Civil Law o No.

The phrase “unless otherwise provided” only refers to the

number of days, not fact of publication.
Bar 2011 Notes  What is required to be published?
o The entire text of the law.
Roland Glenn T. Tuazon
 What is the interpretation of the term “law”?
o It can be executive issuances, regulations, et. al., and not just
Ateneo de Manila University
republic acts, as long as it affects the public in general and it
requires public interest.
TABLE OF CONTENTS:
 Can a law affect just one person?
1. PRELIMINARY TITLE o Yes, for instance, declarations of citizenship. It still has to be
2. PERSONS AND FAMILY RELATIONS published. Same rule applies, even if only one locality is
3. PROPERTY affected
4. SUCCESSION  Read Tanada v. Tuvera.
5. OBLIGATIONS AND CONTRACTS o It is not whether you read the publication or not. It not whether
6. LAND TITLES you understand the law or not. As long as there is opportunity
7. PRESCRIPTION to read it, there is compliance with publication requirements.
8. CREDIT TRANSACTIONS  Garcillano v. House:
9. SALES o The rules of procedure for legislative inquiries of Senate must
10. PARTNERSHIP be published in accordance to Art. 2 of the Civil Code, as
11. AGENCY mandated by the constitution (“duly published”).
12. COMPROMISE  SEC v. GMA Network:
13. LEASE o A memorandum circular regulating filing fees for submission of
14. TORTS AND DAMAGES articles of incorporation or extension of corporate life must be
published because it regulates public rights at large.

PRELIMINARY TITLE Mistake of fact v. mistake of law

 Mistake of fact can be a ground for vitiation of consent. But mistake of

Publication
 When do laws become effective?
o 15 days after publication in OG or newspaper of general
circulation (EO 200), unless otherwise provided
 Is 15 days mandatory?
o No. It can be some other time period, less or more. What is
mandatory is fact of publication.
 Can the law provide that there is no need for publication?
law is not a defense for vitiated consent.
 Specific instances where a mistake of law can have some effect?
o 1. Good faith defense – must show that it is a difficult provision
of law to interpret, and this gave rise to mistake (Art. 526).
BUT this only gives rise to mitigation of liability, not complete
excuse there from.
o 2. Mistake of payment or solutio indebiti
Prospectivity of laws

1
 General rule: laws are prospective in nature. o If law number 2 is a case of implied repeal, then law number 1
 When did the Family Code take effect? is revived unless law number 3 is likewise incompatible or law
o August 3, 1988 number 3 repeals law 1.
 When did the Civil Code take effect?  (2) When does a law lapse?
o August 30, 1950 o When the law itself provides for its own lifespan. There is no
 Exceptions to non-retroactivity? need for a further statute to give effect to its lapse.
o Regardless of what kind of law, it MUST have a retroactivity  (3) Unconstitutionality declared by courts. How does this differ?
clause. (IMPT) o When the court declares that a law is unconstitutional, it is null
o 1. Procedural laws and void from the beginning. Exception: operative fact, which
o 2. Curative laws is based on equity.
o 3. Tax laws
o 4. Penal laws which benefit the accused (who is not a habitual Judicial decisions
offender)
o 5. Substantive laws that do not impair vested rights  Considered as part of the law of the land. Stare decisis, however, only
o 6. Interpretative laws applies to SC decisions.
 Liam Law v. Olympic Sawmill:  It does not, however, become a “law” per se – no need to publish.
o Ineffectivity of usury law should retroact as to change the  De Roy v. CA:
Rules of Court as to this matter. o Judicial decisions need not be published first in the OG before
becoming effective and binding jurisprudence. A lawyer must
Waiver of rights keep abreast with judicial decisions.

 What is the general rule? Computation of period of laws

o Rights may be waived
 What are the exceptions?
o 1. Waiver against public policy, public order, good customs,
morals, or law
o 2. Prejudicial to third persons with right recognized by law
Three types of termination of laws
 Effectivity of laws is a shared legislative and judicial function.
 (1) Repeal: Requires another law passed by Congress declaring that
the law is repealed, or a new law that is irreconcilable with the old law.
Implied repeal is not favored.
 What happens if the repealing law is itself repealed?
o It depends on law number 2. If law number 2 is a case of
express repeal, then law number 1 is not revived. There must
be a specific provision reviving it.
2
 Ordinary contracts: you can define your terms any way you want
(example, a year can be 300 days) For laws, however, a year is 365
days.
o UNLESS, one specifically names the year
 First day excluded, last day included.
 For contracts, it does not matter if the last day falls on a weekend.
Contrast with Rules of Court, where it adjusts to the next business day.
Principle of nationality
 What are the things covered by the principle of nationality?
o Family rights and duties,
o status and condition, (ex. legitimacy, whether marriage is valid)
o Legal capacity
 Wherever a Filipino citizen is, Philippine law governs the three realms
above.
 When there is an alien within our country, we still apply their national
laws as regards family rights and duties, status and condition, and legal
capacity.
 Nationality also governs successional rights of the decedent
 For purposes of legal capacity, when will the principle of
nationality not apply?
o Marriages – lex loci celebrationis but only as to authority of
solemnizing officer, marriage license, marriage ceremony
 General rule: still governed by nationality (IMPT)
o Contracts involving real or personal properties – lex situs
 Exception: when reason of acquisition of the thing is
succession: nationality of the decedent governs
o For the formal validity of wills – lex loci celebrationis
 3 things to determine:
o What law governs legal capacity
o What law governs extrinsic validity
o What law governs intrinsic validity
 CONTRACTS
o Legal capacity – nationality
 Except: contracts referring to properties, which is
governed by lex situs
o Extrinsic validity – lex loci celebrationis
o Intrinsic validity – there is freedom to stipulate governing law
 WILLS
o Legal capacity – national law of decedent, not successor
o Extrinsic validity – lex loci celebrationis
 Aliens’ choices – national law, domicile, Philippine
law, lex loci celebrationis
 NOTE: for aliens’ wills, these refer to wills presented
for probate in the Philippines; we don’t care otherwise
o Intrinsic validity – national law of the decedent
 PROPERTIES –
o Lex rei sitae (where found)
 Ex. so controversy between whether a British
decedent spouse can dispose of the entirety of
3
property in the Philippines, where British law is
unclear, it is presumed it is the same as Philippine
law. Philippine law governs because the property is
found here. Our law says that he can only dispose ½
of his share in the property.
o Exceptions:
 1) successional rights are governed by the national
law of the decedent
 Order of succession, amount of successional
rights, intrinsic validity of testamentary
provisions, capacity to succeed
 2) property relations between spouses governed by
the marriage settlement entered into prior to marriage
 When does renvoi usually apply?
o This usually applies when an alien dies in the Philippines.
Basing this on general principle, basing it on the law of
nationality of decedent. If based on national law of decedent, it
refers back to the law of the domicile (which is the Philippines),
then we accept the renvoi and apply Philippine law
 Llorente v. CA:
o A married Filipino man joined the US army and became a US
citizen. He divorced his wife after his wife cheated on him.
The divorce was valid because under American national laws,
he could initiate divorce.
 What does Article 17 say about prohibitive laws?
o Prohibitive laws here concerning persons, acts, property, or
laws which have for their object public order, public policy, or
good customs are not rendered ineffective by laws, judgments,
or conventions abroad.
o EXCEPTION?
 Art. 26(2), where an alien obtains divorce abroad
allowing him to remarry, his Filipino spouse gains
capacity to remarry as well.
Human relations
 Pardo de Tavera case – human relations chapter are just general
concepts guiding particular human conduct. In the absence of any
 specific law or contract, then you use these provisions. You cannot
immediately use these provisions, if there is a specific governing law or
contract.
 Chato v. Fortune Tobacco Corp:
o In order for Art. 32 to apply, where a private individual can hold
a public officer personally liable of an act or omission only if
there is a particular injury to that person.
 Duty to act with justice, observe honesty, and good faith:
o Every person in the exercise of his rights and in the
performance of his duties must act with justice, give everyone
his due, and observe honesty and good faith.
o Lorente v. Sandiganbayan: An official who cleared three
other terminated employees for unpaid liabilities (which is
offset by gratuities later) and then suddenly “went legal” on
another employee for no apparent reason was not acting with
justice, honesty, good faith.
o Leads to civil liability even if perfectly legal.
o Requisites for Art. 19?
 1. There is legal right or duty
 2. Exercised in BF
 3. With intent to prejudice another
 What is the difference between Art 20 and 21?
 NOTE: Articles 20 and 21 are implementing
provisions of Art. 19. So Art. 19 is the general
principle, and 20 (general sanction) and 21 (acts
contra bonus mores) are the specifics.
o Article 20 has to be contrary to law. Article 21 is legal, but
contrary to morals, public policy, or customs.
o Article 20, the act is either done willfully or negligently – as
long as contrary to law. Article 21, intentional.
 In a case, an example of Art. 21 is a wife who left her
husband, went abroad, got a divorce, and remarried.
It is against morals, good customs, or public policy.
o Requisites of Art. 21?
 1. Legal act
 2. But contrary to morals, GC, PP, PO, or law
 3. With intent to prejudice another
4
 Article 21 – breach of promise to marry. Is there any law that says
you have to comply with the promise to marry?
o No. You cannot demand for specific performance that the
other marry you.
o But you can recover actual damages for expenses, such as
down-payment for venue, dress, food, etc. But not moral
damages, in general.
o Exception: moral damages when there is deceit or fraud.
(Baksh case)
 There was breach of promise to marry. The teacher became
pregnant, and was dismissed from her job because she got
pregnant without a husband. Can she recover from the man loss
of income?
o Yes (old case).
o But now, you cannot be dismissed for this anymore, so it’s
moot.
 Who is liable for hospital expenses?
o Shared expenses, since it takes two to get pregnant.
 When are moral damages allowed?
o Criminal or moral seduction.
Provisions Dean Del just breezed through:
1. Unjust enrichment
a. Garcia v. PAL: If a dismissed employee is reinstated, and then
the reinstatement is reversed, the employee is not bound to
return salaries received. This is a case where social justice
outweighs unjust enrichment provisions.
b. Accion in rem verso – Art. 22. Requisites?
i. 1. Defendant enriched
ii. 2. Plaintiff suffered loss
iii. 3. Unjust enrichment of defendant without just/legal
ground
iv. 4. Plaintiff has no other action based on K, quasi-K,
crime, or quasi-delict
c. What is the difference between Art. 22 and solutio
indebiti?
 i. In solution, mistake is an essential element. In accion
in rem verso, it is not.
2. Less in life = more in law
3. Thoughtless extravagance
4. Violation of privacy
Public officers
 Articles 19-21 bind even public officers. Take note. Though there are
specific provisions.
 Can a public officer invoke acting in public capacity as a defense?
o Aberca v. Ver
o No. “Your official function does not include acting with injustice
and being unfair”
 What actions can you file against public officers?
o Action for nonfeasance
 But this action cannot be brought against those
officers exercising ministerial functions, ex. Register
of Deeds
o Violation of basic rights
o Policemen – failure to come to the aid of persons in danger
Civil liability in criminal prosecutions
 Civil liability is always included
 There is a distinction between being acquitted –
o For reasonable doubt: there is still civil liability
o Because one did not commit the crime: no civil liability
 General rule: civil case is simultaneously filed along with criminal case.
Criminal case suspends separate civil action.
 Independent civil actions
o NOT suspended upon filing criminal case.
o When a civil case is filed ahead, it proceeds independently and
need not wait for resolution of the criminal case.
o Assuming the criminal case is instituted ahead, the civil case
can still be prosecuted separately.
 Prejudicial questions:
5
o Opposite – suspend criminal case, and wait for civil case to be
resolved first, which is determinative of guilt or innocence of
accused in the criminal case.
o Questions on annulment or nullity of marriage are NOT
prejudicial questions for bigamy. Because now, before you get
married, you need a judicial declaration of nullity for the prior
marriage.
o Classic case: ownership of property v. crime of theft.
o Ching – civil case was for annulment of K, and criminal case is
for violation of trust receipts law. HELD: not considered as
prejudicial question because the criminal case can still
proceed, because the act can be considered as ordinary
estafa.
Persons
Natural persons
 Juridical capacity
o Passive subject – the ability to be the subject of legal relations
o UPON BIRTH
o Exceptions: unborn fetus
 (A) Beneficial
 Ex. donation
 (B) subsequent birth
 So aborted fetus is not counted because it
wasn’t born alive
o Birth
 7 months + = just born alive
 Less than 7 months = survive for 24 hours
 Capacity to Act
o 18 years old, in general
 Although you cannot marry without consent of parents
 End of judicial capacity AND capacity to act = upon death of person
 Doubt as to who between two or more persons called to succeed each
other, as to who died first, whoever alleges the death must prove it
o PRESUMPTION: died at the same time, so no transmission of
rights
 CONTRA – rule in Remedial Law/Evidence: Survivorship for those o Illegitimate – of mother
who died due to calamity, wreck, battle, or conflagration o Legitimated – of parents
o Follow what rule? o Foundling – wherever found
 Strength and age of the sexes  One never loses a domicile under a new one is acquired.
o For what purpose can this be used?  It is possible to be without residence, but one always has a domicile
 ANY purpose except succession  Domicile of juridical person
o Allowed for: o Provided in charter
 Insurance o If none, place of business or place of legal representation
o Survivorship agreements

Juridical persons PERSONS AND FAMILY RELATIONS

 Birth and death: from when created by law or for ordinary corporations, MARRIAGE
upon registration/dissolution
 Took effect 3 August 1988
Restrictions and limitations
o Does not change the regime of property relations of those who
got married prior to the FC
 Mere restrictions, which do not exempt the person from certain
o But those who selected CPG, they are affected by the new
obligations:
provisions as to this property relation, post 3 Aug 1988
o Minority,
 Definition of marriage (elements)
o insanity and imbecility,
o 1. Special contract
o deaf-mutism,
 Compare and contrast marriage from ordinary
o prodigality,
contracts?
o civil interdiction
 As a general rule, ordinary contracts are subject to
o [For juridical persons – this is the issue of ultra vires acts]
parties’ stipulations, as long as not against law, PP,
 Modifications, which affect a person depending on the type of
morals. But marriage contract is governed by law,
transaction, who one is dealing with:
and is only subject to stipulation for regime of property
o Age (because it is not minority per se), etc. (See Art. 39)
relations – at the moment of marriage.
o Ex. foreigners’ ownership of land
o 2. Permanent union
Domicile  Only terminated by death
 Grounds for voiding or avoiding a marriage: because
 * Very little relevance in civil law now, but usually just for elections, etc. the marriage was never deemed to have existed
 Domicile – place of habitual residence; based on intention and actual o 3. Between man and woman
connection  Note: P v. Silverio and other spec pro cases on
 Residency – based on actual facts change of sex in registry
 Domicile is acquired from moment of birth o 4. In accordance with law
o Legitimate child – domicile of parents (correct the reviewer) o 5. Purpose: establish conjugal and family rights

6
Essential and formal requirements of marriage:  Is there such a thing as defective legal capacity?
No, it’s either you have it or not.
 Effect of absence or defect: o 2. Consent freely given
o Essential:  Before a solemnizing officer, at the time of the
 Lack/absence – void celebration of marriage
 Defect – voidable  Do you have to speak out your consent? No need
o Formal: to verbally explicate it; as long as you can
 Lack/absence – void communicate your consent effectively to the
 Irregularity – still valid, but the person responsible is solemnizing officer
liable  Is there such a thing as defective consent? Yes,
when it is vitiated. Ex. when one is of unsound mind.
What are the essential and formal requisites of marriage? A person actually said yes, but there was problem in
the voluntariness.
 Essential requirements:  Is it possible for a party not to give consent at all?
o 1. Legal capacity
No. Ex. mistake in identity – there is total absence of
 A) Age
consent.
 Under 18: void
 Formal requirements:
 18 to under 21: need parental consent o 1. Authority of solemnizing officer
o Without: voidable  When does the good faith exemption apply, and
o Whose consent is required? when does it not? Will NOT apply for mistakes of
Ideally, both. But one is allowed to law, such as if you thought one designation of people
decide, if one is absent, has passed (ex. president or senator) can solemnize a marriage,
away, lost capacity, etc. Ignore the when in fact he cannot. It applies to mistakes of fact.
provision on legal guardians here, (ex. you thought the janitor posing as a priest was the
because upon turning 18, then he parish priest.) Also, even if only one party believed in
already has legal capacity. good faith that the solemnizing officer had authority,
 21 to under 25: need parental advice the marriage is valid.
o Without: issuance of ML is delayed  If the solemnizing officer committed fraud or an
for three months irregularity in obtaining authority, it has no validity in
 B) Sex the marriage solemnized.
 C) Absence of legal impediments: (see full discussion o 2. Valid marriage license
below)  A party thinks that the marriage license is valid,
 37. Incestuous relationships when it is not. Can the rule on good faith apply?
 38. Relationships against PP No. There is no good faith exemption for marriage
 35. Prior existing marriage license. The exceptions provided by the FC are not
 36. Psychological incapacity based on GF, but on law.
 52, 53. Failed to comply with distribution of
properties and presumptive legitimes
7
  Aranes v. Occiano: A ML gotten after a marriage
without an ML does not cure the lack thereof. It is still
void.
 Examples of defects in marriage license:
 1. Not applied for in the proper place
 2. Just signed by the employee of the LCR,
although acting with authority of the LCR (if
no authority, void ML)
 3. 10 day posting of ML not complied with
o 3. Marriage ceremony
 There is no particular requirement for the ceremony,
except for:
 1. Both must personally appear before the
solemnizing officer
 2. Must openly declare that they take each other as
husband and wife
 3. Two witnesses of legal age
 In the absence of two witnesses, what is
the effect? Is it an absence or an
irregularity? No resolution yet.
 Other requirements:
o 1. Marriage certificate
 What is this? The document signed after marriage
ceremony. It is the evidence of the celebration of
marriage. This is neither a formal or essential
requisite. It is merely evidentiary, although the best
evidence.
 What is the difference between a ML and a MC?
The absence of a ML results in a void marriage. The
absence of a MC will not affect the marriage.
o 2. Place of celebration
 What about article 8? It is merely directory. If the
solemnizing officer agrees to marry you in another
place, then it is perfectly fine.
 Is there any instance where the place of the
celebration of marriage affects the marriage?
Yes, for those marriages celebrated by persons with
8
limited jurisdiction. For instance, the ship captain or
airplane captain can only solemnize the marriage in
the vessel or during a stopover. For instance, for
military commanders, it must be within the zone of
military operations.
 What about members of the judiciary? Within their
judicial region. If it is SC, CA, or Sandiganbayan, it is
nationwide.
 What is the effect of marriages celebrated by
judges outside judicial regions? As of now, it is a
mere irregularity, according to the SC. This rule is
different as opposed to ship captains, etc. (Navarro
v. Domagtoy)
 Can this decision apply to mayors? For instance,
the mayor of Makati solemnized a marriage in QC.
According to Dean Del, the SC rule on judges must
not extend to mayors – they must strictly comply with
their territorial jurisdiction.
 Legal impediments (in depth)
o A) Incestuous relationships:
 1. Ascendants and descendants, regardless of degree
 How many degrees does this rule cover?
Unlimited.
 2. Brothers and sisters, whether full or half blood
o B) Marriages against public policy
 By blood:
 1. Between collateral blood relative, up to fourth civil
degree (whether legitimate or illegitimate)
 NOTE: no prohibition for collateral relatives
by half-blood
 Created by marriage:
 2. Between step-parents and step-children
 NOTE: no prohibition for step-brother and
step-sister
 3. Between parent-in-law and children-in-law
 If your wife dies, can you now marry your
parent in law? No. Not even death
 terminates this relationship. Not unless you
terminate your marriage first through court
declaration that the marriage was not valid in
the first place.
 Created by adoptive relationship:
 4. Adopter and adopted
 5. SS of the adopter and adopted
 6. Adopter and SS of adopted
 7. Legitimate child of adopter and adopted
 NOTE: the reason is because legitimate
children are asked to give their consent to
the adoption. Illegitimate children are not
asked.
 Hence the illegitimate children and adopted
children may marry.
 8. Between adopted children of same adopter
 Created by criminal intent
 9. When one party kills his own spouse or the other
party’s spouse, with the intention of marrying the
other
 If the killing was to obtain insurance
benefits, but there was subsequent
marriage, is the latter valid? Yes, because
the killing was not with intent to marry.
 No need to be convicted
 Who can marry each other?
 1. Brother-in-law and sister-in-law
 2. Stepbrother and stepsister
 3. Guardian and ward
 4. Adopted child and illegitimate child of the
same person
 5. Parties convicted of adultery or
concubinage
 6. Adopted child of husband, adopted child
of wife
o C) Prior existing marriage
9
 What if the prior marriage has a problem? There
must still be a judicial declaration that the prior
marriage is a nullity or is annulled. You have to wait
for this.
 Wiegel v. Sempio-Diy: Need to have prior judicial
declaration of nullity or annulment first, or else the
second marriage is bigamous.
 If the purpose is some other thing, like succession
issues, then there is no need for prior judicial
declaration prior to questioning the marriage.
Authority of solemnizing officer:
 Who can solemnize:
o 1) Any member of the judiciary, as long as:
 Incumbent
 When does incumbency start? From
when one has taken his oath of office.
 What if the judge was on leave or is on
vacation? Still incumbent.
 Is there a need for further authority or
license? None; it is an inherent function of
office.
 Within territorial jurisdiction
 Who in particular? RTC, MTC, CA, CTA, SC,
Sandiganbayan, etc. Even if their jurisdiction is
limited, like the CTA. Contrast this to executive
branch, where only the mayor can.
o 2) Member of religious group, authorized by religious group.
 Is the ordinary per se coming with the authority to
solemnize marriage? No. The authority does not
come from the office itself. They need special
authority from the group or sect first.
 What is the requirement for the group or sect?
The church, sect or group must be recognized.
 Either or both of the parties must be part of that
religion or church.
  What if both are not members of that religion?
Strictly, invalid. But a lot of people are invoking that
this is a gray area, where the good faith defense can
apply, or one can treat this as a mere irregularity.
o 3) Ship captain or airplane chief
 Who is the captain or chief? The head of the ship,
or the chief pilot.
 When can they solemnize marriages? In articulo
mortis, where one or both are at the point of death.
 A person is diagnosed as terminally ill,
and given two weeks to live. Is he in
articulo mortis? No, the person is not yet
at the point of death. Terminal illness is still
uncertain.
 Who can they solemnize?
 Members of crew or passenger
 What about stowaways?
 Can still marry them, as long as on board the
vessel.
 When and where can they solemnize?
 During the voyage, from the point of
embarkation, until one reaches the final
destination, including stops-over.
 The stop-over must be in a continuous flight.
This is different from a break where one
disembarked and put down all the luggage
and went around already.
 For purposes of marriage, do we adopt
transportation laws?
 No decision yet.
o 4) Military commander
 Who is a military commander?
 Commissioned officer, at least second
lieutenant up, must be the head of a
battalion
 There is a person who is preferred, before the
military commander is allowed. Who is this?
10
 There has to be a chaplain assigned to the
battalion in the zone of operations, and he
has to be absent.
 If he is present, then the chaplain must be
the one to solemnize.
 What if there is no chaplain assigned?
 Dean Del prefers the liberal interpretation:
when there is no chaplain assigned, then the
military commander can solemnize.
 What is military operation?
 Involves State action. This is different from
mere police operations for petty crimes.
 Who?
 No need to be a member of the military or a
combatant. As long as someone is within
the zone of military operation.
o 5) Consuls
 No need to be dying
 As long as abroad and both Filipinos
o 6) Mayors
 Reinstated in the LGC of 1991
Marriage license
 Valid marriage license
o What is the consequence of lying in the place of
residence?
 It is a public document, so one can be charged for
falsification of a public document.
 BUT this is a mere irregularity, and should not affect
validity
o If you lie about your age, and you are not yet 18?
 VOID marriage, not because of the irregularity in the
ML, but because of lack of capacity.
Procedure to obtain a Marriage License
 1. What do you need to present when you get married (FIRST
MARRIAGE)?
o 1. Birth certificate, but just for the purpose of verifying legal
capacity based on age. Absent this, you can submit a
baptismal certificate.
 If none, either:
 Residence certificate
 Instrument containing sworn declaration of
two witnesses of lawful age testifying on this
o 2. Additional requirements:
 18-21: consent of parents; order –
 Father
 Mother
 Surviving parent
 Legal guardian (but ignore this provision,
since when they turn 18, there is no more
need for a legal guardian since he is of full
capacity.)
 What is the nature of the consent given
by the parents? The consent is with
respect to a specific person. If the child
decides to marry someone else, he or she
cannot use that same consent.
 21-25: parental advice
o 3. Certificate of marriage counseling.
 When does this apply?
 Parties below 25 years old
 What if one party is 80 years old, but the other is
23? BOTH must attend, even if the other party is
older than 25.
 Lack thereof results in 3 month suspension of
issuance of Marriage License
 2. What do you need to present for a SUBSEQUENT MARRIAGE?
o Proof of termination of marriage:
 Death certificate
 Judicial declaration of nullity
 Judicial declaration of annulment
11
o If one is previously married but is still 18-21 years old, do
you still need parental consent? Not anymore, because the
prior marriage has fully emancipated the person.
 Jurado says otherwise
o What about those between 21-25, and this is the second
marriage, do you still need parental advice? Yes, because
there is no stated exception of emancipation for prior marriage,
unlike for parental consent. This is not anymore based on
parental authority, but is based on filial love and respect from
parents.
 3. What about alien applicants?
o The diplomatic or consular officials will issue a certificate of
legal capacity. This is usually taken by face value.
 4. What about Stateless persons?
o For these people without citizenship and if they can prove that
they are political refugees, all one needs is an affidavit
declaring oneself as having legal capacity. Again, this is taken
by face value.
 What is the nature of a marriage license?
o It is a license to marry a specific person. You cannot use it to
marry another person. The impediments and capacities of
people are different.
o There is no good faith exemption for a ML. A fake marriage
license is no good.
 What is the validity of the ML?
o For 120 days, then automatically cancelled after
o In any part of the Philippines
o An expired license is NOT a mere irregularity but an absence
of a requirement.
Marriages exempt from requirement of ML
What are the marriages exempt from the ML requirement?
 1. Marriages in articulo mortis.
o Because there is no time.
o The only exemption is the ML. There is no exception as to
other essential and formal requisites.
 o The solemnizing authority determines whether there is legal
capacity between the parties to be married.
o Can the solemnizing officer refuse to solemnize the
marriage? Yes, the solemnizing officer has discretion to
refuse. There is no law compelling solemnizing officers to
marry.
o Are marriages in articulo mortis exempt from requirement
of ML limited to those in an airplane, military operation,
etc? No. It can occur anywhere, and the ML requirement is
still waived.
o If the person miraculously survives, is the marriage valid?
Yes.
 2. People who have been living together as husband and wife for at
least five years.
o Purpose: to save face, because they have already presented
themselves as husband and wife.
o When must there be an absence of impediment? The
entire five-year period of cohabitation. (Ninal v. CA)
o Another issue in Ninal: do the children have standing to
ask for the nullification of the parents’ marriage based on
lack of ML? The court held that the children have standing.
BUT this has been changed when the administrative rules
came out. Ninal was decided before these rules came out.
o What are the requisites:
 1. Exclusivity – absence of 3rd parties
 2. Continuity – cohabitation as husband and wife 5
years immediately preceding marriage
 3. No impediments during the 5 year period
 3. Parties who live in a remote place
o Ratio: no means of transportation to get to LCR
o Not based on distance: it doesn’t matter how many kilometers
there are. What matters is lack of means of transportation.
o Means of transportation need not be public.
 4. Muslims and cultural minorities
o Look into customs, rites, practices
 5. Marriage celebrated abroad and there is no ML requirement in the
country where it was celebrated
12
 For marriages in articulo mortis and where a party lives in a remote
place, the law requires that the solemnizing officer state the
circumstances of the marriage in an affidavit. What is the effect of
the lack of such?
o No effect. It is merely evidentiary. It is not a replacement to
the ML requirement.
Marriages celebrated outside the Philippines
 What is the general rule?
o Art 26: Lex loci celebrationis. When the marriage is valid in
that country, it is valid in the Philippines.
 Does this provision apply to marriages of aliens outside the
country?
o No. It doesn’t matter, our law doesn’t care. Their own national
laws determine whether the marriage is valid.
 Two Filipinos get married outside the country. Do we apply Art
26?
o Yes.
o Art 26 only applies ONLY when at least one of the parties is a
Filipino.
 What are the exceptions to this rule?
o Art 35 (1, 4, 5, 6), Art 36, Art 37, Art 38
 (1) – under 18
 (4) – bigamous
 (5) – mistaken identity
 (6) – void under Art 53
o All of these exceptions deal with the essential requisites of
marriage. But as to the formal requisites, then that is
determined by the law of the place where the marriage is
celebrated.
 What if two male people get married abroad?
o No settled rule yet.
 What is the rule on divorces obtained abroad?
o If the alien obtained a divorce decree abroad allowing him to
subsequently remarry, then the Filipino may remarry as well.
o Van Dorn v. Romillo and Pilapil v. Ibay-Somera
  In Van Dorn, alien husband got a divorce abroad, but No ratification May be ratified by free cohabitation
sought to administer community property in the or prescription
Philippines. The basis of the court was estoppel No community property. Only co- ACP – unless provided otherwise
 Pilapil: “she is married to you but you are not married ownership.
Directly or collaterally attacked Must be directly attacked
to her”
[but subject to recent rules: check
 NOTE: both cases were decided before the Family discussion below]
Code
 Requisites?
o 1. Marriage between Alien and Filipino
o 2. Alien files for divorce  The common statement is that void marriages can be collaterally
o 3. Divorce decree capacitated the alien to remarry attacked. But what does Art. 40 say?
 What if the Filipino obtains the divorce? o Art. 40 – For purposes of remarriage, one has to obtain a
o Not allowed. The article only applies if the alien was the one judicial declaration of nullity.
who obtained the divorce. o So there has to be a direct proceeding. You cannot do this by
 The requirement that one is an alien and one is Filipino: must it collateral attack.
occur during the time of marriage, during the time of divorce, or  RULES ON STANDING re: nullity –
both? o SC 02-11-10 – only husband and wife have standing in a
direct action
Time of marriage Time of divorce Effect  EXCEPT: a) for those commenced before 15 March
2 Fil 2 Fil X 2003, b) marriages under CC
2 Fil 1 Alien, 1 Fil Old view: not allowed to  EXCEPT: for intestate and testate proceedings, allow
circumvent the law through this collateral attack
NOW: the Alien is not anymore
under our jurisdiction, so he can  So the rule in Ninal was technically not changed
obtain divorce. Then Art. 26 o BUT the main determinant is whether the person has standing
applies. (as in an heir)
2 Fil 2 Aliens Amor-Catalan case: recognize as o In Carlos v. Sandoval, since the one questioning was the
being a divorce entered into by 2 brother of the deceased, it doesn’t matter if the marriage was
aliens. Art. 26 does not apply valid or not because he only inherits in default of descendants
because there is no Filipino to
or ascendants.
equalize.
1 Alien 1 Fil 1 Alien 1 Fil Art. 26
1 Alien 1 Fil 2 Aliens Valid as well  What are the grounds for nullity?
o Arts. 35, 36, 37, 38
o Art. 35:
Difference between void and voidable marriages:  A. party below 18 years old
 B. solemnized by unauthorized solemnizing officer
VOID VOIDABLE  EXCEPT if either or both parties believed in
Inexistent from the beginning Valid until annulled GF that the officer had authority
Does not prescribe Generally, 5 years prescription
13
  C. no marriage license
 EXCEPT when license is not required
 D. bigamous or polygamous
 EXCEPT: see below (presumptive death)
 E. Mistake in identity
 F. subsequent marriage void under Art. 53
 Failure to partition and distribute properties
and deliver presumptive legitimes of
children, and recorded in the ROP and LCR
o Art. 36: Psychological incapacity
o Art. 37: Incestuous marriage (see above)
o Art. 38: Void due to public policy
 A. by blood
 B. by adoptive relationship
 C. by marriage
 D. by criminal intent
 When is a marriage entered into without termination of a previous
marriage valid?
o When there is a declaration of presumptive death. Article 41 is
the only article which provides for a situation where there can
be 2 valid subsisting marriages.
 Four years for ordinary situations
 Two years for extraordinary situations
o The declaration is not of DEATH but of PRESUMPTIVE
DEATH.
o This takes the place of the usual requirement of death
certificate to allow the other spouse to remarry.
 The declaration of presumptive death obviously only
empowers the present spouse to remarry.
o For other grounds, any subsequent marriage is automatically
null and void.
o What if both spouses in the subsequent marriage acted in
BF?
 The marriage is void ab initio.
Art. 41
14
 What if the spouse who was declared presumptively dead
reappears?
o If no one does anything, we have a situation where there are
two valid subsisting marriages
o Reappearing spouse files an affidavit of reappearance
 But other people may file an objection to the affidavit
 If there is no objection: then the subsequent marriage
is deemed terminated upon filing of the affidavit
 Who can file – reappearing spouse or persons
interested (ex. children in first marriage)
 Legal effect: not void ab initio, just terminated
o If there are objections, then a court of law must rule on the
objections. The LCR cannot rule upon the objections.
o What is the basis for objection or opposition?
 The only basis: “this is an impostor.”
o Is there a prescriptive period for filing an objection for the
affidavit of reappearance?
 These questions have not been settled yet.
 What is required to be proved in declaration of presumptive death?
o Proof that there is reasonable ground to believe that the
spouse has died.
o Republic v. Nolasco: Not enough to just ask people around and
say that the people haven’t seen her to prove that a person is
presumptively dead. Need more than that.
Mistake in identity as ground for nullity
 Spirit of provision – consent to marriage is for a SPECIFIC person. If
there is mistaken identity, there is no consent.
 This is NOT mistake in particulars of a person (ex. you thought he was
rich, but he was actually a pauper)
Psychological incapacity
 One that has a lot of cases. Members of the committee who drafted the
FC did not define what psychological incapacity. They wanted
jurisprudence to develop the concept.
 What is the distinction between physical and psychological
incapacity?
o Psychological incapacity is NOT physical incapacity, which is
impotence. It is a ground for voidable marriage only.
o It is NOT mental incapacity, which is also for voidable
marriage.
 What is psychological incapacity?
o He is normal under any other circumstance, but he cannot
carry out the essential obligations of marriage
o Ex. “Narcissistic complex”
o Inability to perform obligations to the spouse and obligations to
the family (220, 221, 225)
 Santos: It was a cut and paste case from different sources. In the end,
it did not say how we should define it in the Philippines. Only value is
that it gave the 3 requirements:
o 1) gravity
o 2) juridical antecedence
o 3) incurability
 There is no case yet where the court says that psychological incapacity
is such that he will never be able to perform marital obligations. So after
declaration of nullity, both parties can still marry again. So
psychological incapacity is relative.
 Molina: Eight point test. This is the first case where the court actually
set down, point by point, what one should look for to establish Art. 36:
o 1) plaintiff has burden of proof to show P.I.
o 2) Root cause must be something medically proven and
clinically identified and clearly explained in the decision
 This has received so much flip-flopping from other
decisions
o 3) it must exist at the time of the celebration of the marriage
o 4) the PI is incurable [from Santos case]
o 5) it is grave and it prevents him from performing essential
marital obligations
 Molina included obligations to family and children too,
not just to the spouse
o 6) Essential marital obligations are Arts. 68-71 of FC, and Arts.
220, 221, 225 of FC
15
o 7) Interpretation of the National Marital Tribunal must be given
weight
 But its decision is not public in character; so its effect
is really just to the parties, and is not jurisprudence
o 8) The trial court must order the public prosecutor and the Sol
Gen to act as counsel for the state
 Paras: This should be the case to read if you want to know what DOES
NOT amount to psychological incapacity. In this case the manifestation
relied upon is infidelity of the spouse, going out having drinks with
friends, falsifying signature – all these were struck down by Paras
 Marcos v. Marcos: You don’t need to have a psychiatrist or
psychologist to examine the party. Absence of such is not fatal. What
you need is the totality of evidence. (Totality of evidence approach)
You can use whatever evidence to prove PI.
 Te v. Te: Courts must be allowed to make a decision on a case-by-case
basis without being tied down by the Molina requirements. This came
out strong. “Molina gave us a straitjacket and we don’t want this.”
 Suazo v. Suazo: You don’t have to be strictly bound by cases (open
case policy). “We are not throwing away Molina” but the court must be
open to situational differences.
o The SC is not bound to accept with finality the findings of fact
by the TC.
 What is the end result of all this jurisprudence?
o It is still case-to-case. There is no set doctrine.
Declaration of nullity
 Domingo v. CA:
o Judicial declaration of nullity only needed for remarriage.
o Otherwise, no need for judicial declaration to establish nullity of
the marriage.
 Tamano v. Ortiz:
o RTC has jurisdiction over all actions relating to marriage and
marital relations.
o Jurisdiction based on allegations of the plaintiff in the
complaint; not dependent on the defenses set up. The
complaint said that the parties were married under the civil
code.
 Ninal v. Bayadog: 1. Lack of parental consent
o There must be no impediment or interruption in the five-year a. Who has standing?
cohabitation period in the marriage license exemption. i. Parent/guardian who did not give consent
o Declaration of nullity may be collaterally attacked after the ii. Party whose parent/guardian did not give consent
death of either party. (Ex. heirs, in succession.) b. What if both parties didn’t get parental consent?
 De Castro v. De Castro i. Both can file, separate or joint
o As in Ninal, the nullity of a void marriage may be established ii. Pari delicto doesn’t apply
even collaterally in an action not for that purpose. (ex. c. When can the party who didn’t get consent file?
support). Here, the affidavit stating circumstances establishing i. Upon reaching 21 years old
5-year cohabitation contained false statements; hence, there d. When can the action be filed?
was no ground to exempt from ML requirement. No ML = void. i. BEFORE reaching 21 – parent or guardian who didn’t
consent
Declaration of nullity v. bigamy ii. UPON reaching 21, until 26 – party whose parent or
guardian didn’t consent
 Marbella-Bobis v. Bobis e. How is marriage ratified?
o The question of nullity of a previous marriage not judicially i. Free cohabitation by the parties upon reaching 21.
declared void is NOT a prejudicial question to a charge of f. Specific rules on form of consent:
bigamy. The marriage lawfully subsists. i. Mere attendance in wedding is not automatically
 Mercado v. Tan consent. Must be in ML application.
o Subsequently getting a declaration of nullity will not invalidate a ii. Consent must be before wedding.
conviction for bigamy. 2. Insanity
 Morigo v. People a. When should insanity exist?
o The parties merely signed a marriage contract on their own, i. Time of marriage
without any ceremony – there is no semblance of any valid b. When is there a presumption of insanity?
marriage. No need for prior declaration of nullity. Bigamy i. If the party was insane right before and after the
dismissed. precise moment of giving consent.
 Tenebro v. CA c. Who may file?
o The subsequent declaration of nullity of the second marriage i. Sane spouse – if no knowledge of insanity
under Art. 36 does not negate the criminal action for bigamy. ii. Relative, guardian, etc.
(The mere act of contracting a second marriage during the 1. No need to have no knowledge of insanity
first’s subsistence is punishable.) Article 36 marriages are not iii. Insane spouse
completely without effect (ex. legitimacy of children). So this d. What are the periods?
means that there can be prosecution for bigamy. i. Sane spouse – 5 years from discovery of insanity of
the other spouse [because no period was provided]
Voidable marriages 1. N.B. Sempio-Dy pegs the period at anytime
before death of either party
Grounds ii. Relative, guardian, etc.
1. Anytime before death of either party
16
 iii. Insane spouse – 5 years from regaining sanity a.Potency must be at the point of marriage. Becoming impotent
[because no period was provided] after is not a ground for annulment.
e. How is the marriage ratified? b. What if both are impotent?
i. Free cohabitation by the parties upon regaining of i. Sempio-Diy: there is no “injured party”
sanity by the insane spouse ii. Dean Del: both are injured parties and can file
3. Fraud c. Period?
a. Grounds: i. 5 years after marriage
i. Non-disclosure of a previous conviction by FJ of the d. Cannot be ratified by cohabitation.
other party for crime involving moral turpitude e. NOTE: the other party must not have known it during the
ii. Concealment by wife that at the time of marriage, she marriage
was pregnant with another man f. What is the doctrine of triennial cohabitation?
iii. Concealment of STD, regardless of nature, at time of i. If the wife is still a virgin after three years of living
marriage together, it is presumed the husband is impotent
iv. Concealment of drug addiction, habitual alcoholism, g. What is relative impotency?
homosexuality, lesbianism at time of marriage i. You are only impotent as to one person but not
b. No other misrepresentation is ground for fraud. another. It is still voidable.
c. If the conviction is pending appeal, is the non-disclosure 6. Serious and incurable STD
fraudulent? a. Differentiate: if it is a ground for fraud, it has to be concealed,
i. No. It must be by FINAL judgment. but it need not be serious or incurable
d. What if the crime was alleged in the same annulment b. Who can file?
case? i. Injured party
i. Can’t apply because there must be previous c. Cannot be ratified by cohabitation
conviction by final judgment.
e. Ratification?
i. Free cohabitation upon knowledge of fraud
4. Force, intimidation, undue influence Ground Who can file When Ratification
a. Intimidation: must be evil and imminent and based on a well- Lack of parental Underaged party Within 5 years Yes, but only
consent upon turning 21 upon reaching
grounded fear 21
b. What if intimidation has a legal basis? Parent, guardian Until child or No
i. It does not count. Ex. “I will prosecute you for rape,” who did not ward turns 21
and the guy really committed rape anyway. consent
c. Prescriptive period? Insanity Sane party Within 5 years of
i. 5 years from cessation of cause discovery of
d. Standing? insanity
Insane party Within 5 years of Yes, but only in
i. Injured party
lucid interval a lucid interval
e. Ratification?
Parent or Before death of
i. Free cohabitation after cause ceases. guardian, either party
5. Impotency relative of insane
17
 party  Common children
Fraud Injured party 5 years from Yes  If none, children of guilty spouse in previous marriage
cessation of  If none, innocent spouse
cause o 2) donations propter nuptias: valid, except:
Force, Injured party 5 years from Yes
 Donations in favor of guilty spouse revoked by
intimidation, cessation of
undue influence cause operation of law
Impotence Potent party 5 years from No o 3) designation of guilty spouse as beneficiary in life insurance:
marriage may be revoked
Serious and Healthy party 5 years from No  Even if deemed irrevocable
incurable STD marriage o 4) spouse in BF cannot inherit from innocent spouse by testate
or intestate succession
o 5) if both spouses guilty, revoke by operation of law:
Procedure and effects of termination of marriage  Donations propter nuptias to each other
 Testamentary dispositions to each other
Procedure
 [N.B. these two provisions were just included because
Art. 43 mentions an innocent and guilty spouse; in Art.
 For all cases of nullity or annulment:
44, both are guilty]
o Court orders prosecutor or fiscal to appear on behalf of the
State  Final judgment provides:
o Take steps to: o 1) liquidation, partition, distribution of properties of spouses
 1. Prevent collusion between parties  Includes adjudication of common lot
 2. Make sure evidence is not fabricated or o 2) custody and support of common children
suppressed o 3) delivery of presumptive legitime
 Computed based as of date of final judgment
 No judgment based on stipulation of facts or confession of judgment
 Delivered through cash, property, or sound securities
 Pendency of action:
 Unless there was a judicially approved
o Follow written agreement between spouses
mutual agreement
o 1. Court provides for support of spouses
 Who may ask for enforcement of judgment:
o 2. Custody and support of common children
 Consider mutual written agreement first  1. Children
 Consider best interest of children  2. Guardian
 And Tender Years Doctrine  3. Trustee of property
 And choice of parent  Will not prejudice ultimate successional rights –
 Visitation rights for other parent delivered presumptive legitimes are deemed
advances
Effects, et. al.  Record judgment, partition, distribution, delivery of presumptive legitime
 OR ELSE, it will not affect third persons
 Effects: o Register in appropriate civil registry
o 1) share of party in BF over net profits forfeited in favor of: o Registry of properties in places where they are located

18
 NON-COMPLIANCE with this  any subsequent marriage is null and  N.B.: after 3 months from initial abandonment, there
void can already be judicial separation of property (JSP).
 Which children are legitimate: When a year passes, there is a ground for LS.
o Those born before annulment  Sex stuff
o Those born before Art. 36 nullity o 8. Lesbianism or homosexuality
o Those born of subsequent marriage which doesn’t comply with o 9. Contracting bigamous marriage
Art. 53 (registration) o 10. Sexual infidelity or perversion
o Also, those who were born before reappearance of
presumptively dead spouse Defenses:
 “SUPER DOCTRINE” c/o Breakfast Club, who painstakingly
analyzed this particular provision:  1. Condonation
o When do you not have to deliver presumptive legitime? o Forgiveness/pardon
 1. Legal separation (because marriage not dissolved) o May be express or implied
 2. Death (failure to liquidate and stuff will only make o Sexual intercourse is implied condonation
dispositions post-one-year void and mandate  But not when it was just to save the marriage, and it
separation of properties for marriage #2) was unsuccessful
 3. Presumptive death (which has the same effects of o Each sexual intercourse with another person is a separate act
death) of adultery. Forgiveness for the first does not extend to
subsequent acts
LEGAL SEPARATION  2. Consent
o Express or implied
Grounds: o Prior to the act
o Agreement between spouses against law and morals may be
 Violent stuff null and void, but it may be considered consent that would bar
o 1. Repeated physical violence or grossly abusive behavior v. litigation.
spouse, common child, or child of spouse  3. Connivance
o 2. Physical violence or moral pressure to change o “Luring” but not entrapment
religious/political affiliation  4. Mutual guilt
o 3. Attempt to corrupt or induce to engage in prostitution: o May be on different grounds
spouse, common child, child of spouse o Even when one party has pardoned the other and the other
 Or connivance in such has not
o 4. Attempt against the life of spouse  5. Collusion
 Character stuff o Agreement between the spouses
o 5. Final judgment of more than 6 years in prison o Covered by proscription of legal separation based on
 Even if pardoned stipulation of facts
o 6. Drug addiction or habitual alcoholism  6. Prescription
o 7. Abandonment of spouse without justified cause for more o Even if not alleged, court can take judicial notice
than a year o If there are multiple acts, count from the last separate act
19
 o From knowledge of the ground, not just from mere hearsay
 Prescription for all: within 5 years of occurrence of cause
Procedure
 What is the mandatory “Cooling off period” after filing of the
petition?
o Only try an action for LS after 6 months have elapsed since
filing of petition
 Court must take steps towards reconciliation of the spouses, and satisfy
itself that despite such efforts, reconciliation is highly improbable
 No decree of LS based on:
o Stipulation of facts
o Confession of judgment
 Prosecutor or fiscal assigned to take steps to prevent collusion between
parties and ensure evidence is not fabricated or suppressed
Effects pendente lite, of death, and after finality
 A. Effects of Pendency:
o After filing petition:
 Spouses entitled to live separately from each other
 Administration:
 Based on written agreement
 If none, court designates either or a third
person
 Same powers and duties as those of a
guardian
o Support of spouses
 Lerma v. CA: The court may make a preliminary
ruling of the case during its pendency, to determine
whether support is justified. In this case, where one
spouse was adulterous, the court deemed it proper to
deny him support pendente lite.
 Sabalones v. CA: A decree of LS was issued, where
the husband was denied share in the profits and
denying him support from the wife. The husband
appealed. Pendente lite of the appeal, the wife filed a
20
petition for preliminary injunction against the husband
alienating conjugal properties. The court said this
was valid to preserve the wife’s rights in the pendency
of the appeal
o Support and custody of children
 B. Effect of death of a party:
o Action is dismissed
o Since action is purely personal between the spouses
o Lapuz v. Eufemio:
 Spouse died during pendency of LS case. The
proceeding was dismissed.
o Macadangdang v. CA:
 Spouse died after the decree of LS was issued but
before liquidation. The LS was deemed final
o However, now Rules say that if this happens, the decision in
the LS case, where there has been entry of judgment is final
and binding, and will be accorded such finality in the settlement
of the estate proceedings.
o Dean Del’s interpretation: Because the finding in LS case is
final, even in the settlement of estate, one may invoke
forfeiture provisions.
o You don’t do liquidation and partition in the same LS case
anymore when one party dies after entry of judgment. But the
decision of the LS case is already final and binding in the
settlement of estate proceedings of the deceased person.
(IMPT!!)
 C. Effects of decree:
o 1. Spouses entitled to live separately
o 2. Dissolve ACP or CPG
 Offending spouse not entitled to net profits
 Siochi v. Gozon: what is forfeited are net profits and
not the undivided share in the community property
o 3. Custody of minor children to innocent spouse
o 4. Disqualify offending spouse from inheriting by intestate
succession AND revoke testamentary provisions by operation
of law
  But if the spouse makes another will with
testamentary provisions in favor of the guilty spouse,
then the latter can inherit, obviously
 Optional effects:
o 1. Innocent spouse may revoke his or her donations to
offending spouse  FIVE YEAR period
 Record revocations in the registries of property where
located
 Alienations, liens, encumbrances prior to recording
the revocation are respected
o 2. May revoke designation of spouse as beneficiary in life
insurance policy  No prescription, as long as the policy exists
 Takes effect upon written notification to the insured
o [N.B. so while life insurances are still optionally revocable, the
difference between Art. 43/44 and this provision in LS 
donations are just revocable here]
Reconciliation
 Procedure
o Joint manifestation under oath
o Signed by both
o Filed with court in same proceeding
 Effects:
o If proceedings pending, terminate in whatever stage
o If final, set aside final decree
o What shall persist:
 Separation of property
 Forfeiture of shares
o UNLESS spouses agree to revive former property regime
 Agreement to revive former property regime:
o Under oath
o Will specify:
 1. Properties contributed anew to restored regime
 2. What are retained as separate properties of each
spouse
 3. Names of all known creditors (addresses, amounts)
o Filed in the same proceeding for legal separation
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 Copies furnished to creditors
 Creditors protected by court
o Record order in proper registries of property
 Will not prejudice a creditor not listed or notified
 Unless debtor-spouse has sufficient separate
properties to satisfy debtor’s claim
RIGHTS AND OBLIGATIONS BETWEEN HUSBAND AND WIFE
 Became important due to Molina doctrine (if you cannot perform these,
it can indicate psychological incapacity)
 Obligations:
o 1. Live together
o 2. Mutual love, respect, fidelity
o 3. Render mutual help and support
 Family residence: jointly fixed by husband and wife
o Otherwise, court decides
 If you don’t want to live in the same dwelling, what is the
consequence?
o As a rule, they must live together. If they cannot, they go to
court, and ask for an exemption. Can only be granted
exemption for valid and compelling reasons.
o What are the consequences of refusal to live in the same
dwelling without valid and compelling reasons?
 1. You are not going to be entitled to support
 2. You can be charged with abandonment.
 3. There can be transfer of administration
 “Respect”:
o Lack thereof can lead to criminal and civil consequences
o Includes the woman being allowed to work and exercise her
profession
o When can a spouse object to profession?
 Valid, serious, moral grounds
 What happens when you incur liability pursuant to this profession
objected to? Who bears the liability and charges?
o RULE: no prior consent necessary
o This should be the rule:
 Before any objection  absolute community
  After objection  liabilities towards separate property
o BUT this is what was erroneously printed:
 Before any objection  separate property
 After objection  absolute community
o Nancy Go case: obligations charged against separate property.
Principle: because this is a separate endeavor by the liable
spouse and the contract cannot bind both spouses. (This is
the fall back analysis)
 Support of the family comes from:
o 1. Community or conjugal property
o 2. Income from separate property
o 3. Separate property
Administration of community properties
 Who is the admin of the community properties?
o Spouses, jointly
o Regardless of ACP or CPG
 There are certain cases where it is possible for one spouse to have
admin of the community property. When does this happen?
o Before the marriage – place in the marriage settlement that the
H or W alone will administer the property.
o During the marriage –
 In case of disagreement, decision of H prevails. No
need to go to court for this.
 What is the relief the wife can ask for in court?
 Must establish in court that it amounts to
mismanagement and it prejudices the
community property
 Can ask for receivership, transfer of admin,
or in extreme cases, separation of property
 NOTE: NOT to overturn the husband, but to
get certain reliefs (stated above)
o Need approval of court  became guardian of the other
spouse, etc.
o ONLY ground where there is no need for court approval: when
there is incapability of spouse to jointly administer
 Acts of ownership:
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o Both spouses MUST give consent.
 Other spouse must give written consent
 Or there must be court order
o Ex. selling the house.
o Ex. making donation, except for small donations
o What is the effect if one of the spouses does not give
consent to these acts?
 It’s void.
 It’s a continuing offer from the spouse who gave
consent and the third party.
 It can be validated by the objecting spouse’s consent.
o How much time does the non-consenting spouse have?
 The law does not provide. But the parties (consenting
spouse or third party) may withdraw the offer any
time.
 Rule on donations?
o General rule: cannot donate to each other
o To third party: must be a joint act
 Except moderate donations for charity or family
rejoicing
 What about making a donation to the children?
o As long as it is for education, etc.
o But it would need consent of the other spouse.
o Otherwise, still valid, but charged to the separate property of
the other spouse.
 Management of household:
o Used to be traditional role of wife.
o Now, it is a joint role between both spouses.
 On professions:
o Either spouse may exercise any legitimate profession without
consent of the other.
o Only grounds to object: valid, serious, moral grounds
o In case of disagreement:
 1) Court decides whether objection is proper
 2) Court decides whether benefit accrued to family
before objection or not
  If benefit prior to objection  obligation  Formalities?
enforced against community o 1. In writing
 If after  enforced against separate property  Else, unenforceablee
of spouse who did not get consent o 2. Registered in civil registry  to have effect on third parties

 What are the Choices for property regime?

PROPERTY RELATIONS BETWEEN HUSBAND AND WIFE o 1. ACP
o 2. CPG
How governed o 3. CSP
o 4. Other regime
 In the ff order:
 When does ACP govern?
o 1. MS executed before the marriage
o 1. When it is expressly chosen
o 2. FC provisions
o 2. When none chosen
o 3. Local customs
o 3. When regime chosen is void.
Marriage settlements (MS) o Examples of void provisions:
 Prohibited one party from marrying another, or a
 When can you enter into marriage settlement? second marriage for surviving spouse
o Anytime before you celebrate marriage.  Spouses live separately
o And as long as you have legal capacity to enter into contracts  Imposing fine on infidelity
o And as long as the marriage takes place after  Depriving parties from asking for LS when there is
 Can the parents enter into a marriage settlement on behalf of sufficient ground to do so
minor children?  Third person will manage conjugal properties
o No, it must be the parties themselves who enter into the  All properties of the wife belong to the husband
contract.  N.B. Invalidity of some provisions will not nullify valid
o If it’s 18-21, the parents must be part of the marriage ones.
settlement.  What properties are covered by the regime?
 When can there be a change of property regime? o When a regime is chosen, all properties are governed by that
o 1, separation of property regime. Cannot exclude particular properties from the regime.
o 2. Legal separation  What if the parties expressly rejected ACP but did not agree on any
o 3. Ordinary dissolution system to govern?
 Is there need for judicial approval? o Determine intent of the parties. If it cannot be ascertained,
o No. Only need to register with the civil registrar then apply local custom. When there is no local custom, apply
o To bind third persons co-ownership.
 If the marriage doesn’t take place, what happens to the MS??  When can modifications in MS be done?
o Void. o Any modification in marriage settlements is valid only if made
o Except for provisions not dependent on the marriage taking before the celebration of marriage.
place (ex. recognition of children) o Exception: judicial separation of property

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  In any case, the only change is from ACP/CPG   2. Extrinsic validity of contracts affecting property
CSP, with court approval located abroad, executed there
 There can be no situation where CSP changes to  3. Extrinsic validity of contracts affecting property
ACP or CPG because what is only allowed is revival located abroad, executed here
of the old property regime  Rule if marriage does not take place:
o Extrajudicial agreement between spouses to separate their o Everything stipulated in MS in consideration of future marriage
properties: void is void
 What are the Formal requisites for MS? o Including donations between respective spouses contained
o 1. In writing therein
 What kind of document is needed? o Does NOT invalidate stipulations that do not depend on
 Private/public document, but it must be celebration of the marriage
public document for it to be registered
 What if it’s not in writing? Donations by reason of marriage
 Unenforceable
 Requisites of a valid donation propter nuptias?
 Can compel to be reduced to writing
o 1. Made before marriage
o 2. Signed by the parties
o 2. In consideration of the marriage
 N.B. General rule is ONLY the future spouses are
o 3. To one or both of future spouses
parties to the MS
o 3. Executed before the marriage
Donations propter nuptias (DPN) Ordinary donations
o 4. Those who need parental consent must make parents party Does not require express Requires express acceptance
to the MS acceptance
 Otherwise, MS is void (for lack of consent) May be made by minors Cannot be made by minors
o 5. If under civil interdiction or disability, must make guardian May include future property (if done Just present property
party to the MS by either of the spouses); if done by
 Otherwise, MS is void other persons, just present property
 How does a MS affect third parties? If present property donated by a Only limit: non-impairment of
spouse and regime is not ACP, legitimes
o 1. All above requirements
limited to 1/5. If future property
o 2. MS registered in LCR where marriage contract is recorded donated by a spouse, limit is on non-
and in the property registries of property impairment of legitimes.
o N.B. or else, as to these third persons, ACP will be presumed Grounds for revocation in FC Grounds for revocation in CC
to govern  If future spouses agree upon regime other than ACP, cannot donate to
 What governs property relations between the spouses? each other in MS more than 1/5 of present property.
o Philippine laws, regardless of place of celebration of marriage o Excess: considered void
and regardless of residence o Reason: in ACP, their properties will become part of AC
o In absence of contrary stipulation in MS anyway (except for some)
o Exceptions:  Donations of future property: governed by law on wills
 1. Both spouses are aliens

24
 o Therefore, these are revocable, unlike donation of present
properties in MS
 What is the rule on property subject to encumbrances?
o Property subject to encumbrances can be donated.
o If foreclosed to secure an obligation:
 In case of deficiency, donee not liable for difference
 In case of excess, donee entitled to difference
Possibilities – i.e. how to resolve whether the DPN is revoked by
operation of law (43, 81) or by option (86)
1: If the marriage is not celebrated
 Under Article 81:
o If DPN is included in MS, then the DPN is considered void if
the marriage does not result
 Under Article 86:
o The donation is revocable if not in MS
2: If the marriage is celebrated, but then terminated
 Under Article 43:
o Revoked by operation of law if the donee is in bad faith
 Under Article 86:
o Everything else covered here: if you’re the spouse in GF, it
remains to be revocable due to 86
 What are the grounds for revocation of DPN?
o N.B. “MAY be revoked” so it is not automatic.
o 1. Marriage not celebrated, declaration of nullity
 Except donations in MS  Automatically revoked if
the marriage does not take place
 Declaration of nullity  if donor is one spouse and
donee is in bad faith, automatically revoked by
operation of law
 Prescriptive period?
 Written donation  10 years
 Oral donation  6 years
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 N.B. prescriptive period is such because
there’s no marriage under law
o 2. No consent of parents or guardians to the marriage
 Prescriptive period: 4 years
 N.B. period is such, as specially provided
o 3. Marriage annulled and donee in bad faith
 Again, if donor is other spouse, then donation is
revoked by operation of law
 Prescriptive period: 4 years
 N.B. same rationale
o 4. LS and donee is guilty spouse
 Prescriptive period: 5 years
 N.B. 5 year period for pretty much anything
related to legal separation
o 5. Resolutory condition attached is complied with
 Prescriptive period:
 Written  10 years
 Oral  6 years
 N.B. same as above – the reason for termination is
not attached to marriage or its existence
o 6. Donee commits act of ingratitude:
 1. Offense against person, honor, or property of
donor, spouse, children under parental authority
 2. Donee imputes to donor criminal offense or any act
involving moral turpitude, even if proven
 Except if act is against donee, spouse,
children under authority
 3. Donee unduly refuses to support donor when
legally or morally bound to do so
 Prescriptive period: 1 year from knowledge of the
fact
 Donations during marriage between spouses: VOID
o EXCEPT: moderate gifts on family rejoicing
 Determined by social position of the family, and
customs
o Same prohibition applies to persons living as spouses without
valid marriage
  Ex. common law marriage
 Ex. adulterous relationship
o Prohibitions include grants of gratuitous advantage, direct or
indirect
 Ex. donation to a child of the other spouse by another
marriage (since if the child dies, the other spouse
inherits)
o Who has standing to question:?
 ONLY persons prejudiced, like the donor or his heirs
 Case: husband donates a car to his wife.
The wife insured it. It was destroyed and the
wife sought to collect insurance. The
insurance company challenged the validity of
the donation. HELD: The insurance
company has no standing to question, since
it has no rights or interests over the car in
question.
 Donor is included in those with standing since there
can be a case where the weaker spouse is taken
advantage of by the stronger
Absolute Community of Property (ACP)
 When does ACP commence?
o Precise moment of celebration of marriage
o Any stipulation which makes the commencement at any other
time is VOID
 Basic concept:
o Upon marriage, all properties brought into marriage and
acquired during marriage are included in ACP
o Upon dissolution, the entire common mass is divided between
the spouses
o Contra: in CPG, only the net profits are divided between them
 Waiver of rights, interests, shares, and effects of ACP:
o DISALLOWED
o Except:
 1. Judicial separation of property
 2. Dissolution of marriage (ex. death) or annulled
26
o How is this done?
 1. In a public instrument
 2. Recorded in LCR
o Provided: creditors of waiving spouse may petition to the court
to rescind the waiver to extent of amount sufficient to cover
credits
 What is included in AC?
o All properties belonging to spouses before marriage and during
marriage
o Cannot exclude specific properties from the community
 What are excluded?
o 1. Property acquired during marriage by gratuitous title
(donation, succession)
 Exclude fruits and income as well
 Except if the donor expressly provides that the
property is included in the AC
o 2. Property for personal and exclusive use by either spouse
 Except jewelry
o 3. Property acquired before marriage of spouse with legitimate
descendants from prior marriage
 Exclude fruits and income as well
 What is the presumption?
o Property acquired during marriage are presumed to be
included in the AC, unless proven otherwise
o There must be strong, clear, and convincing evidence
 Apply rules on co-ownership, suppletorily
Conjugal Property of Gains (CPG)
 When does CPG apply?
o 1. Chosen by the spouses in the MS
o 2. Marriages under NCC by default
 What is included in COMMON FUND?
o 1. Fruits, income, proceeds, products of separate property
o 2. Acquired through their efforts
o 3. Acquired through chance
 What is the rule upon dissolution of CPG?
 o Divide net gains equally, unless they agreed to a different
division in the MS
 What is the nature of the spouses’ right over conjugal property?
o Each spouse has a mere inchoate right over conjugal property:
 Cannot alienate ½ of the interest.
 Cannot be attached by creditors.
o Only ripens into actual title upon dissolution and liquidation of
partnership.
 Apply same rules on:
o 1. Commencement: upon precise moment of marriage
o 2. No waiver of rights, shares, interest unless in JSP or
dissolution, and only in public instrument recorded in LCR
 Apply rules on contract of partnership, suppletorily
o If the CP is not enough, use separate properties
o But unlike ordinary partnership (pro rata), liability is solidary
 What are exclusive properties in CPG?
o Property by direct acquisition as exclusive:
 1. Brought into marriage as his or her own
 Includes installment-basis property, if
ownership vested before marriage (but
reimburse CP for payments on installments)
 Includes property alienated before marriage
but reacquired through rescission,
annulment, or revocation of contract
 2. Acquired during marriage through gratuitous title
 Includes unearned increments
 Includes moral damages (but not
hospitalization expenses, medical
assistance, or loss of salary)
o Property by substitution:
 3. Acquired by right of redemption, barter, or
exchange of exclusive property
 If money used for redemption was CP, just
reimburse CP
 4. Purchased with exclusive money of wife or
husband
27
 What about exclusive property that is alienated under pacto de
retro and then subsequently repurchased?
o Still exclusive. If the other spouse paid for the redemption, he
can be reimbursed.
 Who manages exclusive or separate properties?
o 1. The spouses retain ownership, possession, administration,
enjoyment of exclusive properties
o What is the exception?
 May transfer administration to other spouse (or even
another person) by public instrument recorded in
ROP, where located
 Alienation of the property terminates administration by
the other spouse. Obviously, proceeds go to the
owner-spouse
o 2. May mortgage, encumber, alienate, or dispose separate
property without consent of other spouse.
o 3. May appear in court alone to litigate it.
 For joint donations of property to the spouses, who owns the
property?
o If shares therein are designated, those shares are their
exclusive property
 N.B. Because the disposition is gratuitous
o If no designation of shares, it is 50-50
o When does right of accretion exist?
 1. when one spouse refuses to accept
 2. incapacity to accept
 3. predecease or death before perfection of donation
 What about onerous donations?
o Still exclusive property of donee-spouse
o But reimburse CP for advances made
 What is the presumption?
o All property acquired during marriage is presumed to be
conjugal.
o Regardless of registration.
 Specific enumeration of conjugal property:
o Acquired by efforts
  1. Those acquired by onerous title through common
fund, even if placed in the name of one spouse
 2. Obtained from labor, industry, work of either
spouse
 3. Acquired through occupation such as hunting or
fishing
o Fruits of property
 1. Fruits (natural, industrial, civil) of common property
 2. Net fruits of exclusive property of each spouse
 “Net fruits” only because use the income first
to pay for administration, preservation, etc.
 3. Livestock in excess of number of each kind brought
into the marriage of each spouse
 Only matters upon dissolution
o Chance
 1. Share of either spouse in hidden treasure
 Even if it belongs to the exclusive property of
either spouse, because effort was involved
 2. Acquired by chance
 But losses borne exclusively by the loser
spouse
o By presumption
 1. All property acquired during the marriage is
presumed to be conjugal unless contrary is proved
 Rules on life insurance:
o General rule:
 The right to annuity itself is considered the exclusive
property of the purchasing spouse.
 The monthly pensions are conjugal.
o If the beneficiary is the insured himself or his estate:
 If paid out of conjugal funds, proceeds are conjugal
 If paid out of separate funds, proceeds are separate
 If party conjugal, part separate, proceeds are part
conjugal and part separate
o If the beneficiary is the other spouse
 Proceeds belong to the beneficiary spouse, even if
paid out of conjugal funds
28
 Deemed a donee of the premiums paid.
(Must return ½ of premiums to conjugal
partnership)
 If both spouses are jointly insured in a single policy,
proceeds belong to the surviving spouse (obviously),
even if paid from conjugal funds
 No obligation to return ½ of the premiums,
because it is deemed a reciprocal donation
 If the insured is a third person, then the beneficiary
spouse owns it as separate property (deemed a
donation)
 On benefits, pensions, annuities, usufructs, etc.:
o General rule applies.
 Gratuitous = exclusive;
 Onerous = conjugal.
o Annuities:
 The annuity itself (ex. purchased for P100K) is
exclusive property
 Pensions from that annuity (ex. P5K a month) is
conjugal
o Usufruct:
 The harvests or fruits of the land given as usufruct is
conjugal
o What is the determining factor?
 If it was given out of pure liberality, then consider it
gratuitous (exclusive)
 If it is a pension, which is given for services rendered,
then it is onerous (conjugal)
 Special cases:
o For SSS, the beneficiary is the exclusive owner of the
proceeds
o Intellectual property like copyright and patent is the exclusive
property of the creator-spouse (since it is part of one’s person
and is just external manifestation of his genius)
 For loans and credit:
o Principal is exclusive property of lending spouse, if from own
money
 o Interests falling during marriage is conjugal property o What if the house gets destroyed prior to liquidation of the
 On tips: partnership?
o If it is beyond the service charge, which he is entitled to, then it  There is no conversion because conversion only
is separate (gratuitous) happens upon reimbursement during liquidation.
 On damages:
o If actual damages  conjugal Charges upon the ACP/CPG
 But can be separate if losses are based on losses
ACP CPG
from separate/exclusive funds
Support of: a) spouses, b) common Same
o If moral, etc.  separate because these are paid for suffering,
children, c) LC of either spouse
etc. and not actual loss Debts and obligations: a) contracted Same
 Rule on fruits? by both spouses, or b) by one
o Fruits from conjugal property  gross fruits belong to conjugal spouse for benefit of community
property Expenses, taxes, repairs: a) major or Same, except for: b) for mere
o Fruits from separate property  net fruits (total fruits minus minor upon CP; b) for mere preservation during marriage of
expenses incurred) are conjugal preservation during marriage of separate property (no qualification
separate property used by the family because the family already benefits
 Compare with ACP? There, fruits from separate
from the fruits of these)
properties are always separate Expenses for: a) either spouse’s Same
 Rule on improvements? self-improvement b) what both
o Goes against usual rules on accession (“accessory follows the spouses donated or promised to
principal”), which doesn’t care about value common LC’s self-improvement
o If the land is separate property, in CPG, whichever is more Ante-nuptial debts of either spouse Same
valuable becomes the principal that redounded to the benefit of the
family
 So if the conjugal house is more valuable than the
Expenses of litigation between Same
separate land, then the land becomes conjugal upon spouses, unless found to be
reimbursement during dissolution groundless
o When should reimbursement be made? If exclusive property is insufficient, N/A
 Not required UNTIL there is liquidation of the CP but subject to deduction of share of
property. debtor-spouse upon liquidation: 1)
 But there is no prohibition against early ante-nuptial debts not redounding to
benefit of family; 2) support for
reimbursement.
illegitimate children; 3) liabilities due
o BUT change in ownership only vests upon respective to crime or quasi-delict
reimbursements, which only happens during liquidation of the  No need to prove first that
partnership the other obligations of the
 Determine whether there is a change in ownership AC have been covered
upon the time the improvement was made (unlike in CPG where the
o If the land is conjugal, the usual rule on property applies (the other charges must first be
covered), because usually
land is always the principal)
there are no separate

29
 properties in ACP
 Rule for ACP: if community property insufficient to cover for expenses
(except for the last one, which has a special rule), then spouses are
solidarily liable with separate properties for unpaid portion
o Reimbursement from AC due upon liquidation
 For CPG: debts (ante-nuptial or during marriage) not redounding to
benefit of family, support of IC, and liabilities for crimes  will only be
covered by CP after covering other charges
 What is the nature of one spouse acting as surety or guarantor to
another obligation?
o It is deemed as not redounding to the benefit of the AC/CP
because while there can be incidental benefits (e.g. increase in
goodwill) the benefit is not directly redounding to the AC/CP.
Administration of property
CONJUGAL PROPERTY
 Who administers conjugal property?
o The spouses, jointly
 What if there is disagreement?
o Husband’s decision prevails
o But wife may file for proper remedy within 5 years of contract
implementing the decision
 What is one spouse is unable to participate or is incapacitated?
o The other spouse may assume sole powers of administration
(with no need for judicial declaration)
o Does not automatically include power to encumber or dispose,
unless:
 1. With consent of other spouse  in writing
 2. With judicial authorization
o Without this, deemed void. But it is a continuing offer on the
part of the offering spouse and the third person. Perfected by
other spouse’s consent or judicial authorization.
 What is the nature of the other spouse’s consent
that is needed?
30
 It must be written consent because mere
participation or awareness in the negotiation
is not enough.
o What if the other spouse is not incapacitated or is not
unable to participate in administration, can the other
spouse obtain judicial authorization to dispose?
 No. The judicial recourse is available only when the
other spouse is incapacitated or cannot participate.
 Can a spouse make donations alone?
o No. He or she cannot make donations from
community/conjugal property unless with other spouse’s
consent
o Exception:
 MODERATE donations for charity or family
rejoicing/distress
 What may be disposed by will?
o Interest in community property, but not specific properties
therein
EXCLUSIVE PROPERTY OF SPOUSES
 What is the general rule?
o Spouses administer their exclusive properties
 When can the courts transfer administration of exclusive property
of one spouse to the other?
o 1. One becomes the other’s guardian
o 2. Spouse judicially declared an absentee
o 3. Spouse sentenced to penalty carrying with it civil interdiction
o 4. Spouse becomes fugitive from justice or in hiding as
accused in criminal case
o N.B. Distinguish this from administration of conjugal property
where there is no need for court approval to assume
administration
 What if the other spouse is incompetent, has conflict of interest, or
there is similar other just cause?
o The court can appoint some other person as administrator
 N.B. Administrating spouse cannot dispose of other spouse’s separate
properties
Dissolution of ACP/CPG  same rules
 What are the grounds to dissolve the regime?
o Where marriage is dissolved:
 1. Death of one party
 2. Nullity
 3. Annulment
o Where marriage is not dissolved:
 4. LS
 5. Judicial separation of property
 What is Voluntary dissolution of regime?
o May be jointly filed in a verified petition by the parties
o What is specially required for a voluntary dissolution?
 Notify all creditors. Court takes measures to protect
them.
 Compare to: mere separation in fact. This does not affect the property
regime, except that:
o 1. Spouse who leaves conjugal home without just cause loses
right to demand support
o 2. When consent is needed from that spouse by law, judicial
authorization is in summary procedure
o 3. In absence of sufficient community property, separate
properties of spouses are solidarily liable for support.
 The present spouse, in summary proceedings, may
be given judicial authority to administer or encumber
specific separate property of the other spouse and
use fruits/proceeds to cover absent spouse’s share.
 Contra: Abandonment by one spouse, or failure to comply with familial
obligations (marital, parental, property)
o Aggrieved spouse may petition court for:
 1. Receivership
 2. Judicial separation of property
 3. Sole administration of the AC/CP
o What is abandonment?
 Left conjugal dwelling without intention of returning
 Prima facie assumed if one left conjugal dwelling for 3
months or failed to give any information about his
whereabouts for same period
31
 Compare abandonment to separation in fact?
o Separation in fact is physical separation. It can be with or
without just cause (if without just cause, no right to be
supported). It doesn’t follow that when there is de facto
separation that the spouse is not complying with marital
obligations.
o Abandonment implies failure to comply with familial obligations
too.
Liquidation of ACP/CPG and liabilities
 Procedure for liquidation of ACP:
o 1. Inventory – list community and exclusive properties
o 2. Debts and obligations of community paid from assets
 If insufficient, solidarily liable with separate properties
o 3. Deliver remaining exclusive property
o 4. Deliver net assets of community (those remaining)
 According to agreed division
 If none, equal division
 Unless there is voluntary waiver
 TAKE NOTE of forfeiture of net profits (increase of
value of community property at time of dissolution
from time of marriage)  for:
 Termination of subsequent marriage and
spouse in BF
 Void ab initio and spouse in BF
 Annulment and spouse in BF
 LS and spouse is offender
o 5. Deliver presumptive legitimes of children
o 6. Conjugal dwelling and lot delivered to spouse with majority
of common children
 Children below 7 deemed to choose mother unless
court decides otherwise
 If no majority, court decides based on best interest of
children
 Procedure for liquidation of CPG:
o 1. Inventory – list community and exclusive properties
 o 2. Credit CP for amounts advanced to cover spouses’ personal
obligations and debts
o 3. Reimburse spouses for:
 Use of exclusive funds for acquiring CP
 For value of exclusive property which became part of
CP (remember the situation where an expensive
house is built on a spouse’s exclusive property)
o 4. Debts and obligations of CP paid from assets
 If insufficient, solidarily liable with separate properties
o 5. Deliver remaining exclusive properties
o 6. Pay spouse for deterioration of movables used to benefit
family from conjugal funds
 Unless indemnified from some other source
o 7. Net remainder of CP  profits:
 Divide according to agreement
 If none, equally
 Unless there is waiver or forfeiture of share
o 8. Deliver presumptive legitimes
o 9. Conjugal home  same rules as ACP
 Rule on dissolution by death (ACP and CPG):
o Liquidation in judicial proceeding to settle estate of deceased
o What if there is no judicial estate settlement proceeding?
 Within one year, must:
 Judicially liquidate AC/CP
 Or extra-judicially liquidate AC/CP
 If no liquidation within 1 year period, any disposition
or encumbrance of the community/conjugal property
is VOID
o What if there is subsequent marriage without liquidation?
 Mandatory regime of CSP for the subsequent
marriage
 Simultaneous liquidation of two marriages contracted before FC:
o Depending on agreement
o If none, determine the capital, fruits, income of each
community  prove by evidence
o If there is doubt, divide between two communities in proportion
to capital and duration of each
32
o When does this apply?
 In a situation as in where H and W got married, W
died, but H did not liquidate. H gets married to W2,
and then their marriage is dissolved. Liquidation
would be simultaneous.
 NOTE, however, that this will not happen under the
FC because if there is no liquidation of the first
marriage, the second marriage is under mandatory
regime of CSP.
 For CPG  support during liquidation:
o Taken from fruits and income pertaining to their shares in
properties under liquidation
o If the support exceeds fruits and income pertaining to them 
excess is considered advances on shares
o If the liabilities of the CP exceed the assets, SS is not entitled
to any support during liquidation
Separation of properties during marriage
 What is the general rule?
o Separation of property can only take place by judicial order
o Either: voluntary or for sufficient cause
 1. List of sufficient causes [see below]
 2. Voluntary dissolution [see above]
 How to [see above]
 3. Mandatory regime of CSP
 Grounds for judicial separation of property: (CABPA-ABAPS)
o 1. Civil interdiction
o 2. Judicially declared an absentee
o 3. Judicial declaration of loss of parental authority
o 4. Abandonment by spouse or failure to comply with familial
obligations
o 5. Administrator-spouse has abused privilege
o 6. At time of petition, spouses are sep-in-fact for at least 1 year
and reconciliation is highly improbable
o N.B. For grounds 1, 2, and 3  enough to present judicial
declaration
 Procedure for voluntary separation:
 o 1. Spouses file verified joint petition to court  2. Future property
o 2. Petition lists all creditors  3. Both
o 3. Creditors personally notified  What are the rules in administration and ownership?
 No need for publication o Each spouse administers and owns, disposes, encumbers, etc.
o 4. Pendency: AC or CP supports spouses or children own property without other’s consent
o 5. Court enters decree to convert regime to CSP o Each spouse gets his earnings from profession, business, and
o 6. Record in LCRs and registries of property all fruits from property
 What are the effects of separation of property?  How are family expenses borne?
o ACP or CPG dissolved and liquidated and CSP will apply o Borne by both spouses, in proportion to income
o Liability of creditors  spouses still solidary with separate o In case of insufficiency or default: in proportion to market value
properties of separate properties
o Mutual obligation to support still continues unless there was LS  What is the rule on liability to creditors?
o Rights of creditors not prejudiced o Liability is solidary [note!]
 How can there be revival of prior property regime?
o File motion in court for decree of revival PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE
o When:
 1. Civil interdiction terminates Parties capacitated to marry and living together exclusively (147)
 2. Absentee returns
 Requisites for 147?
 3. Court satisfied that abusive admin will not abuse
o 1. Man and woman capacitated to marry each other
again
o 2. Live exclusively with each other as husband and wife
 4. Parental authority restored
o 3. Without marriage or under void marriage
 5. Abandoner returns
 6. Separated-in-fact spouses resume common life o 4. Both have no existing valid marriage with someone else
 7. Agreement, after voluntarily dissolving regime  Who owns wages and salaries?
o Owned in equal shares
 NO voluntary separation may be granted
again  Who owns property acquired jointly through work or industry?
o Governed by co-ownership (proportionate ownership)
CSP Regime  Thus, according to shares actually put in
o What is the presumption?
 When does CSP apply?  Party who did not participate in acquisition of property
o Chosen through MS contributed jointly, through care and maintenance of
 What are the kinds of separation of property? family and household
o Extent: o Where does this rule not apply?
 1. Total  1. Gratuitous title
 2. Partial: those not agreed upon as separate shall be  2. Acquired in exchange for exclusive properties
AC property  When can there be disposition of properties owned in common?
o As to kinds of property: o Cannot dispose unless with consent of the other (this is
 1. Present property different from normal co-ownership)
33
 o Until termination of cohabitation  Which relations fall under the family?
 What is the rule on termination of cohabitation if marriage is void, o 1. H and W
and only one party is in GF? o 2. Parents and children
o Share of party in BF in co-ownership forfeited in favor of: o 3. Ascendants and descendants
 1. Common children o 4. Brothers and sisters, whether full or half-blood
 2. In case of predecease of common child, to  What is the special pre-requisite for suits between family
descendants of that child members?
 Repudiation  leads to representation for o Prior earnest efforts to compromise
descendants  What are exceptional cases, because they cannot be
 3. If none, to innocent party compromised?
o Forfeiture upon termination of cohabitation o 1. Civil status of persons
o 2. Validity of marriage/LS
Parties not capacitated to marry or not living together exclusively (148) o 3. Ground for LS
o 4. Future support
 To which does this apply to? o 5. Future legitime
o 1. Bigamous marriages o 6. Jurisdiction of courts
o 2. Adultery or concubinage  Who may constitute a FH?
o 3. Both man and woman are married to other persons o Jointly by spouses
o 4. Multiple alliances of same married man o Unmarried head of family
 What properties are owned in common?  Can FH be on rented land?
o ONLY properties actually acquired by joint contribution are
o No. The implication is a FH must be permanent, and hence
owned in common, proportionate to contributions. So:
must include the land.
 Wages and salaries are EXCLUSIVE
 What is the exemption of a FH?
 Care by other party to home, children, etc. or moral
o It is exempt from execution, forced sale, or attachment to the
inspiration is not included
value allowed by law
o What is the presumption for actual contributions?
o Except:
 Actual contributions deemed to be equal
 1. Non-payment of taxes
 If one party is married to another:
 2. Debts prior to constitution of FH
o Share in co-owned properties accrue to AC or CP of prior  3. Debts secured by mortgage on the premises before
marriage or after construction
o If party in BF, forfeit shares to:  4. Debts due to laborers who constructed or rendered
 1. Common children materials for the building
 2. Descendants of that child in case of predecease
 How is a FH constituted?
 3. Innocent party
o Automatic, by operation of law
o If both are in BF  rules on forfeiture still apply. [Dean Del:
 But this provision of the FC does not retroact to FHs
“so magpapalitan lang sila ng property.”]
constructed prior to 3 August 1988
o Only one FH allowed
THE FAMILY AND FAMILY HOME
34
 Who are the beneficiaries of a FH?
o 1. H and W or the unmarried head of family
o 2. Ascendants, descendants, brother and sisters (whether
legitimate or illegitimate) who are actually living in the FH and
dependent on the head for support
 How is a FH sold?
o By the owner, with written consent of person constituting it, the
latter’s spouse, and majority of beneficiaries of legal age
 What if one of the spouses (or both) or the unmarried head die?
o The FH continues for 10 years or as long as there is still a
minor beneficiary
o Heirs cannot partition it unless there is compelling reason for it
 What if the FH increases in value beyond that allowed by law?
o If it is due to voluntary improvements introduced by the owners
or beneficiaries, then the FH can be executed.
PATERNITY AND FILIATION
Kinds of filiation
 1. By nature
o Legitimate
o illegitimate
 2. Adoption
Children by nature
 A. Legitimate:
o 1. Conceived OR born during marriage of parents:
o 2. Children conceived through artificial insemination of wife
 Either with sperm of husband, of a donor, or both
o What is the special requirement for artificially inseminated
children?
 Husband and wife must both authorize or ratify
procedure in a written instrument
 Record it in the civil registry, with birth certificate
before the birth of the child
 B. Illegitimate:
35
o Those conceived AND born outside valid marriage
o Exceptions?
 1. Void marriages where solemnizing officer had no
authority, but at least one spouse in GF
 2. Art. 36 nullity
 3. Art. 53 nullity
 C. Legitimated
o Who can be legitimated?
 Children conceived and born outside of wedlock of
parents NOT disqualified by any impediment to marry
each other
o How are they legitimated?
 Through subsequent valid marriage between the
parents
 N.B. Annulment of voidable marriage does not affect
o What is the effect?
 1. Effects retroact to time of child’s birth
 2. Legitimation of children who died before the
marriage benefits descendants
 So it can benefit a dead child with his own
descendants
o Who can file an action to impugn legitimation?
 Only by those prejudiced in their rights
 Ex. testamentary and intestate heirs
 Creditors excluded – because they only step
into the picture when there is repudiation of
inheritance by heirs
 From five years from time their cause of action arises
 Cause of action accrues from death of
putative parent (From minutes of committee
meeting)
 B and G are college sweethearts in Manila. When they graduated,
G was 7 months pregnant. Unknown to G, B promised to marry his
childhood friend C in Cebu after graduation. 2 months before B
and C married, G gave birth to W. During B and C’s marriage, C
gave birth to X. Unbeknownst to C, whenever B has a business
trip in Manila, he still sees G and because of this, G gave birth to Y.
 Unbeknownst to B, when he’s away, C has relations with the
plumber, P. C gave birth to Z. C died. Afterwards, B and G got
married. What is the status of the children?
o 1. W is legitimated, because W was born when B and C were
not yet married, so there was no impediment. The subsequent
marriage of B and G legitimated W.
o 2. X is the legitimate child of B and C. G is X’s step mother.
o 3. Y is the illegitimate child of B and G because Y was
conceived and born outside of valid marriage.
o 4. Z is the legitimate child of B and C. Even if P was the real
father, Z was conceived and born within a valid marriage and
will remain that way until or unless B impugns his legitimacy.
 NOTE: the rule is different from Y, because in Y’s
case, it’s obvious that C was not the mother. It’s
more difficult in the case of fathers.
Actions regarding filiation
 A. To claim filiation
o What are the methods to claim legitimate filiation?
 Primary methods:
 1. Record of birth in civil registrar
 2. Admission of legitimate filiation in:
o A. Public document or
o B. Private handwritten instrument
and signed by parent concerned
 Secondary methods:
 1. Open and continuous possession of status
of legitimate child
 2. Other means in ROC and special laws
o When must action to claim legitimate filiation be filed?
 1. By child, during his or her lifetime
 2. Transmitted to heirs (for up to 5 years), if:
 Child dies during minority
 Or in state of insanity
 N.B. Action filed by child survives even if either party
dies
o What are the methods to claim illegitimate filiation?
36
 Same way, and with the same evidence as legitimate
filiation
o When must action to claim illegitimate filiation be filed?
 1. PRIMARY methods: up to child’s lifetime
 2. SECONDARY methods: up to alleged parent’s
lifetime
o H and W were married and during their marriage, children
A and B were born. X, in a notarized instrument,
acknowledged A and B as his illegitimate children. X died.
On the strength of this declaration, A and B sought to
participate in the settlement of X’s estate, which the heirs
of X contested. Does the acknowledgement of illegitimacy
hold water?
 No. Both A and B were conceived/born under a valid
marriage and are thus legitimate. Recognition of
illegitimacy, even through proper means, cannot
defeat presumption of legitimacy of children, which
was not impugned by H in this case.
 B. To impugn filiation
o How may the legitimacy of a child be attacked?
 ONLY in a direct action or proceeding. (Sayson v. CA)
o Who may impugn a child’s legitimacy?
 1. Husband ONLY, by default
 2. Heirs of husband, if:
 A. Husband dies before expiration of period
fixed to bring action
 B. Husband dies after filing complaint, and
did not desist
 C. Child born after death of husband
o What are the only grounds to impugn a child’s legitimacy?
 1. Physically impossible for H to have sexual
intercourse with W within first 120 days of 300 days
(first 4 months of the 10 months) which immediately
preceded birth of the child; due to:
 Physical incapacity of H to have sexual
intercourse with W
  H and W living separately, and sexual
intercourse not possible
 Serious illness of H preventing sexual
intercourse with W
 2. Proved through biological or scientific reasons, that
the child could not have been that of the H
 Human Leukocyte Antigen (HLA) test 
conclusive determination
 Blood tests can disestablish paternity
 DNA tests  A.M. No. 06-11-5-SC
o CONCLUSIVE of non-paternity
o If probability of paternity value is
less than 99.9% = corroborative
o If probability of paternity value =
99.9% or higher, then it creates a
disputable presumption of paternity
 3. Artificial insemination with no written authorization
or ratification
 Or gotten through mistake, fraud, violence,
intimidation, undue influence
o What is the period to impugn?
 A. Within 1 year from knowledge of birth or recording
in civil register: if husband (or heirs) resides in city
where birth took place or was recorded
 B. 2 years, if residing in Philippines but not in place of
birth or recording
 C. 3 years, if abroad
 If birth concealed or unknown, when do you start
counting the period?
 From knowledge of birth or recording,
whichever came first
o Considered legitimate even if:
 Mother declared against its legitimacy
 Or mother has been sentenced as adulteress
 Mother contracting a second marriage within 300 days (10 months)
after termination of first marriage:
o Child belongs to the first marriage if:
37
 Child born within first 180 days (6 months) after
second marriage is solemnized
 AND MUST BE within 300 days after first marriage
terminated
o Child belongs to the second marriage if:
 Child born after 180 days after second marriage
solemnized
 (Even if within 300 days after first marriage
terminated)
 So the rule is: BOTH periods must concur for the first
marriage to have the child. Else, second marriage
wins.
o N.B. these are mere presumptions. And regardless, the child
will be legitimate
o What about children born after 300 days (10 months) of
termination of the first marriage?
 No default status. Up to the one alleging legitimacy or
illegitimacy.
ADOPTION
RA 8552
 When can a Filipino adopt: (capacity, character, age)
o 1. Legal age
o 2. Full civil capacity and legal rights
o 3. GMC, and not convicted of crime involving moral turpitude
o 4. Emotionally and psychologically capable of caring for
children
o 5. Can provide care/support
o 6. At least 16 years older than adoptee, except if:
 Adopter is biological parent
 Spouse of adoptee’s parent
 Alien: (same, capacity, residence, age, no abuse)
o 1. SAME as above
o 2. Certified by diplomatic/consular office that he has legal
capacity to adopt under his laws and that the country allows
the adoptee to become his son/daughter
 o 3. Country has diplomatic relations with Philippines
o 4. Living in Philippines at least 3 years before adoption
application, and maintains residence until adoption decree
entered, except:
 1. Former Filipino who seeks to adopt relative by
consanguinity within 4th degree
 2. Adopting legitimate son/daughter of Filipino spouse
 3. Married to Filipino spouse and seeks to jointly
adopt a relative by consanguinity within 4th degree of
Filipino spouse
o 5. At least 27 years old and 16 years older than adoptee at
time of application
 Guardians, with respect to their wards:
o 1. After termination of guardianship
o 2. Clearance of liabilities
 Who must adopt?
o By default, the husband and wife must jointly adopt
o Exceptions to this?
 1. Spouse adopted legitimate child of the other
 2. Spouse seeking to adopt own child
 Other spouse must consent
 3. Spouses legally separated
o N.B.: This rule is important. BOTH the H and W must jointly
adopt. If one spouse is qualified but the other is not, then there
can be no adoption.
 Ex., a former Filipina who became American wanted
to adopt her younger minor brother. This is fine. But
if her American husband is not qualified (ex. there is
no residency requirement yet), then he cannot adopt.
The petition will fail.
 Note: in the case above, the waiver of residency
period does not apply to the alien husband because
the brother is not the legitimate child of the wife yet.
 Who may be adopted?
o 1. Person below 18 judicially or administratively declared
available for adoption
o 2. Legitimate child of one spouse by the other spouse
38
o 3. Illegitimate child of adopter, to improve status
o 4. Person of legal age, if prior to adoption and since minority,
consistently treated and considered as own child by adopter
o 5. Child whose adoption has been previously rescinded
o 6. Child whose biological/adoptive parents died
 But not within 6 months of death of parents
 Whose consent is needed for the adoption?
o 1. Adoptee, if 10 years old or above
o 2. Biological parents of child if known or government
instrumentality caring for the child
o 3. Legitimate and adopted children of adopter and adoptee, if
over 10 years old
o 4. Illegitimate children, if over 10 years old and living with
adopter and spouse
o 5. Spouse of adopter or adopted, if any
 What are the effects of adoption?
o 1. All legal ties between the biological parents and the adoptee
are severed
 Except when it is the biological parent that is the
adopter
o 2. The adoptee becomes the LC of the adopter
o 3. Adopter and adoptee obtain reciprocal successional rights
(just them)
 Who can rescind adoption?
o JUST the adopted child. Never the adopter.
 Grounds to rescind?
o 1. Repeated physical or verbal abuse by adopter
o 2. Attempt on life of adoptee
o 3. Sexual assault or violence
o 4. Abandonment/failure to comply with obligations
 Effects of rescission:
o 1. Restores parental authority of biological parents, if adoptee
is still a minor/incapacitated
o 2. The amended birth certificate is cancelled
o 3. Rights to succession are restored, but not as far as there are
already vested rights
 Who may adopt under the Inter-country Adoption Act (RA 8043)?
 o 1. At least 27 years old and at least 16 years older than the
prospective adoptee
 Except:
 1. Adopter is biological parent
 2. Adopter is spouse of biological parent
o 2. If married, the spouse must jointly file for adoption
o 3. Has capacity to act under national laws and undergone
counseling in his country
o 4. Not convicted for crime involving moral turpitude
o 5. Eligible to adopt under national law
o 6. Can give proper care and support to the child
o 7. Agrees to uphold UNCRC, Philippine Law, and the R&R of
the Inter-country adoption act
o 8. Country has diplomatic relations with the Philippines
o 9. Possesses all qualifications and none of the disqualifications
under Philippine law
 Where is a petition under RA 8043 filed?
o 1. RTC with jurisdiction over the child
o 2. With the Inter-country Adoption Board through a
governmental or accredited private intermediate agency in the
country of the prospective adopters
 What supporting documents must be filed?
o 1. Birth certificate of parents
o 2. Marriage contract if married or divorce decree
o 3. Written consent of their biological children above 10 years of
age (sworn statement)
o 4. Physical, medical, and psychological evaluation by licensed
physician and psychologist
o 5. ITRs or other documents showing financial capability
o 6. Police clearance
o 7. Character reference of local church or minister, employer,
and member of immediate community knowing the applicant
for at least 5 years
o 8. Recent postcard-size pictures of applicant and immediate
family
 What applies for judicial proceedings?
o Rules of Court
39
SUPPORT
 What is covered by support?
o Everything necessary for sustenance
o Food, clothing, medicine, education, transportation
 How long does support last?
o Support doesn’t end at age of majority
o It is still the parents’ obligation
 What is the order of support?
o There is a system of priority in support
o This is valuable if there is not much resources to provide
support with
o System of priority found in FC
 Who are the persons required to support each other?
o 1. Ascendants and descendants
 No matter how far removed
 In the case of illegitimate ascendants or descendants
in the direct line:
 Seems to stop at parents, and their
children, whether legitimate or illegitimate,
and their descendants, whether legitimate or
illegitimate
 But the effect is really just the same. The
code just wants to make it clear that there
are no illegitimate parents or illegitimate
ascendants. But basically it is the same. So
illegitimate children can claim from their
“illegitimate grandparents.”
o 2. Collateral relatives: limited to brothers and sisters
 No other collateral relatives
 Half-brothers and sisters are considered legitimate
and are entitled to support
 If the illegitimate brother or sister is a minor, you are
required to support him or her
 If he or she is no longer a minor, you ask for the
reason why he needs support
 E.g. he is indolent, then you are not required
  E.g. he is a paraplegic, sick, and has no job o The court can demand one person to advance, and then the
opportunities, then you are required to person demands from the rest.
o 3. Spouses  Can the right to receive support be levied upon by attachment or
 The only thing that binds them together is the execution?
marriage contract. If you remove the validity of the o No. Legal support is exempt from attachment and execution.
marriage, then there is no obligation to give support. But contractual and testamentary support is NOT exempt from
 This is why the guilty spouse may still be required to attachment and execution.
provide support to the innocent spouse. o The latter are in excess of what one is required to give
 Can you refuse to give support to a philandering  Can judgment for support be considered final and res judicata?
spouse? o No. It’s always subject to modification, depending on need and
 No. Unless there is actual LS, there is no capacity to support.
legal defense to deny support.
 However, an unjustifiable refusal to live with
one’s spouse is a ground to refuse to give
PARENTAL AUTHORITY
support.
 Priority of support:
 How does the rule on parental authority differ from support?
o 1. Spouse
o Parental Authority is time-bound: it only lasts until the children
 Different from succession, where spouse is only #4
reach age of majority
o 2. Nearest descendant
o Thus, the only “freak” situation is the giving of consent for
o 3. Nearest ascendant
marriage, even until 21 years old. This is the outlier.
o 4. Brothers/sisters
 What does Parental authority cover?
o Order:
o 1. Custody
 Spouse
o 2. Discipline (proportionate to offense)
 Children
 What are the concomitant obligations?
 Parents
o Support
 Grandchildren
o Moral and spiritual guidance
 Grandparents
o Provide good environment, etc. (PD 603)
 Etc.
 N.B. Thus the rule is you do not exhaust going down  Two types of PA:
before going up. It alternates o 1. Parental authority over the person
 Parents
 Rule on plurality:
 ARE ALWAYS FIRST
o When you have enough, you do not have to worry about the
priority of support. Just give enough to everyone.  Parents only lose if shown to be unfit
o It will be prorated based on the ability of the provider to give.  Having more resources has never been the
So a child who earns more must support the parent more than criteria
the child who earns less.  Take note of tender years doctrine (in
custody cases, a child under 7 goes to the

40
 mother’s custody unless there are
compelling reasons otherwise)
 If parents are gone, substitute parental authority
(BOTH parents must be gone)
 1. Grandparents – no preference, whether
parental or maternal line. If there is clash,
they go to court
 2. Eldest B/S over 21
 3. Anyone with custody over the child
 And concomitantly, special parental authority
 Teacher, in the classroom or outside the
classroom, for recognized school activity
 Implication: responsible for injury or death
over child
o Defense: due diligence
 The teacher exercising special parental
authority is SOLIDARILY AND PRIMARILY
liable. The parents and those with substitute
parental authority: subsidiarily liable
o 2. Parental authority over property of the children
 Legal guardianship
 Automatic if value of child’s assets are less
than P50,000
 If more than P50,000: required to file a bond
and must be appointed by the court in a
summary proceeding
 Even if you are granted authority by the
court, legal guardianship authorizes only
acts of administration; NOT acts of
ownership
 There is separate approval if you want to sell the
child’s properties
 Rules on property of minor children:
 1. Properties of children (regardless of how
acquired)
o OWNED by the children. Even
minors can own property.
41
o Parents only have legal
guardianship. They can administer
it, and must account in a fiduciary
capacity.
o If LC – joint admin by F and M; if
disagreement, M wins, but F can
seek court redress
 2. Fruits and income of the property
o Can be used by the parents
o Not for their own; ONLY to support
the child
o If there is excess, it can be used for
collective needs of the family
 3. Properties owned by parents
o There can be minor children tasked
to administer certain parents’
properties
o OWNED by parents
o Fruits and income  go to:
 Parents (but parents must
pay the children, which
should be the same
amount they would’ve paid
a 3rd person administrator)
 Children (as earnings, not
treated as advance on
legitime)
 When is parental authority terminated?
o 1. Death of parents or death of child
o 2. Emancipation of child
o 3. Adoption of child
o 4. Appointment of general guardian
o 5. Judicial declaration of abandonment
o 6. Final judgment by court divesting parental authority
o 7. Judicial declaration of absence or incapacity
 Grounds for suspension and deprivation of parental authority?
o 1. Conviction of parent that has civil interdiction
  Automatically reinstated upon service of penalty,  Does the FC retroact?
pardon, or amenesty o Yes, as long as it does not affect vested rights (ex. Illegitimate
o 2. Court, in action, finds that the parent: children)
 A. compels child to beg
 B. Treats child with excessive harshness or cruelty SURNAMES
 C. Gives child corrupting orders, counsel, example
 D. subjects child or allows him to be subjected to acts  Purpose:
of lasciviousness o 1. Interest of the State: because it seeks to prevent confusion
o 3. Subjected child or allowed him to be subjected to sexual of identity
abuse. o 2. To prevent escaping from criminal liability
 What is the special rule under this ground?  What is the legal name of a person?
 Deprivation of PA is permanent o What appears in the birth certificate
 To change: Rule 103 of ROC
Funerals
What can you use as surname?
 Who has the duty and right to make funeral arrangements?
o 1. Spouse  Legitimate and legitimated children:
o 2. Descendants of nearest degree o MUST use father’s surname
o 3. Ascendants of nearest degree  Illegitimate children:
o 4. Brothers and sisters o Only mother’s surname
o What if there are descendants of same degree or several o Revilla law: allows use of father’s surname even if illegitimate,
siblings? if recognized in a private handwritten instrument or public
 Older is preferred document
o Who has preference for ascendants?  This is not mandatory
 Paternal side  Adopted children:
 Against what property are funeral expenses chargeable? o If adopted by both H and W, use husband’s surname
o Property of deceased o If solely adopted, use sole adopter’s surname
o If married, charge to conjugal property o If solely adopted by married woman, use married woman’s
surname
Emancipation  Married women:
o Not required to use surname of the husband. Can retain
 When is someone emancipated? maiden name
o Just by reaching 18  If you change your surname to your husband’s,
 Still pegged at 21: there’s no turning back
o 1. Parental consent for marriage o Options:
o 2. Art. 2180 of NCC (respondeat superior)  1. Keep maiden name
 Ms. Gloria Macapagal
Retroactivity of the FC
 2. Use maiden name plus husband’s surname
42
  Ms. Gloria Macapagal-Arroyo  When can there be change of name under Rule 103?
 3. Use Mrs., then husband’s surname o N.B. you can change surnames through Rule 103
 Mrs. Jose Miguel Arroyo o 1. Name is ridiculous, tainted with dishonor, extremely difficult
 Remo v. DFA to write or pronounce
o Woman adopted legally her husband’s surname. Her passport o 2. Consequence of change of status, such as when child is
was under that name. In renewal, she asked the DFA if she legitimated
can return to her maiden surname. But there is no annulment, o 3. Change is necessary to avoid confusion
or whatever ground to revert. She claimed that she had the o 4. To improve social standing, as long as in doing so, there is
option. no injury to the State or third persons (Caledron v. Republic)
o HELD: Cannot do this.
 Rules: ABSENCE
o ANNULMENT –
Stages:
 If guilty spouse, MANDATED to return to maiden
surname
 1. Provisional absence
 If innocent spouse, may retain husband’s surname or
o An ad hoc stage, since there are certain things that have to be
revert, unless she or the husband has remarried
done (ex. Signing contracts, withdrawing from bank)
o NULLITY – same
o Legal representation: spouse is preferred
o LEGAL SEPARATION
 Only exception: when there is legal separation
 Whether guilty or not, retain since they are still
 But court can appoint someone else if there is
married
reasonable ground
o DEATH of husband
 2. Declaration of absence
 Can still use the husband’s surname
o Two years from time of disappearance, unless administration
 May revert to maiden name
of power of attorney was left with someone else, then five
 Or add “Vda. de Surname”
years
 What is the rule on junior?
o Procedure; prove that he has been missing/absent for a certain
o You can only give junior to the son.
period of time
o There is no rule on giving daughters “junior”
 Administrator of absentee is appointed
 What entries in the Civil Registry may be changed or corrected
o If he reappears, he takes back his properties
without judicial order?
 3. Presumptive death
o ONLY clerical or typographical errors and first/nicknames may
o Here, transfer to administrator of presumptively dead person
be changed under the Clerical Error Law (RA 9408)
o If proven to be dead, then transfer to administrator or executor
o Cannot change:
of estate
 Nationality
 Then proceed to settlement of estate
 Sex
o Periods?
 Age
 7 years of absence  presume dead
 Status
 10 years  for purposes of succession
o NOTE: name can only be changed once
 If over 75 years of age  down to 5 years

43
 o Periods for purposes of declaration of presumptive death o 4. Immovable by analogy
for remarriage?  Contracts for public works
 4 years for ordinary absence  Servitudes and other real rights over immovable
 2 years for extraordinary absence property
 What is the difference?  Actually, the only one that is real property by its very nature is land.
 Four years – there is no danger of death  Buildings, etc. only become immovable property because they are
o If the person reappears, return his assets to him incorporated/adhered to the soil.
 If the spouse remarried, then follow Arts. 42 and 43 of o If the bahay kubo can easily be moved and transported, then it
FC is personal property, not real property.
 Incorporation can be to another immovable; need not be to the soil per
se. Also, a consideration is if it cannot be separated without breaking
PROPERTY the material or the obect (this refers to the attached object, obviously,
because even if land breaks, it still has value.)
 Machines placed in a chocolate-making factory were subjected to a
CLASSIFICATION OF PROPERTY writ of seizure, which can only apply to personal property. The
lease agreement stated that they are considered personal property.
 How does the code define property? What are they?
o Those subject to appropriation by man. o Personal property, based on stipulation between the two
o “Things” would thus be a broader concept since it covers even parties.
those not subject to appropriation. o As to third persons in GF, they are real property, consistent
o The code weirdly interchanges the use of these two words. with the code.
 What are the classifications?  What is the controlling factor for immovable by destination?
o Real/immovable or personal/movable properties o Intention of the owner of the property in question.
o Public dominion or private ownership  Give examples of immovable properties by destination.
 What are real properties? o Statues, etc, used for embellishment.
o 1. Immovable by nature  If a painting is embedded into the cement wall of a house, thus
 Land becoming part of the wall, what happens to it?
o 2. Immovable by incorporation o The painting becomes immovable by incorporation. Because
 Buildings, constructions adhered to the soil the painting will be destroyed when you try to remove it.
 Trees, plants and growing fruits, while attached to the o It doesn’t matter what the intent is; the fact of incorporation is
land the controlling factor.
 Those that cannot be separated without damage o Does ownership of the painting and the wall matter?
o 3. Immovable by destination  No. The fact of incorporation is what matters.
 Ornaments  X constructs a building on a piece of land he is leasing from Y. Is
 Machines it real or personal?
 Animal houses o Real. It doesn’t matter that who owns the land if by
 Loading docks incorporation. It only matters if by destination.
 Fertilizer actually used
44
 But if X and Y enter into a contract that deems the building as
chattel, can it be treated as such?
o Yes (Navarro v. Pineda). So while constructing the building on
leased property does not per se affect the building’s status,
coupled with the declaration, it can. (Tumalad v. Vicencio)
o But as to third persons, it’s considered real property. So if it’s
publicly sold, one must compl with conditions precedent for the
sale of real property. Else, it is void. (Manarang v. Ofilada)
o When there is a chattel mortgage between two persons over a
building and a real estate mortgage over the same property
towards another, the latter wins out because the CM is void as
regards third persons. (Associated Insurance v. Isabel Iya)
 What about a CM over machinery?
o It can be valid even as to third persons, since the machine is
only real property by destination if it directly meets the needs of
the business. If it’s just stored in the factory, then it’s personal
property.
 If I hang the painting on the wall of Justitia (and I don’t own
Justitia)?
o It does not become immovable by destination because it has to
be placed by the owner of the place where the painting is
found, and he intends that it be an embellishment.
 Ateneo owns a St. Thomas More painting and hangs it in the walls
of Justitia. What happens?
o It is immovable property by destination, because there is intent
to make it an ornament and to keep it there indefinitely.
 Machinery/equipment/receptacles placed in building or tenement where
work or industry is done.  Also by destination.
o They are immobilized by intent of the owner.
o Ex. Computers used in a computer shop, and owned by the
owner of the building.
o NOTE: does not apply to rented spaces in malls, because you
do not own the place; it is just for lease.
o Ex. Sewing machines in a clothing manufacturing warehouse,
if the machines and the warehouse are both owned by the
person.
 Animal houses:
45
o If you intend to keep it there forever, then it and the animals
become immovable property.
o Ex. Dog house in one’s house, and the dog himself becomes
immovable property.
 Loading docks
o This covers, for instance, a floating platform made of
wood and metal where machinery of a petroleum
corporation are attached. The platform was tethered to a
ship, which was anchored on the seabed. Real or
personal?
 If intended to remain at a fixed place, real.
 If it can be moved around and towed to other vessels,
personal.
 Fertilizers
 What are those by analogy?
o Contracts for public works, and real rights over immovable
properties.
o Is a mortgage on land movable or immovable?
 Immovable if registered in ROP
 Movable if just between parties
 What about shares of stock for real estate property?
o PERSONAL property. Shares of stock are always personal
property.
 What are the tests to determine personal property?
o 1. Exclusion test
 If not included in the list of immovable property, it is
personal property
o 2. Description test
 Can move from one place to another without
impairment to the real property to which they are fixed
o 3. Considered movable properties by law
 Ex. Growing fruits and plants – because under Chattel
Mortgage Law, they are movables
 Even if they are listed as immovable property in 415.
 How to resolve: only considered as chattels under
Chattel Mortgage Law. Otherwise, immovable under
415
 o 4. Considered as personal property by analogy o 1. Cannot be appropriated
 Contracts, choses of action (right to sue or be sued) o 2. Cannot be subject matter of contracts (no alienation or
 Radio frequencies encumbrance)
 Shares of stock of ANY corporation, even if the o 3. Cannot be acquired by prescription
corporation owns immovable property o 4. Cannot be subject to attachment or execution
 Classification in fungible or non-fungible/consumable or non- o 5. Cannot be burdened by voluntary easement
consumable:
o Only applies to personal or movable properties OWNERSHIP
o Fungible/non-fungible: based on intent of the parties
 Fungible: can be substituted by others of same kind  What are the rights of the owner?
or quality o 1. Right to enjoy the property
o Consumable/non-consumable: based on nature  Jus possidendi
 Cannot be used in manner appropriate to their nature  Jus fruendi
without being consumed  Jus utendi
o Money is ALWAYS fungible  Jus abutendi
 Although “Arrovo” bills are not fungible o 2. Right to dispose of the property (Jus disponendi)
 Other classifications?  Sell, encumber, dispose, etc.
o Constitution: o 3. Right of action to recover (Jus vindicandi )
 Public domain  Note: there is no such thing as absolute ownership. What are these
 Private land restrictions?
o Civil Code: - for purposes of ownership o 1. Those in the Constitution
 A. Properties of public dominion  Eminent domain
 1. Properties intended for public use  Police power
 2. Properties intended for public service  National economy/patrimony powers
o Being used by the government to o 2. Contractual restrictions
render some service to the people, o 3. Provisions in the NCC
but not open to everybody  Nuisance
o Ex. Police car  Right of way
 3. Patrimonial property  Art 431: use property the way you want it, but not in
o “Private property” of the State; used manner injurious to others
for entering into some business or  Art 432: doctrine of incomplete privilege – the greater
utility right of more people can prevail
o Also includes those from first two  Ex. Destroying one’s fence to fervent
classifications that are not anymore flooding
for public use/service  What are means to protect one’s rights?
 B. Privately-owned property o Doctrine of self-help Art 429: can use reasonable force to repel
 What are the characteristics of property of public dominion? actual or imminent aggression

46
  Elements?
 1. Force employed by owner or lawful
possessor
 2. Actual or threatened physical invasion
 3. Invasion/usurpation is unlawful
 4. Force employed is necessary to repel
 When does this not apply?
 When the property has already been stolen.
The provision only applies to repel the
aggressor.
o What are your actions when you lose your property?
 Accion publiciana
 Accion reivindicatoria
 Physical boundaries of property
o Horizontal aspect
o Vertical aspect
 Until Rules of Aerial Navigation
 Ex. If your property is near an airport, you have
special requirements to comply with
 What are the rules on hidden treasure?
o If you own the building, it is yours
o Unless it is deemed to have been part of national treasure
o If of interest to the science or arts, the State may acquire it at
their just price – divided 50-50 as well
o Ownership must not be indicated
 Ex. Golden spoon engraved: Imelda Marcos
o Only manufactured products
 Because if it is gold in raw state  belongs to State
 To whom does the property belong to, and what are the rules on
finder’s fee?
o Finder owns property – 100%
o Finder and owner – split 50/50
 As long as the finder is NOT a trespasser
 X owned a piece of land where treasure was believed to have been
buried. He knew Y had a metal detector that could be used to find
treasure. Y agreed and he found treasure. To whom does it
belong?
47
o To X.
o For there to be 50-50 split, the other person must have found
the treasure by mere chance. Here, X already knew there was
treasure buried in his land.
 N.B. some commentator believe “by mere chance”
can cover even mere tips, because there is no reason
to distinguish between one who finds treasure by pure
stroke of luck and one with an unsure tip.
o Remember, the requisites are:
 1. Treasure is money, jewelry, precious objects
 2. Hidden and unknown
 3. Lawful ownership does not appear
 4. Discovery is by chance
 5. Discover is not a trespasser
o If the thing is of interest to science or the arts, the State may
acquire it by paying just price.
Accession
 It’s an incident of ownership. Not a means of acquiring originally.
 Two things:
o 1. Those produced from property (fruits) whether real or
personal (Accession discreta)
 “internally generated accession”
 Natural fruits
 Industrial fruits
 Civil fruits
o 2. Those attached or incorporated into one’s property and
cannot be separated without damage (Accession continua)
 External forces or additions to the property
 Accessory follows the principal
Accession discreta
 What are the kinds of fruits (accession discreta)?
o 1. Natural
 o 2. Industrial
o 3. Civil
 What are civil fruits?
o Income from use of property, ex. Lease, rent of buildings
o These are synthetic because it is based on income of property.
o Who gets dividends?
 For corporate law – whoever is the registered owner
as far as dividends are concerned,
 For civil law – if you only bought the shares the day
before, you don’t get all the dividends. You have to
split it proportionately.
 What is the difference between natural and industrial fruits?
o Natural fruits – spontaneous products of the soil; products and
the young of animals
 “Spontaneous” – they just grow, without planting,
effort, cultivation
 “Spontaneous” only qualifies soil products. No need
to qualify animal products and young.
 For young of animals, what is the rule?
 If one person owns both father and mother,
then it doesn’t matter.
 If there are different owners, the owner of the
mother gets the young.
o Industrial fruits – products of the land through cultivation or
labor
 These are mostly products of the soil. Does not cover
animals.
 One must cultivate, process, plant, etc.
 But the difference between natural and industrial fruits is mostly
academic, unlike planting and sowing. What is the difference
between planting and sowing?
o Planting – produces something relatively long-term or
permanent, like trees
o Sowing – a one-crop harvest like rice, corn, etc.
o N.B. the rules that apply to planting differ from rules applicable
to sowing.
 How does the rule differ?
48
o When someone plants something in one’s property, there is a
situation where you can compel the person to buy your
property.
o In contrast, there is NEVER a situation where a sower can be
compelled to buy the property. You can only require him to
pay rents.
 What is the rule as to expenses for planting and sowing? Who
pays for cost of the seeds, labor, gathering, preservation, etc.?
o In general, these are charged to the person who receives the
fruits.
o And as a general rule, it is the owner who gets these. But
there are instances when the law gives these fruits away to
some other person apart from the owner.
o What is the exception?
 Antichretic creditor (antichresis) – the fruits are given
to the creditor, and the creditor deducts it from the
amount of the obligation, first to interest then the
principal
 Know difference of Art. 443 and 449
o 449 – you don’t get reimbursement if it’s not yet harvested
 Fruits have not yet been harvested
o 443 – even if you’re in BF you still get compensated for
necessary expenses
 Those fruits already harvested
 448 – planter or builder in good faith
o Gets the fruits by law, regardless of whether fruits have been
harvested or not
Accession continua
 General rules in accession continua:
o 1. Owner receives the extension/increase
o 2. Accessory follows the principal
o 3. The things must be so united that they cannot be separated
without injuring or destroying the property
o 4. Punitive liability attaches to the party in BF; party in GF is
not punished
 Accession continua – those external in character, forming one single
object
o Apply the “accessory follows the principal” rule
o There are different accessions for movable and immovable
o Immovable property:
 Accession industrial – persons who employ industry
to make certain constructions, plantations, sowings
 Accession natural – brought about by forces of
nature; no industry involved
 Alluvium
 Avulsion
 Change in river course
 Formation of islands
o Movable property:
 -ions
 Accession industrial
o Building, planting, or sowing
o Building – constructions, improvements using unnatural
materials
o Does it matter whether the building construction is
permanent or transient (ex. Slums, kubo)?
 For purposes of accession, yes. Because for there to
be accession, the joining together must have some
degree of permanence.
o How many persons are involved in the B/P/S problems?
 2 or 3
 There is always a land owner (LO)
 Second personality is B/P/S (BPS)
 Third person is the owner of the materials (OM)
LO/BPS/OM scenarios
 1. The ideal scenario is the LO, BPS, and OM is just one person. There
is no problem here. Accessory follows the principal. The presumption
is that the LO is also the BPS and OM.
 2. LO and BPS is the same person; OM is a second person
o When is the LO in GF here?
49
 When he does not know the materials do not belong
to him.
o When is the OM in GF here?
 When he does not know someone else is using it, or
he thinks the materials used by the LO+BPS belongs
to the LO+BPS.
o FIRST THING TO DO: determine whether accession exists. If
the materials can be removed, then there is no problem. (Ex.
Light bulbs – take them out and return them)
o Note the basic rule: when two persons are involved and both
are in GF, give preference to the LO.
o If both are in GF, what are the rights of the LO?
 Can acquire materials by paying indemnity to the
owner of the materials. Measure of expenses: cost of
the materials at the time of payment.
o If the LO was in GF and the OM was in BF, what happens?
 Anyone who is in BF loses everything. He loses the
value of the materials and the owner can acquire the
materials without need for payment.
o If the LO was in BF and the OM was in GF, what happens?
 OM can remove the materials, whether or not this
causes damage
 AND at the same time, OM is entitled to
damages. Measure: cost of materials.
 Or if OM doesn’t want to remove the materials, the LO
has to pay the OM cost of materials + damages.
o If both are in BF, what happens?
 Both are in GF.
 3. LO is one person; BPS+OM is another person
o When is the LO in GF here?
 He is not aware that someone has B/P/S in his
property.
o When is the BPS in GF here?
 He doesn’t know he is not the owner of the land. (So
he has to own land in the same area also, to think the
LO’s land was his.) This is why most cases involving
this involves only portions or property and boundary
disputes.
o In all likelihood, there is going to be accession here, unlike in
scenario 2 since here, he builds, plants, or sows. But if it can
be removed without damage, just allow removal.
o If both are in GF, what happens?
 1. LO can acquire what was built, planted, or sown,
but pay indemnity.
 This option is always present.
 Building 
o If necessary improvement –
 Measure of indemnity:
actual costs.
o If useful improvement –
 Measure of indemnity:
actual costs or plus value
(amount of increase of
value in land).
o If luxurious improvement –
 Measure of indemnity:
value at the time you enter
into possession.
 (Strange rule because it
gives the LO option to
acquire the property or
not. But it would have to
stay in the property
regardless, because there
is accession.)
 2. LO can compel the BPS to purchase the land.
 NOTE: you can only exercise this option
when the value of the land is not
considerably [key word] higher than what is
planted or built. (Depra v. Dumlao)
 Alternative: Can ask for rentals instead.
o Value – agree on a lease contract,
or if they cannot, court decides.
o When the lease period is done,
cannot compel to renew.
50
o If he cannot pay the rentals, then
you can eject him.
 BPS’s rights:
 1. Receive indemnity
 2. If there has been no indemnity given yet,
there is right of retention and no need to pay
rents.
 When is there right of removal by the LO against a
BPS, if both are in GF?
 Note that this is NOT a principal remedy. It is
subsidiary: you have to choose option #2,
and then the BPS is unable to pay the
purchase value of the land.
o If the LO is in GF, and the BPS is in BF?
 NOTE: EVEN IF what was built, planted, or sown can
be removed without damage, BPS cannot remove
what he built, planed, or sown.
 1. LO can acquire what was built, planted, or sown,
BUT with different rules.
 The only time he must pay indemnity is for
NECESSARY improvements.
 MWSS case: for USEFUL expense – can
acquire without indemnity.
 LUXURIOUS improvements – LO will pay, if
he wants it. If LO doesn’t want it, he doesn’t
have to take it. Problem is, of course, it’s
going to be attached so LO really gets it free
of charge.
 2. LO can always compel the BPS to purchase the
land, regardless of valuation.
 For sower in BF – cannot be compelled to
purchase the land, whether in GF or in BF.
Sower only pays rent. If in GF, just rentals.
If in BF, rentals and payment of damages.
 3. LO can demolish/remove what was built or planted.
 This is now a principal remedy in this case.
 BPS:
  If LO takes first option:
o Is entitled to indemnification ONLY
for necessary expenses.
o BPS also has no right of retention,
even if not paid.
 If LO takes second option:
o BPS must purchase it. If he doesn’t
pay, LO may sue.
 Sulo ng Nayon v. Nayong Filipino: rights of parties in
this case not governed by these NCC rules. Instead,
the rights are governed by the lease agreement
existing between the two entities. The lease is an
acknowledgement of the rights of the parties; thus, a
lessee neither a builder in GF or BF. He is just a
lessee, governed by the laws on lease.
o If the LO is in BF, and the BPS is in GF?
 First, ask the BPS in GF what he wants to do. He has
first dibs.
 BPS can:
 1. Ask for removal. It doesn’t matter whether
it causes damage or not.
 2. If he doesn’t want to remove it, the ball
passes to the LO, who has the following
choice [just one valid] –
 LO’s choice:
 1. LO can acquire it, with indemnity plus
damages.
 2. N/A. NOTE: cannot compel the BPS to
purchase the land
 3. N/A. NOTE: cannot compel the BPS to
remove what was built or planted.
 BPS here cannot compel the LO to sell him the land.
It is just an option available to the LO.
o If they are both BF?
 Then both are in GF.
 4. Three persons: LO, BPS, and OM
o When is the LO in GF?
51
 If he did not know that some BPS’ed in his land.
o When is the BPS in GF?
 He thought he owned the land.
o When is the OM in GF?
 He did not know someone used his materials.
o As a general rule, the claims are:
 OM, as against the BPS
 BPS, as against the LO
o First thing to consider: Is there accession? The BPS can
remove if there is no damage to materials AND the LO did not
choose to buy what was built, planted, or sown.
o What if they are all in GF?
 Primary option belongs to the LO.
 1. LO can acquire was has been built, planted, or
sown with payment of indemnity including for
materials (to the OM).
 2. LO can sell the land, as long as not considerably
more valuable. Etc.
 NOTE: These are the same rules as scenario 3.
 BPS:
 IF LO chooses to acquire the thing, BPS has
no right to remove the thing.
 OM 
 LO chooses OPTION #1:
o Principal remedy is against the
BPS, since he took your materials.
o Subsidiary remedy is against the
LO if the BPS is insolvent. (Basis:
“material rent lien” because in this
case, the LO received what was
built or planted)
 LO chooses OPTION #2:
o OM can choose to remove the thing
if there is no damage suffered.
o If there is damage suffered –
 Remedy is against the
BPS.
  There is no subsidiary LO BPS OM (in BF)
remedy against LO.
o For the scenarios in BF, Can acquire BPS (pay Until payment, has right Loses everything. Not
 Just apply the rules in scenarios #2 and #3. indemnity for materials of retention; even subsidiary action
+ labor) against LO.
Pays OM for cost of
Illustration of LO, BPS, OM all in GF: materials

LO BPS OM Can sell land (if not BPS pays for land. Loses everything
considerably more Becomes new owner of
Can acquire BPS (pay Until payment, has right  Cannot remove expensive) the land and what was
indemnity for materials of retention; what was built or planted
+ labor) built/planted,
Pays OM for cost of regardless of
materials whether there
would be damage Illustration of LO, BPS, OM; BPS and OM both in BF:
of not.
 Right to receive
LO BPS (in BF) OM (in BF)
payment from
BPS. If BPS is
insolvent, can Can acquire BPS. No Receive payment only Entitled to receive
subsidiarily go indemnity, except for for necessary indemnity from BPS,
after LO. [In latter necessary improvements. No who used his materials.
scenario, LO in improvements. right of retention. [Since both in BF –
effect pays twice becomes in GF as
for the same
regards BPS]
materials]
 No right of
But no right to
retention in case of
non-payment subsidiarily go against
Can sell land (if not BPS pays for land. Right of removal comes LO [since LO in GF]
considerably more Becomes new owner of in (if it wouldn’t cause
expensive) the land and what was any damage only, since Can sell land Pays for land. Can exercise right of
built or planted both in GF). regardless. removal only when it
does not cause
No subsidiary liability of damage. [Since both
LO. OM and BPS in BF –
becomes in GF]

Illustration of LO, BPS, OM; OM in BF:

52
 When does subsidiary liability of LO occur?
o Three requisites:
 1) LO chose to acquire what was built or planted
 2) BPS is insolvent [not mere refusal to pay]
 3) OM is in good faith
 What is the basic rule on BPS liability in favor of LO?
o BPS is always liable in favor of the LO, if the LO is in GF.
o [Or both BPS and LO are in BF – becomes GF]
 When is there right of removal?
o Only enforceable against BPS, by the OM. So the LO has to
always choose option 1.
o The only modification: whether BPS is in GF or BF
 If in GF – must not cause damage
 If in BF – regardless
 What are the remedies of the LO-gf if the chooses to compel the
BPS-gf to buy the land, and the BPS-gf fails to pay?
o 1. Leave things as they are and assume lessor-lessee relation
(Miranda v. Fadullan)
o 2. LO entitled to have improvement removed when the BPS-gf
fails to pay (Ignacio v. Hilario)
o 3. Sale of land and improvement in public auction, applying
proceeds to payment of value of land first to LO-gf, and the
excess delivered to BPS-gf
 There is LO-gf, and BPS-gf. LO-gf filed an action to recover the lot,
including the portion upon which the BPS-gf built his house. The
Trial Court ordered the BPS-gf to vacate and pay monthly rental
until the time they vacate. Correct?
o NO. First since, both are in GF, look at the options of the LO.
Since the LO doesn’t want to buy the house, it looks as if the
LO chose option 2.
o The TC mistakenly ordered the BPS to pay monthly rental,
because being in GF, he has the right of retention until the LO
pays for the value of the expenses incurred by the BPS.
Alluvium
 Alluvium is gradual deposit.
 Four things to remember:
53
o 1. Gradual deposit of SOIL
o 2. Must deposit in banks of rivers (and maybe lakes and
creeks, since they empty into a larger body of water too)
 Not applicable to seas, etc. since these are public
property
 For banks of inland waters (like lagoons), do not apply
alluvium
o 3. Deposit must be done on basis of natural current of the river
 Meaning, not man-made
o 4. Right of ownership belongs to the riparian owner
 No need to report, ask permission, etc. By provision of law, the gradual
deposit becomes yours, automatically.
 Does this mean you are protected in this additional area?
o No. Any land in the additional area is unprotected.
o So better if you subject it to the Torrens system, or else you
can lose it through acquisitive prescription.
o Even if the land receiving the alluvion is registered, the new
land is not yet. So it can be acquired by prescription by other
people. (Grande v. CA)
Avulsion
 This is abrupt. The transfer of a perceptible piece of land caused by the
current of the river, but involving a VIOLENT and SUDDEN action of the
water.
 Prescription: two years to remove
o Or for uprooted trees carried by the current to another land: six
months to remove
 What happens if you don’t take it out after two years?
o Dean Del thinks if you don’t remove it after two years, it’s gone.
It’s not yours anymore.
o It belongs to the person to whom that property is incorporated
into
o BUT some commentators don’t think it will belong to the
person
 What about trees?
o If trees were uprooted and transferred to the other side, they
do not become trees. They are just logs.
 o Six months to remove Accession in movable properties

Change of river course  N.B. Just one set of rules

 Anything beneath the river is public property. So by default, when a 1. Adjunction

river bed dries up, it’s public land. The “change in river course
provision” is an exception.
 Example, a river goes through A’s property. But it changed course to
B’s and C’s properties.
 What happens?
o B and C, the ones who lost property, own the new dry land due
to the change of course.
o In proportion to the land lost (ex. 2 meters of water for B, 4
meters for C, so 1:2 ratio for B and C on the new dry land)
 What is A’s right?
o He can choose to acquire the new dry land. Pay B and C what
is due, in proper proportion.
 The government may choose to redirect the water.
 Under the Water Code: the owners of the affected lands may undertake
to return the river/stream to its old bed at their own expense; but they
have to secure a permit from DPWH, and they must commence works
within 2 years of the change in course
 If the new area is smaller or bigger than the land lost, it doesn’t make a
difference. The law doesn’t qualify.
Formation of islands
 How are islands formed?
o When the water goes to a lower level
 What is the rule?
o If in the seas or navigable rivers, they become part of public
property.
o If not in seas or navigable rivers, then the island belongs to the
nearest riparian owner near the island.
 Ex. A and B on opposite river banks, are riparian
owners. If the island appears on the left side, it goes
to A. If on the right, to B. If in the middle, split
equidistantly
54
 Ex. The table and the varnish
 Form one single object – cannot distinguish one from the other.
 The two objects must belong to different owners
 Who owns the single object?
o If you can separate them without injury (close to impossible) –
then just return
o If it cannot be separated without damage – the accessory
follows the principal
 How do you know why is the principal, which is the accessory?
o First test: What property is attached to what?
o Second test: What is more valuable?
 Only apply this if you cannot determine which is
attached to what
o Third test: Based on volume
 Only apply this if values are the same or you cannot
determine what is more valuable.
 In a diamond ring, which is the accessory and which is the
principal?
o The band is the principal, the diamond is the accessory. This
is notwithstanding relative values.
 But if the accessory is worth much more than the principal, owner of the
accessory can ask for separation, but he has to pay for the value of the
principal since there would be damage caused.
o Ex. Diamond ring
 For art, and similar materials which employ skill:
o DIFFERENT rule.
o The work of art or intellect is the principal. The canvass or
medium is the accessory.
 If one of the parties is in bad faith, how do the rules change?
o If the owner of the accessory is in BF, the owner of the
accessory simply loses his accessory without remuneration,
and he is liable for damages.
 o If the owner of the principal is in BF, the owner of the A has  (“Labor of one + material of another”)
two choices:  The labor is ALWAYS the principal, and the material, the accessory –
 1. Demand return of the accessory whether there is regardless of value
damage or not  What is the rule?
 2. Demand value of accessory, plus damages o Determine whether the worker is in GF or BF.
 Measure of indemnity: o If in GF, he gets the appropriate the thing, but indemnify the
o Of same kind and quality, or give cash equivalent based on other guy for the cost of the materials
valuation. o If the worker is in BF, the owner of the materials can simply get
his stuff, and charge the worker with damages
2. Mixture  Exception: work of art or scientific work – the worker
 The two properties must lose their respective identities, so you cannot can appropriate the whole thing:
determine which is which.  But if with BF – pay damages + value of
 Ex. Two piles of rice get mixed together. You cannot determine who materials
owns which grain.  But if with GF – no damages
 Two types of mixture:
o 1. Commixtion – If solids are mixed Quieting of title
o 2. Confusion – if liquids are mixed
 What is the rule on mixture?  Requisites for quieting?
o 1. If the mixture occurred with the will of each owner: o 1. Plaintiff has legal or equitable title, or interest in the real
 There is a co-ownership on the basis of the property
agreement. o 2. There is cloud on such title
 They agree on the sharing. If there is none, o 3. Cloud is due some instrument, record, claim, encumbrance,
determine by proportion of contribution. or proceeding which is apparently valid or effective but is
o 2. If not by the will of parties, but by chance: actually invalid, ineffective, voidable, unenforceable, and
 Pro-rata sharing by both prejudicial to plaintiff’s title
 Determine proportionate share – based on VALUE, o 4. Plaintiff must return to defendant all benefits he received
and not anything else from latter or reimburse defendant for expenses that benefited
o 3. If only one owner was the cause of the mixture – determine plaintiff
if in GF or BF:  Are tax declarations conclusive evidence of ownership?
 In GF (thought other sack of rice was his): apply same o No. It’s just an indicia of possession in concept of an owner at
rule on co-ownership by chance best, but it’s not considered as title to property per se.
 In BF: he loses whatever is his share in the mixture,  What is the prescriptive period?
and he can be required to pay damages o If one possesses the property, there is no prescription.
 Can it be filed against physical intruders?
3. Specification o No. It must be against an instrument, record, claim,
 There is a thing, and it is turned into a finished product through the labor encumbrance, proceeding
of another
Co-ownership
55
 What are the elements of co-ownership?
o 1. Two or more owners
o 2. Unity of object
o 3. Recognition that there is a co-ownership
 If I say “this part is yours, this part is mine, etc.” – is it a co-
ownership?
o No. Because there has to be undivided, aliquot shares.
 How is co-ownership created?
o 1. By law
 Ex. Party walls, etc.
o 2. By succession
 Ex. Co-heirs before there is actual partition
o 3. By agreement of the parties
o 4. By chance
 Ex. Mixture by chance
o 5. By occupation
 Ex. Getting a wild pig together
 Distinguish partnership from co-ownership.
o You cannot register a co-ownership as having separate
juridical personality.
o Co-ownership can be created by various ways (above), while
partnership must be based on agreement (since it is based on
fiduciary relationship, trust, confidence)
 What is the right of a co-owner over the entire property?
o A co-owner has “borderless” rights; one can use the entire
thing. So an owner of one third of a table can use the whole
table.
 What are the limitations on the right to use the thing owned in
common?
o 1. It must be according to the purpose for which it was
intended
o 2. It must not injure the interest of the co-ownership
o 3. It must not prevent other co-owners from using it according
to their rights
 Does he have right to possession?
o Yes, over the whole thing.
o You cannot prevent other co-owners from using the thing.
56
o One co-owner can file for a suit for ejectment, no need to bring
in the others.
 If he wins the ejectment suit, it will benefit the other
co-owners.
 If he loses the ejectment suit, what happens?
 This is a point of contention among authors.
 Can a co-owner sell the entire property?
o No, not without the consent of other co-owners.
o But if one does, the sale is only over the undivided share of the
co-owner
 What is one’s right over one’s aliquot share?
o As far as one’s share is concerned, this is aliquot – so there is
no specific possession. One talks about RIGHTS. You are an
absolute owner of that right; you can sell or transfer it without
the others’ consent.
o The buyer will stand in the same shoes as you did before the
disposition.
 Do the co-owners have a right of first refusal?
o No. They do not have right of first refusal or preemptive right
to purchase one’s share, under law.
o N.B. Of course if there is an agreement otherwise, respect that.
 What is the right of redemption?
o Co-owners have right to redeem.
o Upon receipt of notice of sale.
o Ratio: the law does not like co-ownership. As long as there is
a means to constrict co-ownership, the law favors that.
Redemption brings the thing back to the original co-owners;
thus there will be fewer co-owners.
 How do you exercise this right?
o Provided the buyer is a third person (not one of the original co-
owners)
o Within 30 days from notice of sale
o Can repurchase the thing from the buyer – pay amount that
was paid by the purchaser
o But if one paid a value grossly excessive, pay reasonable price
– as determined by courts
 Is there any preference among the remaining co-owners as to who
can exercise of redemption?
o Ex. There are 5 of us, 1 sold his 1/5 share. How do you divide
this?
o Take the proportion among the remaining co-owners. So if the
other four have equal shares, each can purchase 1/20 of the
1/5th share.
o If one does not exercise – example, only 3 want to exercise his
right, what happens the other 1/20?
 The 1/20 is divided into 3. It becomes 1/60.
 What if one of the co-owners advances the share of the others to
the purchaser – does he gain interest over the whole redeemed
thing?
o No. He acquires only his own share, and he has right to get
reimbursement from the others.
o If the others don’t pay their share, the shares still do not go to
the one person – he can attach over their properties:
 Properties
 And even the pro rata share over the co-ownership
 Cabales case – was a minor at time of sale. He became of age, the
court told him he had 30 days to exercise right of redemption.
 How do you determine one’s pro rata share in the co-ownership?
o Respective interest in the property – how much the person
actually contributed
o Can you agree over the proportionate interest of each? Or
should you fix it to the amount of contribution?
 Yes, you can agree over the proportionate interest; it
need not correspond to amount of contribution.
 Ex. A gave 1M, B gave 2M, C gave 3M. They can all
own the thing by 1/3.
 If there is no agreement, it is pro rata (1/6, 1/3, 1/2)
o But with respect to income and expenses, can the parties
stipulate?
 Nope. The law renders it void.
o So you can agree on the proportionate interest, but you cannot
stipulate on the share on income and expenses, which must
follow the proportionate interest.
57
 Property must be used for the purpose that it is intended for.
 For an act of alteration, what is the rule?
o To change the purpose of the thing, there must be unanimous
consent of the co-owners.
o Same with sale, mortgage, or another act tantamount to
alteration
o What is the rule on lease?
 If it is either recorded in the ROP or is more than one
year: it is an act of ownership and requires unanimous
consent.
 If neither: it is an act of administration and just
requires a majority.
 A, B, C co-own a house and lot in equal shares. What is the status
of the following acts?
o A repaired the foundation of the house, which was tilting
to one side – Binding upon B and C. They must contribute 2/3
of the expense, since it is for preservation.
o B and C mortgaged the house and lot to secure a loan –
Will only bind B’s and C’s interest, so A’s 1/3 is not covered by
the mortgage.
o A built a concrete fence around the lot – Not binding upon B
and C since expenses to improve the thing must be decided by
majority of the controlling interest.
o C built a grotto in the garden – Does not bind A and B, since
it is for mere embellishment, and it was not decided by majority
of the controlling interest.
o A and C sold the land to X – The sale does not bind B’s 1/3
share of the property. B can redeem the 2/3 share sold by A
and C to X, since X is a third person.
 Distinguish:
o Preservation: may be at the will of any one co-owner; but he
must notify other co-owners first as far as practicable
o Administration: only with concurrence of majority of co-
owners
 But they may designate one co-owner as
administrator; the latter becomes an agent
 o Alteration: only with unanimous concurrence of the other co-
owners
 If you perform an act of ownership or administration, and you do
not get the required number of votes, what happens?
o Your act is considered not authorized, and the other co-owners
can require you to undo what you have done.
o The other co-owners can ask you to destroy what you have
built, and you have to restore it in its original condition.
 What if a co-owner wants to make an improvement on the property
but he cannot secure the majority’s consent, or if the majority
resolution is seriously prejudicial?
o At the instance of an interested co-owner, may petition the
court to order measures it deems proper – ex. Appointing an
administrator
 If you want to get out of the co-ownership, what is the remedy?
o 1. Sell your undivided share.
o 2. Partition – absolute right of any co-owner
 No need to give a reason
 It is a RIGHT by any co-owner
 The other co-owners can remain to be co-owners as
to the remaining shares, after there was distribution to
the “outing” co-owner of his share.
 Is there a way to prevent a co-owner from asking for partition?
o A provision preventing partition until a certain time is valid.
o Any prohibition for division including transfer – good only for
TEN YEARS
o Can extend again, but for another 10 year period. In the
intervals, those who want out can get out again.
o N.B. For testators – can stipulate a longer period (20 years) but
this is not extendable
o What is the exception provided in the FC?
 For family homes, there can be no partition of FH as
long as there are still minor beneficiaries.
 What is the rule on party walls?
o You cannot partition party-walls, and it will continue forever.
Partitioning it would injure the building. So as long as
someone is using it, it will persist.
58
 If partition would render the thing chop-chopped, what should one
do?
o Sell the entire thing, and then divide the proceeds among the
co-owners.
 How does a co-ownership terminate?
o 1. Consolidation of ownership in one co-owner
o 2. Destruction of the thing
o 3. Prescription in favor of a third person or a co-owner
o 4. Partition
 How do you terminate the co-ownership?
o Main way: by partition.
 As to the process of partition, see the ROC. There is
judicial and extra-judicial partition.
 No need for a reason. You can ask anytime.
o What happens about total partition?
 There is obligation of mutual accounting for the co-
owners. This is for the benefits and profits earned by
the co-ownership.
 E.g. If one lot is divided into three equal parts (30
sqm. Each) – A, B, and C, then A loses his part to a
real owner with title, because it wasn’t actually part of
the co-ownership, he can receive 10 sqm. each from
B and C. Same if A ends up with a ravine, as
opposed to B’s and C’s flatlands. Same rule for
proceeds (150K for B, 150K for C, 0K for A, but they
agreed to equal sharing – 50K each from the
proceeds of B’s and C’s lands.)
o Another way: prescription
 Requisites:
 1. Repudiates the rights of other co-owners
 2. Repudiation is brought to the knowledge
of the other co-owners
 3. Evidence is clear and conclusive that he
may acquire exclusive ownership
 4. After lapse of period fixed by law
 One co-owner sets up prescription against the other
co-owners, claiming the property to be entirely his.
  You must have an act considered adverse to the co-
owners; you repudiate the co-ownership through overt
acts or express communication to the other co-
owners.
 From the time of repudiation, count the period
necessary provided for by law for acquisitive
prescription. If completed without protest by the
others, a co-owner can acquire the entire property.
 If you expressly start in co-ownership and you
repudiate it after, then you are surely in BF, so you
have to follow the 30 year period.
 Spouses H and W mortgaged their house to a bank. They failed to
pay, so the bank foreclosed the property. They died and left
behind 3 heirs. One of the heirs redeemed the property within the
one year period for redemption. Is she the sole owner or a co-
owner?
o Co-owner with her co-heirs. Redemption by one would benefit
the others.
 What should the heir do to receive sole ownership?
o Wait for redemption period to expire, and then wait for the
mortgagee/purchaser to consolidate his title, and a new title is
issued in the mortgagee/purchaser’s name. Then the heir can
offer to purchase the property from the mortgagee.
Condominium Act
 There is an aspect of co-ownership in the Condo Act.
 Art. 490 is the predecessor of the Condo Act. (Building with several
stories, and with different owners. There are common areas, too.)
o Art. 490: You only share on the expenses of the stairs that you
actually use. So GF person spends nothing on stairs. 2nd F
person and up spend on the first floor stairs. And so on.
 Two things in condominium system:
o 1. Interest in separate and independent unit (inside inner wall)
– you get a CCT (Condominium Certificate of Title)
o 2. Interest in the common areas (elevator, lobby, gym, etc.)
59
 NOTE: there is constitutional restriction on ownership of land (not the
building). But the land is always part of the common area, since it is
constructed on the land.
 Two options in so far as ownership of common areas:
o 1. Direct ownership – unit owners own the common area in
common (1 unit, and there are 20, you own 1/20 of the
common areas, including the lot)
o 2. Indirect ownership – Condominium corporation, and the unit
owner owns shares in proportion to the number of units owned
(see below)
 How do you get around the restriction on land?
o “Condominium Corporation”: it is a corporate entity. As long as
60% of the ownership is for Filipinos, then the condominium
corporation can own land.
o Transfer of this land to the Condominium Corporation is not
subject to transfer taxes (tax incentive)
 Can you build a condominium on leased land?
o Not many are, but actually, in this case, there are no ownership
restrictions unlike if the land is owned.
o But apparently, this is not marketable; some people think that
when the lease expires, there would be no security.
 How do you register a condominium project?
o 1. Master deed
 Indicates how many units, how big each is, etc.
 Because in the Condo Act, 1 unit = 1 share/vote
regardless of the size of unit
 The master deed changes this, usually: a studio gets
1 vote, two bedroom condominiums get 2 votes,
penthouses get 3 votes, etc.
o 2. Deed of restrictions
o Most of these documents are drawn up by the developers
before the building has been constructed.
 It’s hard to physical partition for common areas. So the only way you
can partition is to sell the entire project (the whole building, including
your units), because there is no one who will just buy the common
areas.
 How do you partition if there is direct co-ownership?
 o If DIRECT co-ownership: It is not like ordinary co-ownership
where a partition can be for no reason. There has to be a
ground under Sec. 8 of the Condominium Act. (ex. Destruction POSSESSION
or damage for period of three years; 50% damage or injury and
more than 30% are opposed to repairing the building, etc.)  Requisites of possession:
o If owned by a CONDOMINIUM CORP: Unlike Corp. Code o 1) modes of possession
where 2/3 vote would lead to dissolution regardless. But here, o 2) intention to possess
you need any of the grounds in Sec. 13 (similar to grounds in o 3) own rights
Sec. 8). So it’s vote + reason for partition.  How do you determine GF/BF?
 Another difference with other corporations, where o GF: 1) possessor acquired thing through title or mode of
there is a 50 year maximum life span; condominium acquisition, 2) there is a flaw or defect in the title or mode, 3)
corporations have no life span and will exist as long he is not aware of it
as the project exists o BF: 1) Same, 2) Same, 3) he is aware of it
 What are these grounds under Sec. 8? o When does possession cease to be in GF?
o 1. 3 years after damage or destruction to projects which makes  When facts exist which show that the possessor is
a material part unfit for use, and not repaired aware that he possesses the thing wrongly
o 2. Damage to at least 50% of units and more than 30% interest  Else, from the moment possessor receives judicial
ownership of common areas are opposed to repair summons to appear in trial
o 3. Existing more than 50 years, or obsolete/uneconomic and  What are the modes of possession?
more than 50% interest in the common areas are opposed to o 1) Actual possession
renovation o 2) Symbolic delivery
o 4. Material part of the condominium was expropriated and the  Ex. Giving someone a key to a car – it’s symbolic
project is no longer viable possession of the thing the key pertains to
 Or more than 70% of the interest are opposed to  Ex. Pointing to a property and saying “that is yours”
continuation of the project after expropriation o 3) Constructive delivery
o 5. Conditions for partition by sale in the deed of restrictions  On the basis of execution of legal formalities
have been met  What does intention to possess mean?
o Subjective element
Water Code  What does “own rights” mean?
o Excludes those who possess something on behalf of other
 Waters are owned by the State (waters in their natural state – not people (so the principal is actually the one in possession of the
commodity water) thing possessed). Example:
 Right to appropriate water – based on beneficial use  Agent
o You have to ask for a water permit before you can draw water  Guardian
from these natural sources of water (if commercial), not small  Attorney-in-fact
drawings of water  Etc.
 For those who want to bathe/swim in the waters o An agent’s possession could never ripen into ownership,
unless ratified by the principal
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 What are the kinds of possession?
o 1) Possession with no title
 Has no legal right at all.
 Ex. Squatter
 Ex. Your phone was stolen by a thief. You took
efforts to get it back. After a week you gave up.
Does the thief gain legal possession of the
property?
 The property becomes res nullius, because it
has been abandoned. Thus, occupation is
the mode of acquiring ownership.
 Contrast: this cannot ripen into ownership
through acquisitive prescription because he
is not considered to be in legal possession of
a property, because the law does not
consider him as such.
 Possession acquired through violence can never
ripen into ownership.
o 2) Possession with juridical title
 You recognize that ownership belongs to another
person, but has turned over possession to you
 Ex. A lessee
 Generally, this does not and cannot ripen into
ownership.
 Exception: repudiation of juridical title – may
lead into acquisition of the property
 Can fall under #3 under extraordinary
acquisitive prescription (always BF)
o 3) Possession with a just title
 Possession acquired through just title but there a flaw
in the title
 Ex. The transferor has no right to transfer
 Basis of just title: there is a mode of acquisition
 Ex. Tradition (through sale), donation,
succession
o 4) possession with just title and there is no flaw
 Titulo verdadero
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 In the concept of an owner, just like #3, but in this
case, he really is the owner
 Need two things:
 A) Just title
 B) possession in the concept of an owner
o Movables: 4 years (GF) 8 years
(BF)
o Immovables: 10 years (GF) 30
years (BF)
 In case of conflict between 2 persons regarding possession of a
certain property, who shall be preferred?
o As a general rule, there can be no simultaneous possession of
more than 2 distinct personalities, except for co-possession
(see below)
o Rules:
 1. Present possessor
 2. If both are present, longer possession
 3. If same length, one with a title
 4. If all are equal, place the thing in judicial deposit
pending determination by court
 What kind of possession can serve as title for acquiring dominion?
o ONLY possession acquired and enjoyed in the concept of an
owner. Must be Titulo verdadero y valido.
o BUT it’s possible that one acquires possession by some
recognized mode, but from a person who could not transfer
right of ownership – yet he can still become an absolute owner.
But he has to prove acquisitive prescription, whether ordinary
or extraordinary. The title here can be Titulo Colorado.
 Acquisitive prescription – must it be only your own possession
that could lead to this?
o No. There is principle of “tacking.” – Those that came before
the person claiming possession.
o You have to trace your title directly to those preceding you.
 There must be someone before you and you can
point at the relationship of the predecessor with you
(there must be privity of title)
 o If all the possessors are in possession of such character (ex.
BF), just add all of the years together to figure out how many
years are left
 Ex. A = 3 years, B = 3 years, C = 3 years  21 years
left
o Once the line is broken, you have to start counting again.
o On issue of ratio: you cannot take credit for BF possession
preceding yours. No credit, no tacking, no ratio.
 While Paras says you can use ratio (ex. Credit 1 year
of possession for 3 years of BF possession), Dean
Del Castillo disagrees. If the preceding possession is
in BF, your possession is already tainted.
Inheritance
 If repudiated, deemed to have never possessed it in the first place.
 Transfer of possession, once accepted, is seamless. You are deemed
to have possessed it since death of decedent.
Rights of Legal Possessor:
Peaceful and uninterrupted possession
 Is there such a thing as co-possession?
o Yes. But in co-possession, you don’t have rights of ownership.
Can be no valid transfer of title, since there is a flaw. The
difference with co-ownership is that in there, there is right of
ownership.
 Can co-possession ripen to co-ownership?
o YES. Same rules on acquisitive prescription will apply.
 How is co-possession credited?
o If there is partition, before ownership is acquired, the co-
possessors can take credit for the years of possession before
partition, in counting acquisitive prescription,
o It is possible that one co-possessor is possessor in BF, and
one co-possessor is possessor in GF. Each of you will have to
take your own character of possession. If you have 3 years of
co-possession, and you are in BF, and other is GF, then the
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BF doesn’t affect period or number of years of GF co-
possessors.
 When is there interruption of possession?
o Two kinds: natural interruption and legal interruption
o How long should natural interruption be before you say
that acquisitive prescription is lost?
 1 year. If gone for 6 months, but you came back and
redeemed possession, you are deemed never to have
lost possession. 6 months will be counted in favor of
acquisitive period.
o In legal interruption, there are judicial summons against you.
 How do you lose possession of property, aside from interruption?
o 1. Absolute loss or destruction
o 2. Assignment
o 3. Abandonment
o 4. Possession by another
 Actions in case of deprivation of possession of immovable
property:
o 1. Forcible entry/unlawful detainer – within 1 year from cause
of action
 Within 10 days from filing this complaint, may secure
preliminary mandatory injunction to restore
possession
o 2. Accion publiciana – within 10 years after possession was
lost
 Plenary action to recover possession of property
o 3. Accion reivindicatoria – within 10 or 30 years, as the case
may be
 Action to recover possession based on ownership of
the property
 Action in case of deprivation of possession of movable property:
o Action for replevin
Fruits
 Civil fruits – rents, profits, and other forms of compensation for use of
property during time when you were in possession
o When do you not give the civil fruits back?
 From time you start possession until time you lost
good faith
 Possessor in GF gets to appropriate fruits, and there
is no need to pay rentals for possession.
o What happens when GF is lost?
  Once good faith is lost, you have to give the fruits
after that to the owner, and you have to pay rent.
o What is the effect of a legal interruption?
 If legal interruption, you have to allocate time when
you received summons and were still in GF. After
summons, you have to turn over fruits and pay rent.
 Natural and Industrial Fruits
o What is the rule on gathered fruits?
 Possessor in GF entitled to gathered fruits during
possession.
 Possessor in BF is not entitled to such and he must
deliver the gathered fruits from time he lost GF or
reimburse the true owner for their value. He is also
liable also for interest.
 He shall also reimburse the true owner for
fruits the true owner could have received
with exercise of due diligence.
 But he can deduct expenses he incurred in
production, gathering, harvesting.
o What about pending fruits?
 Pending fruits are those that have not been gathered,
and are still standing in the property.
 2 options if possessor is in GF:
 (1) allow previous possessor to cultivate or
o If the previous possessor refuses
this concession, he loses all
indemnity
 (2) sharing based on period of possession,
but possession not from the time you
actually took possession, but from time of
pending fruits.
 Possessor in BF:
 Only entitled to be reimbursed for necessary
expenses.
Indemnity for Necessary, Useful, Luxurious Expenses
 What is the right of a possessor who was dispossessed of his
property, from the person who defeated his possession, if he
introduced necessary improvements?
o Rights of possessor in GF:
 1) Right of reimbursement
 2) Right of retention
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o Rights of possessor in BF:
 1) Right of reimbursement only
 No right of retention
 What about for Useful improvements?
o Rights of possessor in GF:
 1) Right of reimbursement
 Either actual amount of expenses
 OR the increase in value of the property
 2) Right of retention
 3) Limited right of removal
 There must be no damage caused
 And the new possessor must not have
chosen to reimburse the prior possessor
o Rights of the possessor in BF:
 NONE.
 What about for Luxurious improvements?
o Rights of possessor in GF:
 Limited right of removal.
o Rights of possessor in BF:
 Limited right of removal as well.
 For deterioration or loss?
o Rights of possessor in GF:
 No liability
 Unless due to fault or negligence after he had
become possessor in BF.
o Rights of possessor in BF:
 Always liable, even if due to his fault or negligence, or
fortuitous event
 Once acquired property through acquisitive prescription, all bets are off:
it is now his.
Special Rule re: movables
1. Rules on acquisitive prescription applies to movables and immovables.
Only that the period for immovables is longer.
2. Legal Interruption –a suit of replevin. Still need summons, still have
rules on legal interruption.
3. Natural Interruption – even if lose physical possession as long as it
remains under your control. As long you did not abandon property it is
still subject to your control. You are still trying to gain back possession.
a. Control means - Patrimonial Control?
b. Misplaced – still have possession
 c. Unlawful Deprivation – still have possession but you have to
recover
a. Mere physical possession, by force, intimidation, violence
 What is the rule on recovery of movables?
o If the possessor is in BF:
 The owner can recover it from him without any
obligation whatsoever
o If the possessor is in GF:
 The owner cannot recover it because possession in
GF is equivalent to title.
 Two exceptions: - where the true owner can still
recover without obligation
 1) True owner lost the movable
 2) True owner unlawfully deprived thereof
 Exception to the exceptions: when the present
possessor acquired the movable in GF in a public
sale
 Remedy: true owner has to reimburse the
price paid for it
 Sample problem: G lost his ring. After a few days, he found it in
the possession of H who had loaned money to Z and received the
ring as security, in GF. What are the relative rights of G and H?
o Default rule: possession of movable in GF is already equivalent
to title.
o BUT in this case, G lost the ring. So he can still recover from
H without obligation.
o The exception to the exception does not apply because H
received it as pledge, and not from purchase in a public sale.
Besides, only the lawful owner can pledge a movable, so the
pledge is void.
 A agreed to sell his car to B, and they registered it in the name of
B. While waiting to get paid money in B’s sala, A never saw B or
the papers again. B sold the car to C, who sold it to D, both in GF.
Can A recover the car from D?
o Yes, since A was unjustly deprived of his car. The usual
common law rule that where two people (A and D here) would
suffer from a fraud, the one whose acts enabled the fraud to be
committed should suffer does not apply by mandate of Art.
559.
 What if the car above was bought in a public sale?
o The possessor is entitled to reimbursement
 What if the car was bought from a merchant’s store?
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oThe possessor wins. As between a purchaser at a mechant’s
store and a legitimate oner of the thing who lost it, the former
wins (Art. 1505, NCC)
 When can the owner of a movable who has lost it or who has been
unlawfully deprived thereof can no longer recover it?
o 1) Prescription
o 2) Possessor acquired thing from a person whose authority the
owner is estopped from denying
o 3) Possessor acquired the thing from a merchant’s store, fairs,
markets, etc.
o 4) Thing is a negotiable instrument and possessor is purchaser
in GF and for value
o 5) Possessor is owner of thing in accordance with finders-
keepers principle in Art 719
 This is where you find a lost item and turn it over to
the mayor. After publication for 2 weeks of
announcement of finding, and lapse of 6 months
thereafter, you become the owner.
 Note; if the real owner comes forward, you get a 1/10
reward
Usufruct
 What is the nature of usufruct?
o A person owning right over property owned by another person
because he has been given the right to use it
o It is a real right
 What is the most important aspect of usufruct?
o The right of possession over property held in usufruct is not
matter of legal necessity. What will make it usufruct, where you
are entitled to, is the right to receive fruits.
 How is usufruct created?
o 1. Voluntary act of owner not possessor. Possessor can lease,
but not usufruct.
o 2. Legal usufruct. But this is no more.
 If children, mere act of administration by parents.
 Husband now no longer owns properties of wife.
 What is the right of the one enjoying usufruct?
o Usufruct has ABSOLUTE right over fruits of property.
o Preservation of substance and form of thing: only if you have
been granted possession of property in the first place. If not,
you only really get the fruits.
 o Owner cannot control how usufruct uses the fruits.
 What can be the subject of usufruct?
o There can be usufruct over movable, immovable properties, or
even rights, but not personal rights
o Usufruct v. easement. Easement only for immovable
properties.
 What is the usufructuary’s obligation?
o Preserve the form and substance of the thing lent in usufruct.
 Substance: no operation, except with consent of
owner, that would prejudice the thing given
 Cannot appropriate the thing subject of usufruct
o But can appropriate the fruits
 What are the exceptions?
o 1. Can appropriate the thing
 “Abnormal usufruct”
o 2. Can alter the form of the thing, leading to a slightly
deteriorated form
 “Quasi usufruct”
 What is a abonormal usufruct?
o For consumable things. So when returned, there is some or all
of it consumed.
o Instead, you have to pay the property’s value based on
appraisal (for movable properties)
 If there was appraisal at the beginning, pay that.
 If there was no appraisal, replace with another object
of same quality and quantity
 What is quasi usufruct?
o For properties that easily depreciate
 Ex. Cars
o You cannot really return the thing in the same form and
substance.
o Instead, you return the object itself. As long as it’s normal
wear and tear, you have no other obligation to the owner.
 If a property has been encumbered, can it still be subject to
usufruct?
o Yes.
o The usufructuary does not compete with the mortgagee as far
as fruits.
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o There is no inconsistency.
 If the mortgagor defaults in the principal obligation, what
happens?
o The mortgagee can foreclose the property. This is his right.
 If you are the usufructuary, how do you stop the foreclosure?
Should you pay the obligation?
o No need; there is no legal obligation to pay for the principal
obligation.
o His right to usufruct continues. It is a real right and can be
enforced against any mortgagee.
 Can there be usufruct over pledged properties?
o No. There is a conflict.
o Pledged property – it is the pledgee who is entitled to the fruits.
The fruits stand as security as well for the obligation.
o So you cannot give the fruits to a usufructuary.
 What about a leased property? Can it be given in usufruct? (Ex. A
leased to B, A gave usufructuary rights to C)
o Yes.
o Use and possession goes to the lessee.
o The usufructuary need not have use and possession; all he
needs to get are fruits. The usufructuary gets the rentals from
that property.
 Requirements for usufruct?
o Form is not a matter of validity, just a matter of convenience.
o It is valid between the parties.
o You want it to be in a public instrument, so that you can
register it.
o NOTE: a usufruct is always a real right, and will follow the
property. A lease is only a real right if registered.
 Bottomline: the owner has parted with not of his rights over his property:
o Jus affruendi
o [And if giving use and possession: Jus utendi and jus
possidendi]
 Modes of extinguishing a usufruct?
o 1. Death of usufructuary, unless contrary intent appears
o 2. Expiration of period or fulfillment of resolutory condition
o 3. Merger of usufruct and ownership in one person
 o 4. Renunciation of usufruct  Gathered fruits?
o 5. Total loss of the thing o Belong to the usufructuary.
o 6. Termination of the right of the person constituting usufruct  What is the nature of the usufructuary’s possession?
o 7. Prescription o Possession with juridical title
 A sold a parcel of land to B. There were two buildings on the land.  Can the usufructuary grant possession to another person (ex.
There was a condition that 1/3 of the rents of the two buildings Lease)?
should go to A. Subsequently, without B’s fault, the buildings o Yes. Here, it is mere possession that is transferred, the right of
were totally destroyed. Did this extinguish the obligation? which the usufructuary possesses
o No. What was constituted was a usufruct. Rentals are not  What is the exception to this right?
only due from buildings, but also the land. There can be no o Caution juratoria - Giving possession to a person who has
building without land. So the loss was not a total loss that nothing
would extinguish the usufruct.  What happens if the period of the lease is longer than the period of
o A is thus entitled to 1/3 of the land + materials thereon, as a the usufruct?
temporary measure until the buildings are reconstituted. o Rentals after termination of the usufruct belong to the owner.
 A owned a parcel of land and gave B usufructuary rights. The land o If the lease has become a real right, then the owner must
was still empty then. After, A constructed commercial buildings respect
on the lot. Is B entitled to the fruits from rentals of the buildings?  1. Leases longer than 1 year
o No. The usufruct was constituted on the land, not the  2. Leases of property registered in the ROD
buildings.  Obligations of the usufructuary?
o But since the construction diminished the rights of the usufruct o 1. Make an inventory of the property
over the land, he must be indemnified for the loss. In a case o 2. Give necessary security
(Gaboya v. Cui), the owner was made to pay monthly rentals to  Exceptions to bond requirement?
the usufructuary.  1. No one will be injured by lack thereof
 2. Donor has reserved usufruct of the
Default provisions of usufruct
property donated
 The other provisions in the Code: are those that apply by default, in the  3. Parents, who are usufructuaries of
absence of specific stipulations of the parties. unemancipated children’s property, except
when the parents contract a second
 If the property has pending fruits, when the contract of usufruct
marriage
was entered into, to whom do these belong?
o Growing fruits at the time usufructuary enters into the property:  4. Caucion juratoria
belong to the usufructuary  Obligations of the usufructary during the usufruct?
o No indemnification o 1. Take care of the property as a GFF
 At the time the usufruct terminates, what happens to the pending o 2. Make ordinary repairs
fruits? o 3. Inform owner for extraordinary repairs
o Belongs to the owner o 4. Pay annual charges and taxes and those considered as lien
o Owner pays indemnification for expenses to plant, cultivate, on fruits
and other expenses for the fruits
66
  Note: if the taxes, charges, or liens are over the
property itself, the owner is liable
o 5. Notify owner of any act of a third person that may be
prejudicial to right of ownership
o 6. Pay expenses, costs, liabilities in suits with regard to
usufruct
 Obligations upon termination of the usufruct?
o 1. Deliver the thing to the owner
o 2. Right to retention for taxes and extraordinary expenses,
which must be reimbursed
 Rights over necessary, useful, and luxurious expenses?
o Necessary expenses: right to demand reimbursement
o Useful and luxurious:
 No reimbursement
 But may remove these if there is no damage to
property caused
o May set-off these improvements against damage on the
property
Easements
 What is the nature of an easement?
o Also a real right. The right attaches to a specific property until
the right is extinguished. Only difference from usufruct: it is
something that attaches to personal property, while easement
only applies to real property
 Further qualify: easement is applicable to land,
buildings, tenements, and not other kinds of
immovables
o No easement over another easement, for instance, even if the
easement is also a real property. Likewise, those by analogy:
cannot receive easements.
 What is an easement?
o It is an encumbrance over an immovable property, for the
benefit of:
67
o Another immovable property belonging to someone else (Real
easement)
o Or a person or community (Personal easement)
 Dominant estate is the one benefited.
 Is there any difference between easement and servitudes?
o For purposes of the NCC, these are used interchangeably
o Servitude – used in common law (personal and real
easements), and they only use “easement” only for real
properties
 Distinguish between positive and negative easements:
o Positive – the servient estate is either obliged to allow
someone to do something on his property, or to do it himself
o Negative – the servient estate is prohibited from doing
something on his property which he could otherwise do
 Give examples of positive easement.
o Right of way, because the servient estate is required to let
other people pass through his property
o Tree with branch hanging out over neighbor’s property –
required to cut
 Give examples of negative easement.
o Easement of light and view – cannot block neighbor’s view
 Distinguish from continuous and discontinuous.
o Discontinuous – only used in intervals, and with intervention of
man
o Continuous – constant, no need for intervention of man
 Apparent from non-apparent.
o Non-apparent – no external signs
o Apparent – made known and with external signs
 Why is the classification needed?
o Positive/negative – determines rights
o Continuous/discontinuous and apparent/non-apparent –
determines how to acquire
 Prescription only applies to apparent continuous
 How to acquire easement?
o Title
 Juridical act (there is a mode of acquiring ownership
ex. Donation, succession, etc.)
  Or law
o Prescription
 10 years of use of servient estate
 Only covers apparent continuous easements
 E.g. Easement of right of way can never be
acquired by prescription, because it is
apparent, but discontinuous
 Ex. On another note, easement over
aqueducts can never be acquired by
prescription even if it is A + C, by express
provision of the Water Code.
 How to count prescription of A+C?
 1. Positive: Count period from actual use
 2. Negative: from notarial act  will contain
the prohibition. Not just sending a letter to a
neighbor. You have to have a basis; that
you are a dominant estate.
 X owned a piece of property, where there was a house on the
southern portion overlooking the northern portion through doors
and windows. X subdivided the property into two: the empty
northern portion and the southern portion with the house. He sold
it to Y and Z respectively. Y wanted to build a house on the
northern property. Z said that it should be not less than 3 m from
their boundary. Who wins?
o Z wins. Under the NCC, when there is an apparent sign of
easement between two properties maintained by the same
owner and these are subsequently alienated to different
owners – and there is no intent to the contrary – the new
owners must respect the easement.
o Apparent easement here is of light and view: demonstrated by
the windows and doors overlooking the northern portion.
o What are the requisites for this rule to apply?
 1. Apparent sign of easement in two estates originally
owned by one owner
 2. The sign was established by the owner
 3. One or both are alienated
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 4. The contrary was not provided in the deed of
conveyance
 Title – is there a specific form?
o Under Statute of Frauds, any transaction over real right over
immovable property must be put into writing
 E.g. if you acquire it through tradition, you have to put
it into writing
 If not put into writing, it is unenforceable
o If granted on basis of donation: it must be a public writing (both
donation and acceptance) and in writing
 Otherwise, it is void
o If through succession, it must be through a will
 What is the meaning of permanence as a characteristic of
easement?
o General use: non-use will not extinguish easement
o Although, non-user for ten years will also extinguish the right
 E.g. drainage – you are required to have neighbor’s
water pass by you. You see the water and block it. It
is an act contrary to the easement. Non-use kicks in
upon the blocking.
 Inseparability?
o You cannot separate the easement from the immovable.
 When you sell property, and you do not inform the buyer about the
registered encumbrance?
o The encumbrance exists
o But you are guilty for breach of warranty, and the buyer can
sue you for not telling him about the encumbrance
o When does registration of an estate without mention of the
easement extinguish the voluntary easement?
 If the dominant estate is registered without annotation
of the voluntary easement in its favor, it still exists
 If the servient estate is registered without annotation
of the voluntary easement, the easement is
extinguished
 Indivisibility
o Increase in number of owners does not increase the burden on
the servient estate. There is just one easement.
 o If servient estate partitioned or alienated, it still doesn’t change
anything.
 Rights of the Dominant Estate
o To make all works necessary for the use and preservation of
the servitude
 Obligations of the Dominant Estaete
o 1. Can’t alter the easement (only for the benefit of the movable
originally contemplated)
 N.B. Check the intent. If a railroad company was
given right of way over several lots to transport sugar
canes, check whether it is only sugar canes that can
be transported, or if he can transport other goods or
transport for other persons, etc.
o 2. Can’t make the easement more burdensome
 Villanueva v. Velasco – it is the need of the dominant
estate that determines the width of the easement
 Rights of the Servient Estate
o To register the easement, even without permission from
dominant estate
 If servient estate registers land without mentioning
easement, the voluntary easement is extinguished. If
dominant estate registers his land without mention of
the easement, the easement still subsists.
o Retains ownership of the portion where the easement is
established and may use it in a manner not affecting exercise
of the easement
 Obligations of the Servient Estate
o Cannot impair in any manner the easement
o But if the easement becomes very inconvenient to the owner of
the servient estate, or prevents him to make important works,
repairs, or improvements thereon, it may be changed at his
expense
 He must provide another place or manner equally
convenient
 How does an easement terminate?
o 1. Merger in the same person of ownership of both dominant
and servient estates
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o 2. Non-use for 10 years
 For discontinuous easements: count from last use
 For continuous easements: count from contrary act
o 3. When either or both of the estates fall into condition that the
easement cannot be used
 But it shall revive if the condition of either or both
should again permit its use
 Except if prescription has set in
o 4. Expiration of term or fulfillment of condition
o 5. Renunciation of owner of dominant estate
o 6. Redemption agreed upon both owners
Legal easements
 Not an exclusive list. There are other kinds.
o Ex. Easements for aerial navigation
 1. Easements relating to waters
o What is the legal easement of drainage of waters?
 Lower estates are obliged to receive waters which
naturally and without intervention of man descend
from higher estates, as well as the stones/earth
carried along
 The lower estate cannot construct works that impede
the flow. The higher estate cannot construct works
the increase the burden
 Water code governs
 To extent not covered by Water code, use
Civil Code
 So lower estates still obliged to receive
waters from higher estates; and higher
estates cannot construct something to
hasten down-flow of water
 Addition by Water Code: servient estate can block this
flow, but must provide an alternative method of
drainage
o What is the legal easement of aqueduct?
  Any person who may wish to use upon his own estate
any water which he can dispose has the right to make
it flow through intervening estates
 He must indemnify the owners of those estates AND
the owners of the estates where the waters may filter
or descend
 What is the nature of this easement?
 Continuous and apparent
 Requisites?
 1. Owner of dominant estate must prove he
can dispose of the water and it is sufficient
for the use for which it is intended
 2. Show that the proposed right of way is the
most convenient and lease onerous to others
 3. Indemnify the owners of the servient
estates
 4. Secure a water right from the National
Water Resource Council
o IMPLICATION: cannot acquire
aqueduct by prescription
o Banks of rivers, etc. – 3 m, etc. covered by Water code
 2. Right of way
o Most common right of way: road right of way
o Requisites:
 1. Dominant estate surrounded by other immovables
and there is no adequate outlet to a public highway
 There must be NO outlet, not merely
inconvenient
 2. Payment of proper indemnity
 3. Isolation not due to acts of dominant estate
 4. Right of way claimed is at the point least prejudicial
to the servient estate
 5. Shortest distance to public highway
o Generic rule: you have to pay indemnity to get road right of
way
 You are not paying rentals, because you have a right
of way
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 It is a one-time indemnity
o Exception: Isolation on account of sale/transfer or donation
[N.B. the rules on sale and donation are inverse]
 If you are the buyer of the property and you property
is in the middle, and is isolated. You are entitled to
ask the vendor to give you a right of way. You do not
have to pay for that.
 If the one that is isolated is the seller’s property, he is
also entitled to demand right of way. But he has to
pay
 Donation: if you receive property through donation,
you can demand for right of way, but you have to pay,
because it’s too much to ask if you get it for free na
nga, you burden the donor more pa.
 If it’s the donee’s property that surrounds the property
of the donor, the donor can demand right of way and
he doesn’t have to pay indemnity.
o Can the width of the easement of right of way be
changed?
 Yes, from time to time, to suit the sufficient needs of
the dominant estate. For instance, when the
dominant estate used to use a tricycle to pass through
the road but changed to a jeep to suit the flourishing
plant nursery business, it can acquire from the
servient estate a bigger width.
o What is the measure of indemnity?
 1. If easement is permanent and general – value of
land and damage caused
 Because here, you’re practically taking it
 2. If easement is limited and merely temporary – just
damage caused
 3. No indemnity for the two above situations:
 Sale of land surrounded by other estates of
vendor
 Donation of land surrounding other estates
of the donor
o When can the servient estate demand that the right of way
be extinguished?
  When the dominant estate joins with another, which
has a right of way abutting a public road.
 In this case, the servient estate returns what he may
have received by way of indemnity. The interest on
the indemnity is deemed payment of rent for use of
the easement.
 3. Party walls
o Rules on co-ownership can apply
o The party wall itself is the servient estate, and the estates are
dominant
o You cannot open a window on a party-wall
 If someone does and the other does not object, you
can acquire it after 10 years by prescription
o Ma’am did not choose to discuss the dimensions, heights, etc.
of windows in detail.
 4. Light and view
o How do you count prescription for acquisition of
easement of light and view
 1. From opening of a window, if through a party wall
 2. From time of formal prohibition upon the adjoining
estate, if window is through a wall of the dominant
estate
 Through a notarial instrument
o When is it positive? When negative?
 Positive – open window through party wall or wall of
adjoining tenement
 Negative – open window through wall of dominant
estate
o What is the implication of failure to follow minimum
distances?
 Cannot acquire by prescription
 Distances:
 2 meters from other lot if direct view
 60 cm from oblique view
 When the easement already exists, any other
construction must be at least 3 meters away as to not
block the view
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o X built a house adjoining the lot owned by Y. It had
several windows overlooking Y’s half a meter away from
the boundary line. After 15 years, Y brought an action to
close the window. Has X acquired the easement by
prescription?
 No. There was no notarial prohibition, so no
prescription can vest.
 Will the action of Y prosper?
 No. Because the action has prescribed after
10 years.
 Doesn’t this mean X acquired the easement of
light and view by prescription?
 No. Because Y can validly build something
or raise a wall that block X’s view.
 5. Drainage of buildings
o What is the rule?
 Roof must be constructed in a way that the rainwater
falls on his own land or street/public place
 NOT on the land of his neighbor
o What is an easement on drainage of buildings?
 When rainwater cannot be collected in the required
areas stated above, it can be made to pass through
contiguous lands or tenements where egress may be
easiest and it causes least damage to the servient
estate
 6. Trees extending over another’s property
o Who owns the fruit on the trees?
 Still the owner of the tree
 But if the naturally fall on the other owner’s land, the
other owner gets them
o What is the right of the adjacent lot’s owner?
 Demand that branches extending over his property be
cut off by the tree’s owner.
 CANNOT cut them off himself
 But for roots, he may
Nuisance
 What is a nuisance? of tender years at play and fails to exercise due diligence to
o Any act, omission, establishment, business, condition of prevent them from playing therewith
property, or anything which: o Even if the child is technically trespassing
o 1. Injures or endangers health/safety of others o Ex. a swimming pool per se is not an attractive nuisance but if
o 2. Annoys or offends the senses there is an artificial condition or feature that will add another
o 3. Shocks, defies, or disregards decency or morality danger to children, it is an attractive nuisance
o 4. Obstructs or interferes with free passage of any public
highway or street, or body of water Modes of acquiring ownership
o 5. Hinders or impairs the use of property
 How do you acquire property?
 Classify nuisances:
o Occupation
o Nuisance per se – always a nuisance
o Law
o Nuisance per accidens – nuisance by circumstance
o Donation
o Public nuisance – affects a considerable number of persons,
o Tradition
even if the extent may be different
o Intellectual Creation
 1. Criminal prosecution
o Prescription
 2. Civil action
o Succession
 3. Extrajudicial abatement
 Sale is not a mode, it is tradition
o Private nuisance – only a person or small number of persons
 Mode:
 1. Civil action
o Process of acquiring ownership
 2. Extrajudicial abatement
o Mode does not need a corresponding title
 X has a small house where he sells shabu and other drugs. X was
 Title:
caught by the police. The police demolished the house for being a
o Juridical justification for a mode
nuisance per se. Are they right?
o Title needs a corresponding mode
o No. It is not a nuisance per se because it is not a nuisance in
 Succession is a mode, because you do not need a prior title
itself and at all times – it was just the venue for the illegal act.
 Occupation
 What are the requisites before there can be summary abatement of
 Original Mode – not dependent on former owner
nuisance by a private person?
o Occupation
o 1. Specially injurious to him
 Seizing of the property physically
o 2. No breach of the peace or unnecessary injury is done
 Not owned by anyone or because there is a previous
o 3. Demand must first be made to owner/possessor
owner and has abandoned it
o 4. Demand was rejected
 You do not occupy land; you occupy corporeal things.
o 5. Abatement approved by district health officer and executed
Land is never without an owner – the State owns it by
with assistance of local police
default. Except if land was previously owned and it
o 6. Value of destruction not exceeding P3000
has been abandoned: this does not revert to the
 What is the doctrine of attractive nuisance?
State.
o A person who maintains in his premises a dangerous
 If intangible – acquired by (1) intellectual creation, or
instrumentality of any character which is attractive to children
(2) tradition

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  Occupation of animals
 If the animal is wild – a person becomes the
owner upon capture.
 Occupation over domesticated animals, after
20 days, unless claim has been made.
Domesticated animals are those taken from
the wild and then tamed.
 Occupation over domestic animals cannot be
acquired by occupation unless they had
been abandoned. Domestic means that they
are never wild to begin with.
o Intellectual creation
o Acquisitive Prescription
 Possession + just title (acquired through mode of
acquiring ownership) + 30 years
 So valid only if acquired through res nullius (in this
case, it’s really occupation)
 Derivative Mode – dependent on former owner or title of another
person
o Succession – from whom you inherit
o Donation – from donor
o Law
o Tradition
 Imposes a charge or burden on the donee
less than the thing given
 Onerous
 Given in consideration of demandable debt
 Actually governed by rules on contract
o 2. Donations mortis causa
 Actually governed by rules on wills
 Distinguish between illegal and impossible conditions in a simple
donation from illegal and impossible conditions in an onerous
donation:
o In simple donation, considered not written
o In onerous donation, annul the donation (since governed by
rules of contract)
 Distinguish between inter vivos and mortis causa donations:
Inter vivos Mortis causa
Takes effect independently of Takes effect upon death of donor
donor’s death
Title or ownership conveyed before Title or ownership conveyed only
death of transferor upon death of the transferor
Valid if transferor survives transferee Void if transferor survives transferee

Donation Generally irrevocable Always revocable

 Requisites of donation: Comply with formalities on donations Comply with formalities on wills
o 1. Decrease or reduction in the patrimony of the donor
o 2. Increase of patrimony of the donee
o 3. Animus donandi or intent to make a donation  A donation provides that it will take effect after the death of the
 Classes of donation: donor, that the donor will not dispose of it or take it away from the
o 1. Donations inter vivos donee, that he had beneficial ownership while he lived. Is it inter
 Simple vivos or mortis causa?
 pure liberality o Inter vivos, since the donor intended to part with ownership
 Remunerative during his lifetime. Providing that the donor will not dispose of
 On account of services rendered by the it or take it away means that the donation is irrevocable; thus,
donee, but not a demandable debt inter vivos. It is also clear that he parted with naked title, while
 Conditional maintaining beneficial ownership.
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 What does a habendum clause and a reddendum clause signify?
o Inter vivos. Habendum cause indicates a grant of the property
before death of the donor, while the reddendum, in so far as it
imposes a condition on how the donees should spent some of
the income of the property and limits on how to dispose it
indicates that the donor parted with ownership of the land prior
to his death.
 Property is donated in a deed named “donation inter vivos.” It
said that the land donated shall be delivered immediately to X
upon the perfection of the donation, with all the fruits thereof, but
“title shall only pass to the donee upon the donor’s death.” What
is this?
o Mortis causa: the fact that no title or ownership is conveyed
until the death of the transferor controls.
 Capacity of donor and donee:
o Donor:
 1. Must have capacity to enter into contracts
 2. Must be able to dispose of property
 3. Must not be prohibited or disqualified by law from
making the donation
o Donee:
 1. Must not be prohibited or disqualified by law from
accepting the donation
 A, from Manila, offered B, who lived in Cebu, in writing to donate
his car. Two days after , B’s letter of acceptance reached A, but
before it reached A, A has been confined in the psychiatric/mental
ward. Is the donation binding?
o No. The donor’s capacity is determined from the perfection of
donation. A donation is perfected the moment the donor
knows of the acceptance. Here, before he found out, he
already lost capacity.
 Prohibited donations:
o By reason of relationship
 1. Between husband and wife, except moderate gifts
in family rejoicing or distress
74
 2. And those with amorous relationships, living
together as husband and wife [here, there is no
criminal act, unlike adultery/concubinage]
o By reason of public policy
 1. Parties guilty of adultery/concubinage at the time
the donation is made
 Do they have to be convicted? No.
 If they have already parted, then it is valid.
 2. Guilty of committing the same crime AND in
consideration thereof
 You don’t have to be both principals
 When must it be given?
o It can be given before committing a
crime (donation as the inducement)
o It can be during or after (reward)
 Distinguish: for adultery/concubinage – it
cannot be after, and it must be in
consideration of the relationship. Here, it
can be after, but it must be in consideration
of the crime.
 3. Made to public officers, spouses, etc. by reason of
his office
 4. Those disqualified under wills apply as well:
 A. Priest who heard confession or minister
who extended spiritual aid during last illness
 B. The relatives within 4th degree of
abovementioned person, or his church/sect
 C. Ward to guardian, before final accounting
o Except if guardian is ascendant,
descendant, or sibling
 D. Physician, or other health officer who took
care of donor during last illness
 E. Made by individuals, associations,
corporations not permitted by law to do so
 Formalities of a donation:
o MOVABLE
 Oral
  Must have simultaneous delivery of thing
 Or simultaneous delivery of document
representing the right
 Writing
 If the property’s value exceeds P5K
 Acceptance must be in writing too
o IMMOVABLE
 Public document – specifying the property + charges
 Acceptance must be:
 In same deed
 Or separate public document. Here, the
donor must be notified in an authentic form,
and the step noted in both instruments.
o Special rules on form:
 Onerous donation  ordinary contract
 Mortis causa donation  formality of wills
 What is the effect of non-registration? Registration? Actual
knowledge?
o Non-registration, although the donation of immovable is in a
public document  only binds the parties thereto
o Registration  binds the whole world
o Third party with actual knowledge  bound by the donation
between the parties, even if unregistered
 X wrote Y, donating in the letter a piece of land. Y accepted by
means of public instrument. X died. His surviving son, B, wanted
to cure the defect of the donation by executing a public instrument
of ratification. Effect?
o No effect. A void contract cannot be ratified. The contract is
void because it was not in a public instrument.
 X donated land to Y in a public instrument. Y accepted in a
separate public instrument. X died before the acceptance could be
communicated to him. Valid?
o No. The constancia autentica (notification of the donor in
authentic form) is an essential formal requisite not complied
with. The donation has no effect.
 X donated land to Y. Y accepted in a separate instrument, but did
not communicate it formally to the donor. Y paid taxes over the
75
land, since it was in the black list for non-payment of taxes. Was it
an onerous donation? Was the donation valid?
o It was a gratuitous donation, because payment of the taxes
was not a condition/burden imposed upon Y. It was just a
consequence of the donation.
o Thus, since it was NOT an onerous donation, it must follow the
formal requisites of a contract. The formal requisite of
constancia autentica was not complied with; thus, the donation
was invalid until communicated formally.
 Incapacity that would prevent a person from succeeding:
o Testamentary – Art. 1027
 Applicable to testamentary succession, but not to
donation: Witnesses to the will, because there are no
witnesses required to a donation
o Intestate – unworthiness (Art. 1032)
 Limitations on donations:
o 1. Donor must reserve sufficient means to support himself and
all relatives, who at the time of the acceptance of the donation,
are entitled to support
 Reduce upon petition of such persons
o 2. Donations cannot comprehend future property
 Exception: donations propter nuptias in a marriage
settlement
o 3. No more than he may give or receive by will
 Reduce what is inofficious
 A donated all his property to a foundation bearing his name,
ignoring claims of wife and children, except for a provision for
their maintenance and education during their lifetime. Effects of
this donation during A’s lifetime and after A’s death?
o Valid during lifetime of A. The donee can appropriate all the
fruits.
o Once A dies, it is inofficious. It must be reduced to avoid
impairing the heirs’ legitimes, upon petition.
 Is there a right of accretion in donation?
o None, by default.
o Exception: H and W jointly.
 When may a donation inter vivos be revoked?
 o 1. Supervening BAR
o 2. Non-fulfillment of condition
o 3. Acts of ingratitude
o 4. Inofficious donations
 When may a donation inter vivos be reduced?
o 1. Donor did not reserve sufficient means to support himself
and relatives entitled to support
o 2. Supervening BAR
o 3. Inofficious donations
 Revocation of donations:
o As a general rule, these are irrevocable. These cover
donations inter vivos. Donations mortis causa are really based
on succession, so they are revocable.
o 1. BAR – for those with no descendants
 A. Birth
 B. Adoption
 C. Reappearance of child
 These apply to those who have made donations
thinking they will not have successors, and these
would affect their legitime.
 Subject to reduction or revocation. This ground does
not consider the donation per se as revoked. It is only
reduced to the extent that it is inofficious
 Determine the legitimate at that point in time (this is
where presumptive legitime is first introduced in the
NCC), then determine if what was given exceeded.
 What is the prescriptive period?
 Period of four years – from birth, adoption, or
filiation, or receipt of information re: missing
child
 Cannot be renounced
 Transmissible to LCs, ICs, or descendants
upon death of donor
o 2. Ingratitude:
 1. Donee commits an offense against person or
property of donor, spouse, or children under parental
authority
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 2. Imputation of a crime involving moral turpitude
 Is veracity of the claim a defense? No.
 The only time it is a defense, is if the crime is
committed to the donee, his spouse, or
children under parental authority.
 3. When donee unduly refuses to support the donor
when there is a legal or moral obligation
 Prescriptive period? One year from knowledge of
the donor.
 It is purely personal and thus intransmissible
to one’s heirs.
 What are the exceptions to
intransmissibility?
o 1. Donor already brought action but
died
o 2. Donor prevented from filing
action due to sickness, fortuitous
event, etc.
o 3. Donee killed the donor
o 4. Donor died without knowing act
of ingratitude
o 5. Donor already instituted criminal
proceedings but died before filing
civil case for revocation
o 3. Inofficiousness of the donation
 When does this action accrue?
 This action ONLY arises when the donor
dies
 Unlike supervening BAR which can be filed
while donor is alive
 Only compulsory heirs and heirs/successors in
interest may bring action
 The creditors may only bring about
rescission if it was in fraud of them
 Prescription of four years is counted from the death of
the donor. So even if he donated the inofficious
 donation in 1960, and he died in 1984, the heirs have o Inheritance is defined in 776 as the transmissible rights and
up until 1988 to challenge the donation. obligations of a person
o 4. Non-compliance with a condition imposed o Are there intransmissible rights and obligations?
 This is a modal issue  Yes.
 The donor has discretion  1. Purely personal;
 Prescription?  2. Intransmissible by stipulation
 4 years from non-compliance  3. Intransmissible by operation of law
 Also transmissible to heirs  Are these conveyed by succession?
 X donated property to Y, with a condition. Y failed  No.
to comply. X sold the property to Z. Valid?  What are examples?
 No. He has to file a judicial action first within  A purely personal obligation or right
4 years to revoke, unless there is an  Ex. Right to receive support from one’s
automatic revocation clause in the donation. parents
 Rule on fruits for these revoked donations?  Give an example of a transmissible obligation.
o Based on BAR  donee entitled to fruits until filing of  X entered into a perfect contract to sell his
complaint car to Y, but it has not been consummated.
o Based on non-fulfillment of condition  donee must return the X died. This transfers to his heirs.
fruits which he may received after failing to fulfill the condition, o Is a money debt a transmissible obligation?
along with the property  Yes.
o Based on inofficiousness  donee entitled to fruits while the  But is it transmitted directly to the heirs?
donor lives  No. It is paid by the estate, upon claim by
the creditor. (Unionbank v. Santibanez)
 Does this not violate Article 774?
 No. Although the creditors do not claim
SUCCESSION directly from the heirs, the effect is the same
General provisions – what the heirs would have otherwise
gotten is diminished, so they are indirectly
 (774) A mode of acquiring ownership and ultimately paying the debt.
o It is not delivery (tradition) that vests ownership. Succession  Does this provision on money claims affect other
itself is the mode. You do not need delivery of the thing to the claims?
successors.
 No. They are still transmitted to the heirs.
o In due time, the successor acquires a right to possession of the
 When does transmission take place?
thing, which may be in the hands of someone else. But this is
o (777) Transmission takes place from the moment of death
an action of assertion/vindication of possession based on
o This is legal fiction, because you don’t really physically get the
ownership.
inheritance at the moment of death.
 What is transferred?
o Why is it proper to say the rights to succession “vest”
o The inheritance. instead of “get transmitted”?

77
  Because you already have that right, albeit inchoate.
It only vests upon death of the predecessor.
 What are the consequences of Art. 777?
o 1. Determination of who the heirs will be is determined at the
moment of death; also, what law is in effect; what portions they
will get, etc.
 Uson v. Del Rosario: Decedent died during
effectivity of the old Civil Code, so the spurious
children are excluded (unlike in the NCC, where they
would get something)
o 2. Even before the actual partition of the estate, the heir can
dispose can dispose of his/her interest over the inheritance.
 De Borja v. De Borja – the heir was allowed to
onerously dispose of her share even if she did not
know how much exactly she would get.
 Could she have disposed of it gratuitously?
 Yes.
o 3. Heirs have a right to substitute their predecessor in an
action that survives.
 Bonilla v. Barcena
 Patrimonial right – right to prosecute an action
 Updates on the abovementioned jurisprudence:
o Lee v. RTC (423 SCRA 497)
 An heir can sell his right/interest in property under
administration. However, an heir can only alienate
such portion of the estate allotted to him in the
division of estate.
 So he can only sell his ideal or undivided share in the
estate, and not specific properties.
o Liu v. Loi (405 SCRA 316)
 An heir can sell his interest in the decedent’s estate,
but always subject to the rights of the creditors and
the result of the partition.
 So if you end up having no share in the estate, then
what you sold is subject to the creditor’s claim.
o Heirs of Conti v. CA (300 SCRA 345)
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 Reiterated Bonilla case: prior settlement of estate not
necessary for heirs to commence action or continue
action pertaining to the estate.
o Heirs of Pinchay [?] v. Del Rosario
 Prevented from filing action because the plaintiffs
have not established proof that they are the
decedent’s heirs.
 How to resolve: you can continue an action if you are
indisputably an heir.
 What are the three kinds of succession?
o 1. Compulsory
o 2. Testamentary
o 3. Intestate
 In absence or default of valid will
 (781)  is a WRONG provision. The heirs acquire rights to the
inheritance upon death. Any fruits/accruals after will indeed belong to
the heirs, but not through succession, but through accession discrete or
continua.
 What is the importance of distinguishing between heirs and
legatees/devisees?
o This is an important distinction because of the rules on
preterition.
o Heirs – succeeds to an aliquot part of the estate, whether
through testate or intestate
COMPULSORY SUCCESSION
Legitimes
 (886) Legitime –
o A part of the testator’s property
 An aliquot or fractional part
o Which he cannot dispose of gratuitously
 Why is “gratuitously” underlined?
 Because he can dispose of it onerously. He
cannot donate to an extent that will eat into
the value of the legitime.
  But he can sell his properties. Onerous 5 IC; SS SS = 1/3; IC = 1/15
dispositions do not impair the legitime. 1 AC; 2 LP; SS AC = ½; SS =1/4; LP = 0
(Joaquin v. CA) 3 LGP; SS 1 LGP (one line) = ¼; 2 LGP (other
 So he can gratuitously dispose? line) = 1/8; SS = ¼
1 IC; SS IC = 1/3; SS =1/3
 YES. But, he cannot eat into the legitime.
2 AC; 2 LP AC = ¼ each
 Manongsong v. Estimo: Sale does not affect the 3 LC; 2 IC; SS LC = 1/6 each; IC = 1/12 each; SS =
value of the decedent’s estate. There is an exchange 1/6
of value. 2 AC; 1 LP; SS AC = ¼ each; SS = ¼
 Who are the compulsory heirs? – (887)
o 1. LC and descendants
o 2. LPs and ascendants (in default of #1)  Legitimate children or descendants
o 3. SS o Get a constant ½
o 4. ICs  Note: There are only three cases where nobody gets
 Which are primary and which are secondary? ½:
o Primary – those who are never excluded  SS – 1/3; IC – 1/3
 Legitimate children/descendants  SS, exceptional circumstance of in articulo
o Secondary – those who receive only in default of the primary mortis – 1/3
 Legitimate parents/ascendants  SS – 1/4; IP – 1/4
 Illegitimate parents o They are the primary compulsory heir
 N.B. does not go beyond parents o The nearer exclude the more remote. So children exclude
o Concurring compulsory heirs grandchildren.
 Surviving spouse o BUT the grandchildren can inherit if representation is proper
 Illegitimate children/descendants  Predecease
 What are the two principles?  Disinheritance
o A) Exclusion and B) concurrence  Incapacity/Unworthiness
o These two principles simultaneously operate to establish o N.B. If all the children renounce, then the grandchildren will all
combinations of compulsory heirs inherit equally (per capita)
 Legitimary combinations – [recit]  But if only a few renounce and not all, the remaining
child/children will get what is left to the exclusion of
1 LC, 1 IC LC = ½; IC = ¼ the grandchildren
1 LC, 2 IP LC = ½ o The adopted child is, for purposes of succession, in the exact
3 IC, 2 LP, SS LP = ¼ each; 3 IC = 1/12 each; SS = position as a LC
1/8  Must be legally, not de facto adopted
2 IP; SS IP = 1/8 each; SS = ¼ o Does the adopted child retain the right to succeed his
2 AC; 1 LC; 1 IC LC = 1/6 each; IC = 1/12
biological parents?
1 LC; 2 IC; SS LC = ½; SS = ¼; IC = 1/4 each, but
reduced to 1/8  This is still an open question. There is an obiter in the
6 LC; 3 IC LC = 1/12; IC = 1/24 Stephanie Garcia case that the adopted child does,

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 but it is a mere obiter, and it cites a Family Code
provision that might have been repealed by the
Domestic Adoption Act.
 Legitimate parents or ascendants
o Nearer exclude more remote. Parents exclude grandparents.
o Equal division by line. So paternal and maternal lines split by
half then divide between the parents.
 Surviving spouse
o Before, in the Spanish Code, she cannot concur with LC; she
would only get usufructuary right over the property of the LC.
Now, she can concur, and is in fact always an heir. But her
share is variable.
o What kind of marriage is needed to become a SS?
 Valid or voidable
o What is the effect of legal separation?
 Final decree will disqualify the guilty spouse from
inheriting through compulsory, testamentary, or
intestate succession.
 Unless there is reconciliation.
 Lapuz v. Eufemio: If pending a case for legal
separation, one of the spouses dies, the action is
automatically extinguished and there will be no LS.
o What are the prerequisites to have the SS inherit only 1/3?
 1. SS inherits alone
 2. The marriage was in articulo mortis
 3. Decedent dies within 3 months of the marriage
 4. Couple did not live together for at least 5 years
 5. The decedent was the one at the point of death
upon marriage
 Illegitimate Children or descendants
o No more distinction between natural and spurious children.
o What if they concur with legitimate children?
 Always get ½ of one LC’s share
 Their share can be reduced pro rata if the shares
exceed 1 whole. They are less preferred than SS and
LC.
o What if they do not concur with legitimate children?
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 Variable shares. If with SS, then 1/3. If with IP, then
¼. Alone, ½ collectively. If with LP and SS, then ¼.
o What is the rule on representation?
 The illegitimate children of an illegitimate child can
represent the latter. The illegitimate children of a
legitimate child cannot represent the latter.
 Illegitimate Parents
o Excluded by BOTH legitimate and illegitimate children.
o No succession for illegitimate ascendants beyond IPs
Preterition (854)
 What is preterition?
o Total omission of a compulsory heir in the direct line from the
inheritance.
o What is the mistake of the judge in Seangio?
 He said that it is total omission from the will. It must
be total omission from the inheritance.
 When is a compulsory heir completely omitted?
o When he gets nothing in the way of:
 1. testamentary (institution of heir) disposition
 2. legacy or devise
 3. intestate succession
 4. donation inter vivos
 Don’t forget donation inter vivos!
 …and he was not disinherited.
 Why does it mention “compulsory heirs in the direct line”? Who is
a compulsory heir not in the direct line?
o The surviving spouse.
o So who is covered?
 It can be LC, IC, and as circumstances apply, LP or
IP
o How do you determine who are the compulsory heirs?
 Determine only at the time of death because that is
only when the rights to succession vest.
 What if there is something is given but is insufficient?
o Remedy is completion of legitime (906)
 What is the effect of preterition?
 o Annulment of the institution of heir. But legacies and devises reduced but not rendered invalid. [Take note of this
are valid in so far as they are not inofficious. scenario]
o If there are no legacies or devises, the entire estate is thrown o Why does it become like this? Because preterition will only
open to intestacy. apply when there is inadvertent omission from the will (“without
 Does the fact that an heir is not mentioned in the will mean that he the heir being expressly disinherited”). An ineffective
is preterited? disinheritance, thus only results into the heir being able to
o No, if the will does not dispose of the entire estate. (Seangio) demand his rightful share. Preterition does not vest.
 If someone dies intestate, can there be preterition?
o No. Disinheritance (915-923)
 Does the fact that an heir is mentioned in the will mean he is not
 What is the effect of disinheritance?
preterited?
o Primary effect – exclusion from the legitime
o Not always! [ex. there was no disposition in his favor]
o Actual effect – TOTAL exclusion of the heir from all manner of
 X has two children, A and B. X made a will giving B ½ of his
succession: exclusion of the heir from the legitime and the
estate, and the other half to Ateneo. X did not give A anything by
intestate portion, if any, and also from testamentary succession
way of donation inter vivos either. But A predeceased X. Is there
is instituted in an earlier will.
preterition?
 Requisites?
o No. A predeceased. You only determine fact of preterition
o 1. Made in a will
upon death of testator. (JLT Agro)
 Can you disinherit in a medium other than a will?
 [Same facts] A, however, had a son A1. A predeceased X still. Is
 No. ONLY through a will.
there preterition?
o 2. Done for a cause specified by law.
o Yes. But not of A, but of A1.
o 3. Specify the cause
o Does it matter than A1 was born after the will was made?
o 4. Must be unconditional
 It does not matter. The reckoning point is still time of
o 5. Must be total
death of the testator, not time of making the will.
o 6. Cause must true
o What is the effect?
o 7. If the truth of the cause is challenged, the truth of the cause
 The entire estate is thrown open to intestacy because
must be proved by the proponent
there are no legacies or devises.
 What is the policy of the law?
 X said “I will disinherit my son B because he took up law, not
 It is reluctant to grant disinheritance. This is
medicine.” Is this a valid disinheritance?
why the burden of proof is automatically with
o No. It is not one of the grounds. It is rendered ineffective, and
the proponent of the will. The rebutting heir
therefore, there is no preterition.
is not tasked to prove the denial.
 [Same facts] But the second sentence now says, in addition, “…so
 Take note of the following:
I give ½ of my estate to Ateneo, and the other 1/2 to my brother Z.”
o 1. Some of the requisites require conviction by final judgment.
What happens here?
 Example: Number 1. Mere attempt to take the life is
o There was no preterition. So X will get his legitime because
not enough; there must be conviction.
the disinheritance is ineffective. The dispositions in favor of
 But some do not need final conviction, like –
Ateneo and Z are valid but inofficious, so these will just be
 Maltreatment by word or deed
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  Living a dishonorable life
o 2. The grounds are exclusive.
o Self-study the grounds – RFB
 Which grounds require conviction by final judgment?
o 1. Attempt against life of testator, spouse, descendant,
ascendant
o 2. Adultery/concubinage with spouse of testator
o 3. Conviction of crime which carries with it penalty of civil
interdiction
 What is the special requirement for the ground of refusal to give
support?
o There must have been a prior demand, and the demand must
have been unjustifiably refused.
 What is “maltreatment by word or deed”?
o It covers a wide range of misdeeds, but it must be verbal or
physical assault of a serious nature
o No need for conviction
 What is “abandonment” as a ground to disinherit a parent?
o Complete withholding of presence, love, care, and opportunity
to display maternal affection; total denial of support and
maintenance
o See discussion below in unworthiness
 Must there be conviction in “Attempt against virtue”?
o No.
 What is “giving cause for legal separation” as ground to disinherit
a spouse imply?
o No need for decree of legal separation, because merely giving
ground is enough
o Contrast this with “loss of parental authority” as a ground
to disinherit a parent:
 Need actual loss of parental authority for this ground
 Is there representation in disinheritance?
o Yes, if the disinherited heir is a descendant.
 Also for brothers/sisters being represented by
nephews/nieces but only in intestacy and not
compulsory (because brothers/sisters are not
compulsory heirs)
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o No, if the disinherited heir is an ascendant.
o N.B. representation does not apply to testamentary succession
(obviously).
o What does representation cover?
 Compulsory and intestate succession
 See rules on representation for further distinction
 Does the disinherited parent have right to usufruct or
administration of the property constituting the legitime?
o No. The usual rule in the FC that the parents are legal
guardians of the child’s property does not apply to a
disinherited parent.
 How can disinheritance be lifted?
o Reconciliation between the parties.
o It may be oral, in writing, or by conduct (implied).
o What must be the form of express pardon?
 It must be a pardon expressly and concretely
extended to the offender, and not a mere general
pardon extended to all who have offended him
o What is the nature of pardon through conduct?
 The intent to forgive must be clear. This is a question
of fact.
 What is the effect of reconciliation?
o It removes the disinheritance.
o Does he recover legitime?
 Definitely. The heir recovers his right to the legitime.
o Does he receive anything by intestate succession?
 He recovers the right to the intestate portion, if there
is any left.
o Does it revive testamentary dispositions in a prior will?
 Yes, unless it was revoked.
o What if there is reconciliation before disinheritance is
made?
 The right to disinherit is extinguished
Unworthiness (1032-1040)
 1032 enumerates causes for incapacity to succeed/unworthiness and
there is a close parallel with disinheritance. As with disinheritance,
 there is need for final conviction for some, not for others, and one  Is there representation here?
requires exoneration. o Yes, in the same way as disinheritance.
 First ground (actually three):  How does one set aside unworthiness?
o 1. Abandonment of child o 1. Written condonation
o 2. Inducement by parent for daughters to live a corrupt or o 2. Execution by offended party of a will with knowledge of the
immoral life cause of unworthiness
o 3. Attempt against virtue of daughter  Why is the code stricter in unworthiness than disinheritance?
 This article refers to unworthiness of compulsory heirs. Parents o This is an inconsistency, because there are many grounds
who have abandoned their children. But what if the child is under common between both unworthiness and disinheritance. This
the authority of grandparents, will this apply? happens when if the offended party avails himself of that
o RFB thinks so. It should probably be “ascendants who ground and actually disinherits.
abandon descendants.” o Ex. X is the son of Y. X attempts to take Y’s life. A case for
 Abandonment has no precise meaning. How do we understand it frustrated parricide was filed, and he was convicted with final
here? judgment. It is a common ground in unworthiness and
o When the parent/ascendant culpably neglects the support of disinheritance. So in this case, he is automatically unworthy.
the child. “Culpably” means without justification. But Y still disinherits X, which he can do. There is no problem
o What about giving consent to adoption, is it here; he is just “double dead.” But what if X and Y reconcile?
abandonment? Y admitted X back into his house, and forgave him orally.
 No. It is not a culpable act. It is encouraged by law. Under the rules on disinheritance, reconciliation is enough to
 Re: inducement. What about grandchildren/granddaughters? set aside the disinheritance. But because there is no written
What about grandsons? pardon, the unworthiness persists.
o A liberal interpretation would include all these. o How do we resolve this?
 Attempt against virtue?  Commentators like Tolentino say that it is the rules on
o This should include grandparents disinheritance that prevail, because disinheritance is
o Does this need conviction? the express will of the aggrieved party. It should
 No. prevail over unworthiness.
o What does “attempt” cover?  If the facts are the same but Y did not disinherit X,
 All stages of commission. unworthiness will apply. So there has to be a written
 Also not limited to rape: it should cover other offenses pardon.
against chastity.  When is capacity or incapacity determined?
 Are the grounds exclusive? o 1. In general, upon time of death of decedent
o Yup. o 2. If institution is subject to a suspensive condition:
 Do you need actual disinheritance?  Time of decedent’s death AND
o No. The law itself excludes the heir.  Happening of the condition
 What is the extent of the disqualification? o 3. If judgment is a requisite of unworthiness, time of final
o Total, like in disinheritance – no compulsory, testamentary, judgment
intestate

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 What if the disqualified heir makes alienations of hereditary corrupt life, corrupt life,
property and acts of administration? attempt v. virtue attempt v. virtue
o 1. As to third persons in GF, these are valid Loss of P.A. Loss of P.A.
 In good faith if he acquired the thing for value (can’t Attempt by one
parent against
be a donation) and without knowledge of the defect of
life of other
the transferor’s title Cause for LS
o 2. But the co-heirs can recover damages regardless from the Prevent from
disqualified heir making will or
o 3. But for necessary expenses, regardless of GF or BF, there revoking one
must be indemnification of the disqualified heir Falsification or
 What is the nature of the possession of the disqualified heir? forgery of will
o Possession in BF. Thus, must return the thing, with all its
accessions, and all the fruits he actually and could have
Representation
received
 What is the prescriptive period to declare incapacity and recover  Definition of representation?
property from the disqualified heir? o Article 970.
o Five years from time of possession o Comment on “fiction of law”?
 This is unnecessary. It is a right created by law, after
D of child/des D of parent/as D of spouse Unworthiness
all.
Attempt against Attempt against Attempt against Attempt against
life1 life life life o Comment on the term “representation”?
Accusation of Accusation of Accusation of Accusation of  It’s a misnomer. Because what he gets in succession
crime2 crime crime crime belongs to him! He is actually subrogated.
Adultery/conc.3 Adultery/conc. Adultery/conc.  When does representation apply?
Force to change Force to change Force to change Force to change o 1. Predecease,
will will will will o 2. Disinheritance,
Refuse to Refuse to Refuse to o 3. Unworthiness/incapacity
support support support
o There is no representation in renunciation
Maltreatment by
word/deed  In what kinds of succession does representation operate?
Dishonorable life o 1. Compulsory
Crime with civil o 2. Intestate
interdiction  In what lines does representation obtain?
Abandoned, Abandoned, o N.B. In both compulsory and intestate succession there is a
induced to induced to direct line and a collateral line. The direct line you have the
ascending and descending. Collateral are not ascendants or
1 descendants, but are related to you up to the 5 th degree.
Of testator, spouse, ascendants, or descendants – need conviction
2 o For legitime – operates ONLY in the descending direct line.
Crime must be 6 years or more and found groundless
3 NEVER in ascending.
With testator’s spouse; Needs conviction
84
 o For intestacy –
 1. Direct descending line
 2. One instance in collateral line: nephews and nieces
representing brothers and sisters of the deceased
 What is the rule on adopted children?
o Cannot represent nor be represented, because the legal
relationship in adoption is strictly between adopter and
adopted.
 What is the rule on representation by illegitimate children? (“iron
curtain”)
o Illegitimate child of a legitimate child cannot represent the
latter.
o Illegitimate child of an illegitimate child can represent the latter.
o If the child is legitimate, he can always represent his parents.
 What is the rule on shares of the succeeding representatives?
o Since they are only stepping into the shoes of the person
represented, they could get unequal shares (per stirpes). Ex.
A had 2 children, B had 3. Both A and B predecease their
father, X. The 2 children of A split A’s share by ½ each and
the 3 children of B split B’s share by 1/3 each.
o When does the rule change from per stirpes to per capita?
 The rule changes when ALL, and not just some, of the
children renounce. The grandchildren will inherit per
capita.
o What if all children predecease?
 The grandchildren still inherit by representation, and
not per capita.
o How does the rule change for the sole case of
representation in the collateral line?
 A, B, and C are brothers and sisters of X. If A and B
predecease X, then the children of A and B inherit per
representation.
 But if ALL of A, B, and C predecease (or are
disqualified) – the nieces and nephews of X will inherit
per capita. NOTE that this is different because in the
descending line, it will be still succession by
representation.
85
 What if there is renunciation by all collateral
heirs?
 Same rule as direct line heirs: the nephews
and nieces will inherit per capita.
 N.B. there is no distinction among the kinds of
disqualifications in collateral representation, so as
long as all brothers/sisters die or renounce (no such
thing as disinheritance or unworthiness for brothers
and sisters), the nephews/nieces inherit per capita
o Is it even relevant to talk about disinheritance or
unworthiness for collateral heirs?
 It’s not. You cannot disinherit a brother or sister
because he’s not a compulsory heir.
 What are the 3 rules on qualification?
o 1. Representative must be qualified to succeed the decedent
(e.g. C must be qualified to represent A)
o 2. Representative need not be qualified to succeed the person
represented (e.g. C need not be qualified to succeed B)
o 3. The person represented need not be qualified to succeed
the representative (e.g. B need not be qualified to succeed C)
 What is the difference between representation OF and BY a
renouncer?
o Representation OF renouncer  does not happen
o Representation BY renouncer  can happen.
 Illustrate this rule. ABC. C renounced B’s
inheritance. But C can represent B if B predeceases
A, because C is inheriting from A, not B.
Reserva troncal
 What is Reserva Troncal?
o See Article 891
 What’s the purpose of reserve troncal?
o To keep property or return property to the line of origin.
(Sanchez Roman view)
 What are the requisites of RT?
o 1. Person acquires property from ascendant or brother/sister
through gratuitous title
 o 2. Dies without legitimate issue
o 3. Inherited by another ascendant through operation of law
o 4. There are relatives within the 3rd degree of consanguinity
belonging to the line from where the property came
 Why is the reserva troncal included in compulsory succession?
o The RT can limit the operation of the legitime
o If that part which is reservable passes as legitime, the law says
that it should pass with no burden. But if it passes as RT, it will
be under the burden of RT because the law says so.
o It’s better to take it up as part of compulsory succession
because it can become an encumbrance on the legitime.
 What are the two transmissions that have to take place?
o 1. By gratuitous title, from the origin to the prepositus
 This can include donation or any kind of succession
o 2. By operation of law, from the prepositus to the reservista
 ONLY compulsory or intestate succession
 What if there is only one transmission?
o There is no RT. There have to be two transmissions for there
to be RT.
o Solivio: there was just one transmission from the mother to the
son, by donation. When the son died, he had no ascendants
at all or descendants either. Because there was no other
ascendant, the second transmission could not happen. The
closest relatives are two aunts, who are not ascendants.
 Who are the parties in RT?
o But first, two basic rules:
 1. All of these parties must be legitimate. If any of the
relationships is illegitimate, there can be no RT.
 2. No further inquiry beyond the origin is required
o 1. The origin –
 Ascendant of prepositus, of any degree, of either line
 Or brother/sister of prepositus, either full or half blood
 If full blood, Manresa says “yes.” JBL says
“no, because there is no possibility of the
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property leaving the line. The ascendant
lines are common.”4
o 2. Prepositus
o 3. Reservista
 Has to be a different ascendant from the origin
 Must he be another ascendant from another line
or can it be same line?
 If another line, no question he can be a
reservista. (Ex. F  S  M)
 If same line (Ex. GF  grandson  F [same
line as grandfather, since he is the son of the
grandfather]), according to JBL, there is no
RT. According to Manresa and Sanchez-
Roman, there is an RT.5
o 4. Reservatarios
 They must be related within the third degree, in
relation to the prepositus, and of the line where the
property originally came from
 N.B. Of course exclude legitimate
descendants, since if the prepositus had
decendants, there would have been no RT
 Who are these possible reservatarios?
 Parent, grandparent, great grandparent, etc.
 Brother, sister, nephew, nieces, uncles,
aunts
 Note: in the situation that JBL seeks to exclude (but
Manresa favors), there is no need to make a
distinction since there is no change in lines.
 When do you determine who the reservatarios?
4
The difference is explained by different theories. JBL’s view is that RT is
curative or remedial; if it does not leave the line, no need for RT. Manresa
says that it is preventive, too – the RT seeks to prevent the property from
leaving the line as well.
5
Again, the source of disagreement is a different in theories on nature and
purpose of RT. RFB leans towards Manresa’s and Sanchez Roman’s view.
  When the reservista dies. They do not have
to exist when the prepositus dies.
 If there are several, but of different degrees, how
do you determine who gets what?
 Tolentino: Selection is made on preferential
basis, not integral and indiscriminate, as
Scaevola believed.
 Apply the rules on intestate succession
(direct over collateral). Another rule of
intestacy that applies is representation of
nephews or nieces of brothers/sisters [so the
brothers/sisters do not exclude
nieces/nephews].
 What is the consequence?
 Gonzales: The reservista cannot choose, by
will who the reservatarios will be. The law
chooses for her.
 Should the reservatario be related to the origin?
 A1 and A2 have a child, B1. B1 is married to
B2, and have a child C. A1 donates property
to C. B1 died, when C dies, it goes to B2.
Thus, there is an RT here. When B2 dies,
A2 survives and claims the property as
reservataria (since she is related by 2nd
degree to C, the prepositus).
 MANRESA – she is a reservataria, she
meets the purpose and requirements
 SANCHEZ ROMAN – she is not, because
you didn’t return it to A1’s line and A1’s
relatives. A2 is not related .
 So what is the majority view?
 The reservatarios must be related by blood
to the origin.
 This is not yet established by jurisprudence,
but this is a good view point.
 What is the nature of the right of the reservista? (Edroso)
o 1. Right of ownership
87
o 2. Subject to the resolutory condition that there will be
reservatarios present upon the reservista’s death
o 3. The right is alienable, subject to the same resolutory
condition
4. The right of ownership is registrable
 What is the right of the reservatarios? (Sienes)
o 1. Right of expectancy
o 2. Subject to a suspensive condition, that there will be
reservatarios present upon the reservista’s death
o 3. The right is alienable, subject to the same suspensive
condition
o 4. The right of expectancy is registrable
o Don’t these two rights of registration conflict with each
other?
 No. There’s only one title. The right of the reservista
is annotated as ownership; the right of the
reservatario is annotated as an encumbrance.
 What kind of property can be reserved?
o Any type
o What is the effect of substitution (e.g. the prepositus sells
the property)?
 No RT because it must be the very same property
that goes through the two transmissions for RT to
arise
 What is the nature of the reserved property when the reservista
dies?
o It’s not part of his estate upon death. It passes by strict
operation of law to the reservatarios.
 What are the rights and obligations of the reservatarios and
reservistas?
o Reservista prepares inventory
o Right of reservatarios to annotate in case the reservista
alienates (within 90 days from acceptance by the reservista)
o Appraise the movables
o Secure by means of mortgage
o Registration is demandable Sumaya
 What are the causes for extinguishment of RT?
 o 1. Death of reservista (causes it to transfer) o 1. It must be in writing (textual requirement)
o 2. Death of all the reservatarios o 2. Executed in a language or dialect understood by the
o 3. Renunciation by all the reservatarios, and none is born testator(textual requirement)
subsequently  Is this rule mandatory?
o 4. Total fortuitous loss of the property  Definitely.
o 5. Merger or confusion of rights  So can the will be translated to the testator?
o 6. Prescription or adverse possession  No. It must be written in a language known
to him. Do not confuse this with the
TESTAMENTARY SUCCESSION attestation clause, which can be translated.
 Must the will state it was written in a language
In general
known to the testator?
 No. It can be shown by extraneous
 What is the nature of making of a will?
evidence/evidence aliunde.
o It is a strictly personal act. It cannot be delegated.
o 3. Testamentary capacity
o The mechanical aspect is delegable but not the disposing
 Who can make a will?
power.
o What cannot be delegated?  Natural person (juridical person cannot make
 1. Designation of heirs, legatees, devisees a will)
 Who are the two classes of disqualified persons?
 2. Duration or efficacy of the designation
 3. Determination of the portions they get  Those below 18 years old
o What is the exception to non-delegation?  Those of unsound mind
 The testator must determine: a) property or amount of  Putting it positively, one must be a natural person 18
money given, and b) the class or cause to be years old or above and of sound mind.
benefited.  What must you know to establish a sound mind?
 And then he may delegate to a third person: a) the  1. Character of estate
designation of persons, institutions, establishments  2. Proper objects of your bounty
within the class or cause, or b) manner of distribution  3. Nature of the testamentary act
 Testamentary succession can never impair the legitime  Is there a presumption?
 What is a will?  Yes, a rebuttable presumption of
o An act whereby a person is permitted, with the formalities testamentary capacity
prescribed by law, to control to a certain degree the disposition  When is there no presumption?
of his estate to take effect after his death o 1. If the testator, 1 month or less
o Why is this inaccurate? before the making of the will, was
 “Act” is too broad. Instrument is a better word. publicly known to be of unsound
 What are the two kinds of wills? mind
o Holographic and attested/notarial o 2. When the testator has been
 What are the three common requisites (first two, textual; one is placed under guardianship for
non-textual)? insanity

88
  What is the presumption then?
o There is a presumption of insanity,
not just a presumption of sanity.
Again, this is rebuttable
 A requirement is that the testator must sign the will and every page at
the left hand margin, except the last.
 How can the testator usually sign?
o He writes his name
 What are the other recognized ways?
o Affixing thumbmark (Matias v. Salud)
 Is the thumbmark for the testator always a valid
way to sign the will?
 Yes. Under all circumstances, even if not
infirm or ill.
o Is a cross allowed (Garcia v. Lacuesta)?
 No, in general.
 THE EXCEPTION: If that is his usual way of signing.
 There are two ways of interpreting the word “the end,” where the
testator’s signature should be. What are these?
o 1. The physical end, where the writing stops
o 2. The logical end, if there are non-dispositive portions written
in the will
 Must the signing always be at the left margin?
o No. It can be any margin.
o Why is there no requirement for marginal signing on the
last page?
 Because it would be superfluous. He also signs at
the end.
 The testator must sign in the presence of the witnesses. The
witnesses must also sign in the presence of the testator and of one
another. What does the law mean by “in the presence”?
o Nera: The requirement of presence does not mandate that the
person must actually see the other party signing; what is
required is that he could have seen, by casting his eyes in the
proper direction (without changing his physical position).
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 One of the options given to the testator is that he/she may ask
someone else to sign for him, provided some conditions are
present (1. Express direction; 2. In his presence).
o Should the testator be physically prevented from signing
or have any particular reason to get an agent?
 No.
o What should the agent write?
 He must write the testator’s name
 It must be in the agent’s own handwriting
o Must the agent write his own name?
 It is not required.
 Must the attestation clause be signed?
o Yes.
o By whom?
 The witnesses.
o What about the testator?
 No. The attestation clause is purely an affair of the
witnesses.
 Where should the witnesses sign the attestation?
o At the end of the attestation clause.
o Can they sign at the margin or elsewhere (beside)?
 No. The attestation clause is deemed unsigned.
 What must the attestation clause state?
o 1. Number of pages of the will
o 2. Fact that the testator signed the will and all the pages
thereof, or caused some other person to write his name under
his express direction, and in the presence of the instrumental
witnesses
o 3. That the witnesses signed the will and all the pages thereof
in the presence of the testator and of one another
 Must the attested will bear a date?
o No.
o Why?
 The certification of the acknowledgement will be
dated anyway.
o Who certifies?
 The notary public – as required by the notarial law.
 Should a holographic will be dated?
o Yes.
 What if the notary public acted outside his notarial jurisdiction?
o It is void and tantamount to not being notarized.
 If the will was notarized by one of the witnesses, who was also a
notary public, will this make the will void?
o No, if there are three other witnesses apart from the notary.
o If there are less than three witnesses including him?
 The will is void. There is a failure to meet the
required number of witnesses.
o But can a notary public be a witness?
 Definitely. But the notary public cannot be counted as
a witness, and the witness cannot be the notary public
too. For the latter, you are undermining the notary
public’s impartiality.
 What is the requirement if the testator is blind?
o Two readings – by the notary public and by one of the attesting
witnesses.
o Is this mandatory?
 Yes. Non compliance makes the will void.
 Should this mandatory nature extend to illiterate
deaf mutes?
 Yes.
 Of course, the two persons need not be the
notary and one witness; it can be whoever
can practicably communicate the will’s
contents to him
o Must the will or attestation clause mention compliance
with this mandatory requirement?
 No. It can be established by extrinsic evidence.
o Garcia: The lawyer who assisted the testator read the will.
It was read only once. The lawyer, however, read it aloud
in the presence of the attesting witnesses and the notary
public, who had their own copies of the will. The testator
was also listening. Art. 808 was hence not complied with.
But is this valid?
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 This is valid, because there was substantial
compliance. The intent of the law was achieved – to
prevent fraud upon the testator.
o Alvarado: Invalid because it was done by the lawyer who
drafted the will who read it aloud, so it wasn’t even one of the
two parties enumerated. And he read it out loud only once.
 Art 809 is the provision on substantial compliance with respect to the
attestation clause, which needs three things (# of pages, fact that the
testator signed at the end in the presence of the witnesses, and that the
witnesses did the same in the presence of the testator and of one
another). How strict must this be in light of Art. 809?
o In the code itself, there is no clear rule about how liberal
interpretation could be.
o Caneda: defect was failure to state that the witnesses signed
in the presence of the testator and of one another. HELD:
This was a fatal defect. Adopting JBL Reyes’s suggested
standard, it could not be remedied by visually examining the
will.
o Azuela: Deficiency was failure of the clause to state the
number of pages, which was left blank. HELD: valid omission,
because it can be supplied by a visual examination of the will.
 Requirements of a Holographic will?
o Completely written, dated, and signed by the testator
o Roxas v. de Jesus: Feb/61 was held as a sufficient date – this
is a problematic decision. Fortunately, there was no other will
also made in Feb/61, which could have possibly repealed it. In
a very liberal decision, it was upheld.
o Where should the date be?
 There was no mention where it should be. It could be
in the body.
o Can you sign by a thumbmark, as in an attested will?
 Seems unlikely. It must be “written by the hand” – not
a thumbmark. Though there is no jurisprudence on
this.
 813-4 – dispositions after the signature
o Some commentators say that this implies that the signature
must be at the bottom of the holographic will.
 o If there is only one additional disposition, it must be written and
signed by the testator.
o If there are several, what is the rule?
 1. Dated and signed
 2. Or each additional disposition may be signed,
provided the last one is dated and signed
 What is required for insertions, cancellations, erasures, or
alterations in holographic wills?
o It must be authenticated by the testator through his signature
o Kalaw v. Relova: Cancellation of the name of the original heir
and writing above it of the name of another heir – invalid
because it was not validated, because it was not signed.
o But the court weirdly held that the cancellation was valid! But it
was not signed. This is an odd decision, because it had an
internal contradiction.
 Are joint wills allowed?
o No.
o But for aliens, if they execute their will abroad and their
national law allows it, then it’s valid.
o If aliens execute it locally, there are two views: it’s either valid
because national law allows it, or it is void due to public policy.
o If a Filipino and alien execute a joint will, it’s always void as to
the Filipino.
 What are the requisites to become a witness to a will executed in
805?
o 1. Of sound mind
o 2. At least 18 years old
o 3. Not blind, deaf, dumb
o 4. Able to read and write
o 5. Domiciled in the Philippines
o 6. Not convicted for falsification of document, perjury, or false
testimony
o What do these qualifications establish?
 Competence only, but not credibility per se
o When is competence of the witnesses needed?
 During attestation only. If they become incompetent
after, it has no effect.
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 When is a witness to a will disqualified to succeed?
o When he is a witness to a will where something is given to him,
his spouse, parent, or child
o What is the effect?
 The will is valid but the witness can succeed to the
will
o How many witnesses are needed for this provision to
apply?
 Only three witnesses. If there are at least three other
competent witnesses, there is no disqualification
o What kind of succession is affected?
 Only the testamentary dispositions, but not legitime or
intestate share because this is not affected by the
witnessing (i.e. if the witness is a son of the testator)
 Codicils and incorporation by reference (825 and 827)
o Article 825 defines a codicil. This is exam material. It assumes
the existence of a prior will. You cannot have a codicil without
a prior will. It can explain or alter the prior will.
o Sometimes it’s hard to determine whether it is a codicil or a
second will.
 If it makes an independent disposition, it is a second
will.
 If it alters, modifies, changes, it is a codicil.
o But honestly, this distinction is academic, because the
requirements of a codicil and a will are just the same.
o 827 – An incorporated document. It is attached to a will and
is intended to explain. It cannot make a testamentary
disposition because otherwise, it has to comply with the
requisites and form of a will.
 Requisites?
 1. It must predate the will
 2. It must be signed on every page by the
testator and witnesses, except if it is
voluminous
 3. It must be clearly referred to in the will
 4. It must be referred to in probate as that
document
  So since it requires witnesses, can you not have
an incorporated document with holographic wills?
 Some say you cannot because there are no
witnesses. RFB says that you must interpret
it liberally, and since there are no witnesses,
then it just means it’s just the testator that
signs.
 Two modes of testamentary succession:
o 1. Institution of an heir
o 2. Institution of devisee or legatee
 What is the permissible form of instituting a successor, whether
heir, devisee, or legatee?
o Only thing required is that the identity of the successor is
adequately determined in the will. No need to mention by
name, as long as the successor’s identity is determinable.
 “I institute my brothers and sisters to ½ of the share of my estate.”
What does this mean?
o Siblings, whether legitimate, illegitimate, or half, inherit in equal
shares.
o This is different from intestacy, where whole, half, and
illegitimate siblings inherit in 2:1:0 ratio. (You cannot inherit
from your illegitimate sibiling)
 What is the rule on statement of false causes on a will?
o In general, it is deemed not written.
o Exception – requisites:
 1. Cause must be false
 2. It must be shown to be false
 3. It must appear on the face of the will that the
testator would not have made the institution had he
known of the falsity of the cause
 If heirs are given different fractions each, and the total is less than
the free portion, what happens? (852/3)
o The rest of the free portion goes into intestacy.
o But what if it is shown that the testator intended to
dispose the entire free portion?
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 If the disposition is less than the portion, you increase
proportionately. If more, you decrease
proportionately.
924-959 – Legacies and devises
 Some provisions are inaccurate. It is estate that is liable for legacies
and devises, not compulsory heirs as 925 says. You cannot charge the
compulsory heir for the legacies and devises. Exception: indirect legacy
 What is the liability of two or more heirs who take possession of
the estate?
o Solidarily liable for loss or destruction of the thing devised or
bequeathed, even if only one is negligent
 Who is liable for eviction?
o In general, the estate
o For subsidiary legacy or devise – the heir, legatee, or devisee
charged
 929-937 outline:
o 1. General rule: you give away what your interest covers. No
more, no less. If you own the whole thing, you give the whole
thing.
 Exception – you can give more than you own. This
estate will attempt to acquire it, but if the estate fails,
the monetary equivalent is given.
 Exception 2 – you give less than you own.
o 2. Legacy or devise of a thing belonging to another – under the
ff rules, you can:
 A) if the testator gives an order to acquire it, the
estate tries. If the owner refuses to sell, the estate
gives the monetary equivalent.
 B) If the testator wrongfully believed he owned the
thing, the disposition is void.
 Exception – if subsequent to making the
disposition, the testator acquires the thing
gratuitously or onerously.
 C) If he knew he did not own it, but did not order for
its acquisition  there is an implied order to acquire.
o 3. The legacy or devise of a thing already belongs to the
devisee or legatee
 A) If a thing given already belongs to the legatee or
devisee, the disposition is void
 Subsequent alienation is not validated,
unless as Manresa says, the alienation is to
the testator himself
 B) If the thing belongs to somebody else when the will
was made, and he erroneously believed it belong to
him, and later, the legatee or devisee acquired the
thing –
 It is still void, because the testator was in
error
 C) If the testator knew it did not belong to him, and
the thing was acquired onerously by the
devisee/legatee, the estate pays
 Except – if acquired gratuitously, then there
is nothing else to be done
 D) If the thing was owned by the testator at the
making of the will, but the legatee/devisee acquired
the thing from the testator after, the disposition is void
(because subsequent disposition, even to the
recipient himself, renders the legacy/devise useless)
o 4. Legacy/devise directing the estate to remove the
encumbrance of property of another  the estate pays for it
 Pledge/mortgage  estate must pay for it first
 Any other kind of encumbrance like easement or
encumbrance  passes with the things
o 5. Legacy of credit or remission
 i.e. giving to the recipient the debt owed to me by
another person  effective as to remaining debt owed
upon the testator when he dies
 If the testator sues after making the disposition 
ipso facto the legacy is revoked. Mere filing revokes
the disposition. Extrajudicial demand does not revoke
the disposition. It must be a complaint for collection.
 If generic, on the debts existing when the disposition
was made. Ex. X owed Y 2 debts in 1999. Y, in his
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will, gave Z the debts X owed Y. X owed Y 3 more
debts in 2001. Y died. What debts transfer?
 Just the 2 existing when the will was made.
 What is the treatment of a legacy/devise to a creditor?
o It will be treated like any other legacy or devise and will not be
imputed to the debt.
o What is the exception?
 Imputed to the debt if the testator provides so. If the
debt exceeds the legacy/devise, the remainder may
be demanded as an obligation of the estate
 When are there alternative legacies or devises?
o It exists if one provides that among several things mentioned
only one is given.
o Who has right of choice?
 1. In general, the estate, through the executor or
administrator in a direct legacy or devise
 If he dies, the successor E/A chooses
 2. In a subsidiary legacy or devise, the heir, legatee,
or devise charged
 If he dies, his heirs choose
 3. If so provided, the legatee or devisee
o What is the nature of the choice?
 Irrevocable
 What is the rule on validity of generic legacies/devises?
o 1. Generic legacy – valid even if no such movables exist in the
testator’s estate upon his death (estate just acquires it)
o 2. Generic devise – valid only if there exists such an
immovable in his estate upon death
o Who chooses?
 The executor or administrator
 Except if the choice is expressly given to someone
else
o What is the limitation?
 Neither superior nor inferior in quality
o What is the nature of the choice?
 Irrevocable
 Legacy of education, support, or periodical pension:
 o A. Education
 Lasts until age of majority or completion of the course,
whichever comes later
 Amount – as fixed by the testator; secondarily, that
which is proper, depending on social standing or
value of disposable portion of the estate
o B. Support
 Lasts until the legatee’s lifetime, unless the testator
provides otherwise
 Amount – as fixed by the testator; secondarily, that
which the testator used to give when he was alive
unless disproportionate to the estate value; tertiarily,
social standing or value of the disposable portion of
the estate
o C. Legacy of a periodical pension
 Demandable upon the testator’s death, and
succeeding ones at the beginning of the period
without duty to reimburse should the legatee die
before the lapse of the period
 What is the order in 950 for reduction?
o 1. Remuneratory
o 2. Preferred
o 3. Legacy for support
o 4. Education
o 5. Specific
o 6. All other, pro rata
 What is the rule in 911?
o 1. Reduce pro rata non-preferred legacies and devises
o 2. Reduce pro rata preferred legacies and devises
 When do you use which?
o If the reason for reduction is impairment of legitimes, use Rule
in 911.
o If the reason for reduction is something else, use Rule 950.
o What other reasons could exist?
 A testator has no compulsory heirs, but he gave away
too many legacies and devises, by sheer
mathematical necessity. Rule 950 is followed.
94
 Or maybe the testator already covered for the
compulsory heirs’ legitimes through donations inter
vivos, so the remaining parts are all free portion.
 What is the rule on acceptance and repudiation of legacies and
devises?
o Acceptance may be total or partial
 Except: if the legacy/devise is partly onerous and
partly gratuitous, the recipient cannot accept the
gratuitous part and renounce the onerous part
 Other combinations are allowed
 In case of repudiation or incapacity of the legatee/devisee, what
are the applicable rules (in order)?
o 1. Substitution
o 2. Accretion
o 3. Intestacy
 When is a legacy or devise without effect?
o 1. Transformation –
 Converted the thing
o 2. Alienation
 Either onerous or gratuitous, and even if the thing
reverts to the testator
 Exceptions?
 1. Reversion was caused by annulment of
alienation because there was vitiated
consent
 2. Reversion due to redemption in a pacto de
retro sale
o 3. Total loss before the testator’s death
Rules common to heirs, legatees, and devisees
 Capacity to succeed:
o In fact, the basic rules are common to all kinds of succession
(Alive + qualified to succeed at the time succession opens.
There is no exception here.)
 Art 1025 – The heir, legatee, or devisee must be living when the
testator dies. There is NO exception, contrary to what this provision
suggests.
 o Representation is not an exception because the representative
must at least be conceived already.
o For juridical persons, it must exist juridically when the testator
dies.
 1027 – First 5 paragraphs are important because they enumerate
instances where one is incapacitated to succeed in testamentary
succession. It does not apply to other kinds of succession.
o 1. Priest who heard confession of testator during last illness or
minister of gospel extending spiritual aid in this period.
Requisites:
 A. Will executed during last illness
 B. Spiritual ministration extended during last illness
 C. Will executed during or after the spiritual
ministration
o 2. Relatives of priest/minister within 4th degree or his institution
o 3. Guardian, from ward before final accounts of guardianship
approved
 Except if guardian is A/D/sibling/spouse
o 4. Attesting witness to the execution of a will, spouse, parents,
children, or anyone claiming under that witness, spouse,
parent, or children
 Put in the exception, where there are three other
competent witnesses to the will, under here too
o 5. Physician or health officer who took care of the testator
during last illness
 1028 – only applies to testamentary succession: extend to prohibited
donations in 739
 What if the disposition is for prayers and pious works for the
benefit of his soul and no specifications are given?
o ½ to the church/denomination of testator
o ½ to the State
 1032 disqualifications (unworthiness) – these are general; these bar the
DQ heir from compulsory, testamentary, or intestate succession
o Only testamentary succession. You cannot have substitution
in compulsory and intestate succession.
 What are the two kinds of substitutions?
o 1. Vulgar
o 2. Fideicomissary
o The code seems to enumerate two more:
 1. Reciprocal
 2. Compendious
 (Several heirs one substitute)
 …but these actually are just variations. They go into
mode.
 What is substitution vulgar?
o Instituting an heir in default of the one instituted
 Predecease, incapacity, renouncement
o How do you make it?
 Enumerate all the three causes
o Can you restrict vulgar to 1 or 2 grounds?
 Yes. Just specify.
 What are the requisites for fideicomissary?
o 1. First heir takes the inheritance
o 2. Second heir takes the thing after tenure of the first heir
o 3. The second heir must be one degree from the first heir
 What does “first degree” mean?
 It refers to relationship.
o 4. The first heir must have absolute obligation to preserve and
transmit
o 5. Both heirs are alive and capacitated at the death of the
testator
 What is the tenure of the first heir?
o What is specified by the testator
o If not specified, it is the lifetime of the testator
 Does the first heir have a right to alienate?
o NO. This rule is unlike the reserva troncal.

Substitutions (857-870) Conditions, terms, modes

 For what kind of succession does this apply?  These all burdens in succession, especially since the testator has free
disposal of his property.
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 What are the types of conditions?
o Suspensive
o Resolutory
 What are the special rules on suspensive conditions?
o An impossible condition (873) – considered not imposed. The
disposition is valid and becomes pure.
o What about condition not to contract first marriage?
 ALWAYS considered not written
o What about subsequent marriages?
 Generally void, unless imposed by the deceased
spouse or the latter’s ascendants/descendants
o BUT what is allowed is to impose a usufruct or some personal
prestation as long as one remains unmarried or a widow is
valid.
o A disposition on condition that the heir/legatee/devisee
must also in turn make a disposition in favor of the
testator or another person?
 The entire disposition is void. Take note of this. The
purpose is to prevent the whole system from being
corrupt.
 When does a suspensive condition take effect?
o If both conditions exist: 1) the heir is alive when the testator
dies, 2) the heir is alive when the condition happens
 What happens while waiting for the suspensive condition to
happen?
o Place the property under administration of
executor/administrator
 What is the difference between a term and condition?
o A term is certain, a condition is not.
 What are the two types of terms?
o Suspensive term
o Resolutory term
 When does an institution based on a term vest?
o A disposition with a term vests upon the death of the testator,
unlike a conditional disposition (esp. suspensive) which only
vests upon the happening of the condition. Since a term is
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certain to happen, it follows the general rule in 777 that it vests
upon death.
 So must the heir be alive when the term arrives?
 No. Just when the testator dies.
 So he can transfer his vested right upon his
own successors.
 What do you do as you wait for a suspensive term to arrive?
o Governed by 885. While you wait for the term to arrive, you
give it to the legal heirs (intestate heirs).
 For resolutory terms?
o After the testator’s death, you give it to the instituted heirs, and
when the term arrives, they turn it over to the legal heirs.
 A condition suspends, but not obligates. A term obligates, but does not
suspend. A term does not delay the efficacy of the disposition, but it
places an obligation upon the instituted heir (even suspensive, since the
instituted heirs have an obligation to turn the property over to the
instituted heir when the term arrives).
 What is a mode?
o You have to do something alongside the disposition.
 What if the heir fails or refuses to perform the act required?
o The beneficiary can ask for the performance of the obligation.
o The legal heirs can ask for the forfeiture of the disposition.
 How must a mode be stated?
o It must be a clear command, not just a request.
 When is a caucion muciana needed?
o 1. In a potestative suspensive condition (879)
 It is under the sole control of the heir (ex. I give X my
house and lot, as long as he doesn’t use it as a drug
den. In order to guarantee that the legal heirs, who
will then be entitled to the property upon violation of
the condition, then X has to put up a bond – the
caucion muciana).
o 2. Resolutory term, before the term arrives
 The legal heirs have the right to enjoin disposition of
the property, but they have to put up a caucion
muciana
o 3. In case of a mode (882)
  As security for compliance with the testator’s wishes
Accretion (1015-23)
 To which kinds of succession does it apply?
o Applies only to testamentary and intestate succession.
 Requisites?
o 1. Two or more heirs, legatees, devisees, called to the same
inheritance or portion thereof pro indiviso
 What does “pro indiviso” here mean?
 Some commentators say they must have
equal shares (like Tolentino), but this is
wrong. There’s no requirement of equality,
just as long as they have aliquot shares.
This means even the shares can be unequal.
 There is no accretion is the shares are
earmarked.
o 2. One or more must predecease the testator, become
incapacitated, or renounce the inheritance.
 X gives his BPI account to A, Citibank account to B, PNB to C. C
predeceases. Is there accretion?
o No. The shares are earmarked.
 X gives ½ of his estate to A, 1/3 to B, 1/6 to C. C predeceases. Is
there accretion?
o Yes, because they got aliquot shares. A and B receive C’s
shares according to the proportion they received their shares.
 In testamentary disposition, what wins out, accretion or
substitution?
o Substitution
 In intestate disposition, what wins out, accretion or
representation?
o Representation, when proper
o So if the intestate decedent has three brothers (X, Y, and Z)
and X has X1 and X2, if X dies, representation applies. If X
has no children and X dies, accretion applies.
Revocation of wills (828-834)
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 There is no such thing as an irrevocable will. It only becomes
irrevocable when the testator dies.
 What are the three ways of revoking a will, whether total or partial?
o 1. By operation of law
 Legal separation (offending party is instituted as a
beneficiary in a will)
 Preterition
 Where the testator disposes property that is given as
legacy or devise in a will (the legacy/devise is
revoked)
o 2. Subsequent will/codicil
 1. The will must comply with the requirements of wills
 2. Testamentary capacity
 3. Either an express revocatory clause or
incompatibility in the dispositions
 4. The will must be admitted to probate
o 3. Physical destruction
 Either by the testator personally or in the case of
attested wills, it can be done by his agent acting
under his express direction and in his presence
 Molo: There must be both a) corpus (actual
destruction), and b) animus (intent)
 What if a will is revoked based on a false cause?
o The revocation is null and void.
o What are the requisites for this situation to apply?
 1. Cause must be concrete, factual, and not purely
subjective
 2. It must be false
 3. The testator must not know of its falsity
 4. It must appear in the will that the testator is
revoking because of the cause which is false
 What if the revocation was unauthorized?
o If it is an attested will, it can be proved, if there are people
available who can attest to the contents of the will
o If it is a holographic will, too bad if no copies survive. There’s
no way of probating it.
Republication and revival
 835 and 836 are inconsistent with each other. o Even if the decision is wrong.
 Republication/revival is giving efficacy to a will which somehow lost its  What cannot be assailed after finality of probate decree?
efficacy o 1. Testamentary capacity
o Ex. it has been revoked, and now you want to revive it. o 2. That he acted freely
 If it is defective as to form? o 3. Followed all the requirements of the will, as to witnesses,
o You have to reproduce it in the form of a valid will or codicil. etc.
o You cannot revive it by reference. o 4. It is genuine and not forged
 What if it is inoperative by some other reason other than form?  For probate of holographic wills, what must one remember?
o You can merely revive it by reference. o 1. You have to present the will itself (Gan v. Yap)
 Except there is a photocopy that survives (Rodella v.
Executors and administrators (1058-1060) Aranza)
o 2. If the holographic will is contested as probate, three
 What if the decedent dies with a will? With no will? witnesses who can identify the will and attest to its validity
o It has to be probated, and if the will has appointed someone to must be presented.
take care of the estate, then he becomes the executor.  Is this mandatory?
o If there is none appointed or no will, then the court appoints an  The leading case of Azaola says that it is
administrator. only directory
 Godoy: Says that it is mandatory, although it
Probate
is criticized
 When is it deemed contested?
 Two aspects of validity of a will?
 If it is challenged as a forgery. If it is
o Formal (Extrinsic validity)
admitted as genuine but admitted on other
 including capacity of witnesses
grounds such as mistake, fraud, or duress, it
o Substantive (intrinsic validity)
is not a contest under 811 and you do not
 Ex. impairment of legitimes, preterition, capacity of
need three witnesses.
heirs, legality or possibility of conditions
 What is probate?
Conflicts rules
o Mandatory proceeding to determine only the formal validity of
the will  Substantive validity?
o There is no substitute for probate. o Time – law as of time of death
o Guevarra v. Guevarra, Seangio v. Reyes, Heirs of Lasam: o Place – law of citizenship of decedent
All lay down the rule that probate is mandatory.  Formal validity?
 Probate is determinative or conclusive of the validity and due execution o There are always five choices:
of the will. o 1. Law of citizenship
 How does it become final? o 2. Philippine law
o Just like any decision of court. o 3. Law of residence
o Once it becomes final, it becomes res judicata – it becomes o 4. Law of place of execution
unassailable as to matters of form of the will. o 5. Law of domicile
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INTESTATE SUCCESSION o Direct excludes collaterals
o As a general rule, descending excludes ascending
In general  Except: legitimate ascendants not excluded by
illegitimate descendants
 What is intestate succession? o Is there representation in the direct line?
o Takes place by operation of law in default of a valid will  Yes, only in the descending
 Look at the instances in 960 where total or partial intestacy occur: o Collateral – nearer excludes more remote
o 1. No will, void will, or ineffectual will o Is there representation if the collateral line?
o 2. Does not dispose of all property (partial intestacy)  Nephews and nieces exclude predeceased or
o 3. Suspensive condition did not occur, predecease, repudiation unworthy brothers/sisters of decedent
 And there is no substitution (testate)  What is the nature of the spouse?
 And there is no accretion (testate/intestate) o Concurs with both direct and collateral (up to third degree)
o 4. Heir is incapacitated/unworthy  What is the rule of proximity of degree?
o 5. Resolutory condition happens o Nearer exclude the more remote
o 6. Resolutory term expires o What is the exception?
o 7. Preterition  Representation (see above – direct descending and
 What are the principles of intestacy? nephews/nieces only for collateral)
o Exclusion and concurrence, just like compulsory succession  What is rule of equality of relatives of the same degree?
 What is the rule of relationship? o Relatives of equal degree inherit equally
o The intestate heir must be related to the decedent o Exceptions?
o Jus familiae (ascendant/descendant)  1. Preference of lines
o Jus sanguinis (collaterals up to fifth degree)  ex. legitimate direct descendant of 1 degree
o Jus xxx (husband and wife) excludes legitimate direct ascendant of 1
o Jus imperii (decedent and State) degree
 Just familiae and sanguinis requires blood relationship. What is  2. In collateral relationships, full blood and half-blood
the exception? distinction
o Legally adopted children and legally adoptive parent  Siblings
 What are the limits?  Nephews and nieces
o Going down, there is no limit  3. Representation
o Going up, there is no limit  See the combinations in the book.
o Collateral line, the limit is up to the fifth degree
 Can the adopted succeed to his biological parents?
 How do you count degrees?
o This is the same problem as in compulsory succession so see
o For direct line, count degrees the discussion above.
o For collaterals, count up to the nearest ancestor
 Combinations 2 and 4 in the book are dangerous, so take note that
 2nd – brothers, sisters
here (children and illegitimate children) – each legitimate child gets
 3rd – nephews, nieces, uncles, aunts
double what the illegitimate children will get. What is the usual
 And so on
pitfall?
 Rule of preference of lines?
99
 o If you observe the 2:1 ratio intestacy, remember that you still
have the legitimes. You might end up impairing the legitime of
the legitimate children, which cannot be impaired. The
illegitimate children can suffer impairment if there are a lot of
them, but never the legitimate children.
o This problem doesn’t apply in any other instance apart from
these two cases.
 What is the successional bar?
o Art. 992. An illegitimate child has no right to inherit ab intestato
from the legitimate children and relatives of his father or
mother; nor shall such children or relatives inherit in the same
manner from the illegitimate child.
 Situations to take note of:
o In case of the concurrence of the SS and 1 LC, the SS will get
½, and the LC gets ½.
o SS, brothers, sisters, nephews, nieces – SS gets ½, brothers
sisters nephews nieces get ½.
 According to the rules of division.
o Nephews and nieces concurring with aunts/uncles of the
decedent – nephews and nieces exclude the aunts/uncles
even if they are in the same degree.
 What is the difference in rules for brothers/sisters in testate and
intestate succession?
o TESTACY: Difference in the rule of brothers and sisters – if
they are instituted indiscriminately, they receive equal shares
whether full or half blood.
o INTESTACY: Take note of the 2:1 ratio [for full and half blood]
and the successional bar.
 Is partial intestacy possible?
o Yes, there is a will but it doesn’t dispose of the entire free
portion.
 Give an example of the difference between total and partial
intestacy.
o Full intestacy:
 Legitimes – ½ to LC, ¼ to SS
 Thus, ½ to LC, ½ to SS (entire ¼ free portion went to
the SS)
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o Partial intestacy: Ex. I gave 1/8 of my estate to Ateneo.
Note that the legitimes are ½ to LC, ¼ to SS.
 ½ to legitimate children, 1/8 to Ateneo, 3/8 to spouse
 Note: the entire remaining free portion of 1/8 went to
the SS.
Acceptance and repudiation of the inheritance (1041-57)
 Acceptance and repudiation are always free acts. A person may always
accept or reject, whether compulsory, testatamentary, intestate.
 Exception: accion pauliana
o If there are creditors and the decedent does not have enough
property to pay the creditors, the creditors can compel the heir
to accept to the extent of the credit
 What is the difference in form?
o Laxer rules in acceptance, and stricter rules in renunciation,
because it is prejudicial
 There is need for judicial approval for renunciation of
incapacitated person. For acceptance, no need.
o Acceptance – there can be express acceptance in writing, oral,
or there can be tacit acceptance (by doing nothing).
o Renunciation – you have to do it in writing or by judicial
approval.
 What is the retroactivity rule?
o Acceptance – as if the property passed at the moment of death
(Art 777)
o Renunciation – as if the renouncer never owned or possessed
the property (the substitute, co-heir, or intestate heir receives it
at the moment of death)
o Conditional institutions – retroactivity still applies even if the
condition happens later
 What is the rule for public official establishments?
o Can neither accept nor repudiate an inheritance without the
approval of the government
 When is there deemed acceptance?
o 1. Heir disposes onerously or gratuitously his right to one or
more co-heirs or stranger
o 2. Heir renounces it gratuitously to one or more co-heirs
 o 3. Heir renounces it onerously to all co-heirs indiscriminately o 3. Return – donations inter vivos is found to be inofficious and
 What about a gratuitous disposition to all co-heirs the inofficious value is actually returned to the estate to satisfy
indiscriminately? legitimes
 This is a true renunciation and thus there is  N.B. if property is to be returned, following Art. 777,
no acceptance the fruits will pertain to the proper person (ex. entirely
 What about a gratuitous disposition to all co-heirs inofficious donation – fruits go to compulsory heir;
but in different portions? partially inofficious donation – some to compulsory
 Still a conveyance and is thus tacit heir and some to donee)
acceptance  For return, what expenses must be reimbursed by
 What if an heir dies without have accepted or repudiated the the final recipient?
inheritance?  Necessary expenses – full extent
o The right passes on to his heirs  Useful expenses – full extent as long as
 What if a renouncing person is both a testamentary and interstate improvement still exists
heir?  You have to collate:
o A. If he renounces the testamentary disposition – he impliedly o 1. Inventory
renounces the intestate share too  What results are his gross assets
o B. If he renounces as intestate heir without knowledge of being o 2. Deduct debts
a testamentary heir, he can still accept the disposition  This is where the Santibanez and Hemady doctrines
o N.B. this doesn’t affect compulsory succession come in. The estate, after all pays money debts, prior
 What is the nature of acceptance/renunciation? to the heirs receiving their shares.
o Final, except:  What results: available assets
 1. Vitiated consent o 3. Add the value of donations inter vivos
 2. Appearance of an unknown will  Net hereditary estate results.
 What are not included?
Collation and partition  Support, education, medical attendance,
customary gifts, etc. (since these are
 What is the effect upon death of the decedent? impractical to calculate)
o The immediate effect of death is the vesting of successional  What about expenses for professional,
rights. But at this point, nobody knows what part of the estate vocational, or other career expenses of
goes to whom. the child, as given by the parents?
o The heirs co-own the mass of properties. o Charged against the free portion,
 What are the three ways by which collation is understood? unless:
o 1. Computation – simple accounting process where value of  1. Provided otherwise
donation inter vivos is added to the available assets  2. Inofficious
o 2. Imputation – donations inter vivos by decedent are charged o If imputable (the two above), deduct
either to the donee’s legitime or against the disposable portion what the parents would have spent

101
 on the child had he stayed home
and loafed
 What is the measure of the value of the property
donated?
 Value when the donation was made, since
this was when it was perfected. Any
subsequent increase inures to the benefit of
the donee.
 What if the recipients of the donations are the
compulsory heirs?
 You impute against their legitimes what they
have received as donations inter vivos.
 Exceptions?
o 1. Donor provides otherwise
o 2. The donee renounces the
inheritance, because he gives up
the status as compulsory heir
 What if the donation to the compulsory
heir exceeds his legitime?
o The excess is taken out of the free
portion
 What if the recipients of the donations are
strangers?
 You impute it against the free portion.
 What if the free portion can accommodate all
those donations?
 You take it all out from there
 What is the special rule for grandchildren
inheriting by representation, concurrently with
their uncles/aunts and other grandchildren?
 Compute both: a) what their parents would
have been obliged to collate and b) whatever
they themselves are obliged to collate.
 Does collation mean you have to physically obtain the assets?
o No. Collating means a purely mathematical computation.
 If he died with a will and the free portion cannot accommodate all
the dispositions?
102
o Reduce testamentary dispositions
o First to be reduced are the non preferred testamentary
dispositions
 After reducing them to zero, what if the legitimes are still
impaired?
o Reduce the donations to strangers or donations to compulsory
heirs considered strangers
o How do you reduce?
 NOT pro rata but in reverse order. The latest
donation gets reduced first.
 Afterwards, the heirs can agree on a partition or go to settlement
proceedings. Partition here is the physical division of the estate.
 How is partition done?
o 1. Extrajudicial agreement by the heirs or
o 2. Judicial order in settlement proceedings
 What are the kinds of partition?
o 1. Actual – physical division of the thing
o 2. Constructive – any act other than physical division that
terminates the co-ownership (e.g. sale to third person)
 What are the characteristics of partition made by the decedent
himself?
o 1. It only takes effect upon death
o 2. It is revocable as long as he is still alive
o How can the decedent/causante make partition?
 1. Will
 2. Act inter vivos
 Must be in writing and in public document
 It must be accompanied by a prior will
because disposal of property mortis causa
can only be done through a will
 N.B. unless the partition through act inter
vivos conforms strictly to intestate
succession portions, so it does not make a
disposition
o What is partition to keep an enterprise intact?
  A parent can keep an enterprise intact by covering for
his compulsory heirs’ legitimes through cash or other
property
 Who can the decedent designate as a mandatary?
o One who is not a co-heir can be chosen. He is designated to
make the partition after death.
 What is the nature of the right to demand partition?
o Generally, it is a mater of right, so any co-heir may demand
partition at any time.
o Exception:
 A. Partition forbidden by testator for period not
exceeding 20 years
 Exceptions to this exception:
o 1. Any of the causes for dissolution
of partnership
o 2. Court finds compelling reasons
for partition
 B. Co-heirs agree on indivision for period not
exceeding 10 years, renewable for like periods
o What about heirs upon whom some suspensive condition
has been imposed?
 Cannot demand partition since he has no rights yet.
 But the other co-heirs can demand partition but must
issue a security to protect the inchoate right of the
conditional heir.
 What if an heir sells his undivided share prior to partition to a
stranger?
o The other heirs may exercise right to redemption within one
month from written notice of the sale and prior to partition.
o N.B. some decisions say written notice is mandatory, while
some say that it can be replaced by actual knowledge.
 Effects of partition:
o 1. Absolute ownership over share
o 2. Each co-heir warrants the share of the others
 Period: within 10 years from date of right to action
 What is the liability for co-warranty?
 Proportional liability of co-heirs
103
 If one of the obligors is insolvent, his portion
are borne proportionally by all, including the
one entitled to the warranty
o 3. Co-heirs warrant solvency of debtor of the estate whose
credit is assigned to a co-heir
 But they only warrant against insolvency during
partition and not subsequent insolvency
 Period: 5 years from partition
o When is there no mutual warranty?
 1. Partition by the testator himself, except when the
legitime has been impaired
 2. Agreement among co-heirs to suppress the
warranty
 3. Supervening events causing loss or diminution in
value
 4. Fault of the co-heir
 5. Waiver
 What are the causes to annul or rescind a partition?
o Same as causes for voidable and rescissible contracts
o N.B. the special provision on lesion in partition, however,
provides that it must be “at least ¼” rather than the usual “more
than ¼” value.
o When is the partition not subject to rescission due to
lesion?
 When it was the testator who made the partition
himself, except:
 1. Impairment of the legitime, even if the
lesion was less than ¼
 2. Mistake by the testator or vitiation of his
intent
o What are the options of the co-heir who is sued for
rescission?
 1. Have a re-partition
 2. Indemnify the co-heir the amount of lesion suffered
OBLIGATIONS
Trends in Obligations and Contracts:
 1. Obligations have been progressively spiritualized
o There is very little requirement as to form. Upon meeting of
the minds, in general, there is a K.
 2. The principle of autonomy of will, which is still the general rule in K
law, has been restricted.
o There are prohibited obligations from being entered into
o Art. 1306 – Contracting parties may establish clauses and
terms as they may deem convenient
 Provided they are not contrary to law, morals, public
order, good customs, or public policy
 There are five categories of restrictions. They restrict
freedom but promote the greater good.
 Ex. labor contract with consideration less than the
minimum wage.
 Ex. Those that violate environmental considerations,
social justice, gender issues, etc.
 3. Mitigation of the principle that the debtor must answer with all his
property
o Before: you enter into a K and the creditor can pursue all your
properties to exact fulfillment of the obligation
o Now: In the interest of social justice, there are many things that
the creditor cannot levy upon, although the principle is still
good – the creditor csan pursue the property of the debtor to
exact fulfillment of the obligation
o In the Rules of Court, there is a list of properties exempt from
attachment, for instance:
 1. The Family Home
 2. What you receive from support
 Etc.
 4. Weakening of the principle that liability results from responsibility
o In general, under the law, you are only liable if you are
responsible. Ex. if you are guilty of driving recklessly.
104
o Ex. employer can be responsible for employee’s wages if not
paid
 5. Unity in modern legislation
o This is especially important in global commerce
o Ex. Bills of Lading, Trust Receipts, Intellectual Property, etc.
Essential requisites of obligations
 What are the requisites of obligations?
o Four generally accepted requisites:
o 1. Active subject
 A.K.A. Creditor (to give) or obligee (to do)
 Has right to demand that the obligation be performed
o 2. Passive subject
 A.K.A. Debtor or obligor
 Has to perform the obligation (reciprocal obligations)
 Note: In a sale of a thing, both parties are
debtors and creditors of each other, with
correlative obligations (as to the thing; and
as to the money)
o 3. Object
o 4. Vinculum juris
 For both the active and passive subject, what is required?
o They must be determined or determinable.
 What are the types of determined/determinable subjects?
o 1. Obligations where subjects are completely and absolutely
determined at the birth of the obligation
 Most common type
o 2. One of the parties is determined, but one is determinable
with a previously-established criterion
 Ex. Negotiable instrument: “I promise to pay X or
order the amount of P5000, on November 15, 2011.”
One of the parties (i.e., me) is determined. The other
is determinable, because X can negotiate it. The
instrument lays down the criterion.
o 3. Subject/s is/are determined in accordance with their relation
to a thing. (Real contracts)
  The subject/s may change at the thing passes from
one person to another.
 Ex. X borrowed 3M from Y, and placed his house and
lot as security. There is a K of loan and a K of
mortgage, which is registered. X sold his house and
lot to Z, who registered the property in her name. The
mortgage in favor of Y is still annotated. X doesn’t
pay by the due date. Y sought to foreclose the
mortgage, and Z cannot deny the mortgage, because
Z is the mortgagor now.
 What is the object of the obligation?
o It’s the prestation. It consists of conduct or an activity to be
performed by the debtor or obligor.
o It’s not the physical thing to be delivered in an obligation to
give. That is merely the object of the prestation.
o Ex. Y has to deliver a car to X on Feb 15, 2011. The object of
the obligation of sale is the act of delivering to X the ownership
the car (tradition). The car is the object of the prestation.
o This distinction is, not, however always observed even by the
NCC.
o What are the requisites for the prestation?
 1. Licit
 Cannot enter into contract of sale for shabu,
because the object of the prestation is illicit.
 2. Possible
 Cannot deliver Mount Apo
 3. Determinate or determinable
 Cannot enter into a K with no defined
prestation
 4. With pecuniary value
 What is the vinculum juris?
o The compulsive element; the obligatory element in an
obligation. It makes an obligation an obligation.
o This is why an obligation dependent solely on one’s will is void.
o Ex. X tells Y, “I will sell my car to you when I feel like it.” Here,
there is no obligatory force.
 Yu v. Asuncion: Enumerated requisites of an obligation.
105
o 1. Vinculum juris, “the efficient cause of the obligation”
o 2. The object (prestation/conduct to be observed)
o 3. Subject persons, the active and passive subject
 Combined #s 1 and 2 into one.
 What is the fifth element, according to Castan?
o The causa. It is the “why” of the contract.
o Ex. Why is Y bound to deliver the car to X? Because X will
deliver P400000 to Y. Why is X bound to give P400000 to X?
Because Y will deliver the car to X.
o What is the causa for a gratuitous contract?
 Liberality.
o What is the causa for a quasi-delict?
 Causing an injury to the other.
 What is the sixth requisite?
o The form. But it does not refer to a specific form, like putting it
in writing. It refers to the outward or external manifestation of
the obligation.
Sources of obligations
 Art 1157 – Obligations arise from:
o 1. Law
o 2. Contracts
o 3. Quasi-contracts
o 4. Crimes
o 5. Quasi-delicts
 Arts. 1158-62 regulate these five sources
 Is this list exclusive?
o Sagrada Orden v. NACOCO: The Japanese during the war
seized the Sagrada Orden’s property during the war. Upon
liberation, the US seized enemy property, which included
Sagrada’s property. The US entered into a custodianship
agreement with NACOCO. Sagrada Orden wanted to collect
rentals from NACOCO. Issue: is there an obligation to pay
rentals to Sagrada? HELD: No obligation to pay rentals. The
court, to arrive at this answer, the court looked at the five
sources of obligations – there was no contract, quasi-delict, no
provision of law that requires payment of rental, crime, or
 quasi-contract. The implication the court forwarded is that this
is a closed list.
 But is it, really? Or should it, really?
o Many commentators believe it is not exclusive.
 What are the other obligations?
o Public offer is a sixth source of obligation, for instance
(auslobung in the German code – or the unaccepted offer). A
person who by public notice advertises an award in exchange
for a particular result is bound to grant this award.
 Ex. Proctor and Gamble announces on TV: “For 30
wrappers of Tide, you get a glass imported from
Switzerland. Offer good until Feb 28, 2011 only!” X
saw this advertisement, and on Feb 27, 2011,
presents 30 wrappers to the P&G office. Issue: is
there an obligation here? Held: yes. There is a public
offer here.
 Ex. X left his important papers inside a cab. X
advertised that whoever returns his papers will get a
P20000 reward. – There is a public offer here.
 Some commentators say there are only two sources: law and contract.
Some say: laws and acts of persons (whether voluntary or involuntary).
 What is the nature of a contract as a source of obligation?
o What the contracting parties establish has the force of law
between them, and must be complied with in GF. They are
free to enter into any contract, provided the stipulations do not
violate Art. 1306. In general, there is no specific form needed.
o How must compliance be done?
 1. It must be complied with according to its terms (ius
civile – pacta sunt servanda)
 2. And according to good faith (ius gentium – bona
fide).
 What is the general rule for obligations arising from delicts
(crimes)?
o If you commit a crime, you are liable both criminally and civilly,
except if there is no private offended party.
 Distinguish a quasi-delict from a contractual obligation:
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o Quasi-delict only arises when there is a violation. The breach
itself gives rise to the obligation.
o In contractual obligations, the obligation precedes breach and
is not dependent on one in order to exist.
 Are quasi-delicts and contracts mutually exclusive?
o No.
o They can co-exist separately.
 Ex. a bus and car collided, and a bus passenger
suffered injuries. The car’s driver was a minor and
incompetent driver. The passenger sued them all.
The liability of the owner of the bus and bus driver
rests on contract. The father’s responsibility for his
child’s act is based on quasi-delict.
o They can also overlap.
 Ex. A bus driver drives recklessly and the bus hits a
tree. A passenger is injured and sues. The bus
driver is liable based on quasi-delict or crime (criminal
negligence). The bus company is liable based on
contract of carriage or quasi-delict (negligence is
selection and supervision of driver).
 You are driving a car. Your car gets into an accident with a bus.
Who do you sue? What are your options?
o 1. Bus driver
o 2. Bus company
o 3. Sue both – because they’re joint tortfeasors, and thus
solidarily liable
 Do you have to prove negligence when you sue under quasi-
delict?
o Yes, you have to prove negligence of the bus driver. It is not
presumed.
 Do you also have to prove the negligence of the bus company?
o Yes, in the selection and supervision of the bus driver. (Culpa
in eligiendo, culpa in vigilando)
o This is a rebuttable/disputable presumption.
 As opposed to conclusive and quasi-conclusive
presumptions
 In a situation where damage or injury is caused to a party, and o Accessory obligations:
there is a contract between him and the person who caused the  1. After constitution of obligation and before delivery:
damage, there is no question he can sue under contract. But can take care of the thing with diligence of GFF
he also sue under quasi-delict?  Except when law or stipulation requires
o There is an old line of SC decisions in this country which says another standard
that you cannot sue under quasi-delict if there is a contract.  If the thing is damaged, debtor is liable for
There is some basis for this, because Art. 2176 says that the damages
act or omission must occur “when there is no pre-existing  2. Account and deliver to creditor the fruits of the thing
contractual relation between the parties.” from the time of obligation to deliver
o There is, however, the theory of concentric circles (the smaller  What is the nature of the right of the
circle of contract is always within the bigger circle of quasi- creditor?
delict). So if you sue under quasi-delict, you are disregarding o Before delivery, merely personal
the contract between the parties. This is valid. o Upon delivery, real
o You can sue under quasi-delict if it is the tort breaches the o A sold B a mango orchard to be
contract. If an act that constitutes breach of contract would in delivered Jan 1. A did not deliver
itself constitute the source of a quasi-delictual liability had there on Jan 1, and instead sold fruits
been no contract, then there is breach of contract through tort. to C, a buyer in GF. B sued for
o So you can choose to sue under quasi-delict or contract. specific performance and won.
 Theory of vicarious liability: Can B recover the fruits?
o If you sue under quasi-delict and you choose to sue the  As against A, yes.
company and not the employee, you are really suing under Art.  But as against C, no
2180. because B’s right is merely
o This is actually a wrong term because vicarious means you are personal, not real. He can
answering for the liability of someone else. sue A for the fruits’ value.
o But the theory under 2180 is that the company/employer itself  3. To deliver accessories
is negligent as well.  What are the creditor’s remedies for an obligation to give a
determinate thing?
Nature and effect of obligations o 1. Specific performance
o 2. Equivalent performance – damages
 What are the kinds of prestations?
 Either exclusively or in addition to specific
o 1. To give performance
 To give a determinate thing
 Rules on improvement, deterioration, and loss
 To give a generic thing
o When do these rules apply – requisites?
o 2. To do
 1. Obligation has suspensive condition (1189),
o 3. To not do
resolutory condition (1190), or a term (1194)
 What is the primary obligation in giving a determinate thing? The
 2. Obligor is obligated to deliver a determinate thing
accessory obligations?
o Primary obligations – give what must be given
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  3. There is improvement, loss, or deterioration before  1. Substitute performance
the fulfillment of the condition or arrival of the period  2. Equivalent performance
 4. The condition is fulfilled or period arrives  What are the creditor’s remedies if the obligation is not to do?
o What are the rules on loss? o 1. Substitute performance
 Without fault of debtor: o 2. Equivalent performance
 Extinguish obligation  Exclusive or in addition
 With fault of debtor:
 Pay damages SPECIFIC EQUIVALENT SUBSTITUTE
o What are the rules on deterioration? PERFORMANCE PERFORMANCE PERFORMANCE
To give
 Without fault of debtor:
Determinate Yes Yes No
 Creditor must accept the thing (bear loss) thing
 With fault of debtor, either: Determinable Yes Yes Yes
 1. Resolution and damages thing
 2. Fulfill obligation and damages To do
o What are the rules on improvement? Very personal No Yes No
 Improved by time or nature: Not very No Yes Yes
personal
 Creditor benefits
Not to do No Yes Yes
 Improved by debtor’s expense:
 Same rights as a usufructuary
o (579) he can remove improvements Irregularity in performance
if no damage is caused to the
property  What are the types of irregularity of performance?
o (580) he may set-off the o I. Culpable (1170)
improvements he made against any  1. Malice (fraud)
damage to the same  2. Negligence
 What are the creditors’ remedies if the obligation is to give a  3. Delay
generic thing? o II. Non-culpable
o 1. Specific performance  Fortuitous event/force majeure
o 2. Substitute performance  MALICE (FRAUD):
 Done by someone else at the debtor’s expense o Responsibility arising from fraud is demandable in all
o 3. Equivalent performance obligations. Any waiver of an action for future fraud is void.
 Damages, by itself o What about waiver of malice already committed?
 Damages in addition to #1 and #2  This can be waived.
 What are the creditors’ remedies if the obligation is to do? o What is another word for “fraud”?
o Something only the obligor can do (personal):  Malice (This means it is intentional or deliberate
 Equivalent performance (damages) evasion of the normal fulfillment of an obligation.)
o Anyone else can do it:

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 o Differentiate this from the other kind of fraud mentioned in  3. Damages, either way
Obligations and Contracts (1338).  DELAY/DEFAULT (MORA)
 Deceit. This refers to vitiation of consent by a party o What are the three kinds of mora?
(through insidious words or machinations without  1. Solvendi
which the other party would not be induced to enter  Delay in performance
into the contract).  This applies here, in this provision
o Is there a difference in effect?  2. Accipiendi
 Yes.  Delay of creditor in accepting performance.
 Deceit makes the obligation annullable, because it  This applies in payment/performance
preceded the obligation. (particularly, consignation).
 Malice only succeeds the obligation. The creditor  3. Compensatio morae
may insist on performance (specific or substitute),  Reciprocal delay. (Taken alongside mora
resolution, and in either case, damages. solvendi)
o What are the effects of malice? o What is mora solvendi?
 1. Creditor may insist on specific/substitute  Non-performance with respect to time, whereas
performance, whichever applies malice and negligence are with respect to quality.
 2. Resolution [for reciprocal obligations] o What are the requisites?
 3. Damages, either way  1. Obligation is liquidated and demandable
 NEGLIGENCE:  2. Debtor delays in the performance due to dolo or
o Always refers to the omission of something that should be culpa (thus, w/o justifiable reason)
there  required degree of diligence. This differs depending  3. The creditor requires performance, judicially or
on attendant circumstances. extra-judicially (demand)
o What are the kinds of negligence?  General rule: demand is required prior to
 Simple mora solvendi applying (this requirement is
 Gross/wanton – if it is so reckless, that it practically called mora solvendi ex persona. If demand
amounts to malice, and is treated as such is not required mora solvendi ex re).
o What is the default standard of diligence required? o N.B. Jurado defines these
 The fictional standard of a “good father of a family.” differently – his ex persona is delay
(In common law, they refer to it as “diligence of a in obligation to do, and his ex re is
prudent businessman.”) delay is obligation to give
o Is waiver of future negligence allowed?  When is demand not required?
 Accepted view: waiver of future gross negligence is o 1. The obligation/law expressly so
not allowed, because it’s tantamount to malice declares.
 Waiver of future simple negligence is allowed  It is not enough that the
o Effects of negligence?
contract states specific
 1. Creditor may insist on specific/substitute dates. Mere setting of
performance, whichever applies
 2. Resolution [for reciprocal obligations]
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 date is not enough. Need
to demand still.
o 2. Time is of the essence.
 Look at intent of the
parties and attendant
circumstances.
o 3. Demand is useless
 N.B. under the law on partnership, a promise
to make contributions on a particular date,
and then failing to do so, would make the
person a debtor of the partnership and is
liable for interest and damages
o Can you have mora solvendi in negative obligations?
 You cannot have mora in negative obligations
o What are the effects of mora solvendi?
 Obligations to deliver a determinate thing: place the
risk on the debtor
 Liable for damages
 Basic remedy: performance or resolution
 The provision also mentions “contravene the tenor of the
obligation.” What is this?
o Just as all-around term that encapsulates all the culpable
violations. But actually nothing will get through the three
above.
 What is compensatio morae?
o If both sides are in delay, these cancel out.
o But when one party complies or is ready to comply with his
obligation, delay by the other begins
 FORCE MAJEURE
o What are the requisites of casa fortuito?
 1. The cause was unforeseen and unexpected and
was independent of human will
 2. Impossible to foresee, or if foreseen, impossible to
avoid
 3. Impossible for the debtor to fulfill his obligation in
the normal manner
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 4. Obligor must be free from participation in the
aggravation of the injury to the creditor
o If any of the four is not present, there is no fortuitous event
o If there is a fortuitous event, what is the effect?
 As a general rule, the debtor is free from liability
 What are the exceptions?
 1. If the parties agree
 2. If the law so declares (ex. in delay)
 3. Nature of the obligation requires
assumption of risk
o Ex. insurance
o Are defective brakes, blown tires, and other similar
problems fortuitous events?
 Our SC is consistent in denying such claim.
Other provisions
 What are the presumptions re: interest and debt?
o 1. If principal has been received without reservation re: interest
– presume the interest has been paid
o 2. If later installment has been received without reservation re:
prior installments – presume the prior installments have been
paid
o N.B. these are rebuttable presumptions
 What are the four types by which creditors can satisfy their
claims?
o 1. Levy and execution on debtor’s non-exempt property
o 2. Accion subrogatoria
 Creditor sues on behalf of his debtor, against his
debtor’s debtor
 Requisites?
 1. Creditor has credit against the debtor
 2. Credit is due and demandable
 3. Failure of debtor to collect his own credit
from a third person (through malice or
negligence)
 4. Insufficiency of assets of debtor to satisfy
creditor’s credit
  5. Right is not intuit personae
o 3. Accion pauliana
 Right of creditors to rescind alienations by their
debtors to defraud them
 Requisites?
 1. There is credit in favor of plaintiff
 2. Debtor performed an act subsequent to
the contract giving advantage to other
persons
 3. Creditor is prejudiced by the debtor’s act
 4. Creditor has no other legal remedy
 5. Debtor’s acts are fraudulent
o 4. Accion directa
 Direct action by the creditor against his debtor’s
debtor – the creditor acts in his own name
 Exception to relativity of contracts
 Give examples:
 1. Lessor against sublessee (skip lessee)
 2. Laborer against principal (skip
independent contractor)
 3. Principal against subagent (skip agent)
 4. Vendor-a-retro against transferee of
vendee (skip vendee)
Types of obligations
 Classes of obligations?
o Pure
o Conditional
 Happening gives birth/death to the obligation
o With a term
 Happening makes it demandable
 What is a potestative condition?
o Something that depends solely on one of the parties
 What is casual?
o Depends solely on chance or a third party’s will.
 What condition will make obligation void?
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o Suspensive, potestative, and is dependent on the sole will of
the debtor  the obligation is void.
o Ex. “I will sell you my car when I feel like it.”
o Because there is no juridical tie here.
 What if it’s a suspensive, potestative condition dependent on the
sole will of the creditor?
o Ex. “I will sell you my car when you feel like it.”
o It’s VALID. In fact, it becomes pure.
 Obligation that depends on an impossible or illegal suspensive condition
o What is contemplated by this provision, original or
supervening impossibility?
 ORIGINAL impossibility.
 The supervening impossibility does not annul the
obligation; it just extinguishes it.
o A positive obligation to do an impossible thing:
 Both the condition and obligation are void.
o Negative obligation not to do an impossible thing:
 Condition is disregarded. The obligation is valid.
 Ex. X sells Y his house and lot on condition that Y
does not transfer the house and lot to California.
o Negative condition not to do an illegal thing:
 Both the condition and obligation are valid.
 Ex. X sells Y his house and lot on condition that Y
does not turn the house into a shabu den.
 Obligations with supensive conditions:
o That X will happen by a certain time –
 Extinguished when time passes
 Or indubitable that it will happen
o That X will not happen by a certain time –
 Take effect when time passes
 Or indubitable that it will not happen
 What are the requisites of constructive compliance/fulfillment?
o 1. Intent of the obligor to prevent fulfillment of the obligation
o 2. Actual prevention
o What is the effect?
 The condition is deemed complied with.
o To which does constructive compliance apply?
  Only to potestative conditions or mixed conditions
with potestative conditions.
 Ex. X sells Y a lot, if Y builds a road from the lot to the
highway. The only road Y can build must go through
X’s property, but X refuses to allow.
 X sells Y a piece of land in year 2000, subject to the condition that
Y pass the Bar examinations. Y passes the Bar in 2005. What is
the effect?
o The condition is deemed to have arisen in year 2000.
o But not fruits.
 X sold the land to Z in 2001, when the condition had
not yet happened. Y sold the land to W in 2002. Y’s
sale wins out because the sale of X to Y retroacted to
2000.
o What is the right of the creditor in the mean time?
 The creditor can take any action that protects his
rights.
 Ex. He can put an adverse annotation on the title.
 When can the debtor recover due to payment by mistake?
o 1. Performance by mistake
o 2. Action for recovery is brought before condition happened or
it’s apparent the condition will not happen
 What are the rules re: deterioration and improvement and loss
before the happening of the suspensive condition?
o 1. Fortuitous loss – obligation is extinguished
o 2. Culpable loss – debtor liable for damages
o 3. Fortuitous deterioration – borne by creditor
o 4. Culpable deterioration – creditor chooses:
 A) rescission with damages
 B) fulfillment with damages
o 5. Fortuitous improvement – benefit to the creditor
o 6. Intentional improvement – governed by Art. 579 of the
usufruct
 Can take it out if it does not lead to damage
 If it would cause damage, no compensation
 Rule on fruits:
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o Those produced from the constitution of the obligation to the
happening of the condition: not covered by the rule on
retroactivity
 Resolution in 1191 – what is the effect?
o Mutual restitution. They are returned to status quo ante.
 1191 –
o Compare rescission and resolution:
 Resolution – primary remedy
 Rescission – subsidiary
 There must be no other remedy
 It has to be a last recourse
o Compare the basis:
 Resolution – non-fulfillment of obligation
 Rescission – based on economic prejudice (lesion)
o Resolution can be extrajudicial or judicial. Either is valid, but
extrajudicial resolution is always subject to court checks and
balance, so it’s at the risk of the party who resolves.
o Is an express provision allowing extra-judicial resolution
mandatory?
 No. Parties can resolve even without an express
provision allowing so.
 Outline of 1191 (resolution):
o 1. Only applies to reciprocal obligations
 Elements:
 1. 2 prestations arising from same source
 2. Each prestation designed to be the
counterpart or equivalent of the other
 Ex. Contract of sale
o 2. There is a tacit resolutory condition: breach
o 3. The party seeking to rescind must be ready to comply with
the obligation, otherwise he is in BF
o 4. The injured party can elect resolution even without court
action
o 5. Effect: mutual restitution –
 What if the other party does not want to return
what you have given him, after resolution?
  Go to the court to recover. The action is not
for resolution, but recovery, because
resolution does not need court action.
 Obligations with a term/period – what is the difference from a
condition?
o Term is certain, condition is uncertain. They are alike in the
sense that they’re both future.
o Only demandable when the day arrives.
 In case of loss, deterioration, or improvement before the day
certain, what do you follow?
o Follow the same rules as in suspensive conditions.
 Anything paid before the day arrives
o If made consciously, what is the implication?
 Nothing can be recovered, because the term was
effectively waived.
o What if it was made out of mistake?
 Old code: only fruits and interests can be recovered
 Now: The thing and the fruits and interests can be
recovered.
 Who is entitled to the fruits received from the constitution of the
obligation until the arrival of the term?
o One view: fruits belong to the debtor
o Other view: fruits belong to the creditor, even if they should not
be delivered ‘til the term arrives
o RFB’s view: The debtor keeps the fruits in the interim.
 What are the instances when the fruits cannot be recovered
notwithstanding premature delivery?
o 1. When the obligation is reciprocal and there is pre-payment
on both sides (so both things are fruit producing)
o 2. The obligation is a loan where the debtor is bound to pay
interest
o 3. When the period is exclusively for the benefit of the creditor
o 4. When the debtor, aware that the period has not yet arrived,
pays anyway
 When is a term for the benefit of the debtor? For the creditor?
o Presumption: a term is beneficial for both
o What is the consequence of this?
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 The creditor cannot demand, and the debtor cannot
insist on pre-payment
o If it is for the benefit of the debtor:
 “I promise to pay you on or before March 2011” – this
is for the benefit of the debtor.
 This is an example of a term benefit for the debtor
 When can the court fix the duration of the period?
o 1. If it does not fix a period but a term is assumed to have
been intended
o 2. If the period entirely depends upon the will of the debtor
o Two requisites for the application of this article?
 1. Parties did not fix the period but from the nature of
the circumstances, it can be inferred that the period
was intended by them
 OR there was a period, but it was made
dependent on the will of the debtor
 2. The court must decide what period the parties
probably intended. The court cannot decide for itself,
it must infer the parties’ intent
o Action for 1197 can only be for the fixing of the period. It
cannot be for fixing of the period and specific performance at
the same time, because the period is presumed not to have
arrived yet.
o Exception: if a separate action for performance would be only
dilatory (i.e. whatever the period was, it already has passed)
 When can the court fix the period for an obligation?
o 1. 1197, par. 1 (above): Parties did not fix the period but from
the nature of the circumstances, it can be inferred they
intended a period
 Exceptions:
 A. 1682, 1687 – these are leases payable
monthly or yearly; these terminate at the end
of the month/year (the K fixed the period)
 B. Pacto de retro under 1606 – the law fixes
the period of redemption for four years
 C. Contracts of service for indefinite period
(involuntary servitude)
 o 2. 1197, par. 2 (above): Period entirely depends on the will of o Two or more obligations are agreed upon but one, some, or
the debtor not all have to be performed.
o 3. 1191, par. 3 o Who has the choice?
 This is resolution – instead of decreeing the  Depending on whom the parties name as having to
resolution, the court decides to fix a period instead make that choice.
o 4. 1687  If there is no choice, the debtor chooses.
 Contracts of lease falling under the 2nd-4th sentences o How must a choice be made?
o 5. 1180  Any form – writing, oral, or implied/passive
 If the debtor binds himself to pay when his means o Why must a choice be communicated?
allow him to do so  If it depends on the creditor, duh, because the debtor
 Deemed to be one with a term is not a mind reader.
 Supposing the court fixes a period, can the parties agree to extend  Ong: But even if it depends on the debtor, it gives the
it further? creditor the chance to consent to or impugn the
o Yes, it is contractual freedom. It is a novation – there has to be choice. RFB does not agree with this, because the
an agreement between the parties, however. creditor has no right to impugn because the debtor is
 When does the debtor lose right to avail of the period? – these acting within his right.
obligations become pure  What is the real reason?
o 1. After the obligation have been contracted, he becomes  1. To give the creditor the chance to prepare
insolvent, unless he gives security/guarantee for the debt for acceptance.
 This is not limited to judicial insolvency  2. Because once the choice is
o 2. He does not furnish to the creditor the guarantees/securities communicated, it is irrevocable – and the
promised obligation ceases to be alternative
o 3. By his own acts, he impaired said guarantees/securities, and  Implications when debtor has right of choice?
by fortuitous event, they are lost. UNLESS he replaces them o 1. Limitation of choice
with securities just as good.  What if there is one choice left due to the
o 4. He violates undertaking in consideration of which the fortuitous event?
creditor agreed to a period.  The debtor has no choice but to perform it
o 5. He attempts to abscond.  What if is limitation of choice left due to the
o 6. Article 2109 – Creditor is deceived as to the substance or creditor’s acts?
quality of the thing  Right to resolution, with damages.
o 2. Own fault
 Classification according to number of prestations.  If all of the things are lost due to the debtor’s
o Conjunctions – 2 or more prestations, all of which must be fault?
performed. No special rules apply here.  Creditor entitled to damages
o Alternative – 1199-1205  If some of the things are lost due to the debtor’s
o Facultative – 1206 fault?
 What is an alternative obligation?  Can perform what remains

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 o 3. All lost
 If all are lost due to fortuitous event?
 Obligation is extinguished
 If all but one are lost due to fortuitous event, and
the last one lost due to debtor’s fault?
 Creditor can demand damages.
 If all but one are lost due to debtor’s fault, and the
last one lost due to fortuitous event?
 Obligation is extinguished
 Implications when creditor has right of choice?
o 1. Some lost
 If some lost due to fortuitous event?
 Perform what remains
 If some are lost due to debtor’s fault?
 Creditor can ask for performance of any of
them or value of one of them + damages
 If some are lost due to creditor’s fault?
 Creditor can choose from remainder
o 2. All lost
 If all are lost due to debtor’s fault?
 Creditor can choose value of any of them +
damages
 If all lost due to fortuitous event?
 Obligation extinguished
 If all lost due to creditor’s fault?
 Obligation extinguished
 What is a facultative obligation?
o There is only one obligation agreed upon, but the debtor has
the right to substitution.
o What is the difference from alternative obligation?
 If one or some of the obligations are impossible or
illegal, then there can still be performance of the
others.
 In facultative, if the principal obligation is impossible
or illegal, then the obligation is extinguished
o Who has the right to substitution?
 Always the debtor.
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o What if through the debtor’s fault, the principal prestation
is lost? Can you compel him to perform the substitute
obligation?
 No. You cannot compel substitution – it always
belongs to the debtor as a choice. But you can ask
for damages.
o What if the substitute prestation is lost due to the debtor’s
fault, and then before the due date, the main prestation is
lost due to fortuitous event?
 You cannot, unless there is abuse of right. Because
even if the substitute prestation has not been lost,
loss of the main prostation due to fortuitous event will
extinguish the obligation anyway.
 What is a joint obligation? (or mancomunada or pro rata)
o The debtors are liable only for a proportionate part of the debt
o Or the creditors are entitled only for a proportionate part of the
debt
 What is a solitary obligation? (or joint and several, in solidum, or
solidaria)
o Debtors can be held liable for the entire part of the debt
o Or the creditors can demand the entire part of the debt
o What does “individually and jointly” mean?
 Solidary
o Where there are several debtors and the obligation
mentions a singular (“I” or “notice to me”) and then
signed by several people, what does this mean?
 Solidary
 What is the essential nature of jointness?
o Active joint (many creditors, one debtor) – You have as many
obligations as creditors multiplied by debtors
o Passive joint (many debtors, one creditor)
o Mixed joint (many debtors, many creditors)
 What is the essential nature of solidarity?
o Active – There is mutual agency, up to a certain point (because
if there are multiple creditors, and one collects, he must deliver
 what is not his. So it’s not complete agency because he keeps
some for himself)
o Passive – There is mutual guarantee among the multiple
debtors, as to the single creditor
o Mixed solidary –
 What is the presumption?
o In favor of joint obligations.
 When is there soldarity?
o 1. When the law so states (ex. joint tortfeasors)
o 2. When parties stipulate
o 3. When the nature of the obligation demands solidarity
 What is the effect of demand by any of the solidary creditors?
o The debtor may pay any of the creditors, but if any demand,
judicial or extrajudicial, is made on him, he must pay only the
one demanding payment
o What is the problem here?
 If one of the creditors demands, but fails to follow up
on it, the rest cannot demand anymore. The debtor
will get off scot-free.
o What if the debtor paid the wrong creditor (non-demanding
creditor)? Can the demanding creditor still demand?
 He can only recover the amount the whole obligation
minus the share of the creditor whom he paid. In
effect, the debtor pays a little less than twice the
amount
o Commentary: if the debtor paid the share of the wrong creditor,
this is fine. The demanding creditor can still recover the whole
amount minus the share of the creditor whom he had paid.
o What if there are multiple creditors (A B C) and debtors (X
Y Z), and A demanded Z. Can B demand X?
 Yes, and X can pay B. A’s demand on Z is moot and
academic.
 What is the conflict between 1212 and 1215?
o According to 1212, in the case of active solidarity, the solidary
creditors can do what is beneficial but not prejudicial
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o Whereas in 1215, the creditor can perform acts like remission,
novation, compensation, or confusion and this extinguishes the
debt
o Ex. (A B and C) are soldiary creditors, X is the debtor. Can
B remit X’s debt?
 1212 disallows this because B’s remission is
prejudicial to A and C.
 1215 seems to allow it.
o How do you reconcile these?
 The remission was a true remission. The debt is
extinguished. But B will be liable for A and C for their
shares.
 A remits one of the solidary debtor’s shares.
o Can A go against one of the other debtors for the
remaining amount?
 Yes.
o Can A go against the debtor whose share he remitted for
the remaining amount?
 Yes, because that debtor can recover from the rest
anyway.
o One of the other solidary debtors becomes insolvent. Will
the debtor whose share was remitted share in covering for
the insolvent debtor’s share?
 Yes. The remission only extended to that debtor’s
original shares, and not to that insolvent debtor’s
shares which has to be covered for now.
 What defenses are available to a solidary co-debtor?
o 1. From nature of obligation
o 2. Personal to him
o 3. Personal to a co-debtor
 What is the effect of each of these defenses?
o Nature of the obligation – total defense (ex. the obligation is
void because the prestation is illegal)
o Person to him – partial (ex. there is a special term or condition
as to him)
o Person as to a co-debtor – partial (ex. when the co-debtor
entered into the obligation, he was insane)
 What is a divisible obligation?  When are the cases when both the
o One susceptible of partial performance penalty and actual damages can be
o It does not follow that because the object of the prestation is demanded?
divisible that the obligation is also divisible o 1. Express stipulation
 What is the general rule? o 2. Debtor refuses to pay the penalty
o Obligations are indivisible, as a general rule because the law o 3. Debtor is guilty of fraud in the
says so fulfillment of the obligation (fraud as
 When are obligations divisible? malice)
o 1. Parties provide so o Pamintuan: There was an obligation with a penalty clause.
o 2. Nature of the obligation necessarily entails performance in It called for liquidated damages or penalty in the form of
parts (Ex. 1225, par. 2 – first clause) 100K. There was fraud in the fulfillment of the obligation.
o 3. The law provides otherwise The aggrieved party was able to prove actual damages in
 See these in “payment or performance” under the the amount of 190K. HELD: Since the amount of actual
topic of indivisibility of payment damages is bigger (190K), it absorbs the 100K. So if greater, it
 Obligations with a penal clause: absorbs the penalty. BUT this is wrong.
o This is especially common in construction projects o Country Bankers: interpreted the rule correctly. The
o Sometimes there is an incentive too aggrieved party can collect BOTH, without absorption.
o What is the nature of the punishment?
 Civil punishment. Usually a penalty or a fine. Extinguishment of obligations
o Purposes?
 What are enumerated?
 1. To provide for liquidated damages, saving him the
o 1. Payment
trouble of having to prove damages
o 2. Loss
 2. To strengthen the coercive force of the obligation
o 3. Condonation/remission
o What is the safeguard?
o 4. Confusion/merger
 The courts can reduce it if unconscionable
o 5. Compensation/set-off
o Characteristics?
o 6. Novation
 1. Subsidiary
 Is this an exclusive enumeration?
 Only upon non-performance can the penalty
o It’s not.
be demanded, nothing else
 What else are there?
 Debtor cannot save himself from performing
o 1. Death, for certain obligations (purely personal)
the obligation by paying the clause
o 2. Renunciation by the creditor
 Exception: cumulative, when both the
o 3. Compromise
principal obligation and the penalty can be
o 4. Arrival of resolutory term
demanded
o 5. Mutual desistance/dissent
 2. Exclusive
 Ex. Landlord and lessee agree to cut short the lease
 It takes the place of liquidated damages.
o 6. Unilateral withdrawal
 Ex. partnership
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 o 7. Change of civil status refused. Cathay bumped them off. X sued for
o 8. Rebus sic stantibus damages. HELD: Won, because you can demand the
o 9. [spaced out] very thing to be done or delivered – even if the
o 10. Judicial insolvency alternative was superior.
o If it’s a generic obligation?
PAYMENT  Cannot demand what is superior and cannot be given
what is inferior.
 Payment or performance: (1232-1251)  What is the special rule on money debts?
o This is the “normal” way of extinguishing an obligation o Made in the currency stipulated
o Distinguish payment from performance. o If not possible, whatever is legal tender in the Philippines
 Payment is the proper term for obligations to give o There was a time when you cannot stipulate currency other
 Performance is the proper term for obligations to do than peso, but now you can.
o Outline this provision:  What about payment in negotiable paper?
 I. As to prestation o General rule: payment of money debt must be in legal tender
 Identity o Seneris: Manager’s check  same as legal tender
 Integrity  Corrected in subsequent cases which said that
 Indivisibility manager’s, cashier’s, or certified check is not legal
 II. As to parties tender and can be rejected by the creditor
 Payer o BUT the creditor can accept, and if he does, this payment is
 Payee only provisional.
 III. As to time/place o X issued a check to Y or order. Y endorsed it to Z. Z lets it go
o Special forms of payment: stale and he goes to the depositary bank and gets refused.
 A. Dacion en pago This is the case where due to the creditor’s fault, there was
 B. Imputacion prejudice.
 C. Cession  Namarco: Impairment has to be by someone else,
 D. Consignation because if it was Y who impaired, X can just issue
 Requisites of payment? again.
o For the prestation:  Rule on inflation or deflation?
 1. Identity o It must be extraordinary – there must be a declaration from the
 2. Integrity Bangko Sentral.
 3. Indivisibility  What are the exceptions to the requirement of identity?
 What does identity mean? o 1. Dacion en pago
o The very thing itself must be done or delivered o 2. Novation
o If it’s a specific thing?  What does integrity mean?
 Cannot compel the creditor to receive some other o One must deliver the whole prestation
thing, even if it’s the same value o Exceptions to integrity?
 Cathay Pacific: Business class has been fully  1. Substantial performance in good faith
booked, so X was being upgraded to first class, but X
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  2. Waiver by the debtor/obligee  If it is done with the debtor’s consent, then there is
 3. Application of payments/imputacion (several debts subrogation. The one who pays becomes the creditor
are equally onerous) and he can go after the debtor.
 What does indivisibility mean?  Exception: if the third person intended it as
o Performance must be in one act a donation.
o Exceptions to indivisibility?  What if it is without the debtor’s consent?
 1. Waiver/agreement between the parties  Payment, but only to the extent of the
 2. Prestations that necessarily entail partial benefit.
performance  Ex. X has a debt to Y for P70K. Y reduced
 3. Cases when the law itself provides for divisibility: the debt to P50K. Z did not know about this,
 A. Debt is liquidated in part and unliquidated so Z paid Y P70K on X’s behalf. How much
in part (1248) can Z demand from X?
 B. Joint divisible obligation (you have as o Only P50K.
many obligations as creditors divided by o [Beyond topic: Z can demand as
debtors) the P20K from Y as solution
 C. Solidary obligation where the debtors are indebiti]
bound under different terms and conditions  Who can you pay?
 D. Compensation, where there is a balance  1. Creditor/obligee
left  2. His successor or transferee
 E. Work is to be delivered partially  3. Agent
 F. Where there are several guarantors that  4. Third person, as long as:
demand division (2065) o It redounded to the creditor’s
 G. Impossibility or difficulty of single benefit, and the payment is good
performance only to the extent of the benefit
o This is an equity measure o When is the benefit deemed to be
 The payor (1236-8) – total?
o Who can the payor be (and the payee cannot refuse)?  1. After payment, the third
 The debtor/obligor himself person acquires the
 Debtor’s heir or assignee creditor’s rights
 Debtor’s agent (provided there is proof of agency)  2. Creditor ratifies
 Anyone interested in the fulfillment of the obligation payment to the third
(ex. guarantor) person
o Who can the payor be with the payee’s consent?  3. By creditor’s conduct,
 Anyone. debtor was led to believe
o What is effect of payment by a third person, if accepted? third person had authority
to receive payment
 5. Anyone in possession of the credit

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 o Ex. NIL
 What if the debt has been garnished?
 The payment is no good, provided that the
notice of garnishment has been served on
the payee. This is because the funds are
held in escrow on behalf of another person.
 When is time/place of payment?
o Time – when it is due
 Generally, when there is judicial or extra-judicial
demand
 Except – the three exceptions on mora solvendi ex re
o Place –
 Primary rule: stipulated place
 Secondary rule: place where the thing was located
at the time of constitution of obligation (only if the
obligation is to deliver a determinate thing)
 Tertiary rule: (for instance, if it is a generic thing, or
an obligation to do) – debtor’s domicile
 1. Dacion en pago (dation in payment)
o Filinvest: The delivery and transmission of the ownership of a
thing by the debtor to the creditor as an accepted equivalent of
the performance of an obligation.
o Go: A special form of payment by virtue of which the debtor
offers another thing to the creditor who accepts it as the
equivalent of payment for an outstanding debt.
o Note: There is no requirement that it must be to satisfy a
money debt. It can be for some other obligation.
o What is the legal effect, as stated before?
 The debtor becomes the seller, the creditor becomes
the buyer, and the debt becomes the purchase price
 Since it is governed by the law of sales, there are
implications: warranty against eviction, etc.
 This has been criticized precisely because of this.
o What is the other point of view?
 Dacion en pago is a novation.
 This has also been criticized because in a novation,
the original obligation is extinguished and a new one
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takes its place. Here, there is no new obligation that
takes the place of the old one.
o So what is it, really (Castan)?
 It’s a special form of payment.
 Because it departs from the rule on identity
o To what extent is the obligation extinguished?
 To the extent of the value of the thing given
 Unless the parties agree on total extinguishment –
generally the parties do
o What is the essential requirement?
 Both parties must consent
o What are the requisites of dacion en pago?
 1. Performance of a prestation in lieu of payment
 2. Some difference between the prestation due and
that which is given
 3. Agreement between the debtor and creditor that
the debt is extinguished by the performance of the
substitute prestation
 2. Imputacion (application of payment)
o What is it?
 Designation of debt which is being paid by the debtor
who has several debts of the same kind to the creditor
who is paid
o Give an example.
 X owes Y four debts: 10k, 20k, 30k, 40k. They are all
due. X remits 100k to Y. No need to apply the rules
on imputacion.
 X remits 90k to Y. In this case, this is less than what
he owes in total. How is the payment applied?
o What are needed?
 1. Debtor
 2. Creditor
 3. Several debts which are due
 4. Remittance of a payment which is less than the
total
o How do you apply the amount paid to the several debts?
 Primary rule – apply according to the agreement of
the parties (1)
  Next – the debtor may apply if there is no agreement,
subject to rules on indivisibility of performance (2)
 What if the debtor does not apply?
 The creditor may apply (3)
 What if neither the debtor nor creditor applies?
 Apply to the most onerous first. (4)
 Ex. interest-bearing debt > non-interest
bearing debt
 Ex. secure debt > non-secure debt
 Ex. debt with penal clause > without one
 What if there are equally onerous?
 Apply proportionally to all (5)
o What makes imputacion a special form of payment?
 It departs from the rule on indivisibility and integrity
 3. Payment by cession
o When does it apply?
 When there is one debtor and many creditors.
o What happens?
 The debtor turns over all his assets to the creditors,
allows them to sell the assets, and then the creditors
divide the proceeds proportionally
o Does cession require creditor’s acceptance?
 Yes.
o Does ownership over the thing pass to the creditors?
 No, they just receive authority to sell.
 As opposed to dacion en pago, where ownership
transfers.
o What is the extent of extinguishment of the debts?
 Only to the extent of the proceeds.
 Unless there is an agreement that the entire debt is
extinguished.
o Why is it a special form of payment?
 Departs from integrity and indivisibility
o Does this contemplate voluntary or legal cession?
 Voluntary. It is extra-judicial.
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 It is legal if the debtor goes to court and applies for
public auction and receives an acquittal (under
Insolvency Law)
 4. Consignation
o N.B. “Tender of payment on consignation” is not the correct
term
o What is this?
 Act of depositing the thing due with the court or
judicial authorities whenever the creditor cannot
accept or refuses to accept payment
 It generally presupposes or requires prior tender of
payment
o Requisites?
 1. There must be a debt due
 2. Consignation was made due to some legal cause
 There was a prior tender which was unjustly
refused
 Or there exist circumstances that make a
prior tender unnecessary or impossible
 3. First notice of consignation given to interested
parties
 4. Actual deposit with court
 5. Second notice given after consignation
o What is a tender?
 Manifestation made by debtor of his desire/willingness
and ability to make immediate payment
o When is prior tender dispensed with?
 1. Creditor is absent or unknown or does not appear
in place of payment
 2. Creditor incapacitated during time of payment
 3. When without just cause, he refuses to give a
receipt
 Odd: this still presupposes tender of
payment
 4. When two or more persons claim the same right to
collect
 5. Title of the obligation has been lost
 o Why is consignation a special form of payment?
 Departs from requisite of parties
o What if it is a case of mora accipiendi, where the creditor
unjustifiably refuses payment?
 Go to court and consign it there. (The French and
German Codes just provide that the obligation is
extinguished. This is probably better and easier.)
LOSS/IMPOSSIBILITY (fortuitous event)
 When is it loss, when is it impossibility?
o Loss, if to give
o Impossibility, if to do
 What happens when loss occurs in an obligation to give a
determinate thing (1262)?
o The obligation is extinguished
 Does it apply to an obligation to give a generic thing? (1263)
o No.
o Genus nunquam perit- the genus never perishes
 Except: if the thing is deemed contraband before
delivery, so the genus perished
o Ex. X had an obligation to deliver a sack of rice, and the stocks
perished. X just has to buy rice.
 What about a limited generic thing?
o The obligation can be extinguished.
o Ex. X entered into an agreement to sell Y one of his cars. If he
lost all of them in a fortuitous event, the obligation perishes.
 What about obligations to do? (1266)
o Released from the obligation is the prestation becomes
impossible.
 What do all of these presuppose?
o That when the obligation was entered into, the obligation was
possible. The loss or impossibility simply supervened.
o If the obligation was initially impossible, there is no obligation
to begin with.
 In a reciprocal obligation, one of the prestations is lost under
fortuitous event. Does it affect the other obligation? (Ex. X
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promised to sell Y his Innova for P1M. It was then lost. Does Y still
have the obligation to give the money?)
o One view (Germanic view) – the entire obligation is
extinguished
 Res perit domino – the debtor in effect bears the
burden
o Other view (Romanic view) – Y still has to pay the money
 Res perit creditori – the creditor in effect bears the
burden
 Exceptions:
o 1504 – sales of goods: just look at the provisions
o 1655 – destruction of the thing leased
o 1717 – contract for a piece of work, where the contractor
furnishes the material
 What is another mode of extinguishment hidden in the folds of this
provision?
o Rebus sic stantibus – When the services become so difficult as
to be manifestly beyond the contemplation of the parties, the
obligor is excused
o Contracts which have stipulations on successive performances
(several prestations) or dependent on the future
o Must interpreted in accordance with the situation that existed
when the obligation was entered into
o Requisites?
 1. The event of change could not have been foreseen
at the time of the agreement
 2. Makes the performance extremely difficult, but not
impossible
 What if it makes it impossible?
o You can invoke impossibility of
performance
o You do not need to invoke rebus sic
stantibus
 3. The event was not due to the act of any of the
parties
 4. The K of the obligation was a future prestation
o To what kind of obligation does it apply?
 Only to do, but not to give
  But in the Philippines, it has evolved into including
even obligations to give, see Naga Telephone
 Because it just says “obligations” in general
CONDONATION/REMISSION
 What is this?
o Act of liberality wherein without receiving any equivalent, the
creditor renounces the debt
o Extinguishes the debt in whole or in part
 Requisites?
o 1. Debt existing at the time the remission is made
 No need for the debt to be due, as long as it exists
o 2. The remission or the waiver must be gratuitous
o 3. Acceptance by the debtor
o 4. Capacity between the parties to enter into a contract of
donation
 What is the form?
o If it is express remission, it must follow the rules on donations
as to form
o If it is an implied remission, and thus not governed by any
form. (Here, the creditor just does not collect)
 In case there is a debt evidenced by a private document and then
later on, it is voluntarily surrendered by the creditor to the debtor,
what is the implication?
o The creditor is impliedly remitting the obligation
 Because he will lose his proof to collect
o It does not apply to a public document because there will be a
copy of the document in the notarial archives
o What if there is delivery by mistake?
 The creditor can claim this and rebut the presumption
 What is the debtor’s defense in this case?
 He can claim that he actually paid the debt
o What is the presumption that gives rise to this
presumption above?
 If the debtor has the instrument in his possession, it is
presumed the creditor delivered it to him
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MERGER/CONFUSION
 What is this?
o When the debtor and the creditor in the obligation is the same
person
 Requisites?
o 1. Takes place between the creditor and the principal debtor
o 2. The very same obligation is involved
 What is the most common cause of merger?
o Intestate succession, where you inherit your own debt/credit.
Ex. X owes his brother Y a sum of money. Y dies intestate and
X receives the credit, so there is confusion.
 Y has a debt to X. The debt is guaranteed by Z. X assigns the debt
to Z. Did remission happen?
o No. Z is not the principal debtor, he was just a guarantor.
o The guaranty is extinguished, and Z can go after Y.
COMPENSATION/SET-OFF
 What is this?
o Concurrent amount of two persons who in their own right are
reciprocal debtors and creditors of each other
 How similar is this to merger?
o There are at least two debts in both, but in merger, it is
concentrated in one person. In compensation, in two persons.
 What are the kinds of compensation?
o 1. Legal compensation (1279) –
 Automatically when all requisites are present
o 2. Facultative compensation
 Can only be claimed by one party, but not the other
(READ 1287-8)
o 3. Conventional/contractual compensation
 Parties agree to compensate, even if the requisites
are not complete (1282)
o 4. Judicial compensation
 By means of court order/decree
 What is legal compensation?
o 1. Parties are mutually debtors and creditors of each other
  as principals
 and in their own right
 X owed Y 10,000. X lent Y’s son 5,000 which the
son used for nightclubbing. When the debt was
due, X only gave 5,000 claiming compensation.
Correct?
 No. Compensation must be between two
parties who are mutually creditors and
debtors of each other. Regardless of how the
son spent the money, he’s not part of the K.
o 2. Both debts consist of sum of money, or fungible goods of the
same kind/quality
 Note: it must be “fungible” – the code wrongly says
“consumable”
o 3. The two debts are due
o 4. They be liquidated and demandable
 Liquidated  the amount is determined already
o 5. Neither of the debts must be garnished
o 6. Must not be prohibited by law
 Conventional – requisites?
o 1. Each of the parties …
o 2. The parties agree to mutually extinguish the credit
 (See 1285) Assignment of credits – confusing wording in the
provision, so here’s the explanation
o Y owes a debt to X (credit 1). X owes a debt to Y (credit 2).
In any other case, when both debts fall due, there is automatic
compensation. This is not the concern of 1285.
o But now, before legal compensation takes place, X
assigns to A credit 1. So for credit 1, A becomes the new
creditor. There are three possibilities:
 1. The assignment was with Y’s consent –
 A goes against Y when the assigned
credit becomes due. Can Y set up
against A credit 2 (what X owes Y)?
o No, because Y consented to the
assignment.
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 2. The assignment was with Y’s knowledge, but
without his consent –
 A goes against Y. Can Y set up against A
credit 2?
o Yes, as long as credit 2 existed by
the time credit 1 was assigned.
Does not cover subsequent debts.
 3. The assignment was without Y’s knowledge –
 A goes against Y. Can Y set up against A
credit 2?
o Yes, as long as it arose before he
learned of the assignment
 Facultative compensation
o 1287 – when legal compensation does not automatically take
place
 1. Deposit
 X deposited 1000kg rice with Y (depositary).
In another unrelated transaction, Y owes X
1000kg rice. – There is no legal
compensation here because one of the
contracts is a contract of deposit.
 But the depositor can claim in his favor
compensation. (Facultative in his favor)
 2. Commodatum
 3. Support
o 1288 – one of the debts arises from civil liability from a crime
 The victim of the crime from which the liability arises
can invoke this
 When do the modes of compensation take place?
o 1. Legal – when all the requisites concur
o 2. Conventional – upon agreement of the parties
o 3. Facultative – when the creditor entitled to the option
communicates his decision
o 4. Judicial – final judgment
 Not covered by compensation:
o 1. From deposit K
o 2. From commodatum K
 o 3. From support due by gratuitous title o Consequence?
o 4. Obligations from criminal offense  The release of the old debtor is absolute, even if the
o 5. Taxes, fees, duties due to government new debtor becomes insolvent.
o N.B. what is common is that these are not debts per se  What is delegacion? (conventional subrogation)
o The consent of all three – creditor, original debtor, new debtor
NOVATION – are all required. The initiative comes from the old debtor.
 Delegante – old debtor
 When does it arise?  Delegatario – creditor
o 1. Changing object or principal conditions  Delegado – new debtor
o 2. Changing the debtor o X owes Y 50000. X approaches Z to ask him to pay for his
o 3. Subrogating third person to rights of the creditor debt. Y agreed. Is this valid?
 Types?  Yes.
o 1. Subjective/personal novation o Consequence?
 Change in one or more parties  The old debtor is absolved, in general. Exceptions:
 Active subjective – change in person of creditor  1. If the new debtor was already insolvent at
 Passive subjective – change in person of debtor the time of the novation AND
 Expromission  2. Such insolvency was known to the old
 Delegacion debtor or public knowledge
o 2. Objective/real novation o What about assignment of credit, do you need the consent
 Change in the object or in the principal conditions of all three parties too?
o 3. Mixed novation  No. Just the old creditor and the new creditor. The
 Requisites of novation? consent of the debtor is not required. He must just be
o 1. Previous valid obligation notified.
 Includes voidable  When the principal obligation is extinguished, are the accessory
o 2. Agreement by the parties to the new obligation oligations extinguished too?
o 3. Extinguishment of the old obligation o As a general rule, yes. (Art. 1296)
 This is actually a consequence o So pledge, mortgage, antichresis, guaranty, etc. are
o 4. Validity of new extinguished.
 Two types of novation? o Exception?
o 1. Express  When there is benefit for a third person (stipulations
o 2. Implied pour autrui)
 The two obligations must be incompatible o What is problem, as to subrogation?
 What is expromission?  In subrogation, Art. 1303, the guarantors, sureties,
o The consent of the creditor and the new debtor are required, mortgagors, etc. continue to be bound.
but the consent of the old debtor is not required  How to resolve the conflict – Art. 1303 is the
o X owes Y 50000. Z approaches Y and tells him that he will exception to 1296. It only refers to one kind of
pay the debt. Is this valid?
 Yes.
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 novation: active subjective novation. (When the o 2. Mutuality
change is just from one creditor to another.)  Performance cannot be left to the will of one of the
 Distinguish conventional subrogation from legal subrogation: parties
o Conventional – with consent of original creditor, new creditor, o 3. Relativity
and debtor o 4. Autonomy of parties
 Distinguish from assignment of rights:  Elements of contract?
 In assignment, no need for consent of the o A. Essential
debtor  1. Consent
 Assignment doesn’t extinguish the old  2. Subject matter
obligation and create a new one; it is just a  3. Cause
transmission of rights. Any vice in the o B. Natural
obligation carries over  Those incorporated by law into the contract
o Legal – by operation of law due to acts of the new creditor automatically
 When is legal subrogation presumed?  Ex. Warranties in sales (against eviction, of
 1. Creditor pays another creditor who is fitness, etc.)
preferred even without debtor’s consent  Ex. Right to resolve in reciprocal contracts
 2. Third person not interested in the o C. Accidental
fulfillment of the obligation pays the debt with  Need to be stipulated by the parties
the debtor’s express or tacit approval  Ex. Purchase price in sales
 3. Even without knowledge of the debtor,  Ex. Conditions for performance of the
person interested in the fulfillment of the contract
obligation pays without prejudice to  Classification of contracts?
confusion as to the latter’s share o A. Degree of dependence
 1. Preparatory
 One intended to lead into another K (ex. K of
CONTRACTS agency)
 2. Principal
 Complete in themselves
 Definition of contract?  3. Accessory
o Meeting of the minds between two or more parties  Cannot exist alone (ex. mortgage)
o Can one contract with oneself? o B. According to perfection
 Yes, an “auto-contract” – one person acting as two  1. Consensual
parties. (Ex. an agency to borrow money: he can also  Most Ks are consensual
act as the lender) o Ex. Sales
 This is why “party” is the proper term.  2. Real
 Characteristics of obligations?  Perfected by consent + delivery of the
o 1. Obligatory force property

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 o Ex. deposit, pledge, commodatum o Generally, you can enter into contracts depending on what you
 3. Formal want
 Need form for validity o This principle, however yields to various restrictions:
o Ex. donation of property  1. Law
o C. According to purpose [just theoretical]  2. Public policy
 1. Transfer of ownership  3. Public order
 2. Conveyance of use  4. Morals
 3. Rendition of service  5. Good customs
o D. According to subject matter  What is the rule on usury?
 1. Involving things o It’s now not a crime anymore.
 2. To render service o The only limit is that it is not unconscionable
o E. According to the nature of the obligation produced o When is it unconscionable?
 1. Bilateral  It changes from decision to decision. Some decisions
 2. Unilateral say that 5.5%/month is invalid, while some say
 Ex. commodatum 7%/month is valid
o F. According to cause  Latest – Macalinaw v. BPI: Interest rate of the credit
 1. Onerous card is 3%/month (36%/annum). HELD: Any interest
 2. Gratuitous/lucrative of 3%/month and above is invalid, and will be reduced
 Implication? to 1%.
 Can determine degree of diligence required.  What is mutuality of contracts?
For instance a gratuitous deposit requires o The K must bind both contracting parties. The legal tie must
less diligence be mutual.
o G. According to risk o What about contracts with escalation clause (adjustment
 1. Commutative of interest)?
 Exchange of value, so there is no risk  It is valid as long as it is tied to a factor not entirely
 2. Aleatory dependent on the will of the creditor (purely
 Contract of risk/chance/hazard potestative)
o Ex. buying a lotto ticket  What is relativity of contracts?
o H. According to name o Acts between two persons cannot affect, positively or
 1. Nominate negatively, a third person
 Ex. sales, lease, etc. o Third persons neither can sue or be sued for the benefits of the
 2. Innominate contract
 “Do ut des” – I give, you give o What if the contract is transmissible?
 “Do ut facias” – I give, you do  If the contract is transmissible, it can pass on to heirs,
 “Facio ut des” – I do, you give assignees, or successors-in-interest
o When do contracts affect third parties?
 “Facio ut facias” – I do, you do
 1. Stipulation pour autrui
 What is autonomy of will?
 2. Accion pauliana
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  3. Accion directa
 4. Contracts involving real rights
 Ex. mortgages, etc.
 What is a stipulation pour autrui – requisites?
o 1. Contracting parties clearly and deliberately conferred a
favor/benefit to a third person
 Not merely incidental
o 2. The stipulation in favor of a third person is a part, not the
whole of the entire contract
o 3. It must not be compensated by any obligation whatsoever
o 4. Neither of the contracting parties must bear the legal
representation of the third party
o 5. The third party communicated his acceptance to the obligor
before the revocation by the original parties
 Give examples showing/not showing stipulations pour autrui.
o There were squatters living in Krus na Ligas, near UP. For
humanitarian considerations, UP entered into a contract with
the QC government to develop the area. The contracting
parties are QC and UP. The informal settlers were third
parties. Later on, there were snags in the arrangements, so
the squatters filed a suit under the contract to carry out the
project. HELD: it is a stipulation pour autrui
 N.B. the most important element is the clear and
deliberate benefit conferred
o There was a sale of two parcels of property which was on a
precipice. The sale was eventually rescinded because the
land was unsuitable. The commission agents protested, saying
that their commissions must be paid nonetheless, suing under
the contract. HELD: not a stipulation pour autrui because
there was no deliberate benefit intended for the agents.
 When can you sue a third party for damages due to tortuous
interference?
o 1. There is a valid contract
o 2. Knowledge by the third party of the existence of that contract
o 3. Interference by that third person on the contractual
relationship without legal justification
 Is it required that third person act malicious?
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 No. As long as it was deliberate.
 For instance, in an old case, the Augustinian
fathers thought an old lady was being
cheated in a contract so they induced her to
break it.
 What if one enters into a contract in the name of another without
authority or beyond the scope of his authority?
o The contract is unenforceable
Consent
 What are the elements of consent?
o 1. Plurality of subjects
o 2. Capacity
o 3. Intelligent and free will
o 4. Express/tacit manifestation of the will
o 5. Conformity of the internal will and its manifestation
 What are the requisites of a valid offer?
o 1. Definite
o 2. Complete
o 3. Intentional
 What are the requisites of acceptance?
o 1. Unequivocal
o 2. Unconditional
 If it is qualified, it is a counter-offer
 What about an amplified acceptance?
 It may or may not be an acceptance. It
depends on the circumstances
o Is silence acceptance?
 Depends on the circumstances. For instance, X
delivers rice to A and B, who own rice stalls. X
delivers rice to A every Sunday, and when A is not
there, his employee takes the rice. There is no such
prior arrangement with B. If both A’s and B’s
employees were silent when X delivered rice to them,
A is deemed to have accepted, and B not.
 What is the cognition theory of acceptance?
 o Offer and acceptance take effect only from the time knowledge
is acquired by the other person. If during the intervening time,
the party dies or becomes insane, the acceptance (or offer)
has no effect.
o X made an offer in Davao on Feb 1, through mail to Y, who
received it Feb 5. Y accepted the offer Feb 5 through mail
to X. On Feb 8 Y becomes insane. The mail reaches X on
Feb 13. Is the offer accepted?
 No, under the cognition theory.
o X made an offer in Davao on Mar 1, through mail to Y, who
received in Mar 3. On Mar 4, Y sent his acceptance to X.
On Mar 5, X countermanded the offer. Both the
acceptance and countermand are in the mail. Which
prevails?
 Whichever reaches the other party first.
 Can an offeror withdraw his offer even if he gave the offeree a
certain time to accept?
o In general, yes.
 What is the exception?
o When there is an option contract, which is supported by a
separate consideration.
o Give an example.
 S is offering to sell B a car. B asked for 30 days to
think about it and paid S P5000 for this period. This is
a distinct contract – an option contract.
 What if S sells the car to someone before the
period is done?
 S is guilty of contractual breach.
 What if there is no consideration given?
 S can withdraw the offer anytime.
 Does S still have to communicate the
withdrawal?
o No. There is no separate option
contract that requires him to do so.
 Original facts (B gave consideration). Within the
30 day period, B told S that he wanted to buy the
car. S refused. What is B’s remedy?
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 Specific performance.
 What if S had already sold the car to X
when B communicated his acceptance –
what is B’s remedy?
o Recover damages from S.
o He cannot sue for specific
performance because X is an
innocent purchaser.
 Differentiate an option contract from the Right of First Refusal
(RFR):
o RFR is the right to have first opportunity to purchase, or the
right to meet any other offer.
o An option contract limits the offeror’s power to revoke the offer.
o What is determined in an RFR? What is undetermined?
 The object is determined.
 The terms are not.
 Does RFR need separate consideration?
o Equatorial v. Mayfair says no. RFB disagrees with this.
o Lintonjua v. CA says that the consideration for the loan or
mortgage is already the consideration for the RFR.
 Does RFR allow actions for specific performance?
o Yes. The actual vendee may be required to sell the property to
the holder of the RFR at the price which he bought it for.
o Contrast: not allowed for option contracts.
 What if the one with the RFR refuses to exercise his option?
o If the one with the RTFR refuses to exercise his option, the
seller cannot sell the property to another person on better
terms. It has to be equal or more onerous.
 Who cannot give consent to a contract?
o 1. Minors
 Only the minor can sue to annul the contract.
 What about a minor who actively misrepresents
himself as a non-minor? Can the minor still sue
to annul the contract?
 He still can. If he is too young to enter into a
contract, he is also too young to be held in
estoppel.
 o 2. Insane or demented persons, and illiterate deaf-mutes  The consequence of incidental fraud is
 N.B. Different from insanity of in testamentary law merely damages
 Being a deaf-mute is not enough; you have to be  What about dolus bonus?
illiterate too.  This is “tolerable fraud” and does not lead to
 What is the exception to the insanity rule? damages
 When he entered into the contract during a  (Usual exaggerations in trade, when the
lucid interval other party had an opportunity to know the
 What are the situations where there is vitiation of consent? facts) – Art.1340
o 1. Mistake o 3. Violence
 When is mistake as to legal effect a vitiation of  Requisites of violence?
consent?  1. Physical force is irresistible
 If the mistake is mutual and it frustrates the  2. It is the determining factor to give consent
real intent of the parties o 4. Intimidation
 To which must the mistake of fact refer to?  Requisites?
 1. Substance of the thing which is the object  1. Threat is determining factor to give
of the contract consent
 2. Conditions which principally moved either  2. Threat is unjust and unlawful
or both parties to enter into the contract o What if the threatened act is
 What if mistake is as to identity? lawful, for instance, “You, Mr. X
 Generally, not a ground to annul a contract. from Surigao Institute of Law, got
 EXCEPT if the identity or qualifications is the my daughter pregnant. You
principal cause of the contract better marry her, or I will report
 What about mistake as to accounting? to the SC that you got her
 It only gives rise to correction pregnant”?
o 2. Fraud  This is a lawful threat, so it
 Different from fraud in 1170 does not vitiate consent.
 It must be dolo causante, or one that has a decisive o When will there be intimidation
effect on the giving of consent even if the threatened act is
 Requisites: lawful?
 1. Employed by one party against the other  When there is no
 2. Induced the other to enter into the contract connection between the
 3. It must have been serious threatened act and the
 What if both parties employ fraud? situation behind it (ex. sell
 No annulment. me your house or else I
 Compare with dolo incidente? will report the crime I saw
 Does not annul the contract because it did you did).
not induce the giving of consent  3. Threat is real and serious

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  4. Threat produces a well-grounded fear that Object
the person making it can and will inflict harm
o 5. Undue influence  Requisites of object of contract?
 What do you consider for undue influence? o 1. It must be within the commerce of man, whether existing or
 Consider both the person invoking influence in potency
and one being influenced o 2. It must be licit
 Consider: o 3. It must be possible
o Confidentiality, family, relations  At the time of perfection of the contract
 If the person was mentally weak, ignorant, or  What if it is impossible from the very start?
financially distressed  The contract does not exist because the
 It must be influence that deprives one of freedom. So prestation does not exist
it can’t be lawful or due influence (ex. parental  What if it becomes impossible in the middle of the
guidance). contract?
 What is the effect of violence if perpetrated by a third person (Art.  Extinguishes the obligation
1336)? o 4. It must be determinate as to its kind and determinable as to
o It still makes it voidable. The contract is still voidable even if quantity
employed by a third person who did not take part in the
Causa
contract.
o What about undue influence by a third person?
 What is the causa in onerous reciprocal obligation, like a contract
 By analogy, same rule.
of sale?
o What about fraud by a third person (Art. 1342)?
o For the seller, the payment of the money to him
 Does not vitiate consent
o For the buyer, the delivery of the thing bought
 Unless it led to substantial mistake and it is mutual
 What about a remuneratory obligation?
 What are the two kinds of simulation of contract?
o The service performed
o 1. Absolute
 For donations?
 There is no underlying contract, and no intent to be
o Gratuity or liberality
bound
 Distinguish object form causa:
 What is the effect?
o Object is – what is owed?
 It is void, because there is no consent
o Causa – the proximate “why” of the contract.
o 2. Relative
 Not the ultimate “why,” which is motive
 They intend to be bound, but concealing the real
 Requisites?
agreement
o 1. It must exist
 Ex. making a donation to a son seem like a
o 2. It must be real
sale as to not make siblings jealous
o 3. It must be licit
 What is the effect?
 Is there any instance when failure of the motive will lead the
 It will be treated in accordance with the rules
contract to fail?
of the concealed contract
o Yes.
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 o 1. When the motive is stipulated to be a suspensive condition
o 2. The realization of the motive is the cause of the contract and
there is an intervening serious mistake of fact
Form
o Failure to follow form makes it valid and enforceable but
cannot be registered
o Can one party require the other to follow the correct form?
 Yes. One party can require the other party to follow
the correct form needed (since they are valid)

 General rule: no specific form required Defective contracts

 When is it required?
o 1. Donation of property  What are the types of defective contracts?
o 2. Sale of large cattle o 1. Rescissible
o 3. Antichresis o 2. Voidable
 Requires statement of the principal and interest in o 3. Unenforceable
writing o 4. Void/inexistent
o 4. Partnership where real property is contributed  When is it rescissible?
o 5. Interests in mutuum o When there is particular economic damage to one of the
 Must be expressly stipulated parties or a third person
o 6. Sale of land by an agent  How does the law treat the contract?
 Else, sale is void o It is intrinsically valid but external factors allow it to be
o 7. Chattel mortgage rescinded
o 8. Stipulation limiting common carrier’s duty of extraordinary  When is it voidable?
diligence to ordinary diligence o Defect in consent in one of the parties
o Can one party require the other to follow the correct form?  How does the law see it?
 No, because that would presuppose a valid contract. o Valid until annulled
There is none here for failure of form.  When is it unenforceable?
 There are cases when form is required but not for validity but for o For lack of authority, or writing, or incompetence of parties
registration. What are these?  How does the law see it?
o Those in Art. 1358 o Cannot be given effect unless ratified
 1. Acts and contracts for real rights over immovable  When is it void?
property, EXCEPT sales of real property or interest o Lack of requisites
therein, which is governed by the statute of frauds  Which can be cured?
 2. Cession, repudiation, renunciation or hereditary o Voidable and unenforceable
rights or those in CPG
 3. Power to administer property or any other power Rescissible
which:
 Should appear in a public document  What is rescission?
 Or should prejudice a third person o A process or remedy designated to render inefficacious a
 4. Cession of actions or rights from a public document contract validly entered into and normally binding by reason of

132
 external conditions creating an economic prejudice, either to a
party or to his creditors
 What are the requisites for rescission?
o 1. The contract must be rescissible under 1381-2
o 2. Last resort for plaintiff
o 3. Plaintiff must be able to return what he would be obliged to
return if rescission takes effect
 Sometimes, there is nothing to return, like a creditor in
action pauliana
o 4. The object of the contract must not have passed to an
innocent third person
 What are the rescissible contracts?
o 1. Entered into by guardians when wards suffer lesion by more
than ¼ of the value of the thing
 Ex. the guardian of a ward who owns harvest with
value of P100K sells it for P80K.
 Is there lesion?
o Yes.
 Is there rescissible lesion?
o No, because P20K is less than ¼ of
the harvest’s property.
 A guardian is judicially appointed. If the sale is
made with court consent, what is the effect?
 There can be no rescission.
 Sale of fruits and personalties are acts of
administration. These do not need judicial approval,
so lesion can result. But for sale of real property, for
instance, where there must be court approval, there
can be no rescission.
o 2. Same, but for representatives of absentees
o 3. Disposition in favor of third person in fraud of creditors
 What is the extent of rescission?
 Only to the extent of creditor prejudice
o 4. Refer to things under litigation if entered into without
knowledge of litigants or consent of judicial authority
 Rescissible at plaintiff’s instance
o 5. By special provision of law
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o (1382) 6. Payments made under state of insolvency for
obligations to whose fulfillment the debtor would not be
compelled at the time they were effected
 Does this require judicial insolvency?
 No, just actual insolvency
 What is the effect?
o Return what he may be obliged to return
o When does it apply?
 Only instances #3 and 4 since for the rest there is
nothing to return
Voidable contract
 What are the characteristics of voidable contracts?
o 1. Effective unless set aside
o 2. It may be assailed only for an action specifically for that
purpose
 Cannot attack it collaterally
o 3. It can be confirmed
 N.B. the law uses “ratify” – “confirm” is a better term
 Ratification is for 1403 par. 1
 Acknowledgement is for 1403 par. 2
o 4. May be assailed only by the party with vitiated consent, his
heirs, or subsidiaries
 What are the requisites of confirmation?
o 1. Contract is voidable
o 2. Confirmation made with knowledge of voidability
o 3. The cause for voidabilty has been removed
o 4. The one who is doing so if the one whose consent is
defective
 When will action for annulment not prosper?
o 1. If it has been confirmed
o 2. Prescription
o 3. Loss of the thing due to fraud or fault of person with right to
institute proceedings
o 4. Estoppel
 1400 and 1401 – In a voidable contract, upon annulment, there
must be mutual restitution (just like resolution and rescission).
 Are there any instances when the duty of mutual restitution is not
present?
o The thing is lost due to defendant’s fault or fraud
 Return the fruits, value of the thing at the time of the
loss, interest
 What if it is lost fortuitously?
 Return fruits and value of the thing at the
time of the loss, but no interest
 What if the thing the plaintiff must return is lost
through fault or fraud?
 Action is extinguished
 What if it is lost fortuitously?
 Tolentino: action is extinguished unless the
plaintiff offers to pay the value of the thing
 Caguioa: plaintiff can still recover
Unenforceable
 What are the kinds?
o 1. Entered into in the name of another by one with no authority
or legal representation, or acting beyond powers
o 2. Both parties are incapable of giving consent
 What if one becomes capacitated and confirms it?
 It becomes voidable
 And if the other does so too?
 Becomes valid
o 3. Falling under the Statute of frauds
 A. Agreement whereby its terms, cannot be begun
within one year from the agreement
 Refers to commencement, not completion
 B. Special promise to answer for debt, default, or
miscarriage of others
 Contract of guaranty or suretyship
 C. Agreement made in consideration of marriage
except mutual promise to marry
 D. Sale of chattel/goods/things in action for price
P500 or more
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 Unless there is payment of price or delivery
of goods
 E. Agreement for leasing for period longer than 1 year
or sale of real property/interest therein
 Amount is immaterial for real property
 F. Representation as to the credit of a third person
 G. (Art. 1443) – no express trust concerning an
immovable or any interest therein may be proved by
parol evidence
 What are the rules re: Statute of frauds?
o 1. Only applies to actions which are for specific performance or
breach
o 2. Does not make void the contracts falling under the
enumeration if not in writing. It just bars action for specific
performance or breach
o 3. Applies only to executory, and not executed contracts in
whole or in part
 Executory – one where there is no performance in
either side
 If either side has performed, then it gets out of SOF
(1405 – acceptance of benefit)
o 4. Cannot be proved by parol evidence.
 How do you resist a claim on an unenforceable contract?
o File a motion to dismiss
o Or use SOF as affirmative defense
o Or object to presentation of parol evidence during trial
Void
 What is it?
o No force and effect, as if never entered into
o Never validated, either by time or ratification
 See enumeration in 1409
o See #3 – it says “those whose cause or object did not exist at
the time of the transaction.” This is wrong, because there can
be a contract over a future thing. It must be “cause or object
could not exist” – original impossibility.
 o 1. Cause, object, or purpose is against law, morals, GC, PP,
PO
o 2. Absolutely simulated
o 3. Cause or object could not exist at the time of the transaction
o 4. Object is outside commerce of men
o 5. Contemplates an impossible service
o 6. Intent of the parties relative to the principal object of the
contract cannot be ascertained
o 7. Expressly prohibited or declared void by law
 Characteristics?
o 1. No effect whatsoever
o 2. No action for annulment necessary because the nullity exists
ipso jure
 Judgment of nullity is merely declaratory
o 3. It cannot be confirmed, ratified, or acknowledge
o 4. If performed, the restoration of what has been given is in
order
o 5. Right to set-up defense of nullity cannot be waived
 What are the special instances of void contracts?
o 1490, 1491 – ex. contract between husband and wife
 What is the pari delicto rule (1411-2)?
o It literally means “in equal fault.”
 If the act constitutes a criminal offense, it’s a void contract which
happens to constitute a criminal offense. If they are in pari delicto, there
can be no action for specific performance, nor restitution on either side
o What if only one party is guilty?
 For the guilty party, no action for restitution
 For the innocent party, there can be
 What if the object/cause is unlawful but not criminal?
o There can be no specific performance or restitution.
o What if only one party is guilty?
 For the guilty party, no action for restitution
 For the innocent party, there can be
 N.B. So whether criminal offense or not, no action for specific
performance. Restitution depends on guilt/innocence.
 Article 1412-19: exceptions to pari delicto rule
135
o N.B. The parties are in pari delicto, but despite that, due to
social considerations, allows one of the parties recovery:
o 1. Interest paid in excess of allowable by usury laws
o 2. Money paid for illegal purpose, but before it was
accomplished or damage has been caused to third persons
o 3. One of the parties to the illegal contract was incapacitated
o 4. Agreement is not illegal per se but merely prohibited, and
prohibition is to protect the part seeking recovery of the money
paid
o 5. Payment of price beyond maximum price allowed by law for
a commodity
o 6. Employer and employee voluntarily agreeing on wages
below the minimum wage or more hours than allowable
working hours (can ask for OT pay)
 What is pactum commissorium?
o The creditor cannot appropriate the things given by way pledge
or mortgage, or dispose of them.
 Contrary stipulation is null and void.
 What is pactum de non alienado?
o There can be no stipulation prohibiting the mortgagor from
alienating his own property.
 What is pactum leonina?
o A stipulation which excludes one or more partners from any
share in the profits or losses of the partnership is void.
LAND TITLES
 What are the purpose and advantages of the Torrens system?
o 1. Make a title indefeasible
o 2. Make it imprescriptible
o 3. Make it immune to collateral attacks
 When is an attack direct?
 When the object is to annul or set aside the
decree of title
 Can a counter-claim be considered a direct attack
on the title?
 Yes. (Erman v. Erman)
 o 4. Conclusive (after lapse of period for remedies)
o 5. Declares the titled property free from liens and
encumbrances not annotated, except:
 A. Those not required to be annotated
 B. Unpaid real estate taxes within 2 years prior to
purchase (the taxes pre-2 years are paid by the
delinquent taxpayer alone)
 C. Existing:
 public highways, government irrigation canal;
 legal right of way under private law;
 and the like
 D. Limitations on disposition or use, under law
 But is registration a mode of acquiring title?
o No, it’s not. There has to underlying basis for title before
registration.
o Such as?
 1. Possession
 2. Succession
 3. Donation
 4. Accretion
 5. Sale
 6. Acquisitive prescription (10/30 years)
 Can land registered under the Torrens system and for which a
certificate of title has been issued be taken?
o No.
o What is the exception?
 If taken by the Dept. of Agrarian Reform (CARL)
 Police Power, Eminent Domain, Taxation
 Who can register under PD 1529?
o 1. Those with open, continuous, exclusive, and notorious
(OCEAN) possession and occupation
 Of what?
 Alienable and disposable lands of public
domain
 What if the land is not alienable (ex.
forest or park reservation)?
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o It cannot be registered. The
certificate of title is void.
 Since when?
 June 12, 1945 or earlier
 By whom?
 The registrant or his predecessors-in-interest
o 2. Acquired ownership of private lands by prescription
o 3. Accretion
 What can be acquired?
 Private lands
 Or abandoned river beds
 When is there accretion (requisites)?
 1. The deposit is gradual and imperceptible
 2. Made through effects of water current
 3. Land is adjacent to river banks
 What does registration do?
 To confirm and make the title imprescriptible
o 4. Acquired ownership of land in any other manner provided by
law
 Who can register under RA 8371 (IPRA)?
o Individual members of IP communities, as to ancestral lands
(not domain), which they continuously possessed and
occupied in the concept of an owner since time immemorial or
at least 30 years before 29 Oct 1997 (approval of IPRA)
 What else is required?
 It must not be contested by fellow IPs in the
community
 Which lands are treated as alienable and
disposable agricultural lands?
 Those ancestral lands which are agricultural
in character and actually used for
agricultural, residential, pasture, and tree
farming purposes
 Including those with a slope 18% or more
 Until when can this right be exercised?
 Unless extended, until 29 Oct 2017
o What is the rule on Ancestral Domains?
  It is communally owned. Registration is with the o Is payment of land taxes sufficient?
Ancestral Domains Office of the NCIP, which shall  No. It must be couple with possession in the concept
cause notice through publication and subsequent of an owner
survey. o If it is not held since June 12, 1945, then what is required
 Is this communal ownership the same as co- apart from adverse possession for the proper period?
ownership under the NCC?  The claimant must prove, by government act, that the
 No. land was classified as public and alienable lands.
o What is the relationship of A.D. registration with existing  What is the status of reclaimed lands?
property rights? o Lands reclaimed by government are not available for sale to
 Existing property rights prevail. private parties unlike other alienable public lands. (Chavez v.
o What is the priority as re: natural resources in these PEA)
Ancestral Domains? o The general rule that the grant of patent or certificate of title
 The IP groups possess priority rights in using such. makes alienable land of the public domain automatically
 Non members of the IP group may develop and use become private land does not apply to government units and
these resources for agreements not exceeding 25 entities like the PEA.
years, renewable for not more than 25 years o When then can it become private land?
 What is specially required?  When it is transferred to qualified private parties or
 There must be a formal and written government entities not tasked to dispose public
agreement lands (unlike the PEA)
 Extractions must be used to facilitate  What properties cannot be registered?
development and improvement of ancestral o [public lands]
domains o 1. Forest lands
 Can a corporation register public land? o 2. Mineral lands
o No. It can only lease public lands. o 3. Grazing lands
o But can a corporation acquire private land? o 4. Mangroves
 Yes, as long as it is a Philippine corporation (60% o 5. Manmade alluvial deposits along a river
rule).  N.B. contrast with accretion
 N.B. If land is held by an individual from June 12, 1945 or ealier, it ipso o [public waters]
jure becomes private land (akin to #1 in the enumeration) o 1. Rivers
o THUS, if a corporation has personally possessed or is claiming o 2. Lakes
under a predecessor-in-interest who has possessed the o 3. Water sheds
property since June 12, 1945, the land is ipso facto converted o [reservations]
to private land, which it can own. o 1. Military reservations
o Is forest land registrable? o 2. Other reservations
 No, it cannot be registered. o [previously titled]
o Who can declassify it? o 1. Previously titled lands
 Executive branch of government  What is the process of land registration?
o 1. Survey
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  Who performs this step?  1. Proof of publication (jurisdictional matter)
 Survey plan is signed by geodetic engineer  2. Proof of ownership
 Approved by Director of Lands  3. Proof of identity of land
 Is this an essential requisite?  What can the oppositors introduce?
 YES.  Rebuttal evidence
o 2. File application for registration o 9. Decision
 Where?  What are the 3 situations?
 In RTC where the land is actually situated  1. In favor of applicant
 What to identify?  2. In favor of oppositor/s
 1. Basis of ownership  3. Dismiss case because nobody proved
 2. Identity of Land ownership
 3. Adjacent owners o 10. Court issues order for Decree
 4. Occupants/tenants o 11. Issuance of Decree
 5. Encumbrances  Becomes incontrovertible after 1 year from issue
o 3. Set date of initial hearing (because the law allows the remedy of Petition for
o 4. Publication/posting Review within this period, under PD 1529)
 What is the time frame? o 12. ROD issues OCT
 It must precede the initial hearing or else the  What are the remedies from an Order of Default?
court has no jurisdiction o 1. Before decision –
o 5. Oppositor files verified opposition  Motion to lift order of default based on FAME
 When? o 2. After decision –
 On or before hearing  Petition for relief based on FAME
o 6. Otherwise, court issues order of general default  What are the remedies from a Decision?
 What if the oppositor attends hearing but does not o 1. MR on ground that decision is contrary to law/evidence
file an opposition? o 2. MNT on grounds of FAME or newly discovered evidence
 1. Can be declared in default o 3. Appeal, on ground that it is contrary to law/evidence
 2. Or can be given extension, after which, o When must any of these be filed?
failure to comply leads to default  Within 15 days from receipt of decision
o 7. Ocular inspection  What are the remedies from a Final Judgment?
 What is checked? o (N.B. decision becomes final after lapse of 15 days)
 1. Improvements o A. When a decree has not been issued
 2. Lot owners  1. Petition for relief under ROC Rule 38
 3. Adjacent owners  What grounds?
 What happens after? o FAME
 The court prepares a report  What are the requirements?
o 8. Hearing/trial o 1. Verified
 What must the applicant prove?
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 o 2. Filed 60 days from notice but no
more than 6 months from entry of
decision
o B. When a decree has been issued –
 1. Petition for review under PD 1529, Sec. 32
 What grounds?
o Deprivation of dominical rights
based on actual and extrinsic fraud
 When may it be filed?
o Within 1 year from issuance of
decree
 Exception?
o When there is an innocent
purchaser for value
 When is there an IPV?
o 1. No knowledge of defect in title
o 2. Payment of just price
o 3. Examined seller’s duplicate
certificate of title
 2. Action for reconveyance
 When do you file this?
o If more than 1 year has elapsed
 Ground?
o Loss of dominical rights over
property based on extrinsic fraud or
breach of trust
 Exception?
o When there is an IPV
o What is the remedy then?
 Action for damages –
value of land + damages
o Within what period?
 4 years
 When can it be filed?
o 1. Within 4 years of discovery of
fraud when there is need to annul
fraudulent deed
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o 2. Within 10 years from breach of
implied trust if aggrieved party is
not in possession of the land
o 3. Imprescriptible from breach of
implied trust if aggrieved party is in
possession of the land
 Akin to a quieting of title
o 4. Imprescriptible from breach of
express trust
 3. Action for damages
 Requisites for award of damages?
o 1. Unlawful deprivation of land
o 2. No negligence of the party
deprived
o 3. Reconveyance is not possible
o 4. Action filed within 4 years
 What is the effect of a final decision with publication?
o It binds all parties in rem (binds the whole world)
o How can oppositors and squatters who entered before the
decree be evicted thereafter?
 Writ of possession from the court
o What about those who entered after the issuance of the
decree?
 Ejectment suit
 What is a certificate of title?
o It is evidence of title, that the land is registered under the
Torrens system
o How many copies of the certificate?
 Original – with the ROD
 Duplicate – with the registered owner
o What happens when there are conflicting certificates?
 Earlier one prevails unless it is defective
 Compare cadastral registration with ordinary land registration:
o In cadastral registration, it is the government, through the
Director of Lands, that commences the petition and NOT the
persons claiming.
 o Those claiming are merely compelled to go to court to make a
claim or make known their interest in the land.
 What is the procedure in cadastral registration?
o 1. Survey conducted
 President tells Director of Lands to conduct the survey
 Notice and publication to those with interest and
general public
 Official Gazette
 Conspicuous place on municipal building
bulletin board
 Copy sent to mayor, barangay captain, and
Sanggunian
 Persons claiming interest inform the geodetic
engineers of boundaries of claimed land
 Parcels are designated as “lots”
o 2. Petition
 Filed by Director of Lands (represented by Sol-Gen),
filed with RTC, and showing public interest involved.
Describe the land and the plan.
o 3. Notice given (same as usual)
 Publication
 Mailing
 Posting
o 4. Answer to petition filed by claimant
 1. Identity of claimant
 2. What is the lot claimed and what is the interest
therein or time of possession/manner of acquisition
 3. Provide adjoining owners and encumbrances or
adverse claims, if any
 When is a MTD allowed?
 Already subject to prior patent
 Or res judicata applies
o 5. Hearing, judgment, and issuance of decree
 What are the possible results?
 1. Judgment of ownership
o Usual remedies allowed
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o If no appeal performed, court orders
LRA to issue certificate of title
o Registration of decree by the LRA
 2. Declare land as public
 3. Order correction of technical description of
the land or resolve overlapping titles
o For both, as long as no impairment
of substantive rights of owners
Actions, dealings, and subsequent registration
 1. Amendments of CT
o When can amendment be done summarily?
 1. Registered interest has terminated
 2. Clerical error in certificate
 3. No serious dispute as to error or change of status
 4. Not amount to reopening
 5. Not impair rights of IPV
o What if there is substantial change in the CT?
 It must go through ordinary registration proceeding
 2. Reconstitution
o `What if the duplicate OCT is lost?
 File action for replacement
o What if the original OCT is lost?
 File action for reconstitution
 What is the requirement for this?
 Petition that notifies occupants, adjacent
owners, adverse claimants by publication,
posting, and personal notices
 Otherwise, the reconstituted title is void
o What is the special requirement re: IPVs on reconstituted
titles?
 If a title has been reconstituted the buyer must
exercise extraordinary diligence to be deemed an IPV
o X pretends to be owner of land, files, for reconstitution,
obtains reconstituted certificate, and mortgages to Z. Y,
the true owner, still has his TCT copy. Does Z have a right
through the mortgage?
  No. Z has no better right than X, especially where Y,
the true owner, still has his TCT copy.
o When is notice to owners or adjacent lots or actual
occupants NOT needed for reconstitution?
 When the source of reconstitution is the owner’s
duplicate copy thereof
 3. Double sale
o In a double sale situation, to whom does ownership
passes?
 The buyer in GF who first records the sale in the ROP
o What is a notice of adverse claim?
 A measure to protect interest of person dealing over a
piece of land, and to warn third persons dealing with
that property
 What is specially required in the notice?
 It must state how and under whom the right
was acquired
 When is a notice of adverse claim effective?
 Upon entry in the day book, even if the
owner’s duplicate has not been surrendered
 What is subsequent registration?
o When the land is already titled and you deal with it
o When is there registration of voluntary transactions?
 Once the deed is entered into the day book, the
registrant surrenders the owner’s duplicate of title,
and pays fees
o Example of voluntary transactions?
 Sale and mortgage
o When is mortgage deemed registered?
 Entry in the day book, even if it is not annotated at the
back of the title
 NOTE: for involuntary dealings, entry in the day book
is enough, even if the title is not surrendered. The
reason is obvious: the owner is likely not to surrender
his title in an involuntary dealing, unlike a voluntary
one.
o How long is the life of an adverse claim?
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 30 days, after which it lapses
 What must be done and what is the effect?
 The affidavit of adverse claim must be
entered into the day book, so the
subsequent buyer is constructively bound
 If there is a notice of lis pendens or adverse claim,
how does it affect the double sale situation?
 The party seeking to register cannot invoke
good faith when there is an annotation at the
back of the title
 Can a private individual bring an action for reversion?
o No he cannot.
o What is the prescriptive period for reversion?
 None, because it’s the right of the State to recover
properties registered but are not capable of private
appropriation
Chain of title
 Can the buyer have title even if the seller does not?
o Yes, on certain situations. This is an exception to the civil law
doctrine that the stream cannot be higher than the source.
 In general, what is the effect of a forged deed?
o It is a nullity and cannot serve as just title.
 Situation 1: X is the registered owner of TCT 12345. X goes to the
US and gives title to Y in trust. Y forges X’s signature in the deed
of sale in Y’s favor. Y gets TCT 12346. Y sells land to Z as IPV. Z
registers the land and gets TCT 12347.
o Does Y have a valid title?
 No, it’s void.
o Does Z have a valid title?
 Yes.
o X returns from the US and learns of the sale. Can X
recover from Z?
 No.
 What is X’s remedy?
 Go after Y for damages.
 When can X recover from Z?
  If Z had not yet obtained his TCT. o 2. Unilateral Contract – only the borrower has obligations upon
o Hypothetically, could Y have mortgaged the land in favor perfection
of Z, and would it have been valid?  What are the kinds of Loan?
 Yes and yes. While legally Y is not the owner of the o 1. Commodatum (hiram)
land and cannot mortgage it, as far as Z is concerned,  The bailor delivers to the bailee a non-consumable
Y is the registered owner. X must respect the thing and the bailee may use it for a certain time and
mortgage. return the same thing
 Situation 2: X is the registered owner of TCT 12345. Y o 2. Mutuum (utang)
misrepresents to Z that he is X and sells the land to Z. Z gets title  The bailor delivers to the bailee money or some
TCT 12345. consumable thing and the latter will pay the same
o Does Z have a valid title? amount or the same kind/quality
 No. Z is negligent because he has the duty to find out  Distinguish the two.
if the seller is the registered owner. (This duty also
applies if the price is suspiciously low.) Commodatum Mutuum
 Note that there is no chain of title, since Y did not get SM is non-consumable SM is consumable
title in his name. Thus, Z has no title either. Ownership retained by bailor Ownership transferred to bailee
o What is X’s remedy? Essentially gratuitous Gratuitous or onerous
Return same thing Pay same amount or same
 Since the title is void, X can recover the property from
kind/quality
Z. Real or personal property Personal property only
 Situation 3: Y forges the deed of sale but does not register it to get Loan for use or temporary Loan for consumption
a new title. Y shows it to Z, and Z buys. Y makes deed of title in possession
favor of Z. Right to demand return of the thing No right to demand return before
o Can X recover the property from Z? in case of urgent need, even before lapse of term agreed upon
 Yes, he can. There is no chain of title. expiration of term
o Who should shoulder the loss? Loss shouldered by bailor Loss shouldered by bailee even if
the loss is caused by fortuitous event
 The one who is negligent. In this case, it was Z.
 Distinguish between commodatum and lease.
 What is the requirement of diligence for those dealing with
property covered by a Torrens title? Commodatum Lease
o Not required to go beyond what appears on the face of title. Real contract Consensual contract
SM is non-consumable thing SM can be even work or service
Essentially gratuitous Onerous
CREDIT TRANSACTIONS  Distinguish between commodatum and usufruct.

Loan Contracts Commodatum Usufruct

By law or by contract
 What are the characteristics of a loan contract?
o 1. Real Contract, because delivery of the thing loaned is Purely personal right to use
another’s property
necessary to perfect the K
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By law, contract, testamentary
succession, or prescription
Real right to the fruits of another’s
property
Essentially gratuitous May be onerous  Cf. for usufruct, this is not the rule because
Real contract Consensual contract usufruct is a real right over the property. It
Bailee only acquires use of thing, but Usufructuary acquires right to both attaches.
not fruits use and fruits of the property o 7. Bailee cannot lend or lease the SM of the contract to a third
Consumable goods may be the SM May be over consumables like
person
only when the purpose of the K is for money
mere exhibition  What is the exception?
 Member of the bailee’s household
 What are the characteristics of commodatum?  What are the exceptions to the exception?
o 1. Essentially gratuitous  1. Stipulated to the contrary
 What if it’s not?  2. Nature of the thing forbids its use
 It’s a lease.  What are the obligations of the bailee?
o 2. Purpose: temporary use of the thing loaned o 1. Liable for ordinary expenses for use and preservation of the
 Can acquisitive prescription in favor of the bailee thing
vest?  Is the bailee liable for ordinary wear and tear of
 No. There is no just title. The duty to return the thing due to use?
prevails.  No.
o 3. Use is limited to the thing, but not the fruits  What are the exceptions?
 Exception? o 1. If done with fault or negligence
 If stipulated otherwise o 2. Devoted the thing to a different
o 4. SM is generally non-consumables unless the purpose of the purpose from what was stipulated
contract is exhibition of consumable things o 2. Bailee not liable for loss due to fortuitous event
 X lent Y P200000 to deposit in Y’s corporation’s  What are the exceptions?
bank account to meet the minimum capitalization  1. Bailee devoted thing to different purpose
requirement. Y would be tasked to return it after a  2. Bailee kept thing longer than period
month. What is the contract? stipulated
 Commodatum, even if the SM was  3. Thing was delivered with appraisal of its
consumable goods. The purpose was value
merely to show requisite capitalization, not o Unless stipulated otherwise
for consumption.  4. Balee lent the thing to a third person
o 5. Bailor need not be the owner, as long as he has possessory outside his household
interest  5. Bailee, given a choice to save either the
o 6. Personal contract thing or his own thing, chose the latter
 What if one of the parties dies?  X lent Y his jeep to bring Y’s sick wife the
 The contract is extinguished; it doesn’t get hospital. On the way back, Y took on paying
inherited. passengers who paid money. The jeep then was
struck by lahar and was destroyed. Is Y liable?

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  Yes. The contract is commodatum, and Y o 2. If the thing loaned is money, it must be in legal tender and in
devoted the jeep to a purpose different from case of extraordinary inflation or deflation, basis of payment
what it was lent for. may be value of the currency at time of creation of obligation
o 3. Bailees are solidarily liable when the thing is loaned to 2 or o 3. If consumable thing is loaned, borrower must return thing of
more bailees in the same contract same kind/quality
o Can the bailee retain the thing loaned as security for  Distinguish between mutuum and lease:
claims against the bailor?
 No, not even due to extraordinary expenses incurred Mutuum Lease
 What are the obligations of the bailor? SM is money or consumable thing Anything
o 1. Allow the bailee the use of the thing loaned for the period Ownership is transferred Ownership is retained by lessor
Relationship is creditor-debtor Relationship is landlord-tenant or
stipulated, or until accomplishment of the purpose
lessor-lessee
 What are the exceptions?
 1. Urgent need, which suspends the  What are the rules on interest?
commodatum o 1. Interest must be expressly stipulated in writing
 2. Precarium:  What are the exceptions?
o A. Duration not stipulated  1. Debtor is in delay – liable to pay legal
o B. Use or purpose not stipulated interest as indemnity, even in the absence of
o C. Use of thing merely tolerated by stipulation of interest
the bailor
 2. Interest due shall earned interest from the
 When else can the bailor demand the thing to be
time it’s judicially demanded (interest on the
returned?
interest)
 Acts of ingratitude by the bailee o 2. Usury Law has been suspended
o 2. Refund extraordinary expenses for preservation of the thing  But in case the interest rate is too exorbitant, the
 What is the notice requirement? obligation is still valid although the interest may be
 The bailor must be notified before the reduced
expenses were incurred o What is the legal interest?
 What is the exception to this?  12% for loan or forbearance of money
 Urgent need to repair  6% for other obligations
o 3. Refund 50% of extraordinary expenses from actual use of  Ex. damages for personal injury, unearned
thing loaned profits, etc.
 What is the exception?  But it becomes 12% from the time when
 Contrary stipulation judgment becomes final and executory –
o 4. Pay damages to bailee for known hidden flaws in the thing until payment of such
loaned  From whence can legal interest be counted?
 What are the characteristics of mutuum?  Usually, from rendition of judgment, not
o 1. Borrower acquires ownership of the thing and can dispose of demand
it

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  But when the demand is established with  3. Property saved from destruction during
reasonable certainty, the interest begins to calamity without owner’s knowledge (must
run from when judicial or extrajudicial claim compensate depositary)
is made (from default)  Distinguish deposit from mutuum.
o What are examples of SC rulings re: interest rate?
 5.5%/month is excessive and unconscionable (“E and Deposit Mutuum
U”) Purpose is safekeeping Purpose is consumption of SM
 6%/month (72% per annum) is E and U Depositor can demand return at will Lender must wait for period to expire
 3%/month (36% per annum)  reduced to 1%/month SM is movables (extra-judicial) and SM is money or consumable thing
immovables (judicial)
(12% per annum)
 Penalty charge of 5%/month is E and U
 Distinguish between deposit and commodatum.
o Is an escalation clause valid?
 Yes, if it also includes a de-escalation clause or a Deposit Commodatum
stipulation that the rate of interest shall be reduced in Purpose is safekeeping Purpose is transfer of use
the event that the maximum rate of interest is reduced May be gratuitous Always gratuitous
by law or the Monetary Board
 Can an escalation clause stipulate that escalation
is dependent on one of the parties?  What are the kinds of deposit?
 No. That would violate mutuality of o 1. Judicial
contracts. o 2. Extra-judicial
o Can a debtor be made liable for both stipulated monthly  Voluntary
interest and the stipulated penalty charge?  necessary
 Yes.  Distinguish between judicial and extra-judicial deposits.
o Can there be compounding of the penalty or
compensatory interest (adding to the principal)? Extra-judicial Judicial
 Yes, and this shall earn new interest. By will of the parties By order of court
SM is movables SM may be immovable or movables
Deposit Purpose is safekeeping Purpose is to secure or protect
owner’s right
 What are the characteristics of deposit? Essentially gratuitous Always onerous
Return upon demand by depositor Thing delivered only upon court
o 1. Real contract
order
o 2. If gratuitous, unilateral. If onerous, bilateral.
o 3. Principal purpose is safekeeping of the thing delivered
 What are the characteristics of voluntary deposit?
o 4. Essentially gratuitous
o 1. Delivery made upon will of depositor
 Exceptions?
o 2. Depositor need not be the owner of the thing, although that’s
 1. Contrary stipulation usually the case
 2. Depositary is in business of storing goods o 3. May be oral or in writing

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 What are the obligations of the depositary?
o 1. Keep the thing safely and return it when required, even if a
specific term was stipulated
 What are the special requirements in return if it is
locked or sealed?
 1. Return the thing deposited in the same
condition, if delivered closed and sealed
 2. Pay for damages if the seal or lock is
broken through his fault (which is presumed)
 3. Keep secret of the deposit when the
seal/lock is broken
 When can the depositary open the thing
deposited, even if locked and sealed?
 1. Presumed authority (ex. keys were
delivered)
 2. In case of necessity
o 2. Liable for loss if through fault or negligence
 What is the presumption?
 If lost while in the possession of depositary,
there is presumption of fault
 How does the degree of negligence differ?
 For gratuitous deposit, the standard of care
required is less than for onerous deposit
o 3. Cannot deposit the thing to a third person
o 4. Liable for loss of the thing deposited, if:
 1. Transferred to a third person without authority
 Negligence need not be proved
 2. Transferred to a third person, with authority, but the
third person is manifestly careless or unfit
 Negligence need not be proved
 3. Thing is lost due to negligence of own employees
 When is the depositary not liable?
 Loss of the thing without negligence of the
third person, if transfer was authorized, and
the person was not manifestly careless or
unfit
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o 5. Notify the depositor and wait for decision if he will change
the way or manner of deposit
 Exception?
 If the delay will cause danger
o 6. If the thing earns interest, must 1) collect interest as it
becomes due, and 2) take steps as may be necessary to
preserve its value and the rights corresponding to it
o 7. Not to commingle things deposited if so stipulated, even if
they are the same kind/quality
 So usually he can commingle?
 Yes.
o 8. Not to make use of the thing, otherwise, liable for damages.
 Exceptions?
 1. Express permission of depositor
 2. Preservation of the thing requires its use
 What if the thing is non-consumable and the
depositary has permission to use it?
 It becomes commodatum
 What if it is money or consumable thing?
 It becomes mutuum
 But what if the principal purpose is still
safekeeping?
o Then it becomes an irregular
deposit
o When is the depositary liable even if loss is due to
fortuitous event?
 1. Stipulated
 2. Used the thing without depositor’s permission
 3. Delays in return
 4. Allows others to use it, although the depositary
himself may be authorized to use it
 To whom can return of the thing deposited be made?
o 1. To the depositor, heirs, or successors, or to the person
designated in the contract
o 2. If the depositor was incapacitated when the deposit was
made (ex. minor):
 Return to his guardian or administrator
  Or the depositor himself if he acquires capacity
o 3. If the depositor was capacitated, but he lost it, then return to
his guardian/legal representative
 Where must it be returned?
o 1. Place agreed upon
o 2. If no stipulation, place where the thing deposited is
 Even if it was transferred?
 Yes, even if it should not be the same place
where the original deposit was made
 Exception?
 When there is malice on the part of the
depositary who transferred the thing
 Who shoulders transportation costs?
 The depositor
 When must the thing be returned?
o Generally, upon demand or at will, regardless of period
stipulated
o Exceptions?
 1. Thing is judicially attached while in depositary’s
possession
 2. Depositary was notified of the opposition of a third
person to the return or removal of the thing
 When can the depositary return the thing deposited at his will
(Requisites)?
o 1. The deposit must be gratuitous
o 2. Justifiable reasons exist
 What are the rules on alteration by the depositary’s heir (i.e. heir of
the depositary sold the thing deposited)?
o 1. If in GF, the heir may either return the price he received or
assign his right of action against the buyer in case the price
was not yet paid
o 2. If in BF, heir liable for damages and may be sued for estafa
 What is the relationship between a bank and depositor?
o The depositor is the creditor, and the bank is the debtor
o It is NOT a deposit contract, but a mutuum
 So what is the legal effect of failure to pay
deposited money?
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 It’s failure of debtor to pay a loan, and not
breach of trust from depositary’s failure to
return the SM
 When does the obligation of a bank to pay interest
on a deposit cease?
 When the operations of the bank are
completely suspended by the C.B.
 What are the obligations of the depositor?
o 1. Pay expenses for preservation of the thing if deposit is
gratuitous
o 2. Pay for losses incurred due to character of the thing
deposited
 What are the exceptions?
 1. Depositor was unaware
 2. Depositor was not expected to know the
dangerous character of the thing
 3. Depositor notified the depositary about it
 4. Depositary was aware, even without
depositor’s advice
o Can the depositary retain the thing deposited in pledge
until full payment of what is due him by reason of deposit?
 Yes, he may.
 Cf. The rule is different from commodatum, which
does not allow retention
 When is there necessary deposit?
o 1. In compliance with legal obligation
 A. judicial deposit of thing where multiple persons
dispute possession of such
 B. deposit with bank or public institution of public
bonds/instruments of credit [payable to order/bearer]
given in usufruct, when the usufructuary does not give
proper security for their conservation
 C. Deposit of thing pledged when the creditor uses it
without authority of the owner or misuses the thing
 D. In suits, when provided by the ROC
 E. Constituted to guarantee contracts with the
government
 o 2. Made during a calamity
o 3. By travelers, in hotels and inns
 What are the required actions of the depositor?
 1. Depositary is informed about the effects
brought by the guests
 2. Guests took precautions for safekeeping
 When is the hotelkeeper liable, regardless of
amount of care exercised?
 1. Loss or injury is caused by servants,
employees, or strangers [if the two requisites
concur above]
 2. Loss is caused by robber or thief acting
without irresistible force
 When is the hotelkeeper not liable?
 1. Loss is caused by force majeure or
theft/robbery attended by irresistible force
 2. Loss is due to acts of guests, his family,
servants/visitors
 3. Loss due to character of the things
brought into the hotel
 Can a hotelkeeper stipulate absolute exemption
from liability?
 No. This is void.
 Can the hotelkeeper retain the things of guests as
security for unpaid lodging expenses and
supplies?
 Yes.
 See the usual rule on deposits, with which
this is consistent.
 Contra commodatum – can’t do this.
 Judicial deposit: see above table for distinction vis-à-vis extra-judicial
deposits
Guaranty and Suretyship
 Distinguish between guaranty and suretyship
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Guaranty Suretyship
G is secondarily liable S is primarily liable and not entitled
to benefit of excussion
G binds himself to pay only when S assumes liability as a regular party
principal cannot pay to the undertaking and promises to
pay if the principal does not pay
G is insurer of debtor’s insolvency S is an insurer of the debt
Usually embodied in a separate Usually embodied in the same
agreement before or after the instrument as the principal
principal obligation obligation; thus, the surety is a party
to the contract
 Is there need for a separate consideration which the surety must
receive?
o No. The surety is bound by the same consideration that
makes the contract effective between the primary parties.
 If there is doubt, what is presumed, guaranty or suretyship?
o Guaranty. Suretyship is never presumed.
o Is an “unconditional guaranty” a suretyship?
 No. It just means that unlike a conditional guaranty, it
needs no other extraneous event to trigger the
guarantor’s liability. But the principle remains that the
principal must first default.
 Differentiate “insurer of debtor’s insolvency” (G) and “insurer of
the debt”:
o 1. Surety promises to pay the principal’s debt if the principal
will not pay.
 Must a surety be notified of the principal’s default
first?
 No. In fact, no prior demand is needed;
direct suit against the principal is the
demand in itself.
 Is there need to demand the principal to pay first?
 No, especially where demand would be
useless. A suretyship is a direct contract to
pay the debt of another. The surety is
absolutely liable as soon as default is made,
without need for demand from the principal
or notice of default.
 o 2. Guarantor promises to pay the principal’s debt if the o What if the creditor required and stipulated a specific
principal cannot pay. So this requires due diligence and person should be the guarantor, can there be
exhaustion of remedies against the debtor. substitution?
 X Corp is liable to Y Corp for P5M. Z is X corp.’s surety. X Corp  No. The selection of the guarantor is part of the terms
defaulted and was placed in a state of suspension of payments. of agreement.
Can Y Corp. proceed against Z?  What are the effects of guaranty between the guarantor and
o Yes. The suspension only applies to X Corp, and as surety, creditor?
there is no need to exhaust X corp.’s property before going o 1. Guarantor has right to benefit of excussion
against Z. o Exceptions?
 H and W are spouses. H signed a suretyship agreement to cover  [waiver]
for the liabilities of XYZ corp. Can the conjugal partnership be  1. G expressly renounced excussion
made liable when XYZ defaults?  2. G fails to set-up benefit of excussion and fails to
o No. This act did not redound to the benefit of the partnership point out to the creditor available property of the
and is thus borne alone by H. debtor in the Philippines
 What is the nature and extent of guaranty?  3. G fails to interpose it as defense before judgment is
o 1. Guarantee is generally gratuitous rendered against him
 What is the exception?  [nature of obligation]
 Contrary stipulation  4. Suretyship
o 2. Accessory contract  5. He is a judicial bondsman and sub-surety
 What if the principal obligation is void?  6. Pledge or mortgage has been given by the G as
 The guaranty cannot exist. special security
o 3. Guarantor’s liability cannot exceed the principal obligation  [debtor clearly insolvent]
 But does this provision include interest and other  7. Debtor is insolvent
costs?  8. Presumed that execution of debtor’s property will
 No. The liability for interest and other costs not satisfy the obligation
does not stem from contract but from the  [absconding]
default. So the guarantor can technically  9. G absconded or cannot be sued in the Philippines
pay more than the obligation secured.  Unless he left a manager/representative
o 4. Doubt must be resolved in favor of the guarantor or surety o 2. Compromise between the creditor and principal – can
 What is the exception? benefit but not prejudice the guarantor, otherwise, he would be
 Compensated sureties released
 What are the qualifications of a guarantor? o 3. If there are several guarantors and only one debtor, the
o 1. Possesses integrity guarantors are entitled to benefit of division. Their liability is
o 2. Capacity to bind himself joint.
o 3. Sufficient property to answer for obligation  Exceptions?
 1. Solidarity

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  2. Any of the circumstances in 2057 taking
place
o A. A guarantor is convicted of crime
involving dishonesty
o B. Becomes insolvent
 When can a guarantor who paid the entire debt
seek reimbursement from co-guarantors?
 1. He paid by virtue of judicial demand
 2. AND because the principal debtor was
insolvent
o What is a continuing guaranty or suretyship?
 One that is constituted to cover even future debts, the
amount of which is not yet known.
 What are the effects of guaranty between the debtor and
guarantor?
o A. Guarantor who pays for a debtor must be indemnified by the
latter.
 What does the indemnity cover?
 1. Amount of debt
 2. Legal interest from the time payment was
made known to the debtor
 3. Expenses incurred by guarantor after
notifying debtor that payment has been
demanded of him
 4. Damages, if due
 What are the exceptions to indemnity rule?
 1. Guaranty constituted without knowledge
or against the will of the debtor. In this case,
the guarantor can only recover to extent
debtor was benefited.
 2. Guaranty did not intend to be paid back
(donation) – although in this case, debtor’s
acceptance is needed
o In any case, payment is valid as to
the creditor who has accepted it
 3. Waiver
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 Can the guarantor demand more than what he has
paid?
 No.
o B. Guarantor has right to be subrogated against the debtor to
enforce the indemnity
o C. Guarantor can proceed (see below what “proceed” means)
against debtor even before payment when:
 [Just causes for guarantor]
 1. He is sued for payment
 2. Reasonable grounds to fear the debtor intends to
abscond
 [Insolvency]
 3. Insolvency of debtor
 4. Debtor is in imminent danger of insolvency
 [Expiration of period, etc.]
 5. Debtor bound himself to relieve him from the
guaranty within a specific period, and this period has
expired
 6. Debt has become demandable because period for
payment has expired
 7. After lapse of 10 years when the principal
obligation has no fixed period for maturity
 Unless the nature of the obligation is such
that it cannot be extinguished except for a
period longer than 10 years
o In all these cases under #3, what are the options of the
guarantor (what does “proceed against the debtor”
mean)?
 1. Obtain release from the guaranty
 2. Demand security to protect him against creditors’
claims or insolvency of the debtor
 How is guaranty extinguished?
o 1. When the principal obligation is terminated (the usual ways
– see oblicon)
 Also, material alterations (where there is additional
obligation, new burden, etc.)
o 2. Release of one guarantor by the creditor
  What is the effect if it is without the consent of the
other guarantors?
 Then they benefit to the extent of the share
of the released guarantor
o 3. Extension of term granted by the creditor to the debtor
without guarantor’s consent
 What if there’s a continuing guaranty allowing for
extensions?
 Then extension of term does not extinguish
the guaranty.
 Does the creditor’s neglect to immediately sue the
principal constitute an “extension of term”?
 No. There has to be a separate agreement
for a definite period without the consent of
the guarantor.
o 4. If there can be no subrogation because of the fault of the
creditor
 What is an example of this?
 When the creditor releases or fails to register
a mortgage
 What if the guarantors are solidary?
 Same effect.
 Does this provision apply to sureties?
 No. (Zobel v. CA)
 What about legal and judicial bonds?
o They are not entitled to the benefit of excussion because they
are guarantors but sureties whose liability is primary and
solidary.
Pledge
 What is a pledge?
o It is a contract by virtue of which the debtor delivers to the
creditor or third person a movable or document evincing
incorporeal rights
o Purpose is to secure a principal obligation
 Characteristics of pledge?
o 1. Real contract – thing must be delivered
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o 2. Accessory contract
o 3. Unilateral contract
 Because the obligation solely rests on the part of the
creditor: to return the thing upon fulfillment of the
principal obligation
 Can the pledgee keep the thing for himself after
default?
 No. This is pactum commissorium
o 4. Subsidiary contract
 Obligation does not arise until fulfillment of the
principal obligation
 X borrowed 400K from Y, pledging shares of stock worth 800K to
secure the obligation. An economic crisis occurred, plunging the
value of the stocks to 100K. Can Y demand X surrender other
shares worth 700K?
o No. There is no showing the fall in value was due to X’s fault.
Likewise, there was no showing Y was deceived as to the
substance or quality of the shares, where would have the right
to claim another thing in their place or immediate payment of
the obligation.
o And more importantly, the right of a pledgee is to just sell the
pledged share at a public sale.
 May the pledge secure future advancements that the pledgor may
procure from the pledge?
o Yes.
 What are the essential requirements of pledge?
o 1. Constituted to secure fulfillment of principal obligation
o 2. Pledgor or mortgagor is absolute owner of the thing
 What if the thing is conjugal property of spouses
and only one acted as pledgor?
 The pledge is only over ½ of the property
 What if the property is covered by certificate of
title (this actually applies more to REM, not
pledge)?
 The innocent pledgee or mortgagee for value
can rely on the certificate, if there is no
reason to further inquire, and is protected
 o 3. Person has free disposal of the property, or legally  What is the obligation of the pledgee?
authorized to do so o Take care of the thing pledged with the diligence of a GFF
o 4. Thing pledged is delivered to the creditor or third person by o When is he entitled to reimbursement?
common agreement  Expenses incurred for preservation
 Distinguish pledge from REM: o When is he liable?
 Loss or deterioration by reason of fraud, negligence,
Pledge REM delay, or violation of terms of contract
Movable property Immovable property  Is a pledgee authorized to transfer possession of the thing to
Delivery of object pledged Delivery of the thing NOT necessary another?
Pledge not valid against third REM not valid against third persons
o No. Remember, he’s not the owner. He has to be authorized
persons unless description of the if not registered
thing pledged + date of pledge is in to do this.
public instrument o Can the pledgee use the thing pledged?
 None. He needs authority, again.
 Who has ownership of the thing pledged? o X borrowed P10K from Y, payable Dec. 1. X pledged his
o Still the pledgor car to Y, allowing Y to use it by express stipulation. X
o Can he sell the thing pledged? wanted to pay his debt on June 1, demanding that Y
 Yes, as long as the pledgee assents accept the money and return the car. Can X compel Y to
o Does this sale extinguish the pledge? accept?
 No, it survives and follows the thing, even if  No. The debt was due Dec. 1. When a period is
ownership is transferred stipulated, it is presumed to be for the benefit of both
o What happens then? the debtor and creditor. In fact here, Y is authorized
 1. The pledgee still possesses the thing until the to use the car, which is the presumed benefit. X
obligation is paid cannot pre-pay.
 2. The pledgee may still sell the thing in case of  When can the pledgor request the thing pledged be deposited
default judicially or extra-judicially?
 Can the debtor demand its return before the debt is paid? o 1. Creditor used the thing without authority
o No, possession is the security of the creditor. o 2. Creditor misused the thing
o What is the exception? o 3. Thing is in danger of being lost or impaired due to
 If the thing is in danger of being impaired or negligence or willful act of the pledgee
destroyed, the pledgor can substitute it with a thing of  What is the effect of sale of the thing pledged upon default of the
the same kind and quality debtor?
o What presumption arises upon return of the thing o The principal obligation is extinguished whether the price of
pledged? sale is more or less than the amount due
 That the pledge has been extinguished o 1. If the price is more than the amount due, the debtor is not
 Is there a presumption that the main obligation entitled to excess
has been extinguished too? o 2. If the price is less than the amount due, the creditor is not
 No. entitled to recover the deficiency

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 o Differentiate from CM:  Remember: pactum non alienando is void (prohibition
 In CM, the excess is returned, and the deficiency is for the mortgagor to dispose the property)
demandable o 4. Over immovable or alienable real rights over immovables
 (Take note of Recto Law, however) o 5. REM must appear in a public document recorded in the
 What are examples of legal pledges under the law? ROP
o 1. Possessor in GF exercising right of retention for necessary  If not registered, just binding between the parties
and useful expenses o 6. REM is a real right that attaches to the property
o 2. Usufructuary exercising right of retention for taxes paid on  So the REM is both a real right and real property by
the capital and for extraordinary expenses itself
o 3. Mechanic’s lien o 7. Mortgagor must be the absolute owner of the property,
o 4. Agent exercising right of retention for necessary expenses otherwise, it is void
for execution of agency and for damages which execution of
agency caused him REM Pacto de retro sale
o 5. Bailee exercising right of retention for damage caused by Accessory contract Principal contract
flaws in the thing loaned where the bailor knew about it but did No transfer of title Conditional title
No transfer of possession Conditional transfer of possession
not inform the bailee
Creditor has no right to fruits Vendee entitled to fruits
o 6. Depository exercising right of retention for necessary
Upon default, creditor is not the Upon consolidation, vendee is the
expenses if deposit is gratuitous or for fortuitous damages owner (no pactum commissorium) owner
caused him by the character of the thing deposited
o 7. Hotel-keeper, over guest’s things for unpaid board and
lodging  What is the effect of REM?
o How does the pledgee/creditor exercise his remedy? o It subsists until after payment of obligation.
 But must first demand payment of the amount due o The right of the mortgagee in case of non-payment is
 Have the thing retained sold at public auction, within 1 foreclosure of the REM. Pactum commissorium is against
month after demand public policy.
 What is the extent of the mortgage?
Real Estate Mortgage (REM) o REM is not limited to the property itself, but also its accessions,
improvements, growing fruits, rents, income, proceeds of
 What is a REM?
insurance in case it perishes, or expropriation value if
o A contract where the debtor secures to the creditor the condemned.
fulfillment of a principal obligation, by subjecting to such o EXCEPT: contrary stipulation.
security immovable property or real rights in case the principal
 Can the mortgage be alienated or assigned?
obligation is not complied with.
o Yes and the assignee or transferee is entitled to foreclose the
 What are the characteristics of a REM?
mortgage in case of non-payment of the obligation. If the
o 1. Accessory and subsidiary contract transferee becomes the owner of the property this is a void
o 2. Unilateral because the only obligation is for the creditor to
pactum commissorium.
free the property from encumbrance upon payment
 What if the mortgagor transfers the property?
o 3. Mortgagor retains possession of the property in general
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 o 1. It does not relieve him from his obligation to pay the debt to
the creditor, in the absence of novation.
o 2. Creditor must make demand against the debtor. If the latter
cannot pay, then the creditor can demand payment of the
credit from the possessor of the property (transferee), and
foreclose thereafter if there is non-payment.
 1. Judicial foreclosure under Rule 68 of the ROC.
o Is there redemption here?
 No, just equity of redemption where the mortgagor is
given the chance to pay the debt within the 90 days
period after the judgment becomes final OR after the
foreclosure sale but before confirmation.
o There is redemption, however, if the mortgagee is a banking
institution (1 year for natural person mortgagors and 3
months/before registration whichever comes first for juridical
person mortgagors)
 2. Extrajudicial foreclosure under Act 3135.
o When does this apply?
 When the mortgagee is given specific power or
express authority to foreclose.
 If there is none, there can be no EJ foreclosure.
o Where must auction be conducted?
 Province where the property is found
o What is the requirement of notice?
 1. Posting of notice of sale in 3 public places therein
 2. Publication in newspaper of GC once a week for 3
consecutive weeks
 If the sale is postponed, republish.
 Is personal notice to the mortgagor required?
 No. Unless, of course, the contract provides
for it.
 Can these notice requirements be waived?
 No, it’s for the benefit of the public, not the
parties.
o How long does the mortgagor have to redeem?
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 Within 1 year from date of sale. If the land is
registered property, then from registration of
certificate of sale.
 But if the mortgagor is a juridical person and the
mortgagee is a bank, quasi-bank, or trust entity, then
redemption is only within 3 months from foreclosure
or registration of certificate of sale with ROD,
whichever is first.
o What is required for a valid redemption?
 1. Within proper period
 2. Payment of purchase price of property plus 1%
interest per month
 Taxes with same 1% interest if paid by
purchaser
 3. Written notice of redemption served on officer who
made the sale, and duplicate filed with ROD
o What if the purchaser contends the right of the redeeming
person to do so (e.g. it was not the mortgagor but one of
his heirs that is redeeming)?
 The sheriff cannot usurp judicial functions. He cannot
decide, so he must advice judicial redress to the
parties.
 Does the mortgagee have a right to recover deficiency post-
foreclosure?
o Yes, he may. The action to recover the deficiency prescribes
after 10 years from right of action.
 If a mortgagor dies, what are the 3 mutually exclusive options of
the mortgagee?
o 1. Waive mortgage and pursue claim against estate as an
ordinary claim
o 2. Judicial foreclosure of the mortgage, and recover deficiency,
if any as an ordinary claim against the estate
o 3. Rely on the mortgage exclusively (e.g. EJ foreclosure),
without right to file claim for deficiency
 What if the mortgagor files a collection suit?
 o It bars foreclosure of mortgage. The creditor cannot avail both
remedies because it is in essence a splitting of his cause of
action into two.
 What is the nature of a writ of possession?
o The purchaser may petition for a writ of possession within the
redemption period by filing an ex parte motion under oath.
o He files a bond. Upon approval of the bond thereafter, the
court must issue a writ of possession. It is a matter of course
and not a matter of discretion.
o Since, it’s ex parte, any questions regarding the validity of the
sale, the mortgage, etc. must be tried in separate proceedings.
 When else may the purchaser file for a writ of possession?
o When ownership has been consolidated upon himself, at the
end of the redemption period.
o The bond is no longer necessary in this case because he is the
absolute owner already.
 Can an ex-parte writ of possession be enforced against a third
party who is in actual possession of the foreclosed property and is
not in privity with the mortgagor?
o No, it cannot. Under Art. 433 of the NCC, one who claims to
be owner of a property possessed by another must bring
appropriate judicial action – in this case, it must be an action
for ejectment.
o To rule otherwise would unduly prejudice the third person who
did not have a chance to oppose the claim, since the
proceedings to issue a writ of possession are ex parte.
 What are the remedies of such third party claimants to property
involved in a foreclosure sale, when the third party was not part of
the foreclosure and there is no privity?
o Two options: a) “terceria” where he serves upon the sheriff an
affidavit of his title and a copy is given to the judgment
creditors; in this case, the officer is not bound to keep the
property; b) independent separate action, to recover ownership
and possession of the contested property (Rule 39, Sec. 16 of
the ROC)
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 Is a purchaser in a foreclosure sale who hasn’t turned over the
excess of the proceeds of sale to the mortgagor entitled to a writ of
possession?
o In a case, the SC ruled that he’s not entitled.
 Can a REM cover future loans or advancements?
o Yes, if stipulated by the parties in the contract.
Antichresis
 What is a contract of antichresis?
o A contract where the creditor acquires right to receive the fruits
of an immovable of his debtor, with the obligation to apply the
proceeds to the payment of interest (if there is), and then to the
principal of the credit
o What if the loan does not earn interest?
 There can still be a contract of antichresis. The
payments are applied directly to the principal, then.
o Again, take note that pactum commissorium is void.
 What are its characteristics?
o 1. Accessory contract
o 2. Formal contract – because the amount of the principal and
of the interest must be in writing or else the antichresis contract
is void
 Is delivery of the property a requisite for the contract’s validity (i.e.
is it a real contract)?
o NO. The delivery is only to allow the creditor to receive the
fruits and apply them, and not to make the contract valid.
o But note, it is a formal contract.
 What is the requirement of appraisal?
o The fruits of the immovable must be appraised at their actual
market value at the time of application (to know how much is
deducted).
 Can the debtor demand the return of the property before the debt
is totally paid?
o No. It stands as security.
 What are the obligations of the antichretic creditor?
o 1. Pay taxes and charges of the estate and necessary
expenses on the property
  Where does he take the funds? o 3. Unilateral – only the creditor has obligation: to free the thing
 From the fruits of the property from encumbrance upon fulfillment of the obligation
 Failure to do so – damages in favor of debtor o 4. It must be constituted by the absolute owner of the thing with
 There can be contrary stipulation as re: payment of free disposal of the property
taxes and charges  X went abroad and left his car with its certificate of registration
o 2. Apply fruits to the interest, and then the principal of the debt with Y. Y falsified X’s signature and sold it to Z. Z, in order to pay
 What are the creditor’s remedies in case of default? for the amount, executed a CM over the car in favor of a savings
o 1. Bring action for specific performance and loan association which lent money to him. Z failed to pay and
o 2. Petition for sale of real property in foreclosure sale under the car was sold at a public auction where the SLA won. X
Rule 68 of the ROC, or if the parties agreed upon it, extra- returned to the country and sought to recover possession of the
judicial foreclosure under Act 3135 car. Can he?
o Yes. A CM can only be constituted by the absolute owner with
Antichresis Pledge free disposal thereof, which Z was not since the seller, Y, had
Real property Personal property no title over the car. Since X was unlawfully deprived of
Formal contract Real contract possession of a movable, he can recover possession.
o However, since Z purchased the car from a public sale, X must
reimburse the SLA for the price at which it was bought for.
Antichresis REM
Property delivered to creditor Debtor usually retains the property
CM Pledge
Creditor acquires only the right to No right over fruits, but it is a real
Delivery is not necessary (to get it, Delivery is necessary
receive fruits of the property. It is right that attaches to the property
one can file for replevin)
NOT a real right.
Registration in CM Registry is Registration in ROP not necessary
Creditor pays taxes and charges Creditor has no such obligation
necessary to be valid beyond the for validity
unless stipulated otherwise
parties
Creditor given possession of the Mortgagee has no such obligation
If foreclosed, excess goes to debtor If sold, excess and deficiency are not
property must apply the fruits to the
and deficiency can be recovered by recoverable in general
interest then the principal
the creditor. EXCEPT: if Recto Law
applies
Chattel Mortgage
 What are the offenses involving CM?
 What are the characteristics of a CM contract?
o 1. Knowingly removing personal property covered by CM to
o 1. Accessory contract
any other province or city without written consent of the
o 2. Formal, because it must be registered in the CM Registry to
mortgagee
be valid
o 2. Selling or pledging such personal property without consent
 What if it’s not registered?
of the mortgagee written on the back of the mortgage and
 It’s not null and void, but it only binds the
recorded in CM Registry
parties.
o What if the mortgagor thereafter pays the debt anyway or
informs the mortgagee post-sale?

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  He is still criminally liable under the RPC.
o Is the sale valid?
 Yes, but the mortgagor is liable criminally.
 What is valid subject matter of CM?
o 1. Shares of stock in corporation
o 2. Interest in business
o 3. Machinery and house of mixed materials treated by the
parties as personal property
 And no third party will be prejudiced thereby
o 4. Vessels, if the mortgage is recorded with MARINA
o 5. Motor vehicles, if mortgage is recorded with both the LTO
and the CM Registry
o 6. House intended to be demolished
o 7. Growing crops and large cattle
 What is the rule when the parties constitute a CM over a building?
o In general, this cannot be done, but the parties are estopped
from questioning it. Thus, the CM is valid. But if it will be
foreclosed, follow procedure for foreclosure of REM, because
third parties are not bound by the constitution of a CM over
immovables.
 What if the property is found in a place other than where the
mortgagor resides?
o Register it in both registers in both provinces. Otherwise, the
CM is void as to third parties.
o But again, the CM is valid as between the parties – this is
always the rule if there is some infirmity: valid between the
parties, but not against the world.
 What is the effect of registration?
o Makes the CM effective against third parties. It creates a
lien/real right which follows the chattel wherever.
 What if the mortgage is assigned to another?
o 1. No need to record the assignment in the registry
o 2. The assignee is subrogated to the rights of the transferee to
the CM
 What is an Affidavit of GF?
o It is an oath in a contract of CM that the parties:
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 severally swear that the mortgage is made for the
purpose of securing the obligation specified therein
and for no other purpose
 and that it is a just and valid obligation and not one
entered for fraud
o If it is not appended, same rule as above: it cannot bind third
persons without notice or subsequent creditors.
o In effect: an Affidavit of GF gives the CM preferred status.
o What is the implication of the Affidavit of GF which has
then become doctrinal in CMs?
 Because it only secures the obligation specified, a CM
cannot cover future debts, unlike a REM.
 What are the options in foreclosure?
o 1. Public sale
o 2. Private sale – needs express stipulation in the contract
 EXCEPT: a) fraud or b) duress
o When can a CM be foreclosed?
 After 30 days from time that the condition is broken
 After there is 10 day notice:
 1. Given to the mortgagor
 2. Posting of public notice of time, place, and
purpose of the sale
o N.B. the 30 day period is a grace period to help the mortgagor
discharge the obligation
o Is there right of redemption after sale?
 No, there is none, unlike in a REM.
o Can the mortgagee recover deficiency post-sale?
 Yes, unlike in a pledge.
 Action accrues within 10 years from sale.
 What is the exception?
 Recto Law, if it is a sale of personal property
in installments.
 So if it is foreclosed, no deficiency. But
under the Recto Law, after specific
performance which leads to execution sale,
there can be recovery of deficiency because
it is not a foreclosure.
Quasi-contracts
 When does negotiorum gestio arise?
o When one voluntarily takes charge of the management of
business or property of another, without any power from the
latter
o What is he obliged to do?
 Continue such management until termination of the
affair and its incidents, or the owner is in a position to
substitute him
o When does negotiorum not arise?
 1. Property or business has been abandoned
 2. Manager has been tacitly authorized
 What are the obligations of the officious manager?
o 1. Perform duties with diligence of GFF
o 2. Liable for damages through fault or negligence
o 3. Liable for acts of a delegate, if he appoints one
o 4. Liable for fortuitous event if:
 A. He undertakes risky operations
 B. Prefers own interest to that of the owner
 C. Fails to return the property or business upon
demand of owner
 D. Assumption of management in BF
 E. He is manifestly unfit to carry on the management,
unless done to save the property or business from
imminent danger
 F. His intervention prevented a more competent
manager from taking over, unless done to save the
property or business from imminent danger
o 5. Liable for contracts entered into with third persons, unless:
 A. owner ratified
 B. the contract refers to things pertaining to the owner
 What are the obligations of the owner?
o If he derived benefit or the property was saved from imminent
danger:
 1. Liable for obligations incurred in his interest
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 2. Reimburse officious manager for necessary and
useful expenses, and damages the manager may
have suffered
o If he did not derive benefit:
 Still liable as above if: a) the manager acted in GF,
and b) property or business is intact and ready to be
returned to the owner
 When does negotiorum end?
o 1. Owner repudiates it or ends it
o 2. Manager withdraws from management
o 3. Death, civil interdiction, insanity, or insolvency of owner or
manager
 When does solutio indebiti arise?
o Something is received when there is no right to demand it and
it was given through mistake
 What is the obligation of the recipient?
o He must return it.
o What if he accepted it in BF?
 1. He must pay legal interest if a sum of money is
involved
 2. Liable for fruits received or fruits that should have
been received if it bears fruits
 3. Answerable for loss or impairment
o What if he accepted it in GF?
 1. Answerable for loss or impairment only so far as it
has benefited him
 2. If he already alienated it, return the price or assign
the action to collect the sum
 3. Exempt from returning/restoring it if in GF, he
already destroyed the document, allowed action to
prescribe, gave up pledges, or cancelled guaranties
Concurrence and Preference of Credits
 What are properties exempt from liability for obligations?
o Survival necessities
o 1. Family Home, except for:
 A. non-payment of taxes
  B. debts prior to constitution of FH o 11. Crop loan, over the fruits harvested
 C. debts secured by mortgage on premises of the FH o 12. Rentals for one year, on the movables in the property
 D. debts due to laborer, mechanics, architects, etc. for leased
the construction of the FH o 13. Claim of depositor, on goods wrongfully sold by the
o 2. Clothing and necessaries of the family depositary
o 3. Furniture and household things not exceeding 1K o For these cases, what if he movables on which the lien
o 4. Provisions for family for 3 months exists have been wrongfully taken?
o Money received for support  The creditor can demand them from any possessor,
o 1. Right to receive support and things procured from such within 30 days from unlawful seizure
support  What are preferred credits over specific immovable property?
o 2. Earnings within the month to support the family (2242)
o 3. Proceeds of life insurance o 1. Taxes, on the immovable
o 4. Right to receive legal support from government or those o 2. Vendor’s lien, for sale of real property
procured from such o 3. Contractor’s lien, over the property
o Employment/trade necessities o 4. Lien of material-men, when material was used for property
o 1. Tools and implements for trade/employment o 5. Mortgages recorded in ROP
o 2. 2 beasts of burden used in occupation o 6. Expenses of preservation, when the law authorizes
o 3. Professional libraries reimbursement (see property law and oblicon)
o 4. One fishing boat and net for fishermen o 7. Recorded attachments, by virtue of judicial order
o Specially enumerated o 8. Warranty in partition of co-heirs of property
o 1. Lettered gravestones o 9. Conditional donations, on the immovable donated as to
o 2. Copyrights and other properties exempted by law pecuniary charges and other conditions
o 3. Property in custodia legis, and of public dominion o 10. Premiums for 2 years in favor of insurers, on the insured
 What are preferred credits as to specific movable property? (2241) property
o 1. Taxes on the movable  What is the order of preference as to other properties of the
o 2. Malversation by public officials of such movables debtor? (2244)
o 3. Vendor’s lien o 1. Funeral expenses
 As long as debtor still possesses it o 2. Wages of employees – for one year
 if resold, on the proceeds of sale o 3. Expenses of last illness
o 4. Credits secured by pledge, chattel mortgage o 4. Workmen’s compensation
o 5. Mechanic’s or repairman’s lien, on the thing o 5. Support for one year
o 6. Laborer’s wages, on the thing o 6. Support during insolvency
o 7. Salvage, on the goods saved o 7. Fines in crimes
o 8. Tenancy, on the share of fruits/harvest o 8. Legal expenses for administration of insolvent’s estate
o 9. Carrier’s lien, on the goods carries o 9. Taxes other than those over specific property
o 10. Hotel’s lien  National government first
 On movables belonging to guests, but not for money  Then to province
loaned to guests  Then to city or municipality
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 o 10. Torts
o 11. Donations
o 12. Credits in public instrument or covered by final judgment
 Have preference among themselves in order of
property of dates of instruments or judgments
 What is the order of preference of credits?
o 1. Credits which enjoy preference as to specific movables
exclude all others to the extent of the value of the movable
o 2. If there are two or more credits as to the same movable,
claims are pro rata (meaning, the enumeration is not in order)
 Except for payment of taxes due the State; this
always goes first
o 3. APPLY SAME RULES TO SPECIFIC IMMOVABLES
o 4. For enumeration in 2244, follow the order
o 5. For common credits, no preference; just apply property pro
rata regardless of dates
 X purchased an aircraft in cash, and had outstanding balance of
P500K. He incurred indebtedness of P300K for repairs with a
repair company over the aircraft. He borrowed P1M from a bank
for additional capital and constituted a CM on the aircraft. During
a flight, a passenger was injured and was awarded P200K in
damages. The aircraft was sold for 1M. The following claims thus
exist –
o A. Vendor’s lien on movable
o B. Repairman’s lien on movable
o C. CM lien on bank loan
o D. Tort claim
o What is the order of preference?
 C  CM lien on bank loan prevails over the tort claim.
 The liens of the vendor and repairman do not exist
anymore because the property has been sold and
thus the debtor is not in possession of the thing. The
claims become ordinary claims that are defeated by
the CM lien of the bank.
 When does the preference of workers to wages apply?
o When there is a declaration of bankruptcy or judicial liquidation
of the company
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 What happens when there is a distressed corporation that asks for
rehabilitation and suspension of payments?
o Preferred creditors cannot assert preference anymore, and
stand in equal footing with other creditors. This allows the
receiver to exercise discretion free from legal interference that
might hinder rescue of the company.
Insolvency Law
 What is the difference between suspension of payments and
insolvency?
o In suspension, purpose is to delay payments; in insolvency,
purpose is to discharge debtor from debts
o In suspension, amount of debt is not changed; in insolvency,
creditors receive less than their credits (or where there are
preferences, some may not receive at all)
 N.B. correlate with concurrence and preference
 What is suspension of payments?
o It applies to situations where a debtor has properties, but not
enough to pay debts as they fall due. He is still solvent, but not
liquid.
 What is the effect of suspension of payments?
o 1. No disposition of property of debtor except in ordinary
course of business
o 2. No payment except in ordinary course of business
o 3. Upon request to court, all pending executions against debtor
shall be suspended
 Except those covered by mortgage
 Which creditors are not affected by suspension of payments?
o 1. Those with claims within 60 days immediately preceding
filing of petition:
 A. claims for personal labor
 B. claims for maintenance
 C. expenses of last illness of debtor
 D. Funeral of spouse or children of debtor
o 2. Those possessing legal or contractual mortgages
 What is the procedure to petition for suspension of payments?
o 1. File petition in RTC where debtor resides 6 months prior.
 o 2. Along with the petition, file:
 A. Verified list of creditors
 B. Debts and liabilities
 C. Statement of assets and liabilities
 D. Proposed agreement/schedule
o 3. Court issues order calling all creditors to a meeting (2-8
weeks from order)
 Publication and notice
o 4. Meeting of creditors
 Quorum: represent at least 60% of liabilities of the
debtor
o 5. Creditors approve the proposition
 Need double majority vote to approve:
 A. 2/3 of creditors
 B. 2/3 of 60% of the liabilities
o 6. Objections can be made within 10 days of meeting
 A. Defects in call for meeting or the meeting itself
 B. Fraudulent connivance between one or some
creditors and the debtor to vote in favor of the
agreement
 C. Fraudulent conveyance of claims to obtain a
majority
o 7. Court issues order directing the agreement to be carried out
 What is the procedure for voluntary insolvency?
o 1. Debtor files petition that he is insolvent and cannot pay
debts in full, accompanied by:
 A. verified schedule of liabilities
 B. verified inventory of properties
o 2. Court issues order of adjudication
 Publication and service of order to creditors
 Is hearing needed?
 No, not in voluntary insolvency
o 3. Meeting of all creditors to elect assignee of debtor’s property
 Clerk of court conveys property to him
 What is the effect?
 The assignee gets legal title over the
property
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 What if someone has a mortgage over the
property?
 File a motion to be excluded from the
insolvency proceedings because he will
pursue the mortgage lien
 What if there is an existing claim being filed in
court?
 The case will only determine how much is
due the creditor, but he has to join the other
creditors when he takes what is due him
 What attachments and judgments shall be set
aside?
 Those levied or secured within 30 days
before insolvency proceeding (again, there is
badge of fraud)
 SAME RULE for dispositions within 30 days
before insolvency proceedings, unless there
is value received in GF for the property
o 4. Liquidation of assets and payment of debts
o 5. Composition
 Offer of terms of composition is made after filing of
schedule of liabilities and creditors
 The offer must be accepted in writing by the same
double majority of creditors
 It is made after depositing the consideration to be
paid and the cost of proceedings
 The court must approve the terms of composition
o What is the effect?
 The debtor is discharged from debts, except if
corporation
o What are available remedies?
 Objection
 Appeal to SC
 What is the procedure for involuntary insolvency?
o 1. Three or more creditors file petition
 When should they have been creditors?
  More than 30 days prior to petition, to avoid
fraudulent conveyance
 The creditors must be residents of the Philippines
o 2. Court issues order requiring debtor to show cause why he
must not be declared insolvent
 Debtor files MTD or answer
o 3. Hearing of the case
 Issuance of order declaring debtor insolvent
 Then he will be required to submit schedule of assets
and liabilities
 Publication and service of order
o (N.B. procedure from this point is the same as voluntary
insolvency – including commentaries)
o 4. Meeting of all creditors to elect assignee of debtor’s property
 Clerk of court conveys property to him
o 5. Liquidation of assets and payment of debts
o 6. Composition
o What is the effect?
 The debtor is discharged from debts, except if
corporation
o What are available remedies?
 Objection
 Appeal to SC
PRESCRIPTION
 What are the kinds of prescription?
o 1. Acquisitive
 What are the requisites of acquisitive
prescription?
 1. Capacity to acquire by prescription
 2. Thing is capable of acquisition by
prescription
 3. Possession of the thing under certain
conditions
 4. Lapse of required time under law
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o 2. Extinctive or statute of limitations
 Who may acquire by prescription?
o 1. Person capable of acquiring property through other modes
o 2. State
o 3. Minors – through guardians or personally
 Against whom may prescription run?
o 1. Incapacitated person/minors with guardians
o 2. Absentees with administrators
o 3. Persons abroad with administrators
o 4. Juridical persons except the state as to non-patrimonial
property
 When does prescription not run?
o 1. Between husband and wife even if there is CSP or JSP
o 2. Between parents and children, during minority/insanity
o 3. Between guardian and ward, during guardianship
 Which are subject to prescription?
o All things within the commerce of men – private property and
patrimonial property of State
o What are not subject to prescription?
 1. Public domain
 2. Intransmissible rights
 3. Movables possessed through crime
 4. Registered land
 What is the rule on renunciation of prescription?
o Person may renounce prescription already obtained, but not
right to prescribe in the future
o How is renunciation done?
 Express or tacit. Tacit is when acts imply
abandonment of the right acquired
o Who may impugn renunciation?
 Creditors and other persons interested in making
prescription effective – notwithstanding renunciation
o X borrowed money from Y on November 29, 1933 as
evidenced by a PN. Y said that he waives prescription and
may still collect even after the 10 year period under law. X
failed to pay after repeated demands so X sued him on
January 7, 1953. Can X collect?
  Yes. What happened here was not an actual waiver  What is “in concept of owner”?
of prescription (which cannot be done) but since there o It not out of mere tolerance of the owner, but is actually
was a 10 year “grace period,” the period only started adverse to the latter. It is a claim that the acquirer owns the
running from November 29, 1943. So the 10 year property.
period ends on November 29, 1953. January 7, 1953  What is “public, peaceful, uninterrupted”?
is within the period. o Known to the owner of the thing
 What are the kinds of acquisitive prescription and their requisites? o Not acquired through violence
o Ordinary o And continuous enjoyment of the property
 1. Possession in GF o When is there an interruption?
 2. Just title  1. If natural –
 3. Within time fixed by law  If through any cause, possession ceases for
 4 years movables more than 1 year.
 10 years immovables  If 1 year or less, as if no interruption.
 4. In concept of owner  2. If civil (judicial summons)–
 5. Public, peaceful, uninterrupted  interrupts, by default
o Extra-ordinary  Exceptions?
 1. Just title o 1. Lack of legal solemnities
 2. Within time fixed by law o 2. Plaintiff desists from complaint,
 8 years movables or allows lapse of proceedings
 30 years immovables o 3. Possessor is absolved from
 3. In concept of owner complaint
 4. Public, peaceful, uninterrupted  3. Renunciation by possessor
 What is the concept of good faith that differentiates ordinary from  4. Possession during wartime
extraordinary prescription?  What are the rules in computing the period?
o Reasonable belief by the person that he is the owner and could o Tacking is allowed to predecessor-in-interest
validly transmit ownership  When does this happen?
o Must exist through the entire period required for prescription  There must be privity; possible when there is
 What does “just title” mean? succession of rights
o Titulo Colorado – where there was a mode of transferring  What if the character of possession
ownership but something is wrong because the grantor was differs?
not the owner o Predecessor in bad faith, possessor
 Had the grantor been the owner, the mode would in GF – use extraordinary
have transferred ownership acquisition
 How does this differ from “titulo putative”? o Presumed to be in possession in intervening periods unless
 Here, there was no mode of acquiring disproved
ownership, although the person believes he o Exclude first day, include last
has obtained title  Periods for prescription of actions:

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30 years Action over immovables (count from o 2. Subject matter
time possession was lost)  Upon perfection: determinable
10 years 1. Mortgage action  Capable of being made determinate without
2. action upon written contract further agreement between the parties
3. action upon obligation created by
law  Is a generic-determinable subject matter
4. action upon judgment subject to loss?
8 years 1. Action to recover movables (count o No.
from loss of possession)  Upon consummation: determinate (requires physical
6 years 1. action upon oral contract segregation or particular designation)
2. action upon quasi-contract o 3. Price
5 years Where period not fixed by law  What are the stages in the life of sale?
4 years 1. action upon injury to rights of
o 1. Negotiation
plaintiff
2. action upon quasi-delict o 2. Perfection
1 year 1. Forcible entry/unlawful detainer  A contract to sell (CTS) is already perfected, but has
2. defamation a suspensive condition – payment of full price
o 3. Consummation
 What are the characteristics of a sale contract?
 Which actions are not extinguished by prescription? o 1. Nominate, principal
o 1. Demand right of way o 2. Consensual
o 2. Abate public or private nuisance  Non-performance does not void the contract
o 3. Declare a contract void  Does the seller need to own the thing during
o 4. Recover property under express trust perfection of the contract?
o 5. Probate of will  No. Only upon consummation.
o 6. Quieting of title o 3. Bilateral and reciprocal
 Obligation of one party is the cause of the other
 Recall:
SALES  Compensation morae
 Resolution for failure to comply with
Introduction reciprocal obligation
o 4. Onerous
 What are the obligations created by a contract of sale?
o 5. Commutative
o Seller:
 Inadequate price does not invalidate sale, but may be
 Transfer ownership
a badge of vitiated consent
 Deliver possession of the subject matter
o 6. Title, not a mode
o Buyer:
 Tradition is the mode to transfer ownership
 To pay the price
 Sale just creates the obligation to transfer and deliver
 What are the elements of a contract of sale?
 Distinguish from barter:
o 1. Consent
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 o Barter is thing-for-thing; sale is thing-for-money
o Special rules for barter:
 1. If the thing received in barter is found not to be the
other party’s, cannot be compelled to deliver what he
promised
 2. If he lost by eviction the thing received in barter, he
may recover what he gave in exchange, with
damages
 As long as it didn’t fall in the hands of a third
person in GF
o Special rules for sales:
 1. SOF
 2. Right of legal redemption to adjoining owners of
urban lands
 Distinguish from piece-of-work:
o 1. Check if it is possible to produce the product ahead of any
special order –
 POW if it can only be made upon receipt of
specifications (ex. A/C specially fitting building space)
 Otherwise, sale (ex. window sashes that can be
customized)
o 2. POW is unique and always different from other orders
o 3. Essence of sale is object; essence of sale is service
 Service takes into account the plan and the labor.
 Sale just requires that an object be delivered at some
future date.
o Is research output POW?
 No. There is no transfer of ownership.
o Why is it important to distinguish?
 Sale is obligation to give. POW is obligation to do.
Remedies differ.
 Distinguish from agency to sell:
o There is sale, not agency, if the middle man had to pay the
price for the thing, and then sell it thereafter. There are two
contracts of sale here.
o Agency is fiduciary, and the agent must act with loyalty.
 Distinguish Contract of Sale (COS) from Contract to Sell (CTS):
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o CTS, upon perfection, must:
 Have a stipulation that the SM remains with the seller
until full payment of the price
 Specific right granted to the seller to extra-judicially
rescind the contract in case of default
 If missing, it’s a COS
 OR, there is a stipulation that upon payment of full
price, the seller executes a deed of sale in favor of the
buyer
o Upon consummation:
 COS – title passes upon delivery
 Non-payment is a substantial breach
 CTS – title not passed to the buyer until payment of
full purchase price
 Payment of the full purchase price is a
suspensive condition
o Remedies:
 COS – need to rescind to recover ownership
 There can be forfeiture of payments already
made as long as it’s provided for in the
contract and it’s not unconscionable
 CTS – ownership retained, so the contract is
automatically extinguished
 Only action is for recovery of possession
 Return payments made
 But there can be decision based on equity if
there were sufficient payments already made
Parties
 Who has capacity to enter into a sale contract?
o Anyone with capacity to enter into a normal contract.
o For minors, follow usual rule.
 What is the status of a Contract for sale of
necessaries to minor?
 If perfected and delivered, it is a valid
contract.
  If just perfected, it is voidable, as per usual  Courts may only nullify it if the lawyer
rule. exercises undue influence.
 What do prohibited “sales” here include?  Can there be ratification?
o Also legal redemption, compromises, and renunciations o No. These are void contracts.
 Can spouses sell to each other? o But there can be a new contract entered into, applying to:
o In general, no.  Agent
o Exceptions?  Guardian
 1. CSP  Executor/administrator
 2. JSP o The following cannot “ratify” through new contracts:
o N.B. prohibition also applies to common law spouses  Public officers and employees
 What are the special disqualifications?  Officers of court
o 1. Agents over principal’s property  Lawyers
 Unless the principal consented. This is the only
relationship that can be validated by the principal by Subject matter
consent.
 What are the requisites for a valid subject matter?
o 2. Guardian over ward’s property
o 3. Executor or administrator over estate property o 1. Possible subject matter
 What if the executor or administrator bought the o 2. Licit
property after administration ceased? o 3. Determinate or at least, determinable
 What does “possible” subject matter mean?
 Generally, valid.
o The person need not be the owner of the subject matter upon
 But void if there was an agreement entered
perfect of the sale contract, and only during delivery must he
into with the heir during administration.
have a right to do so
 Short gap of time between termination of
o “Possible” means that it may not exist at the moment but it can
administration and sale is a badge of fraud.
definitely exist.
o 4. Public officers and employees over property of the State,
 So you cannot sell a fountain of youth, because it’s an
subdivision, or GOCC entrusted to them
impossible thing.
o 5. Officers of the court over property under litigation or levy in
 What is “emptio rae speratae"?
the court they function in
o A sale based on the suspensive condition that the thing comes
 What is the rule on sale of property after litigation
into existence.
or levy?
 What is “emptio spae”?
 If it was offered before, it cannot be “ratified”
o Sale of a vain hope or expectancy. It is void. (Under Jurado, it
after.
says that it’s valid and perfected because what was sold was
 If it’s just the first time, it’s valid.
hope itself)
o 6. Lawyers over property and rights under litigation
 What are examples of illicit subject matters?
 Are contingency fees valid?
o Sale of intransmissible rights, sale of future inheritance, etc.
 Yes. Transfer of property only happens after
 What is “determinable” and what is “determinate”?
favorable judgment.

166
 o Determinable – upon perfection of the contract, the thing is
capable of being made determinate, without necessity for a
new agreement between the parties.
 Ex. a contract refers to an existing document
o Determinate – particularly designated or physically segregated
already
o If neither determinable nor determinate, no contract.
 What is essential for perfection as re: quantity and quality?
o Identity and quality of the subject matter is ESSENTIAL for
perfection.
o Quantity is not as important, but the standard is that there is no
need to enter into a new contract to determine it.
o What is the status of generic things sold?
 Upon perfection, they are determinable.
 They are not subject to loss.
 Upon consummation, they are determinate.
o What about sale of undivided interest in property?
 Co-ownership comes about
o What about sale of undivided share in mass of fungible
goods?
 Proportional co-ownership over the mass
 If mass is less than the measure both, the buyer owns
the entire mass and the seller must make up the
deficiency
 But if a specific mass is sold without weighing, the
subject matter is a definite object even if there are
minor differences in measure
 What is the effect of failure to deliver the subject matter?
o It does not affect the validity of the contract.
o If the person sold something not his, the buyer does not obtain
better right over the goods, unless the real owner is estopped.
o What is the exception to this rule?
 Judicial sale. This is why the mortgagor must be the
absolute owner at the time of the sale.
o What if the seller subsequently obtains title over the thing
sold?
 It passes to the buyer by operation of law.
 But of course, there must be physical delivery.
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Price
 What are requisites of valid price?
o 1. Real
o 2. Must be in money or its equivalent
 Note: there can be post-perfection agreements like
dacion en pago to give something else other than
money
o 3. Certain or ascertainable at the time of perfection
 What is “real”?
o When the buyer has every intention to pay and seller has every
intention to receive.
o Take note of absolutely or relatively simulated contracts.
o What if the price indicated is false but not simulated?
 The contract is valid.
 The contract may be reformed to reflect the true intent
of the parties.
o What if the price indicated is only nominal/meager (ex. P1),
is it valid?
 If it masks the true price given, it’s valid.
 But note that Philippine law requires not just
consideration but valuable consideration, so if it is
found out that there is none, the price is invalid
(because it might actually be a donation).
 So gross inadequacy in itself does not invalidate the
contract but it may indicate vitiation or that it’s a
donation.
 What is “certain or ascertainable”?
o Certain if it is in a definite amount.
o Ascertainable if reference can be made to another thing certain
or judgment of another person.
 Can a third party fix the price?
 Yes, it is valid. The third party’s act is a
suspensive condition.
 What if the third party refuses or cannot fix the
price? Or what if the price cannot be determined
through the thing certain?
  The contract is inefficacious because of
failure of suspensive condition.
 So there is a valid contract at one point.
 Can either party fix the price?
 No.
 When can the courts fix the price?
 1. Third party in BF
 2. Mistake
 What is the rule for sales where there is no price agreed upon?
o First, attempt to determine the price in any other matter.
 Most of the time, it becomes an inefficacious contract
(because for instance, the thing certain cannot
determine the price, or a third person designated to
do so does not or cannot).
o If there is already delivery by the seller and appropriation by
the buyer, then it’s an unjust enrichment and estoppel
situation. So the buyer must pay a reasonable price.
 Can the seller ask for return of the thing at this
point?
 No, because that would violate mutuality of
contract, since the buyer already
appropriated it. There is also estoppel.
 What is the rule on manner of payment?
o It must also be certain or ascertainable. It is essential, being
part of the prestation of the contract.
o The presumption is immediate payment and that it is
demandable at once.
o But if the intent clearly shows some other manner apart from
immediate payment but the contract does not provide for it,
there is no contract because there is no price.
o X wanted to buy a car from ABC Company, on the
condition that X would procure a loan from DEF Finance,
as stipulated on the agreement. The loan was denied. Is
there a void contract for lack of manner of payment?
 No. There is a valid contract, but with a suspensive
condition that did not come into fruition.
 For an executory contract of sale, how is it taken out of the SOF?
168
o The written memorandum must evince all the essential
requisites of a contract of sale.
o Of course if it has been partially executed or is executed, it is
taken out of the Statute of Frauds.
 What is the effect of deficiency of price?
o Does not affect validity of the sale contract, but may indicate
vitiated consent or that it is a donation contract.
o For a judicial sale, inadequacy can avoid a sale if:
 1. Price is shocking to the conscience
 2. And one can get a better price
 3. And there is no right to redeem
 Because if there is right to redeem, the low
price would make it easier to get the property
back
o Take note of lesion in sales of guardians and representatives
of absentees, under OBLICON, which can lead to rescission.
o What if a sale with right to repurchase has a deficient
price?
 There is a presumption that it is an equitable
mortgage. The remedy for the seller is to reform the
contract, while the buyer can foreclose the equitable
mortgage.
Formation of contract of sale
 What is the rule on offers and acceptance?
o See OBLICON notes.
 What is the difference of Contract to Sell (CTS) from an option
contract (OC)?
o CTS – promise to buy and sell a determinate thing for a price
certain
o OC – contracted offer, securing the privilege to buy, so the
other party cannot enter into a contract with another
 What is their similarity?
o Both contracts are subject of specific performance.
o Both are perfected contracts, but not the COS per se
 What is required for an OC to be valid?
o 1. Agreed time
 o 2. Determined price
o 3. Separate consideration
 Need not be in cash. It can be a mortgage, buying
the lands in half a property, etc., as long as it’s an
undertaking of value.
 Does the OC fall under the SOF?
o No. But the resulting sale contract will.
 What if the requisites for an OC are not complete?
o It’s a VALID offer but a VOID option contract.
o So it can be withdrawn with no consequence. But if it’s
accepted before withdrawal, a contract of sale ensues.
 How is the option exercised?
o Merely advising the offering party. No need to pay stipulated
price of the sale yet upon exercise of the option.
 What is the rule and remedy when an option contract is perfected?
o The optionee has the right to exercise the option anytime
during the period, and this will bring about a valid contract of
sale.
o If the offeror withdraws the offer during the period, it is void.
The offeree can still accept the offer.
 BUT in Ang Yu: the withdrawal here only results in a
breach of the option contract, but the offer cannot be
accepted anymore. CLV finds this problematic.
o If the offeror withdraws the offer and sells the thing it to a third
person in BF, the optionee can exercise the option and compel
specific performance from the third person.
o If the offeror withdraws the offer and sells the thing to a third
person in GF, the optionee can recover damages from breach
of contract of sale, and not just breach of the option contract.
 What is the Right of First Refusal (RFR)?
o A promise on the part of the owner that he will sell it first to the
promisee should he decide to sell the thing.
 What is certain among perfection of the RFR?
o Just the object of the contract. NOT YET the price and manner
of payment.
 What if a RFR is not honored?
o Damages only, no specific performance
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 Must there be a consideration?
o Yes, but need not be separate from the main contract.
 Must it be in a written contract?
o Yes, otherwise it is unenforceable. (SOF)
 What if the property is offered to a third person after being offered
to one with a RFR?
o The offered price to the third person must at least be under the
same terms and conditions as the prior offer.
 Take note of the usual rule – offer must be certain, acceptance must be
absolute, otherwise it’s a counter-offer.
 What is the nature of earnest money?
o It’s part of the purchase price.
o It’s given only when there is already a sale.
o Buyer is bound to pay the balance. When there is failure to
pay the balance, the earnest money is returned upon
resolution; it is not forfeited.
 What are the rules on form that you must take note of?
o 1. Sale of real property by an agent (must be in SPA)
o 2. Sale of large cattle (in writing and registered w/ municipal
treasurer)
o 3. Sale of land by “non-Christians”
o 4. Transactions involving rights over real property must be in
public document to be registrable (1358)
 But not a requirement for perfection
o 5. SOF
Transfer of ownership/performance of sale contract
 When is there tradition?
o When the thing sold is placed in the control and possession of
the vendee
o With intent to deliver
 What are the types?
o 1. Actual
o 2. Constructive – any manner signifying transfer of possession
 Constitutum Possessorium: sold as owner, continue
to possess as lessee
  Traditio Brevi Manu: bought as lessee, and become
owner
 Traditio Longa Manu: delivery by agreement
o 3. Symbolic – ex. delivery of keys to a car
 What is the effect of execution of public instrument?
o For both movables and immovables, it is equivalent to delivery
of the thing, unless the contrary can be inferred.
o What are the exceptions to this rule?
 1. Contrary stipulation in the instrument
 2. Seller did not control the subject matter at the time
of execution of the instrument
 Except: when there is express agreement
that the buyer will take steps to obtain
material possession of the thing from a third
person
 3. Seller did not have control or ability to transfer
physical possession of the property for a reasonable
length of time after execution of the public instrument
 What is the rule on delivery by carrier?
o GENERALLY, delivery to carrier is delivery to buyer
o Exceptions:
 1. FAS sales (Free Alongside Ship)
 Delivery when goods placed alongside
vessel
 2. FOB sales (Free On Board)
 FOB “shipping point” – delivery to carrier is
delivery to buyer
o Buyer must pay freight
 FOB “destination” – delivered to buyer only
upon reaching destination
o Seller must pay freight
 3. CIF sales (Costs, Freight, Insurance)
 The buyer pays fixed price while seller pays
insurance and freight up to the point of
destination
 In delivery of movables, what if the seller delivered less goods
than what he contracted to sell?
170
o Buyer may reject.
o If buyer accepts and retains the goods knowing the contract
won’t be performed in full, he must pay at contract rate.
o If buyer used or disposed the goods before he knew the
contract won’t be performed in full, he just pays fair value.
 What if the seller delivered more than what he contracted to?
o Buyer may reject the excess.
o If it’s indivisible subject matter, he may reject the whole.
o If he accepts the whole, he still pays contract rate.
o Same rule if the seller delivers goods where some match the
contract specifications and some do not.
 What is the rule for sale of immovables where the area is stated?
o The seller must deliver all that is stated in the contract.
o If the area is less or the quality is different:
 1. Proportional reduction of price OR
 2. Resolution of contract (as long as the lack is more
than 1/10 of the area)
 But if the buyer would not have bought the
property had he known the smaller area or
inferior quality, he can still resolve even if
less than 1/10
o If area is more than stated:
 1. Reject excess OR
 2. Accept all, but pay contract price
o What if the sale of property is by lump sum?
 No change in the price even if the area is less or more
than what is in the contract.
 Usually indicated by lack of price-per-unit
 When does delivery not transfer title?
o 1. “On sale or return”
 Buyer has option to return instead of paying the price
 Delivery vests ownership but the buyer may return the
goods within the time stipulated/reasonable time
o 2. “Sale on acceptance” (or “on approval” or “on trial”)
 Delivery is transfer only, until:
 Buyer signifies approval
  Buyer does not signify approval but retains
goods without notice of rejection
o N.B. for #1 and 2, there must be clear and written agreement
that sale is on sale or return or sale on acceptance
o 3. Reservation of ownership
o 4. Sale is not valid
o 5. Seller is not owner
 What are the exceptions?
 1. True owner is estopped
 2. Sale made by registered or apparent
owner according to registration laws
 3. Sale pursuant to statutory power of sale or
under order of court
 4. Purchased in merchant’s store, fairs,
markets
 What is the general rule for double sales?
o The Torrens system prevails in setting priorities.
o When the property is covered by two different titles, the earlier
one prevails.
o When one buyer bought the land as registered under Act 3344,
and another bought the land as registered under Torrens title,
the latter prevails.
 What if there was a prior unregistered sale and a subsequent
judicial sale?
o If the land was registered, the judicial sale wins (because the
rule that first-registrant-wins applies)
o If the land was unregistered, the unregistered sale wins (there
are no rights to step into for the second buyer)
 What is the rule for movables?
o First person to take possession of it in GF wins
 What is the rule for immovables?
o NOTE: this pertains to unregistered lands, and “registration”
here is registration of the land in the ROP (Torrens)
o (This rule applies for: 1. Two valid sales, 2. Of the exact same
subject matter, 3. From the same person, 4. And there are
conflicting interests)
o 1. First person who registers the land in the ROP in GF
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o 2. If none, the first person who possessed it in GF
o 3. If none, the person who presents older title in GF
 What is the subsidiary rule?
o Primus tempore, potior jure (First in time, first in right). This
applies when the above rule doesn’t apply for lack of
requisites, or if one is a CTs and one is a COS.
o If one is a CTS and one is a COS, the CTS wins if the CTS
buyer fulfilled all the conditions already and there was a
subsequent COS after.
 What does “purchaser in GF” mean?
o No notice of other person’s right or interest. Paid full and fair
price upon purchase, and before notice.
o If the circumstances call for an investigation and he did not,
he’s in BF (ex. lis pendens or annotated adverse claim).
o So what is required for second person:
 Second buyer must show continuing GF until full
ownership vests.
 The first buyer can simply defeat this continuing GF
by registering.
 As soon as he second buyer obtains knowledge of the
first sale, it’s akin to registration in favor of buyer #1,
because second buyer loses GF.
Risk of loss
 Recall OBLICON notes
Documents of title
 Recall WAREHOUSE RECEIPTS notes, esp. on warranties and how to
garnish/levy a negotiable document or title and a non-negotiable
document of title
o Ex. need to surrender receipt, can ask help from court for
injunction, conflict between assignment of document and levy
of the same document and the rule on notice, etc.
Remedies of unpaid seller
 What is an unpaid seller?  1. Seller delivers goods to carrier or bailee
o 1. Whole price has not been paid or tendered without reservation of ownership
o 2. Negotiable instrument received as conditional payment and  2. Buyer lawfully obtains possession of
the condition was broken due to dishonor, insolvency, etc. goods
 What are the ordinary remedies of an unpaid seller?  3. Waiver
o 1. If ownership has been transferred to the buyer, specific o 2. Stoppage in transitu
performance for price  Right to stop goods in transit
o 2. If ownership has not yet been transferred to the buyer, it can  Buyer’s disposition of the goods does not affect
be resold for a reasonable price. The seller can also offer to stoppage, except:
deliver to the buyer.  1. If seller assents
 If the buyer refuses to receive the goods, the seller  2. What was sold was a negotiable
becomes a bailee for the buyer. instrument held by a possessor in GF
 The seller can ask for specific performance for the  When are the goods in transit?
price.  Carrier/bailee has them before buyer takes
o 3. If price is payable on a certain day, the seller can ask for delivery of the goods
specific performance for the price regardless of delivery  Goods rejected by buyer and carrier/bailee
 The buyer can launch as a defense the seller’s continues in possession
incapability to perform his obligation  BUT if the goods are being carried on behalf
 What are the special remedies for an unpaid seller? (Note: these of the buyer already or the carrier wrongfully
are “special” because they are self-help remedies and can be done refuses to deliver goods to the buyer, they
as long as there is no physical intrusion) are deemed NOT in transit
o 1. Possessory lien over the goods  How is this right exercised?
 When ownership has been transferred, seller has lien  1. Actual possession
on goods or right to retain goods if he still possesses  2. Notice to carrier
them.
 3. If there is negotiable document of title,
 When ownership has not been transferred, seller has
need to cancel it first before carrier gives
right to withhold delivery.
goods back to seller
 Buyer’s disposition of the goods does not terminate
o 3. Special right of resale
lien, except:
 In what instances does this right apply?
 1. If seller assents
 1. Perishable goods
 2. What was sold was a negotiable
 2. Seller expressly reserves right of resale in
instrument held by a possessor in GF
case of default
 When can possessory lien be exercised?
 3. Buyer has been in default for
 1. Goods sold without credit stipulation or
unreasonable time
term of credit has expired already OR
 What is the prerequisite?
 2. Buyer has become insolvent
 The unpaid seller should have a right of lien
 When does the possessory lien terminate?
or should have stopped the goods in transitu
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  What is the effect?
 Seller may resell even without rescinding the
original sale contract
 Buyer is liable for damages and the
difference for the price, if the subsequent
sale is for a lower price
 When does seller have to give notice?
 When the goods are not perishable, to see if
the default has been for an unreasonable
time
 Otherwise, no need for notice
 Seller cannot buy the goods for himself.
o 4. Special right to rescind
 When may this right be exercised?
 1. Express reservation of right to do so
 2. Default for unreasonable time
 What is the prerequisite?
 The unpaid seller should have a right of lien
or should have stopped the goods in transitu
 Buyer is liable for breach
 Give notice to buyer of rescission, not in order to
exercise the right, but to determine whether default
has been for unreasonable time period
Warranties
 What are express warranties?
o Those provided in the contract
 What are implied warranties?
o 1. Implied warranty by seller that he has a right to sell the thing
at the time ownership is to pass and that the buyer from that
 When is there an implied warranty on quality or fitness of the
time will have legal and peaceful possession of the thing
o 2. Implied warranty that the thing is free from any hidden faults
or defects, or any undeclared charges/encumbrances
o BUT this cannot hold liable a pledgee, mortgagee, sheriff,
auctioneer, with authority under fact or law, for the sale of a
thing where a third person has legal or equitable interest
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 What are the buyer’s remedies for breach of warranty by the
seller?
o 1. Accept the goods but recoup price or have it reduced
o 2. Accept the goods and file for damages
o 3. Refuse to accept the goods and file for damages
o 4. Rescind COS and refuse to accept the goods OR have
mutual restitution, if applicable
 When can the buyer not rescind?
 If he knew of breach of warranty but
accepted goods without protest
 Failed to notify the seller within reasonable
time
 If he fails to return the goods or offer to
return them
 If the goods are not in good condition
anymore due to the buyer’s fault
 What if the seller refuses to accept the goods
back?
 The buyer becomes a bailee
 With lien to secure price which has already
been paid
 With no prejudice to seller’s right to enforce
liens of an unpaid seller
 Are these remedies mutually exclusive?
 Yes
 Except: may seek rescission even after
choosing fulfillment if it becomes impossible
o 5. If there is breach of warranty of quality, the loss is the
difference between the actual value of the goods and the value
of the goods had they complied with the warranty
goods?
o 1. Buyer expressly/impliedly makes known to the seller the
particular purpose for which the goods were acquired and the
buyer relies on the seller’s judgment or skill – implied warranty
that the goods are suited for the purpose
 o 2. Goods are bought by description from a seller who deals in
goods of that description – implied warranty that the goods are
of merchantable quality
 What is warranty in case of eviction?
o It is an implied warranty wherein if the vendee is deprived of
the whole or part of a thing purchased by FJ based on a right
prior to the sale by the vendor, the vendor is answerable for
the eviction
o What are the requisites?
 1. Deprivation of the vendee of the whole/part of the
thing bought
 2. By virtue of final judgment
 3. Based on a right prior to the sale or an act
imputable to the vendor
 4. Vendor must be summoned in the suit for eviction
at the vendee’s instance
o What can the vendee demand of the vendor in case of
breach of warranty against eviction?
 1. Return value of the thing when sold
 2. Income or fruits if he has been ordered to deliver
them to the party who won the suit
 3. Cost of suit which caused eviction (or suit brought
against vendor)
 4. Expenses of the contract if vendee paid
 5. Damages and interests, and ornamental expenses
if sale was in BF
 When can the vendee demand the rescission of
the contract?
 1. If due to the eviction a part of the thing
sold was so important that the vendee would
not have bought it without said part
 2. Two or more things jointly sold for lump
sum (or for separate price for each if it is
clear the vendee would not have purchased
one without the other)
o What are the two kinds of waiver of warranty against
eviction?
174
 1. Consciente – voluntary renunciation made by the
vendee of the right
 Effect: liability of the vendor in case of
eviction only extends to the payment of the
value of the thing sold
 2. Intencionada – voluntary renunciation by the
vendee of the right to warranty against eviction with
knowledge of the risk of eviction and assuming its
consequences
 Effect: no liability whatsoever for the vendor
 What is an accion redhibitoria?
o Actions instituted by the vendee against the vendor to avoid a
sale on account of some vice or defect in the thing which
renders it unfit for the use intended
 What is accion quanti minoris?
o Action to procure return of a part of the purchase price paid by
the vendee to the vendor due to the defect
 What is the prescriptive period for either?
o 6 months from date of delivery
o Except redhibitory actions based on faults/defects of animals,
which is 40 days from date of delivery
Breach of contract
 What are the remedies of the seller for breach of contract of sale of
movables?
o 1. If ownership has been transferred to the buyer, specific
performance for price
o 2. If ownership has not yet been transferred to the buyer, it can
be resold for a reasonable price. The seller can also offer to
deliver to the buyer.
 If the buyer refuses to receive the goods, the seller
becomes a bailee for the buyer.
 The seller can ask for specific performance for the
price.
o 3. If price is payable on a certain day, the seller can ask for
specific performance for the price regardless of delivery
  The buyer can launch as a defense the seller’s
incapability to perform his obligation
 What is the remedy for sale of movables on installment (RECTO
LAW)?
o Three options:
 1. Exact fulfillment of the obligation, if buyer fails to
pay an installment
 Can there be recovery of deficiency?
o Yes.
 2. Cancel the sale, if buyer fails to pay 2 or more
installments
 Is there return of price?
o Usually, none, to compensate for
deterioration
 What is the validity of an agreement not
to return price already paid?
o Valid as long as not unconscionable
 What is the nature of rescission?
o It bars further recovery (because
payments are returned and the SM
is returned)
 3. Foreclose CM on the thing, if buyer fails to pay 2 or
more installments
 NO ACTION to recover unpaid balance
 Does this bar foreclosure on another
guarantee and another security?
o Yes.
 What if the seller forecloses on additional
securities instead of the CM?
o Loses lien on the CM.
 What is the effect of taking back the SM
by the seller?
o It’s tantamount to foreclosure
o What if property is sold for two installments only?
 There can be no failure to pay 2 or more installments,
so even if CM is foreclosed, the unpaid balance can
still be recovered (exception to 1484)
175
o What else is deemed a “purchase of movables on
installment”?
 1. Financing agreements
 2. Lease with option purchase
o Are the remedies mutually exclusive?
 Yes.
 But if the chosen remedy fails, can choose another.
 Remedies of seller for sale of immovables? (if not covered by
Maceda Law)
o 1. For anticipatory breach
 If the seller has reasonable fear of breach or loss,
may immediately sue for rescission of sale
 Or else, he can only rely on substantial breach
o 2. For failure to pay the price
 It does not bar the transfer of ownership or nullify the
sale K
 But he can rescind it through judicial or notarial
demand
 What does Art. 1592 provide?
 Even if it is stipulated that failure to pay the
price leads to rescission, there has to be a
demand for rescission first, to grant the
buyer of every opportunity to comply with the
obligation
 So if there is no judicial demand or notarial
act, the buyer can still pay what is due
 When does Art. 1592 apply?
o Ordinary sale of real property transferring ownership
simultaneously with the delivery of the real property sold
 What is the remedy for seller of immovable on installment
(MACEDA LAW)?
o When ML applies:
 1. Sale in installments AND
 2. The immovable is residential real estate or condo
unit (not commercial, industrial, or agrarian reform
land) AND
  3. Either a CTS (notice of cancellation) or COS
(demand for rescission)
 Even applies to financing transactions
o If buyer has paid at least 2 years of installments:
 1. Grace period of 1 month for every 1 year of
installment payments to pay (without interest)
 Can only be availed once every 5 years
 What if there is a stipulation that there is
no grace period or there is payment of
interest?
o INVALID.
 2. If the seller cancels the contract, he must refund to
the buyer the cash surrender value of payments
already made: 50% + 5% for every year beyond 5
years of installments (not exceeding 90% total)
 When does actual cancellation take place?
 AFTER expiration of grace period, the seller
gives:
o 1. Cash surrender value
o 2. Notarial demand for rescission
o 3. And there is lapse of 30 days
from receipt of notarial demand
 What if the lot has been sold to an innocent
purchaser for value at this time?
 Option 1: Buyer can demand return of actual
market value + 12% interest
 Option 2: Buyer may demand substitute lot
 What is the nature of this 30 day period after
notarial demand?
 It, in fact, is a 2nd 30 day grace period for
which payment can be made.
 But in this grace period, there are interests
and penalties.
 Can there be judicial rescission under the ML?
 No. The law requires notarial rescission. If
a judicial rescission is filed instead, the court
will dismiss it.
176
o If buyer has paid less than 2 years of installments:
 1. Grace period: only 60 days from date the
installment became due
 2. After grace period, the seller may either cancel the
contract (CTS) by giving notarial notice of rescission
(COS). There is another 30 day period before the
cancellation or rescission takes effect.
 What about the cash surrender value?
o It doesn’t apply to this situation.
The buyer does not get it back.
 What are the remedies of the buyer in a sale of movables?
o 1. Specific performance
o 2. See four actions above for breach of warranty
o 3. Suspension of payments in anticipation of breach
 If buyer has a reasonable fear of disturbance,
vindicatory action, or foreclosure
 Until when must suspension last?
 1. Seller has caused disturbance to stop
 2. Seller issues a security for return of the
price
 3. There is stipulation that the buyer must
pay nonetheless
 Is trespassing considered as a valid ground to
suspend payments?
 No.
 What are the remedies of the buyer in a sale of immovables?
o 1. Suspension of payment if there is reasonable fear of
disturbance or danger
 Unless the seller gives security for return of price
o 2. Subdivision or condominium projects (PD 957)
 No forfeiture of payments where there is failure to
develop condominium projects or subdivisions and
then the buyer stopped payments
 Buyer can ask for refund of what he paid – notice and
demand can be simultaneous
 NOTE: distinguish against between RESOLUTION ad RESCISSION.
Both these remedies apply. Remember that:
 o Resolution is for breach of reciprocal obligation (common in
sales)
o Rescission is for lesion
o Note again – if the situation involves Maceda Law, then
judicial rescission (actually, resolution), does not apply
because the action must be a notarial rescission
o If Art. 1592 and not the ML applies:
 Either judicial or notarial rescission.
 Rescission cannot be extra-judicial; buyer can
otherwise still continue paying.
Extinguishment of sale
 What are the causes to extinguish a contract of sale?
o 1. Ordinary causes to extinguish an obligation
o 2. Breach (discussed directly before)
o 3. Conventional or legal redemption
 What is conventional redemption?
o When the seller expressly reserves the right to repurchase the
thing sold. It must be reserved by the seller in the same
instrument of sale.
 Once consummated, cannot make pahabol the
stipulation in a separate document. In fact, it cannot
be in a separate document (unless it’s something else
like an option to buy).
 It MUST be in the same sale instrument and
stipulated before consummation.
o It does not prevent the consummation of the sale.
o Can enforce the right from third persons or possessors deriving
right from the buyer, even if the subsequent sale contract did
not mention the conventional redemption.
 Of course, respect laws on Mortgage and Property
Registration Decree.
 Compare with option contract?
o Conventional redemption need not have separate and distinct
consideration to be valid.
o The period of the conventional redemption cannot exceed 10
years, while an option contract may exceed this period.
177
o Option contract – need to just give notice that you are
exercising the option.
o Conventional redemption – give notice AND tender payment
with consignation
 What is the period for redemption?
o 1. If none agreed upon, 4 years
o 2. If there is a period agreed upon, cannot exceed 10 years
o 3. 30 days from judgment of the court, if there is judgment
declaring a contract one with conventional right to redeem and
not something else (ex. Equitable mortgage)
o When is the period suspended?
 Pendency of action in GF questioning the validity of
the underlying sale contract suspends the
prescription. But mere failure to pay the price does
not suspend it.
 What is the effect of the agreement?
o It is a valid contract of sale with a resolutory condition that the
seller exercising right to redeem.
 What must be returned to the buyer by the seller?
o 1. Price
o 2. Expenses of the contract
o 3. Necessary and useful improvements/expenses
 When is a contract presumed to be an Equitable Mortgage (EM)?
o 1. Price of sale with right to repurchase is unusually
inadequate
o 2. The seller remains in possession of the property as lessee
or otherwise
o 3. The period of redemption is extended in another instrument
o 4. The buyer retains for himself a part of the purchase price
o 5. The seller binds himself to pay for the taxes of the thing sold
o 6. Any other similar case
 In case of doubt, what is the rule?
o A sale purporting to be pacto de retro (with conventional
redemption) is deemed an EM.
o Same with absolute sales, but the real intent is to secure an
obligation.
 What is the consequence if a contract is declared an EM, and not
pacto de retro?
o Title of buyer cannot ripen into full ownership because his
possession is not in the concept of an owner.
o There can be no consolidation of title in the buyer’s hands
(otherwise it’s pactum).
o The seller can redeem as long as the buyer hasn’t foreclosed
yet.
 How is consolidation of ownership in the vendee by failure of the
vendor to exercise option in a pacto de retro done?
o Through an ordinary civil action (so all indispensable parties
i.e. those with interest must be impleaded)
 What is legal redemption and when does it apply?
o Mechanism of law to minimize co-ownership.
o 1. Among co-heirs
 Selling to a stranger prior to partition
 Can redeem within 1 month from receipt of notice of
sale to stranger
 Applies only to hereditary rights (co-heirs)
o 2. Among co-owners
 Selling to a stranger of a co-owner’s share
 If two or more co-owners decide to redeem, they
acquire in proportion to their existing shares
o 3. Adjoining owners of:
 A. Rural land
 Sale of land which does not exceed 1
hectare
 Not applicable to lands separated by
servitudes
 If two or more are requesting redemption,
prefer the one with the smaller lot. If equal,
prefer the first requestor to redeem.
 Purpose: maximize use of rural lands
 B. Urban land
 ONLY applies when there is sale of a small
piece of land which was bought by a seller
178
for mere speculation (sold when prices go
up)
 Purpose: prevent speculation in real estate
when there is housing problem already in
urban area
 What is the special rule for sale of
adjoining urban land?
o The right is not just of redemption
but also preemption. It means if the
resale has not yet been perfected,
the adjoining owner can preclude
sale because he is preferred.
o 4. Sale of credit in litigation by the creditor
 When does legal redemption start to run?
o Within 30 days of receipt of notice in writing by the prospective
seller or seller
o Written notice is indispensable even if the redeemer gains
knowledge of the sale some other way
o Exceptions?
 1. Suit in court to eject or collect rentals from co-
owners
 2. Laches by redeemers
 3. The co-owner himself acted as middleman or
intermediary in the sale to the third party
PARTNERSHIP
Contract of partnership
 What are the elements of a Partnership contract?
o 1. Meeting of the minds to form a partnership
 A partnership is consensual contract
 You cannot add a new person to the partnership
unless everyone consents
 Mere co-ownership does not make a partnership
 o 2. Agreement to contribute to common fund with joint interest
in the profits or losses thereof
 Share of profits must come from the equity position
and not some other role (ex. creditor, employee)
o 3. Consideration: promised contributions
 Partners are debtors to the partnership to the extent
of promised contribution. They pay damages and
interest for failing to do so.
 Industrial partners contribute their service, so they
cannot engage in a business for themselves.
 What are the two essential requisites of any partnership contract?
o 1. Two or more persons bind themselves to contribute money,
property, or industry to a common fund
 N.B. mere co-ownership does not per se constitute a
partnership
o 2. Intention by the partners to divide the profits amongst
themselves
 What is the presumption?
 Receipt of share in net profits is prima facie
evidence that the person is a partner
 What are the cases where this rule does not
apply?
 1. Wages of an employee
 2. Rentals paid to landlord
 3. Annuity of surviving spouse or
representative of deceased partner
 4. Consideration for sale of goodwill or other
property
 Key attributes of Partnership:
o 1. Consensual, but weak juridical personality
 Arises even if the partnership is not registered
 Can be extended beyond term if the partnership is not
liquidated or settled at end of term
 Really merely for convenience of transacting with the
public
o 2. Mutual agency
o 3. Delectus personae
179
 There is special fiduciary relationship between
partners. There is utmost trust. When it is breached,
any partner can dissolve the partnership midstream,
even before stated period.
 In fact, even if there is bad faith, a partner may
dissolve the partnership midstream, but with
damages.
 The moment one partner is gone, the partnership is
dissolved.
o 4. Subject to unlimited liability
 Partners are liable pro rata with their separate
property after all partnership assets have been
exhausted
 Does this include even industrial partners?
 Yes
 Can there be a contractual stipulation denying
unlimited liability?
 No. But it can be valid only as an internal
agreement among partners.
 Characteristics of a partnership contract:
o 1. Nominate and principal
o 2. Consensual
 Failure to register and provide a public instrument is
not fatal to the existence of the partnership
o 3. Onerous and bilateral
o 4. Preparatory and progressive
 Distinguish universal from general partnership:
o Universal – partner contributes all his property
o Particular – determinate things, or specific undertaking, or
exercise of profession or vocation
o Why is the distinction important?
 Those who cannot donate to each other cannot enter
into contract of universal partnership
o Can spouses enter into a partnership?
 No. This would indirectly change their property
relations.
o What is the default rule?
  Particular partnership
o X and Y are partners in real estate projects. X was abroad and
Y stumbled upon a potentially lucrative piece of property. Y
was convincing X to commit to the new venture but X refused.
Y initially temporarily used partnership property to secure the
new property but returned it and used his own property when X
refused. The property earned big profits. X is claiming part of
the earnings. Is X entitled?
 HELD: No. They are not universal partners, and only
particular partners. Without sufficient basis, the law
cannot presume a partnership between X and Y as to
the new property.
 Term of partnership:
o 1. Fixed term or particular undertaking
 But partners may choose to continue after, which will
turn it into a partnership at will
 Even if there is specific duration or purpose, any
partner may choose to dissolve the partnership
 But if there is no cause or there is BF,
damages
o 2. Partnership at will
 Any partner may dissolve it at will, but if there is BF,
damages
 What is the extent of a general partner’s liability?
o 1. Liable pro rata when partnership properties have been
exhausted
o 2. Solidarily liable with the partnership for wrongful acts or
omissions causing injury to third persons when the partner acts
in the ordinary course of business
o 3. Also solidarily liable with the partnership when a partner
acting with apparent authority receives money from a third
person and misappropriates it
o What about a subsequent partner?
 He is not personally responsible for liabilities arising
prior to his joining the partnership
 Distinguish a capitalist partner from an industrial partner:
o Capitalist:
180
 Contributes money or property
 Liable for losses (cannot stipulate otherwise)
 Cannot engage in competing business or venture
o Industrial:
 Contributes services
 Not liable for losses (except when all the partnership
assets have been exhausted)
 Cannot engage in any other business at all
o Terms of a partnership contract provide “Participation: A –
40%, B – 40%, C – 20%. Both A and B provide the entire
capital and C was industrial partner. The partnership went
bankrupt. Can a creditor hold C liable for losses?
 Yes, because third parties are not subject to internal
agreements between the partners as to losses. So
the creditor can hold C liable for 20% since that is his
participation.
 C, in turn, can ask for reimbursement from A and B
because of their agreement that C does not share in
losses.
 What is a partner by estoppel?
o He is not really a partner, but because of his acts, he has led
third parties to believe so. He is liable as a regular partner as
to these creditors.
 Pro rata with other partners who consented to the
representation.
 The partnership itself is only liable as the partnership
per se if all the partners acceded to the representation
 What is the registration requirement?
o 1. If capital contributed is 3K or more, must be in a public
document and registered with SEC
 What is the consequence of failure to register?
 None. It has no adverse legal consequence.
It does not affect partnership liability to third
persons.
 Purpose of registration:
 Prevent tax evasion by large partnerships
  Allow public to determine nature of the
partnership more accurately
o 2. For partnerships where real rights or immovable properties
are contributed there must be a public document, inventory,
and registration with the SEC
 What is the consequence of failing to register this
public document?
 The partnership is void, under express
provision of law. But this cannot prejudice
liability towards third parties.
 N.B. The partners lose the benefit of
excussion. They are solidarily liable, and not
just jointly and subsidiarily liable.
 N.B. But under CLV’s blog discussion, failure
to register really has no adverse effect even
here because third parties cannot be
prejudiced by failure to register, and as
among the partners, there are still
contractually bound (consensual
agreement).
 Priority rules if registered –
 A. Partnership creditors over partnership
properties
 B. Separate creditors over separate
properties
 Can a corporation enter into a partnership? What about a JV?
o Cannot enter into partnership.
o But can become a limited partner because there is no unlimited
liability in this case and it will not participate in the
management of the partnership.
o Can enter into a JV (because there is a particular purpose
only)
 What is the rule on liabilities as regards the firm name?
o If a non partner has his name in the firm name, he is subject to
the liability of a partner.
Rights and powers of the partners
181
 What are the three general rights of the partners?
o 1. Right to participate in management of the partnership
(manager)
o 2. Right over specific property of the partnership (agent of
other partners)
o 3. Interest in the partnership (equity holder)
 What is the management right of the partners?
o Presumption is that there is mutual agency – acts of one can
bind the partnership. But what is stipulated in the partnership
articles is what prevails.
o BUT the doctrine of apparent authority prevails. Third persons
cannot be prejudiced; they are not expected to look up the
articles of partnership, even if registered.
 What is the rule as to acts within the ordinary course of business?
o Representations by partners bind the partnership, if acting
within scope of his authority.
o Wrongful acts in ordinary course of business:
 Solidarily liable with the partnership for wrongful acts
or omissions causing injury to third persons when the
partner acts in the ordinary course of business
 Also solidarily liable with the partnership when a
partner acting with apparent authority receives money
from a third person and misappropriates it
 What are the other acts exhibiting that the partners generally act
as agents for the partnership?
o 1. Admission or representation made by any partnership
concerning partnership affairs within scope of authority:
evidence against the partnership
o 2. Notice to any partner regarding partnership affairs,
knowledge acquired by a partner while a partner, and
knowledge of a partner who reasonably could and should have
communicated it to the acting partner – operate as notice to
the partnership
o 3. See the two rules on solidary liability as re: wrongful acts or
omission in ordinary course of business and misapplication of
property received from third person
 What is the rule as to acts NOT within ordinary course of
business?
o NOT valid unless approved by all the partners.
o Examples:
 Assigning partnership property in trust, mortgaging, or
pledging it
 Disposing of the goodwill of the business
 Confession of judgment
 Entering into compromise as to liability or claim
 Renouncing claims by partnership or submitting it to
arbitration
 What if management is stipulated in favor of one partner?
o He may execute all acts of administration despite opposition by
other parties.
o If stipulated in the articles of partnership, it is irrevocable
except for just or lawful cause. If not stipulated in the articles
of partnership, it is essentially revocable.
 What if management is stipulated in favor of 2 or more partners?
o If there is opposition, majority wins.
o If there is a tie, controlling interest prevails.
 What if it is stipulated that none of the managing partners should
act without consent of the others?
o Follow the rule, then.
o Exception is if there is imminent danger or irreparable injury to
the partnership.
 What is the nature of power of alteration (ownership/control)?
o Cannot be done without consent of all other partners, even if
useful
o But if the refusal is manifestly prejudicial to the partnership,
court intervention may be sought
 What is the rule on sale of real property?
o If the title is in the name of the partnership,
 Conveyance in the name of the partnership, done
with authority – valid
 Conveyance in the name of the partnership, done
by a partner without authority – partnership may
recover it unless the purchaser is in GF and for value
182
 Conveyance in the name of a partner, done with
authority – only equitable interest is passed
 Conveyance in the name of a partner, done
without authority – no effect
o If title is in the name of a partner,
 Conveyance by a partner with authority (whether
in the name of the partnership or own name) –
only equitable interest is passed
 Conveyance by a partner without authority – no
effect
o If title is in the name of some but not all of the partners:
 If the records disclose partnership interests –
partners named in the title can convey title, but the
partnership may recover if they acted without
authority, except for purchaser in GF and for value
 If the records do not disclose partnership
interests – partners named in the title may convey
title over property, but the partnership may recover if
they acted without authority
o If title is in the name of all of the partners:
 Conveyance done by all the partners passes all their
rights over the property
 What is the nature of their co-ownership interests over the
partnership property?
o Partner has equal right to posses the partnership property only
for partnership purposes
 Compare with normal co-ownership: can use the
property as long as non-injurious to other co-owners
o Partner’s right over partnership property is non-assignable
 except in assignment of rights of all partners over the
property
o Partner’s right over the property is not subject to:
 1. Attachment or execution on personal claims, unless
on claim against the partnership
 2. Legal support
 What is the rule on equity rights?
o These can be transferred or assigned. What is passed is the
right of the assignor to receive profits.
 o Does this dissolve the partnership?
 No. The rights are separable.
o Does this give the transferee management rights?
 No. The rights are separable.
 When can separate creditors attach and publicly sell the shares of
a partner on assets?
o It must be during dissolution only, and after satisfaction of
partnership creditors.
 What is the share of the partners in profits and losses?
o It is done according to agreement.
o A. If only shares are mentioned, losses follow the same
proportion
o B. In absence of stipulation, follow proportion of contribution
 But industrial partners do not share in losses
o Can designation of profits and losses be left to one of the
partners?
 No.
o Can it be left up to a third person?
 Yes, but it can be impugned if manifestly inequitable.
 Unless it has been executed or more than 3 months
have passed.
 What are the other rights?
o 1. Right to inspect partnership books at reasonable hour
o 2. Right to demand true and full information of all things
regarding the partnership
o 3. Right to demand accounting
 Partner who receives partnership profits holds it in
trust for everyone
 When can there be demand for formal
accounting?
 1. Excluded from partnership business or
property
 2. Right is stipulated in articles
 3. When it is just/reasonable
o 4. Right to dissolve the partnership
 Can be done whenever
 But there are damages if done in bad faith
183
Duties and obligations of the partners
 1. Obligation to contribute to the common fund
o The partners are debtors to the partnership to the extent of
what was promised.
 MONEY: incurs damages and interest for delay
 PROPERTY:
 Liable for breach of warranty against eviction
 Liable for fruits from date of obligation
 Risk is borne by the partnership if appraised,
up to appraised value, or if fungible and
cannot be used without deteriorating, or
meant to be sold
 REAL PROPERTY: need registration, as stated
above
 SERVICE OR INDUSTRY:
 No specific performance (obviously), so only
damages for failure to perform
o Is there obligation to make additional contributions?
 None, generally.
 What if there is imminent loss or danger to the
firm?
 Still no compulsion to contribute.
 But all those who do not contribute are
obliged to sell their interest to the other
partners, except of course for industrial
partners.
o What if there is default of obligation to contribute – what
are the remedies?
 1. Specific performance with damages
 2. Dissolution of the partnership
 NOT rescission, because you cannot have mutual
restitution (will prejudice business)
o What is unlimited liability?
 When the partnership is insolvent
 It is pro rata and subsidiary
  BUT insolvency does not automatically dissolve the o If the debtor provides otherwise and
partnership. The partners can continue to pursue the the debt to the partner is more
business in hopes of improvement. onerous
 2. Fiduciary duties to partners o D. Separate fiduciary duties of an partner
o A. Duty to account  1. Industrial partner cannot engage in any other
 What is the rule on secret profits/benefits? business, regardless of nature
 Only held in trust for the partnership.  Remedies of other partners:
 Other partners can seek recovery or dissolve o Exclude industrial partner from the
the partnership. firm, with damages
o B. Duty of diligence o Avail of benefits derived by the
 Liable for damages to the partnership through own industrial partner, with damages
fault.  2. Capitalist partner cannot engage in competing
 Can he compensate liability for damages with business
profits/benefits he might have earned for the  Remedies of other partners:
partnership? o Have that partner give all benefits
 No. accrued to the partnership and bear
 BUT he may equitably lessen his liability if all the losses to the partnership
his extraordinary efforts have led to unusual because of the competing business
profits for the partnership.  3. Subsequent partner only liable for obligations of
 When can the acts of a designated managing partnership prior to joining with partnership property
partner be opposed? (not personally)
 If done in BF. o When are non-partners liable?
 And his power may be revoked.  1. Names appear in firm name
o C. Duty of loyalty  2. Estoppel, as to third persons
 Liable to partnership if he took partnership funds or  Bind the partners who consented or acted under the
property and applied them to his own use – with representation as well
interest and damages
Obligations of the partnership
 What if there is a debtor to both the partnership
and a partner?
 1. To the partners
 1. If he pays debt to partner alone – split
o A. For amounts disbursed for and in behalf of the partnership
proportionately between partnership and
 With interest
partner’s credit
o B. For contracts entered into for and in behalf of the
 2. If he pays debt to partnership alone – partnership
apply entirely to the partnership
o C. Keeping of books at principal place of business, accessible
 Exception? at reasonable hour
 2. To third persons
o A. From firm name: for anyone represented as partner therein
184
 o B. Partners are assumed to be mutual agents for the
partnership, and their acts generally bind the partnership
except:
 1. Act is not in ordinary course of business and the
one acting has no authority
 2. The third person knows the partner acting has no
authority
 NOTE: intra-partnership problems cannot prejudice third parties in good
faith, who have expectations that the contract will push through
o Third persons have no duty to know what is stipulated in the
articles of partnership. They can rely on normal right and
authority of the partners to bind the partnership.
Dissolution, winding up, termination
 What is the effect of dissolution?
o It breaks up the vinculum juris between the partners but does
not terminate it until there is full winding up.
o But not all dissolution leads to winding up and termination.
The partners can choose to continue on the business.
 What are the effects of dissolution?
o Extinguishes the right and power of the partners to represent
each other in the partnership as a going concern.
 1. Except winding up and completion of pending
transactions
 2. And except acts that would have bound the
partnership had it not been dissolved, when the third
person is not aware of the dissolution, such fact not
advertised in a newspaper of GC.
 What are the exceptions to these exceptions?
 1. When the partnership purpose was
declared illegal
 2. When the partner acting was insolvent
 3. The partner has no authority to wind up
o But since the partners can choose to continue with the
partnership even after dissolution, and so contracts entered
into by the partnership after dissolution are not void. In a case,
there was no termination and there was no publication to warn
185
third persons: creditors can fully expect transactions to push
through.
 What are the grounds that dissolve the partnership without need
for court decree?
o 1. Dissolution without violation of partnership agreement
o 2. Dissolution with violation of partnership agreement
o 3. Dissolution by force majeure
 Loss of specific thing to be contributed
 Business became unlawful
 Death, insolvency, civil interdiction of any partner
 What dissolves the partnership with need for court decree?
o [loss of capacity]
o 1. Partner became insane in judicial proceeding
o 2. Partner became incapacitated in performing his part in the
contract
o [wrongful acts]
o 3. Partner guilty of conduct prejudicial to the business
o 4. Partner willfully and persistently breached the partnership
contract
o [equity]
o 5. Partnership business can only be carried out with a loss
o 6. Other equitable grounds
 What is the effect of dissolution not in violation of partnership
agreement?
o No damages. Any of the partners can participate in the
winding up.
o Except, of course, when a partner is expelled in good faith.
The one expelled is disqualified.
o The remaining partners have no choice but to wind-up, if the
withdrawing partner insists.
 They cannot force continuation of the business,
unless they agree to settle the equity interests of the
withdrawing partner.
 What is the effect of dissolution in violation of partnership
agreement?
o The partners seeking dissolution are liable for damages. They
cannot participate in continuation of the business.
 o Right of the partners who did not dissolve the
partnership?
 If the business is discontinued, right to share in net
assets + damages from erring partners.
 May decide to continue the business. They may
possess the partnership property by either paying a
bond in court or paying the erring partner the value of
his interest in the partnership.
o Right of the partners who dissolved the partnership?
 If the business is discontinued, right to share in net
assets, less damages.
 If the business is continued:
 Released from liabilities
 Have value of his interest in the partnership
secured by a bond in court or paid in cash,
less damages.
 What is the right of the partner with lawful/just cause to ask for the
judicial dissolution of the partnership due to
fraud/misrepresentation by other partners (see enumeration
above)?
o He has a lien on:
 1. Surplus of partnership property after satisfying
liabilities to third persons
 2. Any sum of money paid to purchase interest in the
partnership
 3. Any capital or advances contributed by him
o He can stand in the creditor’s place for payments made by him
for partnership liabilities
o He should be indemnified by the guilty party
 What are the priority rules in winding up of partnership?
o 1. To non-partner creditors
o 2. To partners, other than capital or profits
o 3. To partners, for capital
o 4. To partners, for profits
 When a partner dissolves the partnership, can he demand for the
return of his shares, contributions, etc.?
186
o No. Go through dissolution. This way, the partnership
creditors are given priority.
Limited partnership
 What are the requirements to form a limited partnership?
o 1. Execute a certificate of limited partnership
 Provide who are general, and who are limited
partners
 Provide their contributions and when these are
returned.
 Limited partners cannot be industrial partners.
o 2. File certificate with the SEC
 N.B. Regardless of compliance, who are limited and
who are general partners are binding inter se.
 What is the rule on false statements in the
certificate?
 Those who knew of the falsity are liable to
third persons prejudiced. (So if the third
person was not prejudiced by the falsity, no
liability.)
o 3. Name of the partnership must have “LTD.”
o When can there be cancellation of the certificate?
 Dissolution of the partnership
 Or all limited partners cease to be such
o How can a certificate be amended?
 Signed and sworn by all members
 What are the powers of general partners?
o Same as in a normal non-limited partnership.
o But the following acts need consent of limited partners:
 [prejudice to the partnership]
 1. Any act in contravention of the certificate
 2. Act that would make the business impossible to
carry on
 3. Confession of judgment against the partnership
 4. Use of partnership property other than for
partnership purpose
 [expansion of participants]
  5. Admitting another person as GP
 6. Admitting another person as LP
o What is the relationship of general and limited partners?
 Not mutual agency, but business trust.
 The limited partners thus can engage in other
businesses.
 What are the rights and obligations of limited partners?
o [as to contribution]
o 1. Limited liability – only to extent of contribution
 What if they interfere with management?
 A. They become general partners as to third
persons
 B. But not as to co-partners, who must
respect the contractual agreement inter se
o 2. Return of contribution
 What are prerequisites to return of contribution?
 1. All partnership liabilities to third persons
paid
o If there is premature return of
contributions, these are liable for
the obligations to third persons
 2. Consent of all members obtained
o Except when there can be legal
demand for return of contribution
(see below)
 3. Certificate cancelled or amended to allow
for withdrawal or reduction of members
 When can there be legal demand for return of
contribution?
 1. Dissolution of partnership
 2. Date for return had arrived
 3. After six months notice for return of
contributions (if no return date stated)
 What is returned to him?
 Cash, regardless of what he contributed.
 Unless, of course, there is agreement
otherwise.
187
o [as to income]
o 3. Receive share by way of income
 After liabilities to creditors have been settled
o 4. To assign equity interest
 Only gets profits, but does not become limited partner
unless there is consent and amendment of certificate
o [fringe acts]
o 5. To inspect books
o 6. To demand accounting
o 7. To loan money and transact other business, but should not:
 Receive partnership property as collateral
 Receive payment if there are not enough partnership
assets to discharge other obligations
o [to dissolve]
o 8. To dissolve the partnership
 ONLY when he demands rightfully for his
contributions but he did not get them or
 partnership does not have enough properties to return
his contributions whence it also it has not paid
liabilities
 Can limited partners be compelled to contribute to assets of
partnership in case there is imminent loss?
o No, unless if provided in the contract.
o BUT the usual provision that there is forced sale of partnership
interest to other partners for failure to contribute does not apply
to LPs.
 Does death of a limited partner dissolve the partnership?
o No. Only a general partner’s death (of course, the others can
choose to continue)
o The limited partner’s estate can simply settle liabilities and
claims of the limited partner.
 What is the order of payment of liabilities?
o 1. To third party creditors
o 2. To LPs, for profits
o 3. To LPs, for capital contribution
o 4. To GPs, other than capital or profits
o 5. To GPs, for profits
o 6. To GPs, for capital (N.B. 5 and 6 deviate from usual rule)
AGENCY o 1. Agent is stranger to the contract between the principal and
third party – no rights, obligations, or legal standing
 Define agency: o 2. Liabilities pertain to the principal
o Agency is where a person binds himself to render service or to o 3. All the acts the principal can do in person, he may do
do something in representation of another, with the latter’s through an agent except those strictly personal
consent or authority o 4. Agent not liable to a contract, except:
 A. if he binds himself to the contract expressly
 Elements of contract of agency?
 B. if he exceeds limits of powers without giving the
o 1. Consent of the principal and agent to form an agency other party sufficient notice of his powers
relationship – representative relationship
o 5. Knowledge of agent is knowledge of principal, except:
o 2. Object is execution of a juridical act in relation to third
 A. where agent’s interests are adverse to the principal
parties
 B. agent’s duty is not to disclose the information
o 3. The agent acts as a representative and not for himself
 C. person claiming benefit of the rule colludes with the
o 4. Agent acts within scope of his authority
agent to defraud the principal
o 5. Consideration: either commission or liberality
 Differentiate from a broker:
 Characteristics of agency contract?
o A broker is just a middleman between two parties, and he does
o 1. Nominate, principal
not represent either and cannot bind either to the transaction.
o 2. Consensual
o Not prohibited from purchasing property of the primary party,
o 3. Unilateral and generally onerous
unlike an agent.
o 4. Preparatory and representative
 What is the form needed for a contract of agency?
o 5. Fiduciary and revocable
o None in particular; it’s a consensual contract
 Neither the principal or agent can be forced to remain
o But sometimes a written SPA is needed.
in the relationship when they choose to have it
 Differentiate an express from an implied agency:
terminated
o Express agency – there is actual acceptance
 Consequences:
o Implied agency – implied from:
 A. Agent is estopped from asserting adverse
 1. Acts of principal
title over subject matter of agency belonging
 2. Silence or lack of action
to the principal
 3. His failure to repudiate the agency, knowing that a
 B. Must choose best course of action for the
person is acting on his behalf without authority
principal, and not one that favors himself to
 4. Principal delivers power of attorney to the agent
the detriment of the principal
and he accepts it without objection – if both are in the
 C. Cannot acquire for himself property of the
same place, physically present
principal entrusted for disposition  N.B. But if not physically present in the same place,
o Unless the principal consents
as when the power is delivered through mail, silence
o Or if the agent purchases after
is not implied acceptance
agency is terminated  Exceptions to this?
 Doctrines flowing from preparatory and representative character of
agency:
188
  1. Principal transmits power of attorney to
the agent who receives it without objection
 2. Principal entrusts to the agent by letter or
telegram a power of attorney with respect to
the business in which the latter is habitually
engaged in, and he did not reply
 How can the agent be duly authorized as to particular third
persons?
o A. If the principal informs another person that he has given
power of attorney to an agent, the latter becomes a duly
authorized agent as to that third person
o B. If the principal states by public advertisement the
constitution of agency, the agent is duly authorized as to any
person
o How long does this power last?
 Until notice is rescinded in the same manner in which
it was given
 What is agency by estoppel?
o Even when the agent has exceeded his powers, the principal
should be made liable if he allowed the agent to act as though
he had full powers.
o Elements:
 1. Principal manifested a representation of the agent’s
authority
 2. Third person in GF relied on the representation
 3. Third person changed his position, to his detriment,
relying on the representation
 Differentiate a general from special agency?
o General agency is one that encompasses all of the business of
the principal. (Universal agency)
o Special agency is to cover only one or more specific
transactions. (Particular agency)
 What is the general obligation of the agent who accepts the
agency?
o Legally bound to carry out the terms of the agency
o Breach: principal can sue for damages, but not compel specific
performance because it doesn’t apply to obligations to do
189
 The general rule is that death of the principal terminates the
agency. What is the narrow exception?
o The agent must finish business already began prior to the
principal’s death, should delay entail any danger
o What is the measure of damages?
 Based on the prejudice the principal suffered due to
non-performance of the act required
 What is the obligation of an agent who declines the agency?
o Bound to observe diligence of GFF in the custody of the goods
until the owner appoints an agent or takes charge of the goods
 Is the agent liable for contracts he enters?
o Generally, no.
o UNLESS:
 1. He exceeds authority
 2. He binds himself to the contract personally
o What if the agent exceeds his powers?
 1. The principal may ratify.
 Can the third party still invoke the agent
exceeding his authority?
o No, because the principal has
ratified the act already.
 2. If the principal does not ratify, the contract is
unenforceable as against principal. But if the third
party did not know the extent of the agent’s powers,
the contract is binding between the agent and third
party.
 3. But if the third person was aware that the agent
exceeded his powers, the contract is unenforceable
even between the agent and the third person.
o What if the agent acts within the scope of his authority as
written but contrary to a personal understanding between
him and the principal?
 The act will bind the principal as to a third party who
relies on the power of the agent as written.
 Private or secret orders will not prejudice a third party
relying on written powers of agent.
 o What if the agent acts in a manner more advantageous to
the principal?
 He is deemed to have acted within the scope of his
authority.
 What is the obligation of one dealing with an agent?
o Must discover, upon his peril, not only the fact of agency but
also the nature and extent of the authority of the agent
 When is the third party directly liable to the agent himself?
o 1. Agent contracts in own name on matter within scope of
agency
o 2. Agent possesses a beneficial interest in the subject matter
of agency (ex. selling under a del credere commission)
o 3. Third party commits tort against the agent
 What is the duty of diligence of the agent?
o Cannot carry out an agency if its execution will manifestly
result in loss or damage to the principal.
o N.B. the word is “manifestly” because the agent does not
guarantee against small loses in the exercise of business
judgment
o What if the agent breaches this duty?
 Liable for damages to the principal
 If an agent is empowered to sell his principal’s property, may he
purchase it for himself?
o No, he cannot. This is provided in Art. 1491. Of course, the
principal may ratify the sale.
 If an agent is empowered to borrow or lend money, may he
transact with himself?
o 1. If empowered to borrow, he may be the lender at the current
interest
 Else, liable for return difference
o 2. If empowered to lend, he may not borrow without the
principal’s consent
 Else, liable for damages
 What if the agent acts in his own name?
o The principal has no right of action against the third persons,
neither do the third persons have right of action against the
principal.
190
o Exceptions to this rule?
 1. When the transaction involves the things of the
principal. In this case, the principal is bound.
 2. When the principal ratifies the contract or derives
benefit from it.
o What is the remedy of the principal?
 The principal can file action as against the agent for
damages.
o What if the agent enters into a contract in his own name
on a matter that falls within the scope of the agency?
 He is bound to render an account of his transactions
and deliver to the principal what he received by virtue
of the agency even if it may not be owing to the
principal
 This is based on the duty of loyalty and Art. 1891
o What if the agent uses the principal’s own funds?
 The agent owes interest from the day he borrowed
the money
 This presumes the transaction was not one in breach
of the duty of loyalty (scope of agency) or else, the
effect is not payment of interest on the “loan” but an
accounting and turn-over in favor of the principal
 What is the rule as bonuses or profits derived by the agent through
the agency, but not owing to the principal?
o He must account it to the principal. Every agent is bound to
deliver to the principal what he may have received by virtue of
the agency, even though it may not be owing to the principal
(ex. excess price). Any agreement or stipulation to the
contrary is void.
o An agent who derives secret benefit from the contract of
agency is liable to the principal for breach of duty of loyalty,
and will forfeit his commissions.
o When does the duty to account not apply?
 The agent may retain in pledge the things which are
the object of the agency until the principal reimburses
and pays indemnity in 1912 (agent advancing costs of
agency) and 1913 (damage caused to agent through
no fault of his)
 When can the agent appoint a sub-agent?
o If the principal did not prohibit him from doing so.
o What is the main effect?
 Sub-agent is agent of principal too
o When is the agent responsible for the acts of the sub-
agent?
 1. When he was not given power to appoint one
 2. When he was allowed, but the one chosen was
notoriously incompetent/insolvent
o What if the principal expressly prohibited appointment of a
subagent?
 1. All acts of sub-agent are void as to the principal
 2. The agent is responsible personally for the
contracts entered into by the sub-agent
 What is the scope of the powers of an agent in general?
o General powers: Only acts of administration
o Even if the principal provides that the agency may do whatever
he deems appropriate, or even if the agency authorizes
general and unlimited management
 What needs a SPA?
o N.B. these are acts of strict dominion
o 1. Making payments not considered as acts of administration
o 2. Effect novation of obligations
o 3. Compromise, submit to arbitration, renounce right to appeal,
waive objections, renounce prescription
o 4. Waive obligations gratuitously
o 5. Transfer of immovable (whether onerous or gratuitous)
o 6. Make non-customary gifts
o 7. Loan or borrow money
 Unless urgently needed to preserve a thing under
administration
o 8. Lease for more than 1 year
o 9. Contract for principal to perform service without
compensation
o 10. Bind principal in partnership contract
o 11. Obligate principal as guarantor or surety
o 12. Convey or create rights over real property
o 13. Accept or repudiate inheritance
191
o 14. Ratify or recognize obligations contracted before agency
o 15. Other acts of strict dominion
o Must a SPA be in writing?
 Technically no, but if it’s not the contract is virtually
unenforceable. The principal may however pursue
the resulting contract, while the third-party is estopped
from refusing to comply with a contract he willingly
entered into absent written authority of the agent.
 Except sale of piece of land (see below)
 For the power of an agent to sell a piece of land, what is required?
o It must be in writing, or else it is void.
o What does this provision really mean in light of Ocfemia?
 It’s void to the extent that a third person cannot
enforce the obligation against a principal if the
authority of the agent is not placed in writing.
 But if the principal wants the sale to push through,
then it can push through. So it’s an odd “void”
contract because it’s subject to ratification.
o Does special authority to sell property include authority to
mortgage it?
 No, by express provision of Art. 1879.
 What are the obligations of a commission agent?
o 1. Take custody of goods
o 2. Not to commingle similar goods belonging to different
principals
o 3. Cannot sell on credit without principal’s authorization
 If pre-authorized to sell on credit, inform principal with
the names of buyers – or else, deemed sold on cash
basis
o 4. Bear risks of collection of proceeds of the transaction under
del credere commission set-up
o 5. Collect credits for principal
 Else, liable for damages
o 6. Take responsibility for fraud and negligence
 What are the rights and obligations of the principal?
o 1. The principal is NOT bound by contracts entered into by the
agent without or outside scope of authority, EXCEPT:
 1. If he ratified it expressly or tacitly
  2. Principal allowed agent to act as if he had full
authority
 3. Principal revoked agency but the third party acted
in GF without such notice of revocation
o 2. Principal is liable for torts committed by the agent within
scope of authority
o 3. Principal must advance sums necessary for the agency if
the agent requests. If the agent paid for it first, the principal
must reimburse
o 4. Principal NOT liable for expenses of agent if:
 A. Outside scope of authority
 B. Incurred due to agent’s fault
 C. Agent incurred them with knowledge of
unfavorable result, if the principal was not aware
thereof
 D. Express stipulation
o 5. Must indemnify agent for damages sustained without agent’s
fault
o 6. Pay agent for his services
o 7. If two or more principals constituted the same agent for a
common undertaking, they are solidarily liable
 As opposed to constituting two agents by the same
persons, the usual rule is joint liability, not solidary
liability as between the agents
 What is the power given to the agent if the principal has not
reimbursed or indemnified the former?
o He may return things which are the subject of agency in pledge
 A constituted B as an agent to sell a piece of property for 30K, and
B will get 5% commission. B found a buyer, C, but A said that he
is no longer interested in selling and terminated B’s authority.
Thereafter, A sold the land to C. Can B ask for commission?
o Yes, A acted in bad faith, so B is entitled to his commission.
The termination of B’s contract of agency is clearly to evade
paying commission.
o CONTRAST this to another case where the agent found a
buyer, but the buyer was willing to pay only P9/SQM whereas
the agency was for him to sell the property for P10/SQM. The
agent’s authority was terminated, but when he asked for an
192
extension, he was given it. Three months after, the seller sold
the land to the same buyer the agent found. There was no
badge of bad faith here.
 What is an irrevocable agency?
o An agency cannot be revoked if:
 1. A bilateral contract depends upon it
 2. It is the means of fulfilling an obligation already
contracted
 3. A partner is appointed managing partner and there
is no just cause
o What are examples of agency coupled with an interest?
 X sold Y a parcel of land and to help Y pay for the
purchase price, constituted Y as an agent to
subdivide and sell the parcels of land. X cannot
revoke the agency at will.
 X sold Y a vessel on the condition that for the first five
years, Y would appoint X the agent of the vessel. Y
cannot revoke the agency at will.
o Otherwise, when can an agent withdraw?
 He just gives due notice to the principal.
 If the principal suffers damage due to the withdrawal,
the agent must indemnify the principal, unless the
agent’s basis for withdrawing is impossibility to
continue performance of obligation without grave
detriment to himself.
 What happens in the meantime?
 The agent continues to act as such for the
meantime until the principal is able to
constitute a new agency. EVEN IF the
reason for withdrawing is valid.
o When will an agency persist even after death of the
principal?
 1. Constituted for common interest of principal and
agent (agency with an interest)
 2. There is stipulation pour autrui which a third person
accepted
 3. When the agent did not know the death of the
principal and the third party was acting in GF
 When is agency extinguished?  If the third party was also in GF, then
o 1. Revocation contract is valid
 Even if it is constituted as irrevocable for a definite  If the third party was in BF, void for lack of
term or period – the principal just pays damages to consent, an essential element
agent for damages caused if any o 4. Dissolution of juridical entity which entrusted or accepted the
 There can be implied revocation such as appointing a agency
new agent for the same business, or if the principal o 5. Accomplishment of purpose or object of agency
directly manages the business o 6. Expiration of period of agency
 Or by granting a SPA as regard the same business to  What is the obligation of the agent even after the agency was
another agent, where he previously granted a GPA to terminated?
one agent. o Keep confidential matters learned during course of agency, if
 Principal must give notice: confidential
 To particular third parties
 Or the world, through publication
 N.B. a third party with no notice of COMPROMISE
revocation, acting in GF, can still pursue the
contract entered with an agent  What is a compromise?
 When is an agency irrevocable? o It is a contract where parties make reciprocal concessions to
 1. Coupled with an interest (“a bilateral put an end to litigation or avoid it altogether.
contract depends upon it”)  What matters cannot be compromised?
 2. Means of fulfilling an obligation already o 1. Civil status of persons
contracted o 2. Validity of marriage or legal separation
 3. Partner is appointed manager of a o 3. Ground for legal separation
partnership and removal from management o 4. Future support
is unjustifiable o 5. Jurisdiction of courts
o 2. Withdrawal of agent o 6. Future legitime
o 3. Death, civil interdiction, insanity, or insolvency of principal or  What is the effect of compromise?
agent o It has the effect of res judicata between the parties.
 When does agency remain in full force o If the one party does not want to comply with the compromise,
notwithstanding death of the principal? the other party may:
 A. Constituted in common interest of the  Enforce the compromise
principal and agent  OR rescind the compromise and insist on his original
 B. There is stipulation pour autrui which has demand
been accepted
 What is the effect of transactions entered into by
the agent after death of the principal without LEASE
knowing the principal is dead?

193
 What is lease?
o Lease is a consensual, bilateral, onerous, and commutative
contract where one person binds himself to grant temporary
use of a thing or render some service to another, who pays
compensation.
 Define lease of services and lease of things:
o Lease of things – one party binds himself to give to another the
enjoyment or use of a thing for a price certain, whether for a
definite or indefinite period
 What is the ceiling for the period?
 Ninety-nine years
o Lease of service – one party binds himself to execute a piece
of work or render some service for a price certain
 Without an agency relationship
 Distinguish the two kinds of lease:
o In things, the object is a thing, and in services the object is
some service
o In things, the principal obligation of the lessor is to deliver the
thing leased to the lessee, and in series the principal obligation
is to perform some service
o In things, specific performance is a remedy, in service, only
damages
 Is a boundary-based contract between the owner of a jeep and the
driver a lease?
o No. The driver does not spend anything to acquire the jeep.
The boundary and gas obligation which must be covered by
the driver and the keeping of excess earnings is just a system
of compensation. Instead, there is an employer-employee
relationship.
Lease of rural and urban lands
 May the lessee assign the lease to a third person without the
lessor’s consent?
o No. The lessee may not assign the lease without the lessor’s
consent.
 May the lessee sublease the property to a third person without the
lessor’s consent?
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o Yes. The lessee may sublease the property even without the
lessor’s consent. But the lessee must still comply with his
responsibility to perform the contract toward the lessor.
 May the lessor hold the sublessee for rent due from the lessee?
o Yes, there can be an accion directa. But the sublessee cannot
be held liable beyond the amount due from him under the
sublease.
 What is the nature of the sublease agreement?
o It must comply with the lease agreement as to the manner of
use and preservation of the thing.
o And so, if the lease agreement provides that the property must
only be residential, the sublease cannot be for the use of the
property as a commercial area.
 Is a lessor responsible for hidden defects in the property that is
leased to a lessee?
o Yes. The warranties applicable to sale also apply to lease,
even if the lessor was not aware of such defects.
 What are the obligations of the lessor?
o 1. Deliver the thing, which must be fit for the use intended
o 2. To make necessary repairs on the thing to keep it fit for such
use
 Unless provided otherwise
o 3. Maintain the lessee in peaceful and adequate enjoyment of
the lease during the contract
 What are the obligations of the lessee?
o 1. Pay the price of lease
o 2. Use the thing leased with diligence of GFF, devoting it to
use stipulated (or according to nature of the thing if none is
stipulated)
o 3. Pay expenses for deed of lease
 What is the remedy for breach by either party?
o 1. Rescission with damages
o 2. Damages alone
 What if the thing leased is lost fortuitously?
o The lease is terminated.
o If the thing is reconstructed, there is no automatic renewal of
the lease contract, if there is no BF involved.
 What is tacit renewal of a contract of lease (tacita reconduccion)?
o A new contract of lease is impliedly created or established if at
the end of the lease contract, the lessee continues enjoying the
lease for 15 days, with acquiescence of the lessor – and no
notice to contrary provided by lessor.
o Period of the new lease is according to provisions of law:
 A. for rural lands, duration is what is necessary to
gather fruits it may yield for a year
 B. for urban lands, duration is depending on rent paid
(yearly if monthly rent; monthly if weekly rent, etc.)
 But if lessee has stayed more than 1 year,
the courts may fix a longer term than the
usual monthly rent
 If lessee has stayed more than 6 months, the
courts may fix a longer term than the usual
weekly rent
 If lessee has stayed more than 1 month, the
courts may fix a longer term than the usual
daily rent
o But all other terms of the contract are the same.
o Of course, if there is an option to purchase the leased property
within the original lease period, and it expires, and only tacitly
extended, the option to purchase is not renewed (it is a
separate contract, and is not a mere clause/term).
 What are the grounds to eject a lessee judicially?
o 1. Period has expired
o 2. Lack of payment of price
o 3. Violation of conditions of contract
o 4. Lessee devotes the thing leased to use other than what was
stipulated or its nature
 What are the different instances where the purchaser of the thing
leased cannot terminate the lease?
o 1. When the lease is recorded in the ROP
o 2. There is a stipulation in the contract of sale that the
purchaser will respect the lease
o 3. The purchaser actually knows of the existence of the lessee
o 4. The sale is fictitious
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o 5. The sale is pacto de retro
 What is the rule as to improvements introduced by the lessee on
the property, upon termination of the lease?
o For useful improvements –
 PREMISE: these are suitable to the purpose of the
lease and did not alter the form/substance of the
property
 The lessor must pay the lessee ½ of the value of
improvement
 What if the lessor refuses?
 The lessee can remove the thing, even if it
causes damage
o For ornamental improvements –
 Lessee not entitled to reimbursement
 But the lessee may remove it if it doesn’t cause any
damage
 But the lessor may choose to pay the value of the
thing, which terminates the lessee’s right to remove
the improvement
o Do the rules for builders in GF under property law apply to
lessees?
 No, lessees are not builders or possessors in GF
because they know their right and occupancy of the
land is based on the contract of lease.
 If the period of the lease is not fixed, what is the period?
o A. for rural lands, duration is what is necessary to gather fruits
it may yield for a year
o B. for urban lands, duration is depending on rent paid (yearly if
monthly rent; monthly if weekly rent, etc.)
 But if lessee has stayed more than 1 year, the courts
may fix a longer term than the usual monthly rent
 If lessee has stayed more than 6 months, the courts
may fix a longer term than the usual weekly rent
 If lessee has stayed more than 1 month, the courts
may fix a longer term than the usual daily rent
Contract for piece of work
 What is a contract for piece of work?
o One where the contractor binds himself to execute a piece of
work for the employer, in consideration of a certain price or
compensation.
o The contractor may either employ only his skill/labor, or furnish
the material himself.
 What is the rule on loss if the contractor bound himself to
purchase the material?
o If the loss occurs before the delivery, the contractor bears the
loss
o EXCEPT: if there is delay in receiving it (mora accipiendi)
TORTS
Principles of torts and classification
 Define quasi-delicts:
o Fault or negligence of a person, who by his act or omission,
connected or unconnected with but independent from any
contractual relation, causes damage to another person
o Whether punishable or not punishable by law
o Whether criminal in character or not
 Classify torts:
o Whether intentional, voluntary, or negligent
o Key element: it must cause damage to another
 Can an act that breaks a contract also be a tort?
o Yes.
 What is the rule prohibiting double recovery?
o The injured party cannot recover damages twice.
o Ex. in negligence cases, the aggrieved party can either enforce
civil liability under culpa criminal (Art. 100 of RPC) or file a
separate action for quasi-delict (Art. 2176 of NCC). When he
has recovered from one action, the injured party is barred from
the other remedy because he cannot recover damages twice
for the same act.
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 Differentiate between double recovery and double remedy?
o Double recovery is not allowed; double remedies are allowed.
o An aggrieved party may resort to both remedies
simultaneously or successively, but may only recover the
bigger amount. So if he successively files the cases, he can
only recover from the 2nd if the amount adjudged is larger and
only to the extent of the excess.
 What are the elements in an action based on quasi-delict?
o 1. Fault or negligence of the defendant
o 2. Damage suffered by the plaintiff
o 3. The relation of cause and effect between the
fault/negligence of the defendant and the damage incurred by
plaintiff
 Recall: that for a collision of cars, the passenger has remedies:
o 1. Culpa contractual against employer  car wherein he is
riding, because there is a contract of transportation
 Defense of ER is extraordinary diligence
o 2. Culpa aquliana against either driver and their companies
(joint tortfeasors)
 Defense of ER is diligence of GFF is selection and
supervision
o 3. Culpa criminal against either driver, with the employers
liable subsidiarily if the drivers are insolvent
 Defense of ER is solvency of the EE
The tortfeasor
 Who are possible tortfeasors?
o 1. Direct tortfeasor
o 2. Persons made responsible for others
 Who are the persons who can be made responsible for others?
o 1. Parents, as re: damage caused by minor children who live in
their company
 What is the definition of “Minor” here?
 Still 21, and not 18, because RA 6809 has
excepted marriage and torts from the
complete emancipation of one who has
reached 18 years old.
 o 2. Guardians, as re: damage caused by minors or
incapacitated persons under their authority and living in their
company
o 3. Owners and managers of establishment/enterprise, as re:
damage caused by employees on occasion of their functions
o 4. Employers, as re: damage caused by employees and
household helpers acting within scope of duties
 Even if the employer is not engaged in
business/industry
 N.B. this thus covers responsibility of the registered
owner of a vehicle for acts of his driver
o 5. State, when it acts through a special agent
 But not when the damage is caused by the official to
whom the task done properly pertains. In this case,
the official alone is responsible.
 What is a “special agent”?
 A government employee who is performing a
job foreign to his usual duties
o 6. Teachers or heads of establishments of arts and trade, as
re: damage caused by students or apprentices when they are
in the former’s custody
 Differentiate claim for employer’s liability under Art. 2180 of the
NCc and Art. 103 of the RPC.
o Under the NCC, in quasi-delicts:
 Only requires preponderance of evidence
 Employer’s liability is direct and primary
 Defense available: due diligence in the selection and
supervision of the employee
 The employee need not be insolvent, because the
employee and employer are both primarily liable
(joint tortfeasors)
o Under the RPC, in civil liability for crimes:
 Employer’s liability is subsidiary; so the employee has
to be found insolvent
 The felony committed by the employee must be in the
discharge of his duty
 Requisites for subsidiary civil liability of
employer?
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 1. ER-EE relationship
 2. ER is engaged in some industry
 3. EE committed criminal act in the
discharge of his duties (not necessarily
*while* in the discharge of duties)
 4. EE is insolvent
 What if the felony was committed by a minor?
 Then it is an exception to the general rule,
because under Art. 101 of the RPC, the
liability of parents for felonies of minor
children is also primary, and not subsidiary
 Does the ER need to be impleaded?
 No. Enforcing liability subsidiarily is just an
enforcement issue. Therefore, neither can
there be modification or relitigation. The
enforcement motion, however may be
conveniently litigated within the same
proceeding at that which held the EE liable.
 Is a hospital liable for the negligence of an independent contractor
physician?
o Generally, hospitals are not liable under the Schloendorff
doctrine, which deems physicians as professionals and
independent contractors whose performance of duties are
beyond the control of the hospital.
o Exceptions to this rule?
 1. Apparent authority
 If the hospitals’ actions as principal misleads
the public into believing that the relationship
or authority exists
 2. Corporate negligence
 If the hospitals fail to give reasonable effort
in monitoring or overseeing the treatment
prescribed and administered by the
physicians practicing in their premises
 What is the presumption when an injury is caused by the
negligence of an employee?
 o There s a presumption that the employer is also negligent and
is thus solidarily liable
o Rebuttable by showing exercise of diligence of GFF in
selection and supervision of the employee
 X sold his car to Y and Y failed to register it. Y ended up being
responsible for a car accident due to negligence. Since the
registration was still under X’s name, can X be sued?
o Yes, the suit can prosper against the registered owner, but it is
the actual owner who is ultimately liable. The purpose of car
registration is to reduce the difficulty in identifying the party
liable in accidents.
 What is the rule if the owner of the vehicle is inside the vehicle
with his driver when the accident happened?
o Art. 2154: if the owner was in the vehicle and could have,
through due diligence, prevented the misfortune, then he is
solidarily liable with the driver
o Thus, his defense is different from the employer who is not in
the car, who can use diligence of GFF in selection and
supervision of employees.
o What is the difference in liability?
 If the owner is in the car, he can demand
reimbursement of ½ of the amount from his driver
after paying
 If the owner was not in the car, he can demand
reimbursement of the whole amount from his driver
after paying
o When is a driver presumed negligent?
 1. Guilty of reckless driving at least twice in the
preceding two months
 2. Violation of traffic regulations at least twice in the
preceding two months
 3. Violating a traffic regulation during the mishap
 What is the liability of joint tortfeasors (Art. 2194)?
o If two or more persons are liable for a quasi-delict, their
responsibility is solidary.
o The responsibility is solidary so long as the accident causing
the injury was due to the concurrent acts of two or more
persons: whether quasi-delict, intentional tort, strict liability (or
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arising from criminal offenses or even if there is an underlying
contract).
 When can the State be a tortfeasor?
o 1. Performance of proprietary functions
o 2. State enters into contract with private person
o 3. Imputed liability under Art. 2180 for acts of special agents
Proximate cause
 What is proximate cause?
o That cause which, in natural and continuous sequence,
unbroken by any efficient intervening cause, produces the
injury and without which the result would not have occurred
o Remote cause:
 One that is removed or separate from the proximate
cause of the injury
o Immediate cause:
 Final act in the series of causes leading to a particular
result or event, directly producing the result
 (Stricter that proximate cause – in torts, only
proximate cause is needed)
 What is contributory negligence?
o If the negligence of the plaintiff cooperated with the negligence
of the defendant in bringing about the injury, such negligence
of the plaintiff would be an absolute bar to recovery.
o If the negligence of the plaintiff was merely contributory, the
immediate and proximate cause to the injury still being the
defendant’s acts, then the amount recoverable by the plaintiff
is mitigated by the courts.
 What is imputed negligence?
o The negligence of a certain person in a transaction or act
which gave rise to the injury complained of is imputable or
chargeable against the person for whom he was acting or
against his associates.
 What is last clear chance (or “discovered peril” or “humanitarian
doctrine”)?
o Where both parties are negligent in such a way that it would be
impossible to determine whose negligence was the proximate
 cause, then the party with the last clear opportunity to avoid
the accident through proper care and failed to do so is the
party solely responsible for the injury.
o Elements of last clear chance?
 1. Prior negligence of the plaintiff
 2. Defendant knew the plaintiff’s negligence
 3. Defendant had last clear chance to avoid the peril
but failed to do so
 4. Accident occurs due to the negligence of the
defendant
Intentional torts
 What are the elements of abuse of right?
o 1. Legal right or duty
o 2. Exercised in bad faith
o 3. For the sole intent of injuring or prejudicing another
o Ex. creditors already discussed pari passu division of claims
against insolvent person, then one creditor assigned his claim
to a third person so the latter can recover in full
 What are the elements of acts contrary to law?
o 1. Act is willful or negligent
o 2. It is contrary to law
o 3. Damages suffered by the injured party
o When does this apply?
 When there is no specific law providing for indemnity
for the violation of such and damage is caused
 What are the elements of acts contrary to morals?
o 1. Legal act
o 2. Contrary to morals, good customs, public order, or public
policy
o 3. Done with intent to injure
 What the elements of unjust enrichment?
o 1. No just or legal ground for defendant’s enrichment
o 2. Enrichment on the part of the defendant
o 3. Enrichment is at the expense of the plaintiff
o 4. Damage or loss suffered by the plaintiff
o When does this claim apply?
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 When there is no other remedy in contract, quasi-
contract, crime, or quasi-delict.
 And so if there is failure to pay for services, but there
is a contract, file under the contract and not unjust
enrichment.
 What is thoughtless extravagance?
o If done during period of acute public want or emergency
o May be stopped by the courts at the instance of government or
a private charitable institution
 What is meddling with social relations?
o 1. Prying into another’s residence
o 2. Meddling or disturbing the private life or family relations of
another
o 3. Intriguing to cause another to be alienated from his friends
o 4. Vexing or humiliating another on account of beliefs, lowly
station in life, place of birth, physical defect, or other personal
condition
 What are the elements of dereliction of duty?
o 1. Public servent defendant exercises ministerial duty
o 2. Neglect or refusal to perform a duty owing the plaintiff
o 3. Damage to plaintiff
o Note: it must be done with bad faith. This does not apply
when the officer thought in GF that the plaintiff is not entitled to
some relief or service.
 What is unfair competition as a tort?
o It must be through the use of force, intimidation, deceit,
machinations, or other unjust, oppressive, or highhanded
method
o Applies to agricultural, industrial, and commercial enterprises
 What is violation of civil/political rights as a tort?
o When public officers or employees or a private individual
directly or indirectly obstructs, violates, or impedes/impairs the
plaintiff’s constitutional rights and liberties
 This is an independent civil action.
 Can have exemplary or moral damages.
o What is the required evidence?
 Preponderance of evidence.
 o Is good faith a defense?
 No.
o Differentiate this from the Bill of Rights:
 Under the Bill of Rights, the act complained of must
be committed by public officers. Under the NCC, it
can be by public officers or private individuals.
 Under the NCC, there can be indirect or direct
violations.
o What kind of duty is contemplated here?
 Duty that is owed to an individual particularly, and
there is particular injury to him. It does not cover
duties owing in general to the public, collectively.
 What are the elements of interference in contractual relations?
o 1. Valid contract
o 2. Outsider knew the existence of the contract
o 3. The third party induces one party to breach the contract
without valid justification or excuse
o 4. Damage
o What are the defenses by the one charged with tortuous
interference?
 1. Business competition and lawful means are used
 2. Honest advice in GF, in his duty as an adviser
 3. Lack of inducement
 4. If the interest protected is superior to the interest
broken in social importance
o What is the liability of the party induced to break the
contract?
 In bad faith: liable for all the natural and probable
consequences of his act or omission, whether
foreseen or unforeseen
 In good faith: only liable for foreseen consequences
Negligence
 When is there presumption of negligence?
o 1. Res ipsa loquitur
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o 2. If the death or injury results from possession of dangerous
weapon or substances, except when possession of such is
indispensable to his occupation or business
o 3. Violation of traffic rules
o 4. Common carriers
o 5. Repondeat superior
 What is res ipsa loquitur?
o Where a thing is shown to be under the management of the
defendant or his employees, and the accident in the ordinary
course of events would not have occurred had there been
proper care, it gives rise to evidence that the accident was due
to the fault of the defendant, unless rebutted
o What are the elements of res ipsa loquitur?
 1. Accident would not ordinarily occur in the absence
of negligence
 2. Caused by an agency or instrumentality under the
exclusive control of the defendant
 3. Not due to any voluntary action or contribution of
the plaintiff
 What are the defenses against negligence?
o 1. Contributory negligence
 See above for discussion.
 Remember that this is only a partial defense that
mitigates damages.
o 2. Assumption of risk
 But note: even if there is an assumption of risk,
measures must be taken by the defendant to
minimize risk to the injured party
 Elements?
 1. Plaintiff knew the risk is present
 2. He understood its nature
 3. He freely and voluntarily chose to incur
the risk
o 3. Last clear chance
 See above discussion
 NOTE: that this doctrine will not apply as a defense
for breach of contract of carriage. Neither can one
 negligent party use this as a defense against liability  Unless the emergency in which he finds himself in is
to a third person, by pointing at the negligence of of his own doing
another. It must be between two parties in a situation
where it is impossible to determine whose negligence Special liability in particular activities
it was that was the proximate cause of the accident.
o 4. Prescription  What is the special liability of provinces, cities, municipalities as to
 What is the usual prescription? roads and streets?
 4 years from discovery of the act (“discovery o They are liable for injuries caused by defective condition of
rule”) roads and streets.
 1 year if from the act of a public officer o This special liability trumps provisions on liability arising from
involving exercise of powers/duties charters and general laws.
 What are the prescriptive periods under the o The road or street need not necessarily be owned by the LGU
Consumer Act? (thus it can be a national road). What matters is that it is under
the control of supervision of the said road/street.
 4 years from purchase for apparent defects
 What is the responsibility of a proprietor of a building/structure?
 2 years from knowledge or purchase for
o He is responsible for injuries caused by its total or partial
hidden defects
collapse, if it be due to lack of necessary repairs
o 5. Fortuitous events
o The doctrine of last clear chance does not apply here (De Roy
 See Oblicon discussion
v. CA)
o 6. Diligence
o Proprietors likewise are responsible for:
 For employers: diligence of a GFF is selection and
 1. Explosion of machinery not taken care of with due
supervision of employees
diligence
o 7. Mistake and waiver
 2. Excessive smoke harmful to persons/property
 See Oblicon discussion
 3. Falling trees situated near highways or lanes, if not
o 8. Damnum absque injuria
due to force majeure
 What is this?
 4. Emanations from tubes, canals, sewers, or
 Damage without injury, arising from a
deposits of infectious matter constructed without
person’s exercise of his legal rights.
precautions
 If the injury arises from abuse of right, then damnum
 What is the responsibility of manufacturers and processors?
absque injuria does not apply.
o In general, manufacturers and processors of foodstuffs, drinks,
o 9. Emergency rule
toilet articles, and similar goods are liable for damages for
 What is this?
death and injuries caused by noxious or harmful substances
 One who suddenly finds himself in danger
used, even if there is no contractual relation with the
and is required to act without time to
consumers.
consider the best means to avoid the danger
o When is a product defective under the Consumer
is not guilty of negligence for failing to
Protection Act (CPA)?
choose the best option, in hindsight
 When it does not offer the safety rightfully expected of
it, taking into account: a) presentation of the product,
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 b) use and hazards reasonably expected out of it, and
c) time it was put into circulation
 NOT simply because a better product is on the market
o When is the manufacturer or producer not liable?
 1. It did not place the product in the market
 2. It placed it in the market but it was not defective
 3. Consumer or third party is solely at fault
o When is the seller liable?
 1. When it is not possible to identify the manufacturer
or producer or importer
 2. The product supplied does not clearly identify the
manufacturer or producer or importer
 3. He does not adequately preserve perishable goods
o What is the liability for product or service imperfection?
 If the products are unfit or inadequate for
consumption, or there is inconsistency with
information in the container
 The provider must correct the imperfection within 30
days of demand by the consumer (parties can change
period to 7-180 days, min and max)
 What are the options of the consumer if the
provider fails to correct it?
 1. Replacement of the product
 2. Immediate reimbursement of the amount
paid
 3. Proportionate price reduction
 When can an engineer, architect, or contractor be liable for
collapse of a building?
o The engineer or architect who drew up plans and specifications
is liable for damages if within 15 years from completion, if it
collapses due to:
 1. defects in the plans OR
 2. defects in the ground
o The contractor is liable for damages if within 15 years the
edifice falls due to:
 1. defects in construction
 2. use of inferior materials
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 3. violation of terms of contract
 What if the engineer/architect supervises
construction?
 He is solidarily liable with the contractor
o What is the effect of accepting the building?
 It is not a waiver of action on these claims
o What is the prescriptive period?
 Within 10 years of collapse of building
o Can the owner of the building demand reconstruction
thereof if the building collapses due to the fault of the
engineer, architect, or contractor?
 Yes, he may. The obligation is an obligation to do. If
a person is obliged to do something in contravention
of an obligation, it may be executed at his own cost.
 Or what has been poorly done can be undone, and
then reconstructed.
Strict liability
 Who are instances that fall under the doctrine of strict liability?
o 1. Possessors and users of animals
o 2. Nuisance
o 3. Product liability/violations of Consumer Act
 What is the liability of possessors and users of animals?
o The possessor, and not just the owner, of the offending animal
is liable even if the animal escapes or becomes lost. It does
not matter that the dog was tame and was merely provoked.
o The owner/possessor is liable as long as the animal causes
injury.
 Nuisance: see Property Law
 Manufacturers and processors: See above discussion
DAMAGES
 What are the different kinds of damages?
o 1. Actual or compensatory
 o 2. Moral
o 3. Nominal
o 4. Temperate or moderate
o 5. Liquidated
o 6. Exemplary or corrective
 What are the general principles applied to damages?
o 1. Amount must be fair, just, and commensurate to the damage
o 2. Damage and amount proven by competent evidence
o 3. Only proximate damages, not remote or speculative, may be
recovered
 What must be proved so that damages may be recovered?
o 1. Injury (legal invasion of a right)
o 2. Breach of duty (wrongful act, not just hurtful)
o 3. Breach must be the proximate cause of the injury
Actual or compensatory damages
 What are actual damages?
o Compensation for pecuniary loss actually suffered and proved
by the plaintiff.
 What is the general rule?
o One is entitled to adequate compensation only for pecuniary
loss suffered by him as has been proved.
o Measure is not defendant’s gain, but plaintiff’s loss.
 Except in certain cases like in the IP Code (measured
by benefit of defendant)
 What is the exception that recovery is limited to proven loss?
o 1. Stipulation
o 2. Provided by law (ex. fixed indemnity)
 What are the kinds of actual damages?
o 1. Cano emergente – loss of what a person already possesses
o 2. Lucro cesante – failure to receive as a benefit that would
have pertained to him
 What is “restitutio in integrum”?
o Amount awarded to the plaintiff must be that sum which will put
the party who was injured or who has suffered in the same
position as he would have been if he had not sustained the
injury
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 What is the recoverable value in the following instances –
o Damage to property – value of the property at the time of
destruction
o Personal injury and death –
 1. Reasonable expenses incurred to treat his or her
relative’s injury
 2. Future medical expenses
 3. In case of death, for wake and funeral expenses
 N.B. Expenses after burial are NOT compensable
 Differentiate recoverable damages based on breach of contract or
quasi-contract, depending on GF or BF:
o Defendant in GF – liable for natural and probable
consequences of the breach which the parties could have
foreseen when the obligation was entered into
o Defendant in BF – liable for all damages reasonably
attributable to the obligation
 What about recoverable damages from quasi delicts?
o Defendant is liable for all damages which are the natural and
probable consequences of the act or omission. It need not
have been foreseen or reasonably foreseen by the defendant.
 A. What are covered by cano emergente?
o Court only gives credence to those expenses supported by a
receipt and which appear to have been incurred in connection
with the wake, death, or burial of the victim.
o The following cannot be recovered:
 1. Incurred after considerable lapse of time from burial
or with no relation death, wake, or burial
 2. Incurred for purely aesthetic or social purpose
 3. Receipt appears to have been modified
 4. Incurred before date of slaying of victim
 5. Not in fact shouldered by heirs
 Ex. plane tickets of relatives or in-laws
 6. Merely incidental
 7. Cannot reasonably be itemized
 B. What is disability/commercial credit?
o 1. Actual damages for loss or impairment of earning capacity
for personal injury (temporary or permanent)
 o 2. Actual damages for injury to business standing or
commercial credit
 C. What is fixed indemnity?
o It does not replace the loss of earning capacity
o P50K payment to heirs of deceased
o P75K payment for qualified rape
 D. What is the loss of earning capacity?
o Loss of earning capacity = Life expectancy x (Gross annual
income – necessary living expenses)
 Note: Life expectancy: (2/3 x [80 – age at time of
death])
o How are net earnings proved?
 Sufficient evidence to prove net earnings of the
deceased
 Exceptions – when non-availability of
documentary evidence is fine:
 1. Victim was self-employed earning less
than minimum wage
 2. Victim was employed as a daily wage
worker earning less than minimum wage
o How are living expenses proved?
 Fixed at 50% of the gross income in the absence of
proof of amount of living expenses
o What if the deceased was obliged to give support
according to law?
 The recipient who is not an heir called to inheritance
by law may demand support from the person causing
death for a period not beyond 5 years (court sets the
length of time)
 E. Interest
o 1. If there is a stipulation as to rate, apply it, unless it is
unconscionable and excessive – apply legal rate
o 2. If interest is imposed, but no rate stipulated, apply legal rate
 A. Obligation involving payment of damages: 6%
 Compute from date of demand if indemnities
can be established with reasonable certainty
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 Compute from date of judgment of trial court,
if indemnities cannot be established with
reasonable certainty
 B. Obligation involving loan or forbearance of money:
12%
 Compute from date of default (extrajudicial
or judicial demand)
o 3. Once there is finality of judgment , interest becomes 12%
o Can there be interest for unliquidated damages?
 No. There must be certainty of amount of damages
before interest is demanded.
 F. Attorney’s fees
o What is the general rule?
 Attorney’s fees cannot be recovered
o What are the exceptions?
 1. Exemplary damages are awarded
 2. Defendant’s acts/omissions compelled plaintiff to
litigate with third persons or incur expenses to protect
his interests
 3. Malicious prosecution
 4. Clearly unfounded civil actions against plaintiff
 5. Defendant grossly acted in BF in refusing to satisfy
a plainly valid claim
 6. Action for legal support
 7. Action for recovery of wages
 8. Indemnity under ECSIF and employer’s liability
laws
 9. Separate civil action to recover culpa criminal
liability
 10. Double judicial costs awarded
 11. Any other case where the court deems it equitable
o What are the rules in awarding attorney’s fees?
 Plaintiff must clearly state basis in the complaint
 Court must state basis for the award, or else it’s null
and void
 As fees  go to lawyer
 As damages  go to client
o When can there be attorney’s lien?
  There can be none, over real property subject of o Culpa contractual  bad faith or gross negligence involved
litigation  Except for banks: no need to prove bad faith
 If the action is for damages, can claim a lien on the o Culpa criminal  physical injuries, lascivious acts, adultery or
award concubinage, illegal or arbitrary arrest, illegal search,
o What is the basis of the amount? defamation
 That which is stipulated in the retainer agreement o Contract of carriage  death of passenger, or fraud/BF
 If there is none stipulated, it is fixed on the basis of o Labor cases  if there is bad faith or oppression against labor
quantum meruit – the reasonable worth of his  Who may recover moral damages?
services o Only the party who suffered.
o Except: parents of the child seduced, abducted, raped, or
Moral damages abused
 What are the factors in determining amount of moral damages?
 What are moral damages?
o 1. Sentimental value
o To alleviate the moral suffering the injured party has o 2. Extent of humiliation
undergone by reason of the defendant’s culpable action o 3. Extent of pain and suffering
 What are the requisites of moral damages? o 4. Standing of the offender and offended
o 1. Injury sustained by claimant (physical, mental, or o 5. Age of the claimant
psychological)  What are the elements of malicious prosecution in criminal case?
o 2. Culpable action or omission established o 1. Fact of prosecution and the action terminated with an
o 3. It is the proximate cause of the tortuous act (fraud or bad acquittal
faith) o 2. Prosecutor acted without probable cause
o 4. Award of damages predicated on: o 3. There was legal malice
 Physical injuries (criminal or tortuous)
 What are the elements of malicious prosecution in civil case?
 Lascivious acts (seduction, rape, etc.)
o 1. False allegation
 Adultery or concubinage
o 2. Lack of probable cause
 Arbitrary or illegal detention or arrest
o 3. Malice or bad faith
 Illegal search
o 4. Injury
 Libel, slander, or other defamation
o 5. Action terminated
 Malicious prosecution
 Can corporations and other artificial beings be entitled to moral
 Disrespect for the dead or interference with funeral
damages?
 Acts or omissions in Human Relations chapter
o No.
o 5. Testimony or evidence proves the suffering caused
o EXCEPT libel or slander against the corporation (damage of
 When is moral suffering presumed?
corporate reputation)
o 1. Rape
o 2. Murder Nominal damages
o 3. Homicide
 When may moral damages be awarded?  What are nominal damages?
o Culpa aquiliana  Physical injuries or intentional tort
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 o In order that a right of the plaintiff, which has been violated or  What is the general rule?
invaded by the defendant, may be vindicated or recognized o Liquidated damages substitute for damages and interest.
o Not for the purpose of indemnifying the plaintiff for loss  Exceptions?
suffered o 1. Stipulated otherwise
 What is the nature of nominal damages? o 2. Interest was not paid
o If there is absence of proof of actual damages, only nominal o 3. Fraud
damages are awarded
o Assessment of nominal damages up to the court. The plaintiff Exemplary or corrective damages
has to just prove breach of right – no need to prove bad faith,
fraud, or malice.  What are exemplary damages?
 Examples of violation of nominal damages: o Those imposed by way of example or correction for the public
o Violation of due process in labor cases, although dismissal good.
may be valid o In addition to moral, temperate, liquidated, or actual damages
o Act of bank which merely relied on entries in a deed of  Who determines when exemplary damages are given?
mortgage without checking or adjusting its records, leading to o The courts, on its discretion. It cannot be:
prejudice to plaintiff  demanded
 Can nominal damages co-exist with actual damages or any other  alleged
kind of damages for that matter?  waived
o No. Nominal damages ALWAYS stand alone.  What must be established first?
o Claimant must first establish its right to actual, moral,
Temperate damages temperate, or liquidated damages
 When is it awarded?
 What are temperate or moderate damages? o Culpa aquiliana  attended by gross negligence
o These are more than nominal, but less than actual. These are o Culpa contractual  wanton, fraudulent, reckless, oppressive,
awarded when the court finds some pecuniary loss has been or malevolent manner
suffered but the amount, from the nature of the case, cannot o Culpa criminal  attended by aggravating circumstances
be established with certainty.
 Ex. NAPOCOR’s construction of geothermal plants resulted into Mitigation of damages
damages to a nearby resort. There is pecuniary loss, but it cannot be
ascertained so temperate damages were awarded.  What are the factors that mitigate liability?
o [defenses]
Liquidated damages o 1. Diligence of a GFF
o 2. Mitigating circumstances
 What are liquidated damages? o [acts of other party]
o Those agreed upon by the parties in a contract, in case of o 3. Contributory negligence of the other party
breach thereof. o 4. Plaintiff himself contravened terms of the contract
 Can these co-exist with actual damages? o 5. Plaintiff derived some benefit from the contract
o No. Liquidated and actual damages are mutually exclusive. o [equity]

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 o 6. When defendant acted upon advice of counsel which led to
exemplary damages being awarded
o 7. Loss would have resulted anyway
o 8. Defendant has done his best to lessen the plaintiff’s loss or
injury since the filing of the action
 What is the duty of the party suffering loss or injury?
o Must exercise diligence of GFF to minimize damages arising
from the act or omission in question
 What is the doctrine of avoidable consequences?
o A party cannot recover damages from consequences which the
party could reasonably have avoided
o These are acts or omissions of the plaintiff after the
defendant’s act or omission (as opposed to contributory
negligence, which precedes the act or omission)

Damages in case of death

 1. Indemnity for death: fixed at 50K

 2. Indemnity for loss of earning capacity
o Unless the deceased had no earning capacity at said time
o If deceased obliged to give support, the recipient who is not an
heir may demand support from the accused for a period not
exceeding 5 years, in a period set by court
 3. Moral damages for mental anguish
o ONLY spouse, legitimate or illegitimate descendants and
ascendants (SAD)
o Not brothers/sisters
 4. Exemplary damages
o If crime attended by aggravating circumstances
 5. Attorney’s fees and expenses of litigation
o When a separate civil action to recover civil liability from a
crime is filed
o Or there are exemplary damages awarded
 6. Interests, if proper

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