ABRC2016.Magic Areas in Civil Law Combined 2 Segregate Separate

MAGIC AREAS in CIVIL LAW
2016 Bar Examination

Dean ED VINCENT S. ALBANO
Proprietor & Bar Review Director
PRELIMINARY CHAPTER and HUMAN RELATIONS
Effectivity of laws; publication required.

It is well-settled that laws must be published to be valid. In fact, publication is an indispensable condition for the
effectivity of a law. Tañada v. Tuvera (G.R. No. L-63915, 1986) said as much: Publication of the law is indispensable in every
case x x x. Laws must come out in the open in the clear light of the sun instead of skulking in the shadows with their dark,
deep secrets. Mysterious pronouncements and rumored rules cannot be recognized as binding unless their existence and
contents are confirmed by a valid publication intended to make full disclosure and give proper notice to the people. The
furtive law is like a scabbarded saber that cannot feint, parry or cut unless the naked blade is drawn. The publication must
be of the full text of the law since the purpose of publication is to inform the public of the contents of the law. Mere
referencing the number of the presidential decree, its title or whereabouts and its supposed date of effectivity would not
satisfy the publication requirement. (EDUARDO M. COJUANGCO, JR. v. REPUBLIC OF THE PHILIPPINES, G.R. No. 180705,
November 27, 2012, Velasco, Jr.)
Abuse of right.
A bank may be considered grossly negligent in not giving prior notice to client about its course of action to
suspend, terminate, or revoke the credit line, thus violating Art. 19 of the Civil Code.
In order for Art. 19 to be actionable, the following elements must be present: "(1) the existence of a legal right or
duty, (2) which is exercised in bad faith, and (3) for the sole intent of prejudicing or injuring another." Prior notice is
required before termination of the credit line. This is the legal duty of the bank and since it failed to do so, it is liable for
damages.
Malice or bad faith is at the core of Art. 19. Malice or bad faith "implies a conscious and intentional design to do a
wrongful act for a dishonest purpose or moral obliquity." (EUSEBIO GONZALES v. PCIB, et al., G.R. No. 180257, February
23, 2011, Velasco, J; Ardiente v. Pastorfide, G.R. No. 161921, July 17, 2013)
Liability for breach of promise to marriage; basis.

Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or
public policy shall compensate the latter for moral damages. (Art. 21, NCC)
A person cannot escape liability by promising to marry her, only to thereafter renege on his promise after cohabiting with
her for 21 days. There are other reprehensible acts which he did, like practically detaining the woman after the alleged
rape, leaving her without any justifiable reason, withdrawing the application for marriage license, acts which can make
him liable for damages. (Bunag, Jr. vs. CA, et al., G.R. No. 101749, July 10, 1992; Baksh vs. CA, et al., G.R. No. 97336, Feb. 19,
1993)
Prejudicial question.
The 2000 Rules on Criminal Procedure, effective since December 1, 2000 provides that the two essential elements
of a prejudicial question are: (a) the previously instituted civil action involves an issue similar or intimately related to the
issue raised in the subsequent criminal action, and (b) the resolution of such issue determines whether or not the criminal
action may proceed. Therefore, in order for a civil case to create a prejudicial question and, thus, suspend a criminal case,
it must first be established that the civil case was filed previous to the filing of the criminal case. Assuming arguendo that
the civil case was instituted prior to the criminal action, there is still, no prejudicial question to speak of due to the absence
of the second element, because the agreement surrounding the issuance of dishonored checks is irrelevant to the
prosecution for violation of BP 22. The gravamen of the offense is the issuance of a bad check. (DREAMWORK
CONSTRUCTION, INC. v. CLEOFE S. JANIOLA, G.R. No. 184861, June 30, 2009, VELASCO, JR., J.).
PERSONS AND FAMILY RELATIONS
Marriage without a license is void.

If a marriage was celebrated without a license, it is void.
The certification of the Local Civil Registrar that their office had no record of a marriage license was adequate to
prove the non-issuance of said license. (Cariño v. Cariño, 403 Phil. 861, 869, [2001])
The mere fact that a wedding ceremony was conducted and a marriage contract was signed does not operate to
cure the absence of a valid marriage license. Article 4 of the Family Code is clear when it says, "The absence of any of the
essential or formal requisites shall render the marriage void ab initio, except as stated in Article 35(2)." Article 35(3) of the
Family Code also provides that a marriage solemnized without a license is void from the beginning, except those exempt
from the license requirement under Articles 27 to 34, of the same Code. Again, this marriage cannot be characterized as
among the exemptions, and thus, having been solemnized without a marriage license, is void ab initio. As the marriage
license, a formal requisite, is clearly absent, the marriage of the parties is void ab initio. (SYED AZHAR ABBAS v. GLORIA
GOO ABBAS, G.R. No. 183896, January 30, 2013, Velasco, Jr., J; Cariño v. Cariño, 403 Phil. 861, 869, [2001]).
Proceedings after declaration of nullity of marriage.

The Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages, clearly allow
the reception of evidence on custody, support, and property relations after the trial court renders a decision granting the
ABRC2015.Magic Areas in Civil (combined 2)segregate-separate/EVSA/crys 1

petition, or upon entry of judgment granting the petition. Judge Reyes-Carpio did not deny the reception of evidence on
custody, support, and property relations but merely deferred it, based on the existing rules issued by this Court, to a time
when a decision granting the petition is already at hand and before a final decree is issued. The trial court shall proceed
with the liquidation, partition and distribution, custody, support of common children, and delivery of their presumptive
legitimes upon entry of judgment granting the petition. (ERIC U. YU v. HONORABLE JUDGE AGNES REYES-CARPIO, G.R. No.
189207, June 15, 2011, Velasco, Jr., J.)
Divorce between Filipino citizens void; second marriage void.

When the first marriage between both Filipinos was solemnized in the Philippines, the law in force adopted the
nationality rule to the effect that Philippine laws relating to family rights and duties, or to the status, condition and legal
capacity of persons were binding upon citizens of the Philippines. Pursuant to the nationality rule, Philippine laws
governed this case. So they remained married until his death which terminated their marriage. From the time of the
celebration of his first marriage until the present, absolute divorce between Filipino spouses has not been recognized in
the Philippines. The non-recognition of absolute divorce between Filipinos has remained even under the Family Code,
even if either or both of the spouses are residing abroad.
Hence, the second marriage is void for being bigamous. And under Article 144 of the Civil Code (now Art. 148, FC)
the property relation between them is governed by the rules on co-ownership. But in order to establish co-ownership the
second wife should prove that she actually contributed in the acquisition of the property. Even under the Family Code,
where co-ownership between them is presumed, there must still be proof of actual contribution for the presumption to
apply. In this case, she failed to prove her actual contribution in the acquisition of the subject properties.
If the parties have no legal impediment to marry, it is not necessary that there be actual or material contribution
because in such a case, there is a presumption that the contribution is equal. In fact, the contribution may only be spiritual.
(Lavadia v. Heirs of Luna, G.R. No. 171914, July 23, 2014).
Foreign divorce.
A foreign divorce can be recognized in the Philippines provided the divorce decree is proven as a fact and as valid
under the national law of the alien spouse. The fact that a party was clearly an American citizen when she secured the
divorce and that divorce is recognized and allowed in any of the States of the Union, the presentation of a copy of foreign
divorce decree duly authenticated by the foreign court issuing said decree is sufficient.
Given the validity and efficacy of divorce decree, the same shall be given a res judicata effect in this jurisdiction. As an
obvious result of the divorce decree obtained, the marital vinculum between the spouses is considered severed; they are
both freed from the bond of matrimony. In plain language, they are no longer husband and wife to each other. Consequent
to the dissolution of the marriage, the husband could no longer be subject to a husband's obligation under the Civil Code.
(MARIA REBECCA MAKAPUGAY BAYOT v. THE HONORABLE COURT OF APPEALS, G.R. No. 155635, November 7, 2008,
VELASCO, JR., J.).
Duty to support; effect if a party is a foreigner who divorced the Filipino; nationality principle.
Insofar as Philippine laws are concerned, specifically the provisions of the Family Code on support, the same only
applies to Filipino citizens. By analogy, the same principle applies to foreigners such that they are governed by their
national law with respect to family rights and duties which provides that laws relating to family rights and duties, or to the
status, condition and legal capacity of persons are binding upon citizens of the Philippines, even though living abroad. (Art.
15, NCC).
The obligation to give support to a child is a matter that falls under family rights and duties. Since the respondent
is a citizen of Holland or the Netherlands, the lower court was correct that he is subject to the laws of his country, not to
Philippine law, as to whether he is obliged to give support to his child, as well as the consequences of his failure to do so.
In Vivo v. Cloribel, G.R. No. L-25441, October 26, 1968, 25 SCRA 616, it was said that being still aliens, they are not
in position to invoke the provisions of the Civil Code of the Philippines, for that Code cleaves to the principle that family
rights and duties are governed by their personal law, i.e., the laws of the nation to which they belong even when staying in
a foreign country (Civil Code, Article 15; Norma A. Del Socorro v. Ernest Johan Brinkman Van Wilsen, G.R. No. 193707,
December 10, 2014, Peralta, J).
Why the foreign law which does not oblige the father to support his child cannot be made to apply in the
Philippines.
Notwithstanding that the national law of respondent states that parents have no obligation to support their
children or that such obligation is not punishable by law, said law would still not find applicability. In Bank of America, NT
and SA v. American Realty Corporation, 378 Phil. 1279 [1999] it was said that when the foreign law, judgment or contract is
contrary to a sound and established public policy of the forum, the said foreign law, judgment or order shall not be
applied.
Prohibitive laws concerning persons, their acts or property, and those which have for their object public order,
public policy and good customs shall not be rendered ineffective by laws or judgments promulgated, or by determinations
or conventions agreed upon in a foreign country.
Moreover, foreign law should not be applied when its application would work undeniable injustice to the citizens
or residents of the forum. To give justice is the most important function of law; hence, a law, or judgment or contract that
is obviously unjust negates the fundamental principles of Conflict of Laws.
Applying the foregoing, even if the laws of the Netherlands neither enforce a parent’s obligation to support his
child nor penalize the non-compliance therewith, such obligation is still duly enforceable in the Philippines because it
would be of great injustice to the child to be denied of financial support when the latter is entitled thereto. (Norma A. Del
Socorro v. Ernest Johan Brinkman Van Wilsen, G.R. no. 193707, December 10, 2014).
Purpose of Art. 26(2), F.C.

The intention of the law is to avoid the absurd situation where the Filipino spouse remains married to the alien
spouse who, after obtaining a divorce, is no longer married to the Filipino spouse. The legislative intent is for the benefit of
the Filipino spouse, by clarifying his or her marital status, settling the doubts created by the divorce decree. Essentially,
ABRC2015.Magic Areas in Civil Law (combined 2)segregate-separate/EVSA/crys 2

the second paragraph of Article 26 of the Family Code provided the Filipino spouse a substantive right to have his or her
marriage to the alien spouse considered as dissolved, capacitating him or her to remarry. The capacity of the Filipino
spouse to remarry, however, depends on whether the foreign divorce decree capacitated the alien spouse to do
so. Without the second paragraph of Article 26 of the Family Code, the judicial recognition of the foreign decree of divorce,
whether in a proceeding instituted precisely for that purpose or as a related issue in another proceeding, would be of no
significance to the Filipino spouse since our laws do not recognize divorce as a mode of severing the marital bond; (Art. 17,
NCC) Article 17 of the Civil Code provides that the policy against absolute divorces cannot be subverted by judgments
promulgated in a foreign country. The inclusion of the second paragraph in Article 26 of the Family Code provides the
direct exception to this rule and serves as basis for recognizing the dissolution of the marriage between the Filipino
spouse and his or her alien spouse. (Gilbert B. Corpus v. Daisylyn Tirol Sto. Tomas, et al., G.R. No. 186571, August 11,
2010).
Article 26(2) a corrective measure.

The second paragraph of Article 26 is only a corrective measure to address the anomaly that results from a
marriage between a Filipino, whose laws do not allow divorce, and a foreign citizen, whose laws allow divorce. The
anomaly consists in the Filipino spouse being tied to the marriage while the foreign spouse is free to marry under the laws
of his or her country. The correction is made by extending in the Philippines the effect of the foreign divorce decree, which
is already effective in the country where it was rendered. The second paragraph of Article 26 of the Family Code is based
on the Court’s decision in Van Dorn v. Romillo, 223 Phil. 357 [1985], which declared that the Filipino spouse “should not be
discriminated against in her own country if the ends of justice are to be served.” (Minoru Fujiki vs. Marinay, et al., G.R. No.
196049, June 26, 2013)
Marriage valid even if the purpose is to secure citizenship.

The avowed purpose of marriage under Article 1 of the Family Code is for the couple to establish a conjugal and
family life. The possibility that the parties in a marriage might have no real intention to establish a life together is,
however, insufficient to nullify a marriage freely entered into in accordance with law. The same Article 1 provides that the
nature, consequences, and incidents of marriage are governed by law and not subject to stipulation. A marriage may, thus,
only be declared void or voidable under the grounds provided by law. There is no law that declares a marriage void if it is
entered into for purposes other than what the Constitution or law declares, such as the acquisition of foreign citizenship.
Therefore, so long as all the essential and formal requisites prescribed by law are present, and it is not void or voidable
under the grounds provided by law, it shall be declared valid. (Article 4, Family Code; Republic v. Albios, G.R. No. 198780,
October 16, 2013).
Bringing children to mahjong sessions exposed them to culture of gambling; eroded moral fiber.
A mother’s act of bringing her children with her to her mahjong sessions did not only point to her neglect of
parental duties, but also manifested her tendency to expose them to a culture of gambling. Her willfully exposing her
children to the culture of gambling on every occasion of her mahjong sessions was a very grave and serious act of
subordinating their needs for parenting to the gratification of her own personal and escapist desires.
She revealed her wanton disregard for her children’s moral and mental development. This disregard violated her
duty as a parent to safeguard and protect her children affecting the development of their moral, mental and physical
character and well-being. (Art. 209, FC; Kalaw v. Fernandez, G.R. No. 166357, January 14, 2015).
Extent of the petition under Article 26 paragraph 2 of the Family Code.

An action based on the second paragraph of Article 26 of the Family Code is not limited to the recognition of the
foreign divorce decree. If the court finds that the decree capacitated the alien spouse to remarry, the courts can declare
that the Filipino spouse is likewise capacitated to contract another marriage. No court in this jurisdiction, however, can
make a similar declaration for the alien spouse (other than that already established by the decree), whose status and legal
capacity are generally governed by his national law.
An alien’s legal capacity to contract is evidenced by a certificate issued by his or her respective diplomatic and
consular officials, which he or she must present to secure a marriage license (Article 21, Family Code). The Filipino
spouse who seeks to remarry, however, must still resort to a judicial action for a declaration of authority to
remarry. (Gilbert B. Corpus v. Daisylyn Tirol Sto. Tomas, et al., G.R. No. 186571, August 11, 2010).
Concept of mixed marriage.

Paragraph 2 of Article 26 of the Family Code should be interpreted to include 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 foreign
citizen and obtains a divorce decree. The Filipino spouse should likewise be allowed to remarry as if the other party were
a foreigner at the time of the solemnization of the marriage. To rule otherwise would be to sanction absurdity and
injustice. Where the interpretation of statute according to its exact and literal import would lead to mischievous results or
contravene the clear purpose of the legislature, it should be construed according to its spirit and reason, disregarding as
far as necessary the letter of the law. A statute may therefore be extended to cases not within the literal meaning of its
terms, so long as they come within its spirit or intent.
Even if the marriage became mixed after its celebration and divorce was obtained later after one of the spouses
embraced American citizenship, the Filipino can remarry. While the law appears to apply only to cases where the parties
must be Filipinos and aliens in order that the Filipino who was divorced was remarry, yet, the Supreme Court said it
applies even if the marriage becomes mixed after its celebration. To rule otherwise, would be to sanction the foreigner,
capacitating him on her to remarry. (Republic v. Orbecido III, G.R. No. 154380, October 5, 2005).
Affidavit of cohabitation; effect if contents are false.

The marriage is void if it was contracted without a license. For Art. 76, NCC or Art. 34, FC to apply where in lieu of
a license an affidavit of cohabitation would be sufficient, it is required that the man and the woman must have attained the
age of majority, and that being unmarried, they have lived together as husband and wife for at least 5 years. The minimum
requisite of 5 years of cohabitation is an indispensable requisite carved in the language of the law. This material fact

cannot be dispensed with, otherwise the marriage is void. It is not a directory requirement but a mandatory one. In this
case, they lived for less than 6 months the affidavit was false. The marriage is void. (Republic v. Jose Dayot, March 28,
2008).
Requisites of declaration of presumptive death of an absent spouse.

Before a judicial declaration of presumptive death can be obtained, it must be shown that the prior spouse had
been absent for four consecutive years and the present spouse had a well-founded belief that the prior spouse was already
dead. Under Article 41 of the Family Code, there are four (4) essential requisites for the declaration of presumptive death:
1. That the absent spouse has been missing for four consecutive years, or two consecutive years if the
disappearance occurred where there is danger of death under the circumstances laid down in Article 391, Civil
Code;
2. That the present spouse wishes to remarry;
3. That the present spouse has a well-founded belief that the absentee is dead; and
4. That the present spouse files a summary proceeding for the declaration of presumptive death of the absentee.
(Rep. v. Maria Fe Espinosa Cantor, G.R. No. 184621, December 10, 2013 citing Republic v. Nolasco, G.R. No. 94053,
March 17, 1993, 220 SCRA 20)
Serious efforts must be exerted to locate absent spouse for the latter to be declared presumptively dead;
reiteration of strict standard rule.
The Family Code provides that before a judicial declaration of presumptive death may be granted, the present
spouse must prove that he/she has a well-founded belief that the absentee is dead. (Republic v. Cantor, G.R. No. 184621,
December 10, 2013).
The well-founded belief in the absentee’s death requires the present spouse to prove that his/her belief was the
result of diligent and reasonable efforts to locate the absent spouse and that based on these efforts and inquiries, he/she
believes that under the circumstances, the absent spouse is already dead. It necessitates exertion of active effort (not a
mere passive one). Mere absence of the spouse (even beyond the period required by law), lack of any news that the
absentee spouse is still alive, mere failure to communicate, or general presumption of absence under the Civil Code would
not suffice. (Rep. v. Cantor). The premise is that Article 41 of the Family Code places upon the present spouse the burden
of complying with the stringent requirement of "well-founded belief" which can only be discharged upon a showing of
proper and honest-to-goodness inquiries and efforts to ascertain not only the absent spouse’s whereabouts but, more
importantly, whether the absent spouse is still alive or is already dead. (Republic of the Philippines v. Court of Appeals
(10th Div.), 513 Phil. 391, 397-398 [2005]; Rep. v. Edna Orcelino-Villanueva, G.R. No. 210929, July 29, 2015, Mendoza, J).
Reason for strict standard approach.

This strict standard approach ensures that a petition for declaration of presumptive death under Article 41 of the
Family Code is not used as a tool to conveniently circumvent the laws in light of the State’s policy to protect and
strengthen the institution of marriage. Courts should never allow procedural shortcuts but instead should see to it that the
stricter standard required by the Family Code is met. (Rep. v. Cantor, supra.).
Fraudulent declaration of presumptive death; remedy.

Mere filing of an affidavit of reappearance would not suffice for the purpose of not only terminating the effects of
the declaration of presumptive death. Annulment of judgment on the ground of extrinsic fraud is the proper remedy. There
is extrinsic fraud when a litigant commits acts outside of the trial which prevents a party from having a real contest or
from presenting all of his or her case, or when there is no fair submission of the controversy.
Her allegations in her petition for annulment of judgment constitute extrinsic fraud and lack of jurisdiction. In fact
there was even no publication of the notice of hearing of her husband’s petition in a newspaper of general circulation.
She did not admit to have been absent so it would be inappropriate to file an affidavit of reappearance if she did
not disappear in the first place. Besides, she sought not merely the termination of the subsequent marriage but also the
nullification of its effects. So an affidavit of reappearance is not a sufficient remedy because it will only terminate the
subsequent marriage but not nullify the effects of the declaration of her presumptive death and the subsequent marriage.
(Santos v. Santos, G.R. No. 187061, October 8, 2014).
Decree of legal separation; property relation of the spouses; effect on the guilty spouse.
Among the effects of the decree of legal separation is that the conjugal partnership is dissolved and liquidated and
the offending spouse would have no right to any share of the net profits earned by the conjugal partnership. It is only the
share in the net profits which is forfeited in favor of their daughter. Article 102(4) of the Family Code provides that “[f]or
purposes of computing the net profits subject to forfeiture in accordance with Article 43, No. (2) and 63, No. (2), the said
profits shall be the increase in value between the market value of the community property at the time of the celebration of
the marriage and the market value at the time of its dissolution.” Clearly, what is forfeited in favor of their daughter is not
his share in the conjugal partnership property but merely in the net profits of the conjugal partnership property. (Siochi v.
Gozon, et al., G.R. No. 169900; Interdimensional Realty, Inc. v. Siochi, et al., G.R. No. 169977, March 18, 2010).
Sleeping with the spouse after giving rise to a case for legal separation is condonation.
In legal separation, condonation means forgiveness, express or implied. Sleeping together after full knowledge of
the offense is condonation. Implied condonation may be evidenced by voluntary intercourse after knowledge of the cause.
(Johnston v. Johnston, 116 Va. 778; Keezer, Marriage and Divorce, p. 554; Bugayong v. Ginez, December 28, 1956).
Reason for the prohibition against donation of spouses to one another.

The basic reason why the spouses cannot donate to one another is that there may be undue influence that may be
exerted by one against the other, to the extent that the heirs or creditors of the donor may be prejudiced if the spouses are
allowed to sell to one another.
The prohibition should likewise apply to persons living together as husband and wife without the benefit of
nuptials. For it is not to be doubted that assent to such irregular connection for thirty (30) years bespeaks greater

influence of one party over the other so that the danger that the law seeks to avoid is correspondingly increased to the
extent that the heirs, or creditors of the donor may be prejudiced. (Matabuena v. Cervantes, 38 SCRA 284).
Prohibition applies to common-law relationship.

If the donor and done are living in a common-law relationship, the donation is void because it was made between
persons guilty of adultery at the time of the donation. Moreover, Article 87 of the Family Code provides that the
prohibition against donations between spouses now applies to donations between persons living together as husband and
wife without a valid marriage (Buenaventura v. Bautista, 50 O.G. 3679; Matabuena v. Cervantes, 38 SCRA 284), for
otherwise, the condition of those who incurred guilt would run out to be better than those in the legal union.
(Buenaventura v. Bautista, 50 O.G. 3679; Matabuena v. Cervantes, 38 SCRA 284; Agapay v. Palang, G.R. No. 116668, July 28,
1997, 85 SCAD 145; Arcaba v. Tabancura Vda. de Batocael, G.R. No. 146683, November 22, 2001; Sps. Cirelos v. Sps.
Hernandez, G.R. No. 146523, June 15, 2006).
Presumption of conjugality.
Properties acquired by onerous title during the marriage are presumed to be conjugal. It is an error to say that
before conjugal ownership could be legally presumed, there must be a showing that the property was acquired during
marriage using conjugal funds. Only proof of acquisition during the marriage is needed to raise the presumption that the
property is conjugal. (METROPOLITAN BANK AND TRUST CO. v. NICHOLSON PASCUAL, G.R. No. 163744, 29 February
2008, Second Divison, (Velasco, Jr., J)
Surety undertaking does not redound to the benefit of family.

If a spouse acts as a surety in an undertaking, the contract does not redound to the benefit of the family, instead, it
would later dissipate the assets of the family. While the obligation was contracted during the marriage, yet the measure of
liability of the community of property is the benefit it would bring to the family. A guaranty agreement is without any
consideration. This is especially so if the spouse has abandoned the family. (BA Finance Corporation v. CA, G.R. No. L-
61464, May 28, 1988).
The conjugal partnership cannot possibly be benefitted when the husband binds himself, as guarantor, because
this act does not conserve or augment conjugal funds but instead threatens to dissipate them by unnecessary and
unwarranted risks to the partnership’s financial stability. When the husband assumes the obligations of a guarantor, the
presumption that he acts, as administrator, for the benefit of the conjugal partnership, is lost. (BA Finance Corporation v.
CA, G.R. No. 61464, May 28, 1988; Ting v. Villarin, G.R. No. 61754, August 17, 1989; Phil. Bank of Communications v. CA, et
al., G.R. No. 106858, September 5, 1997, 86 SCAD 599).
In Ayala Investment and Development Corp. v. CA, et al., G.R. No. 118305, February 12, 1998, 91 SCAD 663, it was
ruled that surety obligations cannot be categorized as falling within the context of obligations for the benefit of the
conjugal partnership. It is merely for the benefit of the principal debtor, not for the surety of his family. There is no
presumption if the husband enters into a surety or accommodation agreement that is for the benefit of the family. Proof
must be presented to establish benefit redounding to the conjugal partnership.
Mortgage of conjugal property without consent of spouse is void; effect of subsequent execution of a special
power of attorney authorizing mortgage.
As a rule, a spouse cannot sell, encumber or mortgage a CP or AC property without the consent of the other
spouse, otherwise, it is void. however, the subsequent execution of the SPA can be made to retroact to the date of the
execution of the real estate mortgage as it cures the defect of such act, because the execution of the SPA can be considered
as acceptance of the mortgage by the other spouse that perfected the contract or continuing offer.
Both Article 96 and Article 124 of the Family Code provide that the powers of the administration do not include
disposition or encumbrance without the written consent of the other spouse. Any disposition or encumbrance without the
written consent shall be void. However, both provisions also state that “the transaction shall be construed as a continuing
offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the
acceptance by the other spouse x x x before the offer is withdrawn by either or both offerors.” (Arturo Sarte Flores v. Sps.
Enrico & Edna Lindo, G.R. No. 183984, April 13, 2011).
Void marriage; property relationship is governed by the rule on co-ownership.

Article 105 of the Family Code explicitly mandates that the Family Code shall apply to conjugal partnerships
established before the Family Code without prejudice to vested rights already acquired under the Civil Code or other laws.
Thus, under the Family Code, if the properties are acquired during the marriage, the presumption is that they are conjugal.
Hence, the burden of proof is on the party claiming that they are not conjugal. This is counter-balanced by the requirement
that the properties must first be proven to have been acquired during the marriage before they are presumed conjugal.
(Villanueva v. Court of Appeals, 471 Phil. 394, 411 [2004]).
The applicable law, however, in so far as the liquidation of the conjugal partnership assets and liability is
concerned, is Article 129 of the Family Code in relation to Article 147 of the Family Code.
In a void marriage, as in those declared void under Article 36 of the Family Code, the property relations of the
parties during the period of cohabitation is governed either by Article 147 or Article 148 of the Family Code. Article 147 of
the Family Code applies to union of parties who are legally capacitated and not barred by any impediment to contract
marriage, but whose marriage is nonetheless void. (Virginia Ocampo v. Deogracio Ocampo, G.R. No. 198908, August 3,
2015, Peralta, J).
Article 162, F.C., not retroactive.

The residential house and lot of defendant was not constituted as a family home whether judicially or
extrajudicially under the Civil Code. It became a family home by operation of law only under Article 153 of the Family
Code. It is deemed constituted as a family home upon the effectivity of the Family Code on 3 August 1988, published in the
Manila Chronicle on August 4, 1987 (1988 being a leap year).
Defendant’s contention that it should be considered a family home from the time it was occupied by him and his
family in 1969 is not well-taken. Under Article 162 of the Family Code, “The provisions in this Chapter shall also govern

existing family residences insofar as said provisions are applicable.” It does not mean that Articles 152 and 1153 of said
Code have a retroactive effect such that all existing family residences are deemed to have been constituted as family homes
at the time of their occupation prior to the effectivity of the Family Code and are exempted from execution for the payment
of obligations incurred before the effectivity of the Family Code.
Article 162 simply means that all existing family residences at the time of the effectivity of the Family Code are
considered family homes and are prospectively entitled to the benefits accorded to a family home under the Family Code.
Article 162 does not state that the provisions of Chapter 2, Title V have a retroactive effect. (Modequillo v. Breva, G.R. No.
86355, May 31, 1990).
When family home cannot be partitioned.

Article 159, FC shields the family home from immediate partition despite the death of one or both spouses or of
the unmarried head of the family for a period of ten (10) years for as long as there is a minor beneficiary. The heirs cannot
partition the same unless the court finds a compelling reason. (Josef v. Santos, November 27, 2008). The purpose of the
law is to avert the disintegration of the family unit following the death of its head. The law preserves the family home as
the physical symbol of family love, security and unit by imposing the restrictions against extrajudicial or judicial partition.
The law applies even if the family home has passed by succession to the co-ownership of the heirs or even if has been
willed to anyone of them. (Arriola v. Arriola, January 28, 2008).
The family home’s exemption from execution must be set up and proved to the Sheriff before the sale of the
property at public auction.
The exemption of the family home from attachment, levy or forced sale must be invoked as soon as possible,
otherwise, it is considered as waived. The failure to invoke and prove that the house and lot was a family home is a waiver
of such defense or right. In Honrado v. CA, 512 Phil. 657 (2005), it was said that at no other time can the status of a
residential house as a family home can be set up and proved and its exemption from execution be claimed but before the
sale thereof at public auction:
The settled rule is that the right to exemption or forced sale under Article 153 of the Family Code
is a personal privilege granted to the judgment debtor and as such, it must be claimed not by the sheriff,
but by the debtor himself before the sale of the property at public auction. It is not sufficient that the
person claiming exemption merely alleges that such property is a family home. This claim for exemption
must be set up and proved to the Sheriff.”
Having failed to set up and prove to the sheriff the supposed exemption of the subject property before the sale
thereof at public action, they now are barred from raising the same. Failure to do so estop them from later claiming the
said exemption. (De Mesa v. Acero, et al., G.R. No. 185064, January 16, 2012, Reyes, J).
Effect if there are improvements on family home.

Any subsequent improvement or enlargement of the family home by the persons constituting it, its owners, or
any of its beneficiaries will still be exempt from execution, forced sale or attachment provided the following conditions
obtain: (a) the actual value of thse property at the time of its constitution has been determined to fall below the statutory
limit; and (b) the improvement or enlargement does not result in an increase in its value exceeding the statutory limit.
Otherwise, the family home can be the subject of a forced sale, and any amount above the statutory limit is applicable to
the obligations under Articles 155 and 160.
To warrant the execution sale of respondents’ family home under Article 160, petitioners needed to establish
these facts: (1) there was an increase in its actual value; (2) the increase resulted from voluntary improvements on the
property introduced by the persons constituting the family home, its owners or any of its beneficiaries; and (3) the
increased actual value exceeded the maximum allowed under Article 157. (Sps. Eulogio v. Paterno Bell, Sr., et al., G.R. No.
186322, July 8, 2015, Sereno, J).
Reason for the presumption of legitimacy of child

The law requires that every reasonable presumption be made in favour of legitimacy. The rationale of this rule as
explained in Cabatana v. CA, G.R. No. 124814, October 21, 2004, is that the presumption of legitimacy does not only flow
out of a declaration in the statute but based on the broad principles of natural justice and the supposed virtue of the
mother. It is grounded on the policy to protect the innocent offspring from the odium of illegitimacy. (Gerardo Concepcion
v. Court of Appeals, G.R. No. 123450, August 31, 2005).
Application of Art. 168, F.C.

If the marriage is terminated and the mother contracted another marriage within three hundred days after such
termination of the former marriage, these rules shall govern in the absence of proof to the contrary:
(1) A child born before one hundred eighty days after the solemnization of the subsequent marriage is considered to
have been conceived during the former marriage, provided it be born within three hundred days after the
termination of the former marriage;
(2) A child born after one hundred eighty days following the celebration of the subsequent marriage is considered to
have been conceived during such marriage, even though it be born within the three hundred days after the
termination of the former marriage. (Art. 168, F.C.)
Unsigned birth certificate not proof of filiation.

While it is true that the father did not sign the birth certificate, the placing of his name therein is incompetent
evidence of paternity, the rule does not apply if the father himself gave all the data regarding the child’s birth and caused
his name to be placed therein as the child’s father. Even if he did not sign the certificate, the same is still competent proof
that he is the father because he was the one who supplied the data to the nurse. If he failed to sign the birth certificate, it
was only because he left the hospital quite early (He is bound by the principle of estoppel in pais). (Ilano v. CA, G.R. No.
104376, February 23, 1994, 48 SCAD 432).

SSS Form indicating child as legitimate child is admission of legitimate filiation.
The filiation of illegitimate children, like legitimate children, is established by (1) the record of birth appearing in
the civil register or a final judgment; or (2) an admission of legitimate filiation in a public document or a private
handwritten instrument and signed by the parent concerned. In the absence thereof, filiation shall be proved by (1)
the open and continuous possession of the status of a legitimate child; or (2) any other means 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 acknowledgment of the child, and no
further court action is required. In fact, any authentic writing is treated like SSS form indicating a child as
illegitimate child not just a ground for compulsory recognition; it is in itself a voluntary recognition that does not
require a separate action for judicial approval. Where, instead, a claim for recognition is predicated on other evidence
merely tending to prove paternity, i.e., outside of a record of birth, a will, a statement before a court of record or an
authentic writing, judicial action within the applicable statute of limitations is essential in order to establish the child’s
acknowledgment. (Rodolfo Aguilar v. Edna G. Siasat, G.R. No. 200169, January 28, 2015, Del Castillo, J).
Effect if legitimacy is not impugned within the period; conclusive presumption of legitimacy.
There is perhaps no presumption of the law more firmly established and founded on sounder morality
and more convincing reason than the presumption that children born in wedlock are legitimate. This presumption
indeed becomes conclusive in the absence of proof that there is physical impossibility of access between the spouses
during the first 120 days of the 300 days which immediately precedes the birth of the child due to (a) the physical
incapacity of the husband to have sexual intercourse with his wife; (b) the fact that the husband and wife are living
separately in such a way that sexual intercourse is not possible; or (c) serious illness of the husband, which absolutely
prevents sexual intercourse. Quite remarkably, upon the expiration of the periods set forth in Article 170, and in proper
cases Article 171, of the Family Code (which took effect on 03 August 1988), the action to impugn the legitimacy of a child
would no longer be legally feasible and the status conferred by the presumption becomes fixed and unassailable. (Rodolfo
Aguilar v. Edna G. Siasat, G.R. No. 200169, January 28, 2015, Del Castillo, J).
Putative father of an illegitimate child was the informant of the live birth; he is considered the father; considered
as recognition.
The father had duly acknowledged the child as his illegitimate son. The birth certificate of the child appearing in
the Register of Births showed that the father had himself caused the registration of his birth, he being the informant of the
live birth to be registered. Considering that the putative father, had a direct hand in the preparation of the birth certificate,
reliance on the birth certificate of Anacleto as evidence of his paternity was fully warranted. “It is settled that a certificate
of live birth purportedly identifying the putative father is not competent evidence as to the issue of paternity, when there
is no showing that the putative father had a hand in the preparation of said certificates, and the Local Civil Registrar is
devoid of authority to record the paternity of an illegitimate child upon the information of a third person. Simply put, if the
alleged father did not intervene in the birth certificate, e.g., supplying the information himself, the inscription of his name
by the mother or doctor or registrar is null and void; the mere certificate by the registrar without the signature of the
father is not proof of voluntary acknowledgment on the latter’s part.” (Alejandra Arado Heirs, etc. v. Anacleto Alarcon, et
al., G.R. No. 163362, July 8, 2015, Bersamin, J, citing Jison v. Court of Appeals, G.R. No. 124853, February 24, 1998, 286
SCRA 495, 523).
Surname of illegitimate child.

Under Article 176 of the Family Code as amended by Republic Act (RA) No. 9255, which took effect on March 19,
2004, illegitimate children shall use the surname of their mother, unless their father recognizes their filiation, in which
case they may bear the father’s surname. In Wang vs. Cebu Civil Registrar, it was held that an illegitimate child, whose
filiation is not recognized by the father, bears only a given name and his mother’s surname. The name of the unrecognized
illegitimate child identifies him as such. It is only when said child is recognized that he may use his father’s surname,
reflecting his status as an acknowledged illegitimate child. (Alba, et al. vs. CA, et al., 465 SCRA 495, G.R. No. 164041 July 29,
2005)
Child has the right to decide whether to use or not to use surname of father.
Art. 176 gives illegitimate children the right to decide if they want to use the surname of their father or not. It is not the
father or the mother who is granted by law the right to dictate the surname of their illegitimate children. On its face, Art.
176, as amended, is free from ambiguity. And where there is no ambiguity, one must abide by its words. The use of the
word "may" in the provision readily shows that an acknowledged illegitimate child is under no compulsion to use the
surname of his illegitimate father. The word "may" is permissive and operates to confer discretion upon the illegitimate
children. On the matter of children’s surnames, the use of the father’s surname does not serve the best interest of the
minor child. Indeed, the rule regarding the use of a child’s surname is second only to the rule requiring that the child be
placed in the best possible situation considering his circumstances. (GRACE M. GRANDE v. PATRICIO T. ANTONIO, G.R. No.
206248, February 18, 2014, Velasco, Jr., J.)
Judgment involving the custody of a child not res judicata to any future action of the same nature.
The order granting provisional custody to one of the spouses does not disregard the res judicata rule. The matter
of custody is not permanent and unalterable and can always be re-examined and adjusted (Espiritu v. CA, G.R. No. 115640,
March 15, 1995, 242 SCRA 362). In Dacasin v. Dacasin, G.R. No. 168785, February 5, 2010, 611 SCRA 657, it was ruled that
a custody agreement can never be regarded as “permanent and unbending,” the simple reason being that the situation of
the parents and even of the child can change, such that sticking to the agreed arrangement would no longer be to the
latter’s best interest. In a very real sense, then, a judgment involving the custody of a minor child cannot be accorded the
force and effect of res judicata.
The matter of custody is not permanent and unalterable. If the parent who was given custody suffers a future
character change and becomes unfit, the matter of custody can always be re-examined and adjusted x x x. To be sure, the
welfare, the best interests, the benefit, and the good of the child must be determined as of the time that either parent is

chosen to be the custodian. (Espiritu v. CA, supra.; Geoffrey Beckett v. Judge Olegario Sarmiento, Jr., A.M. No. RTJ-12-2326,
January 10, 2013).
No separation from mother child below 7; exception.

In disputes concerning post-separation custody over a minor, the well-settled rule is that no child under seven (7)
years of age shall be separated from the mother, unless the court finds compelling reasons to order otherwise. (Art. 23,
F.C.). And if already over 7 years of age, the child’s choice as to which of his parents he prefers to be under custody shall be
respected, unless the parent chosen proves to be unfit. In Perez v. Court of Appeals, G.R. No. 118870, March 29, 1996, 255
SCRA 661, it was held that in custody cases, the foremost consideration is always the welfare and best interest of the child,
as reflected in no less than the U.N. Convention on the Rights of the Child which provides that “[i]n all actions concerning
children, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or
legislative bodies, the best interests of the child shall be a primary consideration.” (Article 3, number 1, CONVENTION ON
THE RIGHTS OF THE CHILD, Adopted by the General Assembly of the United Nations on November 20, 1989).
Code Commission’s reason.

The general rule that children under seven years of age shall not be separated from their mother finds its raison
d’etre in the basic need of minor children for their mother’s loving care. In explaining the rationale for Article 363 of the
Civil Code, the Code of Commission stressed thus:
“The general rule is recommended in order to avoid a tragedy where a mother has a seen her
baby torn away from her. No man can sound the deep sorrows of a mother who is deprived of her child
of tender age. The exception allowed by the rule has to be for ‘compelling reasons’ for the good of the
child: those cases must indeed be rare, if the mother’s heart is not to be unduly hurt. If she erred, as in
cases of adultery, the penalty of imprisonment and the (relative) divorce decree will ordinarily be
sufficient punishment for her. Moreover, her moral dereliction will not have any effect upon the baby
who is as yet unable to understand the situation.” (Report of the Code Commission, p.12)
In Lacson vs. San Jose-Lacson, 133 Phil. 884 (1968), the Court held that the use of “shall” in Article 363 of the Civil
Code and the observations made by the Code Commission underscore the mandatory character of the word. Holding in
that case that it was a mistake to deprive the mother of custody of her two children, both then below the age of seven, the
Court stressed:
“Article 363 prohibits in no uncertain terms the separation of a mother and her child below
seven years, unless such a separation is grounded upon compelling reasons as determined by a court.”
In like manner, the word “shall” in Article 213 of the Family Code and Section 6 of the Rule 99 of the Rules of
Court has been held to connote a mandatory character. Article 213 and Rule 99 similarly contemplate a situation in which
the parents of the minor are married to each other, but are separated by virtue of either a decree of legal separation or a de
facto separation (Briones vs. Miguel, G.R. No. 156343, October 18, 2004). In the present case, the parents are living
separately in fact.(Pablo-Gualberto vs. Gualberto V, 461 SCRA 450, G.R. Nos. 154994 and 156254, June 28, 2005)
ADOPTION
Nature of adoption.
Adoption is a juridical act that creates between two persons certain relations, purely civil, of paternity and
filiation. The adopted becomes a legitimate child of the adopter with reciprocal rights and obligations arising from that
relationship. Consequently, the child has the right to bear the surname of the adopter, receive support and to inherit. (Art.
189, Family Code).
The relationship established by adoption is limited to the adopting parents and does not extend to their other
relatives, except as expressly provided by law. Thus, the adopted child cannot be considered as a relative of the ascendants
and collaterals of the adopting parents, nor of the legitimate children which they may have after the adoption, except that
the law imposes certain impediments to marriage by reason of adoption. Neither are the children of the adopted
considered descendants of the adopter. (Santos, Jr. v. Republic, 21 SCRA 379). Hence, no relationship is created between
the adopted and the collaterals of the adopting parents. As a consequence, the adopted is an heir of the adopters, but not of
the relatives of the adopter. (Teotico v. Del Val, 13 SCRA 406).
Middle name of an adopted is surname of biological mother; reason.

First, it is necessary to preserve and maintain the child’s filiation with her natural mother becase under Article
189 of the Family Code, she remains to be an intestate heir of the latter. Thus, to prevent any confusion and needless
hardship in the future, her relationship or proof of that relationship with her natural mother should be maintained.
Second, there is no law prohibiting the adopted to use the surname of her natural mother as her middle name.
What the law does not prohibit, it allows.
Last, it is customary for every Filipino to have a middle name, which is ordinarily the surname of the mother. This
custom has been recognized by the Civil Code and Family Code. In fact, the Family Law Committees agreed that the initial
or surname of the mother should immediately precede the surname of the father so that the second name, if any, will be
before the surname of the mother. (In the Matter of Adoption of Stephanie Nathy Astorga Garcia, Honorato Catindig,
Petititioner, G.R. No. 148311, March 31, 2005).
Welfare of child is of utmost importance.

The paramount consideration in matters of custody of a child is the welfare and well-being of the child. (Silva v.
CA, 275 SCRA 609; Cervantes v. Fajardo, 169 SCRA 575). Strong bias is created in favour of the mother. The reason is to
avoid a tragedy where a mother has seen her baby torn away from her. No man can sound the deep sorrow of a mother
who is deprived of her child of tender age. The exception is when there is a competing reason or reasons like neglect,
abandonment, unemployment and immorality, habitual drunkenness, drug addiction, maltreatment of the child, insanity,
and affliction with a communicable illness. (Perez v. CA, 255 SCRA 661). In this case, the father was given temporary

custody as the mother, a nurse, left for the USA. If the child however is 7 years and above, he can make a choice but not
binding upon the courts. (See Santos v. CA; Tonog v. CA, et al., G.R. No. 122906, February 6, 2002; Agnes Gamboa-Hirsch v.
CA, et al., G.R. No. 174485, July 11, 2007; Malto v. People, G.R. No. 164733, September 27, 2007).
Grounds for Change of Name (RA 9048)

The petition for change of first or nickname may be allowed in any of the following cases:
1. The petitioner finds the first name or nickname to be ridiculous, tainted with dishonor or extremely difficult to
write or pronounce;
2. The new first name or nickname has been habitually and continuously used by the petitioner and he has been
publicly known by that first name or nickname in the community; or
3. The change will avoid confusion. (Sec. 4, RA 9048)
Sex reassignment not a ground for change of name.

RA 9048 does not sanction a change of first name on the ground of sex reassignment. Rather than avoiding
confusion, changing petitioner’s first name for his declared purpose may only create grave complications in the civil
registry and the public interest.
Before a person can legally change his given name, he must present proper or reasonable cause or any
compelling reason justifying such chance. In addition, he must show that he will be prejudiced by the use of his true and
official name. In this case, he failed to show, or even allege, any prejudice that he might suffer as a result of using his true
and official name. In this case, he failed to show, or even allege, any prejudice that he might suffer as a result of using his
true and official name.
Under RA 9048, a correction in the civil registry involving the change of sex is not a mere clerical or typographical
error. It is a substantial change for which the applicable procedure is Rule 108 of the Rules of Court. Furthermore, there is
no special law in the Philippines governing sex reassignment and its effects. (Rommel Jacinto Dantes Silverio v. Republic,
G.R. No. 174689, October 22, 2007).
PROPERTY
Mortgage of building independently of the land.

While a mortgage of a parcel of land necessarily includes the improvements thereon in the absence of a stipulation
on the improvement thereon like a building, still, a building by itself may be mortgaged apart from the land on which it has
been built. Such mortgage would still be a real estate mortgage for the building would still be considered immovable even
if dealt with separately and apart from the land (Leung Yee vs. Strong Machinery Co., 37 Phil. 644). The real estate
mortgage over machineries and equipments is even in accord with the classification of such properties by the Civil Code as
immovable property. (Art. 415, NCC; Star Two [SVP-AMC] Inc. v. Paper City Corp. of the Philippines, G.R. No. 169211, March
6, 2013)
Machinery is movable; exception.

Machinery is as a rule movable. However, if it was placed by the owner on his land or building to respond to his
needs and industry it is considered as immovable by destination. The machinery is a movable property if it was placed by
the tenant, not by the owner. Immobilization by destination cannot be made by one who is not the owner of the land.
However, if there is an agreement in the lease contract that the machinery shall be owned by the lessor after the expiration
of the contract, it is considered as an immovable because the lessee becomes the agent of the lessor. (Davao Sawmills Co. v.
Castillo, 61 Phil. 709).
Builder in good faith; owner makes the choice.

The landowner can choose between appropriating the building by paying the proper indemnity or obliging the
builder to pay the price of the land, unless its value is considerably more than that of the structures, in which case the
builder in good faith shall pay reasonable rent. If the parties cannot come to terms over the conditions of the lease, the
court must fix the terms thereof.
The choice belongs to the owner of the land, a rule that accords with the principle of accession, i.e., that the
accessory follows the principal and not the other way around. Even as the option lies with the landowner, the grant to him,
nevertheless, is preclusive. (PNB v. De Jesus, 411 SCRA 557 [2003]). The landowner cannot refuse to exercise either option
and compel instead the owner of the building to remove it from the land. (Rosales, et al. v. Castellfort, et al., G.R. No.
157044, October 5, 2005 citing Technogas Phils. Mfg. Corp. v. CA, 268 SCRA 5 [1997]).
Reasons for the law

The raison d’etre for the law is that, where the builder, planter or sower has acted in good faith, a conflict of rights
arises between the owners, and it becomes necessary to protect the owner of the improvements without causing injustice
to the owner of the land. In view of the impracticability of creating a state of forced co-ownership, the law has provided a
just solution by giving the owner of the land the option to acquire the improvements after payment of the proper
indemnity, or to oblige the builder or planter to pay for the land and the sower the proper rent. He cannot refuse to
exercise the option, because his right is older, and because, by principle of accession, he is entitled to the ownership of the
accessory thing (Depra v. Dumlao, 136 SCRA 475 [1985]).
Intent of Art. 448, NCC.

The primary intent of Article 448 is to avoid a state of forced co-ownership and that the parties, including the two
courts below, in the main agree that Articles 448 an 546 of the Civil Code are applicable and indemnity for the
improvements may be paid although they differ as to the basis of the indemnity.
The objective of Article 546 of the Civil Code is to administer justice between the parties involved. In this regard,
it has been ruled in Rivera v. Roman Catholic Archbishop of Manila, 40 Phil. 717, that the said provision was formulated in
trying to adjust the rights of the owner and possessor in good faith of a piece of land, to administer complete justice to

both of them in such a way as neither one nor the other may enrich landowner of that which does not belong to him.
Guided by this precept, it is therefore the current market value of the improvements which should be made in the basis of
reimbursement. A contrary ruling would unjustly enrich the landowner who would otherwise be allowed to acquire a
highly valued income yielding four-unit apartment building for a measly amount. Consequently, the parties should
therefore be allowed to adduce evidence on the present market value of the apartment building upon which the trial court
should base its finding as to the amount of reimbursement to be paid by the landowner.
Lessee not a builder in good faith.

Lessees are not builders in good faith. They came into possession of the lot by virtue of a contract of lease
executed by petitioner’s mother in their favor. They are then estopped to deny their landlord’s title, or to assert a better
title not only in themselves, but also in some third person while they remain in possession of the leased premises and until
they surrender possession to the landlord. (Munar v. CA, 56 SCAD 787, 230 SCRA 372). This estoppel applies even though
the lessor had to 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. (49 Am. Jur. 122, 152; Feliciano v. Sps. Zaldivar, G.R. No. 162593,
September 26, 2009; Federico Geminiano, et al. v. CA, et al., G.R. No. 120303, July 24, 1996).
Being mere lessees, they knew that their occupation of the premises would continue only for the life of the lease
plainly, they cannot be considered as possessors nor builders in good faith. (Racaza v. Susana Realty, Inc., 18 SCRA 1172;
Vda. de Bacaling v. Laguna, 54 SCRA 243; Santos v. CA, 221 SCRA 42; Garbito v. CA, G.R. No. 77976, November 24, 1988).
Nature of and requisites of quieting of title.

Quieting of title is a common law remedy for the removal of any cloud upon, doubt, or uncertainty affecting title
to real property. Whenever there is a cloud on title to real property or any interest in real property by reason of any
instrument, record, claim, encumbrance, or proceeding that is apparently valid or effective, but is, in truth and in fact,
invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to remove
such cloud or to quiet the title. In such action, the competent court is tasked to determine the respective rights of the
complainant and the other claimants, not only to place things in their proper places, and make the claimant, who has no
rights to said immovable, respect and not disturb the one so entitled, but also for the benefit of both, so that whoever has
the right will see every cloud of doubt over the property dissipated, and he can thereafter fearlessly introduce any desired
improvements, as well as use, and even abuse the property.
In order that an action for quieting of title may prosper, two requisites must concur: (1) the plaintiff or
complainant has a legal or equitable title or interest in the real property subject of the action; and (2) the deed, claim,
encumbrance, or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid or inoperative
despite its prima facie appearance of validity or legal efficacy.
xxxx
Thus, the cloud on title consists of: (1) any instrument, record, claim, encumbrance or proceeding; (2) which is
apparently valid or effective; (3) but is in truth and in fact invalid, ineffective, voidable, or unenforceable; and (4) may be
prejudicial to the title sought to be quieted. x x x. (Phil-Ville Development and Housing Corporation v. Bonifacio, G.R. No.
167391, June 8, 2011, 651 SCRA 327, 341-347).
Co-owner cannot acquire by prescription.

The possession of a co-owner is like that of a trustee and shall not be regarded adverse to the co-owners but in
fact as beneficial to all of them. Acts which may be considered adverse to strangers may not be considered adverse insofar
as co-owners are concerned. A mere silent possession by a co-owner, his receipt of rents, fruits or profits from the
property, the erection of buildings an fences, and the planting of trees thereon, and the payment of land taxes, cannot serve
as proof of exclusive ownership, if it is not borne out by clear and convincing evidence that he exercised acts of possession
which unequivocably constituted an ouster or deprivation of the right of the other co-owners. (Aguirre, et al. v. CA, et al.,
G.R. no. 122249, January 29, 2004 citing Salvador v. CA, 243 SCRA 329; Carmen Fangonil-Herrera v. Tomas Fangonil, et al.,
G.R. No. 169359, August 28, 2007).
When prescription runs against co-owners.

Prescription as a rule does not run against co-owners and co-heirs as long as the co-ownership is expressly or
impliedly recognized.
The exception is when there is repudiation, provided that the following requisites are present;
1. He must make known to the others that he is repudiating the co-ownership and claiming complete ownership of
the entire property. (Trinidad v. CA, et al., G.R. No. 118904, April 20, 1998, 93 SCAD 610).
2. Evidence of repudiation and knowledge of others is clear and convincing.
3. There is open, continuous, peaceful, public and adverse possession for a period of time required under the law.
(Santos v. Heirs of Crisostomo, 41 Phil. 342; Galvez, et al. v. CA, et al., G.R. No. 157954, March 26, 2006).
Partition is imprescriptible; exception.

The contention that partition is already barred by res judicata since the first case for partition was dismissed for
failure to prosecute is not correct.
The dismissal with prejudice under Rule 17, Sec. 3 of the Rules of Court cannot defeat the right of a co-owner to
ask for partition at any time, provided that there is no actual adjudication of ownership of shares yet. The rule is so
because no co-owner shall be obliged to remain in the co-ownership. Each co-owner may demand at any time the partition
of the thing owned in common, insofar as his share is concerned.
The law generally does not favor the retention of co-ownership as a property relation, and is interested instead in
ascertaining the co-owners’ specific shares so as to prevent the allocation of portions to remain perpetually in limbo. Thus,
the law provides that each co-owner may demand at any time the partition of the thing owned in common. (Quintos, et al.
v. Nicolas, et al., G.R. No. 210252, June 16, 2014, Velasco, J).
Between dismissal with prejudice under Rule 17, Sec. 3 and the right granted to co-owners under Art. 494 of the
Civil Code, the latter must prevail. To construe otherwise would diminish the substantive right of a co-owner through the

promulgation of procedural rules. Such a construction is not sanctioned by the principle, that a substantive law cannot be
amended by a procedural rule. (Philippine National Bank v. Asuncion, 170 Phil. 356 [1977]).
Thus, for the Rules to be consistent with statutory provisions, it was held that Art. 494, NCC is an exception to
Rule 17, Sec. 3 of the Rules of Court to the effect that even if the order of dismissal for failure to prosecute is silent on
whether or not it is wnhith prejudice, it shall be deemed to be without prejudice.
Distinguish occupation from possession.

Occupation and possession are distinguished, as follows:
1. Occupation is a mode of acquiring ownership while possession is not;
2. Occupation itself, when proper, confers ownership; but possession does not by itself give rise to ownership
(II Tolentino, Civil Code, 1992 ed., p. 489).
3. Only corporeal things can be the object of occupation; whereas, not only things but likewise rights can be the
object of possession;
4. A parcel of land cannot be the object of occupation while the same can be the object of possession (Art. 714,
NCC);
5. Occupation can take place only with respect to property without an owner; while possession can refer to all
kinds of property, whether with or without an owner (II Tolentino, Civil Code, 1992, ed., p. 489).
Concept of tacking of possession.

Under the law, possession of hereditary property is deemed transmitted to the heir without interruption and
upon the moment of death of the decedent if inheritance is accepted. In the case, it was accepted since he continued
possessing the land. This is so because an heir’s possession is tacked to the possession of his father. In the computation of
the time necessary for prescription, the present possessor may complete the period for prescription by tacking his
possession to that of his grantor or predecessor-in-interest. (Art. 1138; 533, NCC)
Remedy of owner of movable if unlawfully deprived.

Under the law, one who has lost any movable or has been unlawfully deprived thereof, may recover it from the
person in possession of the same. (Art. 559, NCC)
The term or phrase “unlawfully deprived’’ extends to all cases where there has been no valid transmission of
ownership, including a depositary or a lessee who has sold the same. (Dizon vs. Suntay, 47 SCRA 160; Ledesma vs. CA, et
al., G.R. No. 86051, Sept. 1, 1992; EDCA Publishing and Distributing Corp. vs. Santos, 184 SCRA 614 [1990])
Concept of “unlawfully deprived.”

The term or phrase “unlawfully deprived” extends to all cases where there has been no valid transmission of
ownership, including a depositary or a lessee who has sold the same. (Dizon v. Suntay, 47 SCRA 160; Ledesma v. CA, et al.,
G.R. No. 86051, September 1, 1992; EDCA Publishing and Distributing Corp. v. Santos, 184 SCRA 614 [1990]).
If there was a perfected unconditional contract of sale between the seller and the buyer and the former
voluntarily caused the transfer, title thereto was acquired. The subsequent dishonor of the check merely amounted to a
failure of consideration which does not render the contract of sale void, but merely allows the prejudiced party to sue for
specific performance or rescission of the contract and to prosecute the impostor for estafa under Art. 315, RPC. (Ledesma
v. CA, et al., G.R. No. 86051, September 1, 1992).
Extinguishment of usufruct.
Usufruct may be deemed terminated or extinguished by the occurrence of the resolutory conditions provided in
the title creating the usufruct. The deterioration of the relations of the kins to almost irretrievable level is a good reason
fo/r the termination of the usufruct. This is aside from the provisions of Article 603, NCC. (Moralidad v. Sps. Pernes, G.R.
No. 152809, August 3, 2009).
By express provision of law as usufructuary he does not have the right to reimbursement for the improvements
he may have introduced on the property. Under the law the usufructuary may make on the property held in usufruct such
useful improvements for mere pleasure as he may deem proper, provided he does not alter its form or substance; but he
shall have no right to be indemnified. He may, however, remove such improvements, should it be possible to do so without
damage to the property. (Art. 579, NCC).
The usufructuary may set off the improvements he may have made on the property against any damage to the
same. (Art. 580, NCC).
If the rule on reimbursement or indemnify were otherwise, then the usufructuary might improve the owner out
of his property. He may, however, remove or destroy the improvements they may have introduced thereon without
damaging the property.
Voluntary easement may not be extinguished by an action in court.

The opening of an adequate outlet to a highway can extinguish only legal or compulsory easements, not
voluntary easements. The fact that an easement by grant may have also qualified as an easement of necessity does not
detract from its permanency as a property right, which survives the termination of the necessity. (La Vista Assn. Inc. v. CA,
G.R. No. 95252, September 5, 1997, 287 SCRA 498). A voluntary easement of right of way, like any other contract, could be
extinguished only by mutual agreement or by renunciation of the owner of the dominant estate. (La Vista case; Unisource
Commercial & Dev. Corp. v. Chung, et al., G.R. No. 173252, July 17, 2009).
Agreement on easement binding upon the parties and their heirs.

That the heirs or assigns of the parties were not mentioned in the annotation does not mean that it is not binding
on them. Again, a voluntary easement of right of way is like any other contract. As such, it is generally effective between
the parties, their heirs and assigns, 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. (Art. 1311, NCC). Petitioner cites City of Manila v.
Entote, L-24776, June 28, 1974, 57 SCRA 497) in justifying that the easement should bind only the parties mentioned
therein and exclude those not so mentioned. However, that case is inapplicable since the issue therein was whether the

easement was intended not only for the benefit of the owners of the dominant estate but of the community and the public
at large. In interpreting the easement, the clause “any and all other persons whomsoever” in the easement embraces only
“those who are privy to the owners of the dominant estate and excludes “the indiscriminate public from the enjoyment of
the right-of-way easement.” (Unisource Commercial & Dev. Corp. v. Chung, et al., G.R. No. 173252, July 17, 2009).
Permanent easement; survives termination of necessity.

When the easement in this case was established, the parties unequivocally made provision for its observance by
all who, in the future might succeed them in dominion. So, it is permanent in character, which was annotated on each and
all of the transfer certificates of title.
Even assuming that with the demolition of the house by owner, the necessity for the passageway ceased still such
fact does not detract from its permanency as a property right which survives the termination of the necessity.
It is true that the private respondent is the owner of the portion on which the right of way had been established
and that an easement cannot impair ownership, but the petitioner is not claiming the easement or any part of the property
as its own, rather, it is seeing to have private respondent respect the easements already existing thereon. (Benedicto v. CA,
25 SCRA 145).
Reckoning period in computing the acquisition by prescription of a positive and a negative easement.
(1) In a positive easement, the period shall be computed from the day the owner of the dominant estate or the person
who made use of it commenced to exercise it upon the servient estate.
(2) In a negative easement, the period shall be computed from the day the dominant estate forbade by an instrument
acknowledged before a notary public, the owner of the servient estate from exercising an act which would be
lawful without the easement. (Art. 621, NCC)
Effect of existence of apparent sign of easement.

Under the provision of Article 624 of the New Civil Code, the existence of an apparent sign of easement between
two estates, established or maintained by the owner of both, shall be considered, should either of them be alienated, as a
title in order that the easement may continue actively and passively, unless, at the time the ownership of the two estates is
divided, the contrary should be provided in the title of conveyance of either of them, or the sign aforesaid should be
removed before the execution of the deed. This provision shall also apply in case of the division of a thing owned in
common by two or more persons.
Example of this rule is a case where there is an apparent sign of the existence of an easement of light and view
involving two estates originally owned by one and the same person. This is indicated by the doors and windows of the
house in the southern portion overlooking the northern portion. The sign was established by the original owner. The
southern portion was subsequently alienated to Y and the northern portion to Z. Furthermore, nothing contrary to the
easement was stated in the deed of conveyance; neither was the sign removed. Therefore, the easement of light and view
shall now be protected by law. Z cannot construct his building unless he complies with the three-meter rule as provided by
law (See Gargantos vs. Tan Yanon, 108 Phil. 888). Reason: Easement is inseparable from the estate to which it belongs.
Easement to be established at point least prejudicial.

Where there are several tenements surrounding the dominant estate, and the easement may be established on
any of them, the one where the way is shortest and will cause the least damage should be chosen. The conditions of “least
damage” and “shortest distance” are both established in one tenement, which is the petitioner’s property. (Sta. Maria v. CA,
et al., G.R. No. 127549, January 28, 1998, 91 SCA 65; Alicia Reyes v. Sps. Valentin, G.R. No. 194488, February 11, 2015).
There must be proof that the easement must be established at a point least prejudicial to the servient estate. If the
servient estate is only 164 meters, an improvident imposition of the easement on the lot may unjustly deprive the owner
of the optimum use and enjoyment of the property considering that its already small area will be reduced further by the
easement. Worst, it may even render the property useless for the purpose useless for which it is intended. (Cristobal, et al.
v. CA, et al., G.R. No. 125339, June 22, 1998, 95 SCAD 44).
Requisites of easement of right of way.

The owners of the dominant estate, may validly claim a compulsory right of way only after they had established
the four requisites under Arts. 649 and 650 of the NCC, to wit:
1. The dominant estate is surrounded by the other immovables and is without adequate outlet to a public highway;
2. After payment of proper indemnity;
3. The isolation was not due to the proprietor’s own acts; and
4. The right of way claimed is at a point least prejudicial to the servient estate. (La Vista Assn., Inc. v. CA, et al., G.R.
No. 95252, September 5, 1997, 86 SCAD 551; Cristobal, et al. v. CA, et al., G.R. No. 125339, June 23, 1998, 95 SCAD
44).
DONATION
Distinctions between donations inter vivos and donations mortis causa.

a. Donations mortis causa take effect upon the death of the donor, while donations inter vivos take effect
immediately or during the lifetime of the donor;
b. In donations mortis causa, ownership is conveyed upon the death of the donor, while in donations inter vivos,
ownership is conveyed before his death;
c. In donations mortis causa, it is void if the transferor survives the transferees, while in donations inter vivos, it is
valid if the transferor survives the transferee;
d. Donations mortis causa are basically revocable; donations inter vivos are not revocable as a rule;
e. Donations mortis causa require compliance with the requirements of a will; donations inter vivos merely require
compliance with Arts. 748 and 749, NCC.

Theory of Cognition.
The donation, following the theory of cognition (Art. 1319, CC), is perfected only upon the moment the donor
knows of the acceptance by the donee. Furthermore, if the acceptance is made in a separate instrument, the donor shall be
notified in an authentic form, and this step shall be noted in both instruments.
Acceptance of the donation by the donee is, therefore, indispensable; its absence makes the donation null and
void (Peña vs. Court of Appeals, 193 SCRA 717 [1991]).
It has been said that:
“x x x Title to immovable property does not pass from the donor to the donee by virtue of a deed
of donation until and unless it has been accepted in a public instrument and the donor duly notified
thereof. The acceptance may be made in the very same instrument of donation. If the acceptance does not
appear in the same document, it must be made in another. Solemn words are not necessary; it is sufficient
if it shows the intention to accept. But in this case it is necessary that formal notice thereof be given to the
donor, and the fact that due notice has been given must be noted in both instruments (that containing the
offer to donate and that showing the acceptance). Then and only then is the donation perfected. If the
instrument of donation has been recorded in the registry of property, the instrument that shows the
acceptance should also be recorded. Where the deed of donation fails to show the acceptance, or where
the formal notice of the acceptance, made in a separate instrument, is either not given to the donor or else
not noted in the deed of donation and in the separate acceptance, the donation is null and void.” (Lagazo
vs. Court of Appeals, 287 SCRA 18, G.R. No. 112796, March 5, 1998; Sumipat vs. Banga, G.R. No. 155810,
August 13, 2004; JLT Agro, Inc. vs. Balansag, 453 SCRA 211 [2005])
Void donation.
If the mother of minors signed a deed of donation of properties belonging to her children, the same is void. The
legal maxim nemo dat quod non habet applies to this instance as Nakila only has usufructuary right equal to the share of her
children. (SOFIA PENDEJITO VDA. DE MONTEROSO, et al. vs. COURT OF APPEALS, et al., G.R. No. 113199, April 30, 2008, J.
Velasco, Jr.)
Donation of movable must be in writing; subject of donation is money; effect.

The contract is one of loan, not a donation if there was a contract to sell over a property owned by the GSIS but
due to failure to pay the amortization she sought for financial assistance from her brother who paid the balance. The
contention that there was payment out of generosity, hence there was a donation is not correct.
There was no compliance with the formal requisite that it be in writing, hence, there can be no donation. She never
presented a copy of the written agreement evidencing the same. In Moreno-Lentfer v. Wolff, 484 Phil. 552 [2004], it was
said that a donation must comply with the mandatory formal requirements set forth by law for its validity. When the
subject of donation is purchase money, Article 748 of the NCC is applicable. Accordingly, the donation of money as well as
its acceptance should be in writing. Otherwise, the donation is invalid for non-compliance with the formal requisite
prescribed by law. (Carinan v. Sps. Cueto, G.R. No. 198636, October 8, 2014, Reyes, J).
Characteristics of donation mortis causa.

In Austria-Magat v. Court of Appeals, 426 SCRA 263 (2002), it was held that “irrevocability” is a quality absolutely
incompatible with the idea of conveyances mortis causa, where “revocability” is precisely the essence of the act. A
donation mortis causa has the following characteristics:
1. It conveys no title or ownership to the transferee before the death of the transferor; or, what
amounts to the same thing, that the transferor should retain the ownership (full or naked) and
control of the property while alive;
2. That before his death, the transfer should be revocable by the transferor at will, ad nutum; but
revocability may be provided for indirectly by means of a reserved power in the donor to dispose of
the properties conveyed; and
3. That the transfer should be void if the transferor should survive the transferee.
(Aluad v. Aluad, G.R. No. 176943, October 17, 2008, 569 SCRA 697; Del Rosario v. Ferrer, et al., G.R.
No. 187056, September 20, 2010).
Since the donation in this case was one made inter vivos, it was immediately operative and final. The reason is
that such kind of donation is deemed perfected from the moment the donor learned of the donee’s acceptance of the
donation. The acceptance makes the donee the absolute owner of the property donated. (Heirs of Sevilla v. Sevilla, 450
SCRA 598 (2003)).
Donation of real property must be in a public instrument.

There is no question that the donation in question is invalid because it involves an immovable property and the
donation was not made in a public document as required by Article 633 of the old Civil Code (now Art. 749, NCC), but it
does not follow that said donation may not serve as basis of acquisitive prescription when on the strength thereof the
donee has taken possession of the property adversely and in the concept of an owner. (Espique v. Espique, 99 Phil. 448
[1956]; Pensader v. Pensader, 47 Phil. 959 [1949]).
After the donation was made, the donee has been in adverse, continuous, open, public, peaceful and
uninterrupted, and in the concept of an owner. Thus, by virtue of acquisitive prescription, the donee became the owner
even not in the form prescribed by law. (Bautista, et als. V. Poblete, et al., G.R. No. 141007, September 13, 2005).
Grounds for revocation of donation by reason of ingratitude.

They are:
(a) When the donee committed an offense against the person, honor or property of the donor, or of his wife or
children under his parental authority;
(b) When the donee imputes to the donor any criminal offense, or any act involving moral turpitude, even though
he should prove it, unless the crime itself is committed against him, his wife or children under his authority;

(c) When the donee unduly refuses him support when the donee is legally or morally bound to give support to
the donor. (Art. 765)
Effect if a donation provides for automatic revocation.

By the very expressed provision in the deed of donation itself that the violation of the condition thereof would
render ipso facto null and void the deed of donation, there would be no legal necessity anymore to have the donation
judicially declared null and void for the reason that the very deed of donation itself declares it so. For were it otherwise,
and that the donors and the donee contemplated a court action during the execution of the deed of donation to have the
donation judicially rescinded or declared null and void should the condition be violated, then the phrase reading would
render ipso facto null and void would not appear in the deed of donation.” (Roman Catholic Archbishop of Manila, et al. v.
CA, et al., G.R. No. 77425 and Roman Catholic Archbishop of Manila, et al. v. CA, G.R. No. 77450, June 30, 1991).
NUISANCE
A structure if declared illegal does not mean it is a nuisance per se.

The fact that the owner of a building was given an exemption from constructing an arcade is an indication that the
wing walls of the building are not nuisance per se. The wing walls do not per se immediately and adversely affect the safety
of persons and property. The fact that an ordinance may declare a structure illegal does not necessarily make that
structure a nuisance.
Article 694 of the Civil Code defines nuisance as any act, omission, establishment, business, condition or property,
or anything else that (1) injures or endangers the health or safety of others; (2) annoys or offends the senses; (3) shocks,
defies or disregards decency or morality; (4) obstructs or interferes with the free passage of any public highway or street,
or any body of water; or, (5) hinders or impairs the use of property. A nuisance may be per se or per accidens. A
nuisance per se is that which affects the immediate safety of persons and property and may summarily be abated under
the undefined law of necessity. (Tolentino v. Bustamante, G.R. No. 182567, July 13, 2009, 592 SCRA 552; Tayabas v. People,
517 SCRA 448 (2007)).
Cold storage is not nuisance per se.

The business of a cold storage or ice plant is a legitimate calling, trade or business, hence, it is not a nuisance per
se. It is legitimate industry, beneficial to the people and conducive to their health and comfort. A nuisance is, according to
Blackstone, anything that worketh hurt, inconvenience or damage. The Supreme Court went further by saying that
nuisance arises from pursuing particular trades or industries in populous neighbourhoods; from acts of public indecency;
keeping disorderly houses; houses of ill-fame, and gambling houses. (Salao v. Santos, 7 Phil. 547; Iloilo Ice Cold Storage v.
Iloilo, 24 Phil. 461; AC Enteprises Inc. v. Frabelle Properties, Corp., G.R. No. 166744, November 2, 2006).
Swimming pool not an attractive nuisance.

As a general rule, a swimming pool is not an attractive nuisance. Not all bodies of water can be considered as
attractive nuisance. Hence, under American Law:
“The attractive nuisance doctrine, generally, is not applicable to bodies of water, artificial as well
as natural, in the absence of some unusual condition or artificial feature other than the mere water and its
location.”
“There are numerous cases in which the attractive nuisance doctrine has been held not to be
applicable to ponds or reservoirs, pools of water, streams, canals, dams, ditches, culverts, drains, cesspools
or sewer pools x x x.” (C.J.S., p. 476, et seq., citing decisions of California, Georgia, Idaho, Illinois, Kansas,
Iowa, Louisiana, Mississippi, Missouri, Montana, Oklahoma, Pennsylvania, Tennessee, Texas, Nebraska,
Wisconsin)
The reason why a swimming pool or a pond or a reservoir of water is not considered an attractive nuisance was
lucidly explained by the Indiana Appellate Court as follows:
“Nature has created streams, lakes and pools which attract children. Lurking in their waters is
always the danger of drowning. Against this danger, children are early instructed so that they are
sufficiently presumed to know the danger. And if the owner of private property creates an artificial pool
on his own property, merely duplicating the work of nature without adding any new danger, x x x he is not
liable because of having created an attractive nuisance.” (Anderson vs. Reith-Riley Const. Co., 44 N.E. 2d,
184, 185; 112 Ind. App., 170; Hidalgo Enterprises, Inc. vs. Balandan, et al.,supra, pp. 490-491)
SUCCESSION
Will of a foreigner can be probated in the Philippines.

Our laws do not prohibit the probate of wills executed by foreigners abroad although the same have not as yet
been probated and allowed in the countries of their execution. A foreign will can be given legal effects in our jurisdiction.
Article 816 of the Civil Code states that the will of an alien who is abroad produces effect in the Philippines if made in
accordance with the formalities prescribed by the law of the place where he resides, or according to the formalities
observed in his country.
Section 1, Rule 73 of the 1997 Rules of Civil Procedure provides that if the decedent is an inhabitant of a foreign
country, the RTC of the province where he has an estate may take cognizance of the settlement of such estate. Sections 1
and 2 of Rule 76 of the Rules of Court further state that the executor, devisee, or legatee named in the will, or any other
person interested in the estate, may at any time after the death of the testator, petition the court having jurisdiction to
have the will allowed, whether the same be in his possession, or not, or is lost or destroyed.
Reprobate or re-authentication of a will already probated and allowed in a foreign country is different from that
probate where the will is presented for the first time before a competent court. Reprobate is specifically governed by Rule
77 of the Rules of Court. Reprobate cannot be made to apply in the present case. In reprobate, the local court acknowledge

as binding the findings of the foreign probate court, provided its jurisdiction over the matter can be established. (In Re: In
the Matter of the Petition to Approve the Will of Ruperta Palagans, G.R. No. 169144, January 26, 2014).
Witnesses should sign attestation clause.

The purpose of the law in requiring that the witnesses should sign at the bottom of the attestation clause is to
safeguard against possible interpolation or omission of one or some of its pages and to prevent any increase or decrease in
the pages. The failure to state the number of pages equates with the absence of an averment on the part of the
instrumental witnesses as to how many pages consisted the will, the execution of which they had ostensibly just witnessed
and subscribed to. Following Canedas v. CA, 222 SCRA 781 [1993], there is substantial compliance with this requirement if
the will states elsewhere in it how many pages it is comprised of, as was the situation in Singson and Taboada. However, in
this case, there could have been no substantial compliance with the requirements under Article 805 since there is no
statement in the attestation clause or anywhere in the will itself as to the number of pages which comprise the will.
(Azuela v. CA, et al., G.R. No. 122880, April 12, 2006).
Signature at attestation clause & pages; significance.

The law (Art. 805) segragates that the instrumental witnesses sign each page of the will, from the requisite that
the will be attested and subscribed by the instrumental witnesses. The respective intents behind these two classes of
signature are distinct from each other. The signature on the left – hand corner of every page signify, among others, that the
witnesses are aware that the page they are signing forms part of the will. On the other hand, the signatures to the
attestation clause establish that the witnesses are referring to the statements contained in the attestation clause itself.
Indeed, the attestation clause results in separate and apart from the disposition of the will. An unsigned attestation clause
results in an unattested will. Even if the instrumental witnesses signed the left – hand margin of the page containing the
unsigned attestation clause, such signatures cannot demonstrate these witnesses’ undertakings in the clause, since the
signatures that do appear on the page were directed towards a wholly different avowal.
It is the attestation clause which contains the utterances reduced into writing of the testamentary witnesses
themselves. It is the witnesses, and not the testator, who are required under Art 805 to state the number of pages used
upon which the will is written; the facts that the testator had signed the will and every page thereof; and that they
witnessed and signed the will and all the pages thereof in the presence of the testator and of one another. The only proof in
the will that the witnesses have stated these elemental facts would be their signatures on the attestation clause. (Azuela v.
CA, et al., G.R. No. 122880, April 12, 2006).
Signed in the presence of.

The phrase “en presencia de nosotrosí” or “in our presence” coupled with the signatures appearing on the will
itself and after the attestation clause could only mean that: (1) the testator subscribed to and professed before the three
witnesses that the document was his last will, and (2) the testator signed the will at the left margin of each page of the will
in the presence of these three witnesses. (Testate Estate of the Late Alipio Abada v. Alipio Abaja, et al., G.R. No. 147145,
January 31, 2005).
Meaning of the term “presence.”

It is not required that the witnesses actually saw the testator affix his signature in the will because the phrase “in
the presence” does not necessarily require actual seeing, but only the possibility of seeing without physical obstruction. In
Jaboneta vs. Gustilo, 5 Phil. 541, it was said that if a witness merely turned his back, the signing is still considered in his
presence. What is important is that, the witnesses and the testator had the opportunity to have seen the signing of the
document.
Effect if a holographic will does not comply with the requirement that in case of insertion, cancellation, erasure
and alteration, the testator must authenticate the same by his full signature.
“Ordinarily, when a number of erasures, corrections, and interlineations made by the testator in a holographic
Will have not been noted under his signature, x x x the Will is not thereby invalidated as a whole, but at most only as
respects the particular words erased, corrected or interlined. Manresa gave an identical commentary when he said “la
omision de la salvedad no anula el testamento, segun la regla de jurisprudencia establecida en la sentencia de 4 de Abril de
1895.” (Kalaw vs. Relova, 132 SCRA 237 [1984]).
Thus, unless the unauthenticated alterations, cancellations or insertions were made on the date of the
holographic will or on testator’s signature, their presence does not invalidate the will itself. The lack of authentication will
only result in disallowance of such changes. (Ajero vs. CA, et al.,supra).
Concept of institucion sub modo; its requisites.

Substitucion sub modo is what is otherwise known as a modal substitution. This occurs when any or all of the
following are present:
1. The testator states the object of the institution;
2. The testator states the purpose or application of the property left by the testator;
3. The testator states the charge imposed by the testator upon the heir. (Johnny Rabadilla vs. CA, et al., G.R. No.
113725, June 29, 2000)
Concept of disposition captatoria.

It is any disposition made upon the condition that the heir shall make some provision in his will in favor of the
testator or of any other person. (Art. 875, NCC)
“Ampon,” not entitled to inherit.

A mere “ampon” is not entitled to inherit from the one who took him and raised him as a child, because the
adoption was without the benefit of a formal or judicial adoption, hence, not a compulsory or legal heir. (Manuel, et al. vs.
Ferrer, et al., G.R. No. 117246, August 21, 1995, citing Lim vs. IAC, G.R. No. 69679, Oct. 18, 1988, 166 SCRA 451)

The concept of “barrier” between legitimates and illegitimates in the rules of succession.
It is that basic postulate in Article 992 of the Civil Code known as the principle of absolute separation between the
legitimate family and the illegitimate family. The doctrine rejects succession ab intestato in the collateral line between
legitimate relatives, on the one hand, and illegitimate relatives, on other hand, although it does not totally disavow such
succession in the direct line. Since the rule is predicated on the presumed will of the decedent, it has no application,
however, on testamentary dispositions.
In a series of cases, the SC applied the iron curtain and ruled that Article 992 of the New Civil Code x x x prohibits
absolutely a succession ab intestato between the illegitimate child and the legitimate children and relatives of the father or
mother of said legitimate child. They may have a natural tie of blood, but this is not recognized by law for the purposes of
Article 992. Between the legitimate family and the illegitimate family there is presumed to be an intervening antagonism
and incompatibility. The illegitimate child is disgracefully looked down upon by the legitimate family; the legitimate family
is, in turn, hated by the illegitimate child; the latter considers the privileged condition of the former, and the resources of
which it is thereby deprived; the former, in turn, sees in the illegitimate child nothing but the product of sin, palpable
evidence of a blemish broken in life; the law does no more than recognize this truth, by avoiding further grounds of
resentment. (Grey vs. Fabie, 40 O.G. [First S] No. 3, p. 196, citing 7 Manresa 110; Diaz vs. Intermediate Appellate Court, 150
SCRA 645; and De la Puerta vs. Court of Appeals, 181 SCRA 861)
Illegitimate child; no right of representation.

Under Article 992 of the Civil Code, an illegitimate child has no right to inherit ab intestato from the legitimate
children and relatives of his father or mother; in the same manner, such children or relatives shall not inherit from the
illegitimate child. In Diaz v. Intermediate Appellate Court, G.R. No. 66574, February 21, 1990, 182 SCRA 427, 438, it was
ruled that the right of representation is not available to illegitimate descendants of legitimate children in the inheritance of
a legitimate grandparent. Article 838 of the Civil Code dictates that no will shall pass either real or personal property
unless the same is proved and allowed in accordance with the Rules of Court. It has been clarified in Gallanosa v. Arcangel,
No. L-29300, June 21, 1978, 83 SCRA 676, 683, that in order that a will may take effect, “it has to be probated, legalized or
allowed in the proper testamentary proceeding. The probate of the will is mandatory.” (Alejandra Arado Heirs, etc. v.
Anacleto Alarcon, et al., G.R. No. 163362, July 8, 2015, Bersamin, J).
LACHES
Concept of laches.
Laches is defined as the failure or neglect, for an unreasonable and unexplained length of time, to do that which–
by the exercise of due diligence–could or should have been done earlier. Verily, laches serves to deprive a party guilty of it
to any judicial remedies. Its elements are: (1) conduct on the part of the defendant, or of one under whom the defendant
claims, giving rise to the situation which the complaint seeks a remedy; (2) delay in asserting the complainant's rights, the
complainant having had knowledge or notice of the defendant's conduct as having been afforded an opportunity to
institute a suit; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right in
which the defendant bases the suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the
complainant, or the suit is not held barred. (DEPARTMENT OF EDUCATION, DIVISION OF ALBAY v. CELSO OÑATE, G.R. No.
169501, June 8, 2007, Velasco, Jr., J.; ASSOCIATED LABOR UNIONS(ALU) and DIVINE WORD UNIVERSITY EMPLOYEES
UNION-ALU(DWUEU-ALU) v. CA, THE ROMAN CATHOLIC ARCHBISHOP OF PALO, LEYTE(RCAP) and DIVINE WORD
UNIVERSITY OF TACLOBAN(DWUT), G.R. No. 156882, October 31, 2008, VELASCO, JR., J.)
In Labrador vs. Perlas, G.R. No. 173900, August 9, 2010, 627 SCRA 265, it was ruled that as a registered owner,
petitioner has a right to eject any person illegally occupying his property. This right is imprescriptible and can never be
barred by laches. In Bishop v. Court of Appeals, it was likewise said that even if it be supposed that they were aware of the
petitioners' occupation of the property, and regardless of the length of that possession, the lawful owners have a right to
demand the return of their property at any time as long as the possession was unauthorized or merely tolerated, if at all.
This right is never barred by laches.
Social justice and equity cannot be used to justify the court's grant of property to one at the expense of another
who may have a better right thereto under the law. These principles are not intended to favor the underprivileged while
purposely denying another of his right under the law.
OBLIGATIONS AND CONTRACTS
Mere meeting is not demand.

The mere request by the creditor for the debtor to go to creditor’s office to discuss the settlement of their account
is not a demand to pay. In spite of the lack of demand made, however, the creditor proceeded with the foreclosure
proceedings. It should have first made a demand on the spouses before proceeding to foreclose the real estate mortgage,
that demand was made before the foreclosure was effected is essential. If demand was made and duly received by the
respondents and the latter still did not pay, then they were already in default and foreclosure was proper. However, if
demand was not made, then the loans had not yet become due and demandable. This meant that debtor had not defaulted
in their payments and the foreclosure was premature. Foreclosure is valid only when the debtor is in default in the
payment of his obligation. (GENERAL MILLING CORPORATION v. SPS. LIBRADO RAMOS and REMEDIOS RAMOS, G.R. No.
193723, July 20, 2011, Velasco, Jr., J).
Rescission is the remedy if there is a breach of contract.

The right of rescission of a party to an obligation under Article 1191 of the Civil Code is predicated on a breach of
faith by the other party who violates the reciprocity between them. The breach contemplated in the said provision is the
obligor’s failure to comply with an existing obligation. When the obligor cannot comply with what is incumbent upon it,
the obligee may seek rescission and in the absence of any just cause for the court to determine the period of compliance,
the court shall decree the rescission.

As both parties failed to comply with their respective reciprocal obligations, the liability of the first infractor shall
be equitably tempered by the courts. If it cannot be determined which of the parties first violated the contract, the same
shall be deemed extinguished, and each shall bear his own damages. (Art. 1192, NCC).
No damages shall be awarded to any party in accordance with the rule under Article 1192 of the Civil Code that in
case of mutual breach and the first infractor of the contract cannot exactly be determined, each party shall bear his own
damages. (Fong v. Duenas, G.R. No. 185592, June 15, 2015, Brion., J).
Substantial breach as basis of rescission.

For rescission of a contract to prosper the breach must be substantial and fundamental as to defeat the objective
of the parties. (Song Fo and Co. v. Hawaiian Phil. Co., 33 SCRA 1). If the breach on the part of Y is only a simple one it should
not be made to defeat the objective of the parties in entering into the contract because the law is not concerned with
trifles. (Filoil Refinery Corp. v. Mendoza, June 15, 1987).
Rescission under Article 1191, NCC and Art. 1385, NCC rescission is based on breach. In Article 1385, NCC, it is
based on lesion. It is principal action under Article 1191, NCC but subsidiary under Article 1385, NCC. (Congregation of the
Religious of the Virgin Mary, et al. v. Orola, et al., G.R. No. 169790, April 30, 1998).
No presumption of solidary liability of 2 persons.

The verbal assurance that Deyto would be solidarily liable and the alleged guarantee made by Deyto to Ang’s
checks are not sufficient to hold her solidarily liable. Well-entrenched is the rule that solidary obligation cannot be lightly
inferred. There is a solidary liability only when the obligation expressly so states, when the law so provides or when the
nature of the obligation so requires.
In this case, there is an attempt to recover from Deyto simply because Ang has already absconded, but this
attempt must fail since the contract was only between Ang and Manlar.
As a general rule, a contract affects only the parties to it, and cannot be enforced by or against a person who is not
a party thereto. “It is a basic principle in law that contracts can bind only the parties who had entered into it; it cannot favor
or prejudice a third person.” Under Article 1311 of the Civil Code, contracts take effect only between the parties, their
assigns and heirs. Thus, Manlar may sue Ang, but not Deyto, was not a party to the rice supply contract. (Manlar Rice Mill,
Inc. v. Deyto, et al., G.R. No. 191189, January 29, 2014).
Legal compensation cannot apply if one of the obligations is not fixed or merely contingent.
There can be no compensation between two persons if the obligations are not liquidated or fixed as the payment
by one is dependent upon a contingency, that is the payment by a third person to it. Compensation is a mode of
extinguishing obligations whereby two persons in their capacity as principals are mutual debtors and creditors of each
other with respect to equally liquidated and demandable obligations to which no retention or controversy has been timely
commenced and communicated by third parties. (See Mavest (U.S.A.), Inc. v. Sampaguita Garment Corporation, G.R. No.
127454, September 21, 2005, 470 SCRA 440).
In this case, legal compensation cannot take place in order to effectively offset (a) its own obligation to return the
funds it previously received from DBP with DBP’s assumed obligations under the Assumption Agreement, the obligations
are not yet due and they are not liquidated. Since DBP’s assumed obligations to Union Bank for remittance of the lease
payments are contingent on the prior payment thereof by (FW) to DBP, it cannot be said that both debts are due (requisite
3 of Article 1279 of the Civil Code). Any deficiency that DBP had to make up for the full satisfaction of the assumed
obligations “cannot be determined until after the satisfaction of Foodmasters’ obligation to DBP.” In this regard, it cannot
be concluded that the same debt had already been liquidated, and thereby became demandable (requisite 4 of Article 1279
of the Civil Code). (Union Bank v. DBP, G.R. No. 191555, January 20, 2014).
Casino chips can be used as payment of obligations.

Casino chips can be used and transacted outside of the casino even as payment of an obligation. Though casino
chips do not constitute legal tender, there is no law which prohibits their use or trade outside of the casino which issues
them. In any case, it is not unusual – nor is it unlikely – that respondent could be paid by a client at the former’s car shop
with the casino chips in question; said transaction, if not common, is nonetheless not unlawful. These chips are paid for
anyway; petitioner would not have parted with the same if their corresponding representative equivalent – in legal tender,
goodwill, or otherwise – was not received by it in return or exchange. Given this premise – that casino chips are considered
to have been exchanged with their corresponding representative value – it is with more reason that petitioner should
prove convincingly and persuasively that the chips it confiscated were indeed stolen from it; if so, any Tom, Dick or Harry
in possession of genuine casino chips is presumed to have paid for their representative value in exchange therefor. If
petitioner cannot prove its loss, then Article 559 cannot apply; the presumption that the chips were exchanged for value
remains. (Subic Bay Resorts & Casinos, Inc. v. Fernandez, G.R. No. 193426, September 29, 2014, Del Castillo, J).
Written contract; meaning.

The term “written contract” includes the minutes of the meeting of the board of directors of a corporation, which
minutes were adopted by the parties although not signed by them. (PNB v. Aznar, et al., G.R. No. 171805, May 30, 2011,
Leonardo-de Castro, J). The contention that since the minutes were not signed, the same was only an oral contract, hence,
the 4-year period to enforce it applies is not correct.
The period is ten (10) years, because under the law, actions upon a written contract must be brought within 10
years from the time the right of action accrued. (Article 1144, NCC).
The modification appears in the minutes of the special meeting of the Board of Directors of Lepanto held on
August 21, 1940, it having been made upon the authority of its President, and in said minutes the terms of modification
had been specified. This is sufficient to have the agreement considered, for the purpose of applying the statute of
limitations, as a written contract even if the minutes were not signed by the parties (3 A.L.R., 2d, p. 831). It has been held
that a writing containing the terms of a contract if adopted by two persons may constitute a contract in writing even if the
same is not signed by either of the parties (3 A.L.R., 2d, pp. 812-813). Another authority says that an unsigned agreement
the terms of which are embodied in a document unconditionally accepted by both parties is a written contract (Corbin on
Contracts, Vol. I, p. 85).

The Minutes which was approved on March 14, 1961 is considered as written contract. (PNB v. Aznar, et al., G.R.
No. 171805, May 30, 2011, Leonardo-de Castro, J).
Nature of money placement.

If there is money placement made with a bank, the relationship between a bank (Allied) and a client (Lim Sio
Wan) is one of debtor-creditor. A money market placement is a simple loan or mutuum. (ALLIED BANKING CORPORATION
vs. LIM SIO WAN, et al., G.R. No. 133179, March 27, 2008, Velasco, Jr., J.).
Consignation when proper.

Consignation shall be made by depositing the things due at the disposal of judicial authority, before whom the
tender of payment shall be proved, in a proper case, and the announcement of the consignation in other cases."
Moreover, in order that consignation may be effective, the debtor must show that: (1) there was a debt due; (2)
the consignation of the obligation had been made because the creditor to whom tender of payment was made refused to
accept it, or because s/he was absent or incapacitated, or because several persons claimed to be entitled to receive the
amount due or because the title to the obligation had been lost; (3) previous notice of the consignation had been given to
the person interested in the performance of the obligation; (4) the amount due was placed at the disposal of the court; and
(5) after the consignation had been made, the person interested was notified of the action.
Respondent did not comply with the provisions of law particularly with the fourth and fifth requirements
specified above for a valid consignation. In her complaint for consignation and specific performance, respondent only
prayed that she be allowed to make the consignation without placing or depositing the amount due at the disposal of the
court of origin. Verily, respondent made no valid consignation. (B.E. SAN DIEGO, INC. v. ROSARIO ALZUL, G.R. No. 169501,
June 8, 2007, Velasco, Jr., J.)
Unconscionable interest.
Imposing 5% monthly interest, whether compounded or simple, is unconscionable. Even if there was such an
agreement that interest will be compounded the 5% monthly rate, be it simple or compounded, written or verbal, is void
for being too exorbitant, thus running afoul of Article 1306 of the New Civil Code. As case law instructs, the imposition of
an unconscionable rate of interest on a money debt, even if knowingly and voluntarily assumed, is immoral and unjust. It
is tantamount to a repugnant spoliation and an iniquitous deprivation of property, repulsive to the common sense of man.
It has no support in law, in principles of justice, or in the human conscience nor is there any reason whatsoever which may
justify such imposition as righteous and as one that may be sustained within the sphere of public or private morals.
(SPOUSES TAGUMPAY N. ALBOS and AIDA C. ALBOS v. SPOUSES NESTOR M. et al., G.R. No. 210831. November 26, 2014.
THIRD DIVISION. Velasco, JR., J.)
Effect of qualified acceptance of offer; receipt of payments and additional demands.

Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to
constitute the contract. (Article 1319, Civil Code). The offer must be certain, and the acceptance, whether express or
implied, must be absolute. (Articles 1319 and 1320, Civil Code). An acceptance is considered absolute and unqualified
when it is identical in all respects with that of the offer so as to produce consent or a meeting of the minds. (Traders Royal
Bank v. Cuison Lumber Co., Inc., G.R. No. 174286, June 5, 2009, 588 SCRA 690m, 701, 703).
There was no such meeting of the minds between the parties on the matter of termination because the
petitioner’s acceptance of the respondent’s offer to terminate was not absolute. (Talampas, Jr. v. Moldez Realty, Inc.,
G.R. No. 170134, June 17, 2015, Brion, J).
A qualified acceptance or one that involves a new proposal constitutes a counteroffer and a rejection of the
original offer. A counter-offer is considered in law, a rejection of the original offer and an attempt to end the negotiation
between the parties on a different basis. Consequently, when something is desired which is not exactly what is
proposed in the offer, such acceptance is not sufficient to guarantee consent because any modification or
variation from the terms of the offer annuls the offer. The acceptance must be identical in all respects with that of the
offer so as to produce consent or meeting of the minds. (Manila Metal Container Corporation v. Philippine National Bank,
G.R. No. 166862, December 20, 2006, 511 SCRA 444, 465-466).
Remuneratory donation; form required.

If the owner of a property executed a contract transferring her right over the said property to remunerate his ten
(10) years of service to her the contract is a remuneratory donation. The contract, as well as the evidence presented
during the trial, are silent as to the value of the burden, hence, instead of the law on donations, the rules on contract
should govern the subject contract because the donation is onerous as the burden is imposed upon the donee of a thing
with an undetermined value. It is not necessary that the contract be in a public instrument if it involves immovable
property, properly citing Pada-Kilario v. Court of Appeals, 379 phil. 515, 527 [2002], which states that the requirement of
Article 1358 of the Civil Code that acts which have for their object the creation, transmission, modification or
extinguishment of real rights over immovable property, must appear in a public document, is only for convenience, non-
compliance with which does not affect the validity or enforceability of the acts of the parties as among themselves. (Reyes
v. Asuncion, G.R. No. 196083, November 1, 2015, Peralta, J).
Statute of Frauds, its application.

The Statute of Frauds expressed in Article 1403, par. 2 of the Civil Code applies only to executory contracts, i.e.
those where no performance has yet been made. Stated a bit differently, the legal consequence of non-compliance with the
Statute does not come into play where the contract in question is completed, executed or partially consummated. The
Statute of Frauds, in context, provides that a contract for the sale of real property or of an interest therein shall be
unenforceable unless the sale or some note or memorandum thereof is in writing and subscribed by the party or his agent.
However, where the verbal contract of sale has been partially executed through the partial payments made by one party
duly received by the vendor, as in the present case, the contract is taken out of the scope of the Statute. (ANTHONY
ORDUŇA, et al. v. EDUARDO J. FUENTEBELLA, et al., G.R. No. 176841, June 29, 2010, Velasco, Jr., J.)

Statute of frauds not applicable to contracts with right of first refusal.
The Statute of Frauds does not contemplate cases involving a right of first refusal because the application of such
statute presupposes the existence of a perfected contract. A right of first refusal is not by any means a perfected contract
of sale of real property. It is a contractual grant, not of the sale of the real property involved, but of the right of first refusal
over the property sought to be sold. Thus, a right of first refusal need not be written to be enforceable and may be proven
by oral evidence.
A right of first refusal is not among those listed as unenforceable under the statute of frauds. Furthermore, the
application of Article 1403, par. 2(e) of the New Civil Code presupposes the existence of a perfected, albeit unwritten,
contract of sale.(Rosencor Development Corporation vs. Inquing, G.R. No. 140479, March 8, 2001)
Sale of property without authority is unenforceable.

When the Supreme Bishop executed the contract of sale of petitioner’s lot despite the opposition made by the
laymen’s committee, he acted beyond his powers, hence, the contract is unenforceable as it was entered into the name of
another person by one who has been given no authority or legal representation, or who has acted beyond his power and it
was not ratified.
In Mercado v. Allied Banking Corporation, 555 Phil. 411 [2007], it was ruled that unenforceable contracts are
those which cannot be enforced by a proper action in court, unless they are ratified, because either they are entered into
without or in excess of authority or they do not comply with the statute of frauds or both of the contracting parties do not
possess the required legal capacity. (Iglesia Filipina Independiente v. Heirs of Bernardino Taeza, G.R. No. 179597, February
3, 2014, Peralta, J).
A forged deed is a nullity; it passes no right; it is held in trust.

The heirs of a decedent whose signature in a deed of extrajudicial settlement and sale was forged can file an action
to nullify such contract, because the deed is void, for lack of consent, hence, subject to attack anytime. It is recognized in
our jurisprudence that a forged deed is a nullity and conveys no title. An action to declare the inexistence of a void contract
does not prescribe.
When there is a showing of such illegality, the property registered is deemed to be simply held in trust for the real
owner by the person in whose name it is registered, and the former then has the right to sue for the reconveyance of the
property. The action for the purpose is also imprescriptible, and as long as the land wrongfully registered under
the Torrens system is still in the name of the person who caused such registration, an action in personam will lie to compel
him to reconvey the property to the real owner.
While a certificate of title was issued in respondents’ favor, such title could not vest upon them ownership of the
entire property; neither could it validate a deed which is null and void. Registration does not vest title; it is merely the
evidence of such title. Our land registration laws do not give the holder any better title than what he actually has. (Sps.
Fernando, et al. v. Fernando, G.R. No. 191889, January 31, 2011)
ESTOPPEL and TRUST
Three (3) kinds of estoppel.

There are three kinds of estoppels, to wit: (1) estoppel in pais; (2) estoppel by deed; and (3) estoppel by laches.
Under the first kind, a person is considered in estoppel if by his conduct, representations, admissions or silence when he
ought to speak out, whether intentionally or through culpable negligence, “causes another to believe certain facts to exist
and such other rightfully relies and acts on such belief, as a consequence of which he would be prejudiced if the former is
permitted to deny the existence of such facts.” Under estoppel by deed, a party to a deed and his privies are precluded
from denying any material fact stated in the deed as against the other party and his privies. Under estoppel by laches, an
equitable estoppel, a person who has failed or neglected to assert a right for an unreasonable and unexplained length of
time is presumed to have abandoned or otherwise declined to assert such right and cannot later on seek to enforce the
same, to the prejudice of the other party, who has no notice or knowledge that the former would assert such rights and
whose condition has so changed that the latter cannot, without injury or prejudice, be restored to his former state. (Co
Chien v. Sta. Lucia Realty & Development, Inc., G.R. No. 162090, January 31, 2007, 513 SCRA 570, 581; Jose Go, et al. v.
Bangko Sentral ng Pilipinas, et al., G.R. No. 202262, June 8, 2015, Bersamin, J).
Concept of trust.
Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in another. It is a
fiduciary relationship that obliges the trustee to deal with the property for the benefit of the beneficiary. Trust relations
between parties may either be express or implied. An express trust is created by the intention of the trustor or of the
parties. An implied trust comes into being by operation of law.
Express trusts, sometimes referred to as direct trusts, are intentionally created by the direct and positive acts of
the settlor or the trustor - by some writing, deed, or will or oral declaration. It is created not necessarily by some written
words, but by the direct and positive acts of the parties. This is in consonance with Article 1444 of the Civil Code, which
states that "[n]o particular words are required for the creation of an express trust, it being sufficient that a trust is clearly
intended."
In other words, the creation of an express trust must be manifested with reasonable certainty and cannot be
inferred from loose and vague declarations or from ambiguous circumstances susceptible of other interpretations. (PNB v.
Aznar, et al., G.R. No. 171805, May 30, 2011, Leonardo-de Castro, J).
Trust is created if property is registered under another’s name due to fraud; Action for reconveyance is the proper
remedy.
An action for specific performance to recover a real property covered by a TCT was brought alleging fraud in the
registration of the same is not a proper remedy.
The case for specific performance with damages instituted was effectively an attack on the validity of respondent’s
Torrens title over the subject lot. It is evident that, ultimately, the objective of such claim is to nullify the title to the
property in question, which, in turn, challenger the judgment pursuant to which the title was decreed. This is a collateral

attack that is not permitted under the principle of indefeasibility of Torrens title. Section 48 of Presidential Decree No.
1529, otherwise known as the Property Registration Decree.
A collateral attack transpires when, in another action to obtain a different relief and as an incident to the present
action, an attack is made against the judgment granting the title while a direct attack (against a judgment granting the title)
is an action whose main objective is to annul, set aside, or enjoin the enforcement of such judgment if not yet implemented,
or to seek recovery if the property titled under the judgment had been disposed of. (Urieta Vda. de Aguilar v. Alfaro, G.R.
No. 164402, July 5, 2010, 623 SCRA 130, 143-144). The issue on the validity of title, i.e., whether or not it was fraudulently
issued, can only be raised in an action expressly instituted for that purpose.
The appropriate legal remedy that should be availed of is an action for reconveyance. Proof of actual fraud is not
required as it may be filed even when no fraud intervened such as when there is mistake in including the land for
registration. (Campos v. Ortega, et al., G.R. No. 171286, June 2, 2014, Peralta, J).
When an action for reconveyance based on resulting trust prescribes.

An action for reconveyance resulting from fraud prescribes four years from the discovery of the fraud, which is
deemed to have taken place upon the issuance of the certificate of title over the property, and if based on an implied or a
constructive trust it prescribes ten (10) years from the alleged fraudulent registration or date of issuance of the certificate
of title over the property. (Philippine Economic Zone Authority (PEZA) v. Fernandez, 411 Phil. 107, 119 [2001]). However,
an action for reconveyance based on implied or constructive trust is imprescriptible if the plaintiff or the person enforcing
the trust is in possession of the property. In effect, the action for reconveyance is an action to quiet title to the property,
which does not prescribe. (Yared v. Tiongco, G.R. No. 161360, October 19, 2011, 659 SCRA 545; Campos v. Ortega, et al.,
G.R. No. 171286, June 2, 2014, Peralta, J).
SALES
Where seller promises to execute a deed of absolute sale after payment, the same is a contract to sell.
If the contract states that as soon as the total amount of the property has been paid and the Certificate of Title has
been issued, an absolute deed of sale shall be executed accordingly, it is actually in the nature of a contract to sell and not
one of sale. (See Tan v. Benolirao, G.R. No. 153820, October 16, 2009, 604 SCRA 36, 48-49; Ver Reyes v. Salvador, Sr., G.R.
No. 139047 and 139365, September 11, 2008, 564 SCRA 456, 476-481). Where the seller promises to execute a deed of
absolute sale upon the completion by the buyer of the payment of the purchase price, the contract is only a contract to sell
even if their agreement is denominated as a Deed of Conditional Sale. This treatment stems from the legal characterization
of a contract to sell, that is, a bilateral contract whereby the prospective seller, while expressly reserving the ownership of
the subject property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, such as, the full
payment of the purchase price. In a contract to sell, ownership is retained by the vendor and is not to pass to the vendee
until full payment of the purchase price. (Ursal v. CA, G.R. No. 142411, October 14, 2005, 473 SCRA 52, 65; Coronel v. CA,
331 Phil. 294, 310 [1996]; Sps. Roque v. Aguado, et al., G.R. No. 193787, April 7, 2014, Perlas-Bernabe, J).
No right to recover deficiency under Art. 1484, NCC; when.

Under the law, in a sale on installment of a movable, if the vendor has availed himself of the right to foreclose the
chattel mortgage, he shall have no further action against the purchaser to recover the unpaid balance of the purchase
price. Any agreement to the contrary is void. In other words, in all proceedings for the foreclosure of the chattel mortgage
executed over the chattel which has been sold on instalment, the mortgage is limited to the property included in the
mortgage. The scheme adopted by the seller of asking for foreclosure and the payment of the unpaid balance is a flagrant
circumvention of the prohibition of the law. By praying for the foreclosure of the mortgage over the thing, it renounced
whatever claim it may have under the promissory note. (Magna Financial Services Group, Inc. v. Elias Colorina, G.R. No.
158635, December 9, 2005).
Ownership is acquired by delivery.

Ownership of the thing sold is acquired by delivery. It is settled that a perfected contract of sale cannot be
challenged on the ground of the non-transfer of ownership of the property sold at the time of the perfection of the
contract, since it is consummated upon delivery of the property to the vendee. It is through tradition or delivery that the
buyer acquires ownership of the property sold. As provided in Article 1498 of the New Civil Code, when the sale is made
through a public instrument, the execution thereof is equivalent to the delivery of the thing which is the object of the
contract, unless the contrary appears or can be inferred. The recording of the sale with the Register of Deeds and the
issuance of the certificate of title in the name of the buyer over the property merely bind third parties to the sale. As
between the seller and the buyer, the transfer of ownership takes effect upon the execution of a public document covering
the real property. Long before the sellers secured a Torrens title over the property, the buyers had been in actual
possession of the property and had designated Barte as their overseer. (Heirs of Jesus Mascunana v. CA, et al., G.R. No.
158646, June 23, 2005, Callejo, J).
Mirror doctrine.
Although it is recognized principle that a person dealing on a registered land need not go beyond its certificate of
title, it is also a family settled rule that where there are circumstances which would put a party on guard and prompt him
to investigate or inspect the property being sold to him, such as the presence of occupants/tenants thereon, it is, of course,
expected from the purchaser of valued piece of land to inquire first into the status or nature of possession of the
occupants, i.e., whether or not the occupant possess the land en concepto de dueno, in concept of owner. As is the common
practice in the real estate industry, an ocular inspection of the premises involved is a safeguard a cautious and prudent
purchaser usually takes. Should he find out that the land he intends to buy is occupied by anybody else other than the
seller who, as in this case, is not in actual possession, it would then be incumbent upon the purchaser to verify the extent
of the occupant’s possessory rights. The failure of a prospective buyer to take such precautionary steps would mean
negligence on his part and would thereby preclude him from claiming or invoking the rights of a “purchaser in good faith.”
(Sps. Mathay v. Court of Appeals, 356 Phil. 870 [1998]; Mercado, et al., Allied Banking Corp., G.R. No. 171460, July 27,
2007).

Perfected contract of sale despite reservation of title.
A contract of sale was perfected when the seller accepted the buyer’s proposal. The mere reservation of title in
the invoice did not novate the contract absent a showing of the intention to novate it. Novation is never presumed and the
animus novandi, whether totally or partially must appear by express agreement of the parties, or by their acts that are too
clear and unequivocal to be mistaken. The mere fact that the invoice was received by the representative of the buyer,
cannot by itself prove animus novandi since he was not authorized to do so. The signature merely proved that the fact of
delivery and as matter of judicial notice, invoices are generally issued at the consummation stage of the contract and not
its perfection, and have been even treated as documents which are not actionable per se, although they may prove
sufficiently delivery. Thus, absent any clear indication that the title reservation stipulation was actually agreed upon, the
same can be considered as imposition on the part of the seller which has no effect on the nature of the parties’ original
agreement as a contract of sale. Perforce, the obligations arising thereto, among others, ACE Foods’s obligation to pay the
purchase price as well as to accept the delivery of the goods, remain enforceable and subsisting. (Ace Foods, Inc. v. Micro
Pacific Technologies, Co., Ltd., G.R. No. 200602, December 11, 2013).
Delivery makes the vendee the owner.

Although that sale appeared to be merely verbal, and payment therefor was to be made on installment, it was a
partially consummated sale, with the buyer paying the initial purchase price and seller surrendering possession. That the
parties intended for ownership to be transferred may be inferred from their lack of any agreement stipulating that
ownership of the property is reserved by the seller and shall not pass to the buyer until the latter has fully paid the
purchase price. (Art. 1478, NCC). The fact is, the seller even delivered to the buyer the owner's duplicate copy of the title.
The Civil Code states that ownership of the thing sold is transferred to the vendee upon the actual or constructive delivery
of the same. (Arts. 1477, 1496, NCC). And the thing is understood as delivered when it is placed in the control and
possession of the vendee. (Art. 1497, NCC). Payment of the purchase price is not essential to the transfer of ownership as
long as the property sold has been delivered; and such delivery (traditio) operated to divest the vendor of title to the
property which may not be regained or recovered until and unless the contract is resolved or rescinded in accordance
with law. (Philippine National Bank v. Court of Appeals, 338 Phil. 795, 822 (1997), citing Sampaguita Pictures, Inc. v.
Jalwindor Manufacturers, Inc. 182 Phil. 16, 22 (1979), and Pingol v. Court of Appeals, G.R. No. 102909, September 6, 1993,
226 SCRA 118, 128; Sps. Badilla v. Bragat, G.R. No. 187013, April 22, 2015, Peralta, J).
Sale with pacto de retro 30-day period to repurchase applies if there is a claim that the contract was a loan with
mortgage.
Paragraph 3 of Article 1606 covers only a situation where the alleged vendor a retro claims, in good faith, that
their (the vendor and the vendee) real intention (to the contract) was a loan with mortgage.
Article 1606 is intended to cover suits where the seller claims that the real intention was a loan with
equitable mortgage but decides otherwise. The seller, however, must entertain a good faith belief that the contract
is an equitable mortgage. In Felicen, Sr., et al. v. Orias, et al., it was said:
x x x where the proofs established that there could be no honest doubt as
to the parties’ intention, that the transaction was clearly and definitely a sale
with pacto de retro, the Court adjudged the vendor a retro not to be entitled to
the benefit of the third paragraph of Article 1606. (Heirs of Antero Soliva v.
Severino Soliva, et al., G.R. No. 159611, April 22, 2015, Brion, J citing Claravall v. Lim,
G.R. No. 152695, July 25, 2011, 654 SCRA 301, 311-312, citing Felicen, Sr. v. Orias, 240
Phil. 550 (1987); Heirs of Vda. De Macoy v. Court of Appeals, G.R. No. 95871, February
13, 1992; and Agan v. Heirs of Spouses Andres Nueva and Diosdada Nueva, 463 Phil.
834 (2003)).
The real intention of the parties was a Pacto de Retro sale, not an equitable mortgage, hence, reliance on
paragraph 3, Article 1606 of the Civil Code is misplaced and his argument on this point cannot prosper.
Right to repurchase cannot be indefinite.

Courts have frowned upon agreements indicating indefinite stipulations for the exercise of the right to
repurchase and restricted the redemption period to ten (10) years from the date of the contract of sale, in consonance
with the provisions of the Civil Code.
Accordingly, when vendors a retro were granted the right to repurchase properties sold “at any time they have
the money,” “in the month of March of any year,” or “at any time after the first year,” the Court had not hesitated in
imposing the ten (10)-year period, the expiration of which effectively bars redemption of the subject properties. There
have been numerous occasions wherein the SC invalidated stipulations permitting the repurchase of property only after
the lapse of at least ten (10) years from the date of the execution of the contract for being in contravention of the limitation
mandated by the Civil Code provision. Waivers of such period were likewise held to be void for being against public policy.
(Cebu State College of Science & Technology (CSCST) v. Misterio, et al., G.R. No. 179025, June 17, 2015, Peralta, J).
Void title can be the root of a valid title if transferred to innocent purchaser for value.
A forged deed of sale is null and void and conveys no title, for it is a well-settled principle that no one can give
what one does not have; nemo dat quod non habet. Once can sell only what one owns or is authorized to sell, and the buyer
can acquire no more right than what the seller can transfer legally. (Consolidated Rural Bank, Inc. v. Court of Appeals, G.R.
No. 132161, January 17, 2005, 448 SCRA 347, 363). Due to the forged Deed of Absolute Sale the buyer acquired no right
over the subject property which he could convey to his daughter. All the transactions subsequent to the falsified sale
between him and his daughter are likewise void.
However, it has also been consistently ruled that a forged or fraudulent document may become the root of a valid
title, if the property has already been transferred from the name of the owner to that of the forger, (Lim v. Chuatoco, G.R.
No. 161861, March 11, 2005, 453 SCRA 308), and then to that of an innocent purchaser for value. (Camper Realty Corp. v.
Pajo-Reyes, et al., 646 Phil. 689 [2010]; Rufloe v. Burgos, supra.; citing Cayana v. Court of Appeals, G.R. No. 125607, March
18, 2004, 426 SCRA 10, 22). This doctrine emphasizes that a person who deals with registered property in good faith will

acquire good title from a forger and be absolutely protected by a Torrens title. This is because a prospective buyer of a
property registered under the Torrens system need not go beyond the title, especially when she has not notice of any
badge of fraud or defect that would place her on guard. In view of such doctrine, the Court now resolves the second issue
of whether or not Maria is an innocent purchaser for value. (Tolentino, et al. v. Sps. Latagan, et al., G.R. No.179874, June 22,
2015, Peralta, J).
Notarial act of rescission; refund of full payment of cash surrender value; cancellation after 30 days from receipt
of notice and payment of cash surrender value.
The cancellation of the contract by the seller must be in accordance with Section 3(b) of the Maceda Law, which
requires the notarial act of rescission and the refund to the buyer of the full payment of the cash surrender value of the
payments made on the property. The actual cancellation of the contract takes place after thirty (30) days from receipt by
the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment
of the case surrender value to the buyer. (Sps. Noynay v. Citihomes Builders & Dev. Corp., Inc., G.R. No. 204160, September
22, 2014, Mendoza, J, reiterating Pagtalunan v. Manzano, 559 Phil. 658 [2007]).
The transfer of the subject property is a pactum commissorium; contrary to morals.

The transfer of a property under the name of the buyer of a 4-hectare lot which was sold for only P12,000.00
where the buyer never took possession of the property sold cannot be allowed as it would amount to condoning the
prohibited practice of pactum comissorium. Article 2088 of the Civil Code clearly provides that a creditor cannot
appropriate or consolidate ownership over a mortgaged property merely upon failure of the mortgagor to pay a debt
obligation any stipulation to the contrary is null and void. (Montevirgen v. Court of Appeals, No. L-44943, March 17, 1982,
112 SCRA 641).
The essence of pactum commissorium is that ownership of the security will pass to the creditor by the mere
default of the debtor. Such arrangements are contrary to morals and public policy. (Guerrero v. Ynigo, et al, 96 Phil. 37, 41-
42 (1954)).
The only right of a mortgagee in case of non-payment of debt secured by mortgage would be to foreclose the
mortgage and have the encumbered property sold to satisfy the outstanding indebtedness. The mortgagor's default does
not operate to automatically vest on the mortgagee the ownership of the encumbered property, for any such effect is
against public policy, as earlier indicated. (Guanzon vs. Argel, No. L-27706, June 16, 1970, 33 SCRA 474, 478-479; Sps.
Solitarios v. Sps. Jaque, G.R. No. 199852, November 12, 2014).
Effect if a property subject of a mortgage is sold by the mortgagor.

The sale or transfer of the mortgaged property cannot affect or release the mortgage; thus the purchaser or
transferee is necessarily bound to acknowledge and respect the encumbrance. The mortgage on the property may still be
foreclosed despite the transfer because under the law, the creditor may claim from a third person in possession of the
mortgaged property, the payment of the part of the credit secured by the property which said third person possesses, in
terms and with the formalities which the law establishes. (Art. 2129, NCC).
Since the second mortgage, has not yet been discharged, the said mortgage subsists and is still enforceable.
However, in buying the subject property with notice that it was mortgaged, only undertook to pay such mortgage or allow
the subject property to be sold upon failure of the mortgage creditor to obtain payment from the principal debtor once the
debt matures. The buyer did not obligate herself to replace the debtor in the principal obligation, and could not do so in
law without the creditor’s consent. Under the law, novation which consists in subsisting a new debtor in the place of the
original one, may be made even without the knowledge or against the will of the latter, but not without the consent of the
creditor. Payment by the new debtor gives him the rights mentioned in articles 1236 and 1237. (Art. 1293, NCC; Pablo
Garcia v. Villar, G.R. No. 158891, June 27, 2012, Leonardo-de Castron, J).
PD 957
Mortgage of title must be with the approval of HLURB; invalidity is not of the whole mortgage.
A unit buyer has no standing to seek for the complete nullification of the entire mortgage, because he has an
actionable interest only over the unit he has bought. Hence, the mortgage was nullified only insofar as it affected the unit
buyer. (Philippine National Bank v. Lim, the Court reverted to the previous ruling in Far East Bank, G.R. No. 171677,
January 30, 2013, 689 SCRA 523, 543, citing Manila Banking Corporation v. Rabina, G.R. No. 145941, December 16, 2008,
574 SCRA 16, 23).
The recent view espoused in Philippine National Bank is in accord with law and equity. While a mortgage may be
nullified if it was in violation of Section 18 of P.D. No. 957, such nullification applies only to the interest of the complaining
buyer. It cannot extend to the entire mortgage. A buyer of a particular unit or lot has no standing to ask for the nullification
of the entire mortgage. Since buyer has an actionable interest only over its unit, it is but logical to conclude that it has no
standing to seek for the complete nullification of the subject mortgage and the HLURB was incorrect when it voided the
whole mortgage. (United Overseas Bank of the Phil. v. The Board of Commissioners-HLURB, et al., G.R. No. 182133, June
23, 2015, Peralta, J).
Purpose of prior approval of HLURB.

The prior approval requirement is intended to protect buyers of condominium units from fraudulent
manipulations perpetrated by unscrupulous condominium sellers and operators, such as their failure to deliver titles to
the buyer or titles free from lien and encumbrances. This is pursuant to the intent of P.D. No. 957 to protect hapless buyers
from the unjust practices of unscrupulous developers which may constitute mortgages over condominium projects sans
the knowledge of the former and the consent of the HLURB.
Thus, failure to secure the HLURB'S prior written approval as required by P.D. No. 957 will not annul the entire
mortgage between the condominium developer and the creditor bank, otherwise the protection intended for
condominium buyers will inadvertently be extended to the condominium developer even though, by failing to secure the
government's prior approval, it is the party at fault.

To rule otherwise would certainly affect the stability of large-scale mortgages, which is prevalent in the real
estate industry. To be sure, mortgagee banks would be indubitably placed at risk if condominium developers are
empowered to unilaterally invalidate mortgage contracts based on their mere failure to secure prior written approval of
the mortgage by the HLURB, which could be easily caused by inadvertence or by deliberate intent. (United Overseas Bank
of the Phil. v. The Board of Commissioners-HLURB, et al., G.R. No. 182133, June 23, 2015, Peralta, J).
LEASE
Liability of sublessee.
In case of sublease, the sublessee may be liable to the lessor in the following instances:
1. All acts which refer to the use and preservation of the thing leased in the manner stipulated between the lessor
and the lessee. (Art. 1651, NCC);
2. The sublessee is subsidiarily liable to the lessor for any rent due from the lessee. However, the sublessee shall not
be responsible beyond the amount of rent due from him, in accordance with the terms of the sublease, at the time
of the extrajudicial demand by the lessor. (Art. 1652, NCC). Furthermore, there must be a judgment against the
lessee evicting the latter from the premises where he cannot pay the rentals and the sublessee is in possession.
The mere failure of the lessee to pay the rentals does not make the sublessee subsidiarily liable. (Wheelers Club
Int’l., Inc. vv. Bonifacio, Jr., June 30, 2005).
Extension of lease cannot be done if lessee committed grounds for ejectment; extension is a matter of equity.
In asking for an extension of lease under Article 1687, the lessee lost sight of the restriction provided in Article
1675 of the Civil Code. It states that a lessee that commits any of the grounds for ejectment cited in Article 1673, including
non-payment of lease rentals and devoting the leased premises to uses other than those stipulated, cannot avail of the
periods established in Article 1687. (LL & Co. Dev. & Agro-Industrial Corp. v. Huang Chao Chun. 428 Phil. 665 (2002)
Moreover, the extension in Article 1687 is granted only as a matter of equity. The law simply recognizes that
there are instances when it would be unfair to abruptly end the lease contract causing the eviction of the lessee. It is only
for these clearly unjust situations that Article 1687 grants the court the discretion to extend the lease. An extension will
only benefit the wrongdoer and punish the long-suffering property owner. (Lo Chua v. CA, 408 Phil. 877 (2001); Guiang v.
Samano, G.R. No. 50501, April 22, 1991, 196 SCRA 114; Umale, et al. v. ASB Realty Corp., G.R. No. 181126, June 15, 2011).
When there is implied renewal of a contract of lease.

An implied new lease or tacita reconcluccion will set in when the following requisites are found to exist: (a) the
term of the original contract of lease has expired; (b) the lessor has not given the lessee a notice to vacate; (c) the lessee
continued enjoying the thing leased for fifteen days with the acquiescence of the lessor. (Paterno v. CA, 339 Phil. 154
(1997); Samelo v. Manotok Services, Inc., G.R. No. 170509, June 27, 2012, Brion, J). If the lessor does not notify the lessee of
the non-renewal of the contract, the inaction of the lessor, there can be no inference that it intended to discontinue the
lease contract (Bowe v. CA, G.R. No. 95771, March 19, 1993, 220 SCRA 158).
Period of the lease in an impliedly renewed contract.

In case of an impliedly renewed contract, the period is not the same as that of the original. It depends upon the
manner of payment of the rents. Since the rent is paid on a monthly basis, the period of lease is considered to be from
month to month, in accordance with Article 1687 of the Civil Code. “A lease from month to month is considered to be one
with a definite period which expires at the end of each month upon a demand to vacate by the lessor.” (Arquelda v. Phil.
Veterans Bank, 385 Phil. 1200 (2000)). When the lessor sent a notice to vacate to the lessee, the tacita reconduccion was
aborted, and the contract is deemed to have expired at the end of that month. “A notice to vacate constitutes an express act
on the part of the lessor that it no longer consents to the continued occupation by the lessee of its property. (Tagbilaran
Integrated Sellers Assn. v. CA, 486 Phil. 386 (2004)). After such notice, the lessee’s right to continue in possession ceases
and her possession becomes one of detainer. (Lim v. CA, G.R. Nos. 84154-55, July 20, 2010; Samelo v. Manotok Services,
Inc., G.R. No. 170509, June 27, 2012, Brion, J).
Lease with option to buy.

If there is a lease contract with option to buy and it was exercised before it was sold, the sale cannot be valid
because the right of first refusal was exercised before the contract of lease expired and before it was sold to PUP by the
lessor.
An option is a contract by which the owner of the property agrees with another person that the latter shall have
the right to buy the former’s property at a fixed price within a certain time. It is a condition offered or contract by which
the owner stipulates with another that the latter shall have the right to buy the property at a fixed price within a certain
time, or under, or in compliance with certain terms and conditions; or which gives to the owner of the property the right to
sell or demand a sale (Eulogio v. Apeles, G.R. No. 167884, January 20, 2009, 576 SCRA 561, citing Tayag v. Lacson, G.R. No.
134971, March 25, 2004, 426 SCRA 282, 304). It binds the party, who has given the option, not to enter into the principal
contract with any other person during the period designated, and, within that period, to enter into such contract with the
one to whom the option was granted, if the latter should decide to use the option. (Carceller v. Court of Appeals, G.R. No.
124791, February 10, 1999, 302 SCRA 718, 724; Polytechnic Univ. of the Phils. v. Golden Horizon Realty Corp., G.R. No.
183612; National Dev. Co. v. Golden Horizon Realty Corp., G.R. No. 184260, March 15, 2010)
PARTNERSHIP
Effect of sharing of gross returns.

To regard the petitioners as having formed an unregistered partnership would result in oppressive taxation.
Their original purpose was to divide the lots for residential purposes, but they were compelled to resell because of the
high cost of construction. Article 1769[3] of the NCC provides that: “The sharing of gross returns does not of itself establish
a partnership, whether or not the persons sharing them have a joint or common right or interest in any property from

which the returns are derived.” There must be an unmistakable intention to form a partnership or joint venture. (Obillos v.
CIR, et al., 135 SCRA 436; Pascual v. CIR, 166 SCRA 560).
Effect of sharing of profits.

As early as Tan Eng Kee v. CA, 396 Phil. 68 (2000), it has been ruled that a demand for periodic accounting is
evidence of a partnership (citing Art. 1769, NCC). Elfledo received shares in the profits of the business which is a prima
facie evidence that he was a partner. There was no evidence presented by petitioners to prove that the receipt of share did
not amount to partnership. Bare allegation is not proof. If it were true that it was Jose Lim and not Elfledo who was the
partner, then upon his death, the partnership should have been dissolved and its assets liquidated. On the contrary, these
were not done but instead its operation continued under the helm of Elfledo and without any participation from the heirs
of Jose Lim. (Heirs of Jose Lim v. Juliet Villa Lim, G.R. No. 172690, March 3, 2010, Nachura, J.)
Rules in the management of the partnership and removal of managers.

(1) The partner who has been appointed manager in the articles of partnership may execute all acts of
administration despite the opposition of his partners, unless he should act in bad faith; and his power is
irrevocable without just or lawful cause. The vote of the partners representing the controlling interest shall be
necessary for such revocation of power.
A power granted after the partnership has been constituted may be revoked at any time. (Art. 1800, NCC)
(2) If two or more partners have been intrusted with the management of the partnership without specification of
their respective duties, or without a stipulation that one of them shall not act without the consent of all the
others, each one may separately execute all acts of administration, but if any of them should oppose the acts of
the others, the decision of the majority shall prevail. In case of a tie, the matter shall be decided by the partners
owning the controlling interest. (Art. 1801, NCC)
(3) In case it should have been stipulated that none of the managing partners shall act without the consent of the
others, the concurrence of all shall be necessary for the validity of the acts, and the absence or disability of any
one of them cannot be alleged, unless there is imminent danger of grave or irreparable injury to the partnership.
(Art. 1802, NCC)
(4) When the manner of management has not been agreed upon, the following rules shall be observed:
(a) All the partners shall be considered agents and whatever any one of them do alone shall bind the
partnership, without prejudice to the provisions of Article 1801.
(b) None of the partners may, without the consent of the others, make any important alteration in the
immovable property of the partnership, even if it may be useful to the partnership. But if the refusal of
consent by the other partners is manifestly prejudicial to the interest of the partnership, the court’s
intervention may be sought. (Art. 1803, NCC)
The principle of delectus personarum.

Under the principle of delectus personarum, it is required that for a partner to associate another with him in his
share in the partnership, the consent of all the partners is necessary. This is because of the mutual trust among the
partners and that this is a case of subjective novation. There is subjective novation when there is a change in the parties to
a contract. Their consent thereto is necessary in order to bind them. (See Art. 1804, NCC)
Effect if a partner sold part of his share of the partnership.

A conveyance by a partner of his whole interest in the partnership does not of itself dissolve the partnership, or,
as against the other partners in the absence of agreement, entitle the assignee, during the continuance of the partnership,
to interfere in the management or administration of the partnership business or affairs, or to require any information or
account of partnership transactions, or to inspect the partnership books; but it merely entitles the assignee to receive in
accordance with his contract the profits to which the assigning partner would otherwise be entitled. However, in case of
fraud in the management of the partnership, the assignee may avail himself of the usual remedies.
In case of a dissolution of the partnership, the assignee is entitled to receive his assignor’s interest and may
require an account from the date only of the last account agreed to by all the partners. (Art. 1813, NCC)
Dissolution of partnership.
The dissolution of a partnership is the change in the relation of the parties ceasing to be associated in the carrying
on, as might be distinguished from the winding up of its business. Upon its dissolution, the partnership continues and its
legal personality is retained until the complete winding up of its business culminating in its termination.
The dissolution of the partnership does not mean that the juridical entity is immediately terminated and that the
distribution of the assets to its partners should perfunctorily follow. On the contrary, the dissolution simply effected a
change in the relationship among the partners. The partnership, although dissolved, continues to exist until its
termination, at which time the winding up of its affairs should have been completed and the net partnership assets are
partitioned and distributed to the partners. (Ortega, et al. v. CA, et al., ___ SCRA 529, citing Arts. 828-1829, NCC; Jesus Sy, et
al. v. CA, et al., G.R. 94285; Sy Yong Hu and Sons, et al., v. CA, et al., G.R. No. 94285, August 31, 1999, 111 SCAD 488).
Partnership at will.
A partnership that does not fix its term is a partnership at will. A law partnership is one such partnership. The
birth and life of a partnership at will is predicated on the mutual desire and consent of the partners. The right to choose
with whom a person wishes to associate himself is the very foundation and essence of that partnership. Its continued
existence is, in turn, dependent on the constancy of that mutual resolve, along with each partner’s capability to give it, and
the absence of a cause for dissolution provided by the law itself. Verily, any one of the partners may, at his sole pleasure,
dictate a dissolution of the partnership at will. He must, however, act in good faith, not that the attendance of bad faith can
prevent the dissolution of the partnership but that it can result in a liability for damages.
The dissolution of a partnership is the change in the relation of the parties caused by any partner ceasing to be
associated in the carrying on, as might be distinguished from the winding up, of the business. (Art. 1828, NCC). Upon its

dissolution, the partnership continues and its legal personality is retained until the complete winding up of its business
culminating in its termination. (Art. 1829, NCC).
AGENCY
Contract of agency may be oral unless the law requires otherwise; requirement of SPA refers to nature; not to
form.
In the absence of any authorization, an agent could not enter into a contract of loan in behalf of the principal. As
held in Yasuma v. Heirs of De Villa, G.R. No. 150350, August 22, 2006, 499 SCRA 466, 472, involving a loan contracted by de
Villa secured by real estate mortgages in the name of East Cordillera Mining Corporation, in the absence of an SPA
conferring authority on de Villa, there is no basis to hold the corporation liable, the power to borrow money is one of those
cases where corporate officers as agents of the corporation need a special power of attorney. In the case at bar, no special
power of attorney conferring authority on de Villa was ever presented. x x x There was no showing that respondent
corporation ever authorized de Villa to obtain the loans on its behalf.”
In Gozun v. Mercado, G.R. No. 167812, December 19, 2006, 511 SCRA 305, 313-314, where it was held that it is a
general rule in the law of agency that, in order to bind the principal by a mortgage on real property executed by an agent, it
must upon its face purport to be made, signed and sealed in the name of the principal, otherwise, it will bind the agent only.
It is not enough merely that the agent was in fact authorized to make the mortgage, if he has not acte din the name of the
principal. (Alvin Patrimonio v. Napoleon Gutierrez, et al., G.R. No. 187769, June 4, 2014, Brion, J).
Authority need not be in writing.

Article 1878 paragraph 7 of the Civil Code expressly requires a special power of authority before an agent can loan
or borrow money in behalf of the principal. The law does not state that the authority be in writing. As long as the mandate
is express, such authority may be either oral or written. It was unequivocably declared in Lim Pin v. Liao Tian, et al., 200
Phil. 685 [1982], that the requirement under Article 1878 of the Civil Code refers to the nature of the authorization and not
to its form. Be that as it may, the authority must be duly established by competent and convincing evidence other than the
self serving assertion of the party claiming that such authority was verbally given, thus:
“The requirements of a special power of attorney in Article 1878 of the Civil Code and of a special
authority in Rule 138 of the Rules of Court refer to the nature of the authorization and not its form. The
requirements are met if there is a clear mandate from the principal specifically authorizing the
performance of the act. As early as 1906, this Court in Strong v. Gutierrez-Repide (6 Phil. 680) stated that
such a mandate may be either oral or written, the one vital thing being that it shall be express. (Home
Insurance Company v. United States Lines Company, et al., 21 SCRA 863; 866; Vicente v. Geraldez, 52 SCRA
210; 225; Alvin Patrimonio v. Napoleon Gutierrez, et al., G.R. No. 187769, June 4, 2014, Brion, J).
Duty when dealing with agent.

The well-settled rule is that a person dealing with an assumed agent is bound to ascertain not only the fact of
agency but also the nature and extent of the agent's authority. (Lintonjua v. Fernandez, 471 Phil. 440, 458 [2004]). The law
requires a higher degree of prudence from one who buys from a person who is not the registered owner. He is expected to
examine all factual circumstances necessary for him to determine if there are any flaws in the title of the transferor, or in
his capacity to transfer the land. (Abad v. Guimba, 503 Phil. 321, 331-332 [2005]). In ascertaining good faith, or the lack of
it, which is a question of intention, courts are necessarily controlled by the evidence as to the conduct and outward acts by
which alone the inward motive may, with safety, be determined. Good faith, or want of it, is not a visible, tangible fact that
can be seen or touched, but rather a state or condition of mind which can only be judged by actual or fancied token or signs.
(Philippine National Bank v. Militar, 526 Phil. 788, 798 [2006]; Florentina Bautista-Spille v. Nicorp Management & Dev.
Corp., et al., G.R. No. 214057, October 19, 2015, Mendoza, J).
Agent must act for and in behalf of principal, otherwise, act not binding on principal.
Mortgage executed by an authorized agent who signed in his own name without indicating that he acted for and
on behalf of his principal binds only the agent and not the principal.
In order to bind the principal by a deed executed by an agent, the deed must upon its face purport to be made,
signed and sealed in the name of the principal.” In other words, the mere fact that the agent was authorized to mortgage
the property is not sufficient to bind the principal, unless the deed was executed and signed by the agent for and on behalf
of his principal. (Rural Bank of Bombon (Camarines Sur), Inc. v. Court of Appeals, G.R. No. 95703, August 3, 1992, 212 SCRA
25, Gozun v. Mercado, 540 Phil. 323 [2006], and Far East Bank and Trust Company (now Bank of the Philippine Island) v.
Cayetano, G.R. No. 179909, January 25, 2010, 611 SCRA 96; Philippine Sugar Estates Development Co. v. Poizat, 48 Phil. 536
[1925]; Bucton v. Rural Bank of El Salvador, Inc., Misamis Oriental, et al., G.R. No. 179625, February 24, 2014, Del Castillo J).
When act of an agent binding upon the principal even if he acted beyond the scope of his authority.
Under Articles 1898 and 1910, NCC, an agent’s act, even if done beyond the scope of his authority, may bind the
principal if he ratifies them, whether expressly or tacitly. It must be stressed though that only the principal, and not the
agent, can ratify the unauthorized acts, which the principal must have knowledge of.
Ratification in agency is the adoption or confirmation by one person of an act performed on his behalf by another
without authority. The substance of the doctrine is confirmation after conduct, amounting to a substitute for a prior
authority. Ordinarily, the principal must have full knowledge at the time of ratification of all the material facts and
circumstances relating to the unauthorized act of the person who assumed to act as agent. Thus, if material facts were
suppressed or unknown, there can be no valid ratification and this regardless of the purpose or lack thereof in
concealing such facts and regardless of the parties between whom the question of ratification may arise.
Nevertheless, this principle does not apply if the principal’s ignorance of the material facts and circumstances was willful,
or that the principal chooses to act in ignorance of the facts. However, in the absence of circumstances putting a
reasonably prudent man on inquiry, ratification cannot be implied as against the principal who is ignorant of the
facts. (Country Bankers Insurance Corp. v. Keppel Cebu Shipyard, et al., G.R. No. 166044, June 18, 2012, Leonardo-de
Castro, J).

DEPOSIT
Nature of liability of banks; one imbued with public interest.

The business of banking is impressed with public interest and great reliance is made on the bank’s sworn
profession of diligence and meticulousness in giving irreproachable service. Like a common carrier whose business is
imbued with public interest, a bank should exercise extraordinary diligence to negate its liability to the depositors.
(Solidbank Corporation/Metropolitan Bank and Trust Company v. Tan, G.R. No. 167346, April 2, 2007, 520 SCRA 123, 129-
130). In this instance, the bank is sorely remiss in the diligence required in treating with its client, Gonzales. It may not
wantonly exercise its rights without respecting and honoring the rights of its clients. Art. 19, NCC applies. (Arlegui v. CA,
378 SCRA 322 (2002); Gonzales v. PCIB, et al., G.R. No. 180257, February 23, 2011).
Deposit in hotels.
If upon arrival of guest at a hotel, the guest gave notice to the doorman and parking attendant of the hotel when
he entrusted the ignition of his car to the latter, and there is loss of the car, the hotelkeeper is liable because there was a
contract of deposit with the hotelkeeper. The contract of deposit was perfected from the owner’s delivery, when he handed
over the keys to his vehicle with the parking attendant with the obligation of safely keeping and returning it. Hence, it is
liable for damages for the loss of the car. (Durban Apartments Corp. v. Pioneer Insurance & Surety Corp., G.R. No. 179419,
January 12, 2011, (Abad, J)).
Nature of rent of safety deposit box.

It is a special kind of deposit since the primary function is still the safekeeping of funds, documents, and other
objects. The renting out of the safety deposit boxes is not independent from, but related to or in conjunction with, the
function of safekeeping. (CA Agro-Industrial Dev. Corp. vs. CA, et al., G.R. No. 90027, March 3, 1993; Sia vs. CA, et al., G.R.
No. 102970, May 13, 1993, 222 SCRA 24)
Liability of hotel keeper.

Under the law, the hotel-keeper cannot free himself from responsibility by posting notices to the effect that he is
not liable for the articles brought by the guest. Any stipulation between the hotel-keeper and the guest whereby the
responsibility of the former as set forth in Articles 1998 to 2001 is suppressed or diminished shall be void. (Art. 2003,
NCC).
Article 2003 was incorporated in the New Civil Code as an expression of public policy precisely. The hotel
business like the common carrier’s business is imbued with public interest. Catering to the public, hotel-keepers are bound
to provide not only lodging for hotel guests and security to their persons and belongings. The twin duty constitutes the
essence of the business. The law in turn does not allow such duty to the public to be negated or diluted by any contrary
stipulation in so-called “undertakings” that ordinarily appear in prepared forms imposed by hotel-keepers on guests for
their signature. (YHT Realty Corp., et al. v. CA, et al., G.R. No. 126780, February 17, 2005).
Effect if there are two (2) agents.

When two persons contract with regard to the same thing, one of them with the agent and the other with the
principal, and the two contracts are incompatible with each other, that of prior date shall be preferred, without prejudice
to the provisions of Article 1544. (Art. 1916, NCC)
Article 1544, NCC contemplates of a double sale situation. Under said law, whoever registers the document first in
good faith, he being a buyer in good faith and for value, has a preferred right.
GUARANTY/MORTGAGE
Distinction between the liability of the guarantor from that of a surety.

A surety is responsible for the debt’s payment at once if the principal debtor makes default, whereas a guarantor
pays only if the principal debtor is unable to pay.
A surety is an insurer of the debt, whereas a guarantor is an insurer of the solvency of the debtor. A suretyship is
an undertaking that the debt shall be paid; a guaranty, an undertaking that the debtor shall pay. Stated differently, a surety
promises to pay the principal’s debt if the principal will not pay, while a guarantor agrees that the creditor, after
proceeding against the principal, may proceed against the guarantor if the principal is unable to pay. A surety binds
himself to perform if the principal does not, without regard to his ability to do so. A guarantor, on the other hand, does not
contract that the principal will pay, but simply that he is able to do so. In other words, a surety undertakes directly for the
payment and is so responsible at once if the principal debtor makes default, while a guarantor contracts to pay if, by the
use of due diligence, the debt cannot be made out of the principal debtor. (Palmares v. CA, 351 Phil. 664 [1998]; Trade
Investment Dev. Corp. of the Phils., et al. v. Asia Paces Corp., et al., G.R. No. 187403, February 12, 2014).
Pactum commissorium.
Under the law, the creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of them.
Any stipulation to the contrary is void. (Art. 2088, NCC; Phil. Phosphate Fertilizer Corp. v. Kamalig Resources, Inc., G.R. No.
165608, December 13, 2007). This stipulation is contrary to the nature of a true pacto de retro sale since in such sale,
ownership of the property sold is immediately transferred to the vendee a retro upon execution of the sale, subject only to
the repurchase of a vendor a retro within the stipulated period. Undoubtedly, the aforementioned stipulation is a pactum
commissorium because it enables the mortgagee to acquire ownership of the mortgaged properties without need of any
foreclosure proceedings which is a nullity being contrary to the provisions of Article 2088 of the Civil Code. (Lumayag, et
al. v. Heirs of Jacinto Nemeno, et al., G.R. No. 162112, July 3, 2007).
Reason for the prohibition against pactum commissorium.

The prohibition against pactum commissorium is intended to protect the debtor, pledgor or mortgagor against
being over-reached by the creditor who holds a piece of property, the value of which is more valuable than the amount of

the debt. Furthermore, when the security of the debt is also money deposited in a bank, the amount of which is less than
the debt, it is not illegal for the creditor to encash the time deposit certificate to pay the debtor’s obligation.
In addition to the requisites stated in Article 2085, it is indispensable, in order that a mortgage may be validly
constituted, that the document in which it appears be recorded in the Registry of Property. If the instrument is not
recorded, the mortgage is nevertheless binding between the parties. (Art. 2125, NCC; Yau Chu v. CA, September 26, 1989).
Mortgagor may sell the property mortgaged without the consent of the mortgagee.
The mortgagor may sell the thing mortgaged, but, when a mortgagor sells the mortgaged property to a third
person, the creditor may demand from such third person the payment of the principal obligation. The reason for this is
that the mortgage credit is a real right, which follows the property wherever it goes, even if its ownership changes. Article
2129 of the Civil Code gives the mortgagee, the option of collecting from the third person in possession of the mortgaged
property in the concept of owner (Teoco v. Metrobank, G.R. No. 162333, December 23, 2008, 575 SCRA 82). The
mortgagor-owner’s sale of the property does not affect the right of the registered mortgagee to foreclose on the same even
if its ownership had been transferred to another person. The latter is bound by the registered mortgage on the title he
acquired.
The contract cannot absolutely forbid the mortgagor, as owner of the mortgaged property, from selling the same
while her loan remained unpaid. Such stipulation contravenes public policy, being an undue impediment or interference
on the transmission of property. (Cinco v. CA, G.R. No. 151903, October 9, 2009, 603 SCRA 108; Sps. Antonio & Leticia Vega
v. SSS, et al., G.R. No. 181672, September 20, 2010)
Concept of “blanket mortgage clause” or a “dragnet clause”.

A “blanket mortgage clause,” also known as a “dragnet clause” is one which is specifically phrased to subsume all
debts of past or future origins. Mortgages of this character 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 “dragnet clause” operates as a convenience and accommodation to the borrowers
as it makes available additional funds without their having to execute additional security documents, thereby saving time,
travel, loan closing costs, costs of extra legal services, recording fees, et cetera. Indeed, it has been settled in a long line of
decisions that mortgages given to secure future advancements are valid and legal contracts (Mojica vs. CA, G.R. No. 94247,
September 11, 1991, 201 SCRA 517),and the amounts named as consideration in said contracts do not limit the amount for
which the mortgage may stand as security if from the four corners of the instrument the intent to secure future and other
indebtedness can be gathered. (China Banking Corp. vs. CA, 333 Phil. 158 [1996]; Prudential Bank vs. Don A. Alviar, et al.,
G.R. No. 150197, July 28, 2005)
MUTUUM – INTERESTS
Interest rate is now 6% per annum.

There has been a change in the rules on interest from 12% per annum to 6% per annum in view of the
amendment to Circular No. 905 Series of 1982 by Cir. No. 799. The landmark case of Eastern Shipping Lines, Inc. v. CA, G.R.
No. 97412, July 12, 1994, 234 SCRA 78 is no longer controlling in view of the recent ruling in Dario Nacar v. Gallery Frames
and/or Felipe Bordey, Jr., G.R. No. 189871, August 13, 2013, Peralta, J.
Compounding of interest must be in writing.

The compounding of interest should be in writing. Provision, payment of monetary interest shall be due only if:
(1) there was an express stipulation for the payment of interest; and (2) the agreement for such payment was reduced in
writing. Thus, the collection of interest without any stipulation thereof in writing is prohibited by law.
The first requirement––that there be an express stipulation for the payment of interest––is not sufficiently
complied with, for purposes of imposing compounded interest on the loan. The requirement does not only entail reducing
in writing the interest rate to be earned but also the manner of earning the same, if it is to be compounded. Failure to
specify the manner of earning interest, however, shall not automatically render the stipulation imposing the interest rate
void since it is readily apparent from the contract itself that the parties herein agreed for the loan to bear interest. Instead,
in default of any stipulation on the manner of earning interest, simple interest shall accrue. (SPOUSES TAGUMPAY N.
ALBOS and AIDA C. ALBOS v. SPOUSES NESTOR M. EMBISAN, et al., G.R. No. 210831. November 26, 2014. THIRD DIVISION.
Velasco, JR., J; TING TING PUA v. SPOUSES BENITO LO BUN TIONG et al., G.R. No. 198660, October 23, 2013, Velasco, Jr., J.)
Stipulated interest of 3% or more is excessive; void.

A contract of loan secured by mortgage was entered into with a stipulated interest of 3% per month is not valid.
It is void because it is excessive, iniquitous, unconscionable and exorbitant, hence, illegal, and void for being contrary to
morals. In Agner v. BPI, Inc., it was ruled that settled is the principle that stipulated interest rates of three percent (3%) per
month and higher are excessive, iniquitous, unconscionable, and exorbitant. While Central Bank Circular No. 905-82 which
took effect on January 1, 1983, (as amended by Cir. No. 799) effectively, removed the ceiling on interest rates for both
secured and unsecured loans, regardless of maturity, nothing in the said circular could possibly be read as granting carte
blanche authority to lenders to raise interest rates to levels which would either enslave their borrowers or lead to a
hemorrhaging of their assets. Since the stipulation on the interest rate is void for being contrary to morals, if not against
the law, it is as if there was no express contract on said interest rate; thus, the interest rate may be reduced as reason and
equity demand. (Marilag v. Martinez, G.R. No. 201892, July 22, 2015, Perlas-Bernabe, J).
Effect if there is lack of a written stipulation to pay interest on the loaned amount.
Well-settled is the rule that if there is no express stipulation on interest, no interest shall be due. (De La Paz v. L & J
Dev. Co., G.R. No. 183360, September 8, 2014, Del Castillo). Under Article 1956 of the Civil Code, no interest shall be due
unless it has been expressly stipulated in writing. Jurisprudence on the matter also holds that for interest to be due and
payable, two conditions must concur: (a) express stipulation for the payment of interest; and (b) the agreement to pay
interest is reduced in writing.

If the parties did not put down in writing their agreement, no interest is due. The collection without stipulation in
writing is prohibited by law. (Siga-an v. Villanueva, 596 Phil. 760, 769 [2009]; Sun Life of Canada (Phils.), Inc. v. Sandra Tan
Kit, et al., G.R. No. 183272, October 15, 2014, Del Castillo; Federal Builders, Inc. v. Foudnation Specialsts, Inc., G.R. No.
194507, September 8, 2014).
QUASI-DELICT and DAMAGES
Employer is liable for the loss of cargo due to acts of its employees.
If there is a contract for the delivery of cargo, but there was failure to deliver because the employees were
instrumental in the hijacking or robbery of the shipment the employer is liable for the acts of the employees. The
employer should be made answerable for damages. 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. (Tan v. Jam Transit, Inc.,
G.R. No. 183198, November 25, 2009, 605 SCRA 659, 675, citing Delsan Transport Lines, Inc. v. C & A Construction, Inc.,
459 Phil. 156 (2003)). 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. In this regard, Loadmasters failed. (Loadmasters Customs Services, Inc. v.
Glodel Brokerage Corp., et al., G.R. No. 179446, January 10, 2011).
Effect if there are several causes for the resulting damages of goods that are supposed to be delivered by a party.
The extent of the respective liabilities of several parties if the cause of loss is due to their negligence is that, they
are solidarily liable.
Each wrongdoer is liable for the total damage suffered. Where there are several causes for the resulting damages,
a party is not relieved from liability, even partially. It is sufficient that the negligence of a party is an efficient cause
without which the damage would not have resulted. It is no defense to one of the concurrent tortfeasors that the damage
would not have resulted from his negligence alone, without the negligence or wrongful acts of the other concurrent
tortfeasor.
Employer is liable for negligent act of employee acting within scope of assigned tasks.
Under Article 2180 of the New Civil Code, employers are liable for the damages caused by their employees acting
within the scope of their assigned tasks. Once negligence on the part of the employee is established, a presumption
instantly arises that the employer was remiss in the selection and/or supervision of the negligent employee. To avoid
liability for the quasi-delict committed by its employee, it is incumbent upon the employer to rebut this presumption by
presenting adequate and convincing proof that it exercised the care and diligence of a good father of a family in the
selection and supervision of its employees. (Lampesa v. De Vera, et. al., supra note 11, at 20-21, citing Syki v. Begasa, 460
Phil. 381, 386 [2003]; R. Transport Corp. v. Yu, G.R. No. 174161, February 18, 2015, Peralta, J).
Effect if suit is based on tort.

If an action is based on tort or quasi-delict under Article 2176, in relation to Article 2180 of the New Civil Code, as
such, the liability for which employer is being made responsible actually arises not from a pre-existing contractual relation
between employer and the deceased, but from a damage caused by the negligence of its employee, the employer cannot
escape its solidary liability for the liability of the employer for the negligent conduct of its subordinate is direct and
primary, subject only to the defense of due diligence in the selection and supervision of the employee. (Rafael Reyes
Trucking Corporation v. People of the Philippines, 386 Phil. 41, 57 [2000]).
Liability of registered owner of vehicle.

It is for the better protection of the public for both the owner of record and the actual operator to be adjudged
jointly and severally liable with the driver. (Zamboanga Transportation Company, Inc. v. Court of Appeals, 141 Phil. 406,
413 [1969], citing the Decision of Court of Appeals Justice Fred Ruiz Castro, citing Dizon v. Octavio, et al., 51 O.G. No. 8,
4059-4061; Castanares v. Pages, CA-G.R. No. 21809-R, March 8, 1962; Redado v. Bautista, CA G.R. No. 19295-R, Sept. 19,
1961; Bering v. Noeth, CA-G.R. No. 28483-R, April 29, 1965). “The principle of holding the registered owner liable for
damages notwithstanding that ownership of the offending vehicle has already been transferred to another is designed to
protect the public and not as a shield on the part of unscrupulous transferees of the vehicle to take refuge in, inorder to
free itself from liability arising from its own negligent act.” (R. Transport Corp. v. Yu, G.R. No. 174161, February 18, 2015,
Peralta, J).
Remedy of registered owner.

Although the registered-owner rule might seem to be unjust towards MMTC, the law did not leave it without any
remedy or recourse. According to Filcar Transport Services v. Espinas,14 MMTC could recover from Mina’s Transit, the
actual employer of the negligent driver, under the principle of unjust enrichment, by means of a cross-claim seeking
reimbursement of all the amounts that it could be required to pay as damages arising from the driver’s negligence. A cross-
claim is a claim by one party against a co-party arising out of the transaction or occurrence that is the subject matter either
of the original action or of a counterclaim therein, and may include a claim that the party against whom it is asserted is or
may be liable to the cross-claimant for all or part of a claim asserted in the action against the cross-claimant. (Metro Manila
Transit Corp. v. Cuevas, G.R. No. 167797, June 15, 2015, Bersamin, J).
Liability of hotelkeeper for the death of a guest.

The hotelkeeper is liable for damages in case of death of a guest inside his room occasioned by trespassers. The
hotel business is imbued with public interest. Catering to the public, hotelkeepers are bound to provide not only lodging
for their guests but also security to the persons and belongings of their guests. The twin duty constitutes the essence of the
business. (YHT Realty Corp. v. CA, G.R. No. 126780, February 17, 2005, 451 SCRA 638). Applying by analogy Article 2000,
Article 2001, and Article 2002 of the Civil Code (all of which concerned the hotelkeepers’ degree of care and responsibility
as to the personal effects of their guests), it was held that there is much greater reason to apply the same if not greater

degree of care and responsibility when the lives and personal safety of their guests are involved. Otherwise, the
hotelkeepers would simply stand idly by as strangers have unrestricted access to all the hotel rooms on the pretense of
being visitors of the guests, without being held liable should anything untoward befall the unwary guests. That would be
absurd, something that no good law would ever envision. (Makati Shang-ri La Hotel & Resort, Inc. v. Harper, et al., G.R. No.
189998, August 29, 2012, Bersamin, J).
Res ipsa loquitur.

Literally, res ipsa loquitur means “the thing speaks for itself.” It is the rule that the fact of the occurrence of an
inquiry, taken with the surrounding circumstances, may permit an inference or raise a presumption of negligence, or make
out a plaintiff’s prima facie case, and present a question of fact for defendant to meet with an explanation. (Ramos v. CA,
G.R. No. 124354, December 29, 1999, 321 SCRA 584). Stated differently, where the thing which caused the injury, without
the fault of the injured, is under the exclusive control of the defendant and the injury is such that it should not have
occurred if he, having such control used proper care, it affords reasonable evidence, in the absence of explanation that the
injury arose from the defendant’s want of care, and the burden of proof is shifted to him to establish that he has observed
due care and diligence. (Africa v. Caltex (Phils.) Inc., 123 Phil. 280).
The requisites for the applicability of the doctrine of res ipsa loquitur are: (1) the occurrence of an injury; (2) the
thing which caused the injury was under the control and management of the defendant; (3) the occurrence was such that
in the ordinary course of things, would not have happened if those who had control or management used proper care; and
(4) the absence of explanation by the defendant. Of the foregoing requisites, the most instrumental is the “control and
management of the thing which cause the injury.”
The element of “control and management of the thing which caused the injury” are wanting in the case. Hence, the
doctrine of res ipsa loquitur will not lie. (Professional Services, Inc. v. Agana, G.R. No. 126297; Agana v. Juan Fuentes, G.R.
No. 126467; Ampil v. Agana, G.R. No. 127590, January 31, 2007).
Effect if a driver was driving at a speed beyond the rate of speed required by law, at the time of a vehicular
accident.
He is presumed negligent. (Section 35, R.A. No. 4136). Under the New Civil Code, unless there is proof to the
contrary, it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap, he was
violating any traffic regulation. (Art. 2185, NCC). The driver's violation of the traffic rules does not erase the presumption
that he was the one negligent at the time of the collision. Even apart from statutory regulations as to speed, a motorist is
expected to exercise ordinary care and drive at a reasonable rate of speed commensurate with all the conditions
encountered (Caminos, Jr. v. People, G.R. No. 147437, May 8, 2009, 587 SCRA 348, 361, citing Foster v. ConAgra Poultry Co.,
670 So.2d 471) which will enable him to keep the vehicle under control and, whenever necessary, to put the vehicle to a full
stop to avoid injury to others using the highway. (Nunn v. Financial Indem. Co., 694 So.2d 630; Filipinas Synthetic Fiber
Corp. v. Wilfredo delos Santos, et al., G.R. No. 152033, March 16, 2011).
DAMAGES
Compensatory damages for loss of capacity to earn; when recoverable.

Under Article 2206 of the Civil Code, the heirs of the victim are entitled to indemnity for loss of earning capacity.
Compensation of this nature is awarded not for loss of earnings, but for loss of capacity to earn. The indemnification for
loss of earning capacity partakes of the nature of actual damages which must be duly proven by competent proof and the
best obtainable evidence thereof. Thus, as a rule, documentary evidence should be presented to substantiate the claim for
damages for loss of earning capacity. By way of exception, damages for loss of earning capacity may be awarded despite
the absence of documentary evidence when (1) the deceased is self-employed and earning less than the minimum wage
under current labor laws, in which case, judicial notice may be taken of the fact that in the deceased's line of work no
documentary evidence is available; or (2) the deceased is employed as a daily wage worker earning less than the minimum
wage under current labor laws. (Jose v. Angeles, G.R. No. 187899, October 23, 2013, 708 SCRA 506; People v. Villar, G.R. No.
202708, April 13, 2015, Del Castillo, J).
Death due to crime; amount of damages.

When death occurs due to a crime, the following damages may be awarded: (1) civil indemnity ex delicto for the
death of the victim; (2) actual or compensatory damages; (3) moral damages; ( 4) exemplary damages; and ( 5) temperate
damages. (People v. Nelmida, G.R. No. 184500, September 11, 2012, 680 SCRA 386, 437).
Prevailing jurisprudence pegs the amount of civil indemnity and moral damages awarded to the heirs of the
victim of Parricide at P75,000.00 each. (People v. Tibon, 636 Phil. 521, 533 (2010)). The temperate damages awarded by
the RTC in the amount of P30,000.00 should be decreased to P25,000.00 to also conform with the latest jurisprudence. It is
fitting to additionally award exemplary damages in the sum of P30,000.00 considering the presence of the qualifying
circumstance of relationship. (People v. Guting, G.r. No. 205412, September 9, 2015, Leonardo-De Castro, J).
Award of damages.
Nominal damages are recoverable where a legal right is technically violated and must be vindicated against an
invasion that has produced no actual present loss of any kind. Its award is thus not for the purpose of indemnification for a
loss but for the recognition and vindication of a right. In the present case, Gonzales had the right to be informed of the
accrued interest and most especially, for the suspension of his COHLA. For failure to do so, the bank is liable to pay
nominal damages.
Moreover, the failure to give prior notice when required constitutes a breach of contract and is a clear violation of
Art. 21 of the Code which entitles the client to an award for moral damages. Even in the absence of malice or bad faith, a
depositor still has the right to recover reasonable moral damages, if the depositor suffered mental anguish, serious
anxiety, embarrassment, and humiliation. (EUSEBIO GONZALES v. PCIB, et al., G.R. No. 180257, February 23, 2011, Velasco,
J.)

Award of temperate damages.
In the absence of competent proof on the amount of actual damages suffered, a party is entitled to received
temperate damages. (Manila Electric Company (MERALCO) v. Castillo, supra., citing Duenas v. Guce-Africa, G.R. No. 165679,
October 5, 2009, 603 SCRA 11, 22). Article 2224 of the New Civil Code provides that: “Temperate or moderates damages,
which are more than nominal but less than compensatory damages, may be recovered when the court finds that some
pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty.” The amount
thereof is usually left to the sound discretion of the courts but the same should be reasonable, bearing in mind that
temperate damages should be “more than nominal but less than compensatory.” Considering the concomitant
circumstances prevailing in this case, temperate damages in the amount of P350,000.00 is deemed equitable. (International
Container Terminal Services, Inc. v. Chua, G.R. No. 195031, March 26, 2014, Peralta, J).
LAND REGISTRATION
Land registration court has no jurisdiction over land already decreed under the name of another.
An application for registration over a portion of a big lot covered by a TCT may not be granted. A land registration
court has no jurisdiction to order the registration of land already decreed in the name of another in an earlier land
registration case. Issuance of another decree covering the same land is, therefore, null and void. (Top Management
Programs Corporation v. Fajardo, G.R. No. 150462, June 15, 2011, 652 SCRA 18, 37, and Mercado v. Valley Mountain Mines
Exploration, Inc., G.R. Nos. 141019, 164281, and 185781, November 23, 2011, 661 SCRA 13, 44).
The rationale behind the Torrens System is that the public should be able to rely on a registered title. The Torrens
System was adopted in this country because it was believed to be the most effective measure to guarantee the integrity of
land titles and to protect their indefeasibility once the claim of ownership is established and recognized. The real purpose
of the Torrens System is to quiet title to land and to stop forever any question as to its legality. Once a title is registered,
the owner may rest secure, without the necessity of waiting in the portals of the court, or sitting on the "mirador su casa"
to avoid the possibility of losing his land. (Ingusan v. Heirs of Reyes, 558 Phil. 50, 61 [2007]; Francisco v. Rojas, et al., G.R.
No. 167120, April 23, 2014, Peralta, J).
A Certificate of Title cannot be subject to collateral attack.

It is settled in this jurisdiction that the issue of the validity of title can only be assailed in an action expressly
instituted for such purpose. (Ingusan Miguel v. Heirs of Aureliano I. Reyes, 558 Phil. 60 (2007), citing Caraan v. Court of
Appeals, 551 Phil. 172 (2005); and Spouses Apostol v. Court of Appeals, 476 Phil. 414 (2004)). A certificate of title cannot
be attacked collaterally. This rule is provided under Section 48 of PD 1529 which states that a certificate of title shall not
be subject to collateral attack. It cannot be altered, modified, or canceled except in a direct proceeding in accordance with
law. (Wee v Mardo, G.R. No. 202414, June 4, 2014, Mendoza, J).
PD 1529 merely requires the property sought to be registered as already alienable and disposable at the time the
application for registration of title is filed. The required possession is not to be reckoned from the time of the declaration
of the property as alienable and disposable. Since Section 48(b) merely requires possession since June 12, 1945 and does
not require that the lands should have been alienable and disposable during the entire period of possession, the possessor
is entitled to secure judicial confirmation of his title thereto as soon as it is declared alienable and disposable. (REPUBLIC
OF THE PHILIPPINES v. IGLESIA NI CRISTO, et al., G.R. No. 180067, June 30, 2009, VELASCO, JR., J.)
Good Luck to All 2016 Bar Examinees
We Are Praying for Your Success
God Bless
From: ABRC Family

ABRC2016.Magic Areas in Civil Law Combined 2 Segregate Separate

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ABRC2016.Magic Areas in Civil Law Combined 2 Segregate Separate

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MAGIC AREAS in CIVIL LAW

2016 Bar Examination

Effectivity of laws; publication required.

Liability for breach of promise to marriage; basis.

PERSONS AND FAMILY RELATIONS

Marriage without a license is void.

Proceedings after declaration of nullity of marriage.

ABRC2015.Magic Areas in Civil (combined 2)segregate-separate/EVSA/crys 1

Divorce between Filipino citizens void; second marriage void.

Purpose of Art. 26(2), F.C.

ABRC2015.Magic Areas in Civil Law (combined 2)segregate-separate/EVSA/crys 2

Article 26(2) a corrective measure.

Marriage valid even if the purpose is to secure citizenship.

Extent of the petition under Article 26 paragraph 2 of the Family Code.

Concept of mixed marriage.

Affidavit of cohabitation; effect if contents are false.

ABRC2015.Magic Areas in Civil Law (combined 2)segregate-separate/EVSA/crys 3

Requisites of declaration of presumptive death of an absent spouse.

Reason for strict standard approach.

Fraudulent declaration of presumptive death; remedy.

Reason for the prohibition against donation of spouses to one another.

ABRC2015.Magic Areas in Civil Law (combined 2)segregate-separate/EVSA/crys 4

Prohibition applies to common-law relationship.

Surety undertaking does not redound to the benefit of family.

Void marriage; property relationship is governed by the rule on co-ownership.

Article 162, F.C., not retroactive.

ABRC2015.Magic Areas in Civil Law (combined 2)segregate-separate/EVSA/crys 5

When family home cannot be partitioned.

Effect if there are improvements on family home.

Reason for the presumption of legitimacy of child

Application of Art. 168, F.C.

Unsigned birth certificate not proof of filiation.

ABRC2015.Magic Areas in Civil Law (combined 2)segregate-separate/EVSA/crys 6

Surname of illegitimate child.

ABRC2015.Magic Areas in Civil Law (combined 2)segregate-separate/EVSA/crys 7

No separation from mother child below 7; exception.

Code Commission’s reason.

Middle name of an adopted is surname of biological mother; reason.

Welfare of child is of utmost importance.

ABRC2015.Magic Areas in Civil Law (combined 2)segregate-separate/EVSA/crys 8

Grounds for Change of Name (RA 9048)

Sex reassignment not a ground for change of name.

Mortgage of building independently of the land.

Machinery is movable; exception.

Builder in good faith; owner makes the choice.

Reasons for the law

Intent of Art. 448, NCC.

ABRC2015.Magic Areas in Civil Law (combined 2)segregate-separate/EVSA/crys 9

Lessee not a builder in good faith.

Nature of and requisites of quieting of title.

Co-owner cannot acquire by prescription.

When prescription runs against co-owners.

Partition is imprescriptible; exception.

ABRC2015.Magic Areas in Civil Law (combined 2)segregate-separate/EVSA/crys 10

Distinguish occupation from possession.

Concept of tacking of possession.

Remedy of owner of movable if unlawfully deprived.

Concept of “unlawfully deprived.”

Voluntary easement may not be extinguished by an action in court.

Agreement on easement binding upon the parties and their heirs.

ABRC2015.Magic Areas in Civil Law (combined 2)segregate-separate/EVSA/crys 11

Permanent easement; survives termination of necessity.

Effect of existence of apparent sign of easement.