LAW ON PROPERTY

What are the requisites for easement on right

of way?

1. The easement must be established at the point least Prejudicial to the

servient estate

2. Claimant must be an Owner of enclosed immovable or with real right

3. There must be no adequate Outlet to a public highway

4. The right of way must be absolutely Necessary not mere convenience

5. The isolation must not be Due to the claimants own act

6. There must be payment of proper Indemnity.

Can easement of right of way be acquired by

prescription?

No, because it is discontinuous or intermittent (Ronquillo, et al. vs. Roco, GR No.

L-10619, Feb. 28, 1958).

What if the property is not the shortest way

and will not cause the least damage to the
servient estate?

The way which will cause the least damage should be used even if it will not be
the shortest. The easement of right of way shall be established at the point least
prejudicial to the servient estate and where the distance from the dominant
estate to a public highway is the shortest. In case of conflict, the criterion of
least prejudice prevails over the criterion of shortest distance.

What are the rights of the usufructuary as to

the thing and its fruits?

1. To Receive the fruits of the property in usufruct and half of the hidden treasure
he accidentally finds on the property (Arts. 566, 438, NCC)

2. To enjoy any Increase which the thing in usufruct may acquire through
accession (Art. 571, NCC)

3. To personally Enjoy the thing or lease it to another (Arts. 572-577, NCC)

generally for the same or shorter period as the usufruct

4. To make such Improvements or expenses on the property he may deem proper

and to remove the improvements provided no damage is caused to the property
(Art. 579, NCC)
5. To Set-off the improvements he may have made on the property against any
damage to the same (Art. 580, NCC)

6. To Retain the thing until he is reimbursed for advances for extraordinary

expenses and taxes on the capital (Art. 612, NCC)

7. To Collect reimbursements from the owner for indispensable extra ordinary

repairs, taxes on the capital he advanced, and damages caused to him

8. To Remove improvements made by him if the same will not injure the property

What are the rights of the usufructuary as to

the usufruct itself?

a. To Alienate or mortgage the right of usufruct (Art. 572, NCC) XPN: parental
usufruct (Arts. 225, 226 FC)

b. In a usufruct to Recover property/real right, to bring the action and to oblige

the owner thereof to give him the proper authority and the necessary proof to
bring the action (Art. 578, NCC)

c. In a usufruct of part of a Common property, to exercise all the rights pertaining

to the co-owner with respect to the administration and collection of fruits or
interests.

EXTINCTION/TERMINATION OF USUFRUCT

How is usufruct extinguished?

1. Acquisitive Prescription

Note: the use by a third person and not the non-use by the usufructuary
2. Total Loss of the thing Note: if the loss is only partial, the usufruct continues
with the remaining part.

3. Death of the usufructuary; unless a contrary intention appears. Reason:

Usufruct is constituted essentially as a lifetime benefit for the usufructuary or in
consideration of his person.

4. Termination of right of the person constituting the usufruct

5. Expiration of the period or fulfillment of the resolutory condition

6. Renunciation by the usufructuary. Note: it partakes the nature of a

condonation or donation, it must comply with the forms of donation.

7. Merger of the usufruct and ownership in the same person who becomes the
absolute owner thereof. (Art. 1275, NCC)

What happens when a co-owner sells the whole property as his?

The sale will affect only his own share but not those of the other co-owners who
did not consent to the sale.

Note: A sale of the entire property by one co-owner without the consent of the
other co-owners is not null and void but affects only his undivided share and the
transferee gets only what would correspond to his grantor in the partition of the
thing owned in common (Paulmitan vs. CA, GR No. 51584, Nov. 25, 1992.)

RIGHT TO CONTRIBUTIONS FOR EXPENSES

What are the expenses which the co-owners

can be compelled to contribute?

Only necessary expenses. Useful expenses and those for pure luxury are not
included.

What are those acts which require the majority

consent of the co-owners?

a. Management

b. Enjoyment

c. Improvement or embellishment

What is the remedy in case the minority

opposes the decision of the majority in co-
ownership?

Minority may appeal to the court against the majoritys decision if the same is
seriously prejudicial.

What is avulsion?

It is the deposit of known (identifiable) portion of land detached from the

property of another which is attached to the property of another as a result of
the effect of the current of a river, creek or torrent.

Note: Art. 459 states that Whenever the current of a river, creek, or torrent
segregates from an estate on its banks a known portion of land and transfers it
to another estate, the owner of the land to which the segregated portion
belonged retains the ownership of it, provided he removes it within 2 years.
 What are the requisites of avulsion?

1. Transfer is caused by the Current of a river, creek, or torrent.

2. Transfer is sudden or Abrupt

3. The Portion of the land transported is known or identifiable.

What is the rule on acquisition of titles over an

avulsion?

General Rule: Original owner retains title.

Exceptions: The owner must remove (not merely claim) the transported portion
within 2 years to retain ownership, otherwise, the land not removed shall belong
to the owner of the land to which it has been adjudicated in case of:

1. Abandonment; or

2. Expiration of 2 years, whether the failure to remove be voluntary or

involuntary, and irrespective of the area of the portion known to have been
transferred.

Abandoned Land
Land devoted to any crop at least one year prior to the notice of expropriation,
but was not utilized by the owner for his benefit for the past five years prior to
such notice of expropriation. Sec. 166, Code of Agrarian Reforms

LAW ON SALES

EQUITABLE MORTGAGE

What is an equitable mortgage?

One which lacks the proper formalities, form or words or other requisites
prescribed by law for a mortgage, but shows the intention of the parties to make
the property subject of the contract as security for a debt and contains nothing
impossible or contrary to law

What are the essential requisites of equitable mortgage?

1. Parties entered into a contract of sale

2. Their intention was to secure an existing debt by way of a mortgage.

What is the rule on the presumption of an equitable mortgage?

A sale with conventional redemption is deemed to be an equitable mortgage in

any of the following cases: (Art. 1602)

1. Price of the sale with right to repurchase is unusually Inadequate

2. Seller Remains in possession as lessee or otherwise

3. Upon or after the expiration of the right to repurchase Another instrument

extending the period of redemption or granting a new period is executed

4. Purchaser Retains for himself a part of the purchase price

5. Seller binds himself to pay the Taxes on the thing sold

6. In any other case where the real intention of the parties is that the transaction
shall Secure the payment of a debt or the performance of any other obligation.

7. Art. 1602 shall also apply to a contract purporting to be an Absolute sale. (Art.
1604)

Note: In case of doubt in determining whether it is equitable mortgage or sale a

retro (with right of repurchase); it shall be construed as equitable mortgage.

Remedy is reformation.
An equitable mortgage is one which although lacking in some formality, or form
or words, or other requisites demanded by a statute, nevertheless reveals the
intention of the parties to charge real property as security for a debt, and
contains nothing impossible or contrary to law.

CONVENTIONAL REDEMPTION

What is conventional redemption?

Seller reserved the right to repurchase thing sold coupled with obligation to
return price of the sale, expenses of contract & other legitimate payments and
the necessary & useful expenses made on the thing sold Note: Right to
repurchase must be reserved at the time of perfection of sale. (Pineda, p. 333)

LEGAL REDEMPTION

What is legal redemption?

It is the right to be subrogated upon the same terms and conditions stipulated in
the contract, in the place of one who acquires the thing by purchase or by dation
in payment or by other transaction whereby ownership is transmitted by onerous
title.

What are the instances of legal redemption?

1. Sale of a co-owner of his share to a stranger (Art. 1620)

2. When a credit or other incorporeal right in litigation is sold (Art. 1634)

3. Sale of an heir of his hereditary rights to a stranger (Art. 1088)

4. Sale of adjacent rural lands not exceeding 1 hectare (Art. 1621)

5. Sale of adjacent small urban lands bought merely for speculation (Art. 1622)

What is the period of redemption?

1. No period agreed upon 4 years from date of contract

2. When there is agreement should not exceed 10 years; but if it exceeded, valid
only for the first 10 years.

3. When period to redeem has expired & there has been a previous suit on the
nature of the contract seller still has 30 days from final judgment on the basis
that contract was a sale with pacto de retro:

Rationale: no redemption due to erroneous belief that it is equitable mortgage

which can be extinguished by paying the loan.

4. When period has expired & seller allowed the period of redemption to expire
seller is at fault for not having exercised his rights so should not be granted a
new period

Note: Tender of payment is sufficient but it is not in itself a payment that relieves
the seller from his liability to pay the redemption price.

When does period of redemption begin to run?

1. Right of legal pre-emption or redemption shall be exercised within 30 days
from written notice by the buyer deed of sale not to be recorded in Registry of
Property unless accompanied by affidavit that buyer has given notice to
redemptioners

2. When there is actual knowledge, no need to give written notice; period of

redemption begins to run from actual knowledge

INSTALLMENT SALES LAW

What is the Installment Sales Law?

Commonly known as the Recto Law. It is embodied in Art. 1484 of the NCC which
provides for the remedies of a seller in the contracts of sale of personal property
by installments.

Note: Art. 1484 of the NCC incorporates the provisions of Act No. 4122 passed by
the Philippine Legislature on Dec. 9, 1939, known as the "Installment Sales Law"
or the "Recto Law," which then amended Art. 1454 of the Civil Code of 1889.

To what does the Recto Law apply?

This law covers contracts of sale of personal property by installments (Act No.
4122). It is also applied to contracts purporting to be leases of personal property
with option to buy, when the lessor has deprived the lessee of the possession or
enjoyment of the thing. (PCI Leasing and Finance Inc. v. Giraffe-X Creative
Imaging, Inc., G.R. No. 142618, July 12, 2007)

What are the alternative remedies in case of sale of personal property in

installments?
1. Specific Performance: Exact fulfillment should the buyer fail to pay

General Rule: If availed of, the unpaid seller cannot anymore choose other
remedies;

Exception: if after choosing, it has become impossible, rescission may be

pursued
2. Rescission: Cancel the sale if buyer fails to pay 2 or more installments
Deemed chosen when:

a. Notice of rescission is sent

b. Takes possession of subject matter of sale

c. Files action for rescission

3. Foreclosure: Foreclose on chattel mortgage if buyer fails to pay 2 or more

installments

General Rule: Actual foreclosure is necessary to bar recovery of balance - Extent

of barring effect: purchase price

Exception: Mortgagor refuses to deliver property to effect foreclosure; expenses

incurred in attorneys fees, etc.

What is the Realty Installment Buyer Act?

Commonly known as the Maceda Law. It is embodied in R.A. 6552 which
provides for certain protection to particular buyers of real estate payable on
installments. The law declares as "public policy to protect buyers of real estate
on installment payments against onerous and oppressive conditions.

Note: The purpose of the law is to protect buyers in installment against

oppressive conditions.

What are the transactions/sale covered by the Maceda Law?

The law involves the sale of immovables on installment (Maceda Law, R.A. 6552).

1. Coverage: Residential Real Estate (Villanueva, p. 431)

2. Exclude:

a. Industrial lots

b. Commercial buildings (and commercial lots by implication)

c. Sale to tenants under agrarian laws

What are the rights granted to buyers?

1. Buyer paid at least 2 years installment

a. Pay without interest the balance within grace period of 1 month for every
year of installment payment. Grace period to be exercised once every 5 years.

b. When no payment cancelled; buyer entitled to 50% of what he has paid +

5% for every year but not exceeding 90% of payments made

Note: Cancellation to be effected 30 days from notice & upon payment of cash
surrender value.
2. Buyer paid less than 2 years installment

a. Grace period is not less than 60 days from due date

b. Cancellation if failure to pay w/in 60 days grace

c. 30 days notice before final cancellation

Note: buyer can still pay w/in the 30 days period with interest.

IMPLIED WARRANTIES

What are implied warranties?

Warranties deemed included in all contracts of sale by operation of law. (Art.
1547)
1. Warranty that seller has right to sell refers to consummation stage. Not
applicable to sheriff, auctioneer, mortgagee, pledge

2. Warranty against eviction Requisites:

a. Buyer is Evicted in whole or in part from the subject matter of sale

b. Final Judgment

c. Basis of eviction is a right Prior to sale or act imputable to seller

d. Seller has been Summoned in the suit for eviction at the instance of buyer;
or made 3rd party defendant through 3rd party complaint brought by buyer

e. No waiver on the part of the buyer Note: For eviction disturbance in law is
required and not just trespass in fact.

3. Warranty against encumbrances (non-apparent) Requisites:

a. immovable sold is encumbered with non- apparent burden or servitude not

mentioned in the agreement

b. nature of non-apparent servitude or burden is such that it must be

presumed that the buyer would not have acquired it had he been aware thereof

Exception: warranty not applicable when non-apparent burden or servitude is

recorded in the Registry of Property unless there is expressed warranty that
the thing is free from all burdens & encumbrances

4. Warranty against Hidden Defects Requisites:

a. Defect is important or Serious

i. The thing sold is unfit for the use which it is intended

ii. Diminishes its fitness for such use or to such an extent that the buyer
would not have acquired it had he been aware thereof

b. Defect is Hidden

c. Defect Exists at the time of the sale

d. Buyer gives Notice of the defect to the seller within reasonable time

e. Action for rescission or reduction of the price is brought within the proper
period

i. 6 months from delivery of the thing sold

ii. Within 40 days from the delivery in case of animals

f. There must be No waiver of warranty on the part of the buyer.

When is implied warranty not applicable?

1. As is and where is sale

2. Sale of second hand articles

3. Sale by virtue of authority in fact or law

4. Sale at public auction for tax delinquency

What are the effects of waiver of an implied warranty?

1. Seller in bad faith & there is waiver against eviction void

2. When buyer w/o knowledge of a particular risk, made general renunciation of

warranty is not a waiver but merely limits liability of seller in case of eviction
3. When buyer with knowledge of risk of eviction assumed its consequences &
made a waiver seller not liable (applicable only to waiver of warranty against
eviction)

REMEDIES OF AN UNPAID SELLER

What are the remedies of an Unpaid Seller?

I. Ordinary

1. Action for Price Exercised when:

a. ownership has passed to buyer;

b. price is payable on a day certain

c. goods cannot readily be resold for reasonable price and Art. 1596 is
inapplicable

2. Action for Damages In case of wrongful neglect or refusal by the buyer to

accept or pay for the thing sold

II. Special 1. Possessory Lien Seller not bound to deliver if buyer has not paid
him the price. It is exercisable only in following circumstances:

a. goods sold without stipulation as to credit

b. goods sold on credit but term of credit has expired

c. buyer becomes insolvent Note: When part of goods delivered, may still
exercise right on goods undelivered

2. Stoppage in Transitu

Requisites:

a. Insolvent buyer

b. Seller must Surrender the negotiable document of title, if any

c. Seller must bear the Expenses of delivery of the goods after the exercise of
the right.

d. Seller must either actually take possession of the goods sold or give Notice
of his claim to the carrier or other person in possession

e. Goods must be in Transit

f. Unpaid seller

3. Special Right to Resell the Goods Exercised when:

a. Goods are perishable,

b. Stipulated the right of resale in case of default, or

c. Buyer in default for unreasonable time

4. Special Right to Rescind Requisites:

a. Expressly stipulated OR buyer is in default for unreasonable time

b. Notice needed to be given by seller to buyer

Note: Ownership of goods already with buyer but seller may still rescind;
ownership is destroyed even without court intervention but in ordinary sale, need
to go to court.
 OPTION MONEY

What is the effect of failure to determine the price?

1. Where contract is executory ineffective

2. Where the thing has been delivered to and appropriated by the buyer the
buyer must pay a reasonable price therefore Note: The fixing of the price cannot
be left to the discretion of one of the parties. However, if the price fixed by one of
the parties is accepted by the other, the sale is perfected.

What is an option money?

The distinct consideration in case of an option contract. It does not form part of
the purchase price hence, it cannot be recovered if the buyer did not continue
with the sale.

When is payment considered option money?

Payment is considered option money when it is given as a separate and distinct
consideration from the purchase price. Consideration in an option contract may
be anything or undertaking of value.

EARNEST MONEY

What is an earnest money or arras?

This is the money given to the seller by the prospective buyer to show that the
latter is truly interested in buying the property, and its aim is to bind the bargain.
(Pineda, p. 75)

What is the effect of giving an earnest money?

It forms part of the purchase price which may be deducted from the total price. It
also serves as a proof of the perfection of the contract of sale. The rule is no
more than a disputable presumption and prevails only in the absence of contrary
or rebuttable evidence. (PNB v CA, 262 SCRA 464, 1996)

Note: Option money may become earnest money if the parties so agree.

When is payment considered an earnest money?

When the payment constitutes as part of the purchase price. Hence, in case
when the sale did not happen, it must be returned to the prospective buyer.