when
interest was assigned/charging order
issued
1) EFFECTS OF DISSOLUTION
AUTHORITY OF PARTNER TO BIND PARTNERSHIP
GENERAL RULE: Authority of partners to bind partnership is
terminated
EXCEPTIONS
1. To wind up partnership affairs
2. Complete transactions not finished
Qualifications:
With respect to partners—
Authority of partners to bind partnership by new contract is
immediately terminated when dissolution is not due to ACT,
DEATH or INSOLVENCY (ADI) of a partner (art 1833);
If due to ADI, partners are liable as if partnership not
dissolved, when the ff. concur:
If cause is ACT of partner, acting partner
must have knowledge of such dissolution
If cause is DEATH or INSOLVENCY, acting
partner must have knowledge/ notice
With respect to persons not partners (Art. 1834)—
Partner continues to bind partnership even after dissolution
in ff. cases:
Transactions in connection to winding up partnership
affairs/completing transactions unfinished
Transactions which would bind partnership if not dissolved,
when the other party/obligee:
Situation 1 -
Had extended credit to partnership prior to dissolution &
Had no knowledge/notice of dissolution, or
Situation 2 -
i. Did not extend credit to partnership
Had known partnership prior to dissolution
Had no knowledge/notice of dissolution/fact of dissolution
not advertised in a newspaper of general circulation in the
place where partnership is regularly carried on
Partner cannot bind the partnership anymore after
dissolution:
Where dissolution is due to unlawfulness to carry on with
business (except: winding up of partnership affairs)
Where partner has become insolvent
Where partner unauthorized to wind up partnership affairs,
except by transaction with one who:
CIVIL LAW REVIEWER
Situation 1 -
i. Had extended credit to partnership prior to dissolution
&
ii. Had no knowledge/notice of dissolution, or
Situation 2 -
Did not extend credit to partnership prior to dissolution
Had known partnership prior to dissolution
Had no knowledge/notice of dissolution/fact of dissolution
not advertised in a newspaper of general circulation in the
place where partnership is regularly carried on
2) DISCHARGE OF LIABILITY
Dissolution does not discharge existing liability of partner,
except by agreement between:
Partner and himself
person/partnership continuing the business
partnership creditors
Rights of partner where dissolution not in contravention of
agreement:
Apply partnership property to discharge liabilities of
partnership
Apply surplus, if any to pay in cash the net amount owed
to partners
Rights of partner where dissolution in contravention of
agreement:
Partner who did not cause dissolution wrongfully:
Apply partnership property to discharge liabilities of
partnership
Apply surplus, if any to pay in cash the net amount owed to
partners
Indemnity for damages caused by partner guilty of wrongful
dissolution
Continue business in same name during agreed term
Posses partnership property if business is continued
Partner who wrongly caused dissolution:
If business not continued by others - apply partnership
property to discharge liabilities of partnership & receive in
cash his share of surplus less damages caused by his wrongful
dissolution
If business continued by others - have the value of his
interest at time of dissolution ascertained and paid in
cash/secured by bond & be released from all existing/future
partnership liabilities
Rights of injured partner where partnership contract is
rescinded on ground of fraud/misrepresentation by 1 party:
1. Right to lien on surplus of partnership property after
satisfying partnership liabilities
2. Right to subrogation in place of creditors after payment
of partnership liabilities
Page 217 of 338
3. Right of indemnification by guilty partner against all resources. It can only pay out what it has for its total
partnership debts & liabilities 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
3) SETTLEMENT OF ACCOUNTS BETWEEN PARTNERS becomes available for the payment of partners’ shares.
Assets of the partnership: Villareal v. Ramirez, 406 SCRA 145
Partnership property (including goodwill)
Contributions of the partners F. LIMITED PARTNERSHIP
Order of Application of Assets:
Partnership creditors Characteristics:
Partners as creditors 1. Formed by compliance with statutory requirements
Partners as investors—return of capital contribution 2. One or more general partners control the business
Partners as investors—share of profits if any 3. One or more general partners contribute to the capital
and share in the profits but do not participate in the
4) WHEN BUSINESS OF DISSOLVED PARTNERSHIP IS management of the business and are not personally
CONTINUED liable for partnership obligations beyond their capital
Creditors of old partnership are also creditors of the contributions
new partnership which continues the business of 4. May ask for the return of their capital contributions
the old one w/o liquidation of the partnership under conditions prescribed by law
affairs 5. Partnership debts are paid out of common fund and the
Creditors have an equitable lien on the individual properties of general partners
consideration paid to the retiring /deceased partner
by the purchaser when retiring/deceased partner
sold his interest w/o final settlement with creditors DIFFERENCES BETWEEN GENERAL AND LIMITED
Rights if retiring/estate of deceased partner: PARTNER/PARTNERSHIP
To have the value of his interest ascertained as
of the date of dissolution GENERAL LIMITED
To receive as ordinary creditor the value of his Personally liable for Liability extends only to
share in the dissolved partnership with interest partnership obligations his capital contributions
or profits attributable to use of his right, at his When manner of mgt. not No participation in
option agreed upon, all general management
partners have an equal right
Persons Authorized to Wind Up in the mgt. of the business
Partners designated by the agreement Contribute cash, property or Contribute cash or
In absence of agreement, all partners who have not industry property only, not
wrongfully dissolved the partnership industry
Legal representative of last surviving partner Proper party to proceedings Not proper party to
by/against partnership proceedings by/against
A partner’s share cannot be returned without first partnership
dissolving and liquidating the business for the Interest not assignable w/o Interest is freely
partnership’s outside creditors have preference over the consent of other partners assignable
enterprise’s assets. The firm’s property cannot be Name may appear in firm Name must appear in
diminished to their prejudice. Magdusa v. Albaran, 115 name firm name
Phil. 511 (1962) Prohibition against engaging No prohibition against
in business engaging in business
Due to its separate juridical personality from the Retirement, death, Does not have same
individual partners, it is thus the partnership – having insolvency, insanity of general effect; rights transferred
been the recipient of the capital contributions – which partner dissolves partnership to legal representative
must refund the equity of retiring partners. Such duty
does not pertain to partners who managed the business. REQUIREMENTS FOR FORMATION OF LIMITED
The amount to be refunded, supra, consistent with the PARTNERSHIP:
partnership being a separate and distinct entity, must Certificate of articles of the limited partnership must state
necessarily be limited to what to the firm’s total the ff. matters:

CIVIL LAW REVIEWER Page 218 of 338

1. Name of partnership + word "ltd."
2. Character of business
3. Location of principal place of business
4. Name/place of residence of members
5. Term for partnership is to exist
6. Amount of cash/value of property contributed
7. Additional contributions
8. Time agreed upon to return contribution of limited
partner
9. Sharing of profits/other compensation
Right of limited partner (if given) to substitute an assignee
Right to admit additional partners
Right of limited partners (if given) to priority for
contributions
Right of remaining gen partners (if given) or continue
business in case of death, insanity, retirement, civil
interdiction, insolvency
Right of limited partner (if given) to demand/receive
property/cash in return for contribution
Certificate must be filed with the SEC
To validly form a limited partnership, all that is required is
SUBSTANTIAL COMPLIANCE IN GOOD FAITH with all the
requirements under Art. 1844 (i.e. signing and swearing to a
certificate, affixing the word “Limited” to the partnership
name, etc.). If no substantial compliance, then the firm
becomes a general partnership to third persons (but as
amongst the partners, still limited).
WHEN GENERAL PARTNER NEEDS CONSENT/RATIFICATION
OF ALL LIMITED PARTNERS:
1. Do any act in contravention of the certificate
2. Do any act which would make it impossible to carry on
the ordinary business of the partnership
3. Confess judgment against partnership
4. Possess partnership property/assign rights in specific
partnership property other than for partnership
purposes
5. Admit person as general partner
6. Admit person as limited partner - unless authorized in
certificate
7. Continue business with partnership property on death,
retirement, civil interdiction, insanity or insolvency of
gen partner unless authorized in certificate
SPECIFIC RIGHTS OF LIMITED PARTNERS:
1. Right to have partnership books kept at principal place
of business
2. Right to inspect/copy books at reasonable hour
3. Right to have on demand true and full info of all things
affecting partnership
4. Right to have formal account of partnership affairs
whenever circumstances render it just and reasonable
CIVIL LAW REVIEWER
5. Right to ask for dissolution and winding up by decree of
court
6. Right to receive share of profits/other compensation by
way of income
7. Right to receive return of contributions provided the
partnership assets are in excess of all its liabilities
REQUISITES FOR RETURN OF CONTRIBUTION OF LIMITED
PARTNER:
1. All liabilities of partnership have been paid/if not yet
paid, at least sufficient to cover them
2. Consent of all members has been obtained
3. Certificate is cancelled/amended as to set forth
withdrawal /reduction of contribution
LIABILITIES OF A LIMITED PARTNER
To the partnership
For the difference between his contribution as actually
made and that stated in the certificate as having been
made, and
For any unpaid contribution which he agreed in the
certificate to make in the future time
As a trustee for the partnership
For the specific property stated in the certificate as
contributed by him but which he had not contributed;
For the specific property of the partnership which had
been wrongfully returned to him; and
Money or other property wrongfully paid or conveyed
to him on account of his contribution.
DISSOLUTION OF LIMITED PARTNERSHIP
(Priority in Distribution of Assets):
Those due to creditors, including limited partners
Those due to limited partners in respect of their share in
profits/compensation
Those due to limited partners of return of capital contributed
Those due to general partner other than capital & profits
Those due to general partner in respect to profits
Those due to general partner for return of capital
contributed
AMENDMENT OF CERTIFICATE OF PARTNERSHIP
1. In case any of the ten enumerated changes and
circumstances in Art. 1864, par. 2 are present.
2. It must be signed and sworn to by all the members
including the new members if some are added; in case of
substitution, the assigning limited partner must also sign.
3. The cancellation or amendment must be recorded in the
SEC.
Any person who suffers loss by reliance on false
statement in certificate may hold liable for damages any
party to the certificate who knew the statement to be
Page 219 of 338
 false at the time the latter signed the certificate or came
to know such falsity subsequently but within sufficient
time before reliance to enable such party to cancel or
amend the certificate or file the proper petition for such
purpose (under Art. 1865). (Art. 1847; Walraven v.
Ramsay, 55 N.W.d 853).

A general partner’s DIIC (death, insolvency, insanity, or

civil interdiction) dissolves the partnership unless the
business is continued by the surviving general partners
under a right stated in the certificate or with their
common (i.e. all) consent (Art. 1860). Still, even if
allowed under the certificate or consented to by all,
there must be an amendment further to Arts. 1864 and
1865 (cf. Bautista). Otherwise, limited partners will not
be able to avail of the protection of the law as regards
liability. The partnership will be considered general
Lowe v. Arizona Power & Light Co., 427 P. d. 366

A limited partner shall not become liable as a general

partner, unless in addition to the exercise of his rights
and powers as a limited one, he takes part in the
control (and management) of the business (Art. 1848;
Holzman v. Escamilla, 195 P. d. 833). Actually, a person
may be general and limited at the same time provided
this is stated in the certificate. He shall have all the
powers, rights, and restrictions of a general partner; but
with respect to his capital contribution, his right against
the other members of the firm would be that of a
limited partner (Art. 1853).

A limited partner may also loan money to and

transact other business with the firm. BUT, he
cannot: (1) receive or hold as collateral any
partnership property; or (2) receive from a general
partner or from the firm any payment, conveyance,
release if at that time assets of the firm are not
sufficient to discharge liabilities to outside
creditors; Art. 1854: any violation would be fraud
on such creditors.

The remedy of a general partner who suffers from or faces

interference from his limited partners is dissolution. Weil v.
Diversified Properties, 319 F. Supp

CIVIL LAW REVIEWER Page 220 of 338

V. AGENCY
=================================
TOPICS UNDER THE SYLLABUS
A. DEFINITION OF AGENCY
B. POWERS (ARTS. 1877-1878
C. EXPRESS V. IMPLIED AGENCY
D. AGENCY BY ESTOPPEL
E. GENERAL VS. SPECIAL AGENCY
F. AGENCY COUCHED IN GENERAL TERMS
G. AGENCY REQUIRING SPECIAL POWER OF
ATTORNEY
H. AGENCY BY OPERATION OF LAW
I. RIGHTS AND OBLIGATIONS OF PRINCIPAL
J. MODES OF EXTINGUISHMENT
=================================
A. DEFINITION OF AGENCY
CONTRACT OF AGENCY is a contract whereby a person binds
himself to render some service or to do something in
representation or on behalf of another, with the consent or
authority of the latter.
Characteristics:
Consensual: perfected by mere consent;
Nominate: it has its own name;
Preparatory: entered into as means to enter into other
contracts
Principal: does not depend on another contract for its
existence and validity;
Unilateral/Bilaterial:
Unilateral: if contract is gratuitous or it creates obligations
for only one party (i.e. the agent)
Bilateral: if contract is for compensation or gives rise to
reciprocal rights and obligations
Nature: Since it is a contract, there must be a meeting of the
minds as to consent, object, and cause.
Exception to contractual nature:
When the agency is created by operation of law
Ex: Agency by Estoppel
Basis: Representation
The acts of the agent on behalf of the principal within the
scope of his authority produce the same legal and binding
effects as if they were personally done by the principal.
Hence, the distinguishing features of agency are its
representative character & its derivative authority.
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Purpose: Extend the personality of the principal through the
facility of the agent
Capacity of the Parties:
Principal
He may be a natural or a juridical person
He must be capacitated. General RULE: If a person is
capacitated to act for himself or his own right, he can act
through an agent.
The agent is not liable where he was ignorant of the
principal’s incapacity
Agent
Insofar as third persons are concerned, it is enough that the
principal is capacitated.
Insofar as his obligations to his principal are concerned, the
agent must be able to bind himself.
As an agent, some mental capacity is necessary, therefore,
those who are absolutely incapacitated (ex. Insane persons)
cannot be agents.
ESSENTIAL ELEMENTS
Consent of the parties to establish the relationship;
Object of the contract is the execution of a juridical act in
relation to third persons;
Agent acts as a representative and not for himself; and
Agent acts within the scope of his authority.
An illegal termination of agency does not justify
reinstatement of the agent as such. The agency cannot be
compelled by the courts to be reinstated because such
relationship can only be given effect with the consent of the
principal. Orient Air Services v. CA, G.R. No. 76931, May 29,
1991
Acts That Cannot Be Done By Agent:
Personal Acts – ex. making of a will
Criminal or Illegal Acts
Nature of Relationship between Principal and Agent:
Fiduciary  based on trust & confidence
Agent is estopped from asserting interest adverse to his
principal’s
Agent must not act as an adverse party
Agent must not act for an adverse party
Agent must not use or disclose secret information
Agent must give notice of material facts
GENERAL RULE: Knowledge of the agent is imputed to the
principal even though the agent never communicated it
to his principal
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EXCEPTIONS:
Where the interests of the agent are adverse to those of the
principal;
Agent Acts in Bad Faith or Where the person claiming the
benefit of the rule colludes with the agent to defraud the
principal.
B. POWERS (ARTS. 1877-1878)
Special powers of attorney are necessary in the following
cases: (PECWAM-LLB-BOCARO)
To make such payments as are not usually considered as acts
of administration;
To effect novations which put an end to obligations already
in existence at the time the agency was constituted;
To compromise, to submit questions to arbitration, to
renounce the right to appeal from a judgment, to waive
objections to the venue of an action or to abandon a
prescription already acquired;
To waive any obligation gratuitously;
To enter into any contract by which the ownership of an
immovable is transmitted or acquired either gratuitously
or for a valuable consideration;
To make gifts, except customary ones for charity or those
made to employees in the business managed by the
agent;
To loan or borrow money, unless the latter act be urgent and
indispensable for the preservation of the things which
are under administration;
To lease any real property to another person for more than
one year;
To bind the principal to render some service without
compensation;
To bind the principal in a contract of partnership;
To obligate the principal as a guarantor or surety;
To create or convey real rights over immovable property;
To accept or repudiate an inheritance;
To ratify or recognize obligations contracted before the
agency;
Any other act of strict dominion.
A special power to sell excludes the power to mortgage;
and a special power to mortgage does not include the
power to sell.
Special Power of Attorney - an instrument in writing by
which one person, as principal, appoints another as his agent
and confers upon him the authority to perform certain
specified acts or kinds of acts on behalf of the principal.
The special power of attorney can be included in the general
power when it specifies therein the act or transaction for
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which the special power is required.
Powers Not Included in the Power to Mortgage
To sell
To execute a second mortgage
To mortgage for the agent’s or any 3rd persons’
benefit, UNLESS clearly indicated
Powers Not Included in the Power to Compromise
- Submission to Arbitration
Rationale:
A principal may authorize his agent to compromise
because of absolute confidence in the latter’s judgment
and discretion to protect the former’s rights and obtain
for him the best bargain in the transaction.
If the transaction would be left in the hands of an
arbitrator, said arbitrator may not enjoy the trust of the
principal.
The agent must act within the scope of his authority. He may
do such acts as may be conducive to the accomplishment of
the purpose of the agency.
Requisites for Principal to be Bound by Act of Agent:
The agent must act in behalf of the principal
The agent must act within the scope of his authority
When a principal NOT BOUND by act of agent:
The latter acts without or beyond the scope of his
authority in the former’s name
Exceptions:
Where the acts of the principal have contributed to
deceive a 3rd person in good faith;
Where the limitations upon the power created by
the principal could not have been known by the 3rd
person;
Where the principal has placed in the hands of the
agent instruments signed by him in blank;
Where the principal has ratified the acts of the
agent
The latter acts within the scope of his authority but in
his own name, EXCEPT when the transaction involves
things belonging to the principal
NOTE: The agent is not deemed to have exceeded the limits
of his authority should he perform the agency in a manner
more advantageous to the principal than that indicated by
him, since he is authorized to do such acts as may be
conducive to the accomplishment of the purpose of the
agency.
The powers of an agent are particularly broad in the
case of one acting as a general agent or manager; such a
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 position presupposes a degree of confidence reposed of the sale
and investiture with liberal powers for the exercise of Agent can return the object Buyer, as a general rule,
judgment and discretion in transactions and concerns in case he is unable to sell cannot return the object sold
which are incidental or appurtenant to the business the same to a third person
entrusted to his care and management. In the absence Agent in dealing with the Buyer can deal with the thing
of an agreement to the contrary, a managing agent may thing received is bound to as he pleases, being the
enter into contracts that he deems reasonably necessary act according to the owner
or requisite for the protection of the interests of his instructions of his principal
principal entrusted to his management. Eurotech v. Distinction between Agent & Contractor
Cuizon, G.R. No. 167552, April 23, 2007 AGENT INDEPENDENT CONTRACTOR
Represents his principal Employed by the employer
Distinction between Agency & Lease of Work/Service Acts under the principal’s Acts according to his own
AGENCY LEASE OF WORK/SERVICE control and instruction method
Representation Employment Principal is liable for torts Employer not liable for torts
Agent exercises Lessor ordinarily performs committed by the agent committed by the independent
discretionary powers only ministerial functions within the scope of his contractor.
3 persons are involved: 2 persons are involved: authority
principal, agent and the 3rd lessor and lessee Distinction between Agency and Partnership
person with whom the agent AGENCY PARTNERSHIP
contracts An agent must submit to the A co-partner is not subject to
Relates to commercial or Relates more to the matters principal’s right to control co-partner’s right to control,
business transactions of mere manual or unless there is an agreement
mechanical execution to that effect
The agent assumes no The partner binds not only
Distinction between Agency & Guardianship personal liability where he the firm members but
AGENCY GUARDIANSHIP acts within the scope of his himself as well
Agent represents a A guardian represents an authority
capacitated person incapacitated person. The agent takes his agreed The profits belong to all the
Agent is appointed by the Guardian is appointed by share of profits not as owner partners as common
principal and can be the court and stands in loco but as an agreed measure of proprietors in agreed
removed by the latter. parentis. compensation for his proportions
Agent is subject to the Guardian is not subject to services
directions of the principal. the directions of the ward
but must act for the benefit C. EXPRESS VS. IMPLIED AGENCY
of the latter
Agent can make the principal Guardian has no power to Express – agent has been actually authorized by the
personally liable. impose personal liability on principal, either orally or in writing
the ward. Implied – agency is implied from the acts of the principal,
from his silence, or lack of action, or his failure to
Distinction between Agency & Lease of Property repudiate the agency knowing that another person is
AGENCY LEASE OF PROPERTY acting on his behalf without authority, or from the
Agent is controlled by the Lessee is not controlled by acts of the agent which carry out the agency,
principal. the lessor.
Agency may involve things Lease of property involves OTHER CLASSIFICATIONS OF AGENCY
other than property. property. As to character
Agent can bind the principal. Lessee cannot bind the Gratuitous – agent receives no compensation for his
lessor. services
Onerous – agent receives compensation for his services
Distinction between Agency to Sell & Sale As to extent of business of the principal
AGENCY TO SELL SALE General – agency comprises all the business of the
Agent receives the goods as Buyer receives the goods as principal
the principal’s goods owner Special – agency comprises one or more specific
Agent delivers the proceeds Buyer pays the price transactions

CIVIL LAW REVIEWER Page 223 of 338

As to authority conferred
Couched in general terms – only acts of administration
Couched in specific terms – only the performance of a
specific act/s
As to nature and effects
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.
Forms of Agency
GENERAL RULE: Appointment of an agent may be oral or
written; no formal requirements
EXCEPTION: When the law requires a specific form (ex.
agent’s sale of real property or any interest
therein)
Agency is presumed to be for compensation, unless
there is proof to the contrary.
The agent does not have to prove that the agency is for
compensation.
But the prima facie presumption that the agency is for a
compensation may be contradicted by contrary
evidence
Broker - negotiate contracts relative to property in behalf of
others and for a compensation/fee
When Broker Entitled to Compensation:
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
However, a broker is never entitled to commission for
unsuccessful efforts.
The broker should be paid his commission where he is
the efficient procuring cause in bringing the sale.
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. Manotoc Brothers v. CA, 221 SCRA 224 (1993)
LAW ON DOUBLE AGENCY
Disapproved by law for being against public policy and sound
morality EXCEPT where the agent acted with full
knowledge and consent of the principals
Right of agent to compensation in case of double agency:
With knowledge of both principals - recovery can be had
from both principals
Without the knowledge of both principals - the agent can
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recover from neither
With knowledge of one principal - as to the principal who
knew of that fact and as to the agent, they are in pari delicto
and the courts shall leave them as they were, the contract
between them being void as against public policy and good
morals
ACCEPTANCE BY AGENT
Forms of Acceptance by Agent:
Express - when it is oral or written
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
Between persons who are present – implied acceptance if
the principal delivers his power of attorney to the agent and
the latter receives it without any objection
Between persons who are absent – acceptance not deemed
implied from the silence of the agent.
EXCEPTIONS:
When the principal transmits his power of attorney to the
agent who receives it without any objection
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
What is meant by “present”?
Generally, “face to face”, but includes people conversing
directly through technology (ex. over the telephone).
Power of Attorney - Instrument in writing by which one
person, as principal, appoints another as his agent and
confers upon him the authority to perform certain specified
acts or kinds of acts on behalf of the principal; primary
purpose is to evidence agent’s authority to third parties
within whom the agent deals
Construction of Power of Attorney:
GENERAL RULE: Strictly construed and strictly pursued; held
to grant only those specified powers
EXCEPTION: when strict construction will destroy the very
purpose of the power
Ways of Giving Notice of Agency & Its Effect:
By special information - the person appointed as agent is
considered as such with respect to the person to whom it
was given.
By public advertisement - the agent is considered as such
with regard to any person
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How do you revoke an agency? BASIS GENERAL AGENCT SPECIAL AGENT
In the same manner as it was constituted. However, All acts connected Specific acts in
constitution by Special Information may be revoked by notice Scope of with the business or pursuance of
in a daily newspaper, provided it can be proven that 3 rd Authority employment in particular
persons in question read the revocation which he is engaged instructions or with
restrictions
D. AGENCY BY ESTOPPEL necessarily implied
There is really no agency at all, but the alleged agent seemed from the act to be
to have apparent or ostensible, although not real, authority done
to represent another. Nature of Involves continuity No continuity of
Service of service service
Distinction between Agency by Estoppel & Implied Agency Authorized
BASIS AGENCY BY IMPLIED AGENCY May bind his Can not bind his
ESTOPPEL principal by an act principal in a manner
Existence of There is an actual Extent to within the scope of beyond or outside
No agency at all
actual agency agency Which Agent his authority the specific acts
Can be invoked only May Bind the although it may be which he is
by a 3rd person who Principal contrary to the authorized to
Reliance by in good faith relied latter’s special perform
Such reliance is not
3rd persons on the conduct of instructions
needed, since the
the principal in Apparent authority Duty imposed upon
agent is a real agent
holding the agent does not terminate the third party to
out as being by the mere inquire makes
authorized Termination revocation of his termination of the
An agent by estoppel of Authority authority without relationship as
has none of the notice to the third between the
An agent by implied
rights of an agent, party principal and agent
appointment has all
except where the effective as to such
the rights and
principal’s conduct third party unless
liabilities of an
are such that the the agency has been
agent, i.e. has actual
agent reasonably entrusted for the
Nature of authority to act on
believed that the purpose of
Authority behalf of the
principal intended contracting with
principal
him to act as an such third party
agent
Construction Merely advisory in Strictly construed as
An agency couched in general terms comprises only acts of of Principal’s nature they limit the agent’s
administration, even if the principal should state that he Instructions authority
withholds no power or that the agent may execute such acts
as he may consider appropriate, or even though the agency E. AGENCY COUCHED IN GENERAL TERMS
should authorize a general and unlimited management.
Agency Couched in General Terms: Covers only MERE ACTS
Will an authority embodied in a letter be sufficient? OF ADMINISTRATION even if:
Yes. Jimenez v. Rabot, 38 Phil 387 (1918) The principal should state that he withholds no power
The agent may execute such acts as he may consider
Attorney-In-Fact appropriate
One who is given authority by his principal to do a The agency should authorize a general and unlimited
particular act not of a legal character management
The term is, in loose language, used to include agents of
all kinds, but in its strict sense, it means an agent having How are contracts of agency construed?
a special authority created by a deed. Contracts of agency, as well as general powers of attorney,
must be interpreted in accordance with the language used by
V. GENERAL VS. SPECIAL AGENCY the parties.

CIVIL LAW REVIEWER Page 225 of 338


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,
surroundings and relations of the parties. The intention of
the parties must be sustained rather than defeated.
If the contract is open to 2 constructions, one of which would
uphold the intention while the other would overthrow it, the
former is to be chosen.
F. AGENCY REQUIRING SPECIAL POWER OF ATTORNEY
Special powers of attorney are necessary in the following
cases: (PECWAM-LLB-BOCARO)
To make such payments as are not usually considered as acts
of administration;
To effect novations which put an end to obligations already
in existence at the time the agency was constituted;
To compromise, to submit questions to arbitration, to
renounce the right to appeal from a judgment, to waive
objections to the venue of an action or to abandon a
prescription already acquired;
To waive any obligation gratuitously;
To enter into any contract by which the ownership of an
immovable is transmitted or acquired either gratuitously
or for a valuable consideration;
To make gifts, except customary ones for charity or those
made to employees in the business managed by the
agent;
To loan or borrow money, unless the latter act be urgent and
indispensable for the preservation of the things which
are under administration;
To lease any real property to another person for more than
one year;
To bind the principal to render some service without
compensation;
To bind the principal in a contract of partnership;
To obligate the principal as a guarantor or surety;
To create or convey real rights over immovable property;
To accept or repudiate an inheritance;
To ratify or recognize obligations contracted before the
agency;
Any other act of strict dominion.
A special power to sell excludes the power to mortgage;
and a special power to mortgage does not include the
power to sell.
Special Power of Attorney - an instrument in writing by
which one person, as principal, appoints another as his agent
CIVIL LAW REVIEWER
and confers upon him the authority to perform certain
specified acts or kinds of acts on behalf of the principal.
The special power of attorney can be included in the general
power when it specifies therein the act or transaction for
which the special power is required.
Powers Not Included in the Power to Mortgage
To sell
To execute a second mortgage
To mortgage for the agent’s or any 3rd persons’
benefit, UNLESS clearly indicated
Powers Not Included in the Power to Compromise
- Submission to Arbitration
Rationale:
A principal may authorize his agent to compromise
because of absolute confidence in the latter’s judgment
and discretion to protect the former’s rights and obtain
for him the best bargain in the transaction.
If the transaction would be left in the hands of an
arbitrator, said arbitrator may not enjoy the trust of the
principal.
The agent must act within the scope of his authority. He may
do such acts as may be conducive to the accomplishment of
the purpose of the agency.
Requisites for Principal to be Bound by Act of Agent:
The agent must act in behalf of the principal
The agent must act within the scope of his authority
When a principal NOT BOUND by act of agent:
The latter acts without or beyond the scope of his
authority in the former’s name
Exceptions:
Where the acts of the principal have contributed to
deceive a 3rd person in good faith;
Where the limitations upon the power created by
the principal could not have been known by the 3rd
person;
Where the principal has placed in the hands of the
agent instruments signed by him in blank;
Where the principal has ratified the acts of the
agent
The latter acts within the scope of his authority but in
his own name, EXCEPT when the transaction involves
things belonging to the principal
NOTE: The agent is not deemed to have exceeded the limits
of his authority should he perform the agency in a manner
more advantageous to the principal than that indicated by
him, since he is authorized to do such acts as may be
Page 226 of 338
conducive to the accomplishment of the purpose of the
agency.
The powers of an agent are particularly broad in the
case of one acting as a general agent or manager; such a
position presupposes a degree of confidence reposed
and investiture with liberal powers for the exercise of
judgment and discretion in transactions and concerns
which are incidental or appurtenant to the business
entrusted to his care and management. In the absence
of an agreement to the contrary, a managing agent may
enter into contracts that he deems reasonably necessary
or requisite for the protection of the interests of his
principal entrusted to his management. Eurotech v.
Cuizon, G.R. No. 167552, April 23, 2007
G. RIGHTS AND OBLIGATIONS OF PRINCIPAL
OBLIGATIONS OF THE PRINCIPAL
Obligations of the Principal to the Agent: (CARIP)
Comply with all the obligations agent contracted in
representation of the principal
Advance sums necessary for the execution of the agency,
when agent so requests; liable for reimbursement
regardless of the undertaking’s success whenever agent
had advanced & has no fault; includes interest
Reimburse the agent for all advances made by him provided
the agent is free from fault
Indemnify the agent for all the damages which the execution
of the agency may have caused the latter without fault
or negligence on his part
Pay the agent the compensation agreed upon or the
reasonable value of the latter’s services
Liability of 3rd persons to the Principal
In Contract – a 3rd person is liable to the principal upon
contracts entered into by his agent, as if the contract
has been entered into by the principal.
In Tort – the 3rd person’s tort liability to the principal, insofar
as the agent is involved in the tort, arises in 3 situations:
Where the 3rd person damages or injures property or
interest of the principal in the possession of the
agent
Where the 3rd person colludes with the agent to
injure/defraud the principal
Where the 3rd person induces the agent to violate his
contract with the principal to betray the trust
reposed upon him by the principal.
Requisites for solidary liability of principals
There are 2 or more principals
The principals have all concurred in the appointment of the
same agent
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The agent is appointed for a common transaction or
undertaking
NOTE: The rule in Art. 1915 applies even when the
appointments were made by the principals in separate acts,
provided that they are for the same transaction. The
solidarity arises from the common interest of the principals
and not from the act of constituting the agency.
Rule where 2 persons contract separately with agent and
principal
Two persons may contract separately with the agent and the
principal with regard to the same thing. If the two contracts
are incompatible with each other, the one of prior date shall
be preferred. This is subject, however, to the rules on Double
Sales under Article 1544 of the Civil Code (i.e. for movables:
first in possession, first in right; for immovables: first to
register in good faith, first in right; absent any inscription:
first in possession or party who presents oldest title acquires
ownership).
Agent’s Right of Retention:
Specific (only for those goods connected with the
agency) and
Until the principal effects the reimbursement and pays
the indemnity
PRINCIPAL’S LIABILITIES FOR EXPENSES
GENERAL RULE: Principal is liable for the expenses incurred
by the agent
EXCEPTIONS: (AFUS)
If the agent acted in contravention of the principal's
instructions, unless the latter should wish to avail
himself of the benefits derived from the contract
When the expenses were due to the fault of the agent
When the agent incurred them with knowledge that an
unfavorable result would ensue, if the principal was
not aware thereof
When it was stipulated that the expenses would be
borne by the agent, or that the latter would be
allowed only a certain sum
Who can be estopped to deny agency?
Estoppel of Agent- one professing to act as agent is
estopped to deny his agency both as against his
asserted principal and the third persons interested
in the transaction in which he is engaged
Estoppel by the Principal
As to agent – one knowing another is acting as his agent
and fails to repudiate his acts, or accept the
benefits of them, will be estopped to deny the
agency as against such other
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 As to sub-agent – for the principal to be estopped from Answer for damages which through his non-
denying his liability to a third person, he must have performance the principal may suffer
known or be charged with knowledge of the Finish the business already begun on the death of the
transaction and the terms of the agreement principal should delay entail any danger (exception to
between the agent and sub-agent the rule that death extinguishes agency)
As to third persons – one who knows that another is Observe the diligence of a good father of a family in the
acting as his agent or permitted another to appear custody and preservation of the goods forwarded to
as his agent, to the injury of third persons who have him by the owner in case he declines an agency, until
dealt with the apparent agent as such in good faith an agent is appointed
and in the exercise of reasonable prudence, is Advance necessary funds if there be a stipulation to do
estopped to deny the agency so (except when the principal is insolvent)
Estoppel of Third Persons – a third person, having dealt Act in accordance with the instructions of the principal,
with one as an agent may be estopped to deny the and in default thereof, to do all that a good father of a
agency as against the principal, agent or 3rd persons family would do
in interest Exceptions (to the rule that the agent must not depart
Estoppel of the Government - government neither from the instructions of principal): (SAI)
estopped by the mistake/error of its agents; may be There’s a sudden emergency
estopped through affirmative acts of its officers If the instructions are ambiguous
acting within the scope of their authority If the departure is so insubstantial that it does
not affect the result and the principal suffers no
Distinction between Ratification and Estoppel damage thereby
RATIFICATION ESTOPPEL
Rests on intention Rests on prejudice Not to carry out the agency if it would manifestly result in
Affects the entire transaction Affects only relevant parts of loss or damage to the principal
from the beginning the transaction Answer for damages if there being a conflict between his &
Substance of ratification is Substance of estoppel is the his principal’s interests, he prefers his own
confirmation of an principal’s inducement to Not to loan to himself if he has been authorized to loan
authorized act or conduct another to act to his money at interest
after it has been done prejudice Render an account of his transactions and deliver to the
principal whatever he may have received by virtue of
Distinction between Apparent Authority & Authority by the agency (If the agent fails to deliver and instead
Estoppel converts or appropriates for his own use the money or
APPARENT AUTHORITY AUTHORITY BY ESTOPPEL property belonging to his principal, he may be charged
Though not actually granted, Where the principal, by his with ESTAFA.)
principal knowingly negligence, permits his agent Be responsible in certain cases for the act of the substitute
permits/holds out the agent to exercise powers not appointed by him
as possessing the necessary granted to him, even though Pay interest on funds he has applied to his own use
powers to act in a certain the principal may have no
way notice or knowledge of the Distinctions between Authority and the Principal’s
conduct of the agent Instructions
AUTHORITY INSTRUCTIONS
OBLIGATIONS OF THE AGENT Sum total of the powers Contemplates only a private
committed to the agent by rule of guidance to the
OBLIGATIONS OF THE AGENT TO THE PRINCIPAL the principal agent; independent and
distinct in character
General: (GOC) Relates to the Refers to the manner or
Act with utmost good faith & loyalty for the furtherance subject/business with which mode of agent’s action
of principal’s interests the agent is empowered to
Obey principal’s instructions deal or act
Exercise reasonable care Limitations of authority are Without significance as
operative as against those against those with neither
Specific: (FADI – CALAMARI) who have/charged with knowledge nor notice of
Carry out the agency knowledge of them them
Contemplated to be made Not expected to be made

CIVIL LAW REVIEWER Page 228 of 338

known to third persons known to those with whom
dealing with the agent the agent deals
When agent has a right to disobey the principal’s
instructions:
When the instruction calls for the performance of illegal acts
Where he is privileged to do so to protect his security in the
subject matter of the agency
When obligation to account not applicable:
If the agent acted only as a middleman with the task of
merely bringing together the vendor and the vendees.
If the agent had informed the principal of the
gift/bonus/profit he received from the purchaser and his
principal did not object thereto.
Where a right of lien exists in favor of the agent.
When agent may incur personal liability
When the agent expressly binds himself
When the agent exceeds his authority
When an agent by his act prevents performance on the
part of the principal
When a person acts as an agent without authority or
without a principal
A person who purports to act as agent of an
incapacitated principal
Appointment of Sub-agent:
If the principal has not prohibited the agent from appointing
a substitute, he will be liable to 3rd persons for the acts
of the sub-agent within the scope of his authority
If there is a prohibition but nevertheless the agent appoints a
sub-agent, all the sub-agent’s acts are void as to the
principal.
If there is authority to appoint and sub-agent is not
designated by the principal, the agent will be liable for
all the acts of the sub-agent if the sub-agent is
notoriously incompetent or insolvent.
If there is authority to appoint and sub-agent is designated
by the principal, the agent is released from any liability
from the acts of the sub-agent.
If the appointment of a sub-agent is not authorized but not
prohibited, it shall be valid if it is beneficial to the
principal. But, should the principal incur damage due to
such appointment, the agent shall be primarily
responsible for the acts of the sub-agent.
Responsibility of 2 or More Agents Appointed
Simultaneously:
GENERAL RULE: Liable jointly
EXCEPTION: When solidarity has been expressly stipulated,
in which case, each of the agents becomes solidarily liable for
(1) the non-fulfillment of the agency; and for (2) the fault or
CIVIL LAW REVIEWER
negligence of his fellow agent(s)
EXCEPTION TO THE EXCEPTION: when one of the other
agent/s acts beyond the scope of his authority – innocent
agent is NOT liable
Effect where 3rd person aware of limits of agent’s power: If
the agent exceeds his authority, it shall be VOID unless the
principal ratifies it.
DOCTRINE OF AGENCY BY NECESSITY
An agency can never be created by necessity; what is
actually created is additional authority in an agent appointed
and authorized before the emergency arose.
The existence of emergency or other unusual conditions may
operate to invest in an agent authority to meet the
emergency, provided: (PURE)
The agent’s enlarged authority is exercised for the
principal’s protection
The agent is unable to communicate with principal;
The means adopted are reasonable under the
circumstances;
The emergency really exists;
When 3rd persons can repudiate the contract
Before actual ratification by the principal, or before the
principal has signified his willingness to ratify the agent’s
acts.
Effect of the principal receiving the benefits of the
transaction
He is deemed to have ratified it. A principal may not accept
the benefits of a transaction and at the same time repudiate
its burdens
Conditions for Ratification:
The principal must have capacity and power to ratify
He must have had knowledge of material facts
He must ratify the acts in its entirety
The act must be capable of ratification
The act must be done in behalf of the principal
To be effective, ratification need not be communicated or
made known to the agent or the third party. The act or
conduct of the principal rather than his communication is the
key. But before ratification, the third party is free to revoke
the unauthorized contract.
Effects of Ratification
With respect to agent - relieves the agent from liability to
the third party for the unauthorized transaction, and to
his principal for acting without authority; may recover
compensation
With respect to principal - assumes responsibility for the
unauthorized act, as if the agent had acted under
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 original authority but not liable for acts outside the according to whether the agency was or was not for
authority approved by his ratification compensation.
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 Principal still responsible for the acts
the ratified act Mismanagement of contracted by the agent with respect to
the business by the 3rd persons;
Ratification is spelled out when the principal brings legal agent Principal, however, may seek recourse
proceedings to enforce the contract entered into by the from the agent
unauthorized agent, subject to qualification, however, Principal civilly liable so long as the tort is
that the bringing of legal proceedings is not deemed Tort committed by committed by the agent while
ratification where the principal’s action is undertaken to the agent performing his duties in furtherance of
avert a greater loss rather than to assert a gain. the principal’s business
Robinson v. Borse
Agent in good faith Principal is liable for damages
NOTE: Agent always liable for fraud but not for negligence, but prejudices 3rd
which shall be judged with more or less rigor by the courts, parties
Agent in bad faith Only the agent is liable for damages
and prejudices 3rd
persons

CIVIL LAW REVIEWER Page 230 of 338

 ACTS OF THE AGENT
In 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
CIVIL LAW REVIEWER
EFFECT
Binds principal;
Agent not personally liable
Contract is unenforceable as against the
principal but binds the agent to the third
person
Not binding on the principal;
Principal has no cause of action against
the 3rd parties and vice versa
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 estopped
Motive is immaterial; as long as within
the scope of authority, valid
Authorized - principal still liable
Beyond the scope of the agent’s
authority
GR: Principal not liable
Exception: principal
advantage of a contract or receives
benefits made under
representation of his agent
3. For the agent’s own benefit – principal
still liable; agent’s motive immaterial
EXCEPTION(S)
Agent liable if he:
Expressly makes himself liable
Exceeds the limits of his authority without
giving the parties sufficient notice of his
powers
Binding on the principal when:
Ratified or
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
If the case falls under the general rule, he
can sue the agent.
But when the contract involves things
belonging to the principal, he can
sue the principal.
But if it cannot be determined without
litigation who is liable, he can sue
both.
Third person knew agent was acting for his
own benefit: principal is not liable to 3rd
third person
Owner is seeking recovery of personal
property of which he has been
unlawfully deprived
takes
false
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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 & Broker
COMMISSION AGENT BROKER
Engaged in the purchase and No custody or possession of
sale for a principal of the thing he disposes;
personal property which has merely a go-between, an
to be placed in his intermediary between the
possession and disposal seller and the buyer
Has a relation with principal, Maintains no relation with
buyer or seller, and property the thing which he purchases
which is the object of the or sells
transaction
Distinction between Ordinary Agent & Commission Agent
ORDINARY AGENT COMMISSION AGENT
Acts for and in behalf of his May act in his own name or
principal in that of the principal
Need not have possession of Must be in possession of the
the principal’s goods thing he disposes
Obligations of a Commission Agent: (RMCB)
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
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
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
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 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.
J. MODES OF EXTINGUISHMENT
Agency is Extinguished: (EDWARD)
By the expiration of the period for which the agency was
CIVIL LAW REVIEWER
constituted.
By the death, civil interdiction, insanity or insolvency of the
principal or of the agent;
By the withdrawal of the agent;
By the accomplishment of the object or purpose of the
agency;
By its revocation;
By the dissolution of the firm or corporation which entrusted
or accepted the agency (Art. 1919)
The list not exclusive; causes 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
Agency is TERMINATED, as a matter of law, upon the
outbreak of war.
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
Present,
Capacitated and
Solvent
Modes of extinguishing an agency, generally: (ASO)
Agreement
Subsequent acts of the parties which may be either:
By the act of both parties or by mutual consent
By the unilateral act of one of them
NOTE: Even if the reason for extinguishing the agency is not
true, the agent cannot insist on reinstatement. The agent
can only demand damages.
What happens if the subject matter of the agency is lost or
destroyed?
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:
If it is possible to substitute other material for that which was
destroyed without substantial detriment to either party
If the destroyed subject matter was not in fact essential to
the contract
A partial loss or destruction
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Form of renunciation
It is not always necessary for the agent to renounce the
agency expressly. He can do so impliedly, such as:
Where he has conducted himself in a manner incompatible
with his duties as agent
When he abandons the object of his agency and acts for
himself in committing a fraud upon his principals
When he files a complaint against the principal and adopts
an antagonistic attitude towards him
Exceptions to Extinguishment by Death (CKID)
If the agency is coupled with an interest
If the act of the agent was executed without the knowledge
of the death of the principal and the third person who
contracted with the agent acted in good faith
To avoid damage
If it has been constituted in the common interest of the
principal and of the agent, or in the interest of a third
person who has accepted the stipulation in his favor
Can the heirs continue the agency?
GENERAL RULE: agency calls for personal services on the part
of the agent; rights & obligations are not transmissible
EXCEPTIONS:
Agency by operation of law, or a presumed or tacit agency
Agency is coupled with an interest in the subject matter of
the agency (ex. power of sale in a mortgage).
Exceptions to Extinguishment Upon Loss or Destruction of
Subject Matter
If it is possible to substitute other material for that which was
destroyed without substantial detriment to either party or if
the destroyed subject matter was not in fact essential to the
contract;
A partial loss or destruction does not always result in a
complete termination of the agency, and under such
circumstances, while the agency may be ended in so far as
the destroyed property is concerned, it may continue in
existence as to other property not affected
If the loss brought about by the principal (ex..
principal sells subject matter to another party even
if an agent has been constituted in reference to it),
principal liable for damages for his wrongful
terminating act; if subject matter is lost without
principal’s fault, no liability assumed by him
Change of Circumstance:
GENERAL RULE: when there is a basic change in the
circumstances surrounding the transaction, which was not
contemplated by the parties and which would reasonably
lead the agent to believe that the principal would not desire
him to act, the authority of the agent is terminated
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EXCEPTIONS:
If the original circumstances are restored within a reasonable
period of time, the agent's authority may be revived
Where the agent has reasonable doubts as to whether the
principal would desire him to act, his authority will not
be terminated if he acts reasonably
Where the principal and agent are in close daily contact, the
agent's authority to act will not terminate upon a
change of circumstances if the agent knows the principal
is aware of the change and does not give him new
instructions
Revocation - termination of the agency by the subsequent
act of the principal
Renunciation/Withdrawal - termination of the agency by the
subsequent act of the agent
May the agency be extinguished at will?
AGENT may do so but subject to the contractual obligations
owing to the principal (i.e. fixed period of time for the
agency or purpose not yet accomplished);
Expressly or impliedly
conducted himself in a manner incompatible with his
duties;
abandons the object of agency and acts for himself in
committing a fraud upon his principal;
he files a complaint against the principal and adopts an
antagonistic attitude towards him
with just cause - give due notice
without just cause - liable for damages if the principal
suffers damages thereby UNLESS the agent should
base his withdrawal upon the impossibility of
continuing the performance of the agency without
grave detriment to himself
The mere fact that the agent violates his instructions does
not amount to renunciation, and although he may thus
render himself liable to the principal, he does not cease
to become an agent.
PRINCIPAL may also revoke the agency at will
EXCEPTION: agency coupled with interest
When a bilateral contract depends upon the agency
When the agency is the means of fulfilling an obligation
already contracted
When a partner is appointed as manager of a
partnership in the contract of partnership and his
removal from the management is unjustifiable.
Exception to the exception: when the agent acts to
defraud the principal
Implied Revocation of Agency
Principal appoints a new agent for the same business or
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 transaction (only if there is incompatibility); effective as
between the principal and the agent only if
communicated to the agent; does not prejudice rights of
third persons acting in good faith without knowledge of
the revocation
Principal directly manages the business entrusted to the
agent, or deals directly with 3rd persons

Effect of Issuance of a Special Power of Attorney:

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

Principal’s Liability for Damages despite Revocation

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

Necessity of Notice of Revocation

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

Effect of Extinguishment without Notice

Act of agent deemed valid insofar as 3rd parties acting in
good faith and without knowledge of revocation

CIVIL LAW REVIEWER Page 234 of 338

VI. CREDIT TRANSACTIONS
================================= 1. COMMODATUM VS. MUTUUM
KINDS
TOPIC UNDER THE SYLLABUS: 1. COMMODATUM – bailor delivers to bailee a non-
A. Loan consumable thing so that the latter may use it for a
1. Commodatum vs. Mutuum certain time and return the identical thing
2. Obligations of bailor and bailee Kinds of commodatum:
3. Interest and the suspension of usury law a. Ordinary commodatum – bailee uses the thing for a
====================================== certain period of time
b. Precarium – bailor may demand the thing loaned at
CREDIT TRANSACTIONS include all transactions involving the will; exists in cases where:
purchase or loan of goods, services or money in the present i. There is no stipulation as to the duration of the
with a promise to pay or deliver in the future (contract of contract or use of the thing loaned
security) ii. Use of the thing is merely tolerated by the owner
2. MUTUUM OR SIMPLE LOAN - lender delivers to the
2 Types of Credit Transactions: borrower money or other consumable thing upon the
1. Secured transactions – those supported by a collateral condition that the latter will pay the same amount of
or an encumbrance of property the same kind and quality
2. Unsecured transactions – those supported only by a
promise to pay or the personal commitment of another LOAN CREDIT
such as a guarantor or surety 1. Delivery by one party Ability of an individual to
and the receipt by the borrow money or things by
SECURITY is something given, deposited or serving as a other party of a given virtue of the confidence or
means to ensure the fulfillment or enforcement of an sum of money or other trust reposed by a lender
obligation or of protecting some interest in the property consumable thing upon that he will pay what he may
an agreement, express promise w/in a specified
2 Types of Security: or implied period
1. Personal – when an individual becomes a surety or a 2. To repay the same
guarantor amount of the same
2. Real or Property – when an encumbrance is made on kind and quality, w/ or
property (e.g. mortgage or pledge) w/o interest

BAILMENT - is the delivery of property of one person to COMMODATUM

another in trust for a specific purpose, with a contract, (Articles 1935-1952)
express or implied, that the trust shall be faithfully executed
and the property returned or duly accounted for when a CHARACTERISTICS AND CERTAIN RULES TO REMEMBER:
special purpose is accomplished or kept until the bailor 1. Gratuitous: If there is compensation, then it’s not
reclaims it. Generally, it is contractual, but may also be commodatum. It may be a lease.
created by operation of law. 2. Personal: Death of lender/borrower EXTINGUISHES
the contract
PARTIES IN BAILMENT a. Borrower can’t lend or lease the thing to
1. BAILOR – The lender/giver; the party who delivers third persons
possession/custody of the thing bailed i. EXCEPTION: when stipulated that
2. BAILEE – The recipient; the party who receives the he can
possession/custody of the thing delivered ii. EXCEPTION: the members of the
borrower’s household may make
LOAN use of the thing
CHARACTERISTICS iii. EXCEPTION TO EXCEPTION: when
1. Real Contract – delivery is essential for perfection of the stipulated that members of the
loan (BUT a promise to lend, being consensual, is househould cannot use or if the
binding upon the parties) nature of the thing forbids such use
2. Unilateral Contract - only the borrower has the 3. Subject Matter:
obligation

CIVIL LAW REVIEWER Page 235 of 338

 a. Generally non-consumables (can be real or
personal property)
b. If consumable, it must be for exhibition
(1936)
4. Ownership
a. Lender does not have to be the owner of the
thing loaned in commodatum
5. Right of retention:
a. Borrower can’t retain the thing loaned just
because he has claims against lender
b. Borrow can retain if he suffers damages by
reason of hidden flaws in the thing lent
(1951)
6. Presumption of solidary liability of borrowers
a. If there are two or more borrowers, the
presumption is that they are solidarily liable
7. Fruits: a stipulation to make use of fruits is valid, but it
is never presumed. The enjoyment of the fruits must
only be incidental to the use of the thing itself - if
enjoyment of fruits is primary reason, it is a usufruct.
When borrower is liable for loss of the thing (ADLIB)
a. BAD FAITH – if the bailee devotes the thing to any
purpose different from that for which it has been
loaned
b. DELAY - he keeps it longer than the period
stipulated or after the accomplishment of the use
for which the commodatum has been constituted
c. HAS BEEN DELIVERED W/ APPRAISAL - the thing
loaned has been delivered with appraisal of its
value, UNLESS there is a stipulation exempting the
bailee from responsibility in case of a fortuitous
event
d. LENDS THE SUBJECT MATTER TO A 3RD PERSON - he
lends or leases the thing to a third person who is
not a member of his household
e. INGRATITUDE - being able to save the thing
borrowed or his own thing, he chose to save the
latter
2. OBLIGATIONS OF BAILOR AND BAILEE
OBLIGATIONS OF BAILEE (borrower)
1. To take care of the thing with ordinary diligence
2. To pay for ordinary expenses
3. To be liable for loss due to fortuitous event if
stipulated that he is such
OBLIGATIONS OF THE BAILOR (lender) (AD-READ-HA)
1. Primary obligation of the bailor:
CIVIL LAW REVIEWER
General Rule: To allow the bailee the use of the thing loaned
for the duration of the period stipulated or until the
accomplishment of the purpose for w/c the commodatum
was constituted.
Exceptions: Bailor may demand the return of the thing or its
temporary use when:
a. Bailor has an urgent need for the thing (Art. 1946)
– the contract is suspended
b. Bailee commits an act of ingratitude (Art. 1948)
 If the bailee should commit an offense against the
person, the honor or the property of the bailor, or
of the wife or children under his parental authority
 If the bailee imputes to the bailor any criminal
offense, or any act involving moral turpitude, even
though he should prove it, UNLESS the crime or the
act has been committed against the bailee himself,
his wife, or children under his authority
 If the bailee unduly refuses the bailor support when
the bailee is legally or morally bound to give
support to the bailor
2. May demand the thing at will when the contract is a
precarium
PRECARIUM – a kind of commodatum where the bailor may
demand the thing at will. It is a contract by which the owner
of a thing, at the request of another person, gives the latter
the thing for use as long as the owner shall tolerate
3. To refund the extraordinary expenses (Art. 1949)
General Rule – Notice should be given by the bailee to the
bailor regarding such extraordinary expenses and consent
should be obtained
Exception – Where the extraordinary expenses are so urgent
that the reply to the notification cannot be awaited w/o
danger
4. If the extraordinary expenses arise from the actual use
of the thing and even though bailee acted w/o fault, the
expenses will be borne equally by both the bailor and
the bailee (50-50) (Art. 1949, par. 2)
REASONS:
a. Bailee pays ½ because of the benefit derived from the
use of the thing
b. Bailor pays the other ½ because he is the owner and
the thing will be returned to him
Exception – Stipulation to the contrary (e.g. different
apportionment or sole burden by bailee or bailor)
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5. All other expenses which are not necessary for the use
and preservation of the thing must be shouldered by the
borrower (bailee)
6. The depreciation caused by the reasonable and natural
use of the thing is borne by the bailor (Art. 1943)
REASON: parties to the contract know that the thing
borrowed cannot be used without deterioration due to
ordinary wear and tear.
Exceptions:
a. When there is a stipulation to the contrary
b. When the bailee is guilty of fault or negligence
c. If he devotes the thing to any purpose different from
that for which has been loaned
7. To pay damages for known hidden flaws (Art. 1951)
Requisites: (the following must concur)
a. There is a flaw or defect in the thing loaned
b. The flaw or defect is hidden
c. The bailor is aware thereof
d. Bailor does not advise the bailee of the same
e. The bailee suffers damages by reason of the flaw or
defect
8. The bailor has no right of abandonment for expenses and
damages (Art. 1952)
REASON: expenses and/or damages may exceed the value
of the thing loaned
SIMPLE LOAN OR MUTUUM
(Arts. 1933-1961)
SIMPLE LOAN OR MUTUUM is a contract whereby one of the
parties delivers to another money or other fungible thing w/
the understanding that the same amount of the same kind
and quality shall be paid.
Nature of Mutuum
a. Bilateral – borrower’s promise to pay is the
consideration for the lender’s obligation
to furnish the loan
b. No criminal liability upon failure to pay
Subject Matter
a. Fungible or consumable - depending on the intent of
the parties; that the return of the thing is equivalent
only and not the identical thing
CIVIL LAW REVIEWER
Fungible things – those which are usually dealt with by
number, weight, or measure so that any given portion is
treated as the equivalent of any other unit or portion.
– depends upon the intention of the
parties (as opposed to consumable or non- consumable
which depends upon its nature)
- A fungible from the viewpoint of the
parties is easily replaceable
b. Money
 If the transfer of ownership is on a non-fungible thing,
with the obligation of the other to give things of the
same kind, quantity and quality, it is a barter
FORM OF PAYMENT
1. If the thing loaned is money – currency stipulated,
otherwise that which is legal tender in the Philippines. In
case of extraordinary inflation or deflation, payment
shall be in the value of the currency at the time of the
creation of the obligation.
2. If other than money – another thing of the same kind,
quality and quantity. If impossible to do so, payment
must be its value at the time of perfection of the loan.
3. INTEREST AND THE SUSPENSION OF USURY LAW
INTEREST
General Rule – Interest must be expressly stipulated in
writing, and it must be lawful (Art. 1956)
1. When an obligation, regardless of its source, is
breached, the contravenor can be held liable for
damages.
2. If obligation consists in the payment of a sum of money
(loan, forbearance of money, judgment money)
a. Interest due is what has been stipulated by the
parties
b. The interest shall earn legal interest from the
time of judicial demand
c. If there’s no stipulation, the rate is 12% from
default (judicial or extrajudicial demand)
3. If obligation is not a loan or forbearance of money
a. Interest on the amount of damages awarded
may be imposed at the discretion of the court
at 6%
b. No interest shall be adjudged on unliquidated
claims or damages, except when or until the
amount can be established with reasonable
certainty
c. Where the amount is established with
reasonable certainty, the interest shall begin
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 from the time the claim is made judicially or
extrajudicially
d. But when such certainty cannot be so
reasonably established the time the demand is
made, the interest shall begin to run only from
the date the judgment of the court is made
e. The actual base (principal) for the computation
of the legal interest shall, in any case, be on the
amount finally adjudged.
4. When judgment of court awarding a sum of money
becomes final and executory, 12% interest from such
until its payment
Eastern Assurance and Surety Corporation v. CA [322 SCRA
73, Jan. 18, 2000]
Exceptions:
1. Indemnity for damages – the debtor in delay is liable
to pay legal interest (6%/12%) as indemnity for
damages even in the absence of a stipulation for the
payment of interest. Interest as indemnity for
damages is payable only in case of default or non-
performance of contract.
 Basis for computation for indemnity:
a. Central Bank Circular 416 – 12% p.a. in cases of:
 Loans
 Forbearance of money, goods or credits
 Judgments involving such loans or
forbearance, in the absence of the
express agreement as to such rate of
interest
 During the interim period from the date
judgment until actual payment
b. Art. 2209 of the Civil Code – 6% p.a. in cases of:
 Other sources (e.g. sale)
 Damages arising from injury to persons
 Loss of property which does not involve a
loan
2. Interest accruing from unpaid interest - interest due
shall earn interest from the time it is judicially
demanded although the obligation may be silent upon
this point.
Determination of interest payable in kind: Its value shall be
appraised at the current price of the products or goods at the
time and place of payment. (Art. 1958)
NOTE: In case of an unstipulated interest paid by mistake,
the debtor may recover as in the case of solutio indebiti or
undue payment. If such was voluntarily paid, there can be
no recovery as in the case of natural obligations.
CIVIL LAW REVIEWER
COMPOUNDING INTEREST (Art. 1959)
May be availed of only when there is a written stipulation in
the contract for the payment of interest.
General Rule – Accrued interest (interest due and unpaid)
shall not earn interest
Exceptions:
 When judicially demanded(e.g. when case is filed to
collect)
 When there is an express stipulation made by the
parties: that the interest due and unpaid shall be
added to the principal obligation and the resulting
total amount shall earn interest
USURY
USURY – is the contracting for or receiving something in
excess of the amount allowed by law for the loan or
forbearance of money, goods or chattels.
ELEMENTS OF USURY: (LUIT)
1. Loan or forbearance
2. Understanding between the parties that he loan shall be
paid.
3. Unlawful intent to take more than the legal rate.
4. Taking or agreeing to take for the use of the loan of
something in excess of what is allowed by law.
NOTE: Usury now is legally inexistent. In Art. 1306 of NCC,
contracting parties may establish such stipulations, clauses,
terms and conditions as they may deem convenient,
provided they are not contrary to law, morals, good customs,
public order, or public policy. This may be invoked to annul
the excessive stipulated interest.  However, Usury law has
NOT been repealed
 Since the mortgage contract derives its vitality from the
validity of the principal obligation, the invalid stipulation
on interest rate is similarly insufficient to render void
the ancillary mortgage contract. Sps. Carpo v. Chua,
[G.R. No. 150773 & 153599, September 20, 2005]
BARTER – A contract whereby one person transfers the
ownership of non-fungible things to another with the
obligation on the part of the latter to give things of the
same kind, quantity and quality, shall be considered a
barter.
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TOPIC UNDER THE SYLLABUS:
B. Deposit
1. Voluntary Deposit
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 2. Necessary Deposit Return Upon order of the court Upon demand of
3. Judicial Deposit of thing / end of litigation depositor
====================================== In whose Person who has a right Depositor or / 3rd
behalf it person designated
is held
DEPOSIT
(Arts. 1962-2009) Deposit is generally gratuitous: (Art. 1965)
DEPOSIT is constituted from the moment a person receives a General Rule – A deposit is generally gratuitous.
thing belonging to another, with the obligation of safely Exceptions: (SBSJ)
keeping it and of returning the same. Safekeeping must be a. When there is a contrary stipulation
the principal purpose of the contract. b. Where depositary is engaged in the business of
storing goods
Characteristics c. Where property is saved without knowledge of the
1. Real - because it is perfected only by the delivery of the owner
subject matter d. Judicial deposit
 BUT an agreement to constitute a deposit is binding
and enforceable, since it is merely consensual
2. Unilateral - if gratuitous Subject Matter of Deposit (Art. 1966)
3. Bilateral - if with compensation General Rule: Only movable or personal property may be the
object of deposit (whether voluntary or necessary)
Creation of deposit (Art. 1964) Exception: In judicial deposit, it may cover both movable and
1. By virtue of a court order or immovable property
2. By law
3. Not by the will of the parties Depositor need not be the owner of the thing
4. Depositary must not be the owner of the property General Rule: The depositor must be the owner of the thing
deposited (Art. 1962) deposited
Exceptions: It may belong to another person than the
Kinds of Deposit depositor
1. Judicial - when an attachment or seizure of property in a. When two or more persons claiming to be entitled
litigation is ordered to a thing may deposit the same with a third
2. Extrajudicial (Art. 1967) person. In such case, the third person assumes the
a. Voluntary - delivery is made by the will of the obligation to deliver to the one to whom it belongs.
depositor or by two or more persons each of whom b. Interpleader – the action to compel the depositors
believes himself entitled to the thing deposited to settle their conflicting claims. Here one of the
b. Necessary - made in compliance with a legal depositors is not the owner.
obligation, or on the occasion of any calamity, or by
travelers in hotels and inns or by travelers with Form of contract of deposit
common carriers. There is lack of free choice in the General Rule: A contract of deposit may be entered into (but
depositor. not perfected) orally or in writing (Art. 1969)
Exception: Delivery of the thing deposited is needed for
BASIS JUDICIAL EXTRAJUDICIAL perfection.
Creation Will of the court Will of the contracting
parties DEPOSITARY CAPACITATED DEPOSITARY
/ DEPOSITOR INCAPACITATED /
Purpose Security or to ensure Custody and
INCAPACITATED DEPOSITOR CAPACITATED
the right of a party to safekeeping
the property or to Depositary is subject to ALL Depositary does not incur
recover in case of the obligations of a the obligations of a
favorable judgment depositary depositary
Subject Generally immovables Movables only Depositary must return the Depositary, however, is
Matter property either to: liable to:
a) The legal representative of a) Return the thing
Cause Always onerous May be compensated
the incapacitated, OR deposited while still in
but generally
b) The depositor himself if he his possession; AND
gratuitious

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 should acquire capacity b) Pay the depositor the General Rule: The depositary is not allowed to deposit the
amount by w/c he may thing with a third person
have benefited himself REASON: A deposit is founded on trust and confidence and it
w/ the thing or its price can be supposed that the depositor, in choosing the
subject to the right of depositary, has taken into consideration the latter’s
any 3rd person who qualification
acquires the thing in Exception: The depositary is authorized by express
good faith stipulation

BASIS IRREGULAR MUTUUM LIABILITIES: Depositary is liable for loss of the thing
DEPOSIT deposited when:
Demandable at Lender is bound by a. He transfers the deposit with a third person without
will of the the provisions of the authority although there is no negligence on his
irregular contract and cannot part and the third person;
Demandability depositor for seek restitution until b. He deposits the thing with a third person who is
whose benefit the the time of payment manifestly careless or unfit although authorized,
deposit has been as provided in the even in the absence of negligence; or
constituted contract has arisen c. The thing is lost through the negligence of his
employees whether the latter are manifestly
Benefit Benefit accrues to Necessity of the careless or not.
the depositor borrower
Depositor has Enjoy no preference  Exemption from liability: The thing is lost without the
Preference of preference over in the distribution of negligence of the third person with whom he was
credit other creditors the debtor’s allowed to deposit the thing if such third person is not
with respect to property “manifestly careless or unfit.” (i.e., minor)
thing deposited
3. Obligation not to Change the way of deposit (Art. 1974)
OBLIGATIONS OF THE DEPOSITARY
(SRT-CCC-ULC-RITT-RPPT-TL-HR) General Rule: Depositary may not change the way of the
1. Two primary obligations (Art. 1972) deposit
a. Safekeeping of the object Exception: If there are circumstances indicating that the
 Degree of Care – same diligence as he would depositor would consent to the change. This is a situation
exercise over his property wherein the depositary would reasonably presume that the
 REASONS: depositor would agree to the change if he knows of the facts
i. Essential requisite of judicial relation of the situation.
which involves the depositor’s confidence Requisites:
in his good faith and trustworthiness a. The depositary must notify the depositor of such
ii. The presumption that the depositor took change; and
into account the diligence which the b. Must wait for the reply of the depositor to such
depositary is accustomed with respect to change.
his own property  These requisites may not be dispensed with unless
b. Return of the thing when required delay would cause danger.
– Even though a specified term or time for such
may have been stipulated in the contract 4. Obligation to Collect on the choses in action deposited
(Art. 1975)
The depositary cannot excuse himself from liability, in the  If the thing deposited should earn interest, the
event of loss, by claiming that he exercised the same amount depositary is under the obligation to:
of care toward the thing deposited as he would towards his a. Collect the interest as it becomes due
own if such care is less than that required by the b. Take such steps as may be necessary to
circumstances preserve its value and the right corresponding
to it
2. Obligation not to Transfer deposit (Art. 1973)  The depositary is bound to collect the capital, as
well as the interest, when due

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Contract of rent of safety deposit boxes (Art. 1975)
- A contract for the rent of safety deposit boxes is
not an ordinary contract of lease of things, but a
special kind of deposit; hence, it is not to be strictly
governed by the provisions on deposit.
- The prevailing rule in the US is that the relation
between a bank renting out safety deposit boxes
and its customer with respect to the contents of the
box is that of bailor and bailee.
5. Obligation not to Commingle things if so stipulated
(Art. 1976)
General Rule: The depositary is permitted to commingle
grain or other articles of the same kind and quality
Effects:
a. The various depositors of the mingled goods shall
own the entire mass in common
b. Each depositor shall be entitled to such portion of the
entire mass as the amount deposited by him bears
the whole
Exception: When there is a stipulation to the contrary
6. Obligation not to make Use of the things deposited
(Art. 1977)
General Rule: Deposit is for safekeeping of the subject
matter and not for its use
Exceptions:
a. Expressly authorized by the depositor
b. Such use is necessary for its preservation but limited for
the purpose only
 Effect of unauthorized use: Liability for damages
 Effects of authorized use: (Art. 1978)
a. If the thing deposited is non-consumable:
General Rule: The contract loses the character of a
deposit and acquires that of a commodatum,
despite the fact that the parties may have
denominated it as a deposit
Exception: Safekeeping is still the principal purpose
of the contract
b. If the thing deposited is money or other
consumable thing:
General Rule: Converts the contract into a simple
loan or mutuum
Exception: Safekeeping is still the principal purpose
of the contract, but it becomes an irregular deposit.
Bank deposits are in the nature of irregular deposits
CIVIL LAW REVIEWER
but they are really loans governed by the law on
loans.
7. Liability for Loss through fortuitous event (Art. 1979)
General Rule: Depositary is not liable for loss through
fortuitous event without his fault
Exceptions: (SUDA)
a. If it is so stipulated
b. If he uses the thing without the depositor’s permission
c. If he delays in its return
d. If he allows others to use it, even though he himself
may have been authorized to use the same
NOTE: Liability for loss without fortuitous event:
Depositary presumed at fault since he is in possession
(Art. 1265)
Relation between bank and depositor (Art. 1980)
 Fixed, savings, and current deposits of money in
banks and similar institutions shall be governed by
the provisions concerning simple loan
a. Contract of loan – deposits in banks are really
loans because the bank can use the same for
its ordinary transactions
b. Relation of creditor and debtor – the relation
between a depositor and a bank is that of a
creditor and a debtor.
8. Obligation when the thing deposited is Closed and
Sealed (Art. 1981)
 The depositary has the obligation to:
a. Return the thing deposited when delivered
closed and sealed in the same condition
b. Pay for damages should the seal or lock be
broken through his fault, which is presumed
unless proven otherwise
c. Keep the secret of the deposit when the seal or
lock is broken, with or without his fault
When depositary justified in opening closed and sealed
subject matter (Art. 1982):
a. The depositary is presumed authorized to do
so if the key has been delivered to him
b. When the instructions of the depositor as
regards the deposit cannot be executed
without opening the box or receptacle
(Necessity)
9. Obligation to Return products, accessories and
accessions (Art. 1983)
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10. Obligation to pay Interest on sums converted for
personal use (Art. 1983)
11. The depositary who receives the thing in deposit
cannot require that the depositor Prove his ownership
over the thing (Art. 1984)
12. Where Third person appears to be the owner (Art.
1984)
 The depositary may be relieved from liability when:
a. He advised the true owner of the thing of the
deposit
b. If the owner, in spite of such information, does
not claim it within the period of one month (30
days)
13. Obligation of the depositary when there are Two or
more depositors (Art. 1985)
a. Divisible thing and joint depositors – each one
of the depositors can demand only his share
proportionate thereto
b. Indivisible thing or solidary depositors – rules
on active solidarity
General Rule: Each one of the depositors may
do whatever may be useful to the others (Art.
1212)
Exception: Anything w/c may be prejudicial to
the other depositors
General Rule: The depositary may return the
thing to any one of the solidary depositors
Exception: When a demand, judicial or
extrajudicial, for its return has been made by
one of them in which case delivery should be
made to him
c. Return to one of the depositors stipulated
• If by stipulation, the thing should be
returned to one of the depositors, the
depositary is bound to return it only to the
person designated, although he has not
made any demand for its return
14. Obligation to Return to the person to whom return
must be made (Art. 1986)
a. The depositary is obliged to return the thing
deposited, when required, to:
 The depositor;
 To his heirs or successors; or
 To the person who may have been
designated in the contract.
CIVIL LAW REVIEWER
b. If the depositor was incapacitated at the time
of making the deposit, the property must be
returned to:
 His guardian or administrator
 To the person who made the deposit
 To the depositor himself should he acquire
capacity
c. Even if the depositor had capacity at the time
of making the deposit, but he subsequently
loses his capacity during the deposit, the thing
must be returned to his legal representative
15. Obligation to return at the Place of return (Art. 1987)
– same as the general rule of law regarding the place of
payment (Art. 1251)
GENERAL RULE: At the place agreed upon by the parties,
transportation expenses shall be borne by the depositor
EXCEPTION: In the absence of stipulation, at the place where
the thing deposited might be even if it should not be the
same place where the original deposit was made
16. Obligation to return upon the Time of return (Art.
1988)
General Rule: The thing deposited must be returned to the
depositor upon demand, even though a specified period or
time for such return may have been fixed
Exceptions:
a. When the thing is judicially attached while in the
depositary’s possession
b. When notified of the opposition of a third person to
the return or the removal of the thing deposited
17. Right of the depositary to return the Thing deposited
(Art. 1989)
NOTE: In this case, it is the depositary who is returning the
deposit WITH OR WITHOUT THE DEMAND of the depositor.
General Rule: The depositary may return the thing
deposited, notwithstanding that a period has been fixed for
the deposit, if:
a. The deposit is gratuitous
b. The reason is justifiable
 Remedy if depositor refuses to receive the
thing: The depositary may deposit the thing at
the disposal of the judicial authority
Exception: When the deposit is for a valuable consideration,
the depositary has no right to return the thing before the
expiration of the time designated even if he should suffer
inconvenience as a consequence
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18. 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.
19. 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
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
b. Pay the actual price of the thing deposited
20. Depositary may Retain the thing in pledge until the full
payment of what may be due him by reason of the
deposit (Art. 1994)
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
3. 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
a. Upon the loss or deterioration of the thing
deposited;
b. Upon the death of the depositary, ONLY in
gratuitous deposits;
c. Other provisions in the Civil Code (novation,
merger, etc.)

 The thing retained serves as security for the NECESSARY DEPOSIT

payment of what may be due to the depositary by
reason of the deposit (see Arts. 1965, 1992 & 1993) A deposit is necessary when: (LCCT)
NOTE: The debt must be prior to the deposit 1. It is made in compliance with a legal obligation

IRREGULAR DEPOSIT MUTUUM 2. It takes place on the occasion of any calamity, such as
May be demanded at will Lender is bound by the fire, storm, flood, pillage, shipwreck, or other similar
by the irregular depositor provision of the contract and events
for whose benefit the cannot seek restitution until  There must be a causal relation between the
deposit has been the time for payment, as calamity and the constitution of the deposit
constituted provided in the contract, has
arisen 3. Made by passengers with common carriers
Only benefit is that which If with interest, benefit if  As to baggages the passengers or their agents carry
accrues to the depositor both parties
Depositor has preference No preference 4. Made by travelers in hotels or inns (Art. 1998)
over other creditors  Before keepers of hotels or inns may be held
responsible as depositaries with regard to the
Obligations of the Depositor: (PLD) effects of their guests, the following must concur:
1. Obligation to pay expenses of preservation (Art. 1992) Elements:
- Applies only when the deposit is gratuitous a. They have been previously informed about the
effects brought by the guests; and
2. Obligation to pay losses incurred due to character of b. The latter have taken the precautions
thing deposited (Art. 1993) prescribed regarding their safekeeping.

General Rule: The depositary must be reimbursed for Extent of liability:

loss suffered by him because of the character of the a. Liability in hotel rooms which come under the
thing deposited. term “baggage” or articles such as clothing as
Exceptions: are ordinarily used by travelers
a. Depositor was not aware of the danger

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 b. Include those lost or damages in hotel annexes  In compliance with a legal obligation (governed by
such as vehicles in the hotel’s garage. the law establishing it, and in case of deficiency, the
rules on voluntary deposit e.g. Arts. 538, 586 and
 When hotel-keeper liable: (Art. 2000 – 2002) 2104)

NOTE: In the following cases, the hotel-keeper is
liable REGARDLESS of the amount of care exercised:
a. The loss or injury to personal property is
caused by his servants or employees as well as
by strangers (Art. 2000)
b. The loss is caused by the act of a thief or
robber done without the use of arms and
irresistible force (Art. 2001)
 Made on the occasion of any calamity (governed by
the rules on voluntary deposit and Art. 2168)
SEQUESTRATION OR JUDICIAL DEPOSIT
When judicial deposit takes place: When an attachment or
seizure of property in litigation is ordered by a court. (Art.
2005)

Reason: Hotel-keeper is apparently negligent Nature: Auxiliary to a case pending in court

 When hotel-keeper not liable: Purpose: To maintain the status quo during the pendency of
a. The loss or injury is caused by force majeure, the litigation or to insure the right of the parties to the
like flood, fire, theft or robbery by a stranger property in case of a favorable judgment
(not the hotel-keeper’s servant or employee) Depositary of sequestered property: person appointed by
with the use of firearms or irresistible force the court. (Art. 2007)
EXCEPTION: Unless the hotel-keeper is guilty of Obligations:
fault or negligence in failing to provide against a. To take care of the property with the diligence of a good
the loss or injury from his cause father of the family. (Art. 2008)
b. He may not be relieved of his responsibility until the
b. The loss is due to the acts of the guests, his litigation is ended or the court so orders. (Art. 2007)
family, servants, visitors
c. The loss arises from the character of the things Applicable law: The law on judicial deposit is remedial or
brought into the hotel procedural in nature. Hence, the Rules of Court are
applicable. (Art. 2009)
 Exemption or diminution of liability:
The hotel-keeper cannot free himself from BASIS JUDICIAL DEPOSIT EXTRAJUDICIAL
responsibility by posting notices to the effect that DEPOSIT
he is not liable for the articles brought by the guest Cause or origin By will of the courts By will of the
(Art. 2003) parties. Hence,
there is a
Effect: Any stipulation between the hotel-keeper and the contract
guest whereby the responsibility of the former (as set Purpose Security; Custody;
forth in Art. 1998-2001) is suppressed or diminished shall Secure the right of a Safekeeping of
be VOID. party to recover in the thing
case of favorable
 Hotel-keeper’s right to retain judgment.
The hotel-keeper has a right to retain the things Subject Matter Either movable or Only movable
brought into the hotel by the guest, as a security for immovable property property
credits on account of: but generally,
a. Lodging immovable
b. Supplies usually furnished to hotel guests Remuneration Always remunerated Generally
Reason: It is given to hotel-keepers to compensate (onerous) gratuitous, but
them for the liabilities imposed upon them by law. may be
The right of retention recognized in this article is in compensated
the nature of a pledge created by operation of law.
In whose In behalf of the In behalf of the
behalf it is person who, by the depositor or
held judgment, has a right third person

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 designated need not pass directly to the guarantor or surety; a
consideration moving to the principal will suffice.
======================================
MARRIED WOMAN AS GUARANTOR (Art. 2049)
TOPIC UNDER THE SYLLABUS: General Rule: Married woman binds only her separate
C. Guaranty and Suretyship property
1. Nature and extent of guaranty Exceptions:
2. Effects of guaranty 1. With her husband’s consent, binds the community or
3. Extinguishment of guaranty conjugal partnership property
4. Legal and judicial bonds 2. Without husband’s consent, in cases provided by law,
such as when the guaranty has redounded to the benefit
======================================
of the family
GUARANTY AND SURETYSHIP
GUARANTY UNDERTAKEN WITHOUT KNOWLEDGE OF
(Arts. 2047-2084)
DEBTOR (Art. 2050)
GUARANTY – By guaranty, a person called the guarantor,
Rights of third persons who pay:
binds himself to the creditor, to fulfill the obligation of the
1. Payment without the knowledge or against the will of
principal debtor in case the latter should fail to do so. It is a
the debtor:
contract between the guarantor and the creditor.
a. Guarantor can recover only insofar as the payment
has been beneficial to the debtor (Art. 1236)
CHARACTERISTICS OF THE CONTRACT
b. Guarantor cannot compel the creditor to subrogate
him in his rights (Art. 1237)
1. Accessory – dependent for its existence upon the
2. Payment with knowledge or consent of the debtor:
principal obligation guaranteed by it hence if principal
Subrogated to all the rights which the creditor had
contract is void, then guaranty is also void
against the debtor (Art. 2067)
2. Subsidiary and Conditional – takes effect only when the
Double or sub-guaranty (Art. 2051(2))
principal debtor fails in his obligation subject to
One constituted to guarantee the obligation of a guarantor.
limitation
It should not be confounded with guaranty wherein several
guarantors concur.
3. Unilateral –
a. It gives rise only to a duty on the part of the
GUARANTY OF VOIDABLE, UNENFORCEABLE, AND NATURAL
guarantor in relation to the creditor and not vice
OBLIGATIONS (Art. 2052(2))
versa
b. It may be entered into even without the
A guaranty may secure the performance of a:
intervention of the principal debtor.
1. Voidable contract – such contract is binding, unless it is
annulled by a proper court action
4. Distinct Person – a person cannot be the personal
2. Unenforceable contract – because such contract is not
guarantor of himself
void
3. Natural obligation – the creditor may proceed against
Cause of contract of guaranty
the guarantor although he has no right of action against
1. Presence of cause which supports principal obligation:
the principal debtor for the reason that the latter’s
Cause of the contract is the same cause which supports
obligation is not civilly enforceable.
the obligation as to the principal debtor. The
 When the debtor himself offers a guaranty for his
consideration which supports the obligation as to the
natural obligation, he impliedly recognizes his
principal debtor is a sufficient consideration to support
liability, thereby transforming the obligation from a
the obligation of a guarantor or surety.
natural into a civil one.
2. Absence of direct consideration or benefit to
GUARANTY OF FUTURE DEBTS (Art. 2053)
guarantor: Guaranty or surety agreement is regarded
valid despite the absence of any direct consideration
Continuing Guaranty or Suretyship:
received by the guarantor or surety, such consideration

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1. Not limited to a single transaction but which
contemplates a future course of dealings, covering a
series of transactions generally for an indefinite time or
until revoked.
2. It is prospective in its operation and is generally
intended to provide security with respect to future
transactions.
3. Future debts, even if the amount is not yet known, may
be guaranteed but there can be no claim against the
guarantor until the amount of the debt is ascertained or
fixed and demandable.
Examples:
a. To secure the payment of a loan at maturity –
guarantee of the punctual payment of a loan at maturity
and all other obligations of indebtedness
b. To secure payment if any debt to be subsequently
incurred –construed as continuing when it is evident
from the terms that the object is to give a standing
credit to the principal debtor to be used from time to
time either indefinitely or until a certain period,
especially if the right to recall the guaranty is expressly
reserved.
Guaranty of conditional obligations: A guaranty may secure
all kinds of obligations, be they pure or subject to a
suspensive or resolutory condition.
1. Principal obligation subject to a suspensive condition –
the guarantor is liable only after the fulfillment of the
condition.
2. Principal obligation subject to a resolutory condition –
the happening of the condition extinguishes both the
principal obligation and the guaranty
GUARANTOR’S LIABILITY CANNOT EXCEED PRINCIPAL
OBLIGATION (Art. 2054)
General Rule: Guaranty is a subsidiary and accessory
contract – guarantor cannot bind himself for more than the
principal debtor
 If he does, his liability shall be reduced to the limits
of that of the debtor.
 But the guarantor may bind himself for less than
that of the principal.
Exceptions:
1. Interest, judicial costs, and attorney’s fees as part of
damages may be recovered – creditors may recover
from the surety as part of their damages the
abovementioned fees even without stipulation and even
if the surety would thereby become liable to pay more
than the total amount stipulated in the bond.
CIVIL LAW REVIEWER
REASON: Surety is made to pay, not by reason of the
contract, but by reason of his failure to pay when
demanded and for having compelled the creditor to
resort to the courts to obtain payment.
Interest runs from: (demand)
a. Filing of the complaint (upon judicial demand); or
b. The time demand was made upon the surety until
the principal obligation is fully paid (upon extra-
judicial demand)
2. 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)
Guaranty requires the expression of consent on the part of
the guarantor to be bound. It cannot be presumed because
of the existence of a contract or principal obligation.
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 a secondary evidence of
its contents.
 It need not appear in a public document.
Guaranty Strictly Construed
Strictly construed against the creditor in favor of the
guarantor and is not 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 to 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 which are set forth or
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 which may be inferred from the contract of guaranty or
suretyship, and no further.
3. 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.
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.

Remedy of surety: Foreclose the counterbond put up by the Article 2057:

principal debtor (if there is any) 1. Requires conviction in the first instance of a crime
involving dishonesty to have the right to demand
GUARANTY DISTINGUISHED FROM SURETYSHIP another.
GUARANTY SURETYSHIP 2. Judicial declaration of insolvency is not necessary in
Liability depends upon an Assumes liability as a regular order for the creditor to have a right to demand another
independent agreement to party to the undertaking guarantor.
pay the obligation if the
primary debtor fails to do Estate of Hemady v. Luzon Surety; The supervening
so incapacity of a guarantor DOES NOT terminate the guaranty
Engagement is a collateral Charged as an original for it merely gives the creditor the OPTION to demand
undertaking promisor another guarantor. He is not bound to substitute the
Secondarily liable – he Primarily liable – undertakes guarantor.
contracts to pay if, by the directly for the payment
use of due diligence, the without reference to the Selection of Guarantor:
debt cannot be paid solvency of the principal, and 1. Specified person stipulated as guarantor: Substitution
is so responsible at once the of guarantor may not be demanded
latter makes default, without REASON: The selection of the guarantor is:
any demand by the creditor a. A term of the agreement;
upon the principal whatsoever b. As a party, the creditor is, therefore, bound
or any notice of default thereby.
Only binds himself to pay if Undertakes to pay if the 2. Guarantor selected by the principal debtor: Debtor
the principal cannot or is principal does not pay, answers for the integrity, capacity, and solvency of the
unable to pay without regard to his ability to guarantor.
do so 3. Guarantor personally designated by the creditor:
Insurer of the solvency of Insurer of the debt Responsibility of the selection should fall upon the
the debtor creditor because he considered the guarantor to have
Does not contract that the Pay the creditor without the qualifications for the purpose.
principal will pay, but qualification if the principal
simply that he is able to do debtor does not pay. Hence, RIGHT OF GUARANTOR TO BENEFIT OF EXCUSSION OR
so the responsibility or obligation EXHAUSTION (Art. 2058)
assumed by the surety is
greater or more onerous than 1. Guarantor only secondarily liable – guarantor binds
that of a guarantor himself only in case the principal debtor should fail to do
so. If the principal debtor fulfills the obligation
QUALIFICATIONS OF GUARANTOR (Arts. 2056-2057) (SIC) guaranteed, the guarantor is discharged from any
1. He possesses integrity responsibility.
2. He has the capacity to bind himself
3. He has sufficient property to answer for the 2. All legal remedies against the debtor to be first
obligation which he guarantees exhausted – to warrant recourse against the guarantor
Exception: The creditor waives the requirements for payment, it may not be sufficient that the debtor
appears insolvent. Such insolvency may be simulated.
Effect of Subsequent Loss of Required Qualifications: The
qualifications need only be present at the time of the NOTE: Art. 2058 is not applicable to a contract of suretyship.
perfection of the contract. The subsequent loss of the

CIVIL LAW REVIEWER Page 247 of 338

Right of Creditor to Secure Judgment against Guarantor
prior to Exhaustion
General Rule: An ordinary personal guarantor (NOT a
pledgor or mortgagor), may demand exhaustion of all the
property of the debtor before he can be compelled to pay.
Exception: The creditor may, prior thereto, secure a
judgment against the guarantor, who shall be entitled,
however, to a deferment of the execution of said judgment
against him, until after the properties of the principal debtor
shall have been exhausted, to satisfy the latter’s obligation.
EXCEPTIONS TO THE BENEFIT OF EXCUSSION (Art. 2059)
The guarantor is not entitled to the benefit of excussion:
1. As provided in Art. 2059: (I-SAW-U)
a. If the guarantor has expressly waived it – Waiver
 Waiver is valid but it must be made in express
terms.
b. If he has bound himself solidarily with the debtor –
liability assumed that of a surety
 Guarantor becomes primarily liable as a solidary
co-debtor. In effect, he renounces in the contract
itself the benefit of exhaustion.
c. In case of insolvency of the debtor – guarantor
guarantees the solvency of the debtor
 If the debtor becomes insolvent, the liability of
the guarantor as the debtor cannot fulfill his
obligation
d. When he (debtor) has absconded, or cannot be sued
within the Philippines – the creditor is not required
to go after a debtor who is hiding or cannot be sued
in our courts
Exception: Debtor has left a manager or
representative
e. If it may be presumed that a judicial action including
execution on the property of the principal debtor
would not result in the satisfaction of the obligation
– if such is the case, the guarantor can no longer
require the creditor to resort to all such remedies
against the debtor as the same would be but a
useless formality. It is not necessary that the debtor
be judicially declared insolvent.
2. If he does not comply with Art. 2060: In order that the
guarantor may make use of the benefit of excussion, he
must:
CIVIL LAW REVIEWER
a. Set it up against the creditor upon the latter’s
demand for payment from him;
b. Point out to the creditor:
i. Available property of the debtor – the
guarantor should facilitate the realization of
the excussion since he is the most interested in
its benefit.
ii. Within the Philippine territory – excussion of
property located abroad would be a lengthy
and extremely difficult proceeding and would
not conform with the purpose of the guaranty
to provide the creditor with the means of
obtaining the fulfillment of the obligation.
iii. Sufficient to cover the amount of the debt.
3. If he is a judicial bondsman and sub-surety (Art. 2084) –
because he is solidarily liable
4. Where a pledge or mortgage has been given by him as a
special security
5. If he fails to interpose it as a defense before judgment
is rendered against him
DUTY OF CREDITOR TO MAKE PRIOR DEMAND FOR
PAYMENT FROM GUARANTOR (Art. 2060)
1. When demand to be made – only after judgment on the
debt for obviously the exhaustion of the principal’s
property cannot even begin to take place before
judgment has been obtained.
2. Actual demand to be made – joining the guarantor in
the suit against the principal debtor is not the demand
intended by law. There must be an actual demand and
not judicial demand.
DUTY OF THE GUARANTOR TO SET UP BENEFIT OF
EXCUSSION (Art. 2060)
As soon as he is required to pay, guarantor must also point
out to the creditor available property (not in litigation or
encumbered) of the debtor within the Philippines.
DUTY OF THE CREDITOR TO RESORT TO ALL LEGAL
REMEDIES (Art. 2061)
After the guarantor has fulfilled the conditions required for
making use of the benefit of exhaustion, it becomes the duty
of the creditor to: Exhaust all the property of the debtor
pointed out by the guarantor
If he fails to do so, he shall suffer the loss but only to the
extent of the value of the said property, for the insolvency of
the debtor.
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Resort to all legal remedies includes accion pauliana, among
others.
Joinder of Guarantor and Principal as Parties Defendant
General Rule: The guarantor, not being a joint contractor
with his principal, cannot be sued with his principal.
Exception: Where it would serve merely to delay the
ultimate accounting of the guarantor or if no different result
would be attained if the plaintiff were forced to institute
separate actions against the principal and the guarantors.
PROCEDURE WHEN CREDITOR SUES (Art. 2062)
1. Sent against the principal – The guarantor cannot be
sued with his principal, much less alone, except in the
cases mentioned in Art. 2059 where the guarantor is not
entitled to the benefit of excussion.
 As a rule, the creditor may hold the guarantor only
after judgment has been obtained against the
principal debtor and the latter is unable to pay.
2. Notice to guarantor of the action – guarantor must be
notified so that he may appear, if he so desires, and set
up defenses he may want to offer
a. Guaranty appears – voluntary appearance does not
constitute a renunciation of his right to excussion.
b. Guaranty does not appear –
i. He cannot set up the defenses which, by
appearing are allowed to him by law; and
ii. It may no longer be possible for him to
question the validity of the judgment rendered
against the debtor
3. Hearing before execution can be issued against the
guarantor – a guarantor is entitled to be heard before
an execution can be issued against him where he is not a
party in the case involving his principal.
EFFECTS OF COMPROMISE (Art. 2063)
Compromise – a contract whereby the parties, by making
reciprocal concessions, avoid a litigation or put an end to one
already commenced.
1. Compromise between creditor and principal debtor
benefits the guarantor but does not prejudice him.
2. Compromise between guarantor and the creditor
benefits but does not prejudice the principal debtor.
REASON: A compromise binds only the parties thereto and
not third persons. Thus, it cannot prejudice the guarantor or
debtor who was not party to the compromise. But if it
CIVIL LAW REVIEWER
benefits a third person, then the compromise may bind that
third person.
SUB-GUARANTOR’S RIGHT TO EXCUSSION (Art. 2064)
Sub-guarantor enjoys the benefit of excussion with respect
to:
1. Principal debtor; and
2. Guarantor
REASON: He stands with respect to the guarantor on the
same footing as the latter does with respect to the principal
debtor.
BENEFIT OF DIVISION AMONG SEVERAL GUARANTORS (Art.
2065)
1. In whose favor applicable - should there be several
guarantors of only one debtor and for the same debt, the
obligation to answer for the same is divided among all.
2. Cannot be availed of if there are:
a. Two or more debtors of one debt, even if they be
bound solidarily, each with different guarantors; or
b. Two or more guarantors of the same debtor but for
different debts
c. If any of the circumstances enumerated in Art. 2059
should take place, as would the benefit of
exhaustion of the debtor’s property.
3. Extent of liability of several guarantors – joint obligation:
the obligation to answer for the debt is divided among all of
them. The guarantors are not liable to the creditor beyond
the shares which they are respectively bound to pay.
Exception: Solidarity has been expressly stipulated
Benefit of Excussion among Several Guarantors:
In order that the guarantor may be entitled to the benefit of
division, it is not required that he point out the property of
his co-guarantors.
REASON: Obligation of the guarantor with respect to his co-
guarantors is not subsidiary but direct and does not depend
as to its origin on the solvency or insolvency of the latter.
RIGHT TO INDEMNITY OR REIMBURSEMENT (Art. 2066)
(DELT)
1. Total amount of the debt - The guarantor has no right to
demand reimbursement until he has actually paid the
debt, unless by the terms of the contract, he is given the
right before making payment.
2. Legal interest - It is immaterial that the debt did not
earn interest for the creditor, because the guarantor’s
right to legal interest is granted by law by virtue of the
payment he has made, and is independent of the
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 creditor’s right to claim interest which was necessarily
regulated by the stipulations between him and the
debtor.
3. Expenses incurred by the guarantor - The expenses
referred to are only those that the guarantor has to
satisfy in accordance with law as a consequence of the
guaranty. These expenses are limited to those incurred
by the guarantor after having notified the debtor that
payment has been demanded of him by the creditor.
Exception: The guarantor cannot demand for
reimbursement for litigation expenses, when such
expenses are due to its failure to fulfill its obligation to
pay upon demand. (Tuason vs. Machuca, GR No. L-
22177, December 2, 1924)
4. Damages, if they are due.
Exceptions to Right to Indemnity or Reimbursement
1. Where the guaranty is constituted without the
knowledge or against the will of the principal debtor, the
guarantor can recover only insofar as the payment had
been beneficial to the debtor
2. Payment by a third person who does not intend to be
reimbursed by the debtor is deemed to be a donation,
which, however, requires the debtor’s consent. But the
payment is in any case valid as to the creditor who has
accepted it (Art. 1238)
3. Waiver
GUARANTOR’S RIGHT TO SUBROGATION (Art. 2067)
SUBROGATION transfers to the person subrogated, the
credit with all the rights thereto appertaining either against
the debtor or against third persons, be they guarantors or
possessors of mortgages, subject to stipulation in
conventional subrogation.
1. Accrual, basis, and nature of right – right of subrogation
is necessary to enable the guarantor to enforce the
indemnity given in Art. 2066
a. Arises by operation of law upon payment by the
guarantor
b. It is not a contractual right
c. The guarantor is subrogated, by virtue of the
payment, to the right of the creditor, not those of
the debtor.
2. When right not available – since subrogation is the
means of effectuating the right of the guarantor to be
reimbursed, it cannot therefore be invoked in those
cases where the guarantor has no right to be
reimbursed.
CIVIL LAW REVIEWER
EFFECT OF PAYMENT BY GUARANTOR WITHOUT NOTICE TO
DEBTOR (Art. 2068)
When the guarantor pays the creditor, but the debtor has
already paid the latter, then the debtor can set up against
the guarantor the defense of previous extinguishments of
the obligation by payment.
Hence, guarantor must notify the debtor before making
payment.
REASON: The guarantor cannot be allowed, through his own
fault or negligence to prejudice or impair the rights or
interests of the debtor.
NOTE: In case of an unenforceable contract, if the debtor
consents to the guarantor paying, the guarantor can seek
reimbursement from the debtor. If the debtor did not
consent to the guarantor paying, the guarantor cannot seek
reimbursement from the guarantor.
EFFECT OF PAYMENT BY GUARANTOR BEFORE MATURITY
(Art. 2069)
Debtor’s obligation with a period – demandable only when
the day fixed comes.
1. The guarantor who pays before maturity is not entitled
to reimbursement since there is no necessity for
accelerating payment.
2. A contract of guaranty being subsidiary in character, the
guarantor is not liable for the debt before it becomes
due.
Exception: The debtor will be liable if the payment was
made:
a. With his consent; or
b. Subsequently ratified (express or implied) by him
EFFECT OF REPEAT PAYMENT BY THE DEBTOR (Art. 2070)
General Rule: Before the guarantor pays the creditor, he
must first notify the debtor.
 If he fails to give notice and the debtor repeats
payment:
Guarantor’s Remedy: collect from the creditor
 No cause of action against the debtor for the return of
the amount paid by him.
 In a gratuitous guaranty – if guarantor was prevented to
notify because of a fortuitous event, and creditor
becomes insolvent, debtor shall reimburse guarantor.
Exception: The guarantor may still claim reimbursement
from the debtor in spite of lack of notice if the following
conditions are present:
a. The creditor becomes insolvent
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 b. That guarantor was prevented by a fortuitous event
to advise the debtor of the payment ARTS. 2066 and 2071 Distinguished
c. The guaranty is gratuitous ART. 2066 ART. 2071
(RIGHT OF GUARANTOR TO (RIGHT OF GUARANTOR TO
RIGHT OF GUARANTOR TO PROCEED AGAINST DEBTOR REIMBURSEMENT AFTER PROCEED AGAINST DEBTOR
BEFORE PAYMENT (Art. 2071) PAYMENT) EVEN BEFORE PAYMENT)
General Rule: Guarantor has no cause of action against the Provides for the Provides for the protection
debtor until after the former has paid the obligation. enforcement of the rights of before he has paid but after
the guarantor against the he has become liable – gives
Exceptions: Art. 2071 enumerates instances when the debtor after he has paid the a protective remedy before
guarantor may proceed against the debtor even before the debt – gives a right of action payment
payment. (PAID-SIT) after payment
1. When he is sued for the payment; Substantive right Preliminary remedy
2. In case of insolvency of the principal debtor; Gives a right of action, Remedy given seeks to obtain
3. When the debtor has bound himself to relieve him which, without the from the guarantor “release
from the guaranty within a specified period, and provisions of the other from the guaranty or to
this period has expired; might be worthless demand a security that shall
4. When the debt has become demandable, by reason protect him from any
of the expiration of the period for payment; proceedings by the creditor
5. After the lapse of ten years, when the principal and from the danger of
obligation has no fixed period for its maturity, insolvency of the debtor.”
unless it be of such nature that it cannot be Recovery of Surety against Indemnitor even before
extinguished except within a period longer than ten Payment
years;
6. If there are reasonable grounds to fear that the 1. Indemnity agreement for the benefit of surety –not for
principal debtor intends to abscond; the benefit of the creditor
7. If the principal debtor is in imminent danger of
becoming insolvent. 2. Indemnity agreement may be against actual loss as
well as liability – such agreement is enforceable and not
Purpose: To enable the guarantor to take measures for the violative of any public policy
protection of his interest in view of the probability that he
would be called upon to pay the debt. a. Indemnity against loss – indemnitor will not be
Remedy to which the Guarantor Entitled liable until the person to be indemnified makes
The guarantor cannot demand reimbursement for indemnity payment or sustains loss
when he has not paid the obligation. b. Indemnity against liability – indemnitor’s liability
REMEDIES AVAILABLE: arises as soon as the liability of the person to be
1. To obtain release from the guaranty; or indemnified has arisen without regard to whether
2. To demand security that shall protect him from: or not he has suffered actual loss
a. Any proceedings by the creditor; and c. Such agreement valid - A stipulation in an
b. Against the insolvency of the debtor. indemnity agreement providing that the indemnitor
Guarantor’s remedies are alternative. He has the right to shall pay the surety as soon as the latter becomes
choose the action to bring. liable to make payment to the creditor under the
terms of the bond, regardless of whether the surety
Suit by Guarantor against Creditor before Payment has made payment actually or not, is valid and
The guarantor’s or surety’s action for release can only be enforceable, and in accordance therewith, the
exercised against the principal debtor and not against the surety may demand from the indemnitor even
creditor. before the creditor has paid.

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.
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.

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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
RIGHTS OF THE GUARANTOR AGAINST THE DEBTOR (BRIB)
1. Indemnification
2. Benefit of Subrogation
3. Benefit of Compromise
4. 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.
When Art. 2073 Applicable:
1. When one guarantor has paid the debt to the
creditor;
2. Payment by such guarantor must have been made:
a. By virtue of a judicial demand (benefit of
division must have ceased); or
b. Because the principal debtor is insolvent;
3. Guarantor who paid is seeking reimbursement from
each of his co-guarantors the share which is
proportionately owing him.
Effect of Insolvency of Any Guarantor:
Follows 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)
General Rule: All defenses which the debtor would have
interposed against the creditor (i.e. fraud, prescription,
remission, illegality, etc.).
CIVIL LAW REVIEWER
Exception: Those which cannot be transmitted for being
purely personal to the debtor.
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
sub-guarantor.
CAUSES OF EXTINGUISHMENT OF GUARANTY (Art. 2076)
(PL3CN-ARFP)
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
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2. Takes away some obligation already imposed, changing
the legal effect of the original contract and not merely
the form thereof.
RELEASE BY CONVEYANCE OF PROPERTY (Art. 2077)
General Rule: Payment is made in money.
Exception: Any substitute paid in lieu of money which is
accepted by the creditor extinguishes the obligation and in
consequence, the guaranty.
 If the creditor accepts property in payment of a debt
from the debtor, the guarantor is relieved from
responsibility. This is also true even in case the creditor
is subsequently evicted from the property.
In case of eviction: Eviction revives the principal obligation
but not the guaranty.
REASON: The creditor’s action against the debtor is for
eviction and this is different from what the guarantor
guaranteed.
RELEASE OF GUARANTOR WITHOUT CONSENT OF OTHERS
(Art. 2078)
EFFECT: The release benefits all to the extent of the share of
the guarantor released.
REASON: A release made by the creditor in favor of one of
the guarantors without the consent of the others may
prejudice the others should a guarantor become insolvent.
RELEASE BY EXTENSION OF TERM GRANTED BY CREDITOR
TO DEBTOR (Art. 2079)
Release Without Consent of Guarantor: Creditor grants an
extension of time to the debtor without the consent of the
guarantor.
EFFECT: Guarantor is discharged from his undertaking.
REASON: To avoid prejudice to the guarantor
The debtor may become insolvent during the extension, thus
depriving the guarantor of his right to reimbursement.
It doesn’t matter if the extension is:
a. Prejudicial or not or
b. For a long or short period of time
Consent of the guarantor is a must!
CIVIL LAW REVIEWER
Extension must be based on some new agreement between
the creditor and the principal debtor by virtue of which the
creditor deprives him of his claim.
1. Where obligation payable in installments: where a
guarantor is liable for different payments:
General Rule: An extension of time to one or more will
not affect the liability of the surety for the others.
Exception: When the unpaid balance has become
automatically due by virtue of an acceleration clause for
failure to pay an installment.
Effect of exception: The act of the creditor extending the
payment of said installment, without the guarantor’s
consent, discharges the guarantor.
REASON: The extension constitutes an extension of the
payment of the whole amount of the indebtedness
2. Where consent to an extension is waived in advance
by the guarantor: Such waiver is not contrary to law,
nor to public policy
Effect: Amounts to the surety’s consent to all the extensions
granted.
NOTE: The mere failure or neglect on the part of the creditor
to enforce payment or to bring an action upon a credit, as
soon as the same or any part of it matures, does not
constitute an extension of the term of the obligation, and
therefore, the liability of the guarantor is not extinguished.
In order to constitute an extension discharging a surety, it
should appear that the extension was: (DEW)
1. For a Definite period
2. Pursuant to an Enforceable agreement between the
principal and the creditor
3. Made Without the consent of the surety or with a
reservation of rights with respect to him.
 The contract must be one which precludes the creditor
from, or at least hinders him in, enforcing the principal
contract within the period during which he could
otherwise have enforced it, and precludes the surety
from paying the debt.
 The law does not even grant the surety the right to sue
the creditor for delay, as protection against the risks of
possible insolvency of the debtor; but in view of the
efficacy of the action on the contract against the surety,
beginning with the date the obligation becomes due, his
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 vigilance must be exercised rather against the principal
debtor.
RELEASE WHEN GUARANTOR CANNOT BE SUBROGATED
(Art. 2080)
 If there can be no subrogation because of the fault of
the creditor, the guarantors are thereby released, even
if the guarantors are solidary.
 If the creditor has acquired a lien upon the property of a
principal, the creditor at once becomes charged with the
duty of retaining such security, or maintaining such lien
in the interest of the surety, and any release or
impairment of this security as a primary resource of
payment of a debt, will discharge the surety to the
extent of the value of the property or lien released for
there immediately arises a trust relation between the
parties, and the creditor as trustee is bound to account
to the surety for the value of the security in his hands.
REASON: The act of one cannot prejudice another. It also
avoids collusion between the creditor and the debtor or a
third person.
DEFENSES AVAILABLE TO GUARANTOR AGAINST CREDITOR
(Art. 2081)
General Rule: All defenses, which pertain to the principal
debtor and are inherent in the debt.
Exception: Those which are purely personal to the debtor.
NOTE: Art 2081 does not cover a surety.
SURETYSHIP
SURETYSHIP is a relation which exists where one person
(principal) has undertaken an obligation and another person
(surety) is also under a direct and primary obligation or other
duty to the obligee, who is entitled to but one performance,
and as between the two who are bound, the second, rather
than the first should perform.
 If a person binds himself solidarily with the principal
debtor, the contract is called suretyship and the
guarantor is called a surety.
NATURE OF SURETY’S UNDERTAKING
1. Liability is contractual and accessory but direct:
2. Liability is limited by terms of contract
3. Liability arises only if principal debtor is held liable
a. In the absence of collusion, the surety is bound by a
judgment against the principal event though he was
not a party to the proceedings;
CIVIL LAW REVIEWER
b. The creditor may sue, separately or together, the
principal debtor and the surety;
c. A demand or notice of default is not required to fix
the surety’s liability
EXCEPTION: Where required by the provisions of
the contract of suretyship
d. A surety bond is void where there is no principal
debtor because such an undertaking presupposes
that the obligation is to be enforceable against
someone else besides the surety, and the latter can
always claim that it was never his intention to be
the sole person obligated thereby.
NOTE: Surety is not entitled to exhaustion
4. Undertaking is to creditor, not to debtor: The surety’s
undertaking is that the principal shall fulfill his obligation
and that the surety shall be relieved of liability when the
obligation secured is performed.
EXCEPTION: Unless otherwise expressly provided.
NOTE: Surety is not entitled to notice of principal’s default
5. Prior demand by the creditor upon principal not
required: Surety is not exonerated by neglect of creditor
to sue principal
Strictissimi Juris Rule Applicable Only to Accommodation
Surety
REASON: An accommodation surety acts without motive of
pecuniary gain and hence, --should be protected against
unjust pecuniary impoverishment by imposing on the
principal, duties akin to those of a fiduciary.
This rule will apply only after it has been definitely
ascertained that the contract is one of suretyship or
guaranty.
Strictissimi Juris Rule Not Applicable to Compensated
Sureties
REASONS:
1. Compensated corporate sureties are business
association organized for the purpose of assuming
classified risks in large numbers, for profit and on an
impersonal basis.
2. They are secured from all possible loss by adequate
counter-bonds or indemnity agreements.
3. Such corporations are in fact insurers and in determining
their rights and liabilities, the rules peculiar to
suretyship do not apply.
LEGAL AND JUDICIAL BONDS
Page 254 of 338
MEANING AND FORM OF BOND (Art. 2082) Essential Requisites to Contracts of Pledge and
Mortgage: (FARCAS)
Bond – an undertaking that is sufficiently secured, and not 1. Constituted to secure the fulfillment of a principal
cash or currency obligation
2. Pledgor or mortgagor be the absolute owner of the
Bondsman – a surety offered in virtue of a provision of law or thing pledged or mortgaged
a judicial order. 3. The persons constituting the pledge or mortgage have
the free disposal of their property, and in the absence
Qualifications of personal bondsman: (SIC) thereof, that they be legally authorized for the purpose
1. He possesses integrity; 4. Cannot exist without a valid obligation
2. He has the capacity to bind himself; 5. Debtor retains the ownership of the thing given as a
3. He has sufficient property to answer for the obligation security
which he guarantees. 6. When the principal obligation becomes due, the thing in
which the pledge or mortgage consists may be alienated
PLEDGE OR MORTGAGE IN LIEU OF BOND (Art. 2083) for the payment to the creditor.

Guaranty or suretyship is a personal security. Important Points

Pledge or mortgage is a property or real security. 1. Future property cannot be pledged or mortgaged
If the person required to give a legal or judicial bond should 2. Pledge/mortgage executed by one who is not the owner
not be able to do so, a pledge or mortgage sufficient to cover of the property pledged or mortgaged is without legal
the obligation shall be admitted in lieu thereof. existence and registration cannot validate it.
BONDSMAN NOT ENTITLED TO EXCUSSION (Art. 2084) 3. Mortgage of a conjugal property by one of the spouses
A judicial bondsman and the sub-surety are not entitled to is valid only as to ½ of the entire property
the benefit of excussion. 4. In case of property covered by Torrens title, a
mortgagee has the right to rely upon what appears in
REASON: They are not mere guarantors, but sureties whose the certificate of title and does not have to inquire
liability is primary and solidary. further.
5. Pledgor or mortgagor has free disposal of property
Effect of negligence of creditor: Mere negligence on the part 6. Thing pledged or mortgaged may be alienated.
of the creditor in collecting from the debtor will not relieve 7. Creditor not required to sue to enforce his credit
the surety from liability. 8. Pledgor or mortgagor may be third person
9. The liability of an accommodation pledgor or mortgagor
====================================== extends only to the property pledged or mortgaged.
TOPIC UNDER THE SYLLABUS:
D. Pledge PLEDGE MORTGAGE
1. Definition Constituted on movables Constituted on immovables
2. Kinds Property is delivered to Delivery not necessary
the pledgee, or by
3. Essential requirements
common consent to a 3rd
4. Obligation of pledge person
5. Rights of pledgor Not valid against 3rd Not valid against 3rd persons
6. Perfection (Arts. 2093, 2096) persons unless a if not registered
7. Foreclosure (Arts. 2112, 2115) description of the thing
8. Pledge by operation of law (Art. 2121-2122) pledged and the date of
the pledge appear in a
9. Distinguished from chattel mortgage (Arts.
public instrument
2140, 1484)
====================================== Right of Creditor where Debtor fails to Comply with his
Obligation
PROVISIONS COMMON TO PLEDGE AND MORTGAGE 1. Creditor is merely entitled to move for the sale of the
(Arts. 2085-2123) thing pledged or mortgaged with the formalities
required by law in order to collect

CIVIL LAW REVIEWER Page 255 of 338

2. Creditor cannot appropriate to himself the thing nor can
he dispose of the same as owner.
Prohibition against pactum commissorium
 Stipulation is null and void - stipulation where thing
pledged or mortgaged shall automatically become the
property of the creditor in the event of nonpayment of
the debt within the term fixed
 Requisites of pactum commissorium:
a. There should be a pledge or mortgage
b. There should be a stipulation for an automatic
appropriation by the creditor of the property in the
event of nonpayment
 Effect on Security Contract
Nullity of the stipulation does not affect validity and
efficacy of the principal contract
Important Points
1. Debtor -owner bears the risk of loss of the property
2. Pledge or mortgage is indivisible
Exceptions to the rule of indivisibility:
a. Where each one of several things guarantees
determinate portion of credit
b. Where only portion of loan was released
Example: X borrowed 80k from the bank and he
mortgaged his 100 ha. property. Lender was only
able to release 40k due to CB restrictions. The Court
held that the bank can only foreclose on 50% of the
mortgaged land (50 ha.) Central Bank v. CA, [139
SCRA 46]
c. Where there was failure of consideration
3. The rule that real property, consisting of several lots
should be sold separately, applies to sales in execution,
and not to foreclosure of mortgages
4. The mere embodiment of a real estate mortgage and a
chattel mortgage in one document does not have the
effect of fusing both securities into an indivisible whole
5. Contract of pledge or mortgage may secure all kinds of
obligation, be they pure or subject to a suspensive or
resolutory condition
6. A promise to constitute pledge or mortgage gives rise
only to a personal right binding upon the parties and
creates no real right in the property. What exists is only
a right of action to compel the fulfillment of the
promise, but there is no pledge or mortgage yet.
7. Under RPC, estafa is committed by a person who,
pretending to be the owner of any real property, shall
convey, sell, encumber or mortgage the same knowing
that the real property is encumbered shall dispose of the
same as unencumbered. It is essential that fraud or
CIVIL LAW REVIEWER
deceit be practiced upon the vendee at the time of the
sale.
PLEDGE (Arts. 2093-2123)
PLEDGE is a contract by virtue of which the debtor delivers to
the creditor or to a third person a movable or document
evidencing incorporeal rights for the purpose of securing the
fulfillment of a principal obligation with the understanding
that when the obligation is fulfilled, the thing delivered shall
be returned with all its fruits and accessions.
Kinds of Pledge:
1. Voluntary or conventional - created by agreement of
the parties
2. Legal - created by operation of law
Characteristics of Pledge:
1. Real - perfected by delivery
2. Accessory - has no independent existence of its own
3. Unilateral - creates obligation solely on the part of the
creditor to return the thing subject upon the fulfillment
of the principal obligation
4. Subsidiary - obligation incurred does not arise until the
fulfillment of the principal obligation
Cause or Consideration in Pledge
1. Principal obligation – in so far as the pledgor is
concerned
2. Compensation stipulated for the pledge or mere
liberality of the pledgor- if pledgor is not the debtor
PROVISIONS APPLICABLE ONLY TO PLEDGE
1. Transfer of possession to the creditor or to third person
by common agreement is essential in pledge
a. ACTUAL DELIVERY is important
b. CONSTRUCTIVE delivery or symbolic delivery of the
key to the warehouse is sufficient to show that the
depositary appointed by common consent of the
parties was legally placed in possession.
2. All movables within commerce of men may be pledged
as long as susceptible of possession
3. Incorporeal right may be pledged. The instruments
pledged shall be delivered to the creditor and if
negotiable, must be indorsed.
4. Pledge shall take effect against 3rd persons only if the ff
appears in a public instrument:
a. Description of the thing pledged
b. Date of the pledge
Page 256 of 338
5. Thing pledged may be alienated by the pledgor or owner
only if with the consent of the pledgee. Ownership of
the thing pledged is transmitted to the vendee or
transferee as soon as the pledgee consents to the
alienation, but the latter shall continue in possession
6. Contract of pledge gives the creditor the right to retain
the thing in his possession or in that of a third person to
whom it has been delivered, until the debt is paid
7. Creditor :
a. Shall take care of the thing pledged with the
diligence of a good father of a family
b. Has the right to the reimbursement of the expenses
made for its preservation and is liable for its loss or
deterioration by reason of fraud, negligence, delay
or violation of the terms of the contract, and not
due to fortuitous event
c. May bring the actions which pertain to the owner of
the thing in order to recover it from, or defend it
against a 3rd person
d. Cannot use the thing without the authority of the
owner, and if he should do so, or misuse the thing,
the owner may ask that it be judicially or
extrajudicially deposited
e. May use the thing if it is necessary for the
preservation of the thing (e.g. car has to be driven
once in a while)
f. May either claim another thing in pledge or
demand immediate payment of the principal
obligation if he is deceived on the substance or
quality of the thing
8. Pledgee:
a. Take care of the thing with diligence of a good
father of a family.
b. Cannot deposit the thing pledged with a third
person, unless there is a stipulation authorizing him
to do so
c. Is responsible for the acts of his agents or
employees with respect to the thing pledged
d. Has no right to use the thing or to appropriate the
fruits without the authority of the owner
CIVIL LAW REVIEWER
e. May cause public sale of the thing pledged if,
without fault on his part, there is danger of
destruction, impairment or diminution in value of
the thing. The proceeds of the auction shall be a
security for the principal obligation.
9. Pledgor:
a. Has the responsibility for flaws of the thing pledged.
b. Cannot ask for the return of the thing against the
will of the creditor, unless and until he has paid the
debt and its interest, with expenses in a proper case
c. Is allowed to substitute the thing which is in danger
of destruction or impairment without any fault on
the part of the pledgee, with another thing of the
same kind and quality
d. May require that the thing be deposited with a 3rd
person if through the negligence or willful act of the
pledgee the thing is in danger of being lost or
impaired
EXTINGUISHMENT OF PLEDGE (R2P23A)
1. If the thing pledged is returned by the pledgee to the
pledgor or owner, pledge is extinguished.
2. A statement in writing by the pledgee that he renounces
or abandons the pledge is sufficient to extinguish it. For
this purpose, neither the acceptance by the pledgor or
owner, nor the return of the thing pledged is necessary,
the pledgee becoming a depositary.
3. If subsequent to the perfection of the pledge, the thing
is in the possession of the pledgor or owner, there is
prima facie presumption that the thing has been
returned by the pledgee.
4. If the thing is in the possession of 3rd person who has
received it from the pledgor or owner after the
constitution of the pledge, there is prima facie
presumption that the thing has been returned by the
pledgee
5. Payment of the debt
6. Sale of the thing pledged at public auction
Formalities required in sale by a creditor if credit not paid in
due time:
1. The debt is due and unpaid
2. The sale must be at a public auction
3. There must be notice to the pledgor and owner, stating
the amount due, and
4. The sale must be made with the intervention of a notary
public
Page 257 of 338

EFFECT OF THE SALE OF THE THING PLEDGED
1. Extinguishes the principal obligation whether the price
of the sale is more or less than the amount due
2. If the price is more than amount due, the debtor is not
entitled to the excess unless the contrary is provided
3. If the price of the sale is less, neither is the creditor
entitled to recover the deficiency. Contrary stipulation is
void.
Legal Pledges
1. Necessary expenses shall be refunded to every
possessor, but only possessor in good faith may retain
the thing until he has been reimbursed
Useful expenses shall be refunded only to the possessor in
good faith with the same right of retention, the person
who has defeated him in the possession having the option
of refunding the amount of the expenses or of paying the
increase in value which the thing may have acquired and
by reason thereof. (Art. 546)
2. He who has executed work upon a movable has a right
to retain it by way of pledge until he is paid. (Art. 1731)
3. The agent may retain the things which are the objects of
agency until the principal effects the reimbursement and
pays the indemnity. (Art. 1914)
4. The laborer’s wages shall be a lien on the goods
manufactured or the work done. (Art. 1707)
Special Laws apply to pawnshops and establishments which
are engaged in making loans secured by pledges. Provisions
of the Civil Code shall apply subsidiarily.
======================================
TOPIC UNDER THE SYLLABUS:
E. Real Mortgage
1. Definition and characteristics
2. Essential requisites
3. Foreclosure
======================================
MORTGAGE
REAL MORTGAGE (Arts. 2124-2131) is a contract whereby
the debtor secures to the creditor the fulfillment of a
principal obligation, specially subjecting to such security
immovable property or real rights over immovable property
CIVIL LAW REVIEWER
in case the principal obligation is not complied with at the
time stipulated.
OBJECTS OF REAL MORTGAGE:
1. Immovables
2. Alienable real rights in accordance with the laws,
imposed upon immovables.
General Rule: Future property cannot be object of
mortgage
Exception: (AFTER-ACQUIRED PROPERTIES) A
stipulation subjecting to the mortgage lien,
improvements which the mortgagor may subsequently
acquire, install, or use in connection with the real
property already mortgaged belonging to the mortgagor
is valid People’s Bank and Trust Co. v. Dahican Lumber
Co., [20 SCRA 84 (1967)]
Example: X owns a factory. In that factory, he installed a
machine and subsequently mortgaged it. The parties
may validly stipulate that if the original machine is
replaced, the replacement shall be subject to the
mortgage. The reason for this is that after-acquired
properties are understood to be replacements, as the
original machine may be subject to wear and tear.
Important Points
1. As a general rule, the mortgagor retains possession of
the property. He may deliver said property to the
mortgagee without altering the nature of the contract of
mortgage.
2. It is not an essential requisite that the principal of the
mortgage credit bears interest, or that the interest as
compensation for the use of the principal and the
enjoyment of its fruits be in the form of a certain
percent thereof.
Kinds of Mortgage:
1. Voluntary
2. Legal
3. Equitable – one which, although it lacks the proper
formalities of a mortgage shows the intention of the parties
to make the property as a security for a debt (governed by
Arts. 1365, 1450, 1454, 1602, 1603, 1604 and 1607)
ESSENTIAL REQUISITES OF MORTGAGE: (FADVAP)
1. Constituted to secure the fulfillment of a principal
obligation
2. Mortgagor be the absolute owner of the thing pledged
or mortgaged
3. Mortgagor has free disposal of the property, and in the
absence thereof, that he be legally authorized for the
purpose
Page 258 of 338
4. Cannot exist without a valid obligation
5. When the principal obligation becomes due, the thing in
which the mortgage consists may be alienated for the
payment to the creditor.
6. Appears in a public document duly recorded in the
Registry of Property to be validly constituted
 If the instrument is not recorded, the mortgage is
nevertheless binding between the parties.
LEGAL MORTGAGE: the persons in whose favor the law
establishes a mortgage have no other right than to demand
the execution and the recording of the document in which
the mortgage is formalized.
INCIDENTS OF REGISTRATION OF MORTGAGE
1. Mortgagee entitled to registration of mortgage as a
matter of right
2. Proceedings for registration do not determine validity of
mortgage or its effect
3. Registration is without prejudice to better right of third
parties
4. Mortgage deed once duly registered forms part of the
records for the registration of the property mortgaged
5. Mortgage by surviving spouse of his/her undivided share
of conjugal property can be registered
Effect of Invalidity of Mortgage on principal obligation
1. Principal obligation remains valid
2. Mortgage deed remains as evidence of a personal
obligation
Effect of Mortgage
1. Creates right in rem or real rights. A lien inseparable
from the property mortgaged, enforceable against the
whole world as long as it is registered. If not registered
the third party must know of the mortgage.
2. Creates merely an encumbrance. The law considers void
any stipulation forbidding the owner from alienating the
immovable mortgaged (Art. 2130).
 The mortgagor’s default does not operate to vest in
the mortgagee the ownership of the encumbered
property.
 His failure to redeem the property does not
automatically vest ownership of the property to the
mortgagee.
EXTENT OF MORTGAGE (AIGRiPE)
A real estate mortgage constituted on immovable property is
not limited to the property itself but also extends to its:
1. Accessions
2. Improvements
3. Growing fruits
4. Rents or income
5. Proceeds of insurance should the property be destroyed
CIVIL LAW REVIEWER
6.Expropriation value of the property should it be
expropriated.
To exclude them, it is necessary that there be an express
stipulation to that effect.
But if the mortgaged estate passes into the hands of a third
person, the mortgage does not extend to any machinery,
object, chattel or construction which he may have brought or
placed there and which such third person may remove
whenever it is convenient for him to do so.
MORTGAGE TO SECURE FUTURE ADVANCEMENTS (BLANKET
OR DRAGNET CLAUSE)
Blanket/Dragnet Clause - one which is specifically phrased to
subsume all debts of past or future origin.
General Rule: There must be a stipulation for the inclusion of
future advancements.
Mortgage with a dragnet clause enable the parties to provide
continuous dealings, the nature or extent of which may not
be known or anticipated at the time, and they avoid the
expense and inconvenience of executing a new security on
each new transaction.
A mortgage given to secure future advancements is a
continuing security and is not discharged by the repayment
of the amount named in the mortgage, until the full amount
of the advancements is paid.
ALIENATION OR ASSIGNMENT OF MORTGAGE CREDIT
The mortgage credit is a real right which may be alienated by
the mortgagee without need to obtain the consent of the
debtor. Alienation of the mortgage credit is valid even if it is
not registered. Registration is necessary only to affect third
persons.
Laws Governing Mortgage
1. New Civil Code
2. P.D. 1952
3. Revised Administrative Code
4. R.A. 4882, as regards aliens becoming mortgages
Foreclosure of Mortgage is the remedy available to the
mortgagee by which he subjects the mortgaged property to
the satisfaction of the obligation to secure which the
mortgage was given.
 A foreclosure sale retroacts to the date of registration of
the mortgage and that a person who takes a mortgage
in good faith and for valuable consideration, the record
showing clear title to the mortgagor, will be protected
against equitable claims on the title in favor of third
Page 259 of 338
 persons of which he had no actual or constructive notice
St. Dominic Corporation v. IAC, 151 SCRA 577 (1987)
 Mere inadequacy of the price obtained at the sheriff’s
sale will not be sufficient to set aside the sale unless
“the price is so inadequate as to shock the conscience of
the court” taking into consideration the peculiar
circumstances attendant thereto. Sulit v. CA, 268 SCRA
441 (1997)
 The action to recover a deficiency after foreclosure
prescribes after 10 years from the time the right of
action accrues (Arts. 1142 & 1144)
JUDICIAL FORECLOSURE (governed by Rule 68 of Rules of
Court): (J-PACE-PC)
1. Judicial action for the purpose in the proper court which
has jurisdiction over the area wherein the real property
involved or a portion thereof is situated
2. Court order to mortgagor to pay mortgage debt with
interest and other charges within a period of not less
than 90 days nor more than 120 days from the entry of
judgment
3. Sale to the highest bidder at public auction, should the
mortgagor fail to pay at the time directed.
Confirmation of sale, which operates to divest the rights of
all parties in the action and to vest their rights to the
purchase, subject to the right of redemption allowed by law
4. Execution of judgment
5. Application of proceeds of sale to:
a. Costs of the sale;
b. Amount due the mortgagee;
c. Claims of junior encumbrancers or persons holding
subsequent mortgages in the order of their priority;
and
d. The balance, if any shall be paid to the mortgagor
6. Sheriff’s certificate is executed, acknowledged and
recorded to complete the foreclosure
Nature of Judicial Foreclosure Proceedings
1. Quasi in rem action
2. Foreclosure is only the result or incident of the failure to
pay debt
3. Survives death of mortgagor
EXTRAJUDICIAL FORECLOSURE (governed by Act No. 3135,
as amended)
1. Express authority to sell is given to the mortgagee
2. Authority is not extinguished by death of mortgagor or
mortgagee
CIVIL LAW REVIEWER
3. Public sale should be made after proper notice (posting
and publication)
4. Surplus proceeds of foreclosure sale belong to the
mortgagor or his assigns
5. Debtor has the right to redeem the property sold within
1 year from and after the date of sale
6. Remedy of party aggrieved by foreclosure is a petition to
set aside sale and cancellation of writ of possession
7. Republication is necessary for the validity of a
postponed foreclosure sale (parties have no right to
waive the publication requirement)
Procedure for Extrajudicial Foreclosure of Real Estate
Mortgage (Act No. 3135 )
&
Chattel Mortgage
(Act No. 1508, A.M. N0. 99-10-05-0; January 15, 2000)
(ARC-DIN-REA)
1. Filing of application before the Executive Judge through
the Clerk of Court
2. Clerk of Court will examine whether the requirements of
the law have been complied with, that is, whether the
notice of sale has been posted for not less than 20 days
in at least 3 public places of the municipality or city
where the property is situated, and if the same is worth
more than P400.00, that such notice has been published
once a week for at least 3 consecutive weeks in a
newspaper of general circulation in the city or
municipality
3. The certificate of sale must be approved by the
Executive Judge
4. In extrajudicial foreclosure of real mortgages in different
locations covering one indebtedness, only one filing fee
corresponding to such debt shall be collected
5. The Clerk of Court shall issue certificate of payment
indicating the amount of indebtedness, the filing fees
collected, the mortgages sought to be foreclosed, the
description of the real estates and their respective
locations
6. The notice of sale shall be published in a newspaper of
general circulation
7. The application shall be raffled among all sheriffs
8. After the redemption period has expired, the Clerk of
Court shall archive the records
Page 260 of 338

9. No auction sale shall be held unless there are at least 2
participating bidders, otherwise the sale shall be
postponed to another date. If on the new date there
shall not be at least 2 bidders, the sale shall then
proceed. The names of the bidders shall be reported by
the Sheriff or the Notary Public who conducted the sale
to the Clerk of Court before the issuance of the
certificate of sale
Right of mortgagee to recover deficiency
1. Mortgagee is entitled to recover deficiency
2. If the deficiency is embodied in a judgment, it is referred
to as deficiency judgment
3. Action for recovery of deficiency may be filed even
during redemption period
4. Action to recover prescribes after 10 years from the
time the right of action accrues
Nature of power of foreclosure by extrajudicial sale
1. Conferred for mortgagee’s protection
2. An ancillary stipulation supported by the same cause or
consideration for the mortgage
3. A prerogative of the mortgagee
Stipulation of Upset Price or “tipo”
A stipulation of minimum price at which the property shall be
sold to become operative in the event of a foreclosure sale at
public auction is NULL and VOID
Effect of inadequacy of price in foreclosure sale
1. Where there is right to redeem
General Rule: Inadequacy of price is immaterial
because the judgment debtor may redeem the property
Exception: The price is so inadequate as to shock the
conscience of the court taking into consideration the
peculiar circumstances
2. Property may be sold for less than its fair market value
upon the theory that the lesser the price the easier for
the owner to redeem
3. The value of the mortgaged property has no bearing on
the bid price at the public auction, provided that the
public auction was regularly and honestly conducted
Waiver of security by creditor
1. Mortgagee may waive right to foreclose his mortgage
and maintain a personal action for recovery of the
indebtedness
2. Remedies are alternative, not cumulative.
3. Options in case the debtor dies:
CIVIL LAW REVIEWER
a. To waive mortgage and claim entire debt from the
mortgagor’s estate as an ordinary claim
b. To judicially foreclose mortgage and prove any
deficiency
c. To rely on the mortgage exclusively without filing a
claim for deficiency
NOTE: Foreclosure retroacts to the date of registration of
mortgage
REDEMPTION is a transaction by which the mortgagor
reacquires or buys back the property which may have passed
under the mortgage or divests the property of the lien which
the mortgage may have created.
KINDS OF REDEMPTION
1. Equity of redemption: right of the mortgagor to redeem
the mortgaged property after his default in the
performance of the conditions of the mortgage but
before confirmation of the sale.
a. Applies to judicial foreclosure of real mortgage
and chattel mortgage foreclosure
b. A second mortgagee acquires only the equity of
redemption vested in the mortgagor, and his
rights are strictly subordinate to the superior
lien of the first mortgagee.
NOTE: Redemption of the banking institutions is allowed
within 1 year from confirmation of sale
2. Right of redemption: right of the mortgagor to redeem
the property within a certain period after it was sold for
the satisfaction of the debt
a. Applies only to extrajudicial foreclosure of real
mortgage
NOTE: The right of redemption, as long as within the period
prescribed, may be exercised irrespective of whether or not
the mortgagee has subsequently conveyed the property to
some other party Sta. Ignacia Rural Bank, Inc. v. CA, 230
SCRA 513 (1994)
A sale by the mortgagor to a third party of the mortgaged
property during the period of redemption transfers only the
right to redeem the property and the right to possess, use,
and enjoy the same during the period. The judgment debtor
remains in possession of the property foreclosed and sold
during the period of redemption, but he cannot make a
conveyance of the ownership of the property, since it
belongs to the purchaser at the foreclosure sale Dizon v.
Gaborro, 83 SCRA 688 (1978)
PERIOD OF REDEMPTION
Extra-judicial (Act No. 3135)
Page 261 of 338
 a. Natural person – 1 year from registration of the limited to the right to redeem by paying off the debt
certificate of sale with Registry of Deeds secured by the first mortgage.
b. Juridical person – same rule as natural person 2. He is entitled to the payment of his credit the excess of
c. Juridical person (mortgagee is bank) – 3 months the proceeds of the auction sale.
after foreclosure or before registration of certificate 3. In case the credit of the first mortgagee has absorbed the
of foreclosure whichever is earlier (Sec. 117 of entire proceeds of the sale, the second mortgage is
General Banking Law) extinguished, since the mortgage cannot be enforced
beyond the total value of the mortgaged property.
Judicial – before confirmation of the sale by the court
Mortgagee in Possession – one who has lawfully acquired
Periods of Judicial Foreclosure Extrajudicial Foreclosure actual or constructive possession of the premises mortgaged
redemption to him, standing upon his rights as mortgagee and not
Mortgage: BANKS NON- BANKS NON-BANKS
claiming under another title, for the purpose of enforcing his
BANK
S
security upon such property or making its income help to pay
Individual 1 year X 1 year 1 year his debt
debtors/mortgagor from from from
s registratio registratio registratio RIGHTS AND OBLIGATIONS OF MORTGAGEE IN POSSESSION
n of sale n of sale n of sale 1. Similar to an antichresis creditor – entitled to retain such
Juridical persons as 1 year X Until 1 year
possession until the indebtedness is satisfied and the
debtors/mortgagor from registratio from
s registratio n of registratio property redeemed.
n of sale certificate n of sale 2. Without right to reimbursement for useful expenses
of sale or 3
months RIGHT OF PURCHASER TO WRIT OF POSSESSION
from sale Writ of Possession – order whereby the sheriff is
whichever
is earlier
commanded to place in possession of real or personal
property the person entitled thereto such as when a
NOTE: Allowing redemption after the lapse of the statutory property is extrajudicially foreclosed.
period when the buyer at the foreclosure sale does not
object but even consents to the redemption, will uphold the The issuance of the writ of possession in an extrajudicial
policy of the law which is to aid rather than defeat the right foreclosure is merely a ministerial function.
of redemption Ramirez v. CA, 219 SCRA 598 (1993) The purchaser at the foreclosure sale is entitled as of right to
a writ of possession.
AMOUNT OF THE REDEMPTION PRICE: Before lapse of redemption period – file an ex parte
1. Mortgagee is not a bank (Act No. 3135 in relation to Sec. application and file a bond
28, Rule 39 of Rules of Court)
a. Purchase price of the property After lapse of redemption period – file an ex parte
b. 1% interest per month on the purchase price application and no need for a bond
c. Taxes paid and amount of purchaser’s prior lien, if
any, with the same rate of interest computed from ======================================
the date of registration of sale, up to the time of TOPIC UNDER THE SYLLABUS:
redemption F. Antichresis
2. Mortgagee is a bank (GBL 2000) 1. Definition and Characteristics
a. Amount due under the mortgage deed 2. Obligations of Antichretic Creditor
b. Interest
c. Cost and expenses
======================================

ANTICHRESIS
NOTE: Redemption price in this case is reduced by the
(Arts. 2132-2139)
income received from the property
ANTICHRESIS is a contract whereby the creditor acquires the
Junior Mortgagees
right to receive the fruits of an immovable of the debtor, with
1. After the foreclosure sale, there remains in the second
the obligation to apply them to the payment of the interest,
mortgagee a mere right of redemption. His remedy is
if owing, and thereafter to the principal of the credit.

CIVIL LAW REVIEWER Page 262 of 338

 A stipulation authorizing the antichretic creditor to
CHARACTERISTICS appropriate the property upon the non-payment of the debt
1. Accessory contract – it secures the performance of a within the agreed period is void (Art. 2088)
principal obligation
Formal contract – it must be in a specified form to be valid ======================================
(Art. 2134) TOPIC UNDER THE SYLLABUS:
G. Chattel Mortgage
SPECIAL REQUISITES:
1. Only the fruits of an immovable property
1. Definition and characteristics
2. Delivery of the immovable is necessary for the creditor 2. Registration
to receive the fruits and not that the contract shall be ======================================
binding
3. Amount of principal and interest must be specified in CHATTEL MORTGAGE
writing (otherwise, void) CHATTEL MORTGAGE (Arts. 2140-2141) is a contract by
4. Express agreement that debtor will give possession of virtue of which a personal property is recorded in the Chattel
the property to creditor and that the latter will apply the Mortgage Register as security for the performance of an
fruits to the interest, if any, then to the principal of his obligation.
credit NOTE: If the movable, instead of being recorded is delivered
to the creditor, it is a pledge and not a chattel mortgage.
NOTE: The obligation to pay interest is not essential in a
CHATTEL MORTGAGE PLEDGE
contract of antichresis, there being nothing in the Code to
Involves movable property Involves movable property
show that antichresis is only applicable to securing the
payment of interest-bearing loans. On the contrary, Delivery of the personal Delivery of the personal
antichresis is susceptible of guaranteeing all kinds of property is NOT necessary property is necessary
obligations, pure or conditional Registration is necessary for Registration is NOT
validity necessary for validity
OBLIGATIONS OF ANTICHRETIC CREDITOR: (FAT-P) Procedure: Sec 14 of Act no Procedure: Art 2112 of Civil
1. To pay taxes and charges on the estate, including 1508, as amended Code
necessary expenses If the property is foreclosed, If the property is sold, the
NOTE: Creditor may avoid said obligation by: the excess over the amount debtor is not entitled to the
a. Compelling debtor to reacquire enjoyment of the due goes to the debtor to the excess UNLESS it is
property otherwise agreed or in case
b. By stipulation to the contrary of legal pledge
2. To apply all the fruits, after receiving them, to the Creditor is entitled to Creditor is not entitled to
payment of interest, if owing, and thereafter to the recover deficiency from the recover deficiency
principal debtor EXCEPT if it is a notwithstanding any
3. To render an account of the fruits to the debtor security for the purchase of stipulation to the contrary
4. To bear the expenses necessary for its preservation and personal property in
repair installments

REMEDIES OF CREDITOR IN CASE OF NON-PAYMENT OF Laws Governing Chattel Mortgage

DEBT
1. Action for specific performance
2. Petition for the sale of the real property as in a
foreclosure of mortgages under Rule 68 of the Rules of
Court
NOTE: The parties, however, may agree on an extrajudicial
foreclosure in the same manner as they are allowed in
contracts of mortgage and pledge. Tavera v. El Hogar
Filipino, Inc. [68 Phil 712]
1. Chattel Mortgage Law, Act No. 1508, as amended
2. Civil Code
3. Revised Administrative Code
4. Revised Penal Code
5. Ship Mortgage Decree of 1978 (P.D. 1521) governs
mortgage of vessels of domestic ownership
Affidavit of Good Faith - An oath in a contract of chattel
mortgage wherein the parties "severally swear that the
mortgage is made for the purpose of securing the obligation
specified in the conditions thereof and for no other purposes
and that the same is a just and valid obligation and one not
entered into for the purpose of fraud.”

CIVIL LAW REVIEWER Page 263 of 338

  Not essential to the validity of the mortgage but
only transforms a valid one into a preferred one
 Absence vitiates a mortgage only as against third
persons without notice
NOTE: A chattel mortgage can only cover obligations existing
at the time the mortgage is constituted. A mortgage that
contains a stipulation in regard to future advances in the
credit will take effect only from the date the same are made
and not from the date of the mortgage Jaca v. Davao
Lumber Co., 113 SCRA 107 (1982)
EFFECT OF REGISTRATION
1. Creates real rights – binding notice and symbolical
possession
2. Adds nothing to mortgage
NOTE: Registration of assignment of mortgage is not
required
RIGHT OF REDEMPTION
 When the condition of a chattel mortgage is broken, the
ff may redeem:
a. Mortgagor;
b. Person holding a subsequent mortgage;
c. Subsequent attaching creditor.
Redemption can be done within 30 days from the time the
condition is broken.
 An attaching creditor who so redeems shall be
subrogated to the rights of the mortgagee and entitled
to foreclose the mortgage in the same manner that the
mortgagee could foreclose it
 The redemption is made by paying or delivering o the
mortgagee the amount due on such mortgage and the
costs and expenses incurred by such breach of condition
before the sale
Right of Mortgagee to Possession
1. Before default, mortgagee is not entitled to the
possession of the property (otherwise, it will become a
pledge)
2. When default occurs and the creditor desires to
foreclose, he has the right to take the property.
3. If the debtor refuses to surrender the property, the
creditor’s remedy is to institute an action to effect
judicial foreclosure or to secure possession preliminary
to sale.
 The creditor cannot take the property by force nor
can the sheriff seize the property.
FORECLOSURE OF CHATTEL MORTGAGE
1. Public sale
CIVIL LAW REVIEWER
2. Private sale – there is nothing illegal, immoral or against
public order in an agreement for the private sale of the
personal properties covered by chattel mortgage
Period to Foreclose
1. After 30 days from the time the condition was broken
2. The 30-day period is the minimum period after violation
of the mortgage condition for the creditor to cause the
sale at public auction with at least 10 days notice to the
mortgagor and posting of public notice of time, place,
and purpose of such sale, and is a period of grace for the
mortgagor, to discharge the obligation.
3. After the sale at public auction, the right of redemption
is no longer available to the mortgagor.
Civil Action to Recover Credit
1. Independent action not required
2. Mortgage lien deemed abandoned by obtaining a
personal judgment (civil action to recover amount of
loan)
Right of Mortgagee to Recover Deficiency
1. Where mortgage foreclosed: creditor may maintain
action for deficiency although Chattel Mortgage Law is
silent on this point. Reason is chattel mortgage is only
given as a security and not as payment of the debt.
2. Where mortgage constituted as security for purchase
of personal property payable in installments: no
deficiency judgment can be asked and any contrary
agreement shall be void
3. Where mortgaged property subsequently attached and
sold: mortgagee is entitle to deficiency judgment in an
action for specific performance
Application of Proceeds of Sale
1. Costs and expenses of keeping and sale
2. Payment of the obligation
3. Claims of persons holding subsequent mortgages in their
order
4. Balance, if any, shall be paid to the mortgagor, or person
holding under him
======================================
TOPIC UNDER THE SYLLABUS:
H. Concurrence and Preference of Credits
1. Solutio Indebiti
2. Negotiorum Gestio
======================================
Solutio Indebiti and Negotiorium Gestio
Solutio Indebiti (Art 2154)
Page 264 of 338

 The principle of solution indebiti provides that if
something is received when there is no right to
demand it, and it was unduly delivered through
mistake, the obligation to return it arises.
 In such a case, a creditor-debtor relationship is
created under a quasi-contract whereby the payor
becomes the creditor who then has the right to
demand the return of payment made by mistake,
and the person who has no right to receive such
payment becomes obligated to return the same
 The principle ofsolutio indebiti applies where
(1) a payment is made when there exists no binding
relation between the payor, who has no duty to
pay, and the person who received the payment;
and
(2) the payment is made through mistake, and not
through liberality or some other cause
(Siga-An v. Villanueva, GR 173227 January 2009)
Negotiorium Gestio (Art 2144)
 One who voluntarily takes charge of the
agency/management of the business or property of
another (without any power from the latter), is
obliged to continue such agency or management
until:
o The termination of the affair or its
incidents or
o He has required the person concerned to
substitute him (if the owner is in a position
to do so)
 However, this juridical relation does not arise in the
following:
o When the property or business is NOT
neglected or abandoned
o If the manager has been impliedly
authorized by the owner
======================================
TOPIC UNDER THE SYLLABUS:
I. Concurrence and Preference of Credits
1. Meaning of Concurrence and Preference
2. Preferred Credits on Specific Movables
3. Exempt Property
4. Classification of Credits
======================================
CONCURRENCE AND PREFERENCE OF CREDITS
CIVIL LAW REVIEWER
(Arts. 2236-2251)
CONCURRENCE OF CREDIT implies possession by two or
more creditors of equal rights or privileges over the same
property or all of the property of a debtor.
PREFERENCE OF CREDIT is the right held by a creditor to be
preferred in the payment of his claim above others out of the
debtor’s assets.
 Preference creates no interest or lien on the
property, but merely a preference to the
application of the proceeds.
 The right of preference can be made effective only
by being asserted and maintained. Otherwise, it is
lost.
General Provisions:
1. The debtor is liable with all his property, present
and future, for the fulfillment of his obligations,
subjects to exemptions provided by law
- Exempt property:
a. Present property
1. Family home (Arts 152, 153 and 155, NCC)
2. Right to receive support as well as money
or property obtained by such support shall
not be levied upon on attachment or
execution (Art 205, NCC)
3. Sec 13, Rule 39, Rules of Court (Ordinary
tools, lettered gravestones, necessary
clothing, etc.)
4. Sec 118, the Public Land Act,( CA No. 141,
as amended)
b. Future property
 A debtor who obtains a discharge from his
debts on account of insolvency, is not liable
for the unsatisfied claims of his creditors with
said property (Secs. 68 and 69, Insolvency
Law, Act No. 1956)
c. Property in custodia legis and of public domain
2. Insolvency shall be governed by the Insolvency Law
(Act No. 1956, as amended)
3. Exemption of conjugal property or absolute
community or property provided that:
a. Partnership or community subsists
b. Obligations of the insolvent spouse have
not redounded to the benefit of the family
4. If there is co-ownership, and one of the co-owners
is the insolvent debtor, his undivided share or
interest in the property shall be possessed by the
assignee in insolvency proceedings because it is
part of his assets
Page 265 of 338
 5. Property held by the insolvent debtor as a trustee
of an express or implied trust, shall be excluded
from the insolvency proceedings
CLASSIFICATION OF CREDITS
1. Special preferred credits (Arts 2241 and 2242 of
NCC)
a. Considered as mortgages or pledges of real or
personal property or liens within the purview of
legal provisions governing insolvency
b. Taxes due to the State shall first be satisfied
2. Ordinary preferred credits (Art 2244) - preferred in
the order given by law
3. Common credits (Art 2245) - credits of any other
kind or class, or by any other right or title not
comprised in Arts 2241-2244 shall enjoy no
preference
Order of Preference of Credit
1. Credits which enjoy preference with respect to specific
movables, exclude all others to the extent of the value
of the personal property to which the preference refers.
2. If there are 2 or more credits with respect to the same
specific movable property, they shall be satisfied pro
rata, after the payment of duties, taxes and fees due the
State or any subdivision thereof
3. Those credits which enjoy preference in relation to
specific real property or real rights, exclude all others to
the extent of the value of the immovable or real right to
which the preference refers.
4. If there are 2 or more credits with respect to the same
specific real property or real rights, they shall be
satisfied pro rata, after the payment of the taxes and
assessment of the taxes and assessments upon the
immovable property or real right.
5. The excess, if any, after the payment of the credits
which enjoy preference with respect to specific
property, real or personal, shall be added to the free
property which the debtor may have, for the payment of
other credits.
6. Those credits which do not enjoy any preference with
respect to specific property, and those which enjoy
preference, as to the amount not paid, shall be satisfied
according to the following rules:
CIVIL LAW REVIEWER
 Order established by Art. 2244
 Common credits referred to in Art. 2245 shall be paid
pro rata regardless of dates.
NOTE: Preference of mortgage credits is determined by the
priority of registration, following the maxim “prior tempore
potior jure” (He who is first in time is preferred in right.)
======================================
TOPIC UNDER THE SYLLABUS:
J. Insolvency Law
1. Definition of insolvency
2. Suspension of payments
3. Voluntary insolvency
4. Involuntary insolvency
======================================
INSOLVENCY LAW – FRIA
FRIA DEFINITION OF “INSOLVENCY”
Financial condition of a debtor that is generally unable to pay
its or his liabilities as they gall due in the ordinary course of
business or has liabilities that are greater than its or his
assets
For FRIA to be applicable, there must be insolvency
proceedings in the courts designated by the Supreme Court
to hear and resolve cases brought under this act
PURPOSES OF FRIA
1. To effect equitable distribution of the insolvent’s
property among its or his creditors
2. To benefit the debtor in discharging him from his
liabilities and enabling him to start afresh with the
property set apart to him as exempt
3. To ensure or maintain certainty and predictability of
commercial affairs
FRIA DEFINTION OF “DEBTOR”
 Sole proprietorship (juridical debtor)
 Partnership (juridical debtor)
 Corporation (juridical debtor)
 Individual debtor who has become insolvent
(natural debtor)
NATURE OF PROCEEDINGS
Insolvency proceedings in FRIA are proceedings in rem
HOW JURISDICTION IS ACQUIRED
Jurisdiction is acquired upon publication of notice of the
commencement of proceedings in any newspaper of general
circulation
Page 266 of 338

MODES OF REHABILITATION
 Court-supervised rehabilitation
 Pre-negotiated rehabilitation
 Out of court or informal restructuring
agreements or rehabilitation plans
1. COURT-SUPERVISED REHABILITATION
 Owner, partnership or corporation may initiate
proceedings for rehabilitation, which the proper
court oversees and deliver a final judgment
regarding the rehabilitation plan
 REHABILITATION
o Restoration of the debtor to a condition of
successful operation and solvency
o The debtor is economically feasible and its
creditors can recover by way of present
value of payments projected in the plan
 REHABILITATION PLAN
o Plan by which the financial well-being and
viability of the insolvent debtor can be
restored using various means
 REHABILITATION RECEIVER
o Persons or persons, natural or juridical,
appointed as such by the court entrusted
with powers and duties set forth in the
FRIA
 KINDS
 Voluntary proceedings
o Filing a petition for rehabilitation with the
court done by the insolvent debtor
 Involuntary proceedings
o Filed by a creditor or group of creditors
o Claim or aggregate claim is at least P1M or
at least 25% of capital stock or partner’s
contribution, whichever is higher
 TYPES OF PROCEEDINGS
Initiation proceedings
o Attachments in the petition for rehabilitation:
Voluntary Proceedings
1. Identification of debtor, principal activities
and addresses
2. State fact of and cause of debtor’s
insolvency or inability to pay debt
3. Specific relief sought pursuant to the Act
4. Grounds which petition is based
5. Other information required by the act,
depending on the kind of relief requested
6. List of debtors, liabilities and creditors
with addresses, amounts of claims and
collaterals
CIVIL LAW REVIEWER
7. Inventory of assets, includes receivables
and claims against 3rd parties
8. Rehabilitation plan
9. Names of at least 3 nominees for
rehabilitation receiver position
10. Other documents required by the Act or
rules promulgated by the SC
o Attachments in the petition for rehabilitation:
Involuntary Proceedings
1. Identification of debtor, principal activities
and addresses
2. Circumstances sufficient for a petition to
initiate rehabilitation proceedings
3. Specific relief sought
4. Rehabilitation plan
5. Names of at least 3 nominees for
rehabilitation receiver position
6. Other information required depending on
relief requested
7. Other documents required by the act or
rules promulgated by the SC
GROUNDS TO INITIATE INVOLUNTARY PROCEEDINGS
 No genuine issue of fact on law on the claim/s of
the petitioner/s (creditors) and demandable
payments due have not been made for at least 60
days or debtor failed in meeting obligations
 A third-person creditor other than petitioner/s has
initiated foreclosure against debtor, preventing
debtor to pay debts due or will render him
insolvent
 Action on the Petition and Commencement of
Proceedings
 If court finds the petition for rehabilitation to be
sufficient in form and substance, it shall within 5
working days from filing, issue a Commencement
Order.
 If in the same period the court finds the petition
deficient, court may give petitioner time to amend
or supplement petition, or to submit documents
necessary to fix said petition.
- 5 working days provided for issuing the
order will be reckoned from date of filing
the amended petition or submission of
additional documents
 Commencement order:
- Identifies the debtor
- Summarizes the grounds for initiating the
proceedings
- States the relief
- States the legal effects of the CO
- Declares that the debtor is under rehab
Page 267 of 338
 - Directs publication in newspaper of
general circulation in the Philippines
- Appoints a rehabilitation receiver
- Summarizes the requirements and
deadlines for creditors to establish their
claims against the debtor (5) days before
the initial hearing
- Sets the case for initial hearing
 Suspension/Stay Order (effects)
 Suspend all actions or proceedings for
enforcement of claims against the debtor
 Suspend all actions to enforce any
judgment, attachment or other provisional
remedies against the debtor
 Prohibit the debtor from selling,
encumbering, transferring or disposing in
any manner any of its properties except in
the ordinary course of business
 Prohibit the debtor from making any
payment of its outstanding liabilities as of
the commencement date
 Note: Stay order applies to government
financial institutions (Sec 20)
 Exceptions to the Stay and Suspension Order
 Cases already pending appeal in the SC as
of the commencement date. Provided that
any final judgment on the appeal be
referred to the court for appropriate
action
o Cases pending in specialized court or
quasi-judicial agency, on the court’s
discretion
o Enforcement of claims against sureties
and other persons solidarily liable with
debtor and 3rd party accommodation
mortgagors even issuers of letters of
credit UNLESS the property subject of the
3rd party/accommodation mortgage is
necessary for the rehabilitation of the
debtor as determined by the court (in
other words, secured creditors can enforce
their claims/foreclose if the security
they’re holding is not necessary for
rehabilitation)
o To any form of action of customers of a
security market participant to recover or
claim securities entrusted to the latter in
the ordinary course of the latter’s business
o To the actions of a licensed broker or
dealer to sell pledged securities of a
debtor pursuant to a securities pledge or
margin agreement
CIVIL LAW REVIEWER
o To the clearing and settlement of financial
transactions through the facilities of a
clearing agency
o To any criminal action against the
debtor/owner
o Effectivity and Duration of
Commencement Order
o Unless lifted by the court, CO shall be
effective for the duration of the
rehabilitation proceedings.
o Minimum requirements must be met:
 Rehabilitation plan complies with
minimum contents prescribed by the act
 Sufficient monitoring by rehabilitation
receiver
 Debtor has met with creditors in attempts
for consensus proposed by rehabilitation
plan
 Rehabilitation receiver submits a report, a
preliminary evaluation of how realistic the
goals of rehabilitation plan are and how
reasonable and realistic success is based
on
 Sufficient assets to rehabilitate debtor
 Sufficient cash flow to maintain operations
of debtor
 Petition is not a filing intended to defraud
creditors and delay claims
 Debtors, partners, stockholders, directors
and officers acting in good faith and due
diligence
 Debtor likely to be able to pursue viable
rehabilitation plan
 Attachments on petition for rehabilitation are not
materially false
 If petitioner is the debtor, he has met with creditors
representing ¾ of total obligation made in good
faith. If petitioner is a creditor, he has met with the
debtor, made a good faith effort to reach consensus
 Effect of Failure to File Notice of Claim
o Instead of filing a notice of claim, the creditor files a
subsequent belated claim
o Such claim shall not be entitled to participate in
rehabilitation proceedings
o Creditor is still entitled to receive distributions
arising from rehabilitation
 Rehabilitation Receiver
o Within 40 days from initial hearing, the
rehabilitation receiver shall submit a report to court
stating preliminary findings and recommendations
on whether:
 Debtor is insolvent, causes of insolvency
including any unlawful acts done by
Page 268 of 338
 oweners which may have contributed to
the insolvency
 If the rehab plan is indeed feasible and
reasonable in relation to goals and
underlying assumptions
 Substantial likelihood exists or not
 Petition should be dismissed or not
 Debtor should be liquidated and/or
dissolved or not
 Giving due course to or dimissal of petition
or conversion of proceedings
o Within 10 days from receipt of rehabilitation
receiver report mentioned in section2 24, court
may
 Give due course to petition upon finding
 Debtor is insolvent
 Substantial likelihood for success exists
 Debtor shall comply with provisions of the
Rehab Plan and take action to carry out
the plan
 Payments made to creditors according to
the Rehab Plan
 Contracts with creditors interpreted as
continuing to the extent that they do not
conflict with the Rehab Plan
 Compromises on amounts or rescheduling
of timing of payments by debtor shall be
binding to creditor regardless whether
plan ins a success or not
 Claims after approval of plan not treated
by the plan are not subject to suspension
order
o Period for confirmation of rehabilitation plan
 Court has a maximum period of 1 year
from date of filing of petition to confirm
rehabilitation plan. If no plan is confirmed
within said period proceedings may upon
a motion or motu proprio be converted to
one for liquidation of the debtor
o Accounting discharge of Rehabilitation Receiver
 Upon confirmation of rehabilitation plan,
rehabilitation receiver shall provide a final
report and accounting to the court. Unless
the plan requires or describes the role of
the rehabilitation receiver after approval
of the plan, curt shall discharge
rehabilitation receiver of duties.
o Termination Proceedings
 Upon motion of any stakeholder or
rehabilitation receiver, the rehabilitation
plan may be terminated by order of court.
 Failure of rehabilitation:
 Dismissal of petition by court
CIVIL LAW REVIEWER
 Debtor fails to submit a rehabilitation plan
 Under rehabilitation plan submitted by
debtor, there is no substantial likelihood
for rehabilitation
 Though amended and approved, debtor
fails to implement the rehabilitation plan,
failure to realize objectives
 Commission of fraud in securing the
approval for the plan
 Analogous circumstances as may be
defined by rules of procedure
 Court action upon break of or failure of
rehabilitation plan (upon motion of an affected
party)
 Issue an order directing breach be cured
within specified period, failing which,
proceeding may be converted to
liquidation
 Issue and order converting proceedings to
liquidation
 Allow debtor to submit amendments to
plan subject to approval under same
requirements for approval under
provisions
 Issue any other order to remedy breach
consistent with present regulation
 Enforce applicable provision of
rehabilitation plan through writ of
execution
 Effects of termination
 The discharge of the rehabilitation
receiver subject to his submission of a
final accounting
 The lifting of the Stay Order and any other
court order holding in abeyance any action
for the enforcement of a claim against the
debtor
 PROVIDED, that if the termination is due
to failure of rehabilitation or dismissal of
petition for reasons other than technical
grounds, proceedings will automatically be
converted to LIQUIDATION
2. PRE-NEGOTIATED REHABILITATION
Parties to file a petition for a pre-negotiated rehabilitation
plan
 Insolvent debtor by itself; or
 Jointly with any of its creditors
Requisites for a petition for a pre-negotiated rehabilitation
plan
Page 269 of 338
  Petition must be filed by
o An insolvent debtor by itself or jointly with
any of its creditors
o With the court
 The pre-negotiated rehabilitation plan must be
endorsed or approved by creditors holding at least
2/3 of the total liabilities of the debtor, including
secured claims of the debtor and unsecured
creditors holding more than 50% of the total
unsecured claims of the debtor
Documents that must accompany the petition as a
minimum
 Schedule of debtor’s debts and liabilities
 Inventory of debtor’s assets
 The pre-negotiated Rehabilitation Plan, including
the names of at least 3 qualified nominees for
rehabilitation receiver
 Summary of disputed claims against debtor, and
report on provisioning of refunds to account for
appropriate payments
Procedure for pre-negotiated rehabilitation
 Filing of the petition
 Issuance of Court Order
 Publication of the order in a newspaper of
general circulation in the Philippines once a
week for at least two consecutive weeks
 Objection to the petition or rehabilitation plan
if any
 Hearing on the objections if necessary
 Approval of the plan
Cause for which objection may be made to petition or plan
 The allegation in the petition or the Rehabilitation
Plan or the attachments thereto are materially false
or misleading
 The majority of any class of creditors do not in fact
support the Rehabilitation Plan
 The Rehabilitation Plan fails to accurately account
for a claim against the debtor and the claim is not
categorically declared as contested claim; or
 The support of the creditors, or any of them was
induced by fraud
 Note: if objection is meritorious, the debtor is
directed to cure the defect within a reasonable
period
 Note: if the debtors/creditors supporting the plan
acted in bad faith or the objection is non-curable,
the Court may order conversion of proceedings into
liquidation
CIVIL LAW REVIEWER
 Note: if the objection is not meritorious or the
objection is cured, the rehabilitation plan is deemed
approved
Effect of Approval of Plan
Same effect as confirmation of Plan under Court=Supervised
Rehabilitation
3. OUT-OF-COURT OR INFORMAL RESTRUCTING
AGREEMENTS OR REHABILITATION PLANS
Informal restructuring/workout agreement or rehabilitation
plan defined
Done outside or without the intervention of court provided it
meets the minimum requirements set for the in the Act
Requisites for an Out-of-court or informal
restructuring/workout agreement or rehabilitation plan
 The debtor must agree to the out-of-court or
informal restructuring/workout agreement or
Rehabilitation Plan
 It must be approved by creditors representing at
least 67% of the SECURED obligations of the debtor
 It must be approved by creditors representing at
least 75% of the UNSECURED obligations of the
debtor
 It must be approved by creditors holding at least
85% of the TOTAL LIABILITIES, SECURED and
UNSECURED, of the debtor
Standstill Period
It is a period that may be agreed upon by the parties pending
negotiation/finalization of the out-of-court agreement or
Rehab Plan (similar to a stay order)
Requirements for the standstill period to be enforceable
against 3rd parties
 Agreement is approved by creditors representing
50% of the total liabilities of the debtor
 Notice is published
o Must invite creditors to participate in the
negotiation
o All creditors must be given due notice
 Period does not exceed 120 days
Effect of Standstill Period
Any court action shall not stay the plan’s implementation
UNLESS the relevant party is able to secure a TRO or
injunctive relieve from the Court of Appeals to stay the
implementation of proceedings
Page 270 of 338
 The effect of the approval of the plan is the same to that of least 1M or at least 25% of the subscribed
confirmation of Plan under Court Supervised Rehabilitation capital stock or partner’s contributions of the
debtor, whichever is higher.
Notice of Out-of-Court rehabilitation plan is required i. Contents:
Published once a week for at least 3 consecutive weeks in a 1. Must show that there’s no
newspaper of general circulation in the Philippines. It shall genuine issue of fact or law
take effect after 15 days from the date of the last publication on the claim/s of the
of the notice thereof petitioner/s, and that the
due and demandable
Amendments or modification to the plan payments thereon have not
Amendments or modification must be made in accordance been made for at least 180
with the terms of the agreement and with due notice on all days or the debtor has failed
creditors generally to meet its
liabilities as they fall due
LIQUIDATION OF INSOLVENT JURIDICAL DEBTORS 2. Must show that no
substantial likelihood that
the debtor may be
I. Voluntary Liquidation: rehabilitated

a. An insolvent debtor may apply for liquidation b. Procedure:

by filing a verified petition for liquidation with
the court
i. Contents:
1. Schedule of debtor’s liabilities with a list
of creditors
2. An inventory of all its assets
3. Names of at least 3 nominees to the
position of liquidator
b. Procedure:
i. Filing of Petition (Sec 90)
ii. If court finds petition sufficient in form and
substance, it shall issue the Liquidation
Order (Sec 104)
iii. Publication of the petition or motion in a
newspaper of general circulation once a
week for 2 consecutive weeks [Sec 112
(d)]
iv. Hearing for election and appointment of
liquidator [Sec 112 (j)]
v. Direct payments of any claims and
conveyance of any property due the
debtor to the liquidator [Sec 112 (e)]
vi. Liquidation of the debtor’s assets and
payment of his debts by the Liquidator
(Sec 119)
vii. Discharge of Liquidator (Sec 122)
viii. Appeal if proper
II. Involuntary Liquidation:
a. A verified petition may be filed in court by 3 or
more creditors with the aggregate claims of at
i. Filing of the petition of 3 or more
creditors (Sec 91)
ii. Issuance of order:
1. Directing publication of
petition or motion in a
newspaper of general
circulation once a week for 2
consecutive weeks
2. Directing the debtor and all
creditors to file their
comment on the petition
iii. Filing of comments
iv. Consideration of comments filed by
the court
v. Issuance of the liquidation order
vi. Publication of the petition or motion
in a newspaper of general circulation
once a week for 2 consecutive weeks
[Sec 112 (d)]
vii. Hearing for election and appointment
of the liquidator [Sec 112 (j)]
viii. Direct payments of any claims and
conveyance of any property due the
debtor to the liquidator [Sec 112 (e)]
ix. Liquidation of the debtor’s assets and
payment his debts by the Liquidator
(Sec 119)
x. Discharge of Liquidator (Sec 122)
xi. Appeal if proper
Note: Under both voluntary and involuntary liquidation, the
debtor or the 3 or more creditors may initiate liquidation
proceedings by filing a motion in court at any time during the

CIVIL LAW REVIEWER Page 271 of 338

 pendency of the court-supervised or pre-negotiated
rehabilitation proceedings.
Ching vs. Landbank of the Philippines [201 SCRA 190
(1991)]: SC held that the SEC has jurisdiction only with regard
to petitions of juridical debtors to be declared in the state of
suspension of payments. PD. 902-A cannot be stretched to
include petitions for insolvency. Petitions for declaration of
insolvency of private corporations are within the original and
exclusive jurisdiction of regular courts. SEC may entertain
such petitions only as an incident of and in continuation of its
already acquired jurisdiction over petitions to be declared in
the state of suspension payments.
INSOLVENCY OF INDIVIDUAL DEBTORS
I. Suspension of Payments: postponement, by court
order, of the payment of debts of one who possesses
sufficient property to cover all his debts but foresees the
impossibility of meeting them when they respectively
fall due (Sec 94)
a. Purpose: to suspend or delay the payment of
debts; debtor’s inability to meet his obligations
when they respectively fall due, despite the
fact that he has sufficient assets to cover his
liabilities (De Leon)
b. A debtor may file a verified petition for
suspension of payments if:
i. Individual debtor possesses sufficient
property to cover all his debts
ii. But he foresees the impossibility of
meeting them when they respectively
fall due
iii. Contents:
1. He has to state his residence
6 months before filing of his
petition (and file in the court
where he resided 6 months
prior to the filing)
2. Schedule of debts/liabilities
3. Inventory of assets
4. Proposed agreement with
creditors
c. Procedure:
i. Filing of petition by debtor (Sec 94)
ii. Issuance by the court of an order
calling a meeting of creditor (Sec 95)
iii. Publication of said order and service
of summons
CIVIL LAW REVIEWER
iv. Meeting of the creditors for the
consideration of the debtor’s
proposition (Sec 97)
v. Approval of the creditors of the
debtor’s proposition
vi. Objections, if any, to the decision
which must be made within 10 days
from the date of the last creditors’
meeting (Sec 100)
vii. Issuance of order by the court
directing that the agreement be
carried out in case the decision is
declared valid or when no objection
to said decision has been presented
(Sec 101)
d. Effect of filing a petition for suspension of
payments:
i. No disposition in any manner of his
property may be made by the
individual debtor, except those used
in the ordinary operation of
commerce or of industry in which he
is engaged [Sec 95 (e)].
ii. No payments may be made by the
individual debtor outside of the
necessary and legitimate expenses of
his business or industry [Sec 95 (f)].
iii. Suspension Order: Upon motion by
the debtor, the court may issue an
order suspending any pending
execution against the individual
debtor provided that properties held
as security by secured creditors shall
not be subject of such suspension
order (Sec 96, par. 1).
iv. No creditor shall sue or institute
proceedings to collect his claim from
the debtor from the time of filing of
petition as long as proceedings
remain pending, except:
1. Those creditors with claims
for personal labor,
maintenance, expenses of
last illness and funeral of
wife or children of the
debtor, incurred 60 days
before petition is filed.
2. Secured debtors.
e. Creditor’s meeting (Only creditor included in
the schedules filed by the debtor shall be cited
to appear and take part in the meeting)
Page 272 of 338
 i. To form a majority (Rule of Double before the agreement shall revest in
Majority): them (Sec 102).
1. 2/3 of the creditors voting Distinctions between Suspension of Payments and
unite on the same Insolvency:
proposition, and
2. That the claims represented SUSPENSION OF INSOVENCY
by said majority vote PAYMENTS
amount to at least 3/5 of the Purpose Suspend or delay Discharge the
total liabilities of the debtor the payment of debtor from the
[Sec 97 (d)] debts payment of debts
ii. If the majority agrees, the court will Property Debtor has Debtor does not
approve on the agreement of the sufficient property have sufficient
creditors/debtors as regards the property
payment Amount of Amount of Creditors receive
iii. But petition is deemed rejected Indebtedness indebtedness is less than their
when: not affected credits, and in
1. the number of creditors case there are
representing at least 3/5 of preferences,
the liabilities of the some creditors
individual debtor do not may not receive
attend, or any amount at all
2. if the double majority rule
are not in favor of the
proposed agreement (Sec LIQUIDATION OF INDIVIDUAL INSOLVENT DEBTORS
99)
iv. Effect of disapproval of petition:
Court shall declare the proceedings I. Voluntary Liquidation
terminated and the creditors shall be
at liberty to exercise the rights which a. A verified petition may be filed by an insolvent
may correspond to them (Sec 100, debtor (owing debts exceeding the amount of
par. 2) P500,000) in the court of the province or city in
v. Causes for which objection may be which he has resided 6 months prior to filing
made to the decision of the meeting: the petition.
1. Defects in the call for the i. Contents:
meeting, in the holding 1. Schedule of debts and
thereof and in the liabilities
deliberations, which 2. Inventory of Assets
prejudice the right of the 3. Proposed Agreement with
creditors; creditors
2. Fraudulent connivance
between one or more b. Procedure:
creditors and the individual i. Filing of the petition by the debtor
debtor ot vote in favor of praying for the declaration of
the proposed agreement; insolvency (Sec 103)
3. Fraudulent connivance of ii. If the court finds the petition
claims for the purpose of sufficient in form and substance, it
obtaining a majority. shall issue the Liquidation Order (Sec
vi. Effect of failure or individual debtor 104)
to perform agreement: If the debtor iii. Publication of the petition or motion
fails, wholly or in part, to perform the in a newspaper of general circulation
agreement decided upon the meeting once a week for 2 consecutive weeks
of the creditors, all rights which the [Sec 112 (d)]
creditors had against the debtor

CIVIL LAW REVIEWER Page 273 of 338

 iv. Hearing for election and appointment
of the liquidator [Sec 112 (j)]
v. Direct payments of any claims and
conveyance of any property due the
debtor to the liquidator [Sec 112 (e)]
vi. Liquidation of the debtor’s assets and
payment of his debts by the
Liquidator (Sec 119)
vii. Discharge of Liquidator (Sec 122)
viii. Appeal if proper
c. Effect of filing of petition: The filing of the
petition shall be an act of insolvency (Sec 103).
Once the petition is filed, it ipso facto takes
away and deprives the debtor of the right to do
or commit any act of preference as to
creditors, pending the final adjudication.
d. Effects of errors in description or omission of
property in inventory:
i. The erroneous or ambiguous
description of the insolvent’s
property in inventory does not affect
the title of purchasers in the
insolvency proceedings. Legal title of
the property of the insolvent passes
to the liquidator and is administered
in the insolvency proceedings
regardless of errors in the inventory.
ii. If the insolvent omits property from
his inventory, it is the duty of the
liquidator to recover any property or
its value, fraudulently conveyed by
the debtor [Sec 119 (f)].
iii. Even property exempt from execution
must be included in order to preclude
possible fraudulent omission under
the pretext that such property is
exempt.
e. If the debt exceeds the secured property:
i. To the extent of the unsecured
portion, the creditor can join the
proceedings.
ii. If the creditor wants to participate as
an ordinary creditor, he has to let go
of the mortgage.
II. Involuntary Liquidation
a. Purpose: It is not a mere personal action
against the insolvent for the collection of
debts, but its purpose is to impound all of his
CIVIL LAW REVIEWER
non-exempt property, to distribute it equitably
among his creditors, and release him from
further liability.
b. Any creditor or group of creditors, with a claim
of or with claims aggregating at least P500,000,
may file a verified petition in the court of the
province or city in which the individual debtor
resides.
i. Petitioning creditor must post a
bond.
ii. Petition must allege at least one act
of insolvency.
1. Any debtor who commits an
act of insolvency may
adjudged insolvent. The
date of adjudication of
insolvency retroacts to the
date of the filing of the
petition for insolvency.
c. Acts of Insolvency:
i. That such person is about to depart
or has departed from the Republic of
the Philippines, with intent to defraud
his creditors;
ii. That being absent from the Republic
of the Philippines, with intent to
defraud his creditors, he remains
absent;
iii. That he conceals himself to avoid the
service of legal process for the
purpose of hindering or delaying the
liquidation or of defrauding his
creditors;
iv. That he conceals, or is removing, any
of his property to avoid its being
attached or taken on legal process;
v. That he has suffered his property to
remain under attachment or legal
process for three (3) days for the
purpose of hindering or delaying the
liquidation or of defrauding his
creditors;
vi. That he has confessed or offered to
allow judgment in favor of any
creditor or claimant for the purpose
of hindering or delaying the
liquidation or of defrauding any
creditors or claimant;
vii. That he has willfully suffered
judgment to be taken against him by
default for the purpose of hindering
Page 274 of 338
 or delaying the liquidation or of
defrauding his creditors;
viii. That he has suffered or procured his
property to be taken on legal process
with intent to give a preference to
one or more of his creditors and
thereby hinder or delay the
liquidation or defraud any one of his
creditors;
ix. That he has made any assignment,
gift, sale, conveyance or transfer of
his estate, property, rights or credits
with intent to hinder or delay the
liquidation or defraud his creditors;
x. That he has, in contemplation of
insolvency, made any payment, gift,
grant, sale, conveyance or transfer of
his estate, property, rights or credits;
xi. That being a merchant or tradesman,
he has generally defaulted in the
payment of his current obligations for
a period of thirty (30) days;
xii. That for a period of thirty (30) days,
he has failed, after demand, to pay
any moneys deposited with him or
received by him in a fiduciary; and
xiii. That an execution having been issued
against him on final judgment for
money, he shall have been found to
be without sufficient property subject
to execution to satisfy the judgment.
d. Procedure:
i. Filing of the petition by any creditor
or group of creditors and posting of
required bond (Sec 105)
ii. Issuance of Order to Show Cause (Sec
106): court will order the individual
debtor to defend himself and state
why he is not an insolvent.
1. Nothing in the order shall
impair the rights of a
secured creditor to enforce
his lien in accordance with
its terms (secured creditor
may foreclose
notwithstanding an order
forbidding the debtor to
alienate/encumber any of
his property)
2. If the debtor cannot be
found, the creditors may ask
the court to issue an order
directing the sheriff to take
CIVIL LAW REVIEWER
possession of the debtor’s
property in order for it to
be sold at a public sale (sale
under execution)
iii. Service of order to show cause
iv. Filing of answer or motion to dismiss
by individual debtor
v. Hearing of the case (Sec 107)
vi. Issuance of the Liquidation Order
vii. Publication of the petition or motion
in a newspaper of general circulation
once a week for 2 consecutive weeks
[Sec 112 (d)]
viii. Hearing for election and appointment
of liquidator [Sec 112 (j)]
ix. Direct payments of any claims and
conveyance of any property due the
debtor to the liquidator [Sec 112 (e)]
x. Liquidation of the debtor’s assets and
payment of his debts by the
Liquidator (Sec 119)
xi. Discharge of Liquidator (Sec 122)
xii. Appeal if proper
e. The petitioners shall pay the debtor all costs,
expenses, damages due to the proceedings if
the case is dismissed, withdrawn by them or if
the debtor is not insolvent.
f. Absent Individual debtor:
i. Resides outside the Philippines;
ii. Departed from the Philippines;
iii. Cannot be found with due diligence;
or
iv. Hides to avoid service of the order to
show cause (Sec 108)
g. Liquidation Process if the individual debtor is
absent:
i. Creditors must file the petition
ii. Petitioning creditors must:
1. Submit the required
affidavits for the Order of
publication
2. Present the bonds
equivalent to twice the
amount of their claims
against the debtor
iii. Court shall issue and Order directing
the sheriff to take a sufficient amount
of the debtor’s property not exempt
from execution to satisfy the claim;
iv. The sheriff shall then:
Page 275 of 338
 1. Take said property g) Direct all creditors to file their claims with the
2. Prepare a complete liquidator within the period set by the rules
inventory of the property h) Authorize the payment of admin expenses ad they
within 3 days from said become due
taking and may be extended
for good cause; Effects of the Liquidation Order
3. Give such to the court as a) The juridical debtor is dissolved and its juridical
soon as completed; existence terminated
4. Prepare a schedule of the b) Legal title of all the assets of the debtor shall be
names and residences of the vested in the liquidator/court
creditors and the amounts c) All contracts of the debtor shall be deemed
due to them. terminated unless the liquidator, w/in 90 days from
the date of his assumption of office, declares
Distinction between Voluntary and Involuntary Liquidation: otherwise and the contracting party agree
d) No separate action for the collection of an
VOLUNTARY INVOLUNTARY unsecured claim shall be allowed (direct claims to
Number of One Any creditor or liquidator)
creditors group of creditors e) No foreclosure proceeding shall be allowed for 180
Filed by: Insolvent debtor 3 or more creditors days
with qualifications
set by laws Rights of Secured Creditors: The Liquidation Order shall NOT
Acts of insolvency Must not be Must have affect the right of a secured creditor to enforce his lien. He
guilty committed one or may:
more a) Waive his right under the security, prove his claim
Amounts of Must exceed Not less than in the liquidation proceedings and share in the
indebtedness P500,000 P500,000 distribution of assets
Bond Not Required Required b) Maintain his rights under the security
Order of May be granted Granted only after a. If he chooses to maintain:
Adjudication ex parte hearing i. If the value of the property used
Length of Province or city Immaterial as security is LESS than the claim
residence (for in which debtor it secures, the liquidator may
RTC) has resided for 6 convey the property to the
months prior to secured creditor and the creditor
petition will be admitted in the
When does the Upon filing of the Only until after liquidation proceedings as a
court order the voluntary hearing the case creditor for the balance
adjudication? petition (basically, he can recover
deficiency)
ii. If it is MORE, the liquidator may
PROVISIONS COMMON TO LIQUIDATION IN INSOLVENCY OF
convey the property to the
INDIVIDUAL AND JURIDICAL DEBTORS
creditor and waive the debtor’s
right of redemption upon
What is a liquidation order? The liquidation order shall:
receiving the excess from the
a) declare the debtor insolvent
creditor
b) Order the liquidation of the debtor, or in case of a
b. The liquidator may sell the property and
juridical debtor, declare it as dissolved
satisfy the secured creditor’s entire claim
c) Order the sheriff to take the property of the debtor
from the proceeds
d) Order the publication of the petition in a
c. The secured creditor may
newspaper of general circulation
foreclose/enforce his lien
e) Direct payments of any claims and conveyance of
any property due to the debtor to the liquidator
Functions of Liquidator
f) Prohibit the transfer of property and payment by
the debtor The liquidator shall be deemed an officer of the court with
the principal duly of preserving and maximizing the value

CIVIL LAW REVIEWER Page 276 of 338

and recovering the assets of the debtor, with the end of
liquidating them and discharging to the extent possible all
the claims against the debtor.
The powers, duties and responsibilities of the liquidator shall
include, but not limited to:
a. to sue and recover all the assets, debts and claims,
belonging or due to the debtor;
b. to take possession of all the property of the debtor
except property exempt by law from execution;
c. to sell, with the approval of the court, any
property of the debtor which has come into his
possession or control;
d. to redeem all mortgages and pledges, and so satisfy
any judgment which may be an encumbrance on
any property sold by him;
e. to settle all accounts between the debtor and his
creditors, subject to the approval of the court;
f. to recover any property or its value, fraudulently
conveyed by the debtor;
g. to recommend to the court the creation of a
creditors' committee which will assist him in the
discharge of the functions and which shall have
powers as the court deems just, reasonable and
necessary
NOTE: In sum, the liquidator shall have the right and
duty to take all reasonable steps to manage and dispose
of the debtor's assets with a view towards maximizing
the proceedings therefrom, to pay creditors and
stockholders, and to terminate the debtor's legal
existence.
When can a secured creditor be allowed to vote for a
liquidator?
a) he waives his security or lien; or
b) has the value of the property subject of his security
or lien fixed by agreement with the liquidator, and
is admitted for the balance of his claim.
NOTE: The creditors entitled to vote will elect the liquidator in
open court. The nominee receiving the highest number of
votes cast in terms of amount of claims and who is qualified
shall be appointed as the liquidator.
When can the court appoint the liquidator?
a) on the date set for the election of the liquidator,
the creditors do not attend;
b) the creditors who attend, fail or refuse to elect a
liquidator;
c) after being elected, the liquidator fails to qualify; or
d) a vacancy occurs for any reason whatsoever, In any
of the cases provided herein, the court may instead
set another hearing of the election of the liquidator.
CIVIL LAW REVIEWER
What are the qualifications of the Liquidator?
a) A citizen of the Philippines or a resident of the
Philippines in the six (6) months immediately
preceding his nomination;
b) Of good moral character and with acknowledged
integrity, impartiality and independence;
c) Has the requisite knowledge of insolvency and
other relevant commercial laws, rules and
procedures, as well as the relevant training and/or
experience that may be necessary to enable him to
properly discharge the duties and obligations of a
rehabilitation receiver; and
d) Has no conflict of interest: Provided, That such
conflict of interest may be waived, expressly or
impliedly, by a party who may be prejudiced
thereby.
Preliminary Registry of Secured and Unsecured Creditors:
The liquidator shall prepare a preliminary registry of claims
within twenty (20) days from his assumption into office.
Unsecured Creditors defined
They are Secured Creditors who have:
a) Waived their security or lien; or
b) Who has fixed the value of the property subject of
their security or lien by agreement with the
liquidator and is admitted as a creditor for the
balance, shall be considered as unsecured creditors.
The liquidator shall make the registry available for public
inspection and provide publication notice (on where and
when they may inspect it) to:
a) Creditors,
b) Individual debtors owner/s of the sole
proprietorship-debtor,
c) Partners of the partnership debtor; and
d) Shareholders or members of the corporation-
debtor.
Right of Set-off
Debtor and Creditor are MUTUALLY Debtor and Creditor of
each other: One Debt shall be SET OFF against the other, The
Balance, if any shall be allowed in the liquidation
proceedings.
Opposition or Challenge to Claims
A Challenge to Claim or Claims may be submitted to the
court by serving a certified copy on the liquidator and the
creditor holding the challenged claim; within thirty (30) days
from the expiration of the period for filing of applications for
recognition of claims, creditors, individual debtors, owner/s
of the sole proprietorship-debtor.
Page 277 of 338
Who may submit a Challenge to Claim or Claims:
a) Partners of the partnership-debtor;
b) Shareholders or members of the corporation-
debtor; and
c) Other interested parties

Transactions that may be rescinded or nullified

The Following Transactions may be Rescinded or Nullified:
a) Any transaction occurring prior to the issuance of
the Liquidation Order; or
b) A transaction entered into by the debtor or
involving its assets; in case of the conversion of the
rehabilitation proceedings prior to the
commencement date.

Grounds for rescission or nullification:

a) It was executed with intent to defraud a creditor or
creditors; or
b) It constitutes undue preference of creditors.

The Liquidation Plan.

The Liquidator shall submit a Liquidation Plan to the court
within three (3) months from his assumption into office,
The Liquidation Plan shall, as a minimum enumerate:
a) All the assets of the debtor; and
b) A schedule of liquidation of the assets and payment
of the claims.
NOTE: Duty of the Court to exempt and set apart for the use
and benefit of the said insolvent such real and personal
property as is by law exempt from execution.

CIVIL LAW REVIEWER Page 278 of 338

 REHABILITATION LIQUIDATION
COURT SUPERVISED INSOLVENT JURIDICAL DEBTORS INDIVIDUAL INSOLVENT DEBTORS
INFORMAL
Voluntary Involuntary PRE-NEGOTIATED RESTRUCTURING Voluntary Involuntary Suspension
Proceedings Proceedings AGREEMENT Voluntary Involuntary Liquidation Liquidation of Payments

How Made - verified - verified -verified petition Done without 1) verified 1) verified Verified Verified Verified
petition petition court petition for petition for petition petition in petition
intervention liquidation in liquidation in court of the the court of before
court court city/province the province city/province
provided that it
2) verified 2) verified where or city in where
meets the motion to motion to debtor has which the debtor has
minimum convert pending convert resided 6 individual resided 6
requirement of rehabilitation pending months prior debtor months prior
FRIA proceeding into rehabilitatio to filing resides to filing
a liquidation n proceeding
proceeding into a *filing of
liquidation such
proceeding petition=act
of insolvency
Purpose Establish Establish the approval of the To negotiate To establish the To establish to apply for to impound to be
insolvency and insolvency and Rehabilitation plan terms of the insolvency of the discharge of all of declared in a
the viability of the viability of in court rehabilitation debtor for insolvency of debts and debtor’s state of
rehabilitation rehabilitation plan without purposes of debtor for liabilities non-exempt suspension
in court in court court liquidation purposes of property, to of payment
intervention liquidation distribute it
equitably
among his
creditors and
to release
him from
further
liability
Parties Filed by Filed by Filed by Insolvent Rehabilitation Filed by the 3 or more Individual Creditor or Individual
Insolvent Creditor or debtor by itself or Plan must be Insolvent debtor creditors debtor group of debtor
Debtor group of jointly with other approved by: with the creditors
-sole creditors with creditors 1) debtor aggregate with a claim
proprietorship: aggregate claim 2) creditors claims of at or aggregate
owner of at least 1M representing at least 1M or claim of at

CIVIL LAW REVIEWER Page 279 of 338

 -partnership: or at least 24% least 67% of the at least 25% least 500K
partners of subscribed SECURED of the
-corporation: capital stock or obligations of the subscribed
majority vote partner’s debtor capital stock
of BoD or contributions, 3) creditors or partner’s
trustees + 2/3 whichever is representing at contributions
vote of SH higher least 75% of the of the
representing UNSECURED debtor,
outstanding obligations of the whichever is
capital stock or debtor higher
2/3 vote of 4) creditors
members holding at least
85% of the TOTAL
LIABILITIES,
SECURED and
UNSECURED, of
the debtor

Grounds Debtor’s 1) no genuine Pre-negotiated Consent of the Rehabilitation is 1) no Debtor Acts of Debtor has
insolvency or issue of fact or Rehabilitation plan parties involved no longer genuine doesn’t have Insolvency sufficient
inability to pay law on the which must to the informal possible issue of fact sufficient which tends property to
its obligations claim/s of the approved by re-structuring or law on the properties to to delay the cover all his
as they become petitioner/s creditors holding agreement claim/s of cover his liquidation or debts BUT
due and that the at least 2/3 of total the liabilities and to defraud foresees the
due and liabilities including: petitioner/s, the debts any creditors impossibility
demandable a) secured and that the which he like: of meeting
payments have creditors holding due and owes 1)debtor has debts when
not been made more than 50% of demandable exceeds 500k departed they become
for at least 60 the total secured payments from the due
days or that the claims of the thereon have Philippines,
debtor has debtor and not been with intent
generally failed b) unsecured made for at to defraud
to meet its creditors holding least 180 his creditors;
liabilities as more than 50% of days or the 2) he
they fall due the total debtor has conceals
unsecured claims failed himself to
2)creditor, of the debtor generally to avoid the
other than the meet its service of
petitioner/s has liabilities as legal process
initiated they fall due for the

CIVIL LAW REVIEWER Page 280 of 338

 foreclosure purpose of
proceedings 2) no hindering or
against the substantial delaying the
debtor that will likelihood liquidation
prevent the that the
debtor from debtor may
paying its debts be
as they become rehabilitated
due or will
render it
insolvent
Minimum 1) schedule of 1) 1) schedule of N/A 1) schedule of none 1)schedule of Posting of 1)schedule of
requiremen debtor’s circumstances debtor’s liabilities debtor’s debts and bond in the debts and
ts of the liabilities with sufficient to with list of liabilities with liabilities amount liabilities
petition list of creditors support creditors list of creditors 2) inventory determined 2)inventory
2)an inventory petition 2)an inventory of 2)an inventory of assets by the court of assets
of all its assets 2)specific relief all its assets of all its assets 3)proposed
3)Rehabilitatio sought 3) pre-negotiated 3) names of at agreement
n Plan 3)Rehabilitatio Rehabilitation plan least 3 nominees with
4) names of at n Plan and names of at to the position creditors
least 3 4) names of at least 3 nominees of liquidator
nominees to least 3 to the position of
the position of nominees to receiver
receiver the position of 4) summary of
receiver disputed claims
against debtor and
report on the
provisioning of
funds
Court COMMENCEMENT ORDER Court order Insolvent debtor Liquidation Court Order: Liquidation 1) show Court Order:
Action -shall appoint a rehabilitation -shall appoint a or creditor may Order 1)publication order cause order 1) calling of
(if sufficient receiver rehabilitation seek court 2)directing 2) liquidation creditor’s
in form and -summarize requirements and receiver, if assistance for the debtors and order meeting
substance) deadlines for creditors to provided in the execution or creditors to 2)publication
establish their claim plan implementation file comment of said order
-include a STAY or SUSPENSION - service of petition of the agreed and service
ORDER to each creditor Rehabilitation Liquidation of such order
who is not a Plan order to all
petitioner holding creditors
at least 10% of 3)suspend

CIVIL LAW REVIEWER Page 281 of 338

 total liabilities of any pending
debtor execution
- against
debtor upon
motion
Publication none Once a week for 2 Notice of Petition or Petition or none none Order: Once
consecutive weeks Rehabilitation motion: Once a motion: a week for 2
in a newspaper of plan: published week for 2 Once a week consecutive
general circulation; once a week for 3 consecutive for 2 weeks in a
with first consecutive weeks in a consecutive newspaper
publication made weeks in a newspaper of weeks in a of general
within 7 days from newspaper of general newspaper circulation;
issuance of Order general circulation of general with first
circulation circulation publication
made within
7 days from
issuance of
Order
Hearing 1) for the determination of the For the N/A For the election For the For the For the
creditors determination of and election and election and election and
2) determine any objections to the objections to appointment of appointment appointment appointment
the appointment of receiver the Rehabilitation liquidator of liquidator of liquidator of liquidator
3) direct creditors to comment on plan
the Rehabilitation Plan
4) direct the rehabilitation
receiver to evaluate the financial
condition of the debtor and
submit report within 40 days
Effect COMMENCEMENT ORDER Approval of the CRAM DOWN LIQUIDATION ORDER: SUSPENSION
-there shall be a waiver of taxes Rehabilitation plan EFFECT: the 1)The juridical debtor is dissolved and its juridical existence ORDER: No
and fees due to the National shall have the legal Rehabilitation terminated creditor shall
Government and to LGUs from effect as Plan shall have 2)Legal title of all the assets of the debtor shall be vested in the sue or
the issuance of the Confirmation of the same legal liquidator/court institute
commencement order until Plan effect as 3)All contracts of the debtor shall be deemed terminated unless proceedings
approval of the Rehabilitation Confirmation of a the liquidator, w/in 90 days from the date of his assumption of to collect his
plan or the dismissal of petition, *court has 120 Plan office, declares otherwise and the contracting party agree claim from
whichever is earlier days from date of 4)No separate action for the collection of an unsecured claim the debtor
filing to approve shall be allowed (direct claims to liquidator) from the
CONFIRMATION OF the Plan. Failing to 5) No foreclosure proceeding shall be allowed for 180 days time of filing
REHABILITATION PLAN do so, the Rehab of the

CIVIL LAW REVIEWER Page 282 of 338

 1) Rehabilitation plan and its Plan shall be petition and
provisions shall be binding upon deemed approved. for so long as
the debtor and all creditors the
whether or not such persons have proceedings
participated in the proceeding remain
2) debtor shall comply with the pending
provisions Except:
3)payments shall be made to a)those
creditors in accordance with the creditors
plan having claims
4)contracts bet. Debtor and for personal
creditors shall be interpreted as labor,
continuing to apply to the extent maintenance
that they don’t conflict with the , expense of
plan last illness of
5) any compromises/reschedule debtor 60
of timing of payments by debtor days prior
shall be binding on the creditor filing
regardless whether the plan is b) secured
successfully implemented creditors
6) claims arising after the
approval of the plan that are
otherwise not treated by the Plan
are NOT subject to Suspension
Order

CIVIL LAW REVIEWER Page 283 of 338

 COMMODATUM MUTUUM DEPOSIT BARTER WAREHOUSE RECEIPTS ACT
Object Non-consumable Fungible/ Movable/personal Non-consumable Goods (chattels,
consumable property merchandise)
Except: (i.e. money)
consumable if
used for
exhibition
purposes only
Purpose Temporary use of Consumption Safekeeping Use or Store for profit
the thing consumption

Exchange (sale)
Obligation Take care of the Return a thing of Take care of the Exchange a thing Take care of the goods
thing with due the same kind thing of the same kind,
diligence and quality quality and Do not commingle with
Do not use the thing quantity other goods
Return the thing deposited unless
upon expiration authorized or is Issue a receipt for the
of period or required for its goods
purpose preservation
Status of Retained by Passes to bailee Retained by the Passes to the Retained by the
Ownership bailor depositor other party depositor
(mutual
exchange)
Ability to demand Anytime, if no Only after the Anytime Cannot demand Anytime up to:
return period or purpose expiration of the return because a. Surrender of
has been agreed period contract is warehouse
upon or if by already receipt
mere tolerance extinguished b. Offer to pay
only (precarium) warehousema
Rescission only if n’s lien
If there is an grounds exist c. Sign the
urgent necessity acknowledgem
ent
Acts of
ingratitude by the
bailee
Compensation Essentially Gratuitous or Gratuitous or onerous Onerous
gratuitous onerous onerous

CIVIL LAW REVIEWER Page 281 of 338

 REAL MORTGAGE CHATTEL MORTGAGE PLEDGE ANTICHRESIS

Object Immovables Movables Movables Immovables

Real Rights over immovables Incorporeal rights
(leasehold rights) Except: can CM buildings by evidenced by
agreement and no innocent negotiable instruments,
third party prejudiced bills of lading, shares of
stock, bonds,
warehouse receipts
Requisites 1. Constituted to secure fulfillment of principal obligation 1. Must be in writing
2. Mortgagor/Pledgor absolute owner 2. Express agreement
3. Mortgagor/Pledgor has free disposal/legal authority between debtor-
creditor that the
*RM, CM and Pledge is VALID as between the parties even if registration requirements fruits will be applied
are not complied with BUT is not binding to 3rd persons to payment of
interest if any, and
then to the principal
To bind 3rd Must be registered in the RD Must be registered in the Must be in a public Must be registered in the
persons CM Registry instrument with a RD
description of thing
*If vehicle, must also be pledged and the date
registered in the LTO
Delivery? Generally not required Generally not required Delivery essential to
Delivery essential only so
constitute pledge that the antichretic
creditor can enjoy the
fruits
Effect of Ownership does not pass to the creditor upon default. Principle of pactum comissorium applies
default
Except: In pledge, after two sales and the thing remains unsold, the pledgee can appropriate (in this case, he has to
waive his claim)
Foreclosure Extrajudicial/Judicial Sale through a notary public Extrajudicial Extrajudicial/Judicial
Private sale
Deficiency Creditor can sue for No express right granted by No deficiency Creditor can sue for
deficiency in either EJ/J law, BUT allowed by deficiency in either EJ/J
jurisprudence

Except: No deficiency in sale

on movables in installment
(Recto Law)

CIVIL LAW REVIEWER Page 282 of 338

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

CIVIL LAW REVIEWER Page 283 of 338

 property until his title is nullified. Pascual v. Coronel,
[527 SCRA 474, 2007]
TYPES OF TORRENS CERTIFICATES OF TITLE
1. ORIGINAL CERTIFICATE OF TITLE - the first title issued in
the name of the registered owner by the Register of
Deeds (ROD) covering a parcel of land which had been
registered by virtue of a judicial or administrative
proceeding.
2. TRANSFER CERTIFICATE OF TITLE - the title issued by the
ROD in favor of the transferee to whom the ownership
of the already registered land had been transferred by
virtue of a sale or other modes of conveyance.
MODES OF ACQUIRING TITLE
1. Public Grant A conveyance of public land by
government to a private individual
2. Acquisitive Requisites: ONCE
Prescription Open,
Continuous,
Exclusive, and
Notorious possession
If in good faith & with just title: 10
yrs. uninterrupted possession is
required
If in bad faith & without just title:
30 yrs. continuous possession is
required
Only available if the land possessed
is public, alienable and disposable
A property registered under the
Torrens System is not subject to
prescription
Prescription is unavailing not only
against the registered owner, but
also against his hereditary
successors
CIVIL LAW REVIEWER
3. Accretion Requisites: G-C-A
1. The deposit of soil or sediment
be gradual and imperceptible,
2. It is the result of the current of
the waters (river/sea), and
3. The land where accretion takes
place is adjacent to the banks
of rivers or the sea coast
Accretion to registered lands needs
new registration
There must be No human
intervention,
 The current causing the alluvial
deposit must be from a river. If
it is from the sea, the deposit
will pertain to the state.
(Government of the Phils. v.
Cabangis 53 Phil. 112 (1929))
4. Reclamation Filling of submerged land by
deliberate act and reclaiming title
thereto
 Must be initially owned by the
government
 May be subsequently
transferred to private owners
5. Voluntary Transfer 1. Private grant
2. Voluntary execution of deed of
conveyance
 Contractual relationship
between the parties
 Consensual
6. Involuntary  No consent from the owner of
Alienation land
 Forcible acquisition by the
State
7. Descent or Devise Hereditary succession to the estate
of deceased owner
8. Emancipation To ameliorate the sad plight of
Patent/Grant tenant-farmers (to answer their
(Certificate of Land problems)
Ownership Award)
Such grant is not transferable
except by hereditary succession
LAWS IMPLEMENTING LAND REGISTRATION
1. Property Registration Decree (P.D. 1529, as amended)
2. Cadastral Act (Act 2259, as amended)
3. Public Land Act (Commonwealth Act 141, as amended)
4. Emancipation Decree (P.D. 27, as amended)
5. Comprehensive Agrarian Reform Law of 1988 (R.A. 6657,
as amended)
ADMINISTRATION OF THE TORRENS SYSTEM
1. Land Registration Authority (LRA)
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Agency charged with the efficient execution of the laws
relative to the registration of lands, under the executive
supervision of the DOJ
Composition:
a. Administrator
b. 2 Deputy Administrators (as assistants)
The Functions of the LRA are: (SAC)
2. Extend speedy and effective assistance to the Dept. of
Agrarian Reform, the Land Bank, and other agencies in
the implementation of the land reform program of the
government
2. Extend assistance to courts in ordinary and cadastral
land registration proceedings
3. Be the central repository of records relative to original
registration of lands titled under the Torrens system,
including the subdivision and consolidation plans of
titled lands
2. Register Of Deeds (ROD)
It is the public repository of records and instruments
affecting registered or unregistered lands and chattel
mortgages in the province or city wherein such office is
situated
Composition:
a. Register of Deeds
b. Deputy (as assistant)
The functions of the ROD: (PIDI)
1. Immediately register an instrument presented for
registration dealing with real or personal property which
complies with the requisites for registration
2. Shall see to it that said instrument bears the proper
documentary and science stamps and that the same are
properly cancelled
3. If the instrument is not registerable, he shall deny the
registration thereof and inform the presentor of such
denial in writing, stating the ground or reason therefore,
and advising him of his right to appeal by consulta in
accordance with Sec. 117 of PD 1529
4. Prepare and keep an index system which contains the
names of all registered owners and lands registered
The function of the ROD with reference to registration of
deeds, encumbrances, instruments, and the like is ministerial
in nature, provided the applicant complies with all the
requisites. Baranda v. Gustilo, [165 SCRA 757, 1988]
It is enough that in the ROD’s opinion an instrument is
registrable for him to register it. The act being an
administrative act does not contemplate notice to and
hearing of interested parties. Ledesma v. Villasenor, [13
SCRA 494, 1965]
CIVIL LAW REVIEWER
The determination of whether a document is valid or not is a
function that belongs to a court of competent jurisdiction, and
not to the ROD. Almirol v. ROD of Agusan, [G.R. No. L-22486,
March 20, 1968]
Instances when the ROD may validly deny registration of a
voluntary instrument:
1. Where there are more than 1 copy of the owner’s
duplicate certificate of title and not all such copies are
presented to the ROD
2. Where the voluntary instrument bears on its face an
infirmity
3. Where the validity of the instrument sought to be
registered is in issue in a pending court suit, notice of
which must be given to parties
4. Registration may be suspended Balbin v. ROD, [28 SCRA
12,1969]
The ROD may also refuse to register a private document since
Section 112 of PD 152 provided that deeds of conveyances
affecting lands should be verified and acknowledged before a
notary public or other public officer authorized by law to take
acknowledgement. Gallardo v. IAC, [155 SCRA 248, 1987]
NOTE: When the ROD is in doubt as to the proper action to
take on an instrument or deed presented to him for
registration, he should submit the question to the
Administrator of the LRA en consulta (Section 117, PD 1529).
B. REGALIAN DOCTRINE
1. CONCEPT
Under the Regalian doctrine which is embodied in Section 2,
Article XII of the 1987 Constitution, all lands of the public
domain belong to the State, which is the source of any asserted
right to ownership of land. ll lands of the public domain,
waters, minerals, coal, petroleum and other mineral oils, all
forces of potential energy, fisheries, forests, or timber, wildlife,
flora and fauna, and natural resources belong to the state.
With the exception of agricultural lands, all other natural
resources shall not be alienated
2. EFFECTS
All lands not appearing to be clearly within private
ownership are presumed to belong to the State. Unless public
land is shown to have been reclassified or alienated to a private
person by the State, it remains part of the inalienable public
domain. To overcome this presumption, incontrovertible
evidence must be established that the land subject of the
application is alienable or disposable.
To prove that the land subject of an application for
registration is alienable, an applicant must establish the
existence of a positive act of the government such as a
Page 285 of 338
presidential proclamation or an executive order; an Arts. 5 & 6, Water 1. Rivers and their natural beds;
administrative action; investigation reports of Bureau of Code (PD 1067 ) 2. Continuous or intermittent waters
Lands investigators; and a legislative act or a statute. The of springs and brooks running in
applicant may also secure a certification from the their natural beds and the beds
Government that the lands applied for are alienable and themselves;
disposable. 3. Natural lakes and lagoons;
4. All other categories of surface
3. CONCEPT OF NATIVE TITLE, TIME waters such as water flowing over
IMMEMORIAL lands, water from rainfall whether
natural or artificial, and water from
agriculture runoff, seepage and
NATIVE TITLE - refers to pre-conquest rights to lands and
drainage;
domains which, as far back as memory reaches, have been
5. Atmospheric water;
held under a claim of private ownership by ICCs/IPs,
6. Subterranean or ground water;
havenever been public lands and are thus indisputably
7. Seawater;
presumed to have been held that way sincebefore the
Spanish Conques
Found in private lands:
8. Continuous or intermittent waters
C. CITIZEN REQUIREMENTS rising on such lands;
9. Lakes and lagoons naturally
1. INDIVIDUALS AND CORPORATIONS occuring on such lands;
10. Rain water and falling on such
Alienable lands of the public domain: lands;
11. Subterranean or ground waters;
Only Filipino citizens may acquire not more than 12 hectares and
by purchase, homestead or grant, or lease not more than 500 12. Waters in swamps and marshes
hectares. Regalian Doctrine Forest or timberland, public forest,
under the 1935, forest reserves lands, mineral lands
Private corporations may lease not more than 1,000 hectares 1973, and 1987
for 25 years renewable for another 25 years Constitution

D. NON-REGISTRABLE PROPERTIES
NON-REGISTRABLE PROPERTIES
Article 420 NCC 1. Those intended for public use, such
as roads, rivers, torrents, ports and
bridges constructed by the State,
banks, shores, roadsteads, and
others of similar character
2. Those which belong to the State,
without being for public use, and
are intended for some public
service or for the development of
the national wealth.
It is not the court which determines the classification of lands
of the public domain into agricultural, forest or mineral but the
Executive Branch of the government, through the Office of the
President. Bureau of Forestry v. CA, [153 SCRA 351, 1987]
The State has an imprescriptible right to cause the reversion of
a piece of property belonging to the public domain if title has
been acquired through fraudulent means. Republic v. Heirs of
Alejaga, [393 SCRA 361, 2002]
A land classified as a military reservation zone, until reclassified
or released from the said classification remains inalienable
public land. Republic v. Southside, [G.R. No. 156951, Sept. 22,
2006]

E. ORIGINAL REGISTRATION

Types Of Registration:
1. Original Registration
2. Subsequent Registration

ORIGINAL REGISTRATION UNDER P.D. 1529 is a proceeding

brought before the RTC (as a land registration court) to
determine title or ownership of land on the basis of an

CIVIL LAW REVIEWER Page 286 of 338

application for registration or answer by a claimant in a
cadastral registration.
1. REGISTRATION PROCESS AND REQUIREMENTS
Kinds Of Judicial Registration:
1. Judicial/Voluntary/Ordinary – by filing with the
proper court; application by the private individual
himself
2. Administrative/Involuntary/Cadastral – compulsory
registration initiated by the government
Procedure In Ordinary Land Registration (SurF-D-TraPS-AHJ-
DECT)
1. SURvey of land by the Bureau of Lands or a duly
licensed private surveyor
- Survey plan must be duly approved by the Director
of Lands.
2. Filing of application for registration by the applicant
a. With all muniments of titles and copies thereof
with survey plan approved by Bureau of Lands
MUNIMENTS OF TITLE are instruments or written evidence
which applicant hold or possess to enable him to
substantiate and prove title to his estate.
Tax declarations or realty tax payment of property are not
conclusive evidence of ownership. At most, they serve as a
good indicium of possession in the concept of an owner.
Such an act strengthens one’s bona fide claim of acquisition
of ownership. Republic v. Sta. Ana-Burgos, [523 SCRA 309,
2007]
b. Always filed with the RTC of the place where land
is situated
c. Indorsed to the MTC if there is no controversy
over the land or if its value is less than 100,000
d. In cases of delegated jurisdiction to the MTC,
appeal is directed to the CA
e. If land is situated between boundaries of 2
provinces, application must be filed:
 When boundaries are not defined: with the
RTC of the place where it is declared for
taxation purposes;
 When boundaries are defined: a separate
plan for each portion must be made by a
surveyor and a separate application for each
lot must be filed with the appropriate RTC
3. Setting of the Date of initial hearing of application by
the RTC
- Within 5 days, set hearing 45-90 days from date of
order
4. Transmittal of the application and the date of the
initial hearing, with all the documents or other
evidence attached thereto, by the Clerk of Court to
CIVIL LAW REVIEWER
the LRA
5. Publication of notice of the filing of the application and
the date and place of the hearing in the Official Gazette.
The notices required are mandatory.
a. Publication of notice of initial hearing
i. Once in the Official Gazette (this confers
jurisdiction upon the court)
ii. Once in a newspaper of general circulation
Purpose of publication:
1. To confer jurisdiction over the land applied for upon the
court
2. To charge the whole world with knowledge of the
application of the land involved, and invite them to take
part in the case and assert and prove their rights over
the subject land
b. Mailing
 Within 7 days after publication of said notice in
the OG, mailing of notice to:
i. Persons named in the notice
ii. Sec. of Public Highways, Provincial Governor,
and Mayor, if the applicant requests to have
the line of a public way or road determined
iii. Sec. of Agrarian Reform, Solicitor General,
Director of Lands, Director of Fisheries, and
Director of Mines, if the land borders on a
river, navigable stream, or shore, or on an arm
of the sea where a river or harbor lies
iv. Other persons as the court may deem proper
c. Posting
Posting in conspicuous place on subject land and on
bulletin board of municipal building at least 14 days
before initial hearing
6. Service of notice by the sheriff upon contiguous owners,
occupants and those known to have interests in the
property
7. Filing of answer to the application by any person
whether named in the notice or not
8. Hearing by the court
9. Promulgation of judgment by the Court
10. Issuance of the decree declaring the decision final and
instructing the LRA to issue a decree of confirmation and
registration
Decree– issued by LRA after finality of judgment; contains
technical description of land.
i. Decrees dismissing application
ii. Decrees of confirmation and registration
0. Subject only to appeal
11. Entry of the decree of registration in the LRA
1 year after the date of entry, it becomes incontrovertible
and amendments will not be allowed except clerical errors.
Page 287 of 338
 It is deemed conclusive as to the whole world.
- Puts an end to litigation
- Purpose of Torrens system is protected
12. Sending a copy of the decree of registration to the
corresponding ROD
13. Transcription of the decree of registration in the
registration book and issuance of the owner’s
duplicate original certificate of title to the applicant by
the ROD upon payment of the prescribed fees
NOTE: Noncompliance with the requisites will make the
Certificate of Title (CT) issued invalid and cancellable by the
courts.
2 .WHO MAY APPLY
a. UNDER PD 1529 (OPAL)
1. Those who by themselves or through their
predecessors-in-interest have been in open,
continuous, exclusive, notorious possession and
occupation of alienable and disposable lands of the
public domain under a bona fide claim of ownership
since June 12, 1945 or earlier
2. Those who acquired ownership of private land by
prescription under the provisions of existing laws
3. Those who acquired ownership of private lands or
abandoned river beds by right of accession or
accretion under the existing laws
4. Those who have acquired ownership of land in any
manner provided for by law
NOTE: All these persons must be natural-born Filipino
citizens. By way of exception juridical persons may apply for
registration of leased agricultural and disposable lands not
exceeding 1,000 hectares in area for a period of 25 years and
renewable for not more than 25 years (Sec. 3, Article XII,
1987 Constitution), and except when the land has been
previously acquired by prescription by a natural person and
subsequently transferred to a juridical entity. In this case, a
corporation may apply for judicial confirmation of title. Dir.
of Lands v. IAC and ACME, [146 SCRA 159 (1986]
Limitation To Ownership Of Land By Corporation:
1. Private Lands
a. At least 60% Filipino (Sec. 7, Article XII, 1987
Constitution)
b. Restricted as to extent reasonably necessary to
enable it to carry out purpose for which it was
created
c. If engaged in agriculture, it is restricted to 1,024
hectares
2. Patrimonial Property of the State (Sec. 3, Article XII,
CIVIL LAW REVIEWER
1987 Constitution)
a. May only Lease (CANNOT own land of the public
domain) for 25 years renewable
b. Limited to 1,000 hectares
c. Apply to both Filipinos & foreign corporations
Determinative of this issue is the character of the parcels of
land – whether they were still public or already private – when
the registration proceedings were commenced. If they are
already private lands, the constitutional prohibition against
acquisitions by a private corporation would not apply.
Natividad v. CA, [202 SCRA 439, 1991]
FORM OF THE APPLICATION
(Sec. 15, PD 1529): (WSS)
1. Written
2. Signed by the applicant or person duly authorized in his
behalf
- If there is more than 1 applicant, the application shall
be signed and sworn to by and in behalf of each.
3. Sworn to before an officer authorized to administer oath
for the province or city where the application was actually
signed
CONTENTS OF APPLICATION
(Sec. 15, P.D. 1529): (MADFARCE)
1. Manner of acquisition of land
2. Assessed value of the land and the buildings and other
improvements based on the last assessment for taxation
purposes
3. Description of the land applied for together with the
buildings and improvements; the plan approved by
Director of Lands and the technical descriptions must be
attached
4. The court may require Facts to be stated in the application
in addition to those prescribed by the Decree not
inconsistent therewith and may require the filing of
additional papers
5. Full names and addresses of All occupants of the land and
those of the Adjoining owners, if known; and if not known,
the applicant shall state the extent of the search made to
find them
6. If the application describes the land as bounded by a
public or private way or Road, it shall state whether or not
the applicant claims any portion of the land within the
limits of the way or road, and whether the applicant
desires to have the line of way or road determined (Sec.
20, PD 1529)
7. Citizenship and Civil status of the applicant
 if married, name of spouse, and
 if the marriage has been legally dissolved, when
and how the marriage relation was terminated
8. Mortgage or Encumbrance affecting the land or names of
other persons who may have an interest therein, legal or
equitable
9. If the applicant is a non-resident of the Philippines, he shall
Page 288 of 338
 file an instrument appointing an agent residing in the
Phils. and shall agree that service of any legal process
shall be of the same legal effect as if made upon the
applicant within the Philippines (Sec. 16, PD 1529)
Where To File Application
General Rule – RTC of the province or city where the land is
situated
File together with application all original muniments of titles
or copies thereof and a survey plan of the land as approved
by the Bureau of Lands
P.D. 1529 has eliminated the distinction between the general
jurisdiction vested in the RTC and the limited jurisdiction
conferred upon it by the former law when acting merely as
land registration court. Aimed at avoiding multiplicity of
suits, the change has simplified registration proceedings by
conferring upon the RTCs the authority to act not only on
original applications but also those filed after original
registration, with power to hear and determine all questions
arising upon such applications or petitions. Averia v.
Caguioa, [146 SCRA 459, 1986]
If there are several parcels of land situated in different
provinces/cities but belong to one owner, he must file in RTC
of each province/city where the different parcels of land are
located for registration purposes
Exception – Delegated jurisdiction of the MTC to hear and
determine cadastral or land registration cases covering lots
where:
− there is no controversy or opposition, or
− contested lots, the value of which does not exceed
100,000
AMENDMENTS IN ORDINARY REGISTRATION PROCEEDINGS
1. Striking out one or more of The court may strike out at
the parcels of land applied for any time
or by a severance of the
application
2. Substantial change in New technical description
boundaries, increase in area, and new publication and
inclusion of additional land notice are necessary
3. Joinder, substitution, or File motion with court
discontinuance of any of the
parties
4. Decrease in area File motion with court; no
need for new publication or
notice
If the amendment consists in the inclusion in the application
for registration an area or parcel of land not previously
included in the original application, as published, a new
publication of the amended application must be made. The
CIVIL LAW REVIEWER
purpose of the new publication is to give notice to all persons
concerned regarding the amended application. Without a new
publication, the registration court cannot acquire jurisdiction
over the area or parcel of land that is added to the area
covered by the original application, and the decision of the
registration court would be a nullity insofar as the decision
concerns the newly included land. But if the amendment
consists in the exclusion of a portion of the area covered by the
original application and the original plan as previously
published, a new publication is not necessary. In the latter
case, the jurisdiction of the court is not affected by the failure
of a new application. Benin v. Tuason, [57 SCRA 531, 1974]
Requisites of Opposition: an opposition may be filed by any
person claiming an interest
1. Set forth objections to the application
2. State interest claimed by oppositor
3. Apply for the remedy desired
4. Signed and sworn to by him or by some other duly
authorized person
5. Filed on or before the date of initial hearing
6. If only a portion of the land applied for is contested and
such portion is not properly delimited, court may
require submission of a division plan approved by the
Director of Lands
GENERAL DEFAULT SPECIAL DEFAULT
Those persons who did When a party appears at initial
not appear and answer hearing without having filed an
within the time prescribed answer and asks court for time
to file answer but failed to do
so within period allowed
b. UNDER C.A. 141
Judicial Confirmation of Imperfect or Incomplete Title under
the Public Land Act
 In rem, judicial proceedings
 The decree of registration issued is conclusive and final
 Governed by court procedure and law of evidence
When To File
Extended up to December 31, 2020, as provided in Sec. 2 of RA
9176
Limitation To Area Applied For
Maximum of 12 hectares (Sec. 3, RA 6940)
What Applicant Must Prove
 The land is alienable and disposable land of the public
domain, and
 His possession was for the length of time and in the
manner and concept required by law
Page 289 of 338
NOTE: Form, Contents, Notice, Mailing, Posting
Requirements are the same as those required in original
registration under PD 1529.
A judicial declaration that a parcel of land is public, does not
preclude even the same applicant from subsequently
seeking a judicial confirmation of his title to the same land,
provided he thereafter complies with the provisions of Sec.
48 of C.A. 141, as amended and as long as said public land
remains alienable and disposable. Director of Lands v. CA,
[106 SCRA 426, 1981]
Proof of Private Ownership (STOP)
1. Spanish title (inadmissible and ineffective proof of
ownership in land registration proceedings filed after
Aug. 16, 1976)
2. Tax declarations and tax payments (not conclusive
evidence of ownership, must be coupled with proof of
actual possession for the period required by law)
3. Other kinds of proof (ex. testimonial evidence to prove
accretion, deeds of sale)
4. Presidential issuances and legislative acts (constitutive
of a fee simple title or absolute title in favor of the
grantee, a law ceding full ownership to a government
institution)
The holder of a Spanish title may still lose his ownership of
the real property to the occupant who actually possesses the
same for the required prescriptive period. Taking the law as
a whole, it has clearly set a deadline for the filing of
applications for registration of ALL Spanish titles under the
Torrens system (i.e., 6 months from its effectivity or on 14
August 1976), after which, the Spanish titles may no longer
be presented to prove ownership. Spanish titles can no
longer be countenanced as indubitable evidence of land
ownership. Santiago v. SBMA, [G.R. No. 156888, November
20, 2006]
JUDGMENT is a decision of court constituting its opinion
after taking into consideration the evidence submitted.
It becomes final upon the lapse of 15 days counted from the
receipt of notice of the judgment.
However, notwithstanding the lapse of the 15-day period
from receipt of judgment by the parties, the court continues
to retain control over the case until the expiration of 1 year
after the entry of decree of registration by the LRA. Republic
v. Assosacion Benevola de Cebu [178 SCRA 692, 1989]
In special proceedings the purpose of execution of judgment
is to establish a status, condition or fact; in land registration
proceedings, the ownership by a person of a parcel of land is
sought to be established. After the ownership has been
proved and confirmed by judicial declaration, no further
proceeding to enforce said ownership is necessary, except
when the adverse or losing party had been in possession of
CIVIL LAW REVIEWER
the land and the winning party desires to oust him therefrom.
Ronald Ting v. Liro, [G.R. No. 168913, March 14, 2007]
Post-Judgment Incidents
1. Writ of Possession: order to sheriff to deliver the land to
the successful party litigant; no prescription against: (1)
the loser and (2) anyone unlawfully and adversely
occupying
When writ may not issue: When a party entered into property
after issuance of final decree, is not an oppositor in registration
proceeding, and is in possession of land for at least 10 years
2. Writ of Demolition: the complement of writ of
possession; to demolish improvements introduced by
oppositor or his successor in interest
Means to Recover Possession
1. Forcible entry
2. Unlawful detainer
3. Accion publiciana
4. Accion reivindicatoria
Decree of Registration
 The decree issued by the LRA pursuant to the order of
the court.
 Binds the land, quiets title thereto, subject only to such
exceptions or liens as may be provided by law
 Conclusive upon all persons including the government
Contents of The Decree (DMD-DO)
1. Date, hour and minute of its entry
2. Whether the owner is married or unmarried, and if
married, the name of the spouse; provided that if the
land is conjugal property, the decree shall be issued in
the name of both spouses
3. If the owner is under disability, the nature of such
disability, and if a minor, his age
4. Description of the land and shall set forth the estate of
the owner, and also show their relative easements,
liens, attachments, and other encumbrances
5. Other matters to be determined in pursuance of the law
Process of Issuing The OCT
1. Within 15 days from finality of order of judgment
directing registration of title – court orders the LRA to
issue decree of registration and certificate of title
2. Clerk of court will send order of court and copies of
judgment
3. Writ of Demolition may be issued. The court has
authority to order, as a consequence of the writ of
possession issued by it, the demolition of improvements
introduced by the defeated oppositor or his successor-
in-interest
4. Administrator will issue a decree of registration and
original and duplicate of OCT that is signed by the
Page 290 of 338
 Administrator, enter and file decree of registration in
LRA
5. Send to ROD the original and duplicate of title and
certificate for entry in his registration book
6. Enter in record book, dated, signed, numbered and
sealed to take effect upon date of entry
7. ROD to send notice to registered owner ready for
delivery after payment of fees
8. ROD shall send duplicate and note on each certificate
of title to whom it is issued
9. Original copy to be filed in ROD
10. Bound in consecutive order
Attributes and Limitations on Certificates of Title and
Registered Lands
1. Free from liens and encumbrances
General Rule – Claims and liens of whatever character
existing against the land prior to the issuance of the
certificate of title are cut off by such certificate and the
certificate so issued binds the whole world, including the
government.
Exceptions: (CNT-PD)
i. Those noted on the certificate
ii. Liens, claims, or rights arising or existing under the
laws and the Constitution, which are not by law
required to appear on record in the Register of
Deeds in order to be valid
iii. Unpaid real estate taxes levied and assessed within
2 years immediately preceding the acquisition of
any right over the land by an innocent purchaser for
value
iv. Any public highway, or private way established or
recognized by law, or any government irrigation,
canal or lateral thereof, if the certificate of title
does not state the boundaries of such highway or
irrigation canal or lateral thereof have been
determined
v. Any disposition of the property or limitation on the
issue thereof pursuant to PD 27 or any other law or
regulations on agrarian reform
2. Incontrovertible and indefeasible
General Rule – Upon expiration of 1 year from and
after the entry of the decree of registration in the
LRA, the decree and the corresponding certificate of
title becomes incontrovertible and indefeasible.
Exceptions: (PNF)
a. If previous valid title of the same land exists
b. When land covered is not capable of
registration
c. When acquisition of certificate is attended by
fraud
The rule on the incontrovertible nature of a certificate of
title applies when what is involved is the validity of the
CIVIL LAW REVIEWER
OCT, not when it concerns that of the TCT. Arguelles v.
Timbancaya, [72 SCRA 193, 1976]
3. Registered land not subject to prescription
a. Even adverse, notorious and continuous possession
under claim of ownership for the period fixed by
law is ineffective against a Torrens title. JM Tuason
and Co. Inc. v. CA, [93 SCRA 146, 1979]
b. The fact that the title to the land was lost does not
mean that the land ceased to be registered land
before the reconstitution of its title. It cannot
perforce be acquired by prescription. Ruiz v. CA, [79
SCRA 525 , 1977]
c. Laches may be invoked to bar reconveyance of land
to the registered owner only if there are intervening
rights of third persons which may be affected or
prejudiced if such land is returned to the registered
owner. De Lucas v. Gamponia, [100 Phil 277 , 1956]
With respect to a claim of acquisitive prescription, it is baseless
when the land involved is a registered land since no title to
registered land in derogation of that of the registered owner
shall be acquired by adverse possession. Feliciano v. Zaldivar,
[G.R. No. 162593, Sept. 26, 2006]
4. Certificate of title not subject to collateral attack
Sec. 48 of P.D. 1529 provides that “a certificate of title shall not
be subject to collateral attack. It cannot be altered, modified,
or cancelled except in a direct proceeding in accordance with
the law.”
Torrens title cannot be collaterally attacked. The question on
the validity of a Torrens title, whether fraudulently issued or
not, can be raised only in an action expressly instituted for
that purpose. The action for the declaration of nullity of deed
of sale commenced by the petitioners in the RTC is not the
direct proceeding required by law to attack a Torrens certificate
of title. Tapuroc v. Loquellano de Mende, 512 SCRA 97 (2007
5. Torrens Certificate presumed valid and devoid of flaws
General Rule – Torrens Certificate of Title is presumed
to have been regularly issued, valid, and without
defects. The buyer has the right to rely upon the face of
the Torrens title and dispense with the trouble of
inquiring further.
Exception – When he has actual knowledge of facts and
circumstances that would impel a reasonably cautious
man to make inquiry.
While, it is a familiar doctrine that a forged or fraudulent
document may become the root of a valid title, if title to the
property has been transferred from the forger to an innocent
purchaser in good faith, the same does not apply in case of
banking institutions or those engaged in real estate for they are
expected expected to exercise more care and prudence than
Page 291 of 338
private individuals in their dealing with registered lands. In monuments set-up in proper places thereon
the absence of inquiry, the respondent Bank cannot and 3. Cadastral survey
should not be regarded as a mortgagee/purchaser in good 4. Filing of petition
faith. Erasusta v. CA, [G.R. No. 149231, July 17, 2006] 5. Publication (twice in successive issues of OG), mailing,
posting
6. General incidents of registered land 6. Filing of answer
7. Hearing of the case
Registered land or the owners thereof are not relieved from 8. Decision
the following: 9. Issuance of the decree and certificate of title
a. From any rights incident to the relation of
husband and wife, landlord and tenant NOTE: The cadastral court is not limited to a mere
b. From liability to attachment or levy on execution adjudication of ownership in favor of one or more claimants. If
c. From liability to any lien of any description there are no successful claimants, the property is declared
established by law on the land and buildings public land. Additionally, while the court has no jurisdiction to
thereon, or in the interest of the owner in such adjudicate lands already covered by a Certificate of Title, it is
land or buildings nonetheless true that this rule only applies where there exists
d. From any right or liability that may arise due to no serious controversy as to the certificate’s authenticity vis-à-
change of the law on descent vis the land covered therein. Republic v. Vera, 120 SCRA 210
e. From the rights of partition between co-owners (1983)
f. From the right of the government to take the
land by eminent domain BASIS PD 1529 CADASTRAL
g. From liability to be recovered by an assignee in Nature Voluntary Compulsory
insolvency or trustee in bankruptcy under the Applicant Landowner Director of Lands
laws relative to preferences Lands covered usually involves all classes of lands
h. From any other rights or liabilities created by law private land are included
and applicable to unregistered land
it may also refer to
7. Where certificate of title is obtained by a trustee public agricultural
a. Trustee who obtains a Torrens title in his name, lands if the object
over property held in trust by him for another of the action is
cannot repudiate the trust relying on the confirmation of an
registrations, such being one of the limitations imperfect title
upon the finality of title Parties Applicant and Government,
b. Trustee could not perforce legally convey opponent Landowners must
ownership of the registered property in her will come to court as
for she is not the absolute owner thereof claimants of their
own lands
Purpose Petitioner comes to Government asks
3. CADASTRAL REGISTRATION court to confirm his the court to settle
title and seeks the and adjudicate the
CADASTRAL REGISTRATION is a proceeding in rem initiated registration of the title of the land
by the filing of a petition for registration by the government, land in his name
not by the persons claiming ownership of the land subject Person who Landowner Government
thereof, and the latter are, on the pain of losing their claim requests the
thereto, in effect, compelled to go to court to make known survey
their claim or interest therein and to substantiate such claim Effect of • no adverse claim • if none of the
or interest judgment • if the applicant applicants can
fails to prove his prove that he is
Procedure: (NN-CP-PAHD-DI) title, his application entitled to the land,
1. Notice of cadastral survey published once in OG and may be dismissed the same shall be
posted in conspicuous place with a copy furnished to without prejudice declared public (res
the mayor and barangay captain (no res judicata) judicata)
2. Notice of date of survey by the Bureau of Land
Management and posting in bulletin board of the PATENTS
municipal building of the municipality or barrio, and Classification of Land of Public Domain:
he shall mark the boundaries of the lands by The classification is the exclusive prerogative of executive and

CIVIL LAW REVIEWER Page 292 of 338

not of the judiciary 1. Indefeasible when registered, and deemed
incorporated with Torrens system 1 year after the
Anyone who applies for confirmation of imperfect title has issuance of patent
the burden of proof to overcome the presumption that the 2. GR: May not be opened 1 year after entry by LRA
land sought to be registered forms part of public domain (otherwise, confusion and uncertainty on the
(Regalian doctrine) government system of the distribution of public lands
may arise and this must be avoided)
Under the Constitution: Exception: if it is annullable on ground of fraud, then
1. Agricultural – the only classification subject to it may be reopened even after 1 year because
alienation registration does not shield bad faith
2. Forest or timber  The court, in the exercise of its equity
3. Mineral lands jurisdiction, may direct reconveyance even
4. National park without ordering cancellation of title

Under the Public Land Act: Homestead Restrictions:

1. Alienable/disposable: 1. Land cannot be alienated within 5 years after approval
a. Agricultural of application for patent
b. Residential, commercial, industrial 2. It cannot be liable for satisfaction of debt within 5 years
c. Educational, charitable after approval of patent application
d. Town sites and for public and quasi-public uses 3. Subject to repurchase of heirs within 5 years after
2. Timber lands: inalienable alienation when allowed already
3. Mineral lands: inalienable 4. No private corporation, partnership, association may
 If patent or title is issued, it is void ab initio for lease land unless it is solely for commercial, industrial,
lack of jurisdiction educational, religious or charitable purpose, or right of
General Rule – It is not subject to acquisitive way (subject to consent of grantee and approval of
prescription even if in possession for long time, it Secretary of Environment & Natural Resources)
will not ripen into ownership
Exceptions:
Exception – Mineral lands and forest lands acquired 1. Action for partition because it is not a conveyance
before inauguration of Commonwealth in 2. Alienations or encumbrances made in favor of the
November 15, 1935 because there are vested rights government
which are protected
Erring Homesteader not Barred by Pari Delicto
FISHPONDS - Pari delicto rule does not apply in void contracts
Before: It was included in the definition of agriculture, - Violation of prohibition results in void contract
therefore the conversion of agricultural land to fishponds did - Action to recover does not prescribe
not change character of land
KINDS TO WHOM OTHER REQUIREMENTS
Now: It has a restricted meaning; Fishponds are of a distinct GRANTED
category and cannot be alienated but may be leased from • Grantee does not own more than 12
government To any hectares of land in the Philippines or
Home- Filipino has not had the benefit of any
When Government Grant Deemed Acquired by Operation of stead citizen over gratuitous allotment of more than 12
Law: Patent the age of hectares
1. Deed of conveyance issued by government 18 years or • must have resided continuously for
patent/grant head of a at least 1 year in the municipality
family where the land is situated
2. Registration with the ROD: mandatory, it is the
• must have cultivated at least 1/5 of
operative act to convey and transfer title
the land applied for
3. Actual physical possession, open and continuous
• Grantee does not own more than 12
 Land ceased to be part of public domain & now hectares of land
ownership vests to the grantee To any • has continuously occupied and
 Any further grant by Government on same land is natural born cultivated, either by himself or his
null and void Free citizen of the predecessors-in-interest, tracts of
 Upon registration, title is indefeasible Patent Philippines disposable agricultural public land for
(filing ended at least 30 years prior to March
Title Issued Pursuant to Registration of Patent: Dec. 31, 28,1990

CIVIL LAW REVIEWER Page 293 of 338

 2000) • has paid real property taxes on the
property while the same has not been
occupied by any person
• grant will be limited to 12 hectares
only
• to have at least 1/5 of the land
broken and cultivated within 5 years
Citizens of from the date of the award (public
the auction)
Philippines • shall have established actual
of lawful age occupancy, cultivation, and
or head of improvement of at least 1/5 of the
the family land until the date of such final
may payment
purchase • for agricultural lands suitable for
public residential, commercial or industrial
Sales agricultural purposes, patent is issued only after:
Patent land of not 1.) full payment of purchase price, and
more than 2.) completion of the construction of
12 hectares permanent improvements appropriate
for purpose for which the land is
purchased (must be completed within
18 months from date of award)
• does not own a home lot in the
municipality in which he resides
To any • in good faith, established his
citizen of residence on a parcel of land of public
legal age for domain not needed for public service
residential • not more than 1000 sq. m.
purposes • occupant must have constructed his
house on the land and actually resided
therein
• no public auction required
• not subject to any restriction against
encumbrance or alienation
Special To Non- • Secretary of the DILG shall certify
Patent Christian that the majority of the non-Christian
Filipinos inhabitants of any given reservation
under the have advanced sufficiently in
Public Land civilization
Act
Procedure for Registration of Public Lands: (IFEFI)
1. Official issues an instrument of conveyance
2. File the instrument with ROD
3. Instrument is to be entered in books and owner’s
duplicate to be issued
 Instrument is only a contract between
Government and private person and does not
take effect as conveyance if unregistered, it is
registration which is operative act of conveying
land; evidence of authority for ROD to register
4. Fees to be paid by grantee
5. After issuance of certificate of title, land is deemed
registered land within the purview of the Torrens system
RESTRICTION ON ALIENATION/ ENCUMBRANCE OF LANDS
TITLED PURSUANT TO PATENTS:
CIVIL LAW REVIEWER
1. Lands under free patent or homestead patent is
prohibited from being alienated/encumbered, except if
in favor of the government, within 5 years from and
after the issuance of the patent or grant. When lands
are conveyed within that period, the owner-vendor, his
widow or heirs, may repurchase the same within five
years from conveyance, such right cannot be waived.
Republic v. Heirs of Felipe Alejaga, Sr., 393 SCRA 361
(2002)
2. Transfer or conveyance of any homestead after 5 years
but before 25 years after the issuance of the title
without the approval of the DENR Secretary
3. Lands acquired under emancipation patents issued to
landless tenants and farmers must not be alienated or
encumbered within 10 years from issuance of the title
4. Conveyances and encumbrances made by persons
belonging to the “non-Christian tribes” may be made
only when the person making the conveyance or
encumbrance is able to read and understand the
language in which the instrument or deed is written. If
illiterate, must be approved by the then Commissioner
of Mindanao and Sulu
NATURE OF TITLE TO PUBLIC LANDS CONVEYED:
1. Indefeasible And Conclusive
The certificate of title becomes indefeasible and
incontrovertible upon the expiration of one year from the date
of the issuance of the order for the issuance of the patent. As
such, the land cannot be the subject of a cadastral proceeding
nor decreed to another person
In absence of registration, title to public land is not perfected
and therefore not indefeasible
In case of 2 titles obtained on same date, the one procured
through a decree of registration is superior than patent issued
by director of lands
2 titles procured by one person: one from homestead patent,
and one from judicial decree and sold to 2 different persons,
the one who bought it for value and in good faith and who
registered first shall have preference
A free patent obtained through fraud or misrepresentation is
void. Furthermore, the one-year prescriptive period provided
in the Public Land Act does not bar the State from asking for
the reversion of property acquired through such means. Once a
patent is registered and the corresponding certificate of title
issued, the land covered by them ceases to be part of the public
domain and becomes private property. indefeasibility of a title
does not attach to titles secured by fraud and
misrepresentation. Well-settled is the doctrine that the
registration of a patent under the Torrens System does not by
itself vest title; it merely confirms the registrant’s already
existing one. Verily, registration under the Torrens System is
not a mode of acquiring ownership. Therefore, under Section
101 of Commonwealth Act No. 141, the State -- even after the
Page 294 of 338
lapse of one year -- may still bring an action for the reversion opportunity to be heard
to the public domain of land that has been fraudulently To be filed in same registration case
granted to private individuals. Further, this indefeasibility Within 1 year after entry of decree of registration
cannot be a bar to an investigation by the State as to how the it will not prosper if transferred to innocent purchaser for
title has been acquired, if the purpose of the investigation is value
to determine whether fraud has in fact been committed in
securing the title. Republic v. Heirs of Alejaga, [393 SCRA Grounds:
361, 2002] a. actual or extrinsic fraud, committed outside trial,
preventing petitioner from presenting his side
4. REMEDIES b. fatal infirmity in the decision for want of due process
c. lack of jurisdiction of the court
REMEDIES AVAILABLE TO AGGRIEVED PARTY IN Requisites:
REGISTRATION PROCEEDINGS a. Petitioner has a real and dominical right
Motion to Lift/Set Aside order of default b. He has been deprived of such right
(Rule 9 § 3) c. Through actual or extrinsic fraud
By defaulted oppositor d. The petition is filed within 1 year from the issuance of
Before judgment the decree
Fraud, accident, mistake, excusable negligence (FAME) and e. The property has not been passed on to an innocent
with valid defense, under oath purchaser for value (IPV)
Motion for New Trial Action for
(Rule 37) Reconveyance
By aggrieved party (§96 PD 1529/ §102 Act 496)
Within 15 days from receipt of judgment By aggrieved party, whose land was registered wrongly to
another person
Grounds (FAMINE): Before issuance of decree, or within/after 1 year from entry
a. FAME Available so long as property not yet passed to IPV
b. Newly discovered evidence: action in personam
Discovered after trial if based on fraud, it must be instituted within 4 years from
not discovered earlier even with exercise of diligence the discovery of the fraud
will probably alter judgment if based on implied trust: it must be filed within 10 years
c. Award of excessive damages, or insufficiency of from issuance of OCT,
evidence to justify decision, or that the decision is if action brought by registered owner or his children, co-
against the law heir, or plaintiff in possession: imprescriptible
Appeal if based on expressed trust: imprescriptible
by aggrieved party if based on void contract: imprescriptible
Within 15 days from notice of judgment
To the CA by ordinary appeal; thence to SC by petition for Action for Damages
review By aggrieved party
Relief from Judgment After 1 year from decree and no reconveyance possible due
(Rule 38 § 2) to IPV
By aggrieved party Within 4 years from discovery of fraud (actual or
Within 60 days from knowledge of, and 6 months from, constructive)
judgment Against person responsible for fraud
no new trial
upon finality of judgment Requisites:
a. Person is wrongfully deprived of his land by registration
Requisites: in name of another
a. FAME, with affidavit of merit; in case of extrinsic fraud, b. No negligence on his part
state that deprived of hearing or prevented from c. Barred/ precluded from bringing an action (after 1 year
appealing from decree)
b. After judgment d. Action for compensation has not prescribed
c. Person deprived of right is party to case (applicant or Action for Compensation from the Assurance Fund
oppositor)
Petition for Review of Registration Decree By person deprived of his land by reason of operation of
(§ 32 PD1529) Torrens System, provided: no negligence on his part and
By aggrieved party, including person deprived of barred from recovering land

CIVIL LAW REVIEWER Page 295 of 338

Against person responsible for fraud, and ROD and National
Treasurer
Compensation: fair market value of land at time of loss.
Amount to be recovered not limited to 500,000 which is
maintained as standing fund. If fund is not sufficient,
National Treasurer is authorized to make up for deficiency
from other funds available to Treasury even if not
appropriated.
Execution first against person responsible for fraud; if
insolvent, against national treasury. Thereafter, the
Government shall be subrogated to the rights of plaintiff to
go against other parties or securities
Any court of competent jurisdiction: RTC in city where
property lies or resident of plaintiff
Requisites:
a. The aggrieved party sustained loss or damage, or is
deprived land or any estate or interest therein
b. Such loss, damage or deprivation was occasioned by the
bringing of the land under the operation of the Torrens
system or arose after the original registration of the land
c. The loss, damage or deprivation was due to: fraud, or
any error, omission, mistake, or misdescription in any
certificate of title or in any entry or memorandum in the
registration book. (Loss or damage should not be due to
breach of trust or mistake in resurvey resulting in
expansion of area in certificate of title.)
d. The aggrieved party was not negligent.
e. He is barred under the provisions of PD 1529 or under
the provisions of any law from recovering such land;
f. The action has not prescribed: must be instituted within
6 years from the issuance of the certificate of title (If
plaintiff is minor, insane or imprisoned, he has additional
2 years after disability is removed to file the action.)
Cancellation Suits
By aggrieved party or the government
In case of double title: earlier title prevails, unless procured
by fraud or is jurisdictionally flawed. The later title is void
even if IPV derives title therefrom
In case of non-registered land: to be filed by the Sol-Gen for
cancellation of title or reversion to State)
Voiding or cancellation of OCT does not affect derivative
TCTs if their holders not given opportunity to be heard and
defend their title
Annulment of Judgment
May only be availed of when the ordinary remedies of new
trial, petition for relief, or other appropriate remedies are
no longer available through no fault of the petitioner.
Linzag v. CA, [291 SCRA 304 , 1998]
Reversion Suit
The objective is the cancellation of the title and the
consequential reversion of the land to the State
Grounds:
CIVIL LAW REVIEWER
a. Violation of Sections 118, 120, 121 and 122 of the
Public Land Act (ex. alienation or sale of homestead
executed within the 5 year prohibitory period)
b. When the land patented and titled is not capable of
registration
c. Failure of the grantee to comply with conditions
imposed by law to entitle him to a patent or grant
d. When area is an expanded area
e. When the land is acquired in violation of the
Constitution (e.g. land acquired by an alien)
Indefeasibility of title, prescription, laches, and estoppel do
not bar reversion suits
Quieting of Title
(Article 476 of the new civil code)
By registered owner or person with an equitable right or
interest in the property. Mamadsul v. Moson, [190 SCRA
82, 1990]
An ordinary civil case brought to remove clouds on the title
to real property or any interest therein, by reason of any
contract, record, claim, encumbrance, or proceeding that is
void, voidable or unenforceable, and may be prejudicial to
said title
Quasi-in rem
If plaintiff is in possession, imprescriptible;
if not in possession, must be brought within 10 years from
loss of possession
Criminal Action
(§ 116 Act 496)
The State may criminally prosecute for perjury the party
who obtains registration through fraud, such as by stating
false assertions in the sworn answer required of applicants
in cadastral proceedings. People v. Cainglet, 16 SCRA 749
(1966)
MORE ON THE ASSURANCE FUND
Upon entry of certificate in name of owner or TCT, ¼ of 1%
based on assessed value of land shall be paid to the ROD as a
contribution to the assurance fund. In case there is no
assessment yet, a sworn declaration of 2 disinterested persons
on the value of the land, subject to court approval, is required.
This shall be in the custody of the National Treasurer. It shall be
invested until the principal plus interest aggregates to 500,000.
The excess shall be paid to the Assurance Fund and be included
in the annual report of Treasurer to Secretary of Budget.
PETITIONS AND MOTIONS AFTER ORIGINAL REGISTRATION:
1. Lost Duplicate Certificate
a. Person in interest makes a sworn statement regarding
the loss or destruction of the owner’s duplicate
certificate of title to be filed with ROD. If statement is
false, he can be charged with the complex crime of
estafa through falsification of public document
b. File a petition for replacement of lost or destroyed
Page 296 of 338
 owner’s duplicate of OCT/ TCT in court for the
issuance of new title
c. After notice and hearing, the court is to order
issuance of new title with a memorandum that it is
issued in place of lost certificate (duplicate)
2. Adverse claim in registered land
Different from lis pendens:
Lis pendens has no expiration period but adverse
claim is only for 30 days.
Lis pendens is a notice that property is in litigation
while adverse claim signifies that somebody is
claiming better right
Recent Ruling: adverse claim can only be removed
upon court order, therefore, it is considered to be the
more permanent and stable one as compared to lis
pendens
3. Petition Seeking Surrender of Duplicate Title
When a person in possession of the owner’s duplicate
certificate fails to surrender the same to the ROD, a party in
interest may file a petition in the RTC to compel the
surrender of such duplicate title.
Grounds: registration pursuant to voluntary and involuntary
conveyances and issuance of a new certificate and for
purposes of amendment or alteration
After hearing, the court may order issuance of a new
certificate and annul the old certificate
The new certificate shall contain an annotation regarding the
annulment of the old certificate
4. Amendment and Alteration of Certificate of Title
A certificate of title entered in a registration book cannot be
altered, amended except in direct proceeding in court
(summary proceeding). A court order is necessary to alter
entries of such registration books.
A petition for such purpose may be filed by the (a) registered
owner, or (b) other person having an interest in the
registered property, or (c) in proper cases, the ROD with the
approval of the LRA Administrator
Grounds (CRIMENN):
1. New interest that does not appear on the
instrument have been created
2. Interest have been terminated or ceased
3. Omission or error was made in entering certificate
4. Name of person on certificate has been changed
5. Registered owner has married or registered as
married and the marriage has terminated
6. Corporation, which owned registered land, has
dissolved and has not conveyed the property within
3 years after its dissolution
CIVIL LAW REVIEWER
7. When there is reasonable ground for the amendment
or alteration. What corrections are permitted in title
(which does not include lands included in original;
technical description as long as original decree of
registration will not be reopened and rights or interest
of persons not impaired; old survey was incorrect;
substitution of name of registered owner)
a. Alterations which do not impair rights and
b. Alterations which impair rights: with
consent of all parties
c. Alterations to correct obvious mistakes
5. Reconstitution of Original Certificate of Title
The restoration of the instrument which is supposed to have
been lost or destroyed in its original form and condition, under
the custody of ROD
Purpose: to have the same reproduced, after proper
proceedings, in the same form they were when the loss or
destruction occurred. Heirs of Pedro Pinote v. Dulay, [187
SCRA 12, 1990]
The applicant should prove :
1. The loss or the destruction of the title sought
to be reconstituted and
2. At the time the said title was lost or
destroyed, he was the registered owner
thereof
a. When reconstituted, the new title has the same
validity as old one
b. Kinds of Reconstitution:
a. Judicial
b. Administrative
JUDICIAL RECONSTITUTION
Process:
1. File a petition with the RTC (In rem proceeding)
2. The court shall cause a NOTICE to be PUBLISHED,
POSTED and MAILED. Non-compliance voids the
proceeding as such requirements are jurisdictional
3. When the court grants the petition, it shall issue a
corresponding order to ROD.
Sources:
1. FOR OCT (in this order):
a. Owner’s duplicate of the certificate of title
b. Co-owner’s, mortgagee’s or lessee’s duplicate of
said certificate
c. Certified copy of such certificate, previously
issued by the ROD
d. Authenticated copy of the decree of registration
or patent, as the case may be, which was the
basis of the certificate of title,
e. Deed of mortgage, lease, or encumbrance
containing description of property covered by the
Page 297 of 338
 certificate of title and on file with the ROD, or
an authenticated copy thereof indicating that
its original had been registered
f. Any other document which, in the judgment of
the court, is sufficient and proper basis for
reconstitution.
2. FOR TCT
a. Same as sources (a), (b), and (c) for
reconstitution of OCT
b. Deed of transfer or other document containing
description of property covered by TCT and on
file with the ROD, or an authenticated copy
thereof indicating its original had been
registered and pursuant to which the lost or
destroyed certificate of title was issued
c. Same as sources (e) and (f) for reconstitution
of OCT
ADMINISTRATIVE RECONSTITUTION
May be availed of only in case of:
1. Substantial loss or destruction of the original land
titles due to fire, flood, or other force majeure as
determined by the Administrator of the LRA
2. The number of certificates of title lost or damaged
should be at least 10% of the total number in the
possession of the Office of the ROD
3. These lost or damaged titles should not be less than
500, and
4. Petitioner must have the duplicate copy of the
certificate of title (RA 6732)
Sources:
1. Owner’s duplicate of the certificate of title
2. Co-owner’s, mortgagee’s, or lessee’s duplicate
of said certificate
Contents
a. That the owner’s duplicate of the certificate of
title had been lost or destroyed
b. That no co-owner’s, mortgagor’s, or lessee’s
duplicate had been issued
c. The location, area and boundaries of the
property
d. The nature and description of the buildings or
improvements, if any, which do not belong to
the owner of the land, and the names and
addresses of the owners of such buildings or
improvements
e. The names and addresses of the (a) occupants
or persons in possession of the property, (b) of
the owners of the adjoining properties and (c)
of all persons who may have any interest in the
property
f. A detailed description of the encumbrance, if
any, affecting the property
CIVIL LAW REVIEWER
g. A statement that no deeds or other instruments
affecting the property have been presented for
registration, or, if there be any, the registration
thereof has not been accomplished, as yet
NOTE:
The law provides for retroactive application thereof to cases 15
years immediately preceding 1989
When the duplicate title of the landowner is lost, the proper
petition is not reconstitution of title, but one filed with the
court for issuance of new title in lieu of the lost copy
PUBLICATION, MAILING AND POSTING IN PETITIONS FOR
RECONSTITUTION OF TITLE:
Notice shall be PUBLISHED twice in successive issues of the
Official Gazette,
Must be POSTED on the main entrance of the provincial
building and of the municipal building of the municipality or city
where the land is situated, and
Must be SENT BY REGISTERED MAIL or otherwise, at the
expense of the petitioner, to every person named in said notice
(actual occupants and adjacent owners).
PUBLICATION, POSTING AND SENDING BY MAIL should be done
at least 30 days prior to date of hearing. These notice
requirements are mandatory and jurisdictional. Non-
compliance voids the proceeding.
The publication of the petition ,the service of the notice of
hearing to the adjoining owners and actual occupants of the
land, as well as posting of the notices are mandatory and
jurisdictional requisites… If an order of reconstitution is issued
without any previous publication, such order of reconstitution
is null and void. Even the publication of the notice of hearing in
a newspaper of general circulation like the Manila Daily
Bulletin, is not a substantial compliance with the law because
Section 13 specifies publication in the OG and does not provide
for any alternative medium or manner of publication. MWSS v.
Sison, [124 SCRA 394, 1983]
Notice must be actually sent or delivered to parties affected by
the petition for reconstitution. The order of reconstitution
issued without compliance with the said requirement never
becomes final - it was null and void. Manila Railroad v. Moya,
[215 Phil 593, 1984]
Service of notice of the petition for reconstitution filed under
RA 26 to the occupants of the property, owners of the adjoining
properties, and all persons who may have any interest in the
property is NOT REQUIRED if the petition is based on the
owner’s duplicate certificate of title or on that of the co-
owner’s, mortgagee’s, or lessee’s. Sections 9 and 10 requires
that 30 days before the hearing (1) a notice be published in 2
successive issues of the OG at the expense of the petitioner,
Page 298 of 338
and (2) such notice be posted at the main entrances of the Where incidental matters after original registration may be
provincial building and of the municipal hall where the brought before the land registration court by way of motion or
property is located. The notice shall state the following: (1) petition filed by the registered owner or a party in interest.
the number of the certificate of title, (2) the name of the
registered owner, (3) the names of the interested parties Rules as to the necessity and effects of registration in general
appearing in the reconstituted certificate of title, (4) the 1. Except a will that purports to convey or affect a
location of the property, and (5) the date on which all registered land, the mere execution of the deeds of
persons having an interest in the property must appear and sale, mortgage, or lease or other voluntary
file such claims as they may have. Puzon v. Sta. Lucia, [353 documents serve only 2 purposes:
SCRA 699, 2001] a. as a contract between the parties thereto, and
b. as evidence of authority to the ROD to register
The failure to meet any of the necessary publication, notice such documents
of hearing and mailing requirements did not vest jurisdiction 2. It is only the act of registering the instrument in the
of the case to the court. Thus, the judgment rendered by the ROD of the province or city where the land lies
RTC regarding the reconstitution of title is void. Republic v. which is the operative act that conveys ownership
Sanchez [G.R. No. 146081, July 17, 2006] or affects the land insofar as third persons are
concerned.
When the owner’s duplicate certificate of title has not been 3. The act of registration creates a constructive notice
lost, but is in fact in the possession of another person, then to the whole world of such voluntary or involuntary
the reconstituted certificate is void, because the court that instrument or court writ or process.
rendered the decision had no jurisdiction. Consequently, the
issuance of TCT No. T-17993 is also void, as it emanated from VOLUNTARY DEALINGS INVOLUNTARY DEALINGS
the void in Zaldivar’s name. The indefeasibility of a Torrens Refer to deeds, Refer to such writ or order or
title does not apply where fraud attended the issuance of the instruments, or documents process issued by a court of
title, such as when it was based on void documents. Feliciano which are results of the record affecting registered
v. Zaldivar, [G.R. No. 162593, September 26, 2006] free and voluntary acts of land which by law should be
the parties thereto registered to be effective, and
6. Registration of Transaction evidenced by lost also to such instruments which
document are not the willful acts of the
ROD is forbidden to effect registration of lost or destroyed registered owner and which
documents may have been executed even
without his knowledge or
Steps by interested parties: against his consent
1. Procure an authenticated copy of lost or destroyed • Sale • Attachment
instrument • Real property mortgage • Injunction
2. Secure an order from court • Lease • Mandamus
• Pacto de retro sale • Sale on execution of
OFFENSES IN LAND REGISTRATION: • Extra-judicial settlement judgment or sales for taxes
1. Larceny • Free patent/homestead • Adverse claims
2. Perjury: false statement under oath • Powers of attorney • Notice of lis pendens
3. Fraudulent procurement of certificate • Trusts
4. Forgery An innocent purchaser for Entry thereof in the day book
a. Forging of seal in ROD, name, signature or value of registered land of the ROD is sufficient notice
handwriting of any officer of court of ROD becomes the registered to all persons even if the
b. Fraudulent stamping or assistance in stamping owner the moment he owner’s duplicate certificate
c. Forging of handwriting, signature of persons presents and files a duly of title is not presented to the
authorized to sign notarized and valid deed of ROD
d. Use of any document which an impression of the sale and the same is
seal of the ROD is forged entered in the day book
5. Fraudulent sale: sale of mortgaged property under the and at the same time he
misrepresentation that it is not encumbered; deceitful surrenders or presents the
disposition of property as free from encumbrance owner’s duplicate
certificate of title covering
F. SUBSEQUENT REGISTRATION the land sold and pays the
registration fees
SUBSEQUENT REGISTRATION Need to present title to No presentation required;

CIVIL LAW REVIEWER Page 299 of 338

record the deed in registry annotation in entry book is
& to make memorandum sufficient
on title
1. VOLUNTARY DEALINGS
Operative Act: registration by owner, if deed is not
registered, is binding only between parties
General Rule – MIRROR DOCTRINE: Where there is nothing
on the certificate of title to indicate any cloud or vice in the
ownership of the property, or any encumbrance thereon, the
purchaser is not required to explore further than what the
Torrens title upon its face indicates in quest for any hidden
defect or inchoate right that may defeat his right thereto.
Fule v. Legare,[ 7 SCRA 351, 1963]
Every person dealing with registered land may safely rely on
the correctness of the certificate of title issued therefore
Even if a decree in a registration proceeding is infected with
nullity, still, an innocent purchaser for value relying on a
Torrens title issued in pursuance thereof is protected. Cruz v.
CA & Suzara, [281 SCRA 491, 1997]
Although generally a forged or fraudulent deed is a nullity
and conveys no title, however, there are instances where
such a fraudulent document may become the root of a valid
title. One such instance is where the certificate of title was
already transferred from the name of the true owner to the
forger, and while it remained that way, the land was
subsequently sold to an innocent purchaser. Fule v. Legare,
[7 SCRA 351, 1963]
Exceptions – (BOB-MILK)
1. Where the purchaser or mortgagee is a
bank/financing institution, the general rule that a
purchaser or mortgagee of the land is not required to
look further than what appears on the face of the title
does not apply. Dela Merced v. GSIS, [365 SCRA 1,
2001]
2. The ruling in Fule v. Legare cannot be applied where
the owner still holds a valid and existing certificate of
title covering the same property because the law
protects the lawful holder of a registered title over
the transfer of a vendor bereft of any transmissible
right. Tomas v. Tomas, [98 SCRA 280, 1980]
3. Purchaser in bad faith. Egeo v. CA, [174 SCRA 484,
1989]
4. Where a person buys land not from the registered
owner but from one whose rights to the land has been
merely annotated on the certificate of title. Quiniano
v. CA, [39 SCRA 221, 1971]
5. Sufficiently strong indications to impel closer inquiry
into the location, boundaries, and condition of the lot.
CIVIL LAW REVIEWER
Francisco v. CA, [153 SCRA 330, 1987]
Person’s legal interest cannot raise this exception
Principle of caveat emptor simply requires the purchaser of real
property to be aware of the alleged title of the vendor such
that one who buys without checking the vendor's title takes all
the risks and losses consequent to such failure. While a buyer
of registered land need not go beyond its certificate of title, the
buyer is obliged to investigate or inspect the property sold to
him when there are circumstances that would put him on
guard, such as the presence of occupants other than the
registered owner. This does not apply in this case. D’Oro Land
v. Claunan,[ 516 SCRA 681, 2007]
6. Purchases land with a certificate of title containing a
notice of lis pendens
7. Purchaser had full knowledge of flaws and defects of the
title. Bernales v. IAC, [166 SCRA 519, 1988]
Process of Registration: (Generally)
1. File the instrument creating or transferring the interest
and the certificate of title with ROD, including:
a. Owner’s duplicate
b. Payment of fees and documentary stamp tax
c. Evidence of full payment of real estate tax
d. Document of transfer: 1 additional copy for
city/provincial assessor
2. ROD shall make a memorandum on the certificate of
title, signed by him
3. Issuance of the TCT
Registration of Real Property Mortgage
1. Execution of deed in a form sufficient in law (public
instrument)
2. Registration with ROD where the land lies
a. Present deed of mortgage together with
b. Owner’s Duplicate and affidavit of good faith
c. Payment of fees
d. ROD shall enter upon original certificate of title and
upon duplicate a memorandum (date, time of filing,
signature, file number assigned to deed)
e. ROD to note on the deed the date and time of filing,
and reference to volume and page of the registration
book in which it was registered
3. No duplicate need be issued
Registration of Chattel Mortgage
1. Execution of document
2. Present the document together with affidavit of good faith
3. Payment of fees
4. ROD enters in Day Book in strict order of their
presentation chattel mortgages and other instruments
relating thereto (primary process)
5. ROD thereafter enters in a more detailed form the
essential contents of the instrument in the Chattel
Mortgage Register (complementary process)
Page 300 of 338

Effects of Registration
1. Creates a lien that attaches to the property in favor of
the mortgagee
2. Constructive notice of his interest in the property to the
whole world
Effects of Failure to Register
1. Valid between parties but void against 3rd persons
2. If instead of registration, it is delivered, it shall be a
pledge and not a chattel mortgage (if no chattel
mortgage deed executed)
3. Actual knowledge is same effect as registration
An Affidavit of Good Faith states that:
1. Mortgage is made to secure obligation specified
2. That it is a valid and just obligation
3. That it is not entered into for purposes of fraud
Effect of Absence of Affidavit of Good Faith
4. Vitiates mortgage as against creditors and subsequent
encumbrancers
5. Mortgage is not valid as between parties
6. No need to be in public document
Registration of Lease
It is the lessee, not the lessor, who is required to initiate the
registration.
1. File with ROD the instrument creating lease together
with owner’s duplicate of certificate of title
2. ROD to register by way of memorandum upon
certificate of title
3. No new certificate shall be issued
NOTE: When there is prohibition in mortgaged property as
regards subsequent conveyances, etc., leasehold cannot be
registered in the title thereof
Effects of Registration
1. Creates a real right but without prejudice to rights of 3rd
persons
2. If it is not registered, it is valid as between parties but
not to 3rd persons without notice
May Aliens Register Lease? Yes
1. May be granted temporary rights for residential
purposes
2. Limit: 25 years, renewable for another 25 years
Who Else May Register? Builder in Good Faith
Registration of Trust
1. Implied Trust: present a sworn statement claiming
interest by reason of an implied trust with description of
land, the name of the registered owner and a reference
to the number of the certificate of title shall be
registered in ROD
CIVIL LAW REVIEWER
2. Express Trust: instrument creating the trust does not
prohibit registration
Registration of Appointed Trustee by Court
7. Certified copy of decree shall be presented to ROD and
surrender duplicate certificate
8. Cancel duplicate & new certificate shall be entered by ROD
2. INVOLUNTARY DEALINGS
Transactions affecting land in which cooperation of registered
owner is not needed, or even against his will
1. Attachment
A writ issued at the institution or during progress of an action
commanding the sheriff to attach the property, rights, credits,
or effects of the defendant to satisfy demands of the plaintiff
Kinds:
c. Preliminary
d. Garnishment
e. Levy on execution
Registration of Attachment/Other Liens
1. Copy of writ in order to preserve any lien, right, or
attachment upon registered land may be filed with ROD
where land lies, containing number of certificate of title
of land to be affected or description of land
2. ROD to index attachment in names of both plaintiff and
defendant or name of person for whom property is held
or in whose name stands in the records
3. If duplicate of certificate of title is not presented:
a. ROD shall, within 36 hours, send notice to
registered owner by mail stating that there has
been registration and request him to produce
duplicate so that memorandum may be made
b. If the owner neglects or refuses to comply, the ROD
shall report the matter to the court
c. The court, after notice, shall enter an order to
owner to surrender certificate at the time and place
named therein
4. Although notice of attachment is not noted in
duplicate, notation in book of entry of ROD
produces the effect of registration already.
Effects of Registration of Attachment (REEA)
1. Creates real right
2. Has priority over execution sale
3. But between 2 attachments, one that is registered earlier
is preferred
4. If it is not registered, actual knowledge is the same as
registration
2. Execution Sale
To enforce a lien of any description on registered land, any
execution or affidavit to enforce such lien shall be filed with
Page 301 of 338
ROD where land lies
Register in registration book & memorandum upon proper
certificate of title as adverse claim or as an encumbrance
To determine preferential rights between 2 liens: priority of
registration of attachment
3. Tax Sale
Sale of land for collection of delinquent taxes and penalties
due the government
a. In personam (all persons interested shall be notified so
that they may be given an opportunity to be heard)
b. Notice to be given to delinquent tax payer at his last
known address
c. Publication of notice must also be made in English,
Spanish, and local dialect, posted in a public and
conspicuous place in the place where the property is
situated and at the main entrance of the provincial
building
d. Sale cannot affect rights of other lien holders unless
given the right to defend their rights: due process must
be strictly observed
e. Tax lien is superior to an attachment
f. There is no need to register a tax lien because it is
automatically registered once the tax accrues
g. But the sale of registered land to foreclose a tax lien
needs to be registered
Procedure of Registration of Tax Sale
1. Officer’s return shall be submitted to the ROD
together with the owner’s duplicate title
2. Register in the registration book
3. Memorandum shall be entered in the certificate as an
adverse claim or encumbrance
4. After the period of redemption has expired and no
redemption was made (2 years from registration of
auction sale), title must be cancelled and a new title
will be issued
5. Before the cancellation, notice shall be sent to
registered owner, with the directive that he surrender
title and show cause why it should not be cancelled
4. Adverse Claim
A notice to third persons that someone is claiming an
interest on the property or has a better right than the
registered owner thereof. The disputed land is subject to the
outcome of the dispute. Sajonas v. CA, [258 SCRA 79, 1996]
Claim is adverse when:
1. A claimant’s right or interest in the registered
land is adverse to the registered owner;
2. Such right arose subsequent to date of original
registration
3. No other provision is made in the Decree for
the registration of such right or claim (Sec. 70,
PD 1529)
CIVIL LAW REVIEWER
A mere money claim cannot be registered as an adverse claim.
Sanchez v. CA, [69 SCRA 327, 1976]
Actual knowledge is equivalent to registration of adverse claim.
No 2nd adverse claim based on the same ground may be
registered by the same claimant.
Formal Requisites of an Adverse Claim for Purposes of
Registration (WNR)
a. Adverse claimant must state the following in writing:
1. His alleged right or interest
2. How and under whom such alleged right or interest
is acquired
3. The description of the land in which the right or
interest is claimed
4. The certificate of title number
b. Such statement must be signed and sworn to before a
notary public
c. Claimant shall state his residence or place to which all
notices may be served upon him
NOTE: Noncompliance with said formal requisites renders such
adverse claim non-registrable and ineffective.
PERIOD OF EFFECTIVITY; WHEN CANCELLED
The adverse claim shall be effective for a period of 30 days
from the date of registration and it may be cancelled:
a. After the lapse of 30 days, upon the filing by the
party-in-interest of a verified petition for such
purpose
b. Before the lapse of said 30 days, upon the filing by
the claimant of a sworn petition withdrawing his
adverse claim
c. Before the lapse of the 30-day period, when a
party-in-interest files a petition in the proper RTC
for the cancellation of the adverse claim and, after
notice and hearing, the court finds that the claim is
invalid. If the court also finds the claim to be
frivolous, it may fine the claimant the amount of
not less than 1,000 pesos nor more than 5,000
pesos, in its discretion
For this purpose, the interested party must file with the proper
court a petition for cancellation of adverse claim, and a hearing
must also first be conducted. The Register of Deeds cannot on
its own automatically cancel the adverse claim. Diaz-Duarte v.
Ong, [298 SCRA 388, 1998]
An adverse claim may exist concurrently with a subsequent
annotation of a notice of lis pendens. Ty Sin Tei v. Dy Piao, [103
Phil 858, 1958]
When an adverse claim exists concurrently with a notice of lis
pendens, the notice of adverse claim may be validly cancelled
after the registration of such notice, since the notice of lis
pendens also serves the purpose of the adverse claim. Villaflor
Page 302 of 338
v. Juezan, [184 SCRA 315, 1990]
NOTICE OF LIS PENDENS
It merely creates a contingency and not a lien
The purpose of the notice of lis pendens is to constructively
advise, or warn all people who deal with the property that
they so deal with it at their own risk, and whatever rights
they may acquire in the property in any voluntary transaction
are subject to the results of the action, and may well be
inferior and subordinate to those which may be finally
determined and laid down therein. Heirs of Marasigan v.
IAC, [152 SCRA 253, 1987]
When Notice of Lis Pendeds is Proper: (RQCPO)
1. To recover possession of real estate
2. To quiet title thereto
3. To remove clouds upon the title thereof
4. For partition, and
5. Any other proceeding of any kind in court directly
affecting the title to the land or the use of occupation
thereof or the building thereon.
Effect of Registration:
1. Impossibility of alienating the property in dispute
during the pendency of the suit
2. It may still be alienated but the purchaser is subject to
the final outcome of pending suit
3. ROD is duty-bound to carry over notice of lis pendens
on all new titles to be issued
Cancellation of Lis Pendens: (M-NUVD)
 Before final judgment, the court may order the
cancellation:
1. After showing that notice is only for purpose of
molesting an adverse party
2. When it is shown that it is not necessary to protect
the right of the party who caused the registration
thereof
3. When the consequences of the trial are unnecessarily
delaying the determination of the case to the
prejudice of the other party
4. ROD may also cancel by verified petition of party who
caused such registration
5. Deemed cancelled when certificate issued by clerk of
court stating manner of disposal of proceeding is
registered
When Lis Pendedns has no Application: (P2LAR)
1. Preliminary attachment
2. Proceedings for the probate of wills
3. Levies on execution
4. Proceedings for administration of estate of deceased
persons and
5. Proceedings in which the only object is the recovery of
a money judgment
CIVIL LAW REVIEWER
Other Parties Required to Register:
1. Assignee in Involuntary Proceeding for Insolvency
It is the duty of the officer serving the notice to file a copy of
such notice to ROD where the property of the debtor is located
Assignee elected or appointed by court shall be entitled to
entry of a new certificate of registered land upon presentment
of copy of assignment with the bankrupt’s duplicate certificate
of title
New certificate shall not state that it is entered into by him as
assignee or trustee in insolvency proceedings
Judgment/Order Vacating Insolvency Proceedings
a. order shall also be registered
b. Surrender title issued in name of assignee & debtor shall be
entitled to entry of new certificate
2. Government in Eminent Domain
a. Copy of judgment filed in ROD which states description
of property, certificate number, interest expropriated,
nature of public use
b. Memorandum shall be made or new certificate of title
shall be issued
c. The government does not seek registration of the land in
its own name
d. The objective of the proceeding is the adjudication of
title to the lands involved in the proceeding
G. DEALINGS WITH UNREGISTERED LAND
SYSTEM OF REGISTRATION FOR UNREGISTERED LANDS
a. System of registration for unregistered land under the
Torrens System (Act 3344)
b. Before, it only covered voluntary dealings. Now, it
includes involuntary dealings
c. Effect: if prospective, it binds 3rd persons after
registration but yields to better rights of 3rd person prior
to registration (limited effect to 3rd parties)
d. Reason: no strict investigation involved
e. Subsequent dealings are also valid if recorded
f. ROD keeps day book and a register, and an index system
is also kept
g. Procedure:
1. Presentment of instrument dealing in unregistered
land
2. If found in order, register
3. If found defective, then registration is refused writing
his reason for refusal
Page 303 of 338
 ANNEX A: ORDINARY LAND REGISTRATION
FILING of APPLICATION SETTING OF DATE of Initial
Hearing by court order
 Survey plan approved by Bureau Set 45-90 days from order
of Lands
 Muniments of title
Transmittal of documents and
evidence to LRA
PROCEEDINGS
NOTICE of Initial Hearing
 Publication - 1x in OG
- 1x in newspaper
 Mailing - to named parties
- w/in (7) days from OG
 Posting - (14) days at least before
initial hearing

INITIAL HEARING Filing of OPPOSITION

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

FINALITY OF JUDGMENT
Entry of DECREE OF OCT
 Decree of finality REGISTRATION in LRA Transcription of the decree
 Instruction to LRA to issue decree Copy sent to Registrar of Deeds and issuance of the OCT
of registration

CIVIL LAW REVIEWER Page 304 of 338

 CADASTRAL STATE FILES PETITION
HEARING JUDGMENT DECREE
SURVEY

President orders Geodetic Instituted by Dir. of ANSWER to Same as ordinary land reg.
Dir. Of Lands to Engineer/ Lands (represented by Petition proceedings
cause cadastral employees of Sol-Gen) Any claimant files
survey Bureau of Lands Containing: answer
inform occupants/  technical (partakes of an
persons claiming description action to recover) Appeal
interest  survey plan on/ before hearing
NOTICE of OR time allowed by
Survey to court Court may
persons appearing issue writ of
to claim interest Persons claiming NOTICE of Initial possession or
interest cooperate Hearing to parties order
 Publication – w/ Engineer re: appearing to have demolition
1x in OG boundaries interest and adjoining
 Mailing owners
 Posting  Publication – 2x in MOTION TO DISMISS
OG (successive  If land covered ANNEX B: CADASTRAL
issues) prior OCT REGISTRATION
 Mailing pursuant to land PROCEEDINGS
 Posting patent
 if barred by res
judicata

CIVIL LAW REVIEWER Page 305 of 338

 O. TORTS action based on Articles 19-21 will be dismissed if
the plaintiff merely seeks “recognition”
=================================
 A defendant may likewise be guilty of tort under
Articles 19-21 even if he acted in good faith. Here,
TOPICS UNDER THE SYLLABUS
liability to pay moral damages may not be imposed
I. Principles on the defendant who acted in good faith.
A. Abuse of right; elements
B. Unjust enrichment GENERAL SANCTION (ART. 20)
 For all other provisions of law which do not
C. Liability without fault
especially provide their own sanction
D. Acts contrary to law  In the exercise of his legal right or duty
E. Acts contrary to morals  Willfully or negligently causes damage to another
II. Classification of Torts  Article 20 does not distinguish, the act may be
done either willfully or negligently
A. According to manner of commission:
intentional, negligent and strict liability CONTRA BONUS MORES (ART 21)
B. According to scope: general or specific 1. There is an act which is legal
2. But which is contrary to morals, good custom,
=================================
public order or public policy
I. PRINCIPLES 3. And it is done with intent to injure
Art. 2176. Whoever by act or omission causes damage to  Damages are recoverable even if no positive
another, there being fault or negligence, is obliged to pay law has been violated
for the damage done. Such fault or negligence, if there is no
pre-existing contractual relation between the parties, is UNJUST ENRICHMENT
called a quasi-delict and is governed by the provisions of this ELEMENTS:
Chapter. (1902a) a. That a person is benefited without a valid basis or
justification, and
ELEMENTS OF QUASI DELICT/TORTS: b. That such benefit is derived at another’s expense or
1. Act or omission damage.
2. Damage or injury is caused to another
3. Fault or negligence is present CONCEPT OF VICARIOUS LIABILITY
4. There is no pre-existing contractual relations A person who himself is not guilty of negligence is made
between the parties liable for the conduct of another
5. Causal connection between damage done and
act/omission II. CLASSIFICATION OF TORTS

NEGLIGENCE COMISSION OF TORTS

The omission of that degree of diligence which is required
by the nature of the obligation and corresponding to the 1. INTENTIONAL (DELICT): Every person criminally liable
circumstances of the persons, time and place. (Art. 1173, for a felony is also civilly liable.
NCC) NOTE: QUASI DELICT includes acts done through FAULT.

KINDS OF NEGLIGENCE 2. NEGLIGENT (QIUASI DELICT): Whoever by act or

1. Quasi delict (Art. 2176 NCC) omission causes damage to another, there being fault or
2. Criminal negligence (Art. 356 RPC) negligence, is obliged to pay for the damage done. Such
3. Contractual negligence (NCC provisions on contracts fault or negligence, if there is no pre-existing contractual
particularly Arts. 1170 to 1174) relation between the parties.

ABUSE OF RIGHTS (ART 19) 3. STRICT LIABILITY: Persons Expressly Made Liable By
1. There is a legal right or duty Law Even without Fault
2. The right or duty is exercised in bad faith
3. For the sole intent of prejudicing or injuring another ACCORDING TO SCOPE
 Common element under Articles 19 and 21: the act GENERAL TORTS: Covered by Art. 2176 on Quasi-Delict
must be intentional
 An action can only prosper when damage, material
or otherwise, was suffered by the plaintiff. An

CIVIL LAW REVIEWER Page 306 of 338

SPECIFIC TORTS: These are those found in specific
provisions of law, including the Chapter on Human
Relations, Common Carriers, etc.
=================================
TOPICS UNDER THE SYLLABUS
III. The Tortfeasor
A. The direct tortfeasor
(1) Natural persons
(2) Juridical persons
B. Persons made responsible for others
(1) In General
(a) Quasi-delicts under Article 2180, how
interpreted – Family Code, Arts. 218-219,
221
(b) Indirect liability for intentional acts
(c) Presumption of negligence on persons
indirectly responsible
(d) Nature of liability; joint or solidary?
(2) In Particular
(a) Parents
(b) Guardian
(c) Owners and managers of establishments
and enterprises
(d) Employers
(e) State
(f) Teachers and heads of establishments of
arts and trades
C. Joint tortfeasors (Art. 2194, Civil Code)
=================================
III. TORTFEASOR
TORTFEASOR - Whoever by act or omission causes damage
to another, there being no fault or negligence is obliged to
pay for the damage done (art 2176).
CORPORATE TORTFEASOR
A corporation is civilly liable in the same manner as natural
persons for torts, because "generally speaking, the rules
governing the liability of a principal or master for a tort
committed by an agent or servant are the same whether the
principal or master be a natural person or a corporation,
and whether the servant or agent be a natural or artificial
person. All of the authorities agree that a principal or
master is liable for every tort which he expressly directs or
authorizes, and this is just as true of a corporation as of a
natural person, A corporation is liable, therefore, whenever
a tortious act is committed by an officer or agent under
express direction or authority from the stockholders or
members acting as a body, or, generally, from the directors
as the governing body.
CIVIL LAW REVIEWER
PERSONS VICARIOUSLY LIABLE – the obligation imposed in
2176 is demandable not only for one’s own act or omission
but also for those persons for whom one is responsible (art
2180).
VICARIOUS LIABILITY
– A person who himself is not guilty of negligence is
made liable for the conduct of another
NOTE: Vicarious liability is not governed by the doctrine of
respondeat superior. Employers or parents are made liable
not only because of the negligent or wrongful act of the
person for whom they are responsible but also 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 juris
tantum 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
EXCEPTION: The doctrine of respondeat superior is
applicable in:
a. Liability of employers under Article 103 of the RPC
b. Liability of a partnership for the tort committed by
a partner
WHO ARE THE PERSONS VICARIOUSLY LIABLE:
1. PARENTS - The father, and in case of his death or
incapacity, the mother are responsible for damage
caused by minor children who live in their company.
Father and Mother shall jointly exercise parental
authority over common children. In case of
disagreement, father's decision shall prevail (Art. 211).
NOTE: Persons liable for the act of minors other than
parents:
a. Those exercising substitute parental authority
b. Surviving grandparents
c. Oldest sibling, over 21 years old unless unfit or
unqualified
d. Child’s actual custodian, over 21 years old
unless unfit or disqualified
2. GUARDIANS - Guardians are liable for damages
caused by the minor or incapacitated persons who are
under their authority and who live in their company.
3. OWNERS & MANAGERS OF ESTABLISHMENT/
ENTERPRISE - Owners & managers of establishment or
Page 307 of 338
 enterprise are responsible for damages caused by their
employees who are:
o in the service of the branches in which the
latter are employed OR
o in occasion of their function
4. EMPLOYERS - Employers shall be liable for
damages caused by their:
o employees and
o household helpers
who are acting w/in the scope of their assigned task
even though the former are not engaged in any
business or industry (unlike in RPC – subsidiary liability
of employer attaches in case of insolvency of employer
for as long as the employer is engaged in
business/industry)
DEFENSES AVAILABLE TO EMPLOYERS:
o exercise of due diligence ins election and
supervision of employees
o act/omission was made outside working hours
and in violation of company rules
5. STATE - The state is responsible when it acts
through a special agent, but not when the same is
caused by an official to whom task done properly
pertains in which case Art 2176 is applicable
6. SCHOOL ADMINISTRATOR, TEACHER - Teachers or
heads of establishments of arts & trades shall be liable
for damages caused by their pupils, students &
apprentices as long as they remain in their custody
even if they are beyond the age of majority
NOTE: Art. 2180 applies to all including academic
institution per weight of jurisprudence based on obiter
of Justice JBL Reyes in the Exconde case. Exconde v.
Capuno, [G.R. No. L-10134, June 29, 1957]
TEACHER’S LIABILITY:
The basis of the teacher’s liability is the principle of loco
parentis (stand in place of parents). So long as the
students remain in the protective and supervisory
capacity of teachers, the latter shall be deemed to have
custody over the students. It’s not necessary for the
students to board and live with the teachers so that
there can be custody over them.
SCHOOL’S LIABILITY:
GENERAL RULE: The School itself is NOT liable as party
defendants
EXCEPTIONS: Art. 218 of Family Code – schools are
expressly made liable
CIVIL LAW REVIEWER
 School is liable as an employer, as in the case
where the tortfeasor is a teacher, an employee of the
school. St. Francis High vs. CA, [194 SCRA 341]
 School has a contract with the student, and thus, if
the tortfeasor is a stranger, the school is liable for the
breach of the contract. PSBA cs. CA, [205 SCRA 729]
FAMILY CODE PROVISIONS:
a. Family Code, Art 218 - The school, its administration
& teachers or the individual, entity or institution
engaged in child care shall have special parental
authority & responsibility over the minor child under
their supervision, instruction or custody (authority &
responsibility shall apply to all authorized activities
whether inside or outside the premises or the school,
entity or institution).
b. Family Code, Art 219 - Those given the authority &
responsibility shall be solidarily & principally liable
for damages caused by act/omission of the
unemancipated minor; parents, judicial guardian or
person exercising substitute parental authority over
said minor shall be subsidiarily liable.
JOINT TORTFEASORS
Joint tortfeasors are all the persons who command,
instigate, promote, encourage, advise, countenance,
cooperate in, aid or abet the commission of a tort, or who
approve of it after it is done, if done for their benefit.
The responsibility of two or more persons who are liable for
quasi-delict is solidary
SPECIAL RULES
1. CHILDREN
The action of the child will not necessarily be judged
according to the standard of an adult. But if the minor is
mature enough to understand and appreciate the nature
and consequences of his actions, he will be considered
negligent if he fails to exercise due care and precaution in
the commission of such acts.
NOTE: Applying the provisions of the RPC, Judge Sangco
takes the view that a child who is 9 or below is
conclusively presumed to be incapable of negligence.
On the other hand, if the child is above 9 years but
below 15, there is a disputable presumption of absence
or negligence.
 Absence of negligence does not necessarily mean
absence of liability. A child under 9 years can still be
subsidiarily liable with his property (Art. 100 RPC)
 Absence of negligence of the child may not excuse the
parents from their vicarious liability under Art. 2180
NCC or Art. 221 FC.
Page 308 of 338
2. PHYSICAL DISABILITY E. Cause vs. Condition
GENERAL RULE: a weak or accident prone person must F. Last clear chance
come up to the standard of a reasonable man, otherwise, he
=================================
will be considered as negligent
V. PROXIMATE CAUSE
A. CONCEPT OF PROXIMATE CAUSE
EXCEPTION: If the defect amounts to a real disability, the
standard of conduct is that of a reasonable person under
PROXIMATE CAUSE is defined as that cause which, in
like disability.
natural and continuous sequence, unbroken by any efficient
intervening cause, produces the injury, and without which
the result would not have occurred.
3. EXPERTS AND PROFESSIONALS
More comprehensively, proximate cause is that cause
They should exhibit the case and skill of one who is
acting first and producing the injury, either immediately or
ordinarily skilled in the particular field that he is in; the rule
by setting other events in motion, all constituting a natural
regarding experts is applicable not only to professionals who
and continuous chain of events, each having a close causal
have undergone formal education. (Fernando v. CA)
connection with its immediate predecessor, the final event
in the chain immediately effecting the injury as natural and
4. NATURE OF ACTIVITY
probable result of the cause which first acted, under such
There are activities which by nature impose duties to
circumstances that the person responsible for the first event
exercise a higher degree of diligence (ex. Banks, Common
should, as an ordinarily prudent and intelligent person, have
Carriers)
reasonable ground to expect at the moment of his act or
default that an injury to some person might probably result
5. INTOXICATION
therefrom.
GENERAL RULE: Mere intoxication is not negligence nor
establishes want of ordinary care. But it may be considered
to prove negligence. Brinas v. People of the Philippines, G.R. L-30309,
November 25, 1983.
EXCEPTION: Under Art. 2185 of the NCC it is presumed that The proximate cause of the injury is not necessarily the
a person driving a motor vehicle has been negligent if at the immediate cause of, or the cause nearest in time to, the
time of the mishap, he was violating any traffic regulation injury. It is only when the causes are independent of each
other that the nearest is to be charged with the disaster.
6. INSANITY So long as there is a natural, direct and continuous
An insane person is exempt from liability. However, by sequence between the negligent act the injury (sic) that it
express provision of law, there may be civil liability even can reasonably be said that but for the act the injury could
when the perpetrator is held to be exempt from criminal not have occurred, such negligent act is the proximate
liability. The insanity of a person does not excuse him or his cause of the injury, and whoever is responsible therefore
guardian from liability based on quasi delict (Art. 2180 and is liable for damages resulting therefrom. One who
2182 NCC) negligently creates a dangerous condition cannot escape
liability for the natural and probable consequences
================================= thereof, although the act of a third person, or an act of
TOPICS UNDER THE SYLLABUS God for which he is not responsible intervenes to
precipitate the loss.
V. Proximate Cause
A. Concept
(1) Definition
(2) Test
(3) Distinguished from immediate cause
(4) Distinguished from intervening cause
(5) Distinguished from remote and concurrent
B. Cause in fact
(1) Substantial factor test
(2) Concurrent causes
C. Legal cause
(1) Natural and probable consequences
(2) Foreseeability
D. Efficient intervening cause

CIVIL LAW REVIEWER Page 309 of 338

NECESSARY LINK
Vda. de Bataclan v. Medina, [G.R. No. L-10126, October
22, 1957]
It may be that ordinarily, when a passenger bus
overturns, and pins down a passenger, merely causing
him physical injuries, if through some event, unexpected
and extraordinary, the overturned bus is set on fire, say,
by lightning, or if some highwaymen after looting the
vehicle sets it on fire, and the passenger is burned to
death, one might still contend that the proximate cause
of his death was the fire and not the overturning of the
vehicle. But in the present case and under the
circumstances obtaining in the same, we do not hesitate
to hold that the proximate cause of the death of Bataclan
was the overturning of the bus, this for the reason that
when the vehicle turned not only on its side but
completely on its back, the leaking of the gasoline from
the tank was not unnatural or unexpected; that the
coming of the men with a lighted torch was in response
to the call for help, made not only by the passengers, but
most probably, by the driver and the conductor
themselves, and that because it was very dark (about
2:30 in the morning), the rescuers had to carry a light
with them; and coming as they did from a rural area
where lanterns and flashlights were not available, they
had to use a torch, the most handy and available; and
what was more natural than that said rescuers should
innocently approach the overturned vehicle to extend
the aid and effect the rescue requested from them. In
other words, the coming of the men with the torch was
to be expected and was natural sequence of the
overturning of the bus, the trapping of some of its
passengers’ bus, the trapping of some of its passengers
and the call for outside help
NOTE: If plaintiff's negligence is only contributory, he is
considered partly responsible only. Plaintiff may still recover
from defendant but the award may be reduced by the
courts in proportion to his own negligence
IMMEDIATE CAUSE
The cause nearest in time to, the injury.
INTERVENING CAUSE
Phoenix Construction v. IAC, [G.R. L-65295, March 10,
1987]
If the intervening cause is one which in ordinary human
experience is reasonably to be anticipated or one which
the defendant has reason to anticipate under the
particular circumstances, the defendant may be negligence
among other reasons, because of failure to guard against
it; or the defendant may be negligent only for that reason.
Thus one who sets a fire may be required to foresee that
an ordinary, usual and customary wind arising later wig
CIVIL LAW REVIEWER
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.
Manila Electric Co. v. Remoquillo, [G.R. No. L-8828, May
18, 1956]
A prior and remote cause cannot be made the be of an
action if such remote cause did nothing more than furnish
the condition or give rise to the occasion by which the
injury was made possible, if there intervened between such
prior or remote cause and the injury a distinct, successive,
unrelated, and efficient cause of the injury, even though
such injury would not have happened but for such
condition or occasion. If no danger existed in the condition
except because of the independent cause, such condition
was not the proximate cause. And if an independent
negligent act or defective condition sets into operation the
instances, which result in injury because of the prior
defective condition, such subsequent act or condition is the
proximate cause.
REMOTE CAUSE
CONCURRENT CAUSE
Where several causes producing an injury are concurrent
and each is an efficient cause without which the injury
would not have happened, the injury may be attributed to
all or any of the causes and recovery may be had against any
or all of the responsible persons although under the
circumstances of the case, it may appear that one of them
was more culpable, and that the duty owed by them to the
injured person was not the same. No actor's negligence
ceases to be a proximate cause merely because it does not
exceed the negligence of other actors. Each wrongdoer is
responsible for the entire result and is liable as though his
acts were the sole cause of the injury.
B. CAUSE IN FACT
‘BUT FOR’ TEST
The (but for) test requires a plaintiff to establish that the act
complained of probably caused the subsequent disability.
NELSON V. FIBREBOARD CORPORATION, [912 F.2d 469]
The test applied to determine whether negligent conduct
was the efficient, or proximate cause of the injury or loss
suffered by the claimant is whether such conduct is a cause
without which the injury would not have taken place (which
test is frequently referred to as the "sine qua non rule"), or
is the efficient cause which set in motion the chain of
Page 310 of 338
circumstances leading to the injury. {Sangco, Philippine Law
on Torts and Damages, 1994)
SUBSTANTIAL FACTOR
It is the rule under the substantial factor test that if the
actor's conduct is a substantial factor in bringing about
harm to another, the fact that the actor neither foresaw nor
should have foreseen the extent of the harm or the manner
in which it occurred does not prevent him from being liable.
Philippine Rabbit Bus Lines v. IAC, [G.R. 66102, August 30,
1990]
CONCURRENT CAUSES
If one suffers damage as the proximate result of the
negligence of two others, and the damage would not have
occurred but for the negligence of each of such parties, both
are liable to the person so injured. MENNE v. CELOTEX
CORPORATION, [861 F.2d 1453]
C. LEGAL CAUSE
TEST OF FORSEEABILITY
Where the particular harm was reasonably foreseeable at
the time of the defendant’s misconduct, his act or omission
is the legal cause thereof. Foreseeability is the fundamental
test of the law of negligence. To be negligent, the defendant
must have acted or failed to act in such a way that an
ordinary reasonable man would have realized that certain
interests of certain persons were unreasonably subjected to
a general but definite class of risk which made the actor’s
conduct negligent, it is obviously the consequence for the
actor must be held legally responsible. Otherwise, the legal
duty is entirely defeated. Accordingly, the generalization
may be formulated that all particular consequences, that is,
consequences which occur in a manner which was
reasonably foreseeable by the defendant at the time of his
misconduct are legally caused by his breach of duty.
TEST OF NATURAL AND PROBABLE CAUSES
A natural consequence of an act is the consequence which
ordinarily follows it. A probable consequence is one that is
more likely to follow than fail to follow its supposed cause
but it is need one be one which necessarily follow such
cause. (Sangco, Philippine Law on Torts and Damages,
1994)
HINDSIGHT TEST
A party guilty of negligence or omission is responsible for all
the consequences which a prudent and experienced party,
fully acquainted with all the circumstances which in fact
exist, whether they could have been ascertained by
reasonable diligence, or not, would have thought at the
time of the negligent act as reasonably possible to follow, if
they had been suggested to his mind.
ORBIT TEST
CIVIL LAW REVIEWER
If the foreseeable risk to plaintiff created a duty which the
defendant breached, liability is imposed for any resulting
injury within the orbit or scope of such injury, it is not the
unusual nature of the act resulting in injury that is the test
of foreseeability, but whether the result of the act is within
the ambit of the hazards covered by the duty imposed upon
defendant.
D. EFFICIENT INTERVENING CAUSE
An independent intervening cause as one which is so
distinct as to sever the connection of cause and effect
between the negligent act and the injury BARTELS v. CITY of
WILLISTON, [629 F.2d 509]
If an independent cause intervenes, which is of itself
sufficient to produce the result, it is regarded as proximate
cause, and the originator of the first cause is relieved from
liability MICHAEL v. U.S., [338 F.2d 219]
E. CAUSE/CONDITION
Phoenix Construction v. IAC, G.R. L-65295, [March 10,
1987]
Many courts have sought to distinguish between the active
"cause" of the harm and the existing "conditions" upon
which that cause operated. If the defendant has created
only a passive static condition, which made the damage
possible, the defendant is said not to be liable. But so far
as the fact of causation is concerned, in the sense of
necessary antecedents which have played an important
part in producing the result it is quite impossible to
distinguish between active forces and passive situations,
particularly since, as is invariably the case, the latter are
the result of other active forces which have gone before.
The defendant who spills gasoline about the premises
creates a "condition," but the act may be culpable because
of the danger of fire. When a spark ignites the gasoline,
the condition has done quite as much to bring about the
fire as the spark; and since that is the very risk, which the
defendant has created, the defendant will not escape
responsibility. Even the lapse of a considerable time during
which the "condition" remains static will not necessarily
affect liability; one who digs a trench in the highway may
still be liable to another who fans into it a month
afterward. "Cause" and "condition" still find occasional
mention in the decisions; but the distinction is now almost
entirely discredited. So far as it has any validity at all, it
must refer to the type of case where the forces set in
operation by the defendant have come to rest in a position
of apparent safety, and some new force intervenes. But
even in such cases, it is not the distinction between
"cause" and "condition" which is important but the nature
of the risk and the character of the intervening cause.
Page 311 of 338
 E. LAST CLEAR CHANCE =================================
TOPICS UNDER THE SYLLABUS
Canlas v. Court of Appeals, [G.R. 112160, February 28, VII. Intentional Torts
2000]
A. General
In essence, the doctrine of last clear chance is to the (1) Concept
effect that where both parties are negligent but the (2) Classes
negligent act of one is appreciably later in point of time (a) Interference with persons and property
than that of the other, or where it is impossible to (b) Interference with relations
determine whose fault or negligence brought about the
B. Interference with rights to persons and
occurrence of the incident, the one who had the last
clear opportunity to avoid the impending harm but failed property
to do so, is chargeable with the consequences arising (1) Intentional physical harms
therefrom. (a) General
(b) Violation of persons security, physical
Stated differently, the rule is that the antecedent
injuries (Art. 33, Civil Code)
negligence of a person does not preclude recovery of
damages caused by the supervening negligence of the
(c) False imprisonment (illegal detention)
latter, who had the last fair chance to prevent the (d) Trespass to land
impending harm by the exercise of due diligence. (e) Interference with personal property
(2) Intentional non-physical harms
================================= (a) General
TOPICS UNDER THE SYLLABUS (b) Violation of personal dignity
VI. Legal Injury (c) Infliction of emotional distress
A. Concept (d) Violation of privacy
B. Elements of right (e) Disturbance of peace of mind
C. Violation of right or legal injury (f) Malicious prosecution
D. Classes of injury (g) Defamation
(1) Injury to persons (h) Fraud or misrepresentation (formerly
(2) Injury to property deceit)
(3) Injury to relations (i) Seduction
================================= (j) Unjust dismissal
C. Interference with relations
VI. LEGAL INJURY
(1) General
DAMAGE – the detriment, injury or loss which is occasioned
by reason of fault of another in the property or person (a) Concept
DAMAGES – the pecuniary compensation, recompense or (b) Kinds
satisfaction for an injury sustained, or as otherwise (2) Family relations
expressed, the pecuniary consequences which the law (a) Alienation of affection
imposes for the breach of some duty or the violation of (b) Loss of consortium
some rights (c) Criminal conversation (adultery)
DAMNUM ABSQUE INJURIA or Damage without Injury – a
person may have suffered physical hurt or injury, but for as
(3) Social relations
long as no legal injury or wrong has been done, there is no (a) Meddling with or disturbing family
liability relations
INJURY DAMAGE DAMAGES (b) Intriguing to cause another to be
Legal invasion of Loss, hurt or The recompense alienated from his friends
a legal right harm which or compensation (4) Economic relations
results from the awarded for the
(a) Interference with contractual relations
injury damage suffered
(b) Unfair competition
(5) Political relations
(a) Violation of right to suffrage (NCC, Art.
32)
(b) Violation of other political rights

CIVIL LAW REVIEWER Page 312 of 338

 (freedom of speech, press, assembly and
petition, etc.)
(6) Defenses
(a) Absence of element
(b) Privilege
(c) Prescription
(d) Waiver
(e) Force majeure
=================================
VI. INTERNATIONAL TORTS
1. BREACH OF A PROMISE TO MARRY
GENERAL RULE: Breach of a promise to marry by itself is not
actionable.
EXCEPTION: In cases where there is another act
independent of the breach of a promise to marry which
gives rise to liability
a. Cases where there was financial damage
b. Social humiliation caused to one of the parties
c. Where there was moral seduction
d. If the breach was done in a manner that is
clearly contrary to good morals
 Moral seduction connotes the idea of deceit,
enticement, superior power or abuse of
confidence on the part of the seducer to which the
woman has yielded for which the seducer can be
held liable for damages. Gashem Shookat Baksh v.
CA, [G.R. No. 97336, February 19, 1993]
 Sexual intercourse is not by itself a basis for
recovery but damages could be awarded if the
sexual intercourse is not a product of voluntariness
or mutual desire. Constantino v. Mendez, [G.R.
NO. 57227, May 14, 1992]
2. SEDUCTION WITHOUT BREACH OF PROMISE TO
MARRY
 Seduction by itself, is also an act contrary to
morals, good customs and public policy
 The defendant is liable if he employed deceit,
enticement, superior power or abuse of
confidence in successfully having sexual
intercourse with another even if he satisfied his
lust without promising to marry the offended party
 It may not even matter that the plaintiff and the
defendant are of the same gender
3. SEXUAL ASSAULT
 Defendant is liable for all forms of sexual assault
4. DESERTION BY A SPOUSE
 A spouse has the legal obligation to live with
his/her spouse. If a spouse does not perform
his/her duty to the other, he may be liable for
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damages for such omission because the same is
contrary to law, morals, good customs and public
policy.
5. TRESPASSES AND DEPRIVATION OF PROPERTY
2 KINDS:
A. TRESPASS TO AND/OR
DEPRIVATION OF REAL PROPERTY
 Liability for damages under the RPC and Art.
451 of the Civil Code requires intent or bad
faith
 A builder in good faith who acted negligently
may be held liable under Art. 2176 NCC
 Art. 448 of the Civil Code in relation to Art.
456 does not permit action for damages
where the builder, planter or sower acted in
good faith. The landowner is limited to the
options given to him under article 448
B. TRESPASS TO AND/OR DEPRIVATION OF PRIVATE
PROPERTY
 In tort, trespass extends to all cases where a
person is deprived of his personal property
even in the absence of criminal liability
 Examples: theft, robbery
 It may cover cases where the defendant was
deprived of personal property for the purpose
of obtaining possession of real property. The
defendant who was landlord, was held liable
because he deprived the plaintiffs, his tenants
of water in order to force them to vacate the
lot they were cultivating. Magbanua v. IAC,
[137 SCRA 352]
 The right to disconnect and deprive the
customer, who unreasonably fails to pay his
bills of electricity should be exercised in
accordance with the law and rules. Example: If
a company disconnects the electricity service
without prior notice as required by the rules,
the company commits a tort under Art. 21
NCC, Manila Electric Co. v. CA, [G.R. No.
132539, July 11, 2001]
6. ABORTION AND WRONGFUL DEATH
 Damages may be recovered by both spouses if:
a. The abortion was cause through the
physician’s negligence or
b. Done intentionally without their consent
NOTE: A doctor who performs an illegal abortion is
criminally liable under Art. 259 RPC
 Husband of a woman who voluntarily procured her
abortion may recover damages from the physician
who cause the same on account of distress and
mental anguish attendant to the loss of the unborn
Page 313 of 338
 child and the disappointment of his parental
expectation. [Geluz v. CA, 2 SCRA 80]
7. ILLEGAL DISMISSAL
 The right of the employer to dismiss an employee
should not be confused with the manner in which
the right is exercised and its effects.
 If the dismissal was done anti-socially and
oppressively, the employer should be deemed to
have violated Art. 1701 of the NCC (which prohibits
acts of oppression by either capital or labor against
the other) and Art. 21
 An employer may be held liable for damages if the
manner of dismissing is contrary to morals good
customs and public policy.
8. MALICIOUS PROSECUTION
 An action for damages brought by one against
another whom a criminal prosecution, civil suit, or
other legal proceeding has been instituted
maliciously and without probable cause, after
termination of such prosecution, suit or
proceeding in favor of the defendant therein.
 The action which is terminated should be one
begun in malice, without probable cause to believe
that the charges can be sustained
 STATUTORY BASIS: Art. 19-21, 2, 32, 33, 35, 2217,
2219(8) NCC
ELEMENTS:
a. The fact of the prosecution and the further fact
that the defendant was himself the prosecutor;
and that the action was finally terminated with an
acquittal
b. That in bringing the action, the prosecutor acted
without probable cause
c. The prosecutor was actuated or impelled by legal
malice
NOTE: Presence of probable cause signifies absence of
malice.
 Absence of malice signifies good faith on the part
of the defendant. Good faith may even be based
on mistake of law. Acquittal presupposes that
criminal information is filed in court and final
judgment rendering dismissing the case.
Nevertheless, prior acquittal may include dismissal
by the prosecutor after preliminary investigation.
Globe Mackay and Radio Corp v. CA, [G.R. No.
81262, August 25, 1989]
9. PUBLIC HUMILIATION
 Such acts also constitute an offense under Art.
359, RPC (Slander by Deed)
 A person can be held liable for damages for
slapping another in public. Patricio v. Hon. Oscar
Leviste, [G.R. No. L-51832, April 26, 1989]
CIVIL LAW REVIEWER
 A defendant may likewise be guilty of a tort even if
he acted in good faith if the action has caused
humiliation to another. Grand Union Supermarket
v. Espino, [G.R. No. L-48250, December 28, 1979]
10. UNJUST ENRICHMENT
ELEMENTS:
a. That a person is benefited without a valid basis or
justification, and
b. That such benefit is derived at another’s expense
or damage.
11. OSTENTATIOUS DISPLAY OF WEALTH
 Thoughtless extravagance for pleasure or display
during a period of public want or emergency
12. VIOLATION OF RIGHT OF PRIVACY AND FAMILY
RELATIONS
 The following acts though they may not constitute
a criminal offense, shall produce a cause of action
for damages, prevention and other relief:
a. Prying into the privacy of another's residence
b. Meddling with or disturbing the private life or
family relations of another
c. Intriguing to cause another to be alienated
from his friends
d. Vexing or humiliating another on account of
his religious beliefs, lowly station in life. Place
of birth, physical defect, or other personal
condition
13. DERELICTION OF OFFICIAL DUTY OF PUBLIC OFFICERS
 May be brought by any person suffering from material
or moral loss because a public servant refuses or
neglects, without just cause to perform his official duty
(art 27).
REQUISITES:
a. Defendant is a public officer charged with the
performance of a duty in favor of the plaintiff
b. 3perform such duty (ministerial)
c. Plaintiff sustained material or moral loss as
consequence of such non-performance
d. The amount of such damages, if material
14. ECONOMIC RELATIONS
A. UNFAIR COMPETITION
Unfair competition in agricultural, commercial or
industrial enterprises or in labor through the use of
force, intimidation, deceit. Machination or other
unjust, oppressive or highhanded method (Art 28)
B. INTERFERENCE
One becomes liable in an action for damages for a
nontrespassory invasion of another's interest in
the private use and enjoyment of asset if
(a) the other has property rights and privileges
Page 314 of 338
 with respect to the use or enjoyment interfered
with,
(b) the invasion is substantial,
(c) the defendant's conduct is a legal cause of the
invasion, and
(d) the invasion is either intentional and
unreasonable or unintentional and actionable
under general negligence rules. 7
ELEMENTS OF TORT INTERFERENCE :
(1) existence of a valid contract;
(2) knowledge on the part of the third person of
the existence of contract; and
(3) interference of the third person is without legal
justification or excuse. So Ping Bun v. CA, [G.R.
120554, September 21, 1999]
15. MALICIOUS PROSECUTION
ELEMENTS
a. That the defendant was himself the
prosecutor/ he instigated its commencement
b. That it finally terminates in his acquittal
c. That in bringing it the prosecutor acted
without probable cause, and
d. That he was actuated by legal malice, that is,
by improper and sinister motive
16. VIOLATION OF RIGHTS AND LIBERTIES OF ANOTHER
PERSON
 Any public officer or employee, or any private
individual, who directly or indirectly obstructs, defeats,
violates or in any manner impedes or impairs any of the
rights and liberties (under Article 32 of the NCC) of
another person shall be liable to the latter for damages.
17. NUISANCE
ELEMENTS
a. Any act, omission, establishment, condition of
property, or anything else
b. Which:
 Injures or endangers the health or safety to
others, or
 Annoys or offends the senses, or
 Shocks, defies, or disregards decency or
morality, or
 Obstructs or interferes with the free
passage of any public highway or streets, or
any body of water, or
 Hinders or impairs use of property
KINDS
 Nuisance Per Se - denounced as nuisance by
common law or by statute
 Nuisance Per Accidens - those which are in their
nature not nuisances, but may become so by reason
CIVIL LAW REVIEWER
of their locality, surroundings, or the manner in
which they may be conducted, managed, etc.
 Public - affects a community or neighborhood or any
considerable number of persons
 Private - one that is not included in the foregoing
definition; affect an individual or a limited number of
individuals only
REMEDIES AGAINST PUBLIC NUISANCES
 Prosecution under the RPC or any local
ordinance
 Civil action
 Abatement, without judicial proceeding
REMEDIES AGAINST PRIVATE NUISANCES
1. Civil Action
2. Abatement, without judicial proceedings
WHO MAY AVAIL OF REMEDIES
 Public officers
 Private persons - if nuisance is specially
injurious to himself; the ff. must be
made:
a. Demand be first made upon owner or
possessor of the property to abate nuisance
b. That such demand has been rejected
c. That the abatement be approved by the
district health officer and executed with the
assistance of local police
d. That the value of destruction does not exceed
P3,000
DOCTRINE OF ATTRACTIVE NUISANCE – Cases within the
general rule that one is liable for the injury resulting to
another from failure to exercise the degree of care
commensurate with the circumstances the attractiveness of
the premises or of the dangerous instrumentality to
children of tender years is to be considered as an implied
invitation, which takes the children who accepted it out of
the category of a trespasser and puts them in the category
of invitees, towards whom the owner of the premises or
instrumentality owes the duty of ordinary..
Page 315 of 338
================================= 3. Contractual negligence (NCC provisions on
TOPICS UNDER THE SYLLABUS contracts particularly Arts. 1170 to 1174)
VII. Negligence
A. Concept NOTE:
B. Good father of a family or reasonably prudent  Failure of the court to make any pronouncement,
man favorable or unfavorable, as to the civil liability of the
C. Standard of care accused amounts to a reservation of the right to have
(1) Civil Code, Art. 1173 the civil liability litigated and determined in a separate
(2) Emergency Rule action. The rules nowhere provide that if the court fails
D. Unreasonable risk of harm to determine the civil liability it becomes no longer
E. Evidence enforceable. Jarantilla v. CA, [171 SCRA 42]
F. Presumption of negligence  A quasi-delict is a separate legal institution under the
(1) Legal provisions Civil Code and is entirely apart and independent from a
(2) Res ipsa loquitur delict or crime – a distinction exists between the civil
G. Defenses liability arising from a crime and the responsibility for
(1) Complete quasi-delicts or culpa extra-contractual. Castillo v. CA,
(a) Absence of element [176 SCRA 591]
(b) Accident or fortuitous event
(c) Damnum absque injuria TESTS OF NEGLIGENCE
(d) Authority of law  Did the defendant in doing the alleged negligent act use
(e) Assumption of risk the reasonable care and caution which an ordinary
(f) Last clear chance prudent person would have used in the same situation?
(g) Prescription (Civil Code, Arts. 1144, 1146,  If not, then he is guilty of negligence
and 1150)  Could a prudent man, in the case under consideration,
(h) Waiver foresee harm as a result of the course pursued?
(i) Double recovery (Civil Code, Art. 2177)  If so, it as the duty of the actor to take precautions to
================================= guard against harm

VII. NEGLIGENCE
ELEMENTS OF QUASI DELICT/TORTS:
1. Act or omission
2. Damage or injury is caused to another
3. Fault or negligence is present
4. There is no pre-existing contractual relations
between the parties
5. Causal connection between damage done and
act/omission

NEGLIGENCE - The omission of that degree of diligence

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

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

CIVIL LAW REVIEWER Page 316 of 338

DISTINGUISHED FROM OTHER SOURCES OF OBLIGATION:
CONTRACT
Vinculum Juris Contract
Proof Needed Preponderance of evidence
Defense available Exercise of extraordinary diligence (in contract
of carriage), Force Majeure
Pre-existing contract There is a pre-existing contract
Burden of proof Contractual party.
Prove the ff.:
1. existence of a contract
2. breach
CONTRACT
Vinculum Juris Contract
Proof Needed Preponderance of evidence
Defense available Exercise of extraordinary
diligence (in contract of
carriage), Force Majeure
Pre-existing contract There is a pre-existing
contract
Burden of proof Contractual party.
Prove the ff.:
1. existence of a contract
2. breach
Liability of Employer Solidary
Reservation Requirement Civil aspect of the quasi-
delict is impliedly instituted
with criminal action, but
under 2000 Crimpro Rules it
is independent and separate
Effect of judgment of acquittal in a Not a bar to recover civil
criminal case involving same damages EXCEPT when
act/omission judgment pronounces that
the negligence from which
damage arise is non-existent
CIVIL LAW REVIEWER
QUASI DELICT
Negligent act/ omission (culpa, imprudence)
Preponderance of evidence
Exercise of diligence of a good father of a family in
the selection and supervision of employees
No pre-existing contract
Victim.
Prove the ff.:
1.damage
2. negligence
3.causal connection between negligence and
damage done
DELICT
Act / omission committed by means of dolo (deliberate,
malicious, in bad faith)
Proof beyond reasonable doubt
No pre-existing contract
Prosecution. Accused is presumed innocent until the
contrary is proved.
Subsidiary
Civil aspect is Impliedly instituted with criminal action
Not a bar to recover civil damages
Page 317 of 338
CIRCUMSTANCES TO CONSIDER
1. Time
2. Place
3. Personal circumstances of the Actors
GOOD FATHER OF A FAMILY (pater familias)
 The only standard of conduct used in the Philippines (Art.
1173 NCC)
 A reasonable man is deemed to have knowledge of the
facts that a man should be expected to know based on
ordinary human experience.
 The law presumes or requires a man to possess ordinary
capacity to avoid harming his neighbors unless a clear and
manifest incapacity is shown and the law does not hold
him liable for unintentional injury unless, possessing such
capacity, he might and ought to have foreseen the danger.
Corliss v. Manila Railroad
 The law fixes no arbitrary age at which a minor can be said
to have the necessary capacity to understand and
appreciate the nature and consequences of his acts. Taylor
v. Meralco, [16 Phil 8]
EMERGENCY RULE
Under this rule, one who suddenly finds himself in a place of
danger, and is required to act without time to consider the best
means that may be adopted to avoid the impending danger, is
not guilty of negligence, if he fails to adopt what subsequently
and upon reflection may appear to have been a better method,
unless the danger in which he finds himself is brought about by
his own negligence DELSAN Transport v. C&A Construction,
[G.R. 156034, October 1, 2003]
UNREASONABLE RISK OF HARM
Indeed, a higher degree of care is required of someone who has
in his possession or under his control an instrumentality
extremely dangerous in character, such as dangerous weapons
or substances. Such person in possession or control of
dangerous instrumentalities has the duty to take exceptional
precautions to prevent any injury being done thereby. Unlike
the ordinary affairs of life or business which involve little or no
risk, a business dealing with dangerous weapons requires the
exercise of a higher degree of care. Pacis v. Morales, [G.R.
169467, February 25, 2010]
EVIDENCE
CIVIL LAW REVIEWER
1. NEGLIGENCE - plaintiff must prove negligence of
defendant
Exceptions:
a. In cases where negligence is presumed or imputed by
law - this is only rebuttable/presumption juris tantum
b. Principle of res ipsa loquitur (the thing speaks for
itself) - grounded on the difficulty in proving thru competent
evidence, public policy considerations
2. DAMAGE / INJURY
3. CAUSAL CONNECTION BETWEEN NEGLIGENCE AND
DAMAGE – Defendant’s negligence must be the proximate
cause of the injury sustained by the plaintiff to enable plaintiff
to recover. Thus, if plaintiff’s own conduct is the cause of the
injury there can be no recovery.
NOTE: If plaintiff's negligence is only contributory, he is
considered partly responsible only. Plaintiff may still recover
from defendant but the award may be reduced by the courts in
proportion to his own negligence
Proximate Cause - the adequate and efficient cause which
in the natural order of events and under the particular
circumstances surrounding the case, would naturally
produce the event
A person claiming damages for the negligence of another has
the burden of proving the existence of such fault or negligence
causative thereof. The facts constitutive of negligence must be
affirmatively established by competent evidence. Whosoever
relies on negligence for his cause of action has the burden in
the first instance of proving the existence of the same if
contested, otherwise his action must fail. PLDT v. CA, G.R. L-
57079, [September 29, 1989]
PRESUMPTION OF NEGLIGENCE
1. DRIVER PRESUMED NEGLIGENT BY LAW IF:
a. He had been found guilty or reckless driving or
violating traffic regulations at least twice within the
next preceding two months.
b. at the time of the mishap, he was violating any traffic
regulation.
2. COMMON CARRIERS
Article 1733 of the New Civil Code mandates that common
carriers, by reason of the nature of their business, should
observe extraordinary diligence in the vigilance over the goods
they carry.
Page 318 of 338

In case of loss of the goods, the common carrier is presumed to
have been at fault or to have acted negligently.
In case of death of or injuries to passengers, common carriers
are presumed to have been at fault or to have acted negligently
3. DEFENDANT IN POSSESSION OF DANGEROUS WEAPONS OR
SUBSTANCES, SUCH AS FIREARMS AND POISON
 There is prima facie presumption of negligence on the
part of defendant if death or injury results from such
possession
EXCEPTION: The possession or use thereof is indispensable
in his occupation or business
4. RES IPSA LOQUITOR
(The thing speaks for itself) - Grounded on the difficulty in
proving thru competent evidence, public policy considerations.
Where the thing which causes injury is shown to be under the
management of the defendant, and the accident is such as in
the ordinary course of things does not happen if those who
have the management use proper care, it affords reasonable
evidence, in the absence of an explanation by the defendant,
that the accident arose from want of care. Layugan v. IAC,
[G.R. 73998, November 14, 1998]
G. DEFENSES TO QUASI DELICT
1. CONTRIBUTORY NEGLIGENCE - the plaintiff was also
negligent together with the defendant; to constitute a
defense, proximate cause of injury/damage must be the
negligence of defendant
2. CONCURRENT NEGLIGENCE – if both parties are equally
negligent the courts will leave them as they are; there
can be no recovery
3. DOCTRINE OF LAST CLEAR CHANCE - even though a
person’s own acts may have placed him in a position of
peril and an injury results, the injured is entitled to
recover if the defendant thru the exercise of reasonable
care and prudence might have avoided injurious
consequences to the plaintiff. This defense is available
only in an action by the driver or owner of one vehicle
against the driver or owner of the other vehicle
involved.
REQUISITES:
a. Plaintiff was in a position of danger by his own
negligence
CIVIL LAW REVIEWER
b. Defendant knew of such position of the plaintiff
c. Defendant had the last clear chance to avoid the
accident by exercise of ordinary care but failed to
exercise such last clear chance and
d. Accident occurred as proximate cause of such
failure
 Who may invoke: Plaintiff
NOTE: The doctrine is inapplicable to
o Joint tortfeasors
o Defendants concurrently negligent
o As against 3rd persons
4. EMERGENCY RULE - "one who suddenly finds himself
in a place of danger, and is required to act without
time to consider the best means that may be adopted
to avoid the impending danger, is not guilty of
negligence, if he fails to adopt what subsequently
and upon reflection may appear to have been a
better method, unless the emergency in which he
finds himself is brought about by his own negligence."
 An individual will nevertheless be subject to liability if
the emergency was brought about by his own
negligence. Valenzuela v. CA, [253 SCRA 303]
NOTE: Applicable only to situations that are sudden and
unexpected such as to deprive actor of all opportunity for
deliberation (absence of foreseeability); the action shall
still be judged by the standard of the ordinary prudent
man
FACTORS TO CONSIDER:
a. Gravity of the Harm to be avoided
b. Alternative courses of action - If the alternative
presented to the actor is too costly, the harm that
may result may still be considered unforeseeable to a
reasonable man
c. Social Value and Utility of the Action - The act which
subjects an innocent person to an unnecessary risk is
a negligent act if the risk outweighs the advantage
accruing to the actor and even to the innocent person
himself.
d. Person exposed to the risk - A higher degree of
diligence is required if the person involved is a child.
5. DOCTRINE OF ASSUMPTION OF RISK – Volenti non fit
injuria / That to which a person assents is not deemed
in law an injury.
Page 319 of 338
 REQUISITES:
a. Intentional exposure to a known danger
b. One who voluntarily assumed the risk of an
injury from a known danger cannot recover in an
action for negligence or an injury is incurred
c. Plaintiff’s acceptance of risk (by
law/contract/nature of obligation) has erased
defendant’s duty so that his negligence is not a
legal wrong
d. Applies to all known danger
6. DUE DILIGENCE - diligence required by law/contract/
depends on circumstances of persons, places, things
7. FORTUITOUS EVENT - no person shall be responsible
for those events which cannot be foreseen, or which
though foreseen were inevitable
REQUISITES:
a. The cause of the unforeseen and unexpected
occurrence, or of the failure of the debtor to comply
with his obligation, must be independent of the
human will;
b. It must be impossible to foresee the event which
constitutes caso fortuito or if it can be foreseen it
must be impossible to avoid
c. The occurrence must be such as to render it
impossible for the debtor to fulfill his obligation in a
normal manner
d. The obligor must be free from any participation in
the aggravation of the injury resulting to the
creditor.
GENERAL RULE: Fortuitous Event is a complete
defense and a person is not liable if the cause of the
damage is a fortuitous event.
EXCEPTION: It is merely a partial defense and the
courts may mitigate the damages if the loss would
have resulted in any event [Art. 2215(4) NCC]
NOTE: A person may still be liable for a fortuitous event if
such person made an ASSUMPTION OF RISK.
8. DAMNUM ABSQUE INJURIA – a principle that
involves damage without injury, therefore no liability
is incurred; there is no legal injury
9. LAW – specific provision of law
CIVIL LAW REVIEWER
EXAMPLES
 The owner or lawful possessor of a thing has the right
to exclude any person from the enjoyment and
disposal thereof. For this purpose, he may use such
force as may be reasonably necessary to repel or
prevent an actual or threatened unlawful physical
invasion or usurpation of his property (Art. 429 NCC)
 Article 11 of the Revised Penal Code (Act 3815):
i. Self-Defense
ii. Defense of Property
iii. Obedience to Lawful Order
iv. Lawful Exercise of a right or duty
10. EXERCISE OF THE DILIGENCE OF A GOOD FATHER OF
A FAMILY IN THE SELECTION AND SUPERVISION OF
EMPLOYEES
11. PRESCRIPTION
a. Injury to right of plaintiff/quasi delict - 4
years
b. Defamation - 1 year
c. When no specific provision, must be counted
from the day they may be brought
12. PROSCRIPTION AGAINST DOUBLE RECOVERY -
Responsibility for fault or negligence under quasi-
delict is entirely separate and distinct from civil action
arising from the RPC but plaintiff cannot recover
damages twice for same act or omission of the
defendant
13. WAIVER/ CONSENT
14. ACT OR OMISSION IS NOT THE PROXIMATE CAUSE OF
THE DAMAGE
15. OTHER GROUNDS – Motion To Dismiss:
a. Lack of jurisdiction over person of defendant
b. Lack of jurisdiction over subject matter
c. Venue improperly laid
d. Plaintiff has no legal capacity to sue
e. There is another action pending between
same parties for same cause
f. Cause of action is barred by prior judgment
/statute of limitations
g. Pleading asserting claim states no cause of
action
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 h. Claim set forth in pleading has been paid,
waived, abandoned, extinguished
i. Claim is unenforceable under the provision
of statute of fraud
j. Condition precedent for filing claim has not
been complied with
===============================
TOPICS UNDER THE SYLLABUS
IX. Special Liability in Particular Activities
A. General
(1) Concept
B. Products Liability
(1) Manufacturers or processors
a. Elements
b. Consumer Act [RA 7394, Sec. 92-107, (Ch. 1)]
C. Nuisance (Civil Code, Arts. 694-707)
(1) Nuisance per se and nuisance per accidence
(2) Public nuisance and private nuisance
(3) Attractive nuisance
D. Violation of constitutional rights
(1) Violation of civil liberties
E. Violation of rights committed by public officers
F. Provinces, cities and municipalities
G. Owner of motor vehicle
H. Proprietor of building or structure or thing
I. Head of family
X. Strict Liability
a. Animals
(1) Possessor and user of an animal
b. Nuisance (supra)
(1) Classes: Per se or per accidents; Public or
Private
(2) Easement against nuisance
c. Products Liability (supra)
(1) Consumer Act
===============================
a. Force majeure
b. Fault of the injured/damaged person
2. OWNER OF MOTOR VEHICLE
 In motor vehicle mishap, the owner is solidarily liable
with the driver if:
a. he was in the vehicle, and
b. could have, through due diligence, prevented the
misfortune
 A Driver is Presumed Negligent by law If:
c. He had been found guilty or reckless driving or
violating traffic regulations at least twice within
the next preceding two months.
d. at the time of the mishap, he was violating any
traffic regulation.
NOTE: Every owner of a motor vehicle shall file with the proper
government office a bond executed by a government-
controlled corporation or office, to answer for damages to third
persons.
3. MANUFACTURERS & PROCESSORS OF FOODSTUFFS,
DRINKS, TOILET ARTICLES & SIMILAR GOODS
 They are liable for death and injuries caused
by any harmful substances used although no
contractual relation exists between them and the
consumers
CONSUMER ACT R.A. 7394
NOTE ON STIPULATIONS: The stipulation in a contract of a
clause preventing, exonerating or reducing the obligation to
indemnify for damages effected, as provided for in this and in
the preceding Articles, is hereby prohibited, if there is more
than one person responsible for the cause of the damage, they
shall be jointly liable for the redress established in the
pertinent provisions of this Act. However, if the damage is
caused by a component or part incorporated in the product or
service, its manufacturer, builder or importer and the person
who incorporated the component or part are jointly liable.

SUMMARY OF LIABILITIES:
IX. SPECIAL LIABILITY
1. Any Filipino or foreign manufacturer, producer, and any
STRICT LIABILITY: PERSONS EXPRESSLY MADE LIABLE BY LAW
importer, shall be liable for redress, independently of fault,
EVEN WITHOUT FAULT
design, manufacture, construction, assembly and erection,
1. POSSESSOR OF AN ANIMAL
formulas and handling and making up, presentation or packing
of their products, as well as for the insufficient or inadequate
GENERAL RULE: The possessor of an animal or whoever may
make use of the same is responsible for the damage which it information on the use and hazards thereof.
may cause
NOTE: The manufacturer, builder, producer or importer shall
EXCEPTIONS: not be held liable when it evidences:

CIVIL LAW REVIEWER Page 321 of 338

 a) that it did not place the product on the market;
b) that although it did place the product on the market
such product has no defect;
c) that the consumer or a third party is solely at fault.
NOTE: This liability applies to tradesman/seller when the
persons named above cannot be, or are not identified, or when
the tradesman did not preserve the goods adequately.
2. The service supplier is liable for redress, independently of
fault, for damages caused to consumers by defects relating to
the rendering of the services, as well as for insufficient or
inadequate information on the fruition and hazards thereof.
3. The suppliers of durable or nondurable consumer products
are jointly liable for imperfections in quality that render the
products unfit or inadequate for consumption for which they
are designed or decrease their value, and for those resulting
from inconsistency with the information provided on the
container, packaging, labels or publicity
messages/advertisement, with due regard to the variations
resulting from their nature, the consumer being able to
demand replacement to the imperfect parts.
4. Suppliers are jointly liable for imperfections in the quantity
of the product when, in due regard for variations inherent
thereto, their net content is less than that indicated on the
container, packaging, labeling or advertisement.
5. The service supplier is liable for any quality imperfections
that render the services improper for consumption or decrease
their value, and for those resulting from inconsistency with the
information contained in the offer or advertisement.
6. When services are provided for the repair of any product,
the supplier shall be considered implicitly bound to use
adequate, new, original replacement parts, or those that
maintain the manufacturer's technical specifications unless,
otherwise authorized, as regards to the latter by the consumer.
NOTE: The supplier's ignorance of the quality imperfections
due to inadequacy of the products and services does not
exempt him from any liability.
4. PROVINCES, CITIES & MUNICIPALITIES
 Shall be liable for damages for the death or injuries
suffered by any person by reason of the defective
condition of roads, streets, bridges, public buildings, and
other public works under their control or supervision
5. PROPRIETOR OF BUILDING OR STRUCTURE
 Responsible for the damages resulting from any of the ff.:
CIVIL LAW REVIEWER
a. Total or partial collapse of building or structure if due
to lack of necessary repairs
b. Explosion of machinery which has not been taken
cared of with due diligence, and the inflammation of
explosive substances which have not been kept in a
safe and adequate place
c. By excessive smoke, which may be harmful to persons
or property
d. By falling of trees situated at or near highways or
lanes, if not caused by force majeure
e. By emanations from tubes, canals, sewers or deposits
of infectious matter, constructed without precautions
suitable to the place
6. ENGINEER, ARCHITECT OR CONTRACTOR
 If damage of building or structure is caused by defect
in construction which happens within 15 years from
construction; action must be brought within 10 years
from collapse
7. HEAD OF FAMILY THAT LIVES IN A BUILDING OR PART
THEREOF
 Liable for damages caused by things thrown or falling
from the same
8. NUISANCES
ELEMENTS
a. Any act, omission, establishment, condition of
property, or anything else
b. Which:
 Injures or endangers the health or safety to others,
or
 Annoys or offends the senses, or
 Shocks, defies, or disregards decency or morality, or
 Obstructs or interferes with the free passage of any
public highway or streets, or any body of water, or
 Hinders or impairs use of property
KINDS
 Nuisance Per Se - denounced as nuisance by common
law or by statute
 Nuisance Per Accidens - those which are in their nature
not nuisances, but may become so by reason of their
locality, surroundings, or the manner in which they may
be conducted, managed, etc.
 Public - affects a community or neighborhood or any
considerable number of persons
Page 322 of 338
  Private - one that is not included in the foregoing
definition; affect an individual or a limited number of
individuals only
REMEDIES AGAINST PUBLIC NUISANCES
 Prosecution under the RPC or any local ordinance
 Civil action
 Abatement, without judicial proceeding
REMEDIES AGAINST PRIVATE NUISANCES
 Civil Action
 Abatement, without judicial proceedings
WHO MAY AVAIL OF REMEDIES
 Public officers
 Private persons - if nuisance is specially
injurious to himself; the ff. must be made:
a. Demand be first made upon owner or
possessor of the property to abate nuisance
b. That such demand has been rejected
c. That the abatement be approved by the
district health officer and executed with the
assistance of local police
d. That the value of destruction does not exceed
P3,000
DOCTRINE OF ATTRACTIVE NUISANCE – Cases within the
general rule that one is liable for the injury resulting to
another from failure to exercise the degree of care
commensurate with the circumstances the attractiveness of
the premises or of the dangerous instrumentality to children of
tender years is to be considered as an implied invitation, which
takes the children who accepted it out of the category of a
trespasser and puts them in the category of invitees, towards
whom the owner of the premises or instrumentality owes the
duty of ordinary.
9. PUBLIC OFFICERS
Art. 32 Any public officer or employee, or any private
individual, who directly or indirectly obstructs, defeats, violates
or in any manner impedes or impairs any of the following rights
and liberties of another person shall be liable to the latter for
damages:
(1) Freedom of religion;
(2) Freedom of speech;
(3) Freedom to write for the press or to maintain a
periodical publication;
(4) Freedom from arbitrary or illegal detention;
(5) Freedom of suffrage;
CIVIL LAW REVIEWER
(6) The right against deprivation of property without due
process of law;
(7) The right to a just compensation when private
property is taken for public use;
(8) The right to the equal protection of the laws;
(9) The right to be secure in one's person, house, papers,
and effects against unreasonable searches and seizures;
(10) The liberty of abode and of changing the same;
(11) The privacy of communication and correspondence;
(12) The right to become a member of associations or
societies for purposes not contrary to law;
(13) The right to take part in a peaceable assembly to
petition the Government for redress of grievances;
(14) The right to be a free from involuntary servitude in
any form;
(15) The right of the accused against excessive bail;
(16) The right of the accused to be heard by himself and
counsel, to be informed of the nature and cause of the
accusation against him, to have a speedy and public trial,
to meet the witnesses face to face, and to have
compulsory process to secure the attendance of witness
in his behalf;
(17) Freedom from being compelled to be a witness
against one's self, or from being forced to confess guilt, or
from being induced by a promise of immunity or reward
to make such confession, except when the person
confessing becomes a State witness;
(18) Freedom from excessive fines, or cruel and unusual
punishment, unless the same is imposed or inflicted in
accordance with a statute which has not been judicially
declared unconstitutional; and
(19) Freedom of access to the courts.
Art. 34 When a member of a city or municipal police force
refuses or fails to render aid or protection to any person in case
of danger to life or property, such peace officer shall be
primarily liable for damages, and the city or municipality shall
be subsidiarily responsible therefor. The civil action herein
recognized shall be independent of any criminal proceedings,
and a preponderance of evidence shall suffice to support such
action.
===============================
TOPICS UNDER THE SYLLABUS
DAMAGES-BOOK II
I. General Considerations
A. Classification
(1) Under Art. 2197 of the Civil Code
(2) According to purpose
(3) According to manner of determination
Page 323 of 338
 (4) Special and ordinary b. Special Damages - damages which are the natural, but
II. Actual and Compensatory Damages not the necessary and inevitable result of the wrongful
A. Concept act. (i.e., attorney’s fees)
B. Requisites
(1) Alleged and proved with certainty REQUIREMENTS:
(2) Not speculative i. Need to be pleaded
C. Component Elements ii. Pray for the relief that claim for loss be granted
(1) Value of loss; unrealized profit iii. Prove the loss
(2) Attorney’s fees and expenses of litigation
(3) Interest WHEN LOSS NEED NOT BE PROVED:
D. Extent or scope of actual damages a. Liquidated damages previously agreed upon;
(1) In contracts and quasi-contracts liquidated damages take the place of actual damages
(2) In crimes and quasi-delicts except when additional damages incurred
=============================== b. If damages other than actual are sought
c. Loss is presumed (ex: loss if a child or spouse)
X. DAMAGES
A. GENERALLY d. Forfeiture of bonds in favor of the government for the
purpose of promoting public interest or policy (ex:
DAMAGES MAY BE: (MENTAL) bond for temporary stay of alien)
1. Actual or compensatory;
2. Moral; CONTRACTS AND QUASI-CONTRACTS
3. Nominal; a. Damages in case of Good Faith
4. Temperate or moderate; i. Natural and probable consequences of breach of
5. Liquidated; or obligations
6. Exemplary or corrective. ii. Parties have foreseen or could have reasonably
foreseen at the time the obligation was created
NOTE: b. Damages in case of Bad Faith
 A complaint for damages is a personal action i. It is sufficient that damages may be reasonably
 Proof of pecuniary loss is necessary to successfully recover attributed to the non-performance of the
actual damages from the defendant. No proof of pecuniary obligation.
loss is necessary in case of moral, nominal, temperate,
liquidated or exemplary damages. CRIMES AND QUASI-CRIMES
 The assessment of damages, except liquidated ones, is left a. Defendant is liable for all damages that are natural
to the discretion of the court according to the and probable consequences of the act complained of;
circumstances of each case. b. Not necessary that damages have been foreseen or
could have been reasonably foreseen.
B. ACTUAL
 Adequate compensation for the value of loss suffered or VALUE OF LOSS SUFFERED
profits which obligee failed to obtain  Destruction of things, fines or penalties, medical & hospital
bills, attorney's fees, interests, cost of litigation
EXCEPTIONS:
1. Law LOSS OF EARNING CAPACITY:
2. Stipulation  Variables to consider are:
a. life expectancy
KINDS OF ACTUAL OR COMPENSATORY DAMAGES b. net income/earnings – total of the earnings less
a. General Damage - natural, necessary and logical expenses necessary for the creation of such earnings
consequences of a particular wrongful act which result and less living or other incidental expenses
in injury; need not be specifically pleaded because the
law itself implies or presumes that they resulted from Formula: American Expectancy Table of Mortality or the
the wrongful act Actuarial of Combined Experience Table of Mortality

CIVIL LAW REVIEWER Page 324 of 338

[2/3 x 80 – (age at the time of death)] x monthly earnings x 12 = i. Plaintiff has contravened the terms of contract
GROSS EARNINGS ii. Plaintiff derived some benefit as result of
GE - Approximate Expenses (50% of GE) = Net Earnings contract
iii. In case where exemplary damages are to be
LOSS OF PROFITS (Lucrum Cessans) awarded, that the defendant acted upon the
 May be determined by considering the average profit for advice of counsel
the preceding years multiplied by the number of years iv. That the loss would have resulted in any event
during which the business was affected by the wrongful v. That since the filing of the action, the defendant
act or breach has done his best to lessen the plaintiff's loss or
injury
ATTORNEY’S FEES
 They are actual damages. It is due to the plaintiff and not ===============================
to counsel TOPICS UNDER THE SYLLABUS
 Plaintiff must allege the basis of his claim for attorney’s
III. Moral Damages
fees in the complaint; the basis should by one of the cases
A. Concept (Arts. 2217-2218)
under Art. 2208
B. When recoverable (Arts. 2219-2220)
(1) In seduction, abduction, rape and other
WHEN ARE ATTORNEY’S FEES RECOVERABLE:
lascivious acts
 In the absence of stipulation, attorney's fees and expenses
(2) In acts referred to in Arts. 21, 26, 27, 28, 29,
of litigation, other than judicial costs, cannot be recovered,
32, 34 & 35, Civil Code
except:
(3) In cases of malicious prosecution
a. When exemplary damages are awarded;
IV. Nominal Damages
b. When the defendant's act or omission has
A. Concept
compelled the plaintiff to litigate with third
B. When awarded
persons or to incur expenses to protect his
V. Temperate or Moderate Damages
interest;
A. Concept
c. In criminal cases of malicious prosecution
B. When awarded
against the plaintiff;
VI. Liquidated Damages
d. In case of a clearly unfounded civil action or
A. Concept (Civil Code, Art. 2226)
proceeding against the plaintiff;
B. Rules governing in case of breach of contract
e. Where the defendant acted in gross and
VII. Exemplary or Corrective Damages
evident bad faith in refusing to satisfy the
A. Concept (Civil Code, Art. 2229)
plaintiff's plainly valid, just and demandable
B. When recovered
claim;
(1) In criminal offenses (Civil Code, Art. 2230)
f. In actions for legal support;
(2) In quasi-delicts (Civil Code, Art. 2231)
g. In actions for the recovery of wages of
(3) In contracts and quasi-contracts (Civil Code,
household helpers, laborers and skilled
Art. 2232)
workers;
C. Requisites
h. In actions for indemnity under workmen's
(1) Arts. 2233, 2234
compensation and employer's liability laws;
===============================
i. In a separate civil action to recover civil
liability arising from a crime;
C. MORAL
j. When at least double judicial costs are
awarded;
MORAL DAMAGES Include: (PBMF-MWSS)
a. Physical suffering
WHEN IS ACTUAL DAMAGES MITIGATED:
b. Besmirched reputation
a. Contributory negligence
c. Mental anguish
b. In contracts. Quasi-contracts and quasi-delict
d. Fright

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 e. Moral shock
f. Wounded feelings
g. Social humiliation
h. Serious anxiety
i. Sentimental value of real or personal property may be
considered in adjudicating moral damages
j. The social and economic/financial standing of the
offender and the offended party should be taken into
consideration in the computation of moral damages
k. Moral damages is awarded only to enable the injured
party to obtain means, diversions or amusements that
will serve to alleviate the moral suffering he has
undergone, by reason of defendant's culpable action
and not intended to enrich a complainant at the
expense of defendant
IN WHAT CASES MAY MORAL DAMAGES BE RECOVERED
(Enumeration Not Exclusive):
a. Criminal offense resulting in physical injuries
b. Quasi-delicts causing physical injuries
c. Seduction, abduction, rape or other acts of
lasciviousness
d. Adultery and concubinage
e. Illegal or arbitrary detention or arrest
f. Illegal search
g. Libel, slander or other form of defamation
h. Malicious prosecution
i. Acts mentioned in art 309 of the RPC relating to
disrespect of the dead and interference with funeral
j. Acts and actions referred to in arts 21, 26, 27, 28, 29,
30, 32, 34 and 35
k. The parents of the female seduced, abducted, raped,
or abused
l. Spouse, descendants, ascendants and brother and
sisters for acts mentioned in art 309
m. Art 2220 - in cases of willful injury to property or
breaches of contract where defendant acted
fraudulently or in bad faith
GENERAL RULE: The plaintiff must allege and prove the factual
basis for moral damages and its causal relation to the
defendant’s act
EXCEPTION: Moral damages may be awarded to the victim in
criminal proceedings without the need for pleading proof of the
basis hereof.
CIVIL LAW REVIEWER
D. NOMINAL DAMAGES
 Adjudicated in order that a right of the plaintiff, which
has been violated or invaded by the defendant, may be
vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him
ELEMENTS:
a. Plaintiff has a right
b. Right of plaintiff is violated
c. Purpose is not to identify but vindicate or recognize
right violated
NOTE:
 The Law presumes damage although actual or
compensatory damages are not proven
 They are damages in the name only and are allowed simply
in recognition of a technical injury based on a violation of a
legal right
 Nominal damages cannot coexist with actual or
compensatory damages
E. TEMPERATE OR MODERATE DAMAGES
 More than nominal but less than compensatory where
some pecuniary loss has been suffered but its amount
can't be proved with certainty due to the nature of the
case
 In cases where the resulting injury might be continuing and
possible future complications directly arising from the
injury, while certain to occur are difficult to predict,
temperate damages can and should be awarded on top of
actual or compensatory damages; in such cases there is no
incompatibility between actual and temperate damages.
REQUISITES:
a. Some pecuniary loss
b. Loss is incapable of pecuniary estimation
c. Must be reasonable
F. LIQUIDATED DAMAGES
 Those agreed upon by the parties to a contract, to be paid
in case of breach thereof
WHEN LIQUIDATED DAMAGES MAY BE EQUITABLY REDUCED:
a. Iniquitous or unconscionable
b. Partial or irregular performance
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G. EXEMPLARY
EXEMPLARY OR CORRECTIVE DAMAGE
 Imposed by way example or correction for the public
good, in addition to the moral, temperate, liquidated to
compensatory damages
NOTE: Exemplary damages cannot be recovered as a
matter of right; the court will decide whether or not they
should be adjudicated.
WHEN IMPOSABLE:
Criminal offenses – exemplary damages as a part of the civil
liability may be imposed when the crime was committed with
one or more aggravating circumstances. Such damages are
separate from fines and shall be paid to the offended party.
Quasi-delicts – exemplary damages may be granted if the
defendant acted with gross negligence.
Contracts and quasi-contracts – the court may award
exemplary damages if the defendant acted in a wanton,
fraudulent, reckless, oppressive, or malevolent manner.
WHAT MUST BE PROVED:
a. While the amount of exemplary damages need not be
proved, the plaintiff must show that he is entitled to
moral, temperate or compensatory damages before
the court may consider the question of whether or
not exemplary damages should be awarded.
b. In case liquidated damages have been agreed upon,
although no proof of loss is necessary in order that
such liquidated damages may be recovered,
nevertheless, before the court may consider the
question of granting exemplary in addition to the
liquidated damages, the plaintiff must show that he
would be entitled to moral, temperate or
compensatory damages were it not for the stipulation
for liquidated damages.
===============================
TOPICS UNDER THE SYLLABUS
XIII. Damages in Case of Death
A. In crimes and quasi-delicts causing death
(1) In death caused by breach of conduct by a
common crime
IX. Graduation of Damages
A. Duty of injured party
CIVIL LAW REVIEWER
(1) Art. 2203
B. Rules
(1) In crimes
(2) In quasi-delict (Civil Code, Art. 2214)
(3) In contracts, quasi-contracts and quasi-delicts
(Civil Code, Art. 2215)
(4) Liquidated damages (Civil Code, Art. 2227)
(5) Compromise
X. Miscellaneous Rules
A. Damages that cannot co-exists
(1) Nominal with other damages (Art. 2223)
(2) Actual and Liquidated (Art. 2226)
B. Damages that must co-exist
(1) Exemplary with moral, temperate, liquidated
or compensatory
C. Damages that must stand alone
(1) Nominal Damages (Art. 2223)
===============================
H. DAMAGES IN CASE OF DEATH
BY CRIMES AND QUASI-DELICT
1. Medical & Hospital Bills
2. Damages for death
i.Minimum amount: P50,000
ii.Loss of earning capacity unless deceased had
permanent physical disability not caused by
defendant so that deceased had no earning
capacity at time of death
iii.Support, if deceased was obliged to give support
(for period not more than 5 years)
iv.Moral damages
IN CASES OF COMMON CARRIER
Article 2206 shall also apply to the death of a passenger caused
by the breach of contract by a common carrier. (See Preceding
heading)
I .GRADUATION
DUTY OF INJURED PARTY.
The party suffering loss or injury must exercise the diligence of
a good father of a family to minimize the damages resulting
from the act or omission in question.
RULES
1. Responsibility for fault or negligence under the
preceding article is entirely separate and distinct from
the civil liability arising from negligence under the Penal
Page 327 of 338
 Code. But the plaintiff cannot recover damages twice for
the same act or omission of the defendant.
2. In quasi-delicts, the contributory negligence of the
plaintiff shall reduce the damages that he may recover.
3. In contracts, quasi-contracts, and quasi-delicts, the
court may equitably mitigate the damages under
circumstances other than the case referred to in the
preceding article, as in the following instances:
(1) That the plaintiff himself has contravened the
terms of the contract;
(2) That the plaintiff has derived some benefit as a
result of the contract;
(3) In cases where exemplary damages are to be
awarded, that the defendant acted upon the advice of
counsel;
(4) That the loss would have resulted in any event;
(5) That since the filing of the action, the defendant
has done his best to lessen the plaintiff's loss or injury.
4. Liquidated damages, whether intended as an
indemnity or a penalty, shall be equitably reduced if
they are iniquitous or unconscionable.
5. There may be a compromise upon the civil liability
arising from an offense; but such compromise shall not
extinguish the public action for the imposition of the
legal penalty.

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

Damages that must co-exist

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

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